Grand Committee
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Enterprise and Regulatory Reform Bill
(11 years, 9 months ago)
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The Deputy Chairman of Committees (Baroness Fookes)
My Lords, I am required to remind the Committee that if there is a Division in the Chamber we will adjourn for 10 minutes. I must say, it seems highly unlikely.
Clause 68 : Licensing of copyright and performers' rights
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, in its 10th report of this parliamentary Session, the Delegated Powers and Regulatory Reform Committee considered that the exercise of a number of the powers in these provisions should be subject to the affirmative procedure, at least the first time that they are exercised. The amendments in this group take heed of this recommendation. I am pleased to say that, in fact, they go further by requiring that not just the first use of the powers but all uses be subject to the affirmative procedure. I trust that this additional, significant safeguard in the Bill gives due comfort and assurance to those who have expressed concerns about the exercise of these powers. I beg to move.
Lord Clement-Jones
My Lords, I shall say just a few words on the Minister’s very welcome amendments in response to the 10th report of the Delegated Powers and Regulatory Reform Committee. It is very interesting. The committee demonstrated the value of a collective memory, as it took us all back to the Digital Economy Act and the comments that it made at the time; it has been entirely consistent. It is good to see that the Government have responded. However, I wonder, especially in light of the fact that the Minister has confirmed that the affirmative process will be used for Clause 68, whether he will also confirm that the affirmative process will be used when the Hargreaves exceptions are introduced under the European Communities Act. The Minister has clearly stated that the Government will not be using Clause 66 when those exceptions are introduced; it will be purely for penalties. We very much welcome the assurance that the Minister gave on Monday. However, will he take the opportunity to confirm that the scrutiny process will be by the affirmative procedure of both Houses when those draft statutory instruments come under the ECA procedure?
Lord Stevenson of Balmacara
My Lords, we on this side will also be interested to hear the answer to that question, although I think I gathered from remarks made previously in Committee that that is the case. We will look forward to hearing about that. Other than that, we are very grateful to the Minister for bringing forward these amendments, which, as he says, go a step further than the DPRR Committee recommended, but are none the less welcome for that.
Baroness Buscombe
My Lords, I add my welcome for these amendments and thank the Minister.
Viscount Younger of Leckie
My Lords, I begin by expressing my thanks to my noble friend Lord Clement-Jones for the important part that he has played in the passage of the Bill so far. This is indeed a complex area and his contributions have demonstrated an unrivalled depth of knowledge and a robust grasp of the intricacies of this debate. I appreciate and respect the vigour with which he has presented his position to the Committee. The Government know that at the core of his work on the Bill is his determination to see a stronger and fairer copyright framework in the UK. In answer to his question concerning the affirmative procedure when the Hargreaves exceptions are implemented, I can confirm that we will use the affirmative procedure. This will, I hope, go some way towards answering the question raised by the noble Lord, Lord Stevenson.
I am pleased that these amendments have been accepted in the spirit in which they were intended. The Government recognise that the powers in these provisions could have a significant impact on creators and users of copyright works. I am confident that these amendments ensure that any use of those powers will be subject to significant parliamentary scrutiny.
Lord Clement-Jones
My Lords, I think we gave the issues a pretty good airing on Monday, so I will not tax the patience of the Committee for too long today. The Minister is well aware that there are many who think that we should align ourselves to the EU directive and that the extended collective licensing arrangements go well beyond where we should be at present, given that the digital hub could solve some of our problems.
The first thing I want to do is return the compliment to the Minister for the care and attention that he has given in his capacity as the Minister for Intellectual Property, and for listening to the arguments that have been made. I thank him particularly for his clarification and assurances and, latterly, for his letter which, although directed at the noble Lord, Lord Stevenson, seemed to encompass most of the questions that I had asked, so I was pretty satisfied with that way of dealing with things. In particular, I welcomed the assurances he gave about the ECL on Monday: the Government are clear that an opt-out must be as simple and as low-cost as possible for rights holders; and further safeguards to be drafted in the regulations will require the licensing body to set out the details of opt-out systems, why they are appropriate to meet the needs of rights holders and how it plans to publicise the scheme so that rights holders can opt out in advance. Moreover, the Secretary of State will be able to impose conditions on an authorisation relating to the opt-out if necessary. I found all that very reassuring.
Above all, I hope that the Minister recognises that many bodies and institutions—many of them represented by FOCAL and BAPLA—are still very unhappy about both ECL and orphan works. I hope he will continue to listen and engage with all those organisations. I also mention Stop43 in that context. There is certainly a very strong feeling that the impact assessment—particularly for orphan works, which have a range of 9 million to 91 million—is hardly credible as a business plan. I have made the point directly to officials that genealogy or genealogical services are not a great basis on which to work out a business plan. The Minister has answered many questions but there will be others coming down the track, such as whether the Copyright Tribunal is really suitable and exactly what a “diligent search” consists of, especially when there are several works by the same author. My wording might not have been as good as it should have been, but we were trying to get at the fact that care needs to be taken in respect of individual works and where there are multiple rights holders. What copyright items will be included in the definition of orphan works?
The EU directive does not include photographs, and for that very reason, photographers and the whole of that sector have become very exercised about the new provisions. Therefore, particular care needs to be taken in respect of that sector, as we heard from the noble Lord, Lord Greenway. I recognise that if the museums and universities and so on want to see ECL, then they have to justify how it is used and its impact on rights holders.
As regards ECL, the impact assessment states that the UK’s existing rights clearance system is complex, involving multiple users and rights holders seeking and granting permissions. Hargreaves recommended that it be simplified. Government intervention is required to introduce ECL as a tool for simplification. Is that not precisely what the copyright hub is designed to do? There is the concern very strongly held by foreign rights holders—I mentioned the letter from the US photographers to the Secretary of State—that they will have very inadequate means of monitoring what is happening in the UK.
There are many other questions and I do not want to prolong the session today. There is the whole question of what “substantial support” means for a collecting society in what the Minister said on Monday. What sums of money will be paid to copyright owners under ECL? What will be the duration of licences? Will ECL societies have the right to license just UK content or content from overseas? How will copyright owners know which of their works have been licensed, and so on? Considerable clarification is needed, not least that for the Association of Authors’ Agents. When we were talking about that, the Minister distinguished between certain warranties and other warranties. That was perfectly fair, but nevertheless clarity will be all when dealing with these matters.
The task of the Intellectual Property Minister, especially in these circumstances—holding the ring between different interests—is not easy, but I commend the newsletter from Victoria Espinel, who is the Intellectual Property Enforcement Coordinator in the States. As a statement of the balancing of intellectual property rights with innovation and growth, I cannot fault what she has said about the new United States-Russian Federation intellectual property rights action programme. How about that for a salient? She states:
“Strong IPR protection and enforcement are vital to promoting innovation and creativity by securing the rights of innovators and the creative community, attracting high-technology investment, and fostering the jobs necessary for long-term sustainable growth”.
That seems to me to balance very well the interests of all parties and I commend that to the Minister.
Baroness Buscombe
My Lords, I rise briefly to add a few words in support of everything that my noble friend has said thus far. I also want to refer to a letter addressed by the Minister to the noble Lord, Lord Stevenson, and thank the Minister because it addresses some of the questions which I raised in the Committee’s previous session.
The Minister and the Government agree that when licensing bodies operate ECL, they should do so transparently and should provide for fair treatment for non-member rights holders whose works are licensed through ECL. Any licensing body that wishes to operate a scheme will be required to have a code of practice that complies with the Government’s minimum standards for collecting societies. This will include specific protections for non-member rights holders. We welcome that statement and the statement about the applicability of UK ECL schemes for the use of works outside the UK. The Minister has said that the Government’s proposals would apply only to use within the UK. It is not possible to extend these provisions to other jurisdictions.
I thank the Minister for that but would just say that, where the Minister refers in response to a point raised by my noble friend Lord Clement-Jones about the operation of ECL in Nordic countries, while the Minister said that, since the 1960s, ECL has operated in the Nordic countries without challenge and is explicitly recognised in EU law, there is a difference. This is something to which we will have to give more thought between now and Report. In Nordic countries, the system operates against a background of legislation that guarantees remuneration for creators and the identification and integrity of works. I feel that we are making real progress on this Bill, and I support the Minister’s helpful responses to our concerns thus far.
Finally, I add my continuing concern in relation to photographers. A number of noble Lords spoke on this issue on Monday. It remains a serious concern, and it might be helpful if we could have more thought prior to Report about how the future viability of being a photographer in this digital age could be addressed in the Bill.
Lord Stevenson of Balmacara
My Lords, we on this side of the Room support the introduction of the measures to do with orphan works and believe that the extended collective licensing system represents a good way forward, albeit, as has been pointed out by the noble Lord, Lord Clement-Jones, that it has to be done in conjunction with the copyright hub, which provides the missing ingredient in a lot of what we have been discussing recently.
As was made clear, we have some reservations about how the Government intend to ensure high standards of operation for collecting societies which are, after all, effectively monopolies in many sectors, so we are keen to see, at a very minimum, clarity on the standards to be set for collecting societies and transparency over the way the powers that the Government are taking will operate in practice. We also want to make sure that everything that needs to be done is done to make the copyright hub work well. The new regime and the copyright hub should ideally be brought into existence contemporaneously.
However, we are confident that things are moving in the right direction, and we hope that there will be opportunities for your Lordships’ House to be regularly updated on matters such as this so that we can feed in our continuing thoughts and support. I particularly refer to the point about photography, which I absolutely endorse. There is an issue there that we will need to keep an eye on. Assuming that everything is going well, we cannot support the noble Lord, Lord Clement-Jones, in opposing Clause 68 standing part of the Bill.
Viscount Younger of Leckie
My Lords, the very limited extent to which orphan works can be used is not just a cultural issue, but a real economic issue. The clause will allow for commercial and non-commercial use of orphan works in the UK. The Government estimate this could lead to benefits of up to £220 million a year. Nine out of 10 respondents to the Government’s consultation were in favour of commercial use of orphan works. The UK scheme has more safeguards than the EU orphan works directive. It includes a requirement that any diligent search is verified by an independent authorising body. The authorising body will not be able to license itself.
We are also making provision for remuneration of rights holders at an appropriate rate for the type of work and type of use. The directive is less restrictive about this. Remuneration will be paid whenever a work is used. It is yet to be determined how long such money should be kept on escrow for the returning rights holder. However, after a certain period it is envisaged that unclaimed money will be redistributed. Where the money has come from publicly funded institutions, such as archives, it may be possible for that money to be returned to fund archiving, preservation and digitisation costs.
The Government are pleased that the digital copyright hub is developing but have not yet made any decisions about who will run the orphan works scheme. However, regardless of its final decision, these powers are needed to enable the chosen organisation legally to operate the scheme.
The noble Lord, Lord Stevenson, my noble friend Lord Clement-Jones and other noble Lords raised concerns about the potential impact of these proposals on photographers. The Government continue to work with the photography sectors. The working group on orphan works and extended collective licensing contains significant representation from the world of photography, including the Association of Photographers, the British Association of Picture Libraries and Agencies and Stop43.
The Government appreciate that the stripping of metadata is a real problem for photographers. As noble Lords have noted, this is a current problem, and the practice continues despite the existence of legal instruments making it an offence. I am willing to meet noble Lords, who, in the course of this Committee session, have raised concerns, to discuss possible solutions to the problem of metadata stripping. This is an issue that is also being examined by the industry-led digital copyright hub, following Richard Hooper’s July report. However, the Government do not believe that the introduction of the orphan works scheme will negatively affect photographers, because historical photographs held in museums, archives and libraries, will form the bulk of photographs licensed under the scheme. If anything, the orphan works scheme will very likely improve matters, as it will become more obvious if works are being used unlawfully. Officially licensed orphan works, whether sourced from digital or analogue sources, will carry a reference to the authorising body. Courts may also take a dimmer view of infringement, if there is a legitimate and legal means of using orphan works.
The provisions on extended collective licensing are designed as a tool to help streamline rights clearance, but only where the sector wants it. We know that some collecting societies already operate extended collective licensing-type schemes, which are unregulated and unlawful. This means that rights holders are unprotected and could be missing out on money owed to them. A statutory basis for such schemes would help remedy this. The Government know that extended collective licensing might not be appropriate for all types of works or rights, which is why it can be initiated only by a representative collecting society acting with the explicit support of its members. The Government would have no power to impose extended collective licensing on a sector. Collecting societies tend to be monopoly suppliers in their sectors, so members and licensees cannot simply shop elsewhere.
The clause and schedule introduce provision for the statutory regulation of collecting societies, where self-regulation fails. Any collecting society that fails to meet the Government’s minimum standards for self-regulation would be required to adhere to a statutory code of practice. Collecting societies would have to comply with specified criteria, including on compliance and enforcement. The Government welcome the progress that the industry has made on a self-regulatory framework. Self-regulation remains the Government’s preferred approach. The safeguard of enforceable minimum standards will help to ensure that collecting societies operate in a manner that promotes open and efficient markets. If it works effectively, the reserve power will not be used.
Noble Lords have raised a number of questions. My noble friend Lord Clement-Jones raised the issue of having to wait for the hub before undertaking extended collective licensing, and pointed out that we need extended collective licensing because we have the hub. Both schemes are designed to facilitate legal and properly remunerative use of works; they are two sides of the same coin. The fact that ECL-type schemes are already in use in the UK demonstrates that there is a need. ECL cannot be imposed on a sector; if rights holders prefer to use direct licensing through digital copyright exchange, the hub or another method entirely, that is their decision. The hub cannot act on orphan works without the legislation in Clause 68 in place.
My noble friend Lord Clement-Jones raised an issue that the noble Lord, Lord Stevenson, raised previously, on photographers suggesting that we delay the implementation of the orphan works directive until the October 2014 deadline, and then implement only to relieve any restrictions that the copyright hub failed to address. I understand the concerns behind this suggestion, but this is not an option because we need to implement the orphan works directive in full, and we cannot go outside the requirements of the directive without this clause. This means that no one, including the copyright hub, would be able to license orphan works without the power of this clause.
My noble friend Lord Clement-Jones, in a further question, raised the issue of foreign rights holders who would not be able to monitor what is going on in the UK. The collecting society must produce evidence with its application to show how it deals with those affected, including foreign rights holders. I hope that that answers his question. He also raised the question of FOCAL and BAPLA, which were unhappy with the ECL. Photographers do not have to have ECL—it is voluntary and can be initiated by the collecting society only with the consent of members, as I mentioned earlier.
I believe that my noble friend Lady Buscombe stated that extended collective licensing in Nordic countries is different and guarantees remuneration for rights holders. However, collecting societies in the UK must also show how they will find non-member rights holders and distribute money that is collected to them. I hope that that goes a little way to answering my noble friend’s question. I commend the clause to the Committee.
Lord Clement-Jones
“Greater protection for authors when assigning or licensing copyright
In paragraph 1(c) of Schedule 1 to the Unfair Contract Terms Act 1977, omit “copyright”.”
Lord Clement-Jones
Amendment 33 is inspired by the Creators’ Rights Alliance which feels that the contractual scales are very much weighted against it. I do not often make common cause with Consumer Focus but I am delighted that it supports the amendment. Its brief on the amendment puts the position rather well. It states that the Copyright, Designs and Patents Act 1988 makes creators the first owners of copyright, and that creators’ ability to assign or license their copyright to others is central to the overriding aim of copyright: that is, ensuring that creators benefit financially from their works. However, in the UK, creators frequently assign all their copyright for a one-off payment to intermediaries, such as publishers or record companies. Individual creators are frequently at a disadvantage when negotiating contracts with intermediaries, and some creators complain that they are unfairly pressured into assigning all their rights for a one-off payment.
The 2012 research of Consumer Focus found that 77% of British consumers expect that a fair share of the money they pay for music, films and e-books goes to the artists who created the work. The ability of the copyright system to ensure that creators receive a fair remuneration is central to public support for the principle of copyright. I agree with Consumer Focus that removing the copyright exclusion from the Unfair Contract Terms Act 1977 should be central to the Government’s efforts to build a fairer copyright system that supports economic growth and innovation. How about that, my Lords? Many creators work as freelancers or microbusinesses. They are the bedrock of the creative industries and deserve the protection provided by the Unfair Contract Terms Act. I beg to move.
Lord Stevenson of Balmacara
My Lords, extended collective licensing requires fair contracts. People who work in the creative industries are already seeing intensified efforts by many publishers and other intermediaries to coerce individuals who are sole traders into signing away all rights to their work. Those who succumb to this blandishment would be deprived of the income that the ECL provisions in the Bill are supposed to offer. Therefore, the failure of the Bill to include measures to level the playing field for negotiation of contracts undermines the purposes of copyright in promoting fresh creativity. These are not just matters of concern to professional creators, vital though it is to the creative economy that the possibility of making a living as a professional creator is defended. Every citizen has an interest in enforceable creators’ rights and fair contracts now that so many people are publishing and broadcasting their own works through social media.
There is a well known example of the problems that this can cause. In late 2012, the Instagram online photo-hosting service attempted to impose a contract of terms of service that would allow the company to sell users’ photographs to advertisers. This was defeated only after alert users boycotted the service. Legislation will be required to ensure that the price of creativity is not an eternal vigilance which distracts from the work of creation.
The issue of unfair contracts typically arises in two circumstances: “take it or leave it” contracts presented by large businesses to sole-trader professional creators, who are informed that no negotiation will be contemplated; and “click-wrap” contracts offered to those, professional or amateur, who use online hosting services to store or share their creations in words, music or images.
Amendment 33 would bring contracts dealing with copyright works within the terms of the Unfair Contract Terms Act 1977. This would remove an inexplicable exemption and allow at least some challenge to the contracts being foisted on many creative members. I support the amendment.
Lord Lucas
My Lords, I rise not least for the pleasure of supporting entirely what my noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson of Balmacara, have just said. This is a very present problem in the way that the world is developing. We are getting some very large corporations controlling a lot of the flow of copyright material. The noble Lord mentioned the likes of Facebook but Amazon is just as bad, given the rights you are left with as an author as it moves into the publishing of e-books. If you put an e-book through to Amazon, you have to sign over to Amazon the entire control over what your work is sold for. The terms that it goes for are most astonishing. Generally, we need to remember that copyright is about enabling people to create and remunerating them properly for it, not enabling vast corporations to reap the benefits that we intend for the creators. I entirely support this change and very much hope that the Government, if not accepting this exact amendment, will see their way to doing something equivalent.
Viscount Younger of Leckie
My Lords, a change to the scope of the Unfair Contract Terms Act 1977, as envisaged by this amendment, would warrant considerable investigation and public consultation. For example, contracts governing copyright are specifically excluded from that Act. The Government would need to assess the potential implications of amending the Unfair Contract Terms Act to insert copyright within the scope of that Act. We believe that we understand the intent behind this amendment, which is to address issues surrounding contracts between individual creators and other businesses. However, it is unclear whether the amendment achieves this, since some parts of the Unfair Contract Terms Act would not apply to business-to-business contracts. I would be very happy to have further discussions on this complex matter with my noble friends Lord Clement-Jones and Lord Lucas, and indeed with the noble Lord, Lord Stevenson. I hope that in the light of the above, my noble friend Lord Clement-Jones will be able to withdraw his amendment.
Lord Clement-Jones
I thank my noble friend the Minister for that response. I think that is as good as it gets at this stage and I would very much like to meet him. The time has certainly come to look very carefully at this exclusion from the Unfair Contract Terms Act. There is a head of steam building up and it would be very useful to have that discussion. In the mean time, while looking forward to that discussion, I beg leave to withdraw the amendment.
“(2) The regulations may provide that, if a licensing body fails to adopt such a code of practice, any code of practice that is approved for the purposes of that licensing body by the Secretary of State, or by a person designated by the Secretary of State under the regulations, has effect as a code of practice adopted by the body.
(3) The regulations must provide that a code is not to be approved for the purposes of provision under sub-paragraph (2) unless it complies with criteria specified in the regulations.”
Viscount Younger of Leckie
The government amendments in this group are in response to the Delegated Powers and Regulatory Reform Committee’s 10th report of this parliamentary Session. Government Amendments 33A, 46A and 46B are intended to put additional safeguards into the Bill. In particular, Amendment 33A seeks to ensure that when a code of practice is put in place for a licensing body, it must comply with the criteria specified in the regulations. As the regulations will have been through the affirmative procedure, this gives parliamentary oversight of the code being put in place for a licensing body.
Amendment 46A makes it clear that all the provisions under sub-paragraph (1) are included, while Amendment 46B is intended to clarify that both the determination that there has been a breach and any related sanctions are subject to an appeal process. Amendment 46B, I should mention, gives effect to the intention behind Amendment 47, tabled by my noble friends Lady Buscombe and Lord Clement-Jones. Finally, Amendment 50A removes the power to make regulations which impose requirements on licensing bodies by reference to guidance.
I trust that these additional safeguards will reassure the Committee and demonstrate that the Government have listened to the recommendations of the Delegated Powers and Regulatory Reform Committee and have taken action. I will not at this point speak to the amendments in this group that other Peers have tabled. I will instead wait to hear what they say, but I beg to move Amendment 33A.
Baroness Buscombe
My Lords, I thank the Minister for bringing forward the series of amendments in this group and for his explanation. Although the government changes to Schedule 21 are to be welcomed, I suggest that the Government could edge even closer towards improving the Bill yet further. Briefly, I should like to respond to the government amendments and then introduce those in my name; namely, Amendments 34 through to 51, excepting Amendment 49, which is in the next group.
Amendment 33A responds to the concerns of the 10th report from the Delegated Powers and Regulatory Reform Committee. Its concern, as we have already heard, was that the Bill will allow the requirements of the default code, enforced by penalties, to be imposed or revised without parliamentary scrutiny, given that failure to comply may lead to sanctions. Equally important as parliamentary scrutiny, in my view, is the fact that it is indispensable that the code criteria should be subject to consultation by interested, informed parties. That would be the effect of my Amendments 43 and 51.
I very much welcome the Minister adding his name to Amendment 46, which I tabled. That will help to ensure that the regulations must now set out the process for determining non-compliance, determining the type or size of the sanction and for providing a right of appeal. I also welcome Amendments 46A and 46B. As financial penalties will ultimately be borne by the collecting society’s members, fines should be imposed as a last resort. A right of appeal is essential. Also Amendments 50A, 51A and 51B are welcome additions to the Bill.
I turn to the series of amendments that I have tabled. Although the government amendments put forward are very welcome and a big step in the right direction, my amendments address separate issues which, with respect, still need to be considered. The purpose of these amendments is to provide even greater clarity in the Bill for Schedule 21, which would help to ensure that the Bill meets the stated aim of fostering successful self-regulation. The effect of the changes would be to reduce the considerable uncertainties surrounding future regulations because the powers currently provided for by this legislation are simply too vague, even with the Government’s latest amendments.
Collecting societies have invested considerable time and money in adopting and operating voluntary codes of conduct. PRS for Music introduced a voluntary code of practice for licensees as far back as 2009 and then one for its members in 2010. Many other collecting societies have followed suit. The British Copyright Council’s Principles for Collective Management Organisations’ Code of Conduct, known as the BCC principles, are important to reference here, as many of these codes of conduct for members and users comply with these guiding principles, which have at their heart a commitment to transparency, accountability and good governance. I suggest that those are all good Conservative principles.
These collecting society voluntary codes also have regard to the Government’s recently published minimum standards for collecting societies and, therefore, include an independent complaints review ombudsman. Independent adjudication of a complaint is obviously an important feature of any sensible self-regulatory system. Those BCC principles also include provision for an independent code review process. This first such review is intended to start in November 2013. In short, the principles of good self-regulation are established and are generally being operated successfully by collecting societies.
Amendments are necessary to the Bill to make the path from voluntary to statutory regulation much clearer than is currently outlined in the legislation. It is only reasonable, I suggest, to give businesses the certainty that they deserve. After all, it is a big step to move from self-regulation to underpinning with state regulation.
First, it should be clarified that the majority of the powers in Schedule 21 are exercisable only in a scenario where it has been adjudged through a fair, robust and transparent process that there has been an unremedied failure of self-regulation. The imposition of a statutory code, and/or any statutory appointment of an ombudsman or code reviewer, will lead to significant additional costs and potential exposure to penalties, and should therefore be imposed only when it is clear that self-regulation has failed. Collecting societies need to have visibility of what triggers the imposition of statutory regulation so that they are not left in the dark about whether they are close to or far from crossing the line.
Equally, given that collecting societies are already offering, or on the point of offering, ombudsman dispute-resolution services and providing for a code reviewer, the regulations should also make it plain under what circumstances the Secretary of State would appoint a statutory ombudsman or code reviewer. Amendments 34 and 50 serve to clarify the processes and specific circumstances that would enable the Secretary of State to impose such regulation.
Improvements to the Bill can also be made so that the penalties for non-compliance much clearer and more proportionate. This is why I am proposing Amendments 44, 45 and 48. The Bill provides for sanctions in case there is failure to abide by a code. These sanctions include financial penalties that may be imposed on directors and other personnel. The highest fine stated in the legislation is £50,000. Under the Companies Act 2006, penalties on individuals arise in relation to very specific failures. Codes of conduct are typically of a general nature. I therefore believe it is unacceptable to impose personal liability and financial penalties for undefined offences that are less specific than UK company law.
Let us remember that all collecting society revenues are distributed to members after management costs are deducted, and fines are therefore a direct penalty on the membership itself. Any fines would be paid for by the members of the collecting society. There is a strong argument that fines on societies should be imposed only as a last resort. Instead, it would be more sensible to provide appropriate help or assistance to a society that has been deemed to have failed, as opposed to simply punishment.
I have also tabled Amendments 35 to 42, which are effectively technical. Paragraph 3 refers to a licensing code ombudsman. Codes of practice typically govern a collecting society’s relationship with its members and its licensees. I propose that the phrase “licensing code” should be deleted because it is not appropriate.
Let me conclude by saying that we should not forget that compliance with regulation is costly; and, ultimately, the resources which are devoted to regulation must in effect be paid for by the creator members themselves. It is entirely reasonable that the penalties for non-compliance are clearly set out and proportionate. This Government support the principle of good self-regulation; they should therefore take this opportunity to do just that and reduce the uncertainties provided for by the current drafting.
Lord Clement-Jones
My Lords, I rise briefly to support my noble friend Lady Buscombe. In fact, while she mentioned good Conservative principles, I can pray in aid of self-regulation good Liberal principles. The essence of the issue is that these should be backstop powers, and as she said, we should be fostering successful self-regulation. It is important that there is as much transparency and clarity about these rules as there is in UK company law. Some of the sanctions could be just as high as those in UK company law and, of course, they will ultimately be borne by the collecting societies’ members, and a right of appeal is essential in those circumstances. I thought that my noble friend argued eloquently for why we should be aiming for that kind of regime.
Lord Young of Norwood Green
My Lords, these government amendments, brought forward in response to the DPRRC recommendations, put flesh on the points that we made in respect of the previous group. As we said, we support the introduction of measures to deal with orphan works and believe that extended collective licensing is the way forward. We also want to see the copyright hub being developed, as we have said. These amendments go some way towards ensuring greater clarity over the standards to be set for collecting societies and transparency in how the powers that the Government are taking will operate in practice, and we are happy to support them.
The amendments proposed by the noble Baroness, Lady Buscombe, aim to put more detail into the Bill on how the Government intend to supervise collecting societies and on what might constitute the minimum conditions and procedures that might be required, which would ensure that the Government can step in and require a body to adapt the Government’s standards for collecting societies. I shall listen carefully to what the Minister says in response to the amendments proposed by the noble Lord and the noble Baroness, but at present we take the view that much of what is requested is more appropriate for secondary legislation.
I take the opportunity to say, as somebody who spent a few months of my life dealing with the previous Digital Economy Bill, of which orphan works were a part, but they unfortunately disappeared in the wash-up process, it is nice to know that at long last we seem to be getting near to liberating orphan works for the collective benefit of society as a whole. I welcome the Minister’s comments.
Viscount Younger of Leckie
First, I appreciate the general support of the noble Lord, Lord Young of Norwood Green.
On Amendments 34 and 50, there is already provision in the Bill for consultation before the appointment of a code reviewer. We have considered the proposals to put all processes for the appointment of an ombudsman and the implementation of a statutory code on the face of the Bill. However, the Government, together with stakeholders, need to learn how the schemes work in practice and respond as they evolve. This will help us quickly to remedy any unforeseen issues that result in problems or injustices for rights holders. We have considered Amendments 35 to 42 carefully and believe that the term “licensing code ombudsman” more accurately describes the functions of the role. That role is to investigate and determine disputes about a collecting society’s compliance with its code of practice.
On Amendments 43 and 51, as I noted with regard to Amendments 34 and 50, the Bill already makes provision for consultation when appointing a code reviewer. This is important to ensure independence of process. Codes of practice will be subject to specific criteria, which will be set out in regulations subject to consultation. Therefore, the Government do not consider that additional consultation is necessary.
We have spent some time looking at Amendments 44 and 45 on the power to impose sanctions on individual directors. Where it can be demonstrated that a director is responsible for non-compliance with a code, it is only right that they should be sanctioned. The default should not be to penalise collecting society members. The Government agree with the intent behind Amendment 46, which is consistent with the comments made by the Delegated Powers and Regulatory Reform Committee. Therefore we accept this amendment.
On Amendment 47, I confirm that an appeal mechanism will be available for decisions on non-compliance and for any resulting sanction. This was earlier clarified in government Amendment 46B.
Finally turning to Amendment 48, the Government can confirm that these fees will apply only to a licensing body being regulated. If a licensing body adopts a code of practice which complies with the criteria specified in the regulations, no fees arise in connection with paragraph 1 of the schedule. In addition, paragraph 6(2) of the schedule contains a protection for licensing bodies, limiting the aggregate amount of fees payable for administration and operation of the regulations.
I shall respond to a number of questions raised by noble Lords. In her general comments, my noble friend Lady Buscombe raised the code criteria, which should be subject to consultation. Although I may well have covered this in my previous speech, the code criteria will largely be based on minimum standards on which there will already have been consultation. Specified criteria will be part of the regulations and will be consulted on.
In her general comments, my noble friend Lady Buscombe also raised the work done by the collecting societies on self-regulation. The Government welcome the work they have done and what they have achieved. I repeat that self-regulation is the preferred option, but we need a back-stop if it fails, a protection for licensees and members when dealing with monopoly suppliers. My noble friend Lady Buscombe also said that fines should be used only as a last resort. I entirely agree that they should be a last resort. We do, however, need an ultimate sanction, and fines would provide that.
My noble friend Lady Buscombe also mentioned collecting society revenues which are distributed to members, who are affected by fines, instead of giving help to failing collective societies. I agree with her; this is why, if a director is responsible, he or she, rather than the collecting society members, should be held accountable. Finally, my noble friend Lady Buscombe asked what triggers statutory regulation. The provisions for an independent code reviewer, who will independently assess the performance against the code, are the trigger. I hope that I have answered all the questions raised by noble friends and, if not, I will certainly write to them.
Baroness Buscombe
My Lords, I thank the Minister for his explanation of the various amendments to which I have spoken today. Of course, I want to think about what he has said, but the confirmation of an appeal mechanism is very welcome. I am always concerned about leaving too much to regulations. I remember that when we were in opposition the previous Government too often left so much to regulation, and we always complained about that. I find now that we are in a similar situation. It all comes down to certainty and clarity, hence the main purpose behind the amendments we have tabled. It is a huge step to go from pure self-regulation to having a back-stop power. I think it is right to say that the industry in large part does not oppose that back-stop power in principle. It is asking for as much certainly and clarity as possible and for the Government to recognise the work the industry has done and is continuing to do to put and keep its house in good order, so that creators and the works that they do are protected, and properly so.
We welcome the Minister’s support and understanding of the position of creators and their concerns in this regard. For my part, I think that the key to successful self-regulation is that all the parties involved in it are positive and buy into the system. It works extremely well as long as there is no uncertainty or a spectre of what they would deem unfair or disproportionate state interference. So often, the bottom line is that state interference leads to delay and cost. Just as within any court of law, delay and cost never produce a happy outcome, even for the person who comes out on top. It is not a happy resolution, and that is why I also referred to dispute resolution. I am pleased that the Minister has said that the Government want to be seen to be helping the industry as opposed to coming in with something of a cosh to deter those working in the industry doing the right thing or feeling that what they are doing is worth while and is properly protecting their members.
I do not want to delay this further, so I thank the Minister for his supportive comments. I will take his thoughts away and consider further whether we should come back on Report with further amendments, just to provide certainty in the Bill.
Baroness Buscombe
Baroness Buscombe
Baroness Buscombe
My Lords, Amendment 49 relates to the jurisdiction of the Copyright Tribunal, which we feel needs attention. The Copyright Tribunal is a creature of statute; its powers and jurisdiction are defined in the Copyright, Designs and Patents Act 1988. It has the power to rule on private rights, so we believe that there should be full parliamentary scrutiny for changes to its jurisdiction. Paragraph 7(2) says that regulations may change the jurisdiction of the Copyright Tribunal, but it should be made clear that this is only in relation to the powers in the schedule and not more widely. I am proposing to tighten the drafting accordingly. I beg to move.
Lord Young of Norwood Green
These amendments, which relate to collecting societies, are sensible measures. Clearly, the bodies should act in the public interest and it would be outrageous if they did not have rights holders on their governing bodies. I am sure that the Government will say that this is detail for secondary legislation and they may be right, but for what it is worth we support the noble Baroness.
Baroness Brinton
My Lords, Amendments 56A and 56B would require the Government to ensure that regulations governing collecting societies required them to have user representation on their governing bodies if they wanted to grant extended collective licences. This is born of frustration with the operation of some collecting societies, which in effect already grant extended collective licences—the CLA, for example.
As has been mentioned, the societies are in a monopoly position. Universities negotiate licences with the CLA for the use of books, journals, magazines and so on. They have no alternative. If they do not like the terms of the licence that they are being offered, the only thing that they can do about it, once negotiation has been exhausted, is to go to the Copyright Tribunal, a very expensive and time-consuming process. If collecting societies are to get extensive new rights to offer licences for works which have not been produced by their members, they should also have new duties to act in the interests of their stakeholders and users and ensure that the public interest is also served.
It is important to bear in mind that a large volume of the work we are talking about here will never have been produced with financial returns in mind. It would be wrong for collecting societies representing these works to seek to maximise the commercial return on this kind of material. They should balance the interests of their members, the majority of whom will want financial return for their work with the interests of the producers of the unrepresented work which may not be financial at all.
These amendments are obviously intended to probe the Government and I will be interested to hear the Minister’s views.
Viscount Younger of Leckie
My Lords, I shall begin with Amendment 49. I can confirm that it would not be possible to make unconnected changes to the jurisdiction of the Copyright Tribunal under the power in Schedule 21.
Turning to Amendments 56A and 56B, I can assure the Committee that the proposed schemes already take account of the range of interested parties affected by them. Let me explain how. First, on extended collective licensing, the Government intend that the regulations will allow any affected party the chance to comment on a collecting society’s application before a final decision is reached. A collecting society authorised to grant licences must take into account the interests of affected parties including its members, its licensees and non-member rights holders. These obligations are required to be in the collecting society’s code of practice. An independent code reviewer will measure performance against these obligations. Where there has been an alleged breach of a code, rights holders and licensees will have recourse to an independent ombudsman.
Turning to orphan works, the orphan works authorising body is independent and will not be able to license itself. I submit that this is a stronger safeguard than that proposed by these amendments. The Government concur that representative rights holders, wherever possible, should be on the governing body. In practice, this will not always be possible with some types of orphan works, for example, old diaries, correspondence and other material never intended for publication or commercial use.
I would like to clarify an issue which was raised by my noble friend Lady Buscombe concerning Amendment 49. Any changes to the jurisdiction of the tribunal should be subject to full parliamentary scrutiny. All regulations, including changes to tribunal jurisdiction, are now subject to the affirmative procedure.
The Government have carefully considered these amendments, and I hope that in the light of my response my noble friend Lady Buscombe feels able to withdraw her amendment.
Baroness Buscombe
My Lords, I think the Minister said something slightly different at the beginning. Perhaps this is something I should take away and think about a little more, because I think I have been given different advice than the Minister. Rather than saying that I am grateful to the Minister and all is well, I hope he will allow me to take this away just to be sure that the advice I have received has clearly been wrong. It is important that we should make it clear that this change is only in relation to the powers in the schedule and not more widely. If that is not possible in the Bill, then I will accept what the Minister has said. I beg leave to withdraw the amendment.
Lord Mitchell
“(2B) The regulations must require the inclusion of information regarding the ten highest paid and ten lowest paid employees in the company outside of the board and executive committee.”
Lord Mitchell
My Lords, in addressing this section of the Bill, I should like to say a few words. I am very conscious of the fact that this is most definitely not a Second Reading debate, but I want to give a little perspective before I get to the main issue.
The amendment deals with directors’ remuneration, a subject which has had a lot of intense coverage in the media. Before we get to the nuts and bolts of the various amendments to which I have added my name, it might be useful if I set out some of the background to our thinking on this issue. I should say at the outset that we are very encouraged that shareholders, particularly pension funds and investment funds, are taking a much more proactive position on this issue. I know it is stating the blindingly obvious but it is the shareholders who own the company and it is they who risk their investment when they buy into a company, yet for too long they have been ignored.
I have to recount a ghastly story about Goldman Sachs that I read some time ago before the financial crash. The story goes that senior management in that company in the United States would look at their profits, decide how much reported profit they needed to keep Wall Street and the shareholders happy, and then divvy up the balance between themselves. I do not know whether that story is true but I am sure that some people take that approach: that is, senior executives act as if they own the company and believe that it is up to them to decide how the pie is sliced, but that is not the way things should be done. To its credit, this month Goldman Sachs responded to the outcry when it agreed not to delay bonus payments in this country in order to gain from the lowering of higher-rate income tax in April. I think that was a good result. Sadly, not all companies have followed the example set by Goldman Sachs. For example, I am told that Tullett Prebon intends to delay bonuses until April. It is on this company’s board that the BIS Minister, Michael Fallon, used to sit. That is not a good example of best practice.
As some noble Lords will know, my background is in IT. For all the faults of that industry, I think it is fair to say that instant gratification by way of monster remuneration is not the norm. By and large, it is about share ownership and share options. The late Steve Jobs was famously known for receiving an annual salary of $1 a year. We have spoken about Amazon today but the owner and founder of that company, Jeff Bezos, also receives a basic salary of less than $100,000—that is, less than a Member of Parliament. I know that in those companies, both those entrepreneurs were already wealthy men but for them it was never about raiding the kitty; it was about capital growth and the long term. Does that not send a positive message to their employees? Their priority is the customer, the product and the service. Get that right and the rest will follow.
It is with much dismay that I see the very opposite in many other sectors of the business spectrum. This very week, we read that RBS intends to divvy up £250 million by way of bonuses, plus a likely fine of £500 million to the US authorities—this is a separate issue—for the bank’s manipulation of the LIBOR market. This bank, where people have been lucky to avoid criminal prosecution for fixing markets, is one that we own and what is going on is simply wrong. This very day, we read about the very same actions being taken by Barclays, a bank whose record is less than perfect. These executives grab all they can when their company’s trading record is poor and where the shareholder value has remained at rock bottom. Being paid to fail does not sound right to me. In even more disturbing news this morning, the FSA has come out and criticised the mis-selling of complex interest swaps, which particularly hit SMEs that were, in many cases, ill equipped to evaluate their risk and were relying on the good name of the banks that sold them the product. I am not saying that what the FSA has done is disturbing; what it has done is really good, but the practice that was going on is disturbing.
When they come back, what do these well paid executives say? “It is a global employment market. If we don’t get top dollar, we will go somewhere else or to some company that will pay us”. You hear that all the time. The FT hints that RBS executives are threatening it. You can use any word you like to describe this kind of behaviour; my word is blackmail. It is what Premier League footballers do. My advice to anyone who is faced with this gun to their temple is to call their bluff. My experience in business is that no one is indispensable. Just below the great man—and now, increasingly, the great woman—you can bet your boots that there is someone who can step up to the plate.
My party wants fairness and balance. It is worth noting that if the minimum wage had been increased to reflect the average remuneration of FTSE 100 CEOs, the minimum wage would now be at £19 per hour. Instead we have this growing disparity, especially in London where so many leading companies are based and where, in 2011 alone, the top percentile received a 16.5% greater increase than the bottom percentile. Put simply, too many are being left behind and bringing this imbalance back into balance is exactly what my party’s one-nation philosophy is all about. That is the background but let me repeat: we have no problem with high pay. However, we have a problem when this pay is set by a cohort of good old boys who look after each other’s interests. The solution is to make pay transparent and to ensure that remuneration policies are set via the board, in consultation with independent experts and with the shareholders’ explicit approval.
The amendment which I am addressing first, Amendment 58BA, deals with the top 10 and bottom 10 earners in a company. This amendment aims for greater transparency on pay across the whole of the company, so that shareholders have more information when they come to make decisions on pay. It requires that the salaries of the top 10 highest earners in a company, outside the boardroom, are disclosed in a similar fashion. No doubt companies would choose to do this in an anonymous form, with lists of pay bands and the numbers of employees who fall into each band. This would be entirely acceptable and is good practice. Indeed, I have prepared such lists for companies that I have been involved in, where I have been chairman of a public company. It is also the practice in the United States. In some sectors, particularly the banking sector, very high earners exist outside the boardroom, which is why shareholders need these figures for context.
Baroness Turner of Camden
My Lords, I support my noble friend on this amendment. I sat through the earlier discussions which were not within my particular area of involvement but this certainly is. Of course, transparency is very important in employment relations. My noble friend has just said that my party has no problem with high pay, but we all have problems with low pay. Taxpayers have problems with low pay because it involves the Government paying out welfare. That is the sort of problem that shareholders should be forced to face from time to time, and would be bound to do so under the terms of this amendment. Therefore, I hope that the Government will understand that this is in line with good practice, that it operates throughout the best part of English commerce and industry and that it is something that we should have in the Bill. I hope that the Government will feel inclined to support it.
Viscount Younger of Leckie
My Lords, noble Lords are very familiar with the arguments in favour of action on directors’ remuneration in quoted companies. In my opening remarks, I will be echoing many of the sentiments expressed by the noble Lord, Lord Mitchell, and particularly picking up on the transparency aspect, as expressed by the noble Baroness, Lady Turner.
Over the past decade, directors’ pay packages have risen on average by 13% per year, while the value of many of the companies they run has remained broadly static and workers’ wages have risen at a much slower rate. Business and investors recognise that this disconnect between pay and performance is damaging and not in the long-term interests of the economy. As Sir Roger Carr, president of the CBI has said:
“Now is the time to be more transparent, more responsible and more accountable”.
It is not government’s role to micromanage company pay, but there are actions that we can take to address what is a clear market failure.
Eighteen months ago, the Government initiated a broad, national debate on this issue. This has encouraged shareholders to become more engaged as owners of companies during the so-called shareholder spring. In 2012, several firms saw their remuneration reports voted down, including big companies such as Aviva and WPP. We have also seen many companies taking the initiative and engaging constructively in response. This is an important step for encouraging more responsible paysetting.
The Government’s reforms will build on this, and promote better engagement between companies and shareholders. By giving shareholders clearer information about what directors are paid and binding votes on pay policy, shareholders will be better equipped to hold companies to account. Business and shareholders agree that this comprehensive package of reforms strikes the right balance. It will promote a stronger link between directors’ pay and company performance but avoid placing unnecessary or inappropriate burdens on companies. The head of the Association of British Insurers has said that these proposals,
“are practical, workable and should help tackle excessive executive pay”.
The amendment requires that companies report on high and low pay outside the board. The issue of high pay below board level is most prevalent in the financial services industry because poorly designed remuneration structures can incentivise excessive risk-taking—a point alluded to by the noble Lord, Lord Mitchell. The Government are committed to improving remuneration disclosure in banks and achieved progress on disclosure below board level as part of Project Merlin. At the same time, Europe has proposed bringing in its own disclosure rules. We await the outcome of these negotiations before deciding on how to proceed with any domestic proposals for disclosure below board level at banks. The Government will argue strongly for the right outcome and remain committed to ensuring that the UK has a transparent and comprehensive remuneration disclosure regime for all companies, including the financial services sector.
However, we do not believe that high pay below board level is a major issue in other sectors. Through our consultations with investors, we learned that there is no demand for such a disclosure, which, if adopted, would place an unnecessary regulatory burden on companies.
Regarding the pay of employees more generally and how directors’ pay compares to that of lower-paid workers, the Government recognise that this is an issue of concern for shareholders, employees and the public in general. We want remuneration committees to consider the broader context when setting top pay. That is why, under government proposals, companies will have to say more about how they have taken into account pay of employees at all levels, and publish the percentage increase in pay of the chief executive officer compared to that of the workforce.
Last year, we published a draft of the regulations that will implement these proposals. These regulations will determine the content of remuneration reports in future. We invited people to comment on the draft regulations and a copy is available in the House Library. Noble Lords will have the opportunity to debate this matter thoroughly later this year when these regulations are brought forward.
Amendment 58BB would mandate that regulations prescribing the content of directors’ remuneration reports must require companies to disclose information about fees paid to remuneration and recruitment consultants in respect of directors’ remuneration. Noble Lords will be aware that the Secretary of State already has the power to require companies to disclose this type of information in the directors’ remuneration report and that we have published draft regulations that would give effect to this. Under these proposals, companies would be required to explain how consultants have been appointed, what services they have provided and how much they have been paid. By way of an update for the noble Lord, Lord Mitchell, we invited comments on these draft regulations and are currently considering the responses.
The noble Lord, Lord Mitchell, rightly drew attention to pay in banks, which I alluded to in my remarks. However, it is worth re-emphasising that high pay outside the boardroom is most prevalent in financial services, and we want to see greater scrutiny of how senior executives in large banks are incentivised because their behaviour can have a material impact on a firm’s risk profile. That is why we have committed to extending pay disclosure in large banks to highly paid non-board executives. This would mean that the UK had the most transparent bank pay of any major financial centre, but we do not propose to apply this in other sectors, as mentioned earlier, where it is less relevant. We consulted on this and found that there was no demand from investors for this extra information. Indeed, it would be an unnecessary extra reporting burden on companies.
I thank the noble Lord for raising this issue, but I suggest that the amendment is unnecessary, given that the Government already have the power to do this and have proposed considerable action in this area. I therefore ask the noble Lord to withdraw the amendment.
Lord Mitchell
I thank the Minister for that reply. I think we are not too far away in our philosophy and in what we would like to do in this section of the Bill. What we are suggesting would perhaps give the Bill a little more bite than it has at the moment. It is something we need to think about. My instinct is that we need to pursue these amendments.
I shall say one thing in particular. I do not understand why non-financial companies are not part of this. If I were a shareholder, I would like to know this information, even if it were—to name one company—WPP, which is not in financial services. There are many companies out there that pay pretty massive salaries, and I do not understand why they should be excluded from this. The Minister said that consultation with the investment community showed otherwise, but for all of us who invest in companies, this is key information that we should have. I hope the Minister takes into account what I have said. I beg leave to withdraw the amendment.
“(1A) A representative of the company’s employees must be consulted in the preparation of any such revision.”
Lord Young of Norwood Green
My Lords, I listened carefully to the previous debate because there is a link. I concur with the comments made by my noble friend Lord Mitchell. He referred to investors investing in the company. I shall preface my remarks by saying that so do employees. For the most part, it is the whole of their livelihood, so it is just as important an investment as that made by shareholders. I submit that whether employees feel that they are committed and are working as part of an organisation that values their contribution is relevant to the success or failure of a company. There is also a perception within the company that there is fairness in the remuneration policies that apply.
I am sure that the Minister will not necessarily welcome this amendment, but I would love to be proved wrong. What would an employee representative bring to directors’ remuneration? What would their strategy and policy be? They would bring a different, fresh perspective and one that I would submit many companies need. My noble friend Lord Mitchell pointed out the huge rise in the ratio of top and bottom pay in companies over the past 20 years or so. In some cases, one might argue that there was a justification if they were rewarding success, but in many cases we are seeing failure rewarded just as much as success. In my experience of pay negotiations over a number of years, there was nothing that contributed more to a feeling of resentment than situations where the workers were told that the company could afford only X% for them but, when it came to the pay of directors, they somehow deserved double or treble. The argument is often made that they bring these special skills or talents: I am just as sceptical about this as my noble friend Lord Mitchell.
Viscount Younger of Leckie
My Lords, I concur with the noble Lord, Lord Young, in his interesting remarks that the interests of employees are important as a company cannot excel, or indeed properly function, without a workforce that is committed, motivated and content. This includes being content with their remuneration package in relation to their peers and superiors.
I should also like to pick up the point he raised concerning companies taking into account employees’ pay and their views. He is quite right: in revised remuneration reports, companies will now have to say whether, and if so how, they have taken into account employees’ views on executive pay and policy. In addition, they will have to publish the percentage increase in pay of the chief executive officer and that of the workforce, as I mentioned earlier. These will be discussed in more detail when we debate the regulations.
Amendment 58BC would require companies to consult an employee representative if they propose to change their remuneration policy before the next AGM. The Government agree with the view that it can be useful for companies to engage with their employees when considering directors’ pay. It is important that remuneration committees make their decisions based on a broad range of reliable and robust information. We know that some companies are already doing this and we want to encourage more to do so. That is why we have proposed that, in their annual remuneration reports, companies disclose whether, and if so how, they have sought employee views. They must also say how they have taken employee pay into account.
We also encourage employees to take up existing mechanisms to air their views, such as information and consultation arrangements, employee representative committees and works councils. However, we do not believe that it is necessary to create a statutory duty to consult employees on this matter. It is up to companies and their shareholders to decide whether, and if so how, to go about it. I therefore ask the noble Lord to withdraw Amendment 58BC.
Lord Young of Norwood Green
I thank the Minister for his comments, some of which I found helpful. I will read the points he has made carefully in Hansard. Some of them were a step in the right direction and we will consider whether they have gone far enough. I beg leave to withdraw the amendment.
Lord Mitchell
Lord Mitchell
My Lords, this group of amendments is about accountability. We will be going over some of the area we have discussed before, but some of the points need stressing. Again, the issue is about putting power back into the hands of the shareholders.
Amendment 58BD, where we intend to change the word “ordinary” to the word “special”, talks about the type of resolution that would be necessary to get through any changes in the principle. We feel that a special resolution, which would be 75% of the shareholders, gives it a greater importance as far as the company is concerned and makes any changes to the principles of remuneration that much harder to make.
The current arrangements for backward-looking votes have given some power to shareholders, but have not sufficiently empowered them. While we welcome the changes, we feel that more could be done. In 2012, at the height of what became known, as the Minister said, as the shareholder spring, there were significant votes against directors’ pay, such as those at Aviva, Barclays and William Hill. The most memorable was the voting down of a 30% pay increase for Sir Martin Sorrell at WPP.
However, from 2011 to 2012, there was an increase in executive pay to the tune of 12%. By comparison, the rate at which pay increased for everyone else averaged 2.8%. Only 12% of the country received a pay increase of more than 4%. Needless to say, there was no rise in share price to equate with that 12% jump in wages, and nor would one be expected. In the past 10 years, FTSE 100 executive pay increased by 300%, while the FTSE 100 index has increased by 48% and, more devastatingly, fallen by 8.1% in the past five years.
It is far more difficult for shareholders to organise today than it would have been in the past, mainly because ownership is so global. Indeed the Kay review into the effect of UK equity markets on the competitiveness of UK business pointed out that the increase in foreign ownership has made it much more difficult for a disparate group of shareholders to organise and collaborate. In 1981, the percentage of shares in UK-listed companies held outside the UK was 3.6%. Today the figure is 41.5%—a dramatic change. Shareholding is also often a much more short-term affair than in the past. In 1998, the average holding in US and UK banks was around three years. Ten years later it had reduced to three months. It is probably even less today.
With that in mind, shareholder protest should be reconsidered. If 40% of shareholders in a company combine to oppose a remuneration report, it is a hugely significant development showing a deep level of dissatisfaction with company policy. Indeed the Government’s consultation in March appeared to acknowledge precisely this problem. Under the proposed rules, however, it would be possible for a company to ignore the report. The amendment would rectify that.
I want to address the question of an annual vote, which, of all the issues that I am addressing, we feel very strongly about. Our amendment is also about empowering shareholders. It proposes an annual binding vote for shareholders on a company’s remuneration policy, as opposed to a three-yearly binding vote. Having such a vote will ensure that executive pay is a matter that directors have to engage with regularly and will ensure that the issues around it are kept in mind. It would not be a difficult requirement to comply with, and I do not imagine that businesses will find much difficulty in doing so. This is because there are already many reporting requirements on an annual basis. Indeed the triennial approach, while a well thought-out idea, probably loses sight of that fact. The idea of a binding annual vote on pay has broad support. Indeed, it is again the case that the Government’s consultation in March seemed to suggest that it was their preferred approach.
In this case, there was every indication that Vince Cable and the Government initially supported an annual vote, but then performed a U-turn once it became apparent that pressure had been applied to them by large firms—yet another example of this Government talking big and acting small. A Financial Times editorial piece on the subject said of directors:
“Annual votes would at least put them firmly on the spot. Mr Cable’s triennial polls, however well-meaning and thoughtful, may not”.
This is not to be confused with my party advocating short-termism. We believe that in many cases pay has been thought about with too short-term an approach. The triennial vote actually reflects that to a certain extent, as for many companies, three-year share options are thought of as long-term. However, that is for companies themselves to think about. What the annual binding vote would do is ensure that whatever remuneration policy is chosen, shareholders have the power to hold it to account. I beg to move.
Lord Razzall
My Lords, this is clearly a serious issue and the noble Lord, Lord Mitchell, is right to use this opportunity to get the issue debated. I do not wish to delay the Committee for too long on this point, unlike some of my colleagues, but the point ought to be made that while the noble Lord is of course right that the Secretary of State’s initial position was to look at annual binding votes, one of the objectives of consultation on these issues is to try to arrive at a consensus. It looks as though a consensus about the triennial proposal has been found that gets both the TUC and the CBI on side. That is a significant achievement, given that this is a tricky issue. The initial position could have been significant hostility from one side to the other, whatever the Secretary of State’s recommendation had been. It should be noted that the compromise was well negotiated between the two positions. It is not often that the trade union movement and the CBI can be got to agree on something so complex.
Viscount Younger of Leckie
My Lords, Amendments 58BD, 58BF and 58BG would make the vote on remuneration policy a special resolution, requiring companies to secure the support of 75% of shareholders to pass. The level of support required for remuneration resolutions is a matter that the Government have consulted on extensively. The vast majority of investors agree that the vote on pay policy should remain an ordinary resolution. They would be concerned if a minority of shareholders could overturn the views of a majority. In cases where voting turnout is low, it would take only a small number of activist investors to reject the pay policy.
Investors have welcomed the Government’s decision to keep this as an ordinary resolution. They have shown this year that a majority of shareholders are often willing to vote against egregious pay policies. In 2012, we saw a succession of companies lose the vote on pay policy with at least 50% opposition from shareholders, as the noble Lord, Lord Mitchell, said. Special resolutions should be reserved for rare issues that have a major impact on shareholder rights or company value, such as recapitalisation or changing the articles of the company.
However, the Government agree that companies should have to take action when a large minority of shareholders reject a remuneration resolution, even if legally it has been passed. Therefore, the Government welcome the Financial Reporting Council’s commitment to look at whether companies should formally respond when a significant number of shareholders vote against a pay resolution and to consult on this being in the Corporate Governance Code.
Amendment 58BE would remove the requirement for companies to put their remuneration policy to a shareholder resolution at least every three years—triennially—and instead require that this is done annually. We considered that carefully when consulting with investors and companies. They welcome the option of a three-year pay policy, which encourages companies to plan for the long term and discourages them from making annual tweaks to pay packages. Investors agree that this will help to put a brake on annual pay ratcheting.
Major investors and investor bodies, including the Association of British Insurers, have backed this approach. The ABI has said that it will,
“help the task of keeping executive pay proportionate and aligned to corporate strategy”.
Of course, companies can choose to have an annual vote on pay policy and will be required to if they make any change to it. However, if the policy remains totally unchanged, it is an unnecessary burden on both companies and shareholders to require a vote on it.
We have, however, built in a safety net. Shareholders will continue to have an annual advisory vote on how the pay policy is being implemented. If they are not satisfied, they can oppose the advisory vote and this will trigger a requirement to have a binding vote on the pay policy at the next AGM. Shareholders also have the existing right to force a resolution at an EGM. That means that shareholders could force an annual binding vote on remuneration policy, should they wish to.
The noble Lord, Lord Mitchell, asked whether the high-profile votes against pay last year were a flash in the pan. As he said, last year we saw several such votes against high pay—he cited some examples—which were a step in the right direction. We are pleased that shareholders and businesses are increasingly working together to sort out pay issues, but it will take more than one year to do so. The government reforms will come into force in October this year and will give shareholders more power to push for change. Looking further ahead at least 18 months, if we see less public anger over pay because companies have sensible pay packages, we will have gone some way towards succeeding.
The noble Lord, Lord Mitchell, echoing remarks made by my noble friend Lord Razzall, raised the recent Kay review, and I am grateful to noble Lords for their welcome of that review on how to encourage a more long-term view in our equity markets. This is one of the reasons why, after consultation, we considered that a three-year vote best enabled us to focus shareholders and directors on the long-term value of the company.
Given the wide support for the approach that the Government have taken on this issue, I ask the noble Lord to withdraw his amendment.
Lord Mitchell
My Lords, I thank the Minister for his comments. We are perhaps a little further away from each other than we were on the previous amendments. As the noble Lord, Lord Razzall, said, it is some event when the TUC and the CBI come together on such a key issue, but we still feel that the annual side of this is an important issue.
I shall deal with the special resolution and the 75%. It is part of what we are saying about the need for this issue to be treated as important. In the next round, we would probably want to keep it as it is, but I will think about it. As for the annual side, and the request that it stays on a triennial basis, every single year at annual general meetings a series of issues go through, such as the approval of auditors and accounts. I do not see any reason at all why there should not be an approval of directors’ remuneration principle and package; it should slot in: one; two; three. I am sure that is the correct way for it to be. It does not matter what companies want to do. It is what we should be telling companies to do, so that those who invest and are stakeholders in those companies can really understand what has been going on in the past 12 months.
Having made those points, I beg leave to withdraw the amendment.
“( ) particulars of any remuneration payment (within the meaning of Chapter 4A of Part 10) made or to be made to the person after ceasing to be a director, including its amount and how it was calculated,”
Viscount Younger of Leckie
My Lords, Amendments 58BH, 58BJ and 58BK relate to the information that must be published by a company when a person ceases to be a director. They seek to clarify the information that must be disclosed and ensure complete transparency. Whenever a person ceases to be a director, shareholders want to know the details of their exit package. At present they may have to wait several months before they find this out. We believe that requiring companies to publish this information as soon as possible after a director departs will help to put pressure on companies to moderate such payments. Clause 72 introduces this requirement and requires the company to publish on its website details of payments for loss of office. However, because of the complexity of directors’ pay, some payments made after loss of office will technically be classed as remuneration payments rather than loss of office payments, so, legally, companies would not have to include details of them. Such payments can represent a substantial part of an individual’s exit package and so should form part of the disclosure on a company’s website. These amendments address this gap, bringing within scope,
“particulars of any remuneration payment … made or to be made to the person after ceasing to be a director, including its amount and how it was calculated”.
This will close a loophole which could otherwise have been exploited by companies attempting to evade the spirit of the legislation by not making full disclosures on exit payments. I beg to move.
Lord Mitchell
My Lords, we welcome this amendment. It is in the spirit of giving shareholders more information. We are very happy to support it.
Viscount Younger of Leckie
I am pleased to have support for these minor and technical amendments.
“Supply of customer data
(1) The Secretary of State may by regulations require a regulated person to provide customer data—
(a) to a customer, at the customer’s request;(b) to a person who is authorised by a customer to receive the data, at the customer’s request or, if the regulations so provide, at the authorised person’s request. (2) “Regulated person” means—
(a) a person who, in the course of a business, supplies gas or electricity to any premises;(b) a person who, in the course of a business, provides a mobile phone service;(c) a person who, in the course of a business, provides financial services consisting of the provision of current account or credit card facilities; (d) any other person who, in the course of a business, supplies or provides goods or services of a description specified in the regulations.(3) “Customer data” means information which—
(a) is held in electronic form by or on behalf of the regulated person, and(b) relates to transactions between the regulated person and the customer.(4) Regulations under subsection (1) may make provision as to the form in which customer data is to be provided and when it is to be provided (and any such provision may differ depending on the form in which a request for the data is made).
(5) Regulations under subsection (1)—
(a) may authorise the making of charges by a regulated person for complying with requests for customer data, and(b) if they do so, must provide that the amount of any such charge—(i) is to be determined by the regulated person, but(ii) may not exceed the cost to that person of complying with the request.(6) Regulations under subsection (1)(b) may provide that the requirement applies only if the authorised person satisfies any conditions specified in the regulations.
(7) In deciding whether to specify a description of goods or services for the purposes of subsection (2)(d), the Secretary of State must (among other things) have regard to the following—
(a) the typical duration of the period during which transactions between suppliers or providers of the goods or services and their customers take place;(b) the typical volume and frequency of the transactions;(c) the typical significance for customers of the costs incurred by them through the transactions;(d) the effect that specifying the goods or services might have on the ability of customers to make an informed choice about which supplier or provider of the goods or services, or which particular goods or services, to use;(e) the effect that specifying the goods or services might have on competition between suppliers or providers of the goods or services.(8) The power to make regulations under this section may be exercised—
(a) so as to make provision generally, only in relation to particular descriptions of regulated persons, customers or customer data or only in relation to England, Wales, Scotland or Northern Ireland;(b) so as to make different provision for different descriptions of regulated persons, customers or customer data;(c) so as to make different provision in relation to England, Wales, Scotland and Northern Ireland;(d) so as to provide for exceptions or exemptions from any requirement imposed by the regulations, including doing so by reference to the costs to the regulated person of complying with the requirement (whether generally or in particular cases).(9) For the purposes of this section, a person (“C”) is a customer of another person (“R”) if—
(a) C has at any time, including a time before the commencement of this section, purchased (whether for the use of C or another person) goods or services supplied or provided by R or received such goods or services free of charge, and(b) the purchase or receipt occurred—(i) otherwise than in the course of a business, or(ii) in the course of a business of a description specified in the regulations. (10) In this section, “mobile phone service” means an electronic communications service which is provided wholly or mainly so as to be available to members of the public for the purpose of communicating with others, or accessing data, by mobile phone.”
Viscount Younger of Leckie
My Lords, we announced at Second Reading our intention to introduce into the Bill a new provision on Midata. There are three elements to this new provision. The first relates to the supply of customer data, the second relates to the enforcement regime for the supply of customer data and the third is supplemental and explains how regulations would be introduced. I will explain each of these in more detail, but let me first say a little about what we are seeking to achieve by these amendments.
Midata is currently a voluntary programme led by an independent chair, Professor Nigel Shadbolt. Its aim is to encourage suppliers of goods and services to provide to their customers, upon request, their personal historic transaction and/or consumption data in an electronic machine-readable format. The provision we are seeking to introduce into this Bill is a power to impose a duty on business to supply certain data upon request from a consumer. Let me be clear that business already holds this information electronically and is simply being asked to give it back to consumers.
Let me reassure the Committee that the Government remain keen to see businesses continue to engage with the voluntary programme so that quick progress can be made without the need to resort to regulation. What we want, however, is flexibility to give the Midata programme legislative backing, if it is appropriate to do so, for the benefit of consumers and business in this area of increasing economic potential for the UK.
Midata gives consumers more control and access to their personal and transaction data, and UK businesses will be able to take advantage of new opportunities as potential developments in the data market continue to emerge. There are two main benefits from Midata. First, services which analyse and make sense of consumers’ transaction data will emerge and will help people to manage their spending much more effectively, putting them in a stronger position and better able to deal with the increased cost of living.
How valuable could that be? The company, billmonitor, estimates that 74% of UK mobile users with a contract spend an average of £171 more each than they need to every year, equating to almost £6 billion per year in unnecessary costs. A better alignment between consumer need and purchasing will enhance competition and this in turn will reward firms offering the best value products in particular markets, allowing them to win more customers, make profits and better utilise resources.
Secondly, Midata will act as a platform for innovation and will help to strengthen the competitive digital economy in the UK. It will lead to the creation of new businesses which will help people to manage, interpret and interact with their consumption data in many innovative ways. So what might people do? Services such as Money Dashboard or lovemoney already provide people with an instant, true view of their finances in one place, which helps individuals aggregate information about their money from multiple different financial services providers to gain a rounded picture of their financial affairs but are hampered by constraints in accessing the data. At present, consumers cannot always receive this information through existing mechanisms, or they may struggle to find it in a format that can be easily reused.
Giving consumers the right to obtain their own transaction and consumption data in portable electronic format will make it easier for them to use tools such as those I have described. They would simply be able to plug their past transaction or consumption data in at the press of a button. Automating the provision of data will also make such services cheaper to provide while making it easier for companies to provide innovative new services which can make use of the data. In this way, Midata can help turn a niche market for sophisticated money management tools into a mass market.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for introducing this new provision. We consider that the concept behind the Midata initiative is very worthy. We note that when it was launched, the heading of the BIS press release was:
“New power to boost consumers’ access to data”.
It seemed to be a welcome initiative and we applaud the Government’s role in pushing for voluntary initiatives on giving consumers access to their own purchasing and transactional data.
We also recognise that there is a need to put some of this on a statutory basis so that all providers of goods and services can, in time, be required to provide that access. But the act of putting this on a legal basis forces us to consider, and provide for, the complications that could arise. I am sure that the Minister will be aware of the very strong objection of the British Retail Consortium to this initiative. However, he may also want to note that the consumer organisation, Consumer Focus, while admiring the supposed right, has some serious anxieties about it. We risk the fact that what should be an improved consumer service may actually have issues that have not been dealt with fully on both security and privacy. Some of these arise already, both with the way in which providers keep individual data for their own purpose and in the voluntary schemes of provision to customers that are being introduced without statutory backing.
Once those schemes are required by the Government, then surely the Government and Parliament have a duty to ensure that consumer protection is built into the process. The new service that will be required of providers by law will involve issues of personal data transmission, data storage, multiple combination and multiple access, which means that the process must have built into it security and minimisation of risk to consumers’ privacy and disclosure of identity. Such precautions will also need to be accompanied by systems of identifying liability and responsibility for redress and absolute clarity about how one goes about seeking that redress.
At the moment, data on the purchases and transactions are largely held by the direct provider, although they are also often sold on or combined with other data. Under Midata, consumers will also have access but there will be greater potential for the selling on and combining of data. Hence, liability, clarity on liability and redress systems are essential. If the system works, the Midata providers must be required to adhere to the highest security and data protection standards. Consumers need to know that Midata providers meet those high standards; so there must be easy identification of those who have been designated as trustworthy providers. It is presumably the Government’s contention that this will be done by secondary legislation, but unless the principles are written clearly in primary legislation, it will be difficult to judge whether those systems can work.
Amendment 58D deals with enforcement of the duty to disclose, but it includes no provision for complaint, mediation, arbitration or redress should that obligation be carried out in a way that endangers or threatens to endanger privacy and security of data. We know that the Information Commissioner is designated as enforcer, at least until the Government decide otherwise, but there is no provision for an ombudsman or for ADR coverage for this. On the Information Commissioner, I have great admiration for the difficult job that both he and his predecessor have done but I seek some confirmation that the Minister is confident that that role is appropriate to fall to the Information Commissioner. He does, of course, already have to make difficult judgments between transparency and data protection, but there are particular dimensions here. I am curious to know whether he even wants this job. Perhaps the Government could also give us some assurance about what additional resources will he get in order to carry it out. The Government themselves seem a bit hesitant as to whether the Information Commissioner is the best-placed person, as they have allowed scope for designating some other body. I do not know whether the Government had something else in mind, or whether it was just a fail-safe provision.
Going back to Amendment 58C, there is also the associated issue of what kind of information and what kind of access is covered. There are many ways in which we purchase goods and conduct our financial transactions. Does this cover the web-based data and transaction services—social media, free apps and online platforms that facilitate transactions between parties? Obvious examples are eBay and Amazon—all different, but all using and storing online consumer data. Because of the conglomerate nature of many retail providers across many markets, there is an issue of how this data is shared even within a company and what the legitimate and non-legitimate boundaries are of such sharing.
In the course of the Financial Services Bill, my noble friend Lord Whitty raised the issue of whether consumer data collected by Tesco, and recorded on their Clubcards, from its retail sales could be used by Tesco’s banking arm to establish creditworthiness. Some Chinese walls are already required within banks and financial institutions. The new Financial Services Act, however, does not require that, in the case of a bank owned by a non-financial institution, there must be such Chinese walls—although the Government did write into the Bill, now an Act, a reserve power to make that requirement. Tesco and financial services are simply as a potential example of this. It has not yet happened. More concretely, in America there have been issues with Walmart and its banking arm.
With consumer data now required, or potentially required, under this Midata clause, to be parcelled up neatly on an individual basis rather than aggregated or earmarked for future marketing as is more usually the case, the possibility for data sharing increases significantly. There is also the issue of companies which are major traders in this country but owned overseas, some in the four areas designated as priority by the Government for this legislation.
Could the Minister tell us how far privacy and data protection can be guaranteed beyond UK boundaries? The sectors chosen—energy, mobile phones and financial institutions—are dominated by major companies and feature oligopolistic markets. However, there are small providers, and there will be even more in other sectors to which these provisions will be extended in due course. Provisions which are not onerous for large retailers—banking and telecoms giants, for example—could be very onerous for smaller retailers and even smaller financial institutions. We understand that the legislation has no exclusions for smaller companies. Again, perhaps the Minister could confirm whether that is the case.
We would also like to ask the Government about their choice of sector priorities. The amendment links together information on individuals held by the provider and held on behalf of the consumer. At present these are legally very different. Data, such as that held by Tesco on its Clubcards, are the clear property of the providing company, as is most data on purchases. However, transactional data held with banks on savings or debt are the property of the consumer and subject to strict privacy and disclosure requirements. As we see it, under Midata, the distinction between those two is blurred.
There are also issues about the kind of data disclosable and the format of that disclosure. The intention, as the Minister outlined, is to provide in electronic machine-readable form data requested by the customer. The customer must be able to request all purchasing and transactional data for a period of at least a year in order to be able to draw rational conclusions and make rational decisions on, for example, changing the pattern of purchase or switching suppliers, which has been suggested. That needs to be specified.
Viscount Younger of Leckie
My Lords, I welcome the general support given to Midata by the noble Baroness, Lady Hayter, in her initial remarks. I listened carefully to the large number of points that she raised. She has clearly put a lot of thought into the issue and I would like to address as many of the concerns that she raised as possible. It may well be that I do not cover them all, in which case, I will write to her.
The first issue I want to address is the point that the noble Baroness, Lady Hayter, raised concerning the British Retail Consortium and the objections that they have expressed on Midata. To re-emphasise the point—the focus of the power of this Bill are the four core sectors of energy, mobile phones, current accounts and credit cards. We cannot say that there will never be circumstances where Ministers believe including supermarkets within the regulations is worthwhile. But, before they do so, they will have to take account of the factors set out in proposed subsection (7) in Amendment 58C. The relevant legislation to effect such a change would be subject to enhanced parliamentary scrutiny through the affirmative procedure.
The noble Baroness, Lady Hayter, asked whether it was true that consumer bodies had been warning about the risk of this programme for some time. It is true that the Government continue to work with consumer representative groups and business to tackle any potential risks to consumers—the point that she raised. A range of consumer bodies endorsed the principles of Midata published by the Government in 2011, such as Citizens Advice, Consumer Focus and the Office of Fair Trading. Members of these consumer organisations also sit on the Midata strategy board, which is responsible for driving the direction of the overall programme. However, the Government are taking these concerns seriously and the Department for Business, Innovation and Skills will continue to work closely with consumer groups to ensure that consumer privacy is protected.
The noble Baroness, Lady Hayter, asked whether the Information Commissioner actually wanted the role of enforcement. I can reassure her that Ministers have discussed this with him directly and he was, indeed, willing to take on the role. The noble Baroness also asked if this was an appropriate role for the Information Commissioner and whether he had enough resources to undertake this particular role. We have had detailed discussions with the ICO on how the enforcement regime could work for Midata. If regulations are brought forward in the future, we are confident that the ICO’s existing expertise in data protection will help it to effectively enforce the Midata right for consumers. In addition, we did not want to place any additional cost burden on business, but we have included provisions enabling other bodies to be designated as enforcers, if that is later decided to be more appropriate than the ICO. For example, if we were to regulate for one sector only, it might be appropriate to designate a particular sector regulator.
The noble Baroness raised the issue of data protection. Existing consumer protections would still apply under Midata. All organisations that process personal data in the UK, including for the purposes of the Midata initiative, must comply with the Data Protection Act’s eight data protection principles. The DPA is enforced by the independent Information Commissioner’s Office, which has powers of prosecution and can issue monetary penalty notices requiring organisations to pay up to £500,000 for serious breaches of the DPA.
The noble Baroness also raised the issue of exclusions for smaller companies. I mentioned earlier that she will remember the issue of micro-businesses. The power allows flexibility for smaller companies to be excluded at the regulation stage. I hope that reassures the noble Baroness on that particular point.
The noble Baroness, Lady Hayter, also raised the issue as to whether consumers would be charged. The regulations could allow for consumers to be charged if that is considered appropriate at that particular stage. The new clause already limits such charges to the cost of complying with the request for data.
There are two more questions raised by the noble Baroness. First, she asked why there has been no government lead on providing public sector data. These measures will not apply to the public sector. However, in parallel, the Government are looking at issues of public sector data. The Open Data White Paper sets out the Government’s position and plans on public sector data release.
The noble Baroness also asked what form the regulations would take. The Government want first and foremost to encourage voluntary progress on this particular Midata programme. If regulations are subsequently brought forward, they will be shaped by consultations with stakeholders first.
The Government will continue to engage with business, consumer groups, regulators and trade bodies involved in the voluntary programme to accelerate progress as well as to broaden our engagement with other sectors. In bringing forward these amendments, we are conscious that a balance needs to be struck between the rights of individuals, the costs to businesses and wider benefits to the economy. This balance also needs to reflect the digital age and the increasing amount of data that is now unavoidably available.
We believe that giving consumers the right to obtain their own transaction and consumption data in portable electronic format, thus enabling them to use tools to manage this information in a smart way, is an effective way to empower consumers in the 21st century, which is good for business and good for the economy.
Lord Whitty
It seems to me that the Minister was talking about charging by the current owner of the information, or provider—the person with whom you are dealing through your mobile phone company. But I understand that the Government envisage there being new intermediaries in this area that will obviously be looking for a profit out of it for themselves and to use that data in different ways. Would that restriction on charging apply to them? In a sense, you have doubled the administrative time with a provider and an organisation that is being subcontracted by that provider to deal with the consumer. It also complicates data protection and potential liability and redress.
Viscount Younger of Leckie
The noble Lord, Lord Whitty, makes an interesting point. I will need to double check and revert to him to clarify his point.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for his reply. I am particularly reassured by the ongoing discussions with consumer groups. Perhaps it was not clear in what he said—I did not quite hear it—but it seemed to me that he said that no extra resources would be made available to the Information Commissioner. If that is not the case, perhaps that could be clarified.
“Supply of customer data: enforcement
(1) Regulations may make provision for the enforcement of regulations under section (Supply of customer data) (“customer data regulations”) by the Information Commissioner or any other person specified in the regulations (and, in this section, “enforcer” means a person on whom functions of enforcement are conferred by the regulations).
(2) The provision that may be made under subsection (1) includes provision—
(a) for applications for orders requiring compliance with the customer data regulations to be made by an enforcer to a court or tribunal;(b) for notices requiring compliance with the customer data regulations to be issued by an enforcer and for the enforcement of such notices (including provision for their enforcement as if they were orders of a court or tribunal).(3) The provision that may be made under subsection (1) also includes provision—
(a) as to the powers of an enforcer for the purposes of investigating whether there has been, or is likely to be, a breach of the customer data regulations or of orders or notices of a kind mentioned in subsection (2)(a) or (b) (which may include powers to require the provision of information and powers of entry, search, inspection and seizure);(b) for the enforcement of requirements imposed by an enforcer in the exercise of such powers (which may include provision comparable to any provision that is, or could be, included in the regulations for the purposes of enforcing the customer data regulations).(4) Regulations under subsection (1) may—
(a) require an enforcer (if not the Information Commissioner) to inform the Information Commissioner if the enforcer intends to exercise functions under the regulations in a particular case;(b) provide for functions under the regulations to be exercisable by more than one enforcer (whether concurrently or jointly);(c) where such functions are exercisable concurrently by more than one enforcer—(i) designate one of the enforcers as the lead enforcer;(ii) require the other enforcers to consult the lead enforcer before exercising the functions in a particular case;(iii) authorise the lead enforcer to give directions as to which of the enforcers is to exercise the functions in a particular case.(5) Regulations may make provision for applications for orders requiring compliance with the customer data regulations to be made to a court or tribunal by a customer who has made a request under those regulations or in respect of whom such a request has been made.
(6) Subsection (8)(a) to (c) of section (Supply of customer data) applies for the purposes of this section as it applies for the purposes of that section.
(7) The Secretary of State may make payments out of money provided by Parliament to an enforcer.
(8) In this section, “customer” and “regulated person” have the same meaning as in section (Supply of customer data).”
“Supply of customer data: supplemental
(1) The power to make regulations under section (Supply of customer data) or (Supply of customer data: enforcement) includes—
(a) power to make incidental, supplementary, consequential, transitional or saving provision;(b) power to provide for a person to exercise a discretion in a matter.(2) Regulations under either of those sections must be made by statutory instrument.
(3) A statutory instrument containing regulations which consist of or include provision made by virtue of section (Supply of customer data)(2)(d) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(4) A statutory instrument containing any other regulations under section (Supply of customer data) or section (Supply of customer data: enforcement) is subject to annulment in pursuance of a resolution of either House of Parliament.”
Lord Razzall
“Fiduciaries: performance of investment functions
(1) In the performance of any investment functions, a fiduciary must act in the way the fiduciary considers, in good faith, would be most likely to be for the benefit of the beneficiaries as a whole and to be fair as between the beneficiaries, including as between present and future beneficiaries and in doing so, the fiduciary may have regard (amongst other matters) to—
(a) the likely consequences of any investment activities in the long term,(b) the impact of any investment activities on the financial system and the economy,(c) social and environmental considerations, including—(i) the implications of social and environmental factors for return on investments, and(ii) the impact of any investment activities on communities and the environment,(d) the implications of any investment activities for beneficiaries’ quality of life, and(e) the views, including the ethical views, of beneficiaries.(2) If a fiduciary considers that the general adoption by market participants of a particular standard of conduct has been or would be conducive to the benefit of the beneficiaries, the fiduciary may observe and promote the standard notwithstanding any rule of common law or equity which might otherwise oblige the fiduciary to act contrary to the standard or to require or influence any other person to do so.
(3) In this section—
“beneficiaries” means persons for whose benefit investments are being, will be or may be applied, whatever the particular form of ownership under which investments are held for the time being;
“benefit” includes—
(a) financial benefit provided out of investments; and(b) any benefit which the fiduciary considers can be conferred on beneficiaries without any material prejudice to long-term return on investments; “fiduciary” means a person or institution to which this section applies;
“investment activities” means any actions taken in the performance of any investment functions;
“investment functions” includes (amongst other matters) such of the following as pertain to the particular description of fiduciary—
(a) the selection, retention and realisation of investments,(b) the exercise of rights, including voting rights, attaching to investments,(c) engagement with the managers of investee companies and other investee entities, including in relation to corporate governance and corporate actions,(d) the selection, appointment and monitoring of investment managers and other agents to whom the fiduciary delegates any investment functions,(e) the selection and ongoing review of any investment funds which are operated by institutions acting as principals and in which the fiduciary invests,(f) the selection, appointment and monitoring of investment consultants and of other advisers in relation to the performance of any investment functions,(g) advising or assisting another fiduciary in relation to the performance of any investment functions,(h) taking such steps as the fiduciary considers reasonable to ascertain the views of beneficiaries in relation to the fiduciary’s investment activities, and(i) collective action with other market participants to further any common interests;“investments” means the investments in relation to which any investment functions are performed and, where the context admits, includes assets of any kind representing such investments;
“standard of conduct” includes (without limitation) a standard which a fiduciary considers to be in accordance with—
(a) widely accepted norms of behaviour relating to environmental, social or governance issues, including any such norms set out in international conventions, voluntary codes of practice or otherwise, or(b) the views or values of beneficiaries.”
Lord Razzall
My Lords, this is a new point. Although the amendment which stands in my name and that of my noble friend Lady Brinton, on which I am grateful for the assistance of FairPensions, is complicated, the issue is really quite straightforward. It is that there has been significant concern in the financial markets for a number of years that organisations that are described as fiduciaries in the drafting of this amendment, which include trustees, pension funds et cetera, are, as a matter of law, obliged when making an investment to take into account only the financial advantage of their pensioners, beneficiaries and clients.
The purpose of the amendment is to establish clearly a matter of law that has always been in doubt, on whether, in making an investment decision, such as whether to accept a bid for a company in which they are invested or any decision regarding the investment money for which they are responsible, fiduciaries are entitled to take into account the wider considerations set out in subsection (1) of new Clause 58F without potentially being attacked for not looking after the interests of the people whose money they are managing. This is a serious issue because the law is unclear on whether they are entitled to do so, and the purpose of these amendments is to make clear that in those situations the fiduciaries, as they are defined, may take into account other factors.
One of the objections to these proposed amendments is that they are mandatory. They are not mandatory; there is nothing here to say that a trustee cannot simply take the money and run. The purpose is to clarify that if trustees take into account the wider interests as set out in subsection (1) of the proposed new clause in Amendment 58F, they cannot be criticised as a matter of law. That is the purpose of this amendment and FairPensions has been campaigning for it for some time. We thought this was a Bill where we could try to get it inserted. I beg to move.
Baroness Hayter of Kentish Town
My Lords, we very much welcome the amendments tabled by the noble Lord, Lord Razzall, and the noble Baroness, particularly their intention to clarify investors’ fiduciary duty. The amendments, as have been suggested, would clarify that institutional investors are not legally obliged to maximise short-term profits at any cost but “may”—that word was emphasised—take into account wider factors, such as the long-term sustainability of returns. This is modelled on Section 172 of the Companies Act 2006, which similarly clarified that company directors may take account of longer-term and wider factors, such as their impact on communities or the environment.
We on this side tabled remarkably similar amendments to the Financial Services Bill last year. We remain of the view that the position of those who hold money or assets on behalf of others, and who take decisions about those assets, should have their real owners’ or beneficiaries’ interests centre stage. The Kay Review of UK Equity Markets of July 2012 acknowledged a problem with misinterpretations of fiduciary duties, based on what he said was,
“a narrow interpretation of the interests of … beneficiaries which focused on maximising financial returns over a short timescale and prevented the consideration of longer term factors which might impact on company performance, including questions of sustainability or … social impact”.
This can lead to unhelpful short-term behaviour by investors and is a barrier to the adoption of the stewardship approach. The Kay report concluded that,
“there is a need to clarify how these duties should be applied in the context of investment, given the widespread concerns about how these standards are interpreted”.
The Bill in front of us is about enterprise and long-term growth. The Government are giving shareholders additional rights, which we welcome, but these must be balanced with duties to the underlying beneficiaries, who may have wider interests than just immediate returns. These amendments propose that there should be no legal barriers to consideration of those beneficiaries’ interests. They do not mandate anything but they clarify the law. The amendments are, we would say, permissive rather than prescriptive, and would ensure that the law does not prevent trustees from taking a broader approach. The provision does not mandate them to do so; in fact, it restores the primacy of trustees’ discretion in deciding how best to serve their beneficiaries, as opposed to assuming that the law restricts them to taking a particular approach.
The amendments make it clear that the duty of fiduciary investors is solely to their beneficiaries, and that the interests of beneficiaries must be the basis for all decisions. They clarify that this need not always mean maximising short-term profits: if trustees believe that their beneficiaries’ interests will be better served by taking into account wider factors, they will be empowered to do so. Indeed, where trustees choose to take account of purely non-financial factors—such as beneficiaries’ ethical views or implications for their quality of life—the amendments specify that this must not be to the detriment of beneficiaries’ long-term financial interests.
Perhaps I may give one example to show why this amendment is so needed. A large pension fund, which I fear does not wish to be named in this debate, received legal advice to the effect that its policy on shareholder engagement and responsible investment might be unlawful. Its policy stated that the fund would seek to exercise voting rights in listed companies in which it held shares, and that it would take into account environmental, social and governance issues with the potential to affect the long-term value for the fund’s beneficiaries. This position is firmly grounded in the financial interests of beneficiaries, and is widely accepted as best practice within the industry. The Government endorsed such an approach by promoting the stewardship code, through its package of enhanced shareholder rights on executive pay, and, in the Commons, where Pensions Minister Steve Webb said that,
“the coalition Government fully support the highest standards of corporate governance and ethical behaviour. We agree that a socially responsible investment strategy is a sound choice for pension schemes”.—[Official Report, Commons, 20/1/12; col. 1044.]
Despite this, the advice from a large and reputable law firm took an extremely narrow view of beneficiaries’ best interests, and suggested that the costs involved in exercising voting rights might render the policy unlawful unless the firm could demonstrate that such stewardship brought monetised benefits to the individual fund. The opinion cast doubt on whether such benefits could be demonstrated. This illustrates why the Government’s approach to responsible capitalism, which has focused on giving shareholders more rights, needs to be complemented by measures to remove any perceived legal barriers to the responsible exercise of these rights.
For long-term, sustainable growth and returns, we want responsible shareholder engagement with listed companies. The Kay review recommended, and the Government agreed, that the Law Commission be asked to review the question of fiduciary duty, with Kay himself indicating that statutory clarification may be necessary to resolve this. We would therefore ask Minister to confirm today that, if the Law Commission thereby recommends such statutory underpinning, the Government will take action.
Viscount Younger of Leckie
My Lords, these amendments would introduce a statutory requirement for institutional investors to act in the best interests of their clients and beneficiaries. They seek to clarify that these investors are not legally obliged to maximise short-term financial returns, but may take into account longer-term considerations, including the social and environmental impact of the companies in which they invest.
I am grateful to my noble friend Lord Razzall, supported in name by my noble friend Lady Brinton, for giving us the opportunity to debate the vital issue of fiduciary standards in the investment industry. As noble Lords may be aware, the duties of investment intermediaries were considered by Professor John Kay in his 2012 independent review of equity markets and long-term decision-making. The noble Baroness, Lady Hayter, mentioned this in her speech. The Government have broadly accepted the recommendations of the Kay report in this area. Specifically, they have made clear their support for the view expressed by Professor Kay, and echoed in Amendment 58F, that institutional investors should not automatically assume that maximising short-term returns is sufficient to serve the interests of their clients or beneficiaries. Instead they should take into account long-term factors relevant to their clients’ interests over the time horizon of the investment. However, the Kay report also found that there was no clear agreement on what the law currently requires of those investing on others’ behalf, and recommended that the matter be referred to the Law Commission.
The Government have therefore asked the Law Commission to undertake a review of the legal obligations arising from fiduciary duties that dictate what considerations are appropriate for trustees and other intermediaries acting in the best interests of their clients and beneficiaries. The Government also support Professor Kay’s view that there should be a common minimum standard of behaviour required of all investment intermediaries. While I therefore have great sympathy with the spirit of my noble friends’ intentions, I do not believe that the approach taken in these amendments would achieve this. The amendments attempt to enshrine aspects of the common-law concept of fiduciary duties in statute, and to apply these to certain institutional investors in all circumstances. This includes applying them to certain FSA-authorised firms without due regard to the FSA’s existing regulatory requirements. This approach would add to confusion and uncertainty about the meaning of the word “fiduciary”, the circumstances in which a fiduciary relationship already arises and the standards already expected of investors in regulation.
The government response to the Kay report is very clear in setting out the principle that all investment intermediaries should act in the best interests of their clients or beneficiaries in line with generally prevailing standards of decent behaviour. In order to embed this principle effectively, the Government have asked the FSA, and its successor organisation, the FCA, to consider to what extent current regulatory rules in this area align with this principle and to determine what action might be desirable. This includes, if necessary, changes to regulatory requirements at EU level.
With these reassurances, I hope that my noble friends will feel able to withdraw their amendment.
Lord Razzall
My Lords, I must say I am slightly disappointed by the Government’s response to this. This amendment is not about looking at the issues that the noble Viscount has suggested need to be looked at. It has nothing to do with the FSA or European regulations. Its entire purpose is to clarify the existing law. For example, it seeks to clarify that institutional shareholders which had a shareholding in Cadbury’s were entitled to take the view that they did not have to accept a very successful financial bid if they were concerned about other characteristics. That is not an FSA point or a European regulation point; it is a simple matter of clarifying the law. That is all we are asking for.
I have serious reservations and concerns about the matter being referred to the Law Commission because I predict that we will be debating this in five or 10 years’ time—those of us who are still alive then—when the Law Commission eventually comes back with a recommendation that will cover much wider areas than are dealt with by the amendment, as the Minister has indicated. To my mind, that is typical of the way in which Governments respond to things, in that you propose a relatively small amendment and they say, quite fairly, that the whole area, which is huge, is being looked at, of which the amendment is just a small part, and therefore they cannot do anything about the small amendment until that huge area has been looked at. That is the problem, and that is what I worry about. However, in the mean time, I shall withdraw the amendment.
Viscount Younger of Leckie
I would like to clarify this matter or go some way to clarifying it. I re-emphasise that the Government are currently discussing the precise terms of reference for the review with the Law Commission and, as mentioned earlier, will make an announcement in the coming weeks. The objective of the review is to provide clarity for institutional investors on their legal obligations. It would not be appropriate to prejudge the Law Commission’s review on whether there is a need for legislation to achieve that end. I hope that goes a little way to clarify our position, but an announcement will be made in the coming weeks.
Lord Razzall
If I may say so, that very short response was more helpful than the Minister’s previous comments. I beg leave to withdraw the amendment.
“(6) The regulations may provide for an employment tribunal to have power, where a person fails to comply with an order to carry out an equal pay audit, to order that person to pay a penalty to the Secretary of State of not more than an amount specified in the regulations.
(6A) The regulations may provide for that power—
(a) to be exercisable in prescribed circumstances; (b) to be exercisable more than once, if the failure to comply continues.(6B) The first regulations made by virtue of subsection (6) must not specify an amount of more than £5,000.
(6C) Sums received by the Secretary of State under the regulations must be paid into the Consolidated Fund.”
Baroness Stowell of Beeston
In moving Amendment 58GA, I will speak also to Amendments 58GB and 58GC, which together clarify three elements of Clause 74.
Clause 74 inserts a new Section 139A into the Equality Act 2010. This will enable Ministers to make regulations that will require employment tribunals to order employers to undertake an equal pay audit where they have been found to have broken sex discrimination law relating to pay. Each of these amendments responds to the three recommendations made by the Delegated Powers and Regulatory Reform Committee in its 10th report published on 14 December 2012.
The first recommendation drew the attention of the House to the lack of clarity in subsection (6) about the intended means of enforcement of equal pay audit orders. The second recommendation asked the Government to address the scope of the duty in subsection (7), which provides an exemption for micro and start-up businesses in the first regulations made under this power. In practice, this means that they will not have to undertake equal pay audits in the event that they are found by an employment tribunal to have breached equal pay laws.
The third recommendation of the committee concerned the lack of an expressed requirement for the Minister bringing forward regulations to make them in concurrence, or in consultation, with the Minister with responsibility for employment tribunals at the time.
The Government are very grateful to the Delegated Powers and Regulatory Reform Committee for its recommendations. We have considered them carefully and accept them; I hope that in the amendments I am moving today, we are able to address all the points that they raised. I will take them in turn.
Amendment 58GA outlines the enforcement regime referred to in subsection (6). It explains that the regulations will give an employment tribunal the power to ask an employer who fails to comply with its order to undertake an equal pay audit to pay a civil penalty that initially must not exceed £5,000. This civil penalty can be repeated if the employer’s noncompliance continues. All fines collected by the Secretary of State from noncompliant employers must be paid into the Consolidated Fund.
Amendment 58GB replaces the reference to micro-businesses and start-up businesses in subsection (7) with a definition of the businesses to which the first regulations on equal pay audits must not apply. New subsections (7) and (8) outline what we mean by a micro-business and a start-up business. A micro-business must have fewer than 10 employees immediately before a period that will be set out in regulations. A start-up business, on the other hand, is a business that began during a period that will also be specified in regulations. This amendment also removes the phrase,
“unless further provision is made under this section”.
at the end of subsection (7), which the committee had criticised as lacking clarity.
Amendment 58GC inserts a requirement for the Minister of the Crown responsible for making regulations under the power in new Section 139A to first consult the,
“Minister of the Crown with responsibility for employment tribunals”.
This will ensure that any interdepartmental consultations do not exclude whichever government department has responsibility for employment tribunals whenever secondary legislation is made under this power.
We have found all the recommendations from the Delegated Powers and Regulatory Reform Committee helpful. We are grateful to it and are happy to propose and recommend the clarifying amendments we have made to this clause, which give effect to each of them. I beg to move.
Baroness Thornton
My Lords, I thank the Minister for that very clear explanation of these amendments; we welcome them. There is a general consensus that these amendments are welcome, but the Minister will not be surprised to hear that we believe that the substantive issues needed to go further. I have a few questions to ask the Minister about the substantive issue of these subsections.
As the Minister will be aware, the EHRC advocates that time limits be imposed; the TUC contends, because of the difficulties that employees are likely to face in accessing pay information, that all employers should be required to carry out these orders, not just those taken to a tribunal. As my honourable friend Kate Green MP said on Report in the Commons,
“While the Government have made one or two grudging steps forward in relation to improving equalities, the proposal on equal pay audits is a watering down of our commitment to have such audits across the board for larger businesses, not only when they have been unsuccessful at tribunal”.—[Official Report, Commons, 16/10/2012; col. 252.]
The reason why that is necessary is that recent evidence shows, as the Minister will be aware that gender pay gap continues to persist. The 2012 annual survey of hours and earnings found that the mean pay gap between men and women’s average hourly earnings, excluding overtime, was 14.9% for full-time workers and 7.9% for part-time workers. The Equality and Human Rights Commission’s 2010 triennial view found that pay gaps also affect disabled people and some ethnic groups, and I am going to return to that in a moment. In its response to the modern workplace consultation carried out by the Government, the EHRC noted that the power to impose pay audits needs to be as robust as possible in order to have maximum effect.
It seems to us that the tests for this legislation are, first: will it help employers? Carrying out an equal pay audit should be viewed as a positive means of enabling the employer concerned to eliminate pay inequality and minimise the likelihood of facing future equal pay tribunal court claims, rather than as a penalty. Secondly, will it avoid the possibility that, if equal pay audits are seen as a penalty, there is a risk that employers will settle equal pay cases outside court to avoid that penalty? This could be particularly true of those firms that can afford to settle and are anxious to avoid negative publicity.
Does the Minister acknowledge that conducting an equal pay audit will not in itself eliminate a gender pay gap? It will, however, bring to light and enable employers to address any equal pay issues that are uncovered. Employers will still need to draft an action plan to rectify any unjustifiable pay gaps they find, implement changes and regularly monitor the outcomes. It seems to us that implementing and monitoring the necessary changes are the most important aspect of any equal pay audit. Employers will need to be made aware that there will be an expectation on them to do this. Will the Minister assure the Committee that this is indeed the case? Employers will also need to be made aware of the time limits that will be placed on them to conduct and action their equal pay audits and of what sanctions will be taken if they are breached.
Finally, what are the Minister’s views on progress on pay gaps for other strands of discrimination; for example, religion or belief, age, race, disability, and sexual orientation? Do the Government intend to do any research or take any action on those matters too, and if so, when?
I welcome this part of the Bill and the amendments which will improve it significantly, but I do not believe that any of us can rest on our laurels on this matter. I am sure the Minister will agree.
Baroness Stowell of Beeston
My Lords, I am grateful to the noble Baroness for her support of our amendments. The Government very much believe in and are strongly committed to equal pay and the important laws that already exist. If there were enough time, and perhaps on another occasion, I might recount some of the stories that my mother used to tell me about when she first arrived in Nottingham as a teenager and was working in big factories and was very miffed to find that the men were paid a lot more than she was paid for doing the same job.
Businesses should be encouraged to make progress on complying with these important laws. Where it is not necessary, we should avoid a statutory approach in terms of making them comply. I recognise the point that the noble Baroness was making about progress in this area. There has been progress, but clearly more needs to be done. That is why this Government have introduced some measures to increase transparency on how pay is reflected in organisations. There seems to be quite a positive response to those voluntary measures.
We think that equal pay is so important, so we also believe that it is right to introduce these mandatory equal pay audits for businesses that have failed to comply with the law. When the law has been broken, they need to be forced to address that. That is why we believe that this is the right approach to take.
The noble Baroness raised some questions for me to respond to. She asked why equal pay audits are not available as an automatic right. We believe that carrying out a systematic pay audit of staff can be burdensome, and we do not want to place unnecessary burdens on employers who have done nothing wrong. We also feel that some employers are already carrying out these equal pay audits on a periodic basis and are using them in a constructive and good way. We do not want them to feel that they are being unnecessarily penalised when they are already doing the right thing.
The noble Baroness asked whether we thought that, once this measure is in force, the equal pay audits will simply push employers to settle equal pay claims. Our view on that is that if any employer were facing a continuing claim against it on equal pay grounds, it would soon find that it would not be cost effective to keep settling those claims. I do not accept that that would be a consequence of this.
The noble Baroness asked why the equal pay audit would not cover other protected characteristics. As she and I have acknowledged, equal pay legislation for men and women has been in place for some 40 years. We think it is right to focus the audit on sex-based pay differentials alone as only there is there a specific right to equal pay, and the appropriate route of redress for discrimination due to any protected characteristic other than sex in matters relating to pay, is through the discrimination provisions in the Equality Act.
The noble Baroness also asked how the timeframe for carrying out an audit would be decided. New Section 139A of the Equality Act allows employment tribunals to be given discretion in,
“deciding whether its order has been complied with”.
I think those are all the questions that the noble Baroness—
Baroness Thornton
Perhaps the noble Baroness could write to me about what the time limits are, as that is quite important. I do not want to delay the Grand Committee on that matter, so I will accept an answer in handwriting.
Baroness Stowell of Beeston
I will follow that up in writing. It is worth making the point that there will be a second consultation on the detail of how equal pay audits are carried out. It is possible that that might be reflected in it, but I do not know for sure, so I will not try to guess any more on that matter. I shall confirm this in writing to the noble Baroness. I hope that I have covered all the points that she has raised with me today.
“(7) The first regulations under this section must specify an exemption period during which the requirement to order an equal pay audit does not apply in the case of a business that—
(a) had fewer than 10 employees immediately before a specified time, or(b) was begun as a new business in a specified period.(8) For the purposes of subsection (7)—
(a) “specified” means specified in the regulations, and(b) the number of employees a business had or the time when a business was begun as a new business is to be determined in accordance with the regulations.”
“( ) Before making regulations under this section, a Minister of the Crown must consult any other Minister of the Crown with responsibility for employment tribunals.”
“Relationship between an insolvent company and its suppliers
(1) Section 233 of the Insolvency Act 1986 (supplies of gas, water, electricity, etc) is amended as follows.
(2) In subsection (3)(a) at the end insert “or other supplier”.
(3) In subsection (3)(b) at the end insert “or other supplier”.
(4) In subsection (3)(d) at the end insert “or other supplier”.
(5) After subsection (3)(d) insert—
“(e) a supply of computer hardware or software or infrastructure permitting electronic communications.”(6) After subsection (3) insert—
“(3A) Any provision in a contract between a company and a supplier of goods or services that purports to terminate the agreement, or alter the terms of the contract, on the happening of any of the events specified in subsection (1) is void.””
Lord Stevenson of Balmacara
My Lords, one of the key aims of the Enterprise and Regulatory Reform Bill is to encourage long-term growth. Key to this is promoting the rescue of potentially viable companies that are facing short-term financial difficulties.
Suppliers are a company’s lifeblood. Companies cannot continue to operate without them yet, under existing legislation, suppliers can currently take a number of unreasonable actions when they hear a business is in trouble. Struggling companies can often be faced with extortionate payments, being moved onto more expensive tariffs or with certain key suppliers withdrawing their services altogether. This behaviour frequently leads to the unnecessary liquidation of potentially viable businesses, which is bad news not only for creditors but also for jobs and the economy. The company R3 has estimated that a change in the law could result in approximately 2,300 additional business rescues a year and increased returns to creditors.
It is true that Section 233 of the Insolvency Act 1986 currently prohibits utilities suppliers from withdrawing supply but it does not stop any other supplier, no matter how crucial, withdrawing supply or imposing a higher tariff or payment before agreeing to continue to supply. It also fails to prevent any supplier from raising its tariff once a business enters insolvency. These actions can prevent any chance of business rescue, damn the business to closure, and reduce dividends for creditors. We suggest that this legislation should be updated in the following ways to help rescue more businesses and save jobs.
Certain suppliers often use the advent of insolvency to extract “ransom payments” before they continue to supply the company. Furthermore, while utilities suppliers listed under Section 233 cannot withhold supply, there is nothing to prevent them moving an insolvent company onto a much higher tariff. We suggest that Section 233 should include a provision to prevent the exercise of contractual termination provisions on the grounds of insolvency alone, and should prevent suppliers of essential services from using their position to extract so-called ransom payments as a condition for continued supply, provided that the company continued to pay under existing contractual terms.
While original sellers of utilities services are prevented by the Insolvency Act from terminating their contracts on insolvency, on-sellers of telecoms services and equipment are not covered by the legislation, even though they are every bit as important to the business community—increasingly, these days. In addition, other services, such as IT and software suppliers, which are vital to business survival in the 21st century, are freely able to stop supplying a company on the ground of insolvency. Section 233 sets out the suppliers to which these provisions apply—currently, gas, electricity, water and communications. We suggest including in this list certain additional suppliers deemed essential for the continued operation of the business, particularly IT suppliers and on-sellers of utilities that are not covered by the original definition. A precedent for this change was set by Regulation 14 of the Investment Bank Special Administration Regulations 2011, which prevents suppliers of essential services such as financial data, computer hardware and data processing from withholding supply in the event of administration.
Finally, it is important to note that these changes expose suppliers to minimal risk, because they are paid as a priority, ahead of all other creditors during the insolvency. This is not about special treatment for insolvent businesses, but about preventing suppliers taking advantage of an insolvency and leapfrogging other creditors, at the expense of the business’s survival.
I turn to Amendment 58HZA in the group. The Finance Act 2009 established a duty on HMRC to produce a report each year on its adherence to its charter, which sets out the rights and obligations of taxpayers. Our amendment asks for HMRC’s annual report to consider a particular issue, consumer debt, and to relate that to the objectives in its annual business plan. One of the recurrent themes raised during the debates we held recently in your Lordships’ House on the Financial Services Bill was the need for the new regulatory structures to have the consumer at the centre of their thinking and practice. We have had not dissimilar debates on earlier sections of this Bill in relation to the new Competition and Markets Authority, to which we will return on Report.
This amendment is in the same vein, although the target is the HMRC, and is relatively uncontroversial and not particularly burdensome because it simply requests the HMRC to report additionally about what it is finding about levels of personal debt in the UK. This will be useful data for all those interested in this area, and might over time help to sensitise HMRC to what impact it is having on those struggling with unmanageable personal debts. I declare my interest as chair of StepChange, the leading debt charity. Its figures show that its median client owes more than £20,000 to five different creditors, with the bulk in credit cards and personal loans, and other consumer credit products. They also include mortgage arrears, rent arrears and, increasingly, fuel and utility debts, income tax and council tax. Nearly half the people who StepChange help report that unemployment or a reduced income was the main reason for their debt problems. However, people also say that life events such as illness and separation can quickly overwhelm family finances and cause or contribute to mounting debts. What StepChange finds, in fact, is that debt is rarely a problem in isolation—there are nearly always other factors that need to be addressed, including a particular concern of ours, which is the link between problem debt and depression. Nearly a half of StepChange’s clients say they had been worrying about their debts for a year or more before seeking help from a debt service provider. Around a third told the charity that their debt problems had weakened their relationships or led to a break-up. Nearly half said that debt had shattered their self-confidence to support themselves and their family.
Things changed in the personal debt world in about 2006-07, but the pre-crash boom in consumer credit also remains a key part of the UK debt narrative. Even after several years of near-zero lending, the total of outstanding secured and unsecured debt is still some 91% higher than it was 10 years ago. It is a pretty bad picture. Recent research by the Financial Inclusion Centre concluded that some 6.2 million households are currently either already in financial difficulties or at risk of getting there. And it is going to get worse. The IFS estimates that real median household incomes will fall by 7.1% between 2009-10 and 2013-14 as a result of low growth and fiscal tightening—the largest decline since the 1974 to 1977 fall of 7.5%. Recent research published by the Joseph Rowntree Foundation predicts an increase in both relative and absolute poverty between 2009 and 2020. Unemployment remains at a stubbornly high 8.3%, or 2.65 million people, and more than one in five young workers are without a job. That is particularly worrying as we know that time spent not in employment, education or training as a young adult can have a scarring effect as well as reducing lifetime earnings.
At the same time, we are experiencing an extended period where households are facing rising costs for essential goods and services. Food, fuel and transport costs are rising sharply, and we will sooner or later face a rise in interest rates, which are unnaturally low at present. Figures from the Financial Inclusion Centre show that, if living costs rise by more than £50 per week, it would double the percentage of households, currently 30%, who have no spare cash at the end of the month. That is the rather grim background to our amendment. I apologise for taking the Committee’s time, but it is important to get the context so that we can focus more closely on the amendment.
We need to know more about personal debt—how it arises, and how people cope with it. HMRC is a major player in this area, and it is important that it participates in the research that is needed and contributes to finding solutions to the problems that currently exist. Reporting on the situation that it finds each year would be a great step forward. I beg to move.
Lord Razzall
My Lords, I have considerable sympathy with the amendment proposed by the noble Lord, Lord Stevenson, and the noble Baroness, Lady Hayter. These issues are always extremely tricky in that it is a matter of getting the balance right between the wish of companies or individuals to carry on trading following an insolvency action and that of creditors to protect their interests. There is a slightly wider issue of pre-pack administrations and sale of businesses where the major losers are the unsecured creditors. That is something that your Lordships have looked at from time to time to see whether any change needs to take place. This is a relatively small amendment to marginally shift the balance in relation to organisations which, although insolvent in one form or another, are carrying on trading. We have had a lot of evidence—obviously on the Labour side as well as on our side—that there are quite significant occasions when the suppliers of these services, rather than cutting off the service, say that they will carry on the service but charge a significant extra amount. That seems not to be conducive and, in this case, shifts the balance far too far away from the creditors’ interests. Therefore, I think that this amendment is very appropriate and the Government should consider it seriously.
Lord Mitchell
My Lords, I had not intended to talk about what I am talking about now, but it is pertinent, particularly as the noble Lord, Lord Razzall, mentioned pre-pack administration. I would like to say a little more about that.
Some pretty awful stuff is going on out there. Pre-pack administration is a situation in which a company is in trouble, particularly with its creditors, and is just about hanging on, when at the very same time some influential shareholders get together with a friendly administrator and say that they will put the company into administration. They suggest that the moment that it is put into administration there will be just a short period of time in which to sell it, then they will come in with company mark 2, which will buy the assets and business from the administrator and start up again, often with a very similar name. The effect of doing that is that the small creditors, which is the area that I care about because they are generally SMEs, and the small shareholders, get absolutely stuffed, because the company ceases to exist—and it then in its revised form continues with a different name and some of the same shareholders. They have an agreement with their banker. They have dumped all the toxic stuff into the river and moved on and started the company again. This does goes on; I have seen lots of examples of it happening. In fact, I am a minority shareholder in a company and there was a time when the majority shareholder was threatening to put the company into pre-pack, which would have meant me losing my shareholding. This was several years ago but I have experienced the threat of it. In effect, it never happened but it is one of the weapons that a company can use to dump shareholders and creditors. I put this down as something that I might come back to. I am not expecting the Minister necessarily to come back on any key points but I just want to make that point.
Viscount Younger of Leckie
My Lords, this amendment seeks to amend the Insolvency Act 1986 to prevent suppliers withdrawing their services from a company after it enters formal insolvency. The amendment also seeks to address concerns about whether all utility providers are bound by an existing provision to prevent them demanding so-called ransom payments as a condition of continuing supply, which is an issue that the noble Lord, Lord Stevenson, highlighted in his speech. In addition, it seeks to extend that provision to IT suppliers.
The Government recognise the concerns that have been raised here and are looking very closely at these issues. My noble friend Lord Razzall recognised the difficulty in creating a balance here. We are committed to exploring any option which might help to rescue viable businesses and jobs, or which would improve the outcome for creditors of insolvent companies. The UK’s insolvency regime is very well regarded internationally. The regime continues to rank highly in World Bank reports for its ability to deliver quick and effective business rescue mechanisms. We want to maintain that standing and, indeed, build upon it.
However, I am sure noble Lords will recognise that this is a complex issue and that proper consideration must be given to the consequences that might result from such a change. For example, forcing suppliers to continue to supply an insolvent business might interfere with commercial behaviours and contractual rights. Freedom of contract is an important tenet in English law. Restricting a supplier’s right to terminate might also lead to knock-on insolvencies and could affect the pricing of contracts. While we recognise the advantages that such an amendment might bring, in the light of the important issues it raises, the Government wish to understand more clearly the consequences before deciding whether, and if so how, to change the law. In that way, we can satisfy ourselves that the right balance is being struck between the competing interests. I thank noble Lords for tabling this amendment and I assure them that the Government will consider this important issue very carefully.
Turning to Amendment 58HZA, this proposed new clause would require the annual report on HMRC’s charter to include a review of how its standards and values interacted with HMRC’s strategic objectives for the relevant year. It would also require the report to be made with the aim of taking a long-term view when considering proposals from individuals to repay their debts. The charter sets out HMRC’s role and the standards of behaviour and values to which the department aspires when dealing with everyone. The charter contains nine rights and three obligations. Examples include: the right to help and support; honest and even-handed treatment; professional behaviour; and acting with integrity. HMRC has six strategic objectives. These include improving the customer experience and maximising revenue to close the tax gap. The standards and values set out in the charter cover all aspects of HMRC’s work to meet these objectives, as well as its interactions with individuals and businesses.
At this point, I want to acknowledge the reference made in the speech of the noble Lord, Lord Stevenson, to StepChange. He produced some statistics and used the word “grim”. They are indeed grim figures, which I listened to extremely carefully. Whether HMRC should report on levels of personal debt was a question that the noble Lord raised. We very much recognise the issues that he raised about vulnerable customers and consumers, and the level of personal debt that he highlighted so eloquently. The Government very much recognise the need to look at these issues and we are doing so, which I should stress goes beyond HMRC’s remit.
Lord Stevenson of Balmacara
My Lords, I thank the noble Lords, Lord Razzall and Lord Mitchell, for participating in this debate. We have ranged a little further than the original terms but it was useful to have that exchange on pre-packs. I think that the main focus of the comments from the noble Lord, Lord Mitchell, was more on the interests of shareholders than creditors but it still comes back to the same point in the end. There is a bit of an issue here and I am glad to hear that it is being discussed.
I shall deal with these two amendments in reverse order. As regards the points in the second amendment about the role of the Inland Revenue, I heard what the Minister said. However, I think that the problem is exactly as he stated it but in reverse. If your primary concern—it is not a wrong concern—is that the purpose of the Inland Revenue is to maximise revenue to ensure that government services and so on may be maintained, you may have to regard vulnerable consumers and others who have difficulties as a slightly lower priority. It is true that there are nine rights and three obligations in the wonderful Inland Revenue charter but none of them mentions either of those issues in any great detail.
It is more a question of tone and approach. It is true that we have done less badly in this recession than in many other recessions, largely because the banks and other private institutions have been extraordinarily generous in terms of forbearance. That was achieved in dialogue with the Government of the day and has been continued by the current Government. However, without that there would have been a huge hole in the public fabric and services which it would have been impossible to tolerate. There are ways in which we can reach out to the vulnerable consumers that we are talking about; we have those at the heart of my charity. What I was trying to get across in the amendment was that perhaps we could have a broader discussion involving Treasury Ministers to take account of some of these issues.
This is not the time for this but, as regards much of the insolvency and the other areas with which we are dealing; it seems we are gradually finding 20th-century solutions to 19th and 18th-century problems. The idea, which I think I have mentioned in other places, that somehow there is an unimpeachable line of integrity between the creditor and the debtor is at variance with the reality of what happens when vulnerable consumers get themselves into difficulty. It is time for us to have a mature discussion about people who are facing the possibility of going bankrupt.
Forbearance, for all its huge pleasures, is a wonderful approach, but is totally without a statutory framework. Does that need to be considered? Even when forbearance is operating and we are talking about keeping people in a family home which they would otherwise have to have left, is forbearance right if, as a result, they can neither heat that home nor feed themselves there? These are issues that we do not get quite right; there is a black-and-white approach to them. This amendment tries to say, “Perhaps we can begin by gathering the figures and thinking again about how these things operate”. Using the rights and privileges that the Revenue has above and against all other creditors is obviously important in terms of making sure that we maximise revenue, but that is not necessarily right in terms of societal norms and values. I am sorry to have taken so long but it is important to get that on the record.
Regarding Amendment 58H, I am glad that the Minister feels that there is something there to look at again. I would be happy to participate in any meetings or discussions he might have, wearing both, or one of, my hats. I beg leave to withdraw the amendment.
Viscount Younger of Leckie
Noble Lords will be aware that the reforms to the debtor-initiated bankruptcy process being introduced by the Bill remove the order-making function from the court and replace it with a new administrative process. These are minor and technical amendments to the “Extent” provisions in Clause 78 relating to those reforms. Individual insolvency law is a devolved matter in Scotland and these reforms will have no substantive effect on legislation in Scotland.
The jurisdiction of the adjudicator is limited to the determination of bankruptcy applications received from debtors who meet the jurisdictional criteria of having resided or traded in England and Wales for the required period. However, certain consequential amendments made by the reforms extend to Scotland. The purpose of these amendments is to ensure that we have the legal power to make all those consequential amendments that are necessary to give effect to the reforms being made in England and Wales. The amendments make no substantive changes to bankruptcy law in Scotland, which is a devolved matter. I therefore beg to move.
Lord Stevenson of Balmacara
My Lords, we have read the amendments and recognised the points. Rather surprisingly, given the volume of correspondence that we received on everything else in the Bill, we received no comments from anyone on this matter and therefore have to rely entirely on our own judgments. In this case, we are happy for the amendments to go forward.
Viscount Younger of Leckie
My Lords, given that this is the last group of amendments in our Committee discussions, I would like to place on record my thanks to our Deputy Chairmen and the clerks who have masterfully steered our way through all the amendments; to the Bill teams involved; to the Hansard writers who have admirably recorded our discussions and, indeed, were obliged to stay somewhat later than the extended time allotted last week; and to the Doorkeepers for their unstinting assistance.
We have given the Bill careful and detailed scrutiny and I pay tribute to noble Lords opposite as well as my noble friends who have participated in our debates. Although there have been areas on which we have not wholly agreed, which we will discuss further on Report, as one would expect from this House, they have brought a depth of knowledge and analysis to the wide range of issues covered by the Bill. I would also like to thank my noble friend Lady Stowell for the part she has played and my noble friend Lord Popat and many other noble friends who have assisted and supported me and my officials.
The Government’s amendments to Clause 79 have two effects. The first is to commence all powers to make subordinate legislation by statutory instrument on Royal Assent. This is to assist with the orderly commencement of the Bill’s provisions. I should make it clear that these amendments should not be seen as suggesting that all the powers in the Bill will be exercised straight after Royal Assent, or indeed at all. Some are reserve powers which will be needed only if certain circumstances apply—for example, Clause 45 on the powers of sector regulators. Amendment 60AD adds further provisions to the list in Clause 79(2) which are to come into force automatically two months after Royal Assent without the need for a commencement order. I beg to move Amendment 60AA.
Lord Whitty
My Lords, it is probably totally inappropriate for me—as I am probably the person who has been here least in recent days—but I would like to join the Minister in thanking the clerks, the support staff and everybody who has participated on all sides during these debates. I also thank the various Chairs, including our current Chair. I extend that to the Minister and his colleagues and to the noble Lord, Lord Marland, who, many moons ago, started us out on this course.
Lest the Minister think he is going to get away after that, I have a couple of questions on this virtually final clause. As he says, the powers do not necessarily come in at the first date that is stipulated here in terms of implementation, but the Secretary of State will be able to implement them. In Amendment 60AB, he has already referred to proposed new paragraph (b), which relates to concurrent powers in Clause 45. The Minister may recall that during the debate on this there was considerable concern expressed about how the balance between the sector regulator and the new CMA would work. My understanding is that there will be different times in practice when each of the concurrent powers cease or are otherwise redefined; does that mean that, as it stands, Clause 45 would come in all at once on whatever date the Secretary of State determined after the first date? In fact, there may be a different date for Ofcom and the CMA or Ofgem and the CMA or the other sector regulators. It would be heavy work for the Government if they were all to come in at the same time, because there are different considerations in each of the sectors and there will be some inquiries which are still ongoing and some which need to be completed. In any case, we will probably have to return to the substantive issue on Report to get further clarification—if not to move further amendments—but it would seem that if all of Clause 45 were brought in applying to all sectors at the same time, it would be a problem.
My second point is about proposed new paragraph (f) in Amendment 60AB. This effectively says that anything that does not happen to be listed here can nevertheless come into play on the first day after Royal Assent. It seems, since Her Majesty will be signing them off, that this is getting fairly close to his late Majesty, King Henry VIII, in that if you do not specify the date in which various sections come into operation, then bringing any Section forward to an immediate date—even though it is not specified in this commencement clause—could seriously disturb the arrangements of the particular bodies that apply. For example, if there is a commencement of a particular power to either commence or cease, people need to know that in advance. Therefore, it is important that the Bill specifies that rather than have a catch-all ability for the Secretary of State, or some future Secretary of State, to bring any clause into play on the first day. If the noble Viscount tells me that this is normal, of course I shall withdraw it, but it is not something that I see in many pieces of legislation. Perhaps he could clarify the position.
Viscount Younger of Leckie
I thank the noble Lord, Lord Whitty, in the sunset of this Bill, for bringing up these issues, which I regard as quite technical in terms of the timing. I appreciate what he has asked and it is obviously my business to get back to him with some answers. It may help him to know that it is the powers only that will be commenced on Royal Assent; the substantive provision will come in separately later. It might help to facilitate the commencement of the Bill. That is the reason for it. It should reduce the number of commencement orders and the commencement dates. It is important for me to re-emphasise exactly why we are bringing in this issue. However, I might not have addressed his concerns entirely but I would be more than happy to take up this matter later and give him a proper response in writing, with a copy placed in the Library.
(a) section 19;(b) section (Power to remove concurrent competition functions of sectoral regulators);(c) section 51;(d) sections 66 to 69 and Schedule 21;(e) sections 74 to 80;(f) any other provision so far as is necessary for enabling the exercise on or after the day on which this Act is passed of any power (arising under or by virtue of that provision) to make provision by regulations or order made by statutory instrument.”
“( ) Part 1;
( ) sections 11, 13, 15, 16 and 17;”
House of Lords
(11 years, 9 months ago)
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Royal Assent
(11 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text
Crime: Wildlife Crime
(11 years, 9 months ago)
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Baroness Miller of Chilthorne Domer
To ask Her Majesty’s Government what progress they have made in tackling wildlife crime.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, the Government are committed to the fight against wildlife crime. We have made real progress in recent years, including providing funding for the National Wildlife Crime Unit and introducing civil sanction powers for Natural England to deal with certain illegal activities. Internationally, among other things, we have helped fund Interpol projects, building enforcement capacity to conserve tigers, elephants and rhinos in the countries where they live in the wild.
Baroness Miller of Chilthorne Domer
I thank my noble friend for his Answer. I am sure he is therefore aware of the comments of the CITES Secretary-General, John Scanlon, about the huge increase in poaching of wildlife, especially in Africa, which he feels is going to help fund the insurgencies there. Domestically, in Britain, does my noble friend agree that poaching birds’ eggs, for example, is stealing our children’s inheritance as much as stealing the Crown jewels? What guidance will he give to the new police commissioners to make sure that they realise the seriousness of wildlife crime?
Lord De Mauley
My Lords, first, I am aware that John Scanlon recognises the increasing involvement of organised crime in illegal wildlife trade. He has welcomed the UN Security Council’s call for an investigation into the alleged involvement of the Lord’s Resistance Army in the poaching of African elephants and the smuggling of ivory. Police and crime commissioners will hold their chief constables to account for the totality of their policing, which includes the chief constable working in collaboration with other police forces and agencies to address national issues that impact on their communities. As I have said, we believe that there is often a link between organised wildlife crime and other organised crimes, such as drugs and arms trafficking. We therefore expect the police to take wildlife crime seriously where it is a priority for their communities; co-operation with the NWCU will be key to this.
Lord Clark of Windermere
My Lords, while I commend the Government for their efforts in tackling wildlife crime in this country, is the Minister satisfied with the seriousness with which magistrates’ courts in certain parts of the country take this? Does he appreciate that there is a great deal of public anguish when people who are caught and proved guilty of killing golden eagles or hen harriers get off virtually scot free?
Lord De Mauley
The noble Lord makes a good point. Enforcement is important. The magistrates have taken account of that and issued a document a while ago that specifically addresses that.
Lord Ashdown of Norton-sub-Hamdon
My Lords, I declare an interest as the chairman of a small charity which funds the training of wildlife wardens in east Africa. Is not my noble friend right to say that this is now an international issue? It has an impact on corruption, particularly in east Africa, and perhaps in Kenya especially. It has an impact on insurgency. The right way for us to deal with it internationally is to begin to raise the human capacity of those organisations in Africa which are taking the front line in fighting what is an increasing tide of wildlife crime. Will my noble friend recommend to DfID that it consider specific programmes targeted at raising the human capacity of, for instance, wardens in east Africa?
Lord De Mauley
First, I pay tribute to the work that my noble friend does. The Government support a wide range of action to tackle illegal wildlife trade, including working with other countries, contributing financially to Interpol-led projects which build enforcement capacity in countries where the animals in question live in the wild to conserve tigers, elephants and rhino, funding a post in the CITES secretariat to help to combat wildlife crime and chairing the CITES rhino working group, tasked with investigating the dramatic rise in rhino poaching.
Lord Mackenzie of Framwellgate
My Lords, does the Minister think that opting out of the crime and justice measures of the European Union will assist in the fight against international wildlife crime?
Lord De Mauley
My Lords, for the reasons that I have given, I am confident that the measures in place and the resources that we devote to the matter very well address the specific problem of wildlife crime.
Baroness Fookes
My Lords, I suggest to my noble friend that another way to tackle the matter could be to encourage the use of tourism so that wild animals are an asset, not a liability. That would encourage the local people to care about them.
Lord De Mauley
My noble friend makes an extremely important point. In the past, I have been on safari in those wonderful countries seeing those wonderful animals. The more that tourism is encouraged in those countries, the more that money is brought into those countries, the more people will recognise the value of the wildlife. That will contribute to clamping down on crime.
Lord Lea of Crondall
My Lords, in so far as it is an international wish to prevent the extinction of lions, elephants, et cetera, is it not logical to say that in conjunction with African Governments, who have population pressures—which is why in the localities people are not so keen to do much about this problem—the police forces in those countries need a lot more resource? Would it not be logical to say that there should be international help with that resourcing for the local police forces?
Lord De Mauley
In fairness to many of those countries, their Governments recognise the problem. Some countries are making major efforts. As I said, we are doing quite a lot but we all must do better.
Baroness Smith of Basildon
My Lords, I draw the Minister’s attention to the report of the Environmental Audit Committee which, like the Government, traces the work of the National Wildlife Crime Unit. The problem is that the unit has to stagger from year to year with just one year’s funding allocated each time. If it is to have proper certainty in its investigations, if it is to recruit and retain the best qualified staff and get best value for money, it needs longer-term funding to ensure that it can undertake its work as effectively as possible. Will the Minister consider that?
Lord De Mauley
My Lords, the provision of funding for the year to come is an important step forward, and removes uncertainty in the short term. I ask the noble Baroness to share with me my delight that the NWCU will continue its excellent work. We will discuss future steps with the unit’s co-funders in the coming months.
Lord Elton
Will my noble friend confirm that the Government endorse the view of the charity commissioners that expenditure by charities on pursuing one of their aims through the courts should be proportionate to the demands of their other aims?
Railways: Fares
(11 years, 9 months ago)
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Lord Bradshaw
To ask Her Majesty’s Government whether they have conducted any comparison of the level of railway fares in the United Kingdom compared with those in countries elsewhere in Europe.
Earl Attlee
My Lords, the most recent major study that included comparisons of the level of railway fares in Europe was published by Passenger Focus. It showed that, although the overall picture is mixed, Great Britain compares favourably with other European countries in respect of many ticket types, particularly on longer-distance tickets purchased in advance. The study compared some other factors, such as frequency of commuter services into major cities, in which Great Britain also compared favourably.
Lord Bradshaw
Does the Minister agree that, although the fares are supposed to go up by RPI plus one, there are countless incidents of fares rising by much more than that—for example 9% from Sevenoaks to London. Will he ensure, and also ask his right honourable friend to ensure, that, when a cap is placed on fares, it is a cap that people can understand? The majority of people do not understand the way in which the fares baskets are compiled, which allows such breaches of common sense and of what is commonly understood.
Earl Attlee
My Lords, I agree that it must be difficult for ordinary passengers to understand how ticket pricing works. The increase in regulated fares is implemented by train operators as an average across a basket of fares. This flexibility allows some fares to be increased by up to 5%—although only 2% on Southern—more than the average, while other fares must increase by much less or even be held flat to comply with the regulated average.
Lord Snape
Does the Minister agree that this largely synthetic row about rail fare increases takes place every year around new year, when there is not much bad news elsewhere? The British media love bad news, and it provides them with an annual story. Notwithstanding that, does the Minister agree with the figures that show that fares for travelling by train have increased in real terms by about 20% over the past decade, while the cost of motoring has reduced by 5% over that period? Are there not some inconsistencies here in government policy?
Earl Attlee
My Lords, first, the relative prices of motoring and travelling by rail vary up and down. The comparison does vary. My right honourable friend the Secretary of State asked exactly the same question as the noble Lord about the timing of rail fare increases—and he was not amused.
Lord Cormack
My Lords, will mortgages and savings accounts be available for those who wish to travel by HS2?
Earl Attlee
My Lords, I know how much my noble friend supports HS2. The business case for HS2 is not predicated on premium fares.
Lord Davies of Oldham
My Lords, I am surprised that the Minister takes a patronising attitude to what the public understand. The public understand fare increases quite clearly. The National Audit Office warned that if excessive fare increases occurred they would merely be reflected in higher profits for the train operating companies. The Prime Minister said that fares should not go up by more than 1% above inflation—in other words, 4.2%. How does the Minister justify fare increases of 9%?
Earl Attlee
My Lords, a fare increase of 9% can arise where you have the RPI plus one, plus the flexibility that is necessary in order that train operating companies can adjust their fares to suit changing conditions. For instance, let us suppose there was a new shopping centre in an adjacent town. It might be desirable to adjust the pricing structure to reflect that. If there were no flexibility, train operators would not be able to adjust their price structure but would have to stick with an old system.
Lord Roberts of Llandudno
My Lords, does the Minister realise that the main obstacle for many young people searching for employment is the cost of transport, especially since the discounted fares come in after 9.30 am and they might have to get to an interview by 9 am? Will the Minister take this up with the train operators, to see whether there might be more acceptable means of providing cheaper transport for young people?
Earl Attlee
My noble friend makes an important point. The Government recognise that, for those starting their employment career, being able to travel economically to work is important. My noble friend will be aware that a fares review is currently under way, looking at all aspects of the fares structure.
Lord Campbell-Savours
My Lords, fares payable on the day of travel are invariably far more expensive than advance travel tickets. On what basis are the European comparisons that the Minister referred to being made: the former or the latter?
Earl Attlee
The noble Lord asks a good question. Just walking up to Euston and buying a ticket is very expensive, and we do not compare well with our continental partners. However, when we look at advanced purchases, we compare quite well. One day, I wanted to go to the NEC to visit the motor show and I could not afford the walk-on fare; it was too expensive for me.
Lord Dykes
My Lords, on another item of major annoyance to rail users, will the Government encourage the installation of more quiet coaches on all long routes, to follow the excellent example of Virgin Trains, which bans mobile phones in the quiet coaches?
Earl Attlee
My Lords, this is largely a matter for the train operating companies. The difficulty for them is enforcing the quiet carriage rules. I like a quiet carriage, but some people do not adhere to the rules.
Lord Faulkner of Worcester
My Lords, the Minister is right to draw attention to the availability of advanced tickets, which represent decent value for money in the great majority of cases. Does he share my irritation when one discovers that it is cheaper to buy tickets for a journey by buying two or three tickets rather than a through ticket?
Earl Attlee
My Lords, I was not aware of that particular anomaly, but I hope that the fares review will look at that.
Waste Management: Refuse Collections
(11 years, 9 months ago)
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Lord Storey
To ask Her Majesty’s Government what assessment they have made of the impact of the £250 million fund set up to help local councils in England maintain or restore weekly bin collections.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, the impact of the £250 million Weekly Collection Support Scheme is that it will ensure a weekly collection of residual waste for around 6 million households while recycling 400,000 tonnes of waste and saving more than 1 million tonnes of greenhouse gas emissions. All successful bids will deliver environmental benefits and successful local areas have been truly delighted with this financial injection into one of their most important services.
Lord Storey
I am grateful for my noble friend the Minister’s reply to my Question. On the Weekly Collection Support Scheme—the “Pickles fund”, as it is known—is there any evidence that having fortnightly bin collections leads to a fall-off in recycling? Further, the Minister will be aware that Liverpool City Council was awarded a grant but has since withdrawn its application. Can the Minister tell the House whether the Government amended any of Liverpool’s grant conditions between: first, the council applying for the fund; secondly, the Government awarding the money; and, thirdly, the council deciding not to accept the grant?
Baroness Hanham
My Lords, the short answer to my noble friend’s first question is no. I can amplify that a bit by saying that many of the successful bidders for the Weekly Collection Support Scheme are demonstrating that you do not need a fortnightly residual waste collection to generate high recycling rates. As I said, the scheme is set to generate 400,000 tonnes of recycling.
On Liverpool, I absolutely assure the House that the Government did not change any of the grant conditions between Liverpool City Council applying for funding, the Government awarding the money and Liverpool deciding to withdraw its bid. That was Liverpool’s option; it was not up to the Government.
Lord McKenzie of Luton
How does the Minister assess the relative merits of the £250 million fund to help weekly bin collections against the £480 million cut in council tax benefit support which, as the Resolution Foundation publication today shows, means that three-quarters of councils will be forced to demand increases of up to £600 per year in council tax payments from 3.2 million of the poorest households in our country? Does the Minister recall the poll tax?
Baroness Hanham
My Lords, the £250 million found by the Department for Communities and Local Government was found from within its own budget. We are dealing with a very important area—that is, to ensure that people who already pay for their bin collections have the opportunity of having weekly collections. The analogy which the noble Lord is trying to draw and the trap he is trying to drag me into are not relevant to this particular discussion.
Lord Tomlinson
But if the department can find £250 million from what the Minister describes as its own resources so easily, would it not be an act of generosity and kindness to transfer £650,000 of it to the department of the noble Lord, Lord McNally, so that he will not have to get so upset at Question Time when he is questioned about cutting legal aid services?
Baroness Hanham
My Lords, I am inclined to stick to my Question, which is about weekly collections of bins. I reiterate that householders value a weekly collection very much. It had gone out of favour with the previous Government and we see it as being of genuine benefit to local people.
Lord Greaves
My Lords, is it not time that the Secretary of State for Communities and Local Government spent more of his time fighting for the interests of local people and local authorities within Whitehall, rather than his apparently weekly attempts to micro-manage the local decisions of local authorities on matters such as bin collection and the level of the council tax?
Baroness Hanham
My noble friend knows perfectly well that the Secretary of State has been at the forefront of ensuring that local authorities are able to manage their own affairs. They have devolved funding, are able to manage their own budgets and now have the business rates staying with them. The whole way that local government finance is going is to ensure that local government can answer for itself.
Lord Bach
My Lords, the noble Baroness was a very distinguished leader of an important local authority, so she knows the role played by Shelter, the housing charity, in helping local authorities and ordinary people. Is she aware that this week it is being considered that Shelter will have to close 10 centres around the country because of the cuts in government spending, in particular in this regard in the legal aid spend? Does she know that to save those 10 centres would take about one-tenth—or perhaps a good deal less than that—of the £250 million set aside by the Government for this task? Is not that a ridiculous set of priorities?
Baroness Hanham
My Lords, this supplementary question only came back to relevance in the last sentence. I understand the problems of Shelter and know that many organisations are having to make very considerable decisions. The Question today is about this money. We believe that it is a good use of funds for local residents to have a proper weekly rubbish collection service. That is what this money was allocated for.
Children: Childcare Costs
(11 years, 9 months ago)
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Baroness Deech
To ask Her Majesty’s Government whether they have any plans to assist full-time working parents by granting tax relief on childcare costs.
Lord Newby
My Lords, the Government announced in the mid-term review that they would support families with childcare costs. They are considering options and will make an announcement shortly. Earlier this week, they published plans to improve high-quality childcare which represents true value for parents, children and the taxpayer.
Baroness Deech
The noble Lord will appreciate that improvements in quality do not amount to affordability. We cannot expect, and the Government cannot call on, women to take half the top jobs and half the places in boardrooms without childcare help, because they are squeezed out in mid-career by unaffordability. Childcare for a woman in full-time work is just as worthy of tax relief as secretarial assistance for the businessman, who receives the full allowance on that. The difference in treatment of employees with workplace nurseries and those without is unfair, and it is even worse for the self-employed. Therefore, will the Minister please consider basic-rate tax relief being available for the employed and self-employed alike who wish to work full time?
Lord Newby
My Lords, the factors that the noble Baroness has referred to are exactly the kinds of considerations currently being undertaken. Of course, the Government are extremely keen, not just in this area but more generally, to ensure that women can achieve their potential. She will be aware of the steps that my right honourable friend the Secretary of State at BIS is taking to ensure that a higher proportion of women is appointed to boardrooms up and down the country.
Baroness Massey of Darwen
My Lords, does the Minister accept that there are many different kinds of families and parents in different economic situations? How will the Government differentiate between the different kinds of families—for example, single-parent families and so on—and decide who needs more relief or less relief?
Lord Newby
I absolutely agree with the noble Baroness. She will be aware that the Government have already focused funding on childcare and free childcare for the most vulnerable. That is why we will be increasing the number of two year-olds who get 15 hours’ free childcare from about 20,000—the number funded under the previous Labour Government—to about 260,000. This is one of the most tangible ways of focusing childcare support on people at the bottom end. Those getting that additional free childcare support in the first instance will be children on free school meals and looked-after children—that is, those from the poorest families.
The Earl of Listowel
My Lords, following the Government’s recent announcement, is the Minister aware of the widespread concern among practitioners about the increasing ratio—to above 3:1—of the very youngest infants to carers? The additional investment in training that the Government have offered to reassure these practitioners is welcome. However, can the Minister go further in reassuring them, given the utmost importance of the highest quality of care for children at this tender age in terms of their future welfare and indeed their future productivity, as well as the deep adverse consequences for them of early poor-quality care in terms of their future outcomes?
Lord Newby
Absolutely, my Lords. That is very much the thrust of the proposals that were announced at the beginning of this week. We have looked in particular across the EU, where childcare and nursery care is in some cases thought to be better than in the UK and two things have emerged: first, that we need to have better-qualified people involved and, secondly, that the ratios that the noble Earl spoke about are tighter in the UK than virtually anywhere else. However, the two go together, and that is why in our plans for early years teachers and educators we are putting a lot of emphasis on improving the qualifications of people working in childcare, while having more flexibility in the numbers.
The Lord Bishop of Chester
My Lords, would it not be unfair to introduce this tax relief for working parents with children while denying effective tax relief through transferable allowances to those parents who choose to stay at home with young children and who are currently penalised through the tax system for doing so?
Lord Newby
My Lords, obviously one of the problems with simply having a tax relief-based scheme is the one that the right reverend Prelate refers to. That is why we are looking at a number of options, some of which are tax based and others of which are not. I hope very much, however, that the Government will be in a position to make an announcement on this very shortly.
Baroness McIntosh of Hudnall
My Lords, going back to the question from the noble Earl, Lord Listowel, does the Minister agree that one of the real problems in the provision of childcare is the very low rates of pay that are awarded to people who are in fact qualified and have a great deal to offer, but who are in the main only able to earn extremely low wages? If the Government’s plan is to put more burdens on those people by increasing the numbers of children that they can look after, is it likely that that will do anything at all either for the childcare or for the people delivering it?
Lord Newby
My Lords, I think the question that we have to look at in terms of the number of children is why it is that those countries that, by common consent, have the best childcare provision in the world have higher ratios of children. The answer is partly that we need to have a combination of things of which better training is one. The pay is very low, but the Government will fund the additional free support which I mentioned earlier at a higher average rate of pay than is currently paid across the sector.
Lord Martin of Springburn
My Lords, not so long ago—and it might still be the case—employees in the House of Commons who had children in nursery care were given tax-free vouchers by the House. Will the Minister and his department look at extending this scheme to the wider population?
Lord Newby
Yes, my Lords. Vouchers are one of the possible ways of dealing with this, and they are one of the options being considered.
Lord Tomlinson
Will the Minister explain to the House how improving the demands for training of care assistants of young children by requiring them to have a C-grade GCSE in maths and English helps them to make better provision for the children in their care?
Lord Newby
My Lords, I think it is recognised by common consent that having better qualified teachers and assistants in this area is beneficial to the pupils and the young children being cared for. If we want, as we do, to improve the quality of the care given, part of it will involve soft skills but another part will involve basic competence.
Syria
(11 years, 9 months ago)
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Baroness Falkner of Margravine
To ask Her Majesty’s Government what assessment they have made of the potential escalation of regional conflict in the Middle East in the light of reported Israeli air strikes near the Lebanese-Syrian border.
Baroness Falkner of Margravine
My Lords, I beg leave to ask a Question of which I have given private notice.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, we are aware of the reports of a possible Israeli air strike in the vicinity of the Lebanese-Syrian border on the evening of 29 January. We are looking into these reports, but it would be unhelpful to speculate at this stage on the implications of this reported incident.
Baroness Falkner of Margravine
My Lords, I wonder if my noble friend will agree with the two following propositions: first, that that pre-emptive strikes breach international law and will undoubtedly heighten tensions in the region; and, secondly, that while the benefit to Israel’s security is likely to be short-lived, the likelihood of pushing the beleaguered regime into even more ruthless actions against its opponents is increased, and risks drawing chemical weapons into the equation. In light of that, will my noble friend tell the House why the United Kingdom Government seek to request a further relaxation of the EU arms embargo tomorrow against this backdrop? Do they believe that putting further arms into the equation will actually help the situation?
Baroness Warsi
As noble Lords will be aware, I try whenever I come to the Dispatch Box to provide as much detail as I can in relation to any Question that is asked. It is important to be as open and frank as possible with your Lordships’ House. Unfortunately, in relation to this matter, we are still looking at these reports. It would be wrong for me to speculate about the implications of what may have taken place and of what has in fact taken place.
However, I note the point that my noble friend makes in relation to the arms embargo. We have taken the position that there should be flexibility in the arms embargo both in relation to the period of time that it operates and to its specifics. That does two things. It sends out a clear message to Assad that we intend to keep the pressure on him to try to resolve this crisis. It also gives us flexibility, as part of the wider EU, to ensure that we can respond appropriately to the situation as it changes on the ground.
Lord Hannay of Chiswick
My Lords, will the Minister inform the House as to whether, if it turns out that the Syrian regime was transferring arms or military material to any organisation in Lebanon other than the state armed forces, it would have been acting contrary to Security Council resolutions?
Baroness Warsi
I do not want to answer the noble Lord’s supplementary question by speculating. I can say that on two occasions we have had specific questions on the issue of chemical weapons and their transfer. I said on those occasions that we had made clear to Syria what its obligations were in relation to any chemical or biological weapons that it had. We have also made it clear that we have worked with the regional powers in the area to make sure that the borders around Syria are properly protected to ensure that there is no movement or transfer of biological and chemical weapons. Of course, we have made clear our views to the Syrian authorities, who have sent back some reports that they do not intend to use chemical and biological weapons. But we will continue to make our concerns heard.
Lord Anderson of Swansea
My Lords, I accept that the position is as yet unclear, but does the Minister agree that if this convoy was taking weapons to be used by Hezbollah against Israel, Israel had not only a right under Security Council resolutions but also a right under the charter of self-defence, knowing the record of Hezbollah against Israel?
Baroness Warsi
The noble Lord is aware that we have in the past raised concerns about any weapons that may be passing to Hezbollah, about where those weapons may be coming from and about comments that have been made by Hezbollah about where they may be receiving weapons from. I hope that the House feels that I am not being evasive, but it would be inappropriate for me to speculate on what has happened, the implications of it, what someone may do in response and the implications that that would have in relation to international law.
Lord Howell of Guildford
While I appreciate that the Minister obviously does not want to speculate until there is a clearer view about this, and while I am the first to be critical of Israel when occasionally it overreacts and overresponds with undue rigour, do the noble Lords, Lord Hannay and Lord Anderson, not have a point? The shipping of weapons to Hezbollah, which already has thousands of rockets, is an extremely dangerous and destabilising act in the Middle East. Anything that furthers the position of Hezbollah, which is a state within a state in Lebanon, and makes it more ready to be highly provocative, as it has proved in the past, against Israel, will add to the difficulties in the area. Does she appreciate that we need to watch this very carefully and in a balanced way?
Baroness Warsi
My noble friend, as always, makes an important point and comes at it with great expertise. He will, however, be comforted to know that whatever has happened on that border, we understand at the moment that the blue line between Israel and Lebanon remains calm and that the work of UNIFIL continues in the region in the way that it has done until now. I can, however, say that any transfer of arms to Hezbollah would clearly be a violation of Security Council Resolution 1701.
Lord Triesman
My Lords, the difficulty in answering the Question without adequate information at this stage is well understood on all sides of the House. But there will be an anxiety both about the prospect of Hezbollah attaining additional weaponry and about the proportionality of what has happened. When will the Minister, in her judgment, be able to come and give a full Statement to the House about the facts so that we can have a proper discussion?
Baroness Warsi
As the noble Lord is aware, I am here most days, so I am available most days to answer any Questions that may arise. The Minister with responsibility for this particular region is my right honourable friend Alistair Burt. I will be obtaining updates on this tonight and in my weekend Box and, if further information comes to light, of course I shall update the House.
Baroness Symons of Vernham Dean
My Lords, I agree strongly with what the noble Lord, Lord Howell of Guildford, said and I also understand the reluctance of the noble Baroness to speculate. However, one thing about which we need not speculate is that the Russians have made a very forthright statement about these reported air strikes. Can the Minister tell us what bilateral exchanges we are having with the Russians about this very worrying situation, which could grow more serious on a daily basis?
Baroness Warsi
I do not have any information about the specific bilateral discussions we are having in relation to this particular incident. However, I can assure the noble Baroness that we are having constant discussions with the Russians in relation to the situation in Syria. These matters are now arising because we are failing to deal with the crisis in the region. We must deal with the issue of Syria. We keep taking this back to the United Nations. The Prime Minister has made his views very clear and I have repeated them on many occasions at this Dispatch Box. We are trying to seek agreement at the United Nations to move matters forward. In the mean time, Russia is one party with whom we seek to move further forward.
Lord Wright of Richmond
My Lords, may I revert to the question of the arms embargo on Syria? Is the Minister aware that it was reported on the news this morning that the Foreign Secretary, in consultation with the French, would be arguing for the lifting of that arms embargo? Does the noble Baroness not agree that that would be a very serious escalation in our involvement in what is frequently described as a Sunni/Shia war, and that we ought to be very careful before getting involved with a group of very nasty people indeed in Syria who are aiming—as apparently we are—to remove the legitimate and secular Government of Syria?
Baroness Warsi
Where I disagree with the noble Lord is that I would not describe the current regime in Syria as one that is legitimate and represents the views of the Syrian people. I can assure him that no decision has been taken by the Government to change the nature of our assistance to the national coalition. We understand absolutely the concerns he has raised in relation to further arms. Our purpose in putting forward the amendment to the arms embargo is to create the space for and increase the chances of a political settlement. It is not to exacerbate the militarisation of the conflict which is already happening.
Business of the House
(11 years, 9 months ago)
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Lord Hill of Oareford
That Standing Order 40(5) (Arrangement of the order paper) be suspended from Thursday 7 February until the end of the session.
Lord Steel of Aikwood
My Lords, perhaps I may ask a couple of questions about this Motion, because it refers to starting next Thursday, 7 February. As noble Lords may be aware, I have tabled a Motion, which appears at the top of the Order Paper for debate that day, that,
“this House resolves that no introductions of new Peers shall take place until the recommendations in paragraphs 36, 47, 57, 63, and 67 of the First Report of the Leader’s Group on Members Leaving the House, chaired by Lord Hunt of Wirral (HL Paper 83, session 2010–12), have been implemented”.
We have just passed the second anniversary of the publication of this unanimous, all-party report. Nothing has been done about it and there is an increasing concern about overcrowding in this Chamber, which is why I have tabled my Motion. Can the Leader assure me that if we pass the Motion before us, my debate will not be gazumped and we shall have the chance to discuss it next Thursday morning?
Secondly, is the noble Lord aware that the Bill that passed through this House which would give effect to that report is in the Commons and has been taken up by our colleague, the Conservative MP Eleanor Laing? Last Friday she tried to get a formal Second Reading of that Bill so that it could come back here, but it was objected to by the Government Whips in the normal way. She is going to try again tomorrow, and of course, if the Government Whips do not object and she gets a formal reading, the Bill next Thursday would be unnecessary.
Lord Forsyth of Drumlean
My Lords, further to the point made by my noble friend, I understand that the Chief Secretary to the Treasury has suggested that this House should find economies of at least 2% in its budget. That seems to be inconsistent with proposals to add to the burdens on the House by appointing more Peers. This is not the moment to debate the issue, but would it not be appropriate for the Procedure Committee of this House to look at how the rate at which introductions are made is consistent with the resources available to us and the demands being placed on us by the Treasury to reduce the burden on the taxpayer, with which I very much agree?
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
My Lords, first, I should say to my noble friend Lord Steel of Aikwood that I am well aware of the concerns he has expressed for a long time on this issue. Indeed, I was glad to have the opportunity to discuss them with him soon after I took over this post. If the House will allow me, I should say for the record that I am slightly disappointed that, in bringing forward his Motion, my noble friend did not discuss it with my noble friend the Chief Whip in the way that convention suggests. It is important that we observe the conventions because that is how this House operates. I feel that I should bring that to the attention of the House.
On the matters raised by my noble friend Lord Forsyth, we will be discussing those next week and I am sure that we will have a good opportunity to hear a range of views from all sides of the House. On the Government’s position generally on this important issue, that has not changed since the last time it was discussed in this House in terms of both future legislation and the position regarding the appointment of new Peers. As it has always been, it is for the Prime Minister to make recommendations to Her Majesty the Queen. That is how it has always been done in this House by both parties and how it was done with great vigour by Mr Blair. It is the situation that exists now.
Lord Pearson of Rannoch
My Lords, can the noble Lord tell us where the Prime Minister and the Government stand on their commitment to ensure that membership of your Lordships’ House more accurately reflects the votes cast in the previous general election? Does the noble Lord agree that that would give my party, the UK Independence Party, no fewer than 24 Peers, whereas at the moment we have three? Does the Prime Minister stand by this commitment or has he abandoned it?
Lord Hill of Oareford
My Lords, I think we all feel that the value we get from the noble Lord, Lord Pearson of Rannoch, is worth at least 24 Peers. The position taken by the Government on this is set out clearly and has not changed. The Government’s view is that we should work over time more accurately to reflect the balance of Peers.
Lord Forsyth of Drumlean
My Lords, I do not wish to detain the House, but further to the point made by the Leader of the House, there is a distinction between the prerogative power to appoint Members to this place and the rate at which they can be introduced. I think that my noble friend’s Motion was about having a debate that takes account of the resource constraints upon this House and the proposals that are now in the other place which would enable a sensible accommodation to be reached. However, it would be useful if, before next week, we had something from the Procedure Committee to indicate what the constraints are so that we can have a more informed debate.
Lord Hill of Oareford
I am sure that the Chairman of Committees will have heard that point. More generally on this debate, my noble friend says that he does not want to delay the House. We will be discussing it next week and I am sure that there will be plenty of opportunity to consider this and all the other points that noble Lords want to raise then.
Lord Grocott
My Lords, would we not have a more informed debate if a Government Minister was able to answer a question that I and, I am sure, others have repeatedly put in Written Questions and elsewhere: what precisely in terms of numbers is the coalition commitment to establishing the party strengths in this House on the basis of the last general result? What does that mean in terms of numbers for each of the three parties? Although the Leader of the House dealt with the question put by the noble Lord, Lord Pearson, very effectively in parliamentary terms, he did not actually answer the question, which was a valid one. If the Government are committed to their repeatedly stated objective of reflecting the last election results, surely we are entitled to know precisely in numbers, including the total number, what that would occasion. If we do not know the numbers, it is very difficult to have an informed debate.
Lord Campbell-Savours
My Lords, perhaps I could just add that I have tabled a whole series of Questions to the Chairman of Committees on this matter of availability of resources to the House against the number of Peers to be created. Perhaps the Government might take note of the answers that I am receiving, because clearly the figures do not add up.
Lord Hunt of Kings Heath
My Lords, I can see that the noble Lord is looking forward to this debate next week. If I may follow up on the question asked by my noble friend Lord Grocott, at the moment the number of Conservative Peers is anything up to about 39% or 40% of the Peers in this House who carry a political label. Therefore the Conservative Party already has a higher proportion of Peers than of the votes cast at the last election. The noble Lord needs to clarify exactly what the Government are committing themselves to.
Lord Steel of Aikwood
Before the Leader of the House answers, perhaps I may reply to him on the question of tabling the Motion. As he knows, I wanted originally to table an amendment to this Motion today, but I thought that would be unfair because the House had no notice of it. There is a better opportunity next week. So I hope that he will acquit me of any discourtesy on that point.
Secondly, as regards the point made by my noble friend Lord Forsyth, the recommendation from the committee of which the noble Lord, Lord Hunt, was a member two years ago was also designed to save money, and it would save money if it were implemented.
Lord Tyler
My Lords, has my noble friend the Leader of the House noted that it is possible now for Members of this House to retire permanently? Indeed, two Members have done so. That would solve the problem of the large and increasing population of the House and the difficulties that have resulted. Indeed, I wonder whether my noble friends Lord Forsyth and Lord Steel might like to take advantage of that opportunity.
Baroness Deech
My Lords, does the Minister appreciate the illogicality of the proposition that has been put forward? There are nearly 200 Cross-Bench Peers in this House who are independent minded, as the Minister will know, who may vote one way or the other. It would make more sense for the parties to try to win over, by logical arguments, the votes of the Cross-Bench Peers rather than striving to pack the House with Members already committed to one side or the other.
Lord Hill of Oareford
My Lords, I believe in deferred gratification, and I am prepared to defer some more gratification until next week when we have the debate. In the past nine minutes, we have had a good illustration of the range of views on retirement in this House. I would not want to personalise the very fair general point made by my noble friend Lord Tyler in the way that he did. However, it is true that that scheme is available for any Member of Your Lordships’ House who would like to take a permanent leave of absence. I can refer any noble Lords who might be interested in looking at it to page 22 of the new Companion. In the conversations that I have had about retirement, the views expressed to me in the Corridors and around the place have tended to be affected by the age of the noble Lord to whom I have been speaking—and the age of retirement suggested is normally a couple of years above the age of the particular noble Lord to whom I am speaking.
The point raised by the noble Lord, Lord Hunt of Kings Heath, about membership representation on particular Benches was a slight case of pots and kettles, if I may say so. I think that he conveniently forgot the important contribution made in this House by Cross-Benchers when he looked at his percentages. The noble Baroness, Lady Deech, rightly reminds us of the extremely important contribution that the Cross-Benchers make at all times.
On the specific point of numbers, the noble Lord, Lord Grocott, knows probably better than I—since he is a great expert on all these matters—the form of words that the coalition Government set out. No precise figure has been set but the general intention is clear.
Business of the House
(11 years, 9 months ago)
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Lord Hill of Oareford
That Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with to allow the HGV Road User Levy Bill to be taken through all its remaining stages on Thursday 7 February.
Business of the House
(11 years, 9 months ago)
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Lord Hill of Oareford
That the debate on the motion in the name of Baroness Noakes set down for today shall be limited to three hours and that in the name of Lord MacGregor of Pulham Market to two hours.
Lord Hannay of Chiswick
I wonder if I can put a couple of questions to the Leader of the House about these time limits that he is proposing to have today. I know it is early days in his tenure of his present post, but does he not recognise that the business managers are imposing limits today which are severely testing the sense of humour of Back-Benchers to a point of destruction? Does he not also recognise that he is moving these time limits pretty close to the time limits imposed in the European Parliament—not an example normally thought good for emulating by this House? Finally, does he not recognise that there could be occasions when the national interest—and I think the two items on the Order Paper today are genuinely of national importance—does not require the House to rise at a fixed time on a Thursday evening?
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
My Lords, the House has taken the decision over time as to how long it wants to set aside for debates. I take the point about the importance of some of the issues being discussed this afternoon, and the number of speakers who have signed up to discuss Europe is an indication of the great deal of interest that there is in that subject. If there is appetite for a debate of that nature, my noble friend the Chief Whip is always available to discuss that, and one could have a discussion through the usual channels as to whether we could make more time available.
The Earl of Sandwich
My Lords, I feel it is an important discussion to have now. For example, can the noble Lord say whether the usual channels have discussed and agreed the principle of a limit on the numbers of speakers, which would surely allow those who have prepared for several weeks for debates to have their say in a reasonable way?
Baroness Royall of Blaisdon
My Lords, time is short and I do not want to prolong this debate. However, I, too, am concerned about the time limits today on speeches, on issues which are of concern to all the people of our country. We are a self-regulating House and, although on this occasion it is too late, my noble friend Lord Bassam did make representations to the Chief Whip suggesting that perhaps we could have additional time on another day for the second debate. It is clearly too late now but I hope that in future the Government will exercise more flexibility when it comes to these issues in a self-regulating House.
The Deputy Chairman of Committees (Baroness Anelay of St Johns)
My Lords, since reference has been made personally to me, on this rare occasion perhaps I may assist the Leader of the House at the Dispatch Box. This is a Conservative Party debate day and the House decided as a matter of procedure that the time allocated would be five hours, as an envelope. That time limit may, in exceptional circumstances and in consultation with the Leader of the House, be extended to six hours. That has happened on one occasion in the past two and a half years, and it was of course open to the usual channels to consider it. However, as I explained yesterday to several Peers individually, even if extra time had been allocated to the first debate, that would not have given each Member one extra minute. It would not have made a difference.
Peers have quite rightly raised the question of the importance of these matters. In a brief discussion with the noble Lord, Lord Bassam, the opposition Chief Whip, I made it clear that I was not going to invite the chairman of my Back-Bench committee, the Association of Conservative Peers, to surrender the only debate that he has had in this Session. In the past two and half years, he has only had one, in the last Session. He is leading our second debate and I would not ask him to abandon it. It could not be moved to another date as this is the last Conservative debate day until the next Session. That is how precious it is.
I have also indicated that I am very happy to look at the possibility of a debate on another day, in prime time, on an issue such as Europe, where I have had representations that have been most fairly made. On that basis, we should now move on. We have important speeches to be made, and this House has made it clear in the past that speeches can be succinct. I can assure the House that I am looking at a way of ensuring that they can be less succinct perhaps on another occasion. It is time to move on and allow those who wish to speak in the debates to do so.
Lord Lea of Crondall
How is it that one hour does not accommodate one extra minute for 40 people?
Baroness Anelay of St Johns
My Lords, there are two debates today, half an hour each. Two into one hour goes 30 minutes each, not one hour each.
Motion agreed.
EU: Prime Minister’s Speech
(11 years, 9 months ago)
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Baroness Noakes
That this House takes note of the Prime Minister’s speech on Europe on 23 January.
Baroness Noakes
My Lords, it gives me great pleasure to invite your Lordships’ House to take note of the Prime Minister’s speech on Europe. This was a bold speech about the future of our relationship with the EU, and was well worth waiting for. It may be too much to expect, but I hope that all noble Lords will today join me in welcoming the prospect of a new settlement in Europe, and in particular, the opportunity for the people of this country to have their say on it.
My right honourable friend the Prime Minister set the context for his speech by saying that he spoke as a:
“British Prime Minister with a positive vision for the future of the European Union. A future in which Britain wants, and should want, to play a committed and active part”.
It is well known that my party includes people across the whole spectrum of views on Britain in Europe. However, I believe that the Prime Minister’s plan to negotiate a sustainable basis for the UK to remain in active membership of the EU hits the sweet spot for our party and, I hope, for the whole country.
It is a fact that the financial crisis has exposed the fault lines in the euro, and there have to be changes to allow the eurozone to function. The lesson from history was that monetary union would not survive without deeper union on other fronts, and that is one of the many reasons why the UK will never want to join the euro. The first steps towards banking union have been taken with a single supervisory arrangement, which your Lordships’ House debated last week, but that is just the start of what will be needed to shore up the eurozone.
At the same time, countries outside the eurozone have to protect their own national interests against the development of a large voting bloc, particularly in relation to the single market. We have achieved protections in the context of banking union, at least for now, but the task will get tougher as the eurozone integrates further.
I am sure that those who are designing changes to the eurozone will move heaven and earth to avoid treaty changes; not because they are afraid of the UK, but because they will not want to risk testing popular opinion within the eurozone countries. Therefore, we may not have the opportunity of a treaty through which to negotiate a new way forward. Even if that opportunity does not exist, I believe the Prime Minister is right to pursue the reshaping of how the EU works, not just for us, but for all members.
The Prime Minister put forward five principles as the basis for a new start: the EU should be more competitive; there should be a flexible structure of membership, particularly for those who do not sign up to ever closer union; powers must start to flow back to member states; we need a bigger role for national parliaments; and any new arrangements must be fair for all members, particularly those outside the eurozone. I believe that all but the most ardent of federalists should support these principles. Yesterday, in the other place, the Labour Front Bench supported them and I hope that it will do so again today.
I am sure that some noble Lords today will try to dismiss the Prime Minister's determination to reach a new settlement in Europe as naive or foolish or both. I am sure that some whose careers and livelihoods depend on the EU’s institutions and powers hope that they can swat the UK away like an irritating fly, and carry on as before.
The UK’s concerns are not necessarily those of the majority but they are not held in isolation. Other countries will remain outside the eurozone and will need protection against eurozone bloc voting. Some countries within the eurozone, such as the Netherlands, also question the balance of powers between Brussels and their own democratic institutions. I am sure that many more have concerns about the decline in competitiveness in the EU, even if they do not yet share our view that the answer is less—not more—Europe. Importantly, there are countries, particularly those in the north, that positively want the UK to remain at the table as much as we want to remain there.
Of course, renegotiation will be tough. We cannot take it for granted that we can negotiate our way to a satisfactory relationship with Europe. I am absolutely convinced, however, that the British people must have the final word on whether or not we can remain in the EU, on whatever terms can be achieved. I know that some of your Lordships do not like referenda and believe that it is the role of politicians to make all decisions, but I do not share that view. I believe that the British people have to be consulted on major issues, and the EU and our relationship with it certainly is one of the major issues of our time. I believe that we can trust the British public to reach the correct answer. In recent history the British public have shown their innate common sense when given a referendum.
I hope that those on the Liberal Democrat Benches will not declare against a referendum simply because they might not like the answer. I gently remind them that before the previous election their leader fronted a campaign for what he called a “real referendum on Europe”; namely, an in-out vote.
Lord Ashdown of Norton-sub-Hamdon
I am listening very carefully to my noble friend’s impressive speech but, on a point of information, we should be clear that in 2008 at the time of Lisbon, the Liberal Democrats said, and repeated at the general election, that if there was a substantial shift of powers to Europe there should be a referendum. That was the position we took at the election. That is the position that has now been legislated for—just as a point of accuracy.
Baroness Noakes
That is very interesting and we look forward to hearing further from the noble Lord later, but I have seen the videos of Mr Clegg on this subject.
Last week Mr Miliband was quick to say that he was against a referendum but almost immediately his colleagues briefed that he did not want a referendum now—or yet. We can agree on that. The Prime Minister is not promising one now, but in 2017. I will be listening intently to the Benches opposite today in the hope that we will get some clarity on their position. This is not just a debating point. I am not foolish enough to think that a Conservative victory in the next general election is a done deal and hence that my party’s policy will definitely be implemented. The electorate must be left in no doubt about whether and when any Labour Government would give them a say as well.
The scaremongers have been saying that the Prime Minister’s speech has cast a damaging shadow of uncertainty over the UK economy for the next five years. These prophets of doom also predicted, with spectacular inaccuracy, that Britain’s failure to join the euro would be our undoing. In any event, uncertainty was created as soon as the eurozone states faced up to having to work together in a deeper way. We have to protect our national interests so our relationship with the EU inevitably has to change. The Prime Minister is right to be on the front foot on this and to seek a comprehensive way forward.
If the Prime Minister can negotiate a good outcome for the UK, which meets the five principles that he set out, I am sure that the British people will vote to remain in but it is a big “if”. Some of my honourable friends in the other place are engaged in the Fresh Start project and have recently produced the excellent Manifesto for Change. This includes major changes to social and employment rules, in particular being free from the costly working time directive and agency staff rules. It also targets policing and criminal justice laws, agricultural and fisheries policies, the bloated EU budget and further financial services legislation. I hope that my noble friend on the Front Bench will outline what the Government will target. I know that revealing one’s hand is not good strategy in poker but for the sake of the public debate the Government need to be open about what they want to achieve in the national interest.
If the Government achieved most of the Fresh Start agenda, that could create an EU worth staying in but if they achieve significantly less than that, an out vote will seem to many of us like a better choice. Leaving the EU is not my preferred outcome but I am not afraid of the prospect if the deal on offer is substandard. An exit from the EU would not be the end of the world. Three million jobs might well be connected with the 40% or so of the UK’s exports that go to Europe but they are at risk only if, as pointed out by the man who calculated that figure, Professor Iain Begg, we stop trading with the EU. There is no sign that we will, not least because we have a persistent trade deficit with the EU. It is therefore rational for the EU to want to carry on trading with us. It is also not clear that we have to accept the kind of solutions to which Norway and Switzerland have signed up. There are many other countries in the world that trade with the EU without conditions attached.
Some assert that we would lose out on foreign direct investment but there is no evidence for this. International studies show that there is a host of unquantifiable social, political and institutional factors at play when decisions on investment are made. There is a lot more going for the UK than its EU membership and I remind noble Lords that we did not suffer, as was predicted, when we chose to stay out of the euro.
As we have debated several times over the years in your Lordships’ House, there is no definitive study of the economic impact of leaving the EU and successive Governments have refused to commission such a study. The noble Lord, Lord Pearson of Rannoch, who is in his place, has often sought to press Governments to do just that. Professor Begg’s verdict on the impact of exit is that we,
“would probably find that the economic plus or minus is very small”.
That is good enough for me. Exit would not be easy but the consequences need not terrify us into staying locked in a loveless marriage in the EU.
Let me conclude by wishing the Prime Minister the very best of luck in negotiating a new settlement in Europe but at the end of that road the Government must be honest about the quality of the deal available and the extent to which it meets our national interests. There must be no attempt to portray a sow’s ear as a silk purse. A referendum in 2017 is an exciting prospect, but its result will need to stand the test of time and we must be absolutely clear, which we were not in 1975, about exactly what we will get for our vote.
Lord Triesman
My Lords, I thank the noble Baroness for introducing the debate. Prime Ministers’ jobs are complex: they must lead; they must set the strategic policy direction for the country and the Government; they must optimise support both domestically and with allies abroad; and they are, of course, also party managers. Paramount among these things, however, are the interests of the nation and the reliable and honourable adherence to alliances. For Labour, the only question is the United Kingdom’s interest. We are facing today’s priorities and relying for the setting of those priorities on the good sense of the British public.
The European referendum statement shows that Mr Cameron has failed this key test of leadership—it is party first, and only party. The noble Baroness, Lady Noakes, made the point that the statement struck a sweet spot for the Conservatives. It is populist, certainly. It has been popular with his party and popular with much of the media, and it addresses, I suppose, Mr Cameron’s UKIP Achilles heel. But it is tactically bizarre, even in the unlikely event of the Conservatives being re-elected at the next general election. Detailed questions about what he would seek and what would be enough for him to agree to stay in have not been answered. None of those issues has been either set out or explored.
What we have instead is five years of what I believe will be crippling uncertainty. I declare an interest because I lead a finance business. Investors, I know, avoid uncertainty like the plague and look to de-risk. The longer the period of uncertainty and the greater the uncertainty about de-risking the less likely it is that they will do anything other than withhold their investment.
Mr Cameron’s priority is not, apparently, the triple-dip recession. It is not the lack of growth. It is not the 1 million unemployed young people. It is not the declining purchasing power of lower and middle-income families. It is simply this issue.
The move has been generously described, and I understand why, as sleepwalking out of the EU. However, a sleepwalker is not engaged in a voluntary activity: he does not make a calculation about setting off on his sleepwalk. Mr Cameron is a very sophisticated politician and he knows the nature of his gamble. The only logical explanation for this gamble is either that he has decided that, in all probability, we should leave the EU, or that he is reckless with regard to it happening. However, it is ruinous to British business and will be fatal for the interests of our country.
Baroness Falkner of Margravine
My Lords, I, too, thank the noble Baroness, Lady Noakes, for this opportunity to reflect on Mr Cameron’s speech last week. The Prime Minister was on that occasion speaking as leader of the Conservative Party, and, on that basis, it was indeed one of the best speeches on the EU delivered by a Conservative leader. It enabled the country to hear from him where he stood on the EU, where he expects to lead his party, and, if the voters give him the opportunity, where he expects to take this country should he get a mandate in 2015.
That is all well and good, one might say, except for the consequences. Broadly, there are three. The first is that by “coming out” so clearly, he has created considerable uncertainty for business, investment and jobs in terms of investment decisions and planning. Only today the London School of Economics has published a report on UK economic growth which points to the UK political process as being the greatest barrier to a virtuous circle of investment. It describes the PM’s decision to seek an in-out referendum as “misguided” because it creates the,
“very uncertainty that will damage investment and productivity right now”.
It points out that we need a more stable environment for investment. This is not improved by adding to policy risk which deters investors worried that the rules might change before their payback begins. This will not only affect the services and manufacturing sectors but adversely impact on financial services too, particularly at a time when the uncertainty of regulation around banking union is still so unclear.
The second consequence is that we have a firm commitment accompanied by a date. The Prime Minister might have done better both by his party and the country to have left things more open. Nailing the date of 2017 to a mast is perhaps unwise when he is not clear as to what exactly is to be renegotiated, with whom and in what manner. We are delighted that he has prioritised multilateral negotiations, working with other, like-minded countries to bring about the kind of changes that we all want in order to make the EU more competitive and fleeter of foot in meeting global challenges. Reform of the EU is not simply a UK priority but is shared across most of the Union. It may have been wiser to accept that the process needed time—conceivably more time than he has allowed himself.
Finally, while we greatly welcome the Prime Minister’s robust rejection of the Norway and Switzerland model, he risks creating greater confusion by not spelling out exactly what we would negotiate for. This Government have gone further than any other in ensuring that significant powers cannot be transferred to the EU by putting in place the European Union Act 2011. This is surely the right way forward, both for the UK and the European Union.
In concluding, I want to answer clearly the question from the noble Baroness, Lady Noakes, on the Liberal Democrat position. We proposed an “in or out” referendum in the previous Parliament against a backdrop of relative stability in both the eurozone and the European Union. It was right for the time. The situation has changed dramatically since then. A new architecture for the eurozone, and consequently for the European Union, is unknown, hence our view that this is not the right time to be putting up these lines.
Lord Williamson of Horton
My Lords, I declare an interest, which is in the register. I want to say one word first about the exercise on the balance of competencies currently being worked on by practically all government departments. Evidence and opinions have been called for in a wide consultation, with a deadline of 28 February for sectors including foreign policy, the internal market and animal health and welfare. This seems to me to be a valuable initiative and highly relevant to the negotiations foreseen in the Prime Minister’s speech, for which it will provide raw material. It is also highly relevant to the question of whether the principle of subsidiarity is being respected, which will no doubt feature in any future settlement or negotiation. Is subsidiarity being respected? We may doubt it.
In his speech the Prime Minister called for “fundamental, far-reaching change”, and the next Conservative manifesto will ask for a mandate from the British people for a Conservative Government, if elected, to negotiate a new settlement with a view to an “in or out” referendum. The Prime Minister states that power must be able to flow back to member states. He wants an EU that is competitive, flexible and fair—don’t we all? Of course, we cannot set out our priorities in detail now because we have to probe the opinions of other member states. In particular, we need to assess whether our priorities are more likely to be achieved by opt-outs or by decisions of the member states as a whole—that some issues could now be left to them. I think that there may some possibilities by the second route. Although a referendum of the British people provides the essential reassurance it is also legitimate to question how the end game will turn out. There could be much dispute on whether the result was good enough, which will make it difficult for the British people to take a clear-cut position on the referendum.
Finally, it is extremely important that we have a better and fairer presentation of European issues to the public, which is not always the case now. I can think of many cases in the media almost every day. Where do we go from here? Forwards, I hope, but I commend an opinion poll in last week’s Sunday Express which showed that 63% of the public considered that the EU issue was a distraction from the real concerns about the economy as a whole and a great majority thought that the United Kingdom would be in the European Union in 10 years’ time. That sounds like the voice of the British people.
The Lord Bishop of Wakefield
My Lords, in March 1990 the European churches gathered in Geneva to celebrate the tearing down of the iron curtain. More than that, however, it celebrated the solidarity of the Christian churches never recognising the fracturing of Europe into two post 1945. That stance was vindicated. Later that year, I walked through the Brandenburg Gate with my German friend, Klaus Kremkau. It was the first time that he had walked through it since he was a young soldier cadet in 1945. Now he was crossing the threshold with an Englishman.
Early in his speech, the Prime Minister notes:
“today the main … purpose … is … not to win peace, but to secure prosperity”.
No one can doubt that, but peace, as we have seen to our horror in the past few years, can never be taken for granted, even in apparently stable states, so the European Union still exists to secure and sustain a lasting peace, without which there can be no prosperity.
The Prime Minister also notes that the British are not somehow un-European. Even in the seventh century, Saint Wilfrid, Saint Benedict Biscop and others proved that as itinerant travellers and missionaries across Europe. Perhaps that is part of what we are called to be now in a more political sense. In other words, Europe needs change. Its institutions are beyond middle age—almost elderly—but good missionary work always starts from within.
The Prime Minister spoke of three challenges and, as we have heard, five principles. I wonder what might be called the foundation of those principles. Here is a starter for two. Catholic social teaching developed the concept of subsidiarity, which became something of a motto of the European movement. Decisions should be made at the most local level possible. Somehow, the spirit behind that has been lost. Subsidiarity can underpin fairness locally, flexibility and even an appropriate passing of power back to member states—three of the Prime Minister’s principles.
Secondly, there is the democratic deficit. There is a feeling that Europe is ruled by the unelected, by bureaucrats. Such a characterisation has been fuelled by Eurosceptics and ruthlessly pursued by the less responsible media. Again, Christian culture has encouraged proper sharing in decision-making. Benedict’s rule argues for consensus, even at the most local level.
What should be our hope for Europe? Economic prosperity, yes, but not at the expense of the rest of the world. Social development, yes, and the Prime Minister hints at that throughout his speech. In the Christian tradition, human flourishing and fulfilment are the ultimate vision. We need economic and social progress, but there is one step more.
Let me return to the less responsible press. Twenty years ago, the Sun printed one of its celebrated headlines—please forgive my language in this Chamber, but I repeat it verbatim—“Up Yours Delors”. It was Jacques Delors who called for a vision founded on a soul for Europe. That remains essential. The greatest risk is colluding with a referendum process that puts us outside the tent. Reform is essential, but we shall achieve it only if we remain inside, working for Europe’s soul.
Lord Howell of Guildford
My Lords, those, both here and overseas, who think that the Prime Minister’s speech was all about getting some exclusive deal for the United Kingdom from the rest of the European Union are starting from entirely the wrong point. The first line of the Prime Minister’s speech was that this speech was,
“about the future of Europe”.
What he is concerned about, and what we should in all parties and sections be concerned about, is giving new direction to a European Union which is today lost in the thickets of the debate about the eurozone—which will continue for a long time, it has not been cured—overcentralisation and general unpopularity. That creates uncertainty which will continue and must be addressed.
To give new direction to that unsatisfactory situation throughout Europe, we need two things. We need colossal intellectual effort, similar to, or perhaps even greater than, that which went into the original Monnetiste ideas in the post-war situation; and we need new friends and allies all around Europe to mobilise the new thinking.
I believe that the friends are there. I think that the European budget experience last autumn showed that many people are determined to have a new approach in Europe. They are to be found in almost every quarter, not just in the smaller ex-satellite countries of eastern and central Europe but in France, Germany, Italy and other great countries.
On the intellectual side, huge new effort will be required. If I may say so, it must be more than diplomatic effort. I very much admire the team inside the Foreign and Commonwealth Office—indeed, some of them are my good friends—but the task now is one for which we will have to draw on the best brains in business, engineering, science, management and, I would hope, all the political parties to bring new direction to the eurozone and new relationships of its members to the central institutions. The task is to show how a modernised European Union can work and how treaties can be amended to allow that. The challenge now is to draw up the architecture for a more flexible, dynamic, democratic European Union which connects to the people. It is a challenge to which all those who are concerned about our position in Europe and the stability of Europe should now turn their efforts.
Lord Giddens
My Lords, the Prime Minister said in his speech:
“There are always voices saying ‘don’t ask the difficult questions’”.
I do not want to be one of them, so here are my difficult questions for the Prime Minister. First, if he can get a new settlement for Britain, he will campaign for a yes vote in a referendum,
“with all my heart and soul”.
What will he do if only minor concessions, or no concessions at all, are made?
Secondly, many EU leaders recognise that a new Europe built around the eurozone as it becomes more integrated should consider returning some powers to nations and regions. They have also made it perfectly clear that any such changes must apply to all member states; there will be no cherry picking. Is not cherry picking—in other words, a special deal for the UK— exactly what the PM seeks to achieve? Thirdly, some parts of the speech seemed to suggest that the PM might seek to derail the treaty change needed to stabilise the eurozone if he does not get his way on a special deal for the UK. Can we be assured that that absolutely will not be the case?
Fourthly, does the Prime Minister not see that his vision of the EU—
“whose essential foundation is the single market”—
is not shared by any other member of the Union? I refer to what the right reverend Prelate said. Other member states see the European Union as a far more rich entity than that. Is it not obvious that the bulk of the EU is moving in an entirely different direction from that specified by the Prime Minister? Fifthly, and finally, will an in-out referendum still be held by the date specified even if the longer term prospects for the EU are still not clear—which could very well be the case? I hope that the Minister will respond to all those questions in the absence of the Prime Minister.
Lord Ashdown of Norton-sub-Hamdon
My Lords, at the end of my noble friend’s speech on behalf of the Liberal Democrats, I heard some laughter from our noble friends on the Conservative Benches. If I recall correctly, she said that this was not the moment, and she was right. Do not listen to her, do not listen to me, listen to the Prime Minister only months ago, when a Motion for a referendum was tabled in the House of Commons and the Conservative party, led by the Prime Minister, voted against it for the reason that it was not right at the moment, that it was a distraction, and that it would distract us from tackling the recession.
The question is not why the Liberal Democrats have changed their mind, because we have held a consistent view throughout; it is why the Prime Minister has changed his mind in a matter of months. That reveals the lie to this whole affair. When a Prime Minister makes a speech, it necessarily contains some politics, but it also has as a primary purpose to contain what is in the best interests of this country. His speech was about politics and nothing else. It was directed not to the nation but to the Conservative Party. It aimed to put a sticking plaster over the gaping and bloody wound that now runs deep into the heart of the Conservative soul between those who see this country’s future in Europe and those who do not. It was also aimed at a second political purpose, which was to cut UKIP off at the pass.
By the way, I agree with my noble friend that it was a good speech. Measured by those purposes, it was a good speech. It was effective and well put together. It had an effect in the short term, but there will be a price to pay in the long term. That is for the simple reason that even were the Prime Minister to return with his arms full of the bounty about to be dished out to him by his European colleagues—I very much doubt that that will be the case—they still would not like it. This is because there is now a virulent Little Englander movement running throughout the Conservative Party. They do not want to renegotiate Europe; they want out altogether. It does not matter what the Prime Minister brings back; they will reject it.
However, he will not bring back much because of this fact. My noble friend Lord Howell is right. The European Union is always about negotiation. There is constant negotiation. It goes on all the time and we should be involved in that. But the difference between Britain and the rest is that we are negotiating wanting to get out while the rest of them are negotiating wanting to get further in. That is the fundamental difference. So the Prime Minister will return with too little to satisfy the Conservative Party. He will have held up our attachment to and concentration on the issue of jobs and getting ourselves out of this recession. He will have damaged investment into this country. He has given huge stimulus to the Scottish National Party, arguing the case for the break-up of the United Kingdom, and he will have set Britain on a path, intentionally or not, when he returns with too little and has to recommend “no” in a referendum which takes this country out of Europe. That would be devastatingly damaging.
Forgive me; in a three-minute speech I do not have time to take interventions. The fact is that the interests of this country have never lain outside Europe. Go back to Pitt, go back to Canning, go back to Churchill, go back to Macmillan—all of them have understood that our engagement in Europe was vital to the future of our country. The Conservative Party—the party of Little Englanders—is taking us away from that. This is folly.
How do I describe a speech that not only fails to solve the problems of the Conservative Party but deepens the problems of our recession, gives encouragement to those who would wish to see the break up of the United Kingdom and also removes our country from Europe? This is the House of Lords so I will say simply that it was deeply inadvisable.
Lord Bilimoria
My Lords, the Prime Minister was spot on when he summarised in his excellent speech that the key priorities of the European Union are peace and prosperity. We have had nearly 70 years of peace and we have had free movement of people and Europe is our biggest trading partner. So we should never take any of this for granted and I thank the noble Baroness, Lady Noakes, for initiating this debate.
However, the European project has had, right from the beginning, this utopian idea of a fully integrated United States of Europe. The euro, which we thankfully did not join, was a step too far that has demonstrated that the dream of a federal Europe cannot be realised. One size cannot fit all, and the only way that Europe can function in the future on a long-term basis is if there is full fiscal union and full monetary integration. These things can only happen if there is a surrender of sovereignty by eurozone members, so it can then be a true federal state like the United States of America or India. Although there may be a lull at the moment, the eurozone crisis has not gone away. This could be the lull before the storm. If the euro disintegrates, let us talk about referendums then.
We have lost a sense of balance and perspective in Europe. The European political system is frankly useless. We have MEPs who are completely disconnected. Most people in this country—and, I suspect, many noble Lords in this House—cannot name their MEPs. Many would not even be able to name one. The MEPs themselves have no connection with the so-called regions that they represent. It is nothing like the connection that MPs have with their constituencies. There is a disconnect. The Prime Minister’s speech did not touch on this.
There is also this ludicrous wholesale movement of the European Parliament between Brussels and Strasbourg. This sort of inefficiency irks us in this country, let alone things like the ridiculous working time directive. We are an open country and anything that curbs our sense of independence and openness makes our citizens want to run a mile.
There are restrictions in being part of Europe—not just financial ones. Look at the red tape, the regulations and the delays. The EU-India free trade agreement still has not happened after five years. If we had been able to negotiate a free trade agreement directly with India, it would have happened a long time ago.
We have already opted out of lots in Europe. We are not part of Schengen or the euro. But do we want to be a Norway or a Switzerland? We want to be at the top table and still remain a gateway to Europe and an integral part of the European Union. We need to renegotiate, as the Prime Minister has said, and then, if we do it on sensible terms, as the noble Lord, Lord Williamson, said, people will want to stay in Europe. We do not have to have the binary way of thinking: in or out.
To conclude, the European Union is fundamentally about peace and prosperity. Let us not lose sight of that and let us never take it for granted.
Lord Howe of Aberavon
My Lords, there seems to be an irony at the heart of the Prime Minister’s speech on the issue of sovereignty. He asserts that it is,
“national parliaments, which are, and will remain, the true source of real democratic legitimacy and accountability in the EU”.
At the same time, he does not appear to trust our own national Parliament at Westminster to judge what kind of relationship we should have with the Union. The decisions of this Parliament to approve each of the treaties that govern our membership, from the European Communities Act of 1972, which I helped steer through the House of Commons, to the Lisbon treaty in 2009, are perceived as illegitimate.
The Prime Minister says that,
“democratic consent for the EU is now wafer-thin”,
in Britain, and that the people have had “little choice” over the endorsement of successive treaties. Is it really of no consequence that, at each stage, a majority of parliamentarians supported our membership on the basis of treaties negotiated by democratically elected Governments? Is it irrelevant today that a clear majority of MPs elected to the House of Commons wish Britain to stay in the Union and do not support his proposed renegotiation of our membership?
I would like to think that I am wrong in suspecting that the Prime Minister’s sudden conversion to the merits of a referendum is less about occupying the moral high ground of democratic consent than a search for a means to overcome the problems of internal party management. At the risk of appearing discourteous, I and some of my colleagues who are old enough to remember the complicated Wilson European era between 1967 and 1975, will recognise a distinct pattern of Wilsonian behaviour which I fear may be beginning to infect our Prime Minister in this context.
There is another irony on this particular subject. If it is,
“national parliaments, which are, and will remain, the true source of real democratic legitimacy and accountability in the EU”,
one wonders why the Prime Minister did not give his Bloomberg speech in the House of Commons rather than in a high-tech conference room in the City. One wonders whether it is because, as he said in his speech, it is national parliaments,
“which instil proper respect—even fear—into national leaders”.
In justifying his promise of a referendum in the next Parliament if the Conservative Party gains an absolute majority at the next general election, the Prime Minister said:
“A vote today between the status quo and leaving would be an entirely false choice”.
I disagree. Although I am no enthusiast for referenda and do not advocate one, it seems to me that at any time the choice between the status quo and a clearly defined alternative in the here and now—in this case whether to stay in or to leave the European Union as it actually exists and operates—is a straightforward proposition. I do not, however, believe that a referendum is the best way to address that question. As the Prime Minister said in his speech, our own national Parliament, not a widely consulted referendum, is the true source of real democratic legitimacy and accountability in the European Union. It was so in 1972 and is so today, and to introduce, in this particular context, the concept of a referendum does not serve the purpose of the Prime Minister, the Government or anybody else.
Lord Grenfell
My Lords, the Prime Minister’s speech went down well with my very conservative mother, who celebrated her 100th birthday on the morning that he delivered it. I myself found quite a lot to commend in the analysis of what is wrong with the functioning of the European Union, but I wish that he had heeded Rab Butler’s dictum that politics is the art of the possible. The road he has taken for achieving the improvements he seeks is a road that leads to where he says he does not want to go—to Britain’s exit from the European Union.
When President Hollande told his cabinet that he wished Britain to stay at the heart of Europe, his Ministers hardly needed reminding that that could not be at any price. France is not alone in taking that view. David Cameron should take seriously what Poland’s foreign minister, Radoslaw Sikorski, spelled out in bold language in his Blenheim speech last September.
The Prime Minister reminds us in his speech that history has often proved heretics right. But one proposition, which he admits is heretical, is a heresy too far for most if not all of his European partners. He attacks the commitment of member states enshrined in the European treaty to lay the foundations of an ever closer union among the peoples of Europe. He respects the right of others to hold to that commitment but he says that that is not the objective for Britain, and that it may not be the objective of others, either.
However, attacking the founding principle of the Union is not the recommended way of seeking the indulgence of fellow member states, which is what he now needs. Why should they feel bound to meet the demands of a fellow member who rejects the club’s primary objective? Therein lays the dilemma he has created for himself. The price he must demand from his European partners in order to satisfy his Eurosceptic Back-Benchers and constituents is a price that the European partners will almost certainly not be prepared to pay.
However, he now has the bit between his teeth. He gallops around the Union with all the zeal—though happily not the belligerence—of Charlemagne seeking to bring a Carolingian renaissance to Europe. But David Cameron is no Charlemagne. Rather, he is the man of La Mancha, dreaming his impossible dreams and fighting his invincible foes; dreaming of treaties popping open at his command like champagne corks at a wedding reception; ready to fight the invincible foes drawn up on his Back Benches, waiting to fall on him when he fails to deliver what they believe he promised when they cheered him to the rafters last week. And then will he hear the ghostly voice of Andrew Bonar Law proclaiming: “I must follow them. I am their leader”?
As to the referendum, I happen to believe that the people will vote to stay in the European Union. We are a people, for better or for worse, much wedded to the status quo, as previous referendums demonstrated. If the case is well made that the advantages of staying far outweigh any perceived advantages of leaving, that, I believe, can and probably will be the result. But, in the mean time, the damage done to our relationships with our European partners will take long to repair, and confidence in us as members of the Union will not quickly be regained. That will be a task, I hope, that a future Labour Government will take up with enthusiasm and determination.
I wish the Prime Minister would not now be leading us down this long, dark, uncertain alley. Lord Birkenhead once said of Stanley Baldwin, “I think he’s mad”. He added:
“He simply takes one jump in the dark, looks around, and then takes another”.
If the Prime Minister has forgotten Rab Butler, he should at least seek to avoid being branded another Baldwin.
Lord Maclennan of Rogart
My Lords, it is an honour and privilege to follow the noble Lord, Lord Grenfell, in his witty and perceptive remarks. He and others have been right to suggest that the British people, in their hearts, know what the European Union has contributed to the continent of Europe: the end of the civil wars that have lasted for centuries. There is no need to win peace, but there is every need to sustain and support it, and to enable Europe not only to maintain internal peace but to adopt a peace-making role in the wider global community to which we belong.
The Prime Minister’s speech seemed to me to be clear in neither its goals nor its recommended process for changing the Union. The tone suggested that he was not looking for reform but for revolution. That is not the way in which democratic countries operate. We have seen considerable changes in the way in which Europe governs itself since it was formed. We have seen enlargement. We have seen the enthusiasm of other countries to become part of it. We in Britain have fostered that enthusiasm. As to the objectives and process, however, the Prime Minister had very little clue. He talked in general, unimpeachable terms about greater democracy, suggesting perhaps that national Parliaments should have a greater role. I question how 28 national Parliaments could decide for themselves, without some more representative body, how to deal with the working time directive, for example. Many of these national Parliaments believe that the working time directive is an extremely important part of the advance of social development in the Union. It is not all about achieving prosperity at the cost of the life standards of those who work. That seems to be the clear implication of those who are trying to suggest that the working time directive is nonsense.
As to process, the gradualism which we have seen has delivered substantial changes for the better. We now have qualified majority voting in the Council. We now have co-decision-making with the European Parliament. It makes no sense to ridicule that shaping of the expressions of interest of the British people and all the other peoples of the European Union. The European Parliament is the democratic foundation. We need to go further and make sure that other institutions are elected in a not dissimilar way.
Lord Kerr of Kinlochard
My Lords, the Prime Minister has given notice that we want to invoke Article 48 of the treaty, and change the treaty which everybody sees as their treaty. Therefore, other Governments will now be trying to work out precisely what we might want.
On the five principles set out in the speech and listed by the noble Baroness, Lady Noakes, nothing that the Prime Minister said on competitiveness cannot be done inside the Council and inside the present treaty. The Monti report sets out what should be done and we do not need to change the treaty to do it.
On democratic accountability, the noble and learned Lord, Lord Howe of Aberavon, gets it right. I would add that I personally would find it offensive if any EU treaty should purport to lay down how a Government should be held accountable by their national Parliament.
On the fairness agenda, the noble Baroness, Lady Noakes, got it right. The aim is to try to ensure that, when the dwindling band of euro-outs do not constitute a blocking minority, they can still block in Council. I would have thought that the Prime Minister would have learned in the middle of the night in the European Council in December 2011 that it is not possible to do that. To get all member states to agree, and to entrench in the treaty, that the UK should have a blocking veto seems completely impossible.
On the fourth principle, that we should abandon the one-size-fits-all approach, the fact is that it was abandoned 21 years ago at Maastricht. EMU, Schengen, fiscal union, banking union—flexibility exists, and there is no attempt to force everybody into the same, rigid pattern.
The last of the Prime Minister’s principles was flow-back—the return of powers. That is in the treaty already, in Article 48. But what exactly do we want to flow back? The only example given was the working time directive, which is nothing to do with the treaty. That is Council business. If we want to change it, we must raise it in the Council.
So how are Governments in other capitals interpreting all this? I guess that they think that it is more to do with party management, and they understand that. But we are asking them to change their treaty, and I very much fear that the noble Lord, Lord Howell of Guildford, will be proved wrong; I wish that he was going to be proved right, but I think that the noble Lord, Lord Williamson, is correct that the audit exercise here in Whitehall is crucially important. That is going to be the foundation of the Government’s negotiating position, and I very much fear that it will be a demand for a series of opt-outs: a bout of cherry-picking from the treaty.
That would be unprecedented. There has never been a retrospective opt-out. Opt-outs are invoked when most want to go forward and somebody does not want to go forward. An opt-out has never been invoked because somebody wants to go backward. If that is the position in which we find ourselves after 2015—arguing that we want everybody else to carry on if they want to, but we want to take bits back—then we may be in the awkward “blackmailing” scenario to which the noble Baroness, Lady Noakes, referred.
I am afraid that other Governments will not agree, that it will not work, and that they will tend to say, “Make your minds up: in or out. No unravelling. Stop wasting our time. We have got work to do. Solve your domestic problem or invoke Article 50 and get out”.
Lord Lamont of Lerwick
My Lords, I believe that the Prime Minister’s speech was brave and far reaching. He made it clear that his view and his preference was that Britain should remain a full, active member of the EU. I agree, but I emphasise the term “preference” rather than the words “predetermined” or “inevitable”. As the Financial Times said, a whole confluence of trends has made a referendum inevitable: the increasing scepticism of the British people, the changing nature of the EU and the fact that we have not had a referendum since 1975. Some people call this a gamble. But democracy is sometimes a gamble: you do not know the outcome when you call an election. One of the worst features of the EU has been that it only welcomes referendums that produce the right result. My noble friend Lord Ashdown asked why, if the Prime Minister rejects a referendum in this Parliament, we should have one in the next? There is a slight problem, however. We are in a coalition with him and they are not likely to allow a referendum in this Parliament.
The Prime Minister’s proposals are designed to improve and strengthen Europe’s competitiveness, as my noble and learned friend Lord Howe said. There is a challenge; it requires improvement. That is why what he said is right. It is in Europe’s interest as well as ours that these changes should be made. The single market is valuable, but it should not require everything to be harmonised in the search for, as the Prime Minister put it,
“some unattainable and infinitely level playing field”.
The Prime Minister rightly wants to prevent the integration of the eurozone fragmenting the single market and discriminating against non-eurozone countries. That is an entirely reasonable and right affirmation of our natural interest.
The Prime Minister said in his speech that the single market,
“is the principal reason for our membership of the EU.”
That is one of the problems; that is what Europeans dislike. As Jacques Delors said the other day,
“The British are solely concerned about their economic interests … If the British cannot accept the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis”.
He went on to suggest a free trade area.
We do want the single market, but not at any price. We could have access to it with the free trade areas suggested by Delors. Of course, we would not be setting the rules, any more than Germany would be setting the rules of the single market in Britain—and Britain is now Germany’s most important trading partner. Outside the EU, Britain is not going to become an insignificant nobody. The US and the EU will still want us as an ally.
Forty-one years ago I made my maiden speech in the House of Commons, supporting our membership of the European Economic Community. I quoted Lord Rosebery about the 1707 Act of Union, when he said he wondered what affection might grow out of that union. I wondered what affection might grow out of our entry into the EEC. But I was completely wrong. As the noble Baroness, Lady Noakes, said, this is not just a loveless marriage but, one might add, a quarrelsome one. If there is no agreement on what the future of the marriage means, then it would be better eventually to separate and, as Delors said, remain friends and move on.
Baroness Crawley
My Lords, the House is grateful to the noble Baroness, Lady Noakes. For much of the first 10 pages of his 13-page, portentous speech, I would agree with the Prime Minister. It should follow from his early arguments in favour of our interests in Europe that the prize of future economic prosperity for Britain is bigger than any one Government’s transient polling problems with a rival minority party, or the Prime Minister’s unwillingness to face down the militant Europhobes in his own party, as my noble friend Lord Kinnock put it this week.
It should follow, but it does not. On page 11 of the speech the die is cast and the Rubicon is crossed. If the Conservatives win the next election—and we on this side will do all in our power to make that an impossible “if”—then there will be an in-out referendum that will put, I believe, our whole economic future at grievous risk. Why? Why would the Government want to have a lengthy period of uncertainty hanging over the thousands of British businesses and their workforces whose job it is to sell into the European Union? Why would they ratchet up that uncertainty, at a time of double-dip, nudging triple-dip, recession?
Those businesses depend on Britain being a leading, influential member of the EU, pushing for day-to-day reform and growth, not a semi-detached, bags packed, ready to go, peripheral member. Why would the Prime Minister pay so much attention to those Eurosceptic friends who tell him that Britain would do just as well outside the EU, especially if we concentrate on trade with the emerging BRIC countries instead? Yes, the BRIC countries are strengthening, but the World Bank’s latest figures on GDP per capita must give us some much-needed perspective. GDP per capita for the UK is $39,000. For China, it is $5,000; for India, it is below $2,000. In order to grow out of this recession the UK needs to find the scale of export market that the BRIC countries at present cannot provide and which the European Union can. The BRIC countries together do not have the buying power of France and Germany alone.
Why would the Prime Minister risk the special relationship with the United States, as he second-guesses the proposed scale of treaty change that may never come about? I know that diplomatic language was used last week when the White House pleaded with the Government not to come out of Europe, but translated, President Obama is saying, “Are you all nuts? Has drink been taken?”. Why would the Prime Minister take such a gamble with our national interest? His speech should have stopped at page 10.
Lord Roper
My Lords, I begin by thanking my noble friend Lady Noakes for having obtained this extraordinarily topical debate. There are three things in the speech on which I agree with the Prime Minister. First, Britain should continue to be a member of the European Union. Secondly, there are a number of areas in which the European Union’s institutions and policies are in need of reform. Thirdly, the relationship between this country and the eurozone will have to be watched with great care as the eurozone develops. A good deal to protect this country and therefore the City of London from the impact of the banking union was achieved at last December’s European Council, but there will be a need for continued vigilance.
Where I am confused by the speech is that the Prime Minister combines two different approaches to achieving his objectives. At one level he is suggesting that there should be a multilateral approach whereby, as he says, the changes would be,
“for the entire EU, not just for Britain”.
At others he is saying that there would be a unilateral negotiation to establish a new relationship for Britain. This approach has to be seen in the light of the Prime Minister’s discussion of his principle of flexibility. At first sight the concept of flexibility seems desirable, as suggesting that the European Union should not be set in concrete but should be allowed to develop as conditions develop. However, if we examine the speech more closely, it suggests that greater flexibility means greater freedom for member states to,
“pick and choose on the basis of what your nation needs”.
I believe that there is an opportunity to make progress in reform if we follow the multilateral route. My own experience meeting chairmen of European Union committees of other national parliaments suggests that there is interest in a collective approach. There are obvious targets, but other targets for reform may well result from the progress in the next two years of the “balance of competences” exercise which, as we know, is being paralleled in the Netherlands. That may reveal areas where there is no clear European value added—the converse of subsidiarity—and areas in which policies should be modified or responsibility returned to member states. The article by Guido Westerwelle in yesterday's Times seems to suggest that this approach would be welcomed in Germany, while the alternative of unilateral “cherry-picking” would be rejected.
There is not time to discuss the case for a referendum, which does not seem to be made unless there were to be a treaty change which transferred significant powers to Brussels. I was opposed at the time to the 1975 referendum but I have to say that, when it came, I much enjoyed it and I made a number of friends during the campaign. Perhaps the remarkable movement in voting opinion suggested that the process of education which a referendum provides is of great importance.
Lord Owen
The speech was that of a party leader, not a Prime Minister. What interests me, and, I suspect, interests the country, is what the Prime Minister is going to say when the European Council meets in the summer and, we are told, President Hollande and Chancellor Merkel will be proposing changes in the eurozone. Those changes are essential due to the economic situation—you have only to see the results in America. This economic global situation is still very serious and we need to encourage that process of reform in order to keep the eurozone viable. That is essential in the British interest.
I hope that the coalition will be able to put forward a sensible negotiating position. I suggest that it should be the following. There is no need for an intergovernmental conference but there will be a need for treaty change to reform the eurozone. We in Britain will be helpful in that process. Within the European Council we will contribute to unanimity where there is to be an increase in integration for the eurozone countries. Such treaty amendment would come under the significant clause in the very sensible legislation passed in this Parliament in 2011 allowing for a referendum where there is a transfer of sovereignty which affects this country. However, these transfers of sovereignty will not affect this country and therefore there does not have to be a referendum. That is a practical new idea and a negotiating stance which should be put forward this summer.
At the same time, we must argue—and it is perfectly rational to do so—that you cannot have much greater integration of the eurozone countries without there being a profound impact on the single market and indeed on other aspects of the European Union. That is not a selfish or a foolish view; it is a serious view, and it ought to be represented by some of the diplomats in this House a little more frequently. The fact is that in that debate we will put forward issues. It has been rightly said that it has already been addressed in part, but not sufficiently, in the banking union. If the eurozone countries were to vote en bloc in the single market, as they wanted to do in the banking union, that would have a profound effect. It would mean that all the voting—all the weighting—would be unanimous, even if there were disagreement within the eurozone. That is a profound change.
I believe that the way to deal with this is not with British exceptionalism; it is to accept that the single market needs to be restructured at the same time as there is reform of the eurozone. The best and simplest way of doing that would be to take one single initial step—to ensure that Norway, Iceland and Liechtenstein, which are part of the EEA treaty, which has already separated out the single market from all the other aspects of the treaties, are invited in as full members. That would be a logical development. It would be a recognition of the fact that there are other European countries with interests and involvements in the single market, and it would ensure that Britain was not necessarily always alone because it was outside the eurozone. That is not an exceptionalist position. I believe that it could be argued for and it would be a sensible renegotiation—one which should not wait until after a general election which the Conservative Party may or may not win, but one which should happen now, in the present. That position should be put forward. There are other aspects of the single market that similarly should be addressed.
Lord Popat
I remind noble Lords that the time limit for each speaker in this debate is three minutes.
The Marquess of Lothian
My Lords, my noble friend Lady Noakes rightly emphasised the central importance of the Prime Minister’s five principles, but I hope that they are more than just words and aspirations. I believe that they should form the bottom line of our negotiations in the months ahead. We must start and finish with them, not drawing down or clawing back towards them but building up within them.
However, we should be under no illusion from past experience that when the referendum eventually arrives there may still be no progress in negotiation, and that without a positive alternative the choice might still, in the Prime Minister’s words, be false. We must therefore, at the same time, urgently explore alternatives.
We live today in a network world. Tomorrow’s relationships will not be between blocs but between peoples and interests and common values offering new trading opportunities and new markets. In this regard, a refreshed, refunded and re-empowered Commonwealth, bound together not by wealth or military might but by shared values in democracy, the rule of law and human rights, embracing significant economic players such as India, Canada, Australia, South Africa, and Singapore, could have enormous potential. We would be going with the flow of our island history and the choice at a referendum would at least then be a real one.
I wish the renegotiations well but, if the principles are not achieved, I will have no qualms in campaigning and voting no. Of course we could survive and prosper outside the EU; to argue otherwise is to stray into the wilder realms of EU propaganda. But that is not the real question. Whether it is in our national interest is what matters—and that is not just about wealth.
Europe is changing and so are we. The flood of the tide is with us. We must take it.
Lord Monks
My Lords, it is pretty clear that European Union social and employment laws are being lined up in the Prime Minister’s gun sight. He has made no secret of his wish to push the single market much more into a free trade zone, probably on NAFTA lines. If that line is pursued, trade unions in Europe and many Governments, of whatever political persuasion, will take the contrary view and will be determined to preserve a single market that has some employment and social standards within it.
Mrs Thatcher recognised the need for some social standards when she agreed that health and safety would be included in the Single Market Act—from which, by the way, comes the much derided working time directive. I wish that people would look at this in a bit more detail. Britain has an opt-out from the 48-hour rule. Fourteen other countries have opt-outs from specific parts of that directive. The one bit that really matters is the entitlement to four weeks’ paid holiday, from which 6 million British workers benefit. Is the Prime Minister perhaps proposing to take that back? I do not think that he will. You could go on into Social Chapter territory on equality and equal pay. Should the single market not have equal pay provisions for the new countries, and so on? Should it not have a voice in European works councils and through the information and consultation arrangements? Are we saying that, if we can do what we want, others can too, so undercutting our interests?
The Government can take away the rights of British workers that come from British law. They have done so recently. Three million British workers have been removed from the scope of unfair dismissal legislation. However, these European-based rights are a bulwark for workers in this single market. I warn noble Lords: if the Government are successful in an adventure of this kind, the response will be protectionism, just as it is in NAFTA, with American unions influencing the Democratic Party—the major obstacle to an EU/US free trade agreement. So be careful what you wish for. In the mean time, Europe’s unions are already on notice that they will have to fight with their Governments against any renationalisation of employment and social policy.
Lord Taverne
My Lords, I want to address a question to my noble friends in the Conservative Party, and it goes to the root of the whole approach to Europe.
The Conservative Party has traditionally been the party of law and order. It always seemed to me that the Conservative Party was at its best when its approach was pragmatic and not ideological. However, I find it very hard to reconcile that view with the attitude of the Prime Minister and the party to the block opt-out from the justice and home affairs jurisdiction of the European Union.
I hope that my Conservative friends will look at the evidence, because a lot of the evidence given to the Hannay committee has already been published. What emerges from it is that the evidence overwhelmingly rejects the idea of the opt-out. As far as policing is concerned, this is sheer common sense. More and more crime—ordinary crime and terrorism threats—is cross-border, and the answer to that is not national police reactions but cross-border policing. That is very much common sense. Think what we would lose.
The European arrest warrant has resulted in an enormous amount of time-saving and improvement in getting our criminals back from abroad, and criminals in this country back to their own countries. It has had its flaws, but most of them have been cured, as the Scott Baker report showed. We can improve it with further amendments if we are part of it.
Dominic Raab, MP, has said that a bilateral arrangement would be just as good as cross-border policing. Do my noble friends in the Conservative Party really believe that? As regards the European arrest warrant, will we have 26 separate extradition treaties with our colleagues? The whole idea is absurd. What would we lose? We would lose our position in Europol and all the successes that cross-border co-operation has so far achieved.
I therefore hope that they will look at the evidence and will approach the matter pragmatically. It seems to me that the evidence is—and it makes common sense—that the mass opt-out and bilateral approach will be a severe handicap in our fight against crime and terrorism. Is the Conservative Party truly ready to prejudice these aims of fighting against crime and terrorism for the sake of an ideological, visceral dislike of Brussels?
Lord Bowness
My Lords, I, too, thank my noble friend Lady Noakes for introducing this debate.
The Prime Minister sought to bring together the divergent views which existed within the Conservative Party, but it remains to be seen how successful that will prove to be over the coming months and years. I welcome the Prime Minister’s continued commitment to continued membership of the European Union, his acknowledgement of its achievements and his view that its original objectives of peace and reconciliation should not be taken for granted. Although he believes that the overriding purpose of the Union is now not to win peace but to secure prosperity, the two still go together, as the right reverend Prelate the Bishop of Wakefield made clear this morning. The prospect of EU membership remains a powerful motivation in those parts of the continent where the ideals of peace and democracy have only recently been or are still to be achieved. For them and for others the European Union is more than just a trade deal.
The Prime Minister recognises that some of the changes he wants can be achieved by amendments to existing European legislation, but he also states clearly that he wants treaty change, and I believe that this may be more difficult. We seem to believe that we have a great opportunity to achieve treaty change for our benefit because the eurozone member states want to make changes for the economic governance of the eurozone. Having lectured them on the need to “get a grip”, as I believe the phrase was, and sort themselves out so that uncertainty no longer affects the United Kingdom, I wonder how welcome the prospect of wholesale treaty change and a review will be.
Will the Minister say whether account has been taken of the procedures by which we are bound under the treaties with regard to treaty change, which require conventions and intergovernmental conferences unless it is not significant? I presume that the Prime Minister thinks that he is going for something significant. The timing is important, because until the process is complete how will the British people know what they are voting for or against?
We will not get our own way in negotiations by giving the impression that our partners need us more or as much as we need them. The tone we apply to our partners also has to change. The Government would do well to remind themselves of what the Polish Foreign Minister said, which was already referred to by the noble Lord, Lord Grenfell, that,
“don’t expect us to help you wreck or paralyse the EU”.
Perhaps more controversially, the Conservative Party needs a rapprochement with our natural allies in the EPP. If we can govern in coalition with the Liberal Democrats, surely we can have a sensible relationship in the EU with the EPP.
I fear that the demands of those who want a trade deal with no strings—all benefits and no burdens—will increase no matter what the Prime Minister announces, whatever and whenever he wishes to negotiate. History has proved them insatiable; UKIP policy is not the policy of the Conservative Party and my noble friend knows from her previous incarnation that people should not stand for election as Conservatives using the Tory party as an umbrella for otherwise unelectable UKIP views.
If the UK is to stay in the EU, as the Prime Minister wishes, he has to start the fight now, otherwise we will find ourselves out of the European Union as a result of an uncontrolled drift in that direction.
Baroness Symons of Vernham Dean
My Lords, I, too, thank the noble Baroness, Lady Noakes, for introducing this debate today. I will address one very specific point about the Prime Minister’s speech that raises a serious constitutional issue around the Civil Service.
In the passage dealing with a possible in-out referendum, the Prime Minister said,
“Legislation will be drafted before the next election. And if a Conservative Government is elected we will introduce the enabling legislation immediately and pass it by the end of that year”.
The difficult point is the commitment that the legislation is drafted before the next election. That is difficult because it is clear that the policy is not government policy or coalition policy. It is specifically Conservative Party policy. Noble Lords on the Liberal Democrat Benches have made that very clear today.
That raises the question of who will draft the legislation before the next election. If it were to be done by lawyers independent of the Government, there would be no problem. However, of course, all legislation in this country is drafted by the parliamentary draftsmen, and it would be an entirely improper use of these civil servants for the Conservative Party to instruct them to undertake this work—which is certainly not coalition Government work—before the next election.
If the Prime Minister and the Conservative Party plan to use the Civil Service for this purpose, they must think again, otherwise why should not the other party of Government, the Liberal Democrats, ask for completely different legislation to be drafted before the next election? Why should not my own party, the Labour Party, also ask for draft legislation to be prepared? After all, according to current polls we are more likely to win the next election.
This is a coalition Government, as we are reminded over and over again. They are not a Conservative Government, and they have to instruct the Civil Service as the Government of the day, not as a political party. Of course, it is perfectly reasonable and right for the Prime Minister to say that he would expect the legislation to be drafted, but if he wants it done by the civil servants, that has to be done after an election that his party has won. The Prime Minister must recognise that he is Prime Minister because he is in a coalition, not because his party won a majority at the 2010 election.
Lord Dykes
My Lords, I very much thank my noble friend Lady Noakes for raising this debate on a most important subject. I also thank the noble Baroness, Lady Symons of Vernham Dean, for raising a most disturbing constitutional point, to which I hope the Minister will be able to give us at least a preliminary response today.
I was very glad that the Prime Minister emphasised his apparent desire to remain a member of the Union. He said that repeatedly. Of course, he did not bring himself to say “full-hearted member”, which was in the original Conservative manifesto that we remember from many years ago. Apart from some limpid support from a few Czech politicians, the UK stands chillingly alone yet again in this chauvinistic posture.
Despite the eurozone crisis last year, most new member states are anxious to join in the euro, which they see remains a strong international currency, unlike sterling. That is one very important point that we have to acknowledge as we now see the eurozone economy and markets recovering. Instead of getting on with strengthening the Union to create a greater and greater collective sovereignty for all the members, which of course remain individual sovereign countries as well, a small number of witless—I am sorry to use that word—Tory MPs, scared of the euro and of UKIP in equal measure, have forced a foolish PM to abandon his own exhortation five years ago for his party to stop banging on about Europe all the time.
Struggling, therefore, to contain the atavistic forces that he has now unleashed, Mr Cameron will henceforth lead a country teetering on the brink of resolving its incoherent European policies in favour of either long-term half-membership or perhaps complete separation. The others are by now getting so fed up with the antics coming from Britain from one of the parties in the coalition that the bad member of the club is now disliked more and more. They may one day even invoke the Lisbon treaty machinery to ask us to leave. We have not reached that point yet and they are happy to go into discussions about so-called reform.
I am very glad to see, in contrast, that the Deputy Prime Minister is not going along with all this nonsense about an in-out referendum, to be promulgated many years before any real negotiations begin. The public must by now be thoroughly bemused by the twists and turns of the superficial referendumitis arguments by all politicians of all parties, with the dubious exception of Mr Nigel Farage and his colleagues.
My right honourable friend has clarified the latest position in asserting that it makes sense to wait before suggesting such a drastic step, since, sadly, we still have the very unappetising EU Act of 2011 on the statute book. After all, even a dubiously worded referendum at some stage in the future would be dealing, presumably, with powers returning to the UK rather than going away, were such a negotiation to be feasible, which is, as Ken Clarke said in the launch yesterday, a big “if”.
Parliament is constantly undermined. Our Conservative colleagues always say that they admire and respect history. Why do they undermine it by always talking about referendums when we made all the major decisions in British history without establishing Parliament’s authority again and again. That is what we need to do in this country.
Finally, why is it that myopic Tory politicians strongly approve of British companies being international, even to the extent sometimes of being slack on paying national taxes, but believe that countries have to be national only? This is a peculiar division and we need more clarification.
Lord Hannay of Chiswick
My Lords, I suggest that the Prime Minister's speech is a curate's egg—some good some bad. I include among the bad elements, the commitment to a referendum on a fixed timetable many years ahead on what may well turn out to be a false premise; namely, that wholesale treaty reform will be called for by others in a federating sense. That is not likely. They are more likely to go for rather modest changes to meet the requirements of the eurozone, so I regard that as unwise.
In one speech, the Prime Minister created a whole string of known unknowns. He should not have been playing Russian roulette with major national assets such as membership. I entirely see what the noble Baroness, Lady Noakes—I welcome her initiative in choosing this debate—said was not the end of the world. But nothing done by politicians has ever been the end of the world, yet. That does not mean that they have not done some damn stupid things.
It was wise of the Prime Minister not to choose a long laundry list of things that he wanted changed. Much more careful thought is needed as to how to approach this. I suggest three criteria are needed to be applied to any such changes. The first is: are the changes necessary for Britain's national interest and are they, at the same time, good for the EU as a whole? If the second condition cannot be met, they will not be agreed. The second criterion is: are they negotiable? The third is: do they match the Prime Minister's laudable objective of Britain staying in the European Union and influencing EU policy? The proposals published by the Fresh Start Group, which I would rather characterise as the false start group, would not fulfil any of those criteria.
However, we do need a positive agenda and we need that now. We do not need it in 2015 or 2016. We should be pursuing that now and be prepared to go outside the normal British comfort zone of single market completion, enlargement and freer world trade, although those are excellent things that we should be pursuing. But why are we not thinking more actively and intelligently about defence? The effect of austerity on defence budgets is surely pushing us all closer together.
My final word in the brief time that we have been allotted in this debate is; tactically astute, strategically reckless.
Lord Sheikh
My Lords, as a man who conducts business and addresses conferences overseas, many of the arguments on European integration resonate very strongly with me. The European Union was established as a way of preserving peace and stability between its member states. It was what was needed then, and in the same way we must now react to internal and external changes that are happening in Europe and the world.
This is not about the interests of the United Kingdom versus the interests of other member states; it is about achieving large-scale reform to change the relationship between member states and the rest of the world in everyone’s interests. Europe needs to serve its member states better and help them to get the most out of the benefits that such a union provides.
The Prime Minister was very clear that he wants Europe to be a success and as such wants us to be a part of that success, and I share that sentiment. Europe itself is changing and we must push to make sure that it properly adapts. The completion of the single market was one of the key aims to which the Prime Minister referred, and rightfully so. This provides a strong foundational framework on which member states can build their economies.
We must allow the diversity of the different EU economies to flourish to increase competitiveness and achieve growth. Bureaucratic red-tape policies must be returned to the UK so that we can make our own judgments based on what works best for business here at home. I also agree with strengthening the role of national parliaments within the EU, as they are without a doubt the most democratically accountable and legitimate form of governance to their people.
Laws and regulations have been heaped on to British families and businesses from a foreign land, in a Parliament that they did not elect, and with a one-size-fits-all mentality. That is why I support the decision to hold a referendum in the next Parliament. People can then decide for themselves what will be in the best interests of their own country, and the integrity of the resulting decision cannot be questioned.
I also believe that the vast majority of people in this country would like us to remain in a union that helps us when we need it, allowing us to take good things from it but without inflicting unwanted repressive policies on its member states.
It is the job of the Government to get the best deal for their people, and this is exactly what the Prime Minister wants to do in negotiating a new settlement. It also makes sense to wait until the current turbulent waters have calmed before deciding what the future would hold for us in the union. Allowing member states the autonomy and liberty to do what is best for their people and their economies will enable us to contribute that much more and, I believe, form an even stronger bond of shared values and co-operation. I say this as a Conservative and ultimately as a supporter of the future of the European Union.
Lord Anderson of Swansea
My Lords, I have three short minutes, and I will make three brief reflections. The first is that I have an overwhelming sense that this is where I came in. In 1960, I joined the Foreign Office as a desk officer responsible for Europe—political. At that time, after the failure to join the Rome treaty in 1957, the Conservative Government realised the danger of isolation and thrashed around trying to construct alternatives, hence the EFTA cul-de-sac, trying to build a relationship with a new Europe—for example by constructing an enhanced role for the Western European Union. In time, the Government and the people acknowledged that other alternatives were pipe dreams and that our future lay with our European partners.
The second is that Mrs Thatcher never threatened to leave the Community, however hard she fought her corner. Now, her political children, egged on by a nationalist press, seek to take events a stage further. They see little or no good in the current European Union and seek vainly for false alternatives. What is certain is that, outside the European Union, we would be a lesser attraction for foreign investment. We would have less clout in trade negotiations, and the best deals are possible when we work with our partners inside the Union.
Finally, I come to the Prime Minister’s speech on behalf of the Conservative part of the coalition. I have some sympathy for him as he has the impossible task of reconciling our partners and his party. He fails to recognise that international relations are essentially human relations. Some critics may well say that the Conservatives in opposition were too busy with their outside interests to build valuable personal relations with their natural partners: hence the Prime Minister’s absurd decision to leave the EPP, the family of the centre right, which led only to a mutual misunderstanding.
The EU is a club, and we are unlikely to persuade sympathetic club members if we threaten to leave. Suddenly and belatedly, the Conservative Party is beginning to appreciate the need for friends, particularly Germany, where 74% of the population supports the UK remaining within the EU. Thus, for the first time, the Foreign Secretary will participate in the Königswinter conference in May. However, let us look at the German Chancellor’s response at Davos to the Prime Minister’s speech. Yes, as government spin doctors tell us, she emphasised her support for free trade and open, competitive markets, but they ignore her warning on the referendum and the insistence that the Prime Minister will need to compromise. His dilemma is that, in so far as he compromises to win over our EU partners, he will lose his party. So we are back with unrealistic alternatives: hence my sense that this is where we came in.
Lord Blair of Boughton
My Lords, it is a privilege to listen to so many excellent speeches. I am neither a constitutional expert, nor a political expert on Europe, but I know a little about criminal justice and I want to use this occasion to draw some comparisons and to make some observations about the Government’s indication that they might wish to opt out of the European justice and home affairs provisions. A committee of your Lordships’ House, chaired by the noble Lord, Lord Boswell, is examining this. Here is a flavour of some of the answers they are receiving to that question.
On 16 January, one member of the committee, the noble Baroness, Lady Prashar, asked:
“So it”—
an opt-out—
“would be complex, complicated, risky and it is right that it would be a gamble?”.
Professor Peers of the University of Essex said yes. Would that all answers by witnesses were that succinct.
Of course, the opt-out on criminal justice is not the subject of this debate. I just want to use it as a way of looking at what would happen if you extended away from dealing with an important but minor part of the third pillar of some part of the European conventions to attempt to renegotiate our entire relationship with Europe. I draw your Lordships’ attention to an excellent article by Hugo Brady of the Centre for European Reform, entitled: Britain’s 2014 Justice Opt-out: Why it Bodes Ill for Cameron’s EU Strategy. He lists five reasons, but I am only going to talk about two. The first is Scotland. Policing and criminal justice are devolved powers, so it seems ill-advised for the Westminster Government to announce that they want to give up something that the Scots clearly want to keep in the same year as the referendum on independence.
The second is more important. It is what Brady describes as, “make your case clearly” or they will not understand. He describes the sense of bewilderment, turning to anger, contempt and disengagement by our European partners at the sight of the British trying to withdraw their support from something they invented in the first place. You cannot be a little bit pregnant. You cannot be a little bit divorced, but lots of people try. Many of us have seen friends have trial separations. They attempt to end in reunion, but they normally wreak havoc on relationships, partnerships and the prospects of future generations.
Lord Clinton-Davis
My Lords, in recent times we have witnessed the transformation of the European Union—previously warring countries co-operating, growing in economic strength and developing their negotiating power. We are living in a competitive world of power blocs. The European Union has also developed social policies that have been a worldwide example.
Of course, the Union should not be static, but our position should not be poisoned by threats and ultimatums. If federalism leads to a new treaty, then the British people, like all others within the EU, should be able to express their opinion in a referendum. Shouting from the sidelines is no substitute for being constructive and sometimes critical.
It is my experience within the EU that all controversial proposals are tackled in depth. Of course the Commission and others can make mistakes. They are human. Her Majesty’s Government are not exactly a shining example to the country. The Commission does its best, as do all the other institutions.
What this Tory-led Government really want is the adulteration, even the elimination, of the European Union’s social policies. It would be absurd for the UK to absent itself from specific areas of policy. Estrangement from our partners would be utterly mistaken, and that would be the inevitable outcome of what the Government are proposing. The pathetic aim of trying to pacify the Eurosceptics, who are so prominent in the Tory Party today, is bound to fail, and it will deserve to.
Baroness Donaghy
My Lords, I thank the noble Baroness, Lady Noakes, for her welcome initiative. She may remember that many months ago we had a conversation about Europe, and I told her that I was one of the only members of my local Labour Party to take the day off work during the 1975 referendum to urge people to vote no. The noble Baroness informed me that she, too, had taken the day off work to campaign for a yes vote. We have both developed different points of view from all those years ago—I because of the Social Chapter possibilities, which gave workers rights and women opportunities during an era, the 1980s and 1990s, that was pretty bleak for both. The noble Baroness’s view was affected by the very same issues, which I think she sees as red tape. I have a great deal of respect for her views, even though we may not agree. I simply want to illustrate that, as Europe develops, we are all entitled to change our minds and openly debate issues on their merits.
For 10 years, during the 1990s, I was one of the representatives of the TUC on the European TUC executive. I was privileged to move in the ETUC executive acceptance of the framework agreement on part-time workers, so I plead guilty but proud of my part in ensuring that workers, particularly women workers, should be treated equally. The irony was that we were working hard at the European level on these Social Chapter issues. They were negotiated and agreed with the social partners, which included the CBI, and I watched these directives being implemented, except in the UK. That Alice in Wonderland position was put right when the Labour Government were elected. While I think that the Prime Minister’s clever speech contained something for all views, except for those of us who support workers’ rights, a referendum is too far off to get worked up about. However, I agree that we should trust the British people, if and when the time comes.
Finally, I may be alone in this view but at present we have expert debates in this House arising from the European sub-committees, which are too rich for my diet, or we have one-dimensional exchanges in Question Time: “We should all leave Europe”, “Oh no we shouldn’t”. Those of us who are interested in the wider framework issues are looking for opportunities to discuss them in an intelligent, challenging forum where not everything is black and white and where there are no easy answers.
Viscount Eccles
My Lords, noble Lords have gone back a long time, but I am going to go back even further. Some 63 years ago I was fortunate enough to be in Strasbourg when the Council of Europe met. Of course, the two world wars were on everyone’s mind. Winston Churchill made what I think would now be called the keynote speech and the Conservative Party delegation was led by Harold Macmillan. Since then, whenever I use the word “Europe” I include in it the United Kingdom; I do so again today. We have been on a very long journey since, but the idea of giving up and leaving does not yet occur to me.
However, where is Europe now? It is riven by uncertainty. It has two financial crises that differ from each other. The reasons for the crises are not yet fully understood, and as for putting to bed the question of the responsibility for them, we are still a long way from that. The crisis in the United Kingdom is the first one and the eurozone crisis is the second. The outcome of both is entirely uncertain as we debate this matter today. All we can do is analyse what we know. What we must agree on is that there have been flaws in the direction of travel, otherwise we would not be where we are. Can we just wait and see whether, having lived beyond our means, things will in some way correct themselves and we will be able to continue on the same path? That does not seem credible. Things have changed very radically over the past 63 years. There is a global market now of which Europe forms 7% of the population, and things are happening elsewhere.
We need to think through the following proposition: is this convoy of 27 nations likely to go in the right direction without reform? I think not. Strategy, not just tactics, should be on the table and we need to get on with the debate.
Lord Davies of Stamford
My Lords, in all my political experience I do not think I have come across a more absurd notion than a referendum that will only take place some four, five or six years after it is announced. But, of course, this is not a serious political idea. It is, as we know, a short-term and cynical party-political ploy designed simply to push the European issue beyond the horizon of the next election and to keep the Eurosceptics off the Prime Minister’s back until then. If there are costs in terms of investment and jobs and other costs to our national interest, then to hell with the national interest. That is what we are actually confronted with.
If we need further evidence of the superficiality of this exercise, it is in the fact that the Prime Minister hardly mentioned what the objectives of this negotiation or renegotiation are going to be. In all that elaborate speech only one sentence deals with them by mentioning three things: the environment, social affairs and crime. We have only to look at those three in order to realise that either we are faced with what is essentially a hypocritical exercise that is not intended to be taken seriously or else something that would be disastrous if pursued. Are we going to pull out of the European environmental policy? Are we going to get rid of the commitment to reduce emissions by 20% from their 1990 levels by 2020? Are we going to try to do it unilaterally? Does the Prime Minister mean the non-climate change aspects of environmental obligations such as water pollution? Are British factories going to be allowed to release any kinds of effluent into our rivers? If we believe in having environmental controls, is it not in our interests to make sure that our competitors on the continent of Europe bear the same level of costs? It is quite clear that this has not been thought through at all. It is an entirely cynical, short-term exercise.
The same applies to social policy. I would love to see the Prime Minister fight the next election on the basis that he is going to get rid of the working time directive or the parental leave directive. Is that to be taken seriously? And what about crime, which comes under justice and home affairs? We are told that the Government are already intending to opt out of the justice and home affairs chapter. In that case, what is the point of renegotiating something that we are going to opt out of? None of this makes sense.
There are many aspects of this which worry me. Obviously I am anxious about the costs of the uncertainty and even more anxious about the costs attached to our leaving the European Union, if that is the ultimate aim of this exercise; it could easily lead to that bad accident. However, my worst anxiety is that our continental partners will say—they may be far too diplomatic and astute to do so, but it is what more and more of them will think—“For heaven’s sake, the British are hopeless. They cannot make up their minds. They have been humming and hawing and coming and going for 30 years. They always oppose everything and they are very difficult. For God’s sake, if they want to leave, let them leave. Let’s conduct this negotiation in such a way that they end up having to go”.
When that happens, what is the prospect for this country? The prospect is the one that we have been trying to avoid for 500 years. It is why we fought Philip II, Louis XIV, Napoleon, Nicholas I and the Kaiser. We will find ourselves with a superpower on the European continent with whose policies we have in practice to align ourselves although we will have no influence whatever on their formulation. That is the position we shall be in, and under the shadow of that superpower we shall live for the rest of time—regretting the appalling decisions that we came to in a fit of absence of mind.
Lord Framlingham
My Lords, I warmly welcome the Prime Minister’s speech simply because at long last it has set my party on an unstoppable path to serious treaty changes and a referendum. However, I have two reservations. The first is that I believe that the changes needed are so profound that they are unlikely to be agreed by the other countries, and the second is timing. These things are not going to happen until 2017. Anyone who has run any kind of organisation knows that when it starts to go seriously wrong, as Europe is doing now, its decline has a habit of accelerating. I do not believe that time is on our side and I am anxious that we will be overtaken by events.
A wise man once said, “All great issues are essentially very simple. We make them complicated when we do not want to face them”. I believe that that is true of Europe. The issue of Europe is essentially very simple. It is about who governs this country. That sounds simplistic, but it is true. It was the question in 1975, it is the question in 2013, and it is the question that the British people understand. It will be the question in 2017—and I have no doubt, when it is put to the British people, what their answer will be.
Lord Hamilton of Epsom
My Lords, I do not terribly want to get involved in a debate about what will happen when the referendum is held. Rather, I will make two points. The first is that within the next 12 months, I suspect that the Labour Party will commit itself to an “in or out” referendum, whether the noble Lord, Lord Davies, likes it or not. It is completely unsustainable for any party to stand at the next election saying that it is not going to hold a referendum when a major party like the Conservatives is doing so. I suspect that the Liberal Democrats will follow suit as well.
Not for the first time, I find that I agree with the noble Lord, Lord Kerr. He knows, as most noble Lords in this Chamber know, that the construct of the EU has been a series of treaties which need unanimous support, and that if you want to revise those treaties, it has to be done with unanimity. I therefore suggest that the chances of Britain renegotiating a position that entails treaty change is virtually non-existent, and by the same token, it will not be possible for Germany, Holland, Sweden and Finland to renegotiate to make the EU more competitive. If something needs treaty change, it will not happen; that is the reality of the position that we are in.
I have absolutely no idea who will win the election of 2015, but we will have either a Labour or a Conservative Prime Minister. Then what will happen? If Ed Miliband is Prime Minister, he will go off to Europe and come back with a minimal number of concessions. He will not be able to pull off the same trick as Harold Wilson: namely, minimal renegotiation and a vote for us to stay in the EU. He would have to win major concessions—which I do not think he will get—and, of course, at that stage he will be faced by a Conservative Opposition, led, I suspect, by a different leader, who will campaign vigorously against any move to keep us in the EU. Alternatively, if David Cameron wins, he will have to go off to Europe and come back with very serious concessions. I suspect that the best that he will be able to achieve will be some hybrid solution for the United Kingdom that will leave us more out of the EU than in. Either way, I do not see that we will do anything other than come out.
That brings us to my noble friend’s Liberal Democrats, who already have the somewhat suspect reputation of being the people whom Conservative and Labour candidates least want to face in an election. They have now added to that the reputation of being unreliable and untrustworthy when it comes to the coalition agreement that was set up at the beginning of this Parliament. So I do not think that an awful lot of people will want to go into a coalition with the Liberal Democrats ever again. If the opinion polls are right, they will probably get only 10 seats at the next election, so the question may not even come up.
Lord Lea of Crondall
My Lords, if a speech can be a 180-degree turnaround from a previous speech, this is it. The context of the Prime Minister’s speech is, of course, the Conservatives’ frustration, because they have missed the boat. The eurozone is recovering and the pound is falling against the euro. Therefore we no longer hear the speech from the noble Lord, Lord Lamont, proclaiming that the euro is dead. The problem now for the Conservative Party is the dictum, “If you can’t beat them, you’d better join them”, so the frustration grows apace.
The Prime Minister’s speech is intended to set up a scenario where he demands the repatriation of things such as employment rights, as my noble friend Lord Monks pointed out—as if, incidentally, that would make workers more inclined to vote to stay in the EU. However, as we heard—from the noble Lord, Lord Kerr, I believe—there is no such thing as a retrospective opt-out. The Labour Party—correctly—will have nothing to do with this scenario, including the referendum hypothesis. Apart from anything else, you do not expect the Labour Party to get heavily involved in highly imaginary negotiations conducted by an equally highly imaginary Conservative Government in 2016 or 2017, which, as everyone knows, are intended only to keep the Conservative Party together.
A Labour Government responsible for a hypothetical referendum presupposes equally a Labour Government, which I believe will be elected in 2015. Until nearer that time, what crystal ball are we supposed to look into and to say that one thing or another needs renegotiation followed by a referendum? I am sure that we in the Labour Party are not going to invent such a scenario on the back of an envelope just to meet the wishes of those who read the Daily Mail and the Daily Express. The fact is that this is a crisis for the Conservative Party; it is no crisis at all for the Labour Party.
My non-political friends to whom I talked last weekend, for example, are aghast at the political cynicism of the referendum announcement in particular. They do not think that this whole business has anything to do with the national interest. I therefore think that it will not necessarily be of any benefit to the Conservative Party.
Lord Watson of Invergowrie
My Lords, this might be termed the “boiling an egg” debate, because that is probably one of the very few things that you can usefully accomplish in the amount of time that each of us has been given to speak today.
I find myself very much aligned with my noble friend Lady Donaghy, who said that she campaigned for a no vote in 1975 for reasons of working people’s rights but has now come round to face somewhat the other way—as, indeed, have I. I would be very concerned should we, as a country, depart from the European Union. Perhaps the noble Lord, Lord Owen, summed it up best when he described the Prime Minister’s speech last week as the words of a party leader and not a Prime Minister—that is exactly it. I really think that the European Union and our place within it are too important to be used as a way of dealing with a little local difficulty within the Conservative Party.
On the question of a referendum, I will ask: why now? I do not see why at all, but why now? Nothing of any great importance has occurred within the past few months. You could say, “I believe that referendums are appropriate for parliamentary democracy”. Referendums do have their place—certainly they were appropriate in 1975, for the Scottish Parliament, for the Welsh Assembly and, indeed, for the voting system. But what has happened to make this a pressing issue? Furthermore, what is likely to happen of a constitutional nature? I think it is key to a referendum that it should involve something of a constitutional nature. What has happened in the past few months or will happen in the next five years to make a referendum necessary? You could say it could have happened after Maastricht or Lisbon, but I do not see why we should be positing it as a notion now, because there is no constitutional issue per se to discuss. The basic question would be: do we stay in the EU?
The noble Baroness, Lady Noakes, opened the debate by talking of uncertainty. I think that she talked rather disparagingly of scaremongers. I ask the noble Baroness whether the following are scaremongers: Sir Andrew Cahn of Nomura, Sir Richard Branson, Sir Martin Sorrell of WPP, the CBI, and indeed the noble Lord, Lord Browne, a close confidant of the Prime Minister. These are people of some substance, as indeed is Sir Nigel Sheinwald, who has made some pretty pithy statements in the past few days. So there is a bit more to it than perhaps meets the eye. The response might be, “What about the 50 business leaders who wrote to the Times?”. When you read their statement, it is clear that they did so very strongly from a position of wanting to remain within the European Union. That is different from the wishes of many people advocating a referendum who want us to withdraw.
I think that there will be a referendum, as various noble Lords have said. It is pretty much inconceivable that any of the main political parties will not suggest that at the 2015 general election. Therefore, I think that those of us who are in favour need to start making the positive case for remaining in the EU. We should not just deal with negatives but talk the case up.
I conclude by referring back to the noble Baroness, Lady Noakes, who said that she regarded the prospect of a referendum in 2017 as an exciting one. Well, placing her head in the mouth of a lion might be exciting, but it is not something that I would recommend.
Lord Birt
My Lords, I thought the Prime Minister’s speech was exceptionally well crafted. He articulated why history and geography helped define the UK’s very singular attitude to the EU. He identified where and why many are unenthusiastic about some EU regulation. However, he also captured very well the benefits of the EU—the economic advantage and influence that arise from being part of the world’s biggest single market and political bloc. The EU has a bigger aggregated GDP than the US, and we are twice as big as China.
Most of us share the vision of the UK as part of a flexible network of independent European nation states, combining voluntarily, issue by issue, on matters of mutual interest. That is where, of course, we are now. We are out of the euro—thank goodness—and out Schengen, but in the single market, in NATO, unlike six other EU countries, and in the fight alongside France in Libya and Mali.
All organisations benefit from time to time from a reappraisal. However, the Prime Minister’s speech creates a problem of perception. Pace the noble Baroness, Lady Noakes, my work routinely takes me into contact with the world’s leading investors, with trillions of funds to place. They are already nervous of the eurozone and understand the UK’s dependence on it. They are careful decision-makers and I have no doubt that they will be further unsettled by the prospect of a referendum. The PM’s announcement was well argued, and the party-political need for it was understandable, but it was not cost free.
Lord Whitty
My Lords, I thank the noble Baroness and to some extent, for reasons I should explain, the Prime Minister for getting us to this debate. The Prime Minister has presented us and our European partners with a false prospectus: a referendum in four or five years’ time, on terms as yet unclear, and in economic and political circumstances that are unknowable. In so far as his negotiating position prior to that referendum is discernible from his speech, it is self-contradictory. His main point is that he wants to strengthen the single market, but he is looking to opt out of key pillars of that single market. You cannot have a true single market without common labour standards—the Social Chapter. You cannot have a true single market without some degree of commonality on financial regulations, which he resists to the benefit of and on behalf of the City of London. You cannot have a true single market without common environmental standards. That agenda is not one that can be negotiated without European partners. He might have a bit more luck on the justice side, but even there, although there may be some prospective, minor, further derogations, there will be no retrospective opt-outs, as the noble Lord, Lord Kerr, has said.
The PM has created unnecessary irritation among our European partners and damaging uncertainty for global investors. However, he may politically have done us all a great favour, in that he has at last provoked the pro-European elements in all parties to come out of their shell and start arguing the pro-European case. I have long been a pro-European, since before 1975, when it was deeply unpopular in the Labour Party, particularly in the left wing of the party, of which I was otherwise a member. I have often been dismayed at the lack of effective engagement by British Governments with Europe—my own as well as this one. I have often also been dismayed at the occasional arrogance and ineptitude of European institutions in relating to the real concerns of the people. However, it remains the case for Britain that our prosperity, our influence in the world and our prospects of reaching global agreements on climate change, trade, and peace and development depend utterly on the UK being a leading, constructive and authoritative partner within Europe. I ask those who object to the whole concept of ever closer union what they think are the consequences of the opposite dynamic. They need look no further than the borders of the EU, at the former Yugoslavia.
Like my noble friend Lord Grenfell, whose speech I greatly admired, I am not afraid of a referendum. However, whether we have one or not, in what timescale and on whatever terms, the Prime Minister has now triggered a revival among those of us who wish to argue the pro-European case. We will do so with equal passion and, one hopes, more logic than I suspect the next speaker, who will make the opposite case. To that extent, I thank the Prime Minister.
Lord Pearson of Rannoch
My Lords, in this heavily Europhiliac debate, I thought I would concentrate on just one of the basic misconceptions to which noble and Europhile Lords, and indeed the Prime Minister, still cling: that the single market is a good thing and that we might lose inward investment, free trade and jobs if we left the EU and its customs union. The single market is a bad thing: it is what imposes the thousands of regulations which weigh down all EU economies in their trade with the markets of the future. Together with the euro, it is the economic iceberg which will eventually sink the whole project of European integration, at great social cost.
As for us, in the mean time, our free trade with clients and suppliers in the EU will inevitably continue when we leave it. Articles 3, 8 and 50 of Lisbon oblige Brussels to negotiate a free trade agreement with a departing country. The EU already has FTAs with 67 countries and dozens more are in the pipeline. As its largest client, and with our substantial trade deficit, we will hold the whip hand in agreeing our own free trade agreement, which will be unique to us.
Your Lordships may have missed the Government’s Written Answer on 14 December to my noble friend Lord Stoddart, who had asked whether the burdens of single market regulation applied to countries signing FTAs with Brussels. According to the Answer:
“It is not the case that as a result of these trade negotiations the countries concerned will have to adopt all the legislation and regulations that apply to EU member states. The aim of these negotiations is to eliminate, as far as possible, duties applied to trade in goods and to address non-tariff barriers that affect trade in goods in services—ie rules, regulations and practices that affect market access. Non-tariff barriers can be overcome through a variety of methods. These include the adoption of international rules”—
the World Trade Organisation—
“mutual recognition of approaches to testing, standards, et cetera, and commitments to end discriminatory practices”.—[Official Report, 14/12/12; col. WA 263.]
What more do we want?
Why should inward investment be affected when the reasons for investing here will not have changed? It is interesting that our Invest in the UK agency gives 13 good reasons for investing here—and not one of them is our membership of the European Union. Therefore, I hope we will hear no more scaremongering from the same old quisling voices of big business and elsewhere, which told us that if we did not join the euro, the City of London was finished. It became number one in the world, so why should we listen to them now? Some hope, my Lords, but I trust that the British people will ignore the Brussels propaganda when the time comes.
Lord Liddle
My Lords, the three-minute rule has produced many excellent speeches in this debate, including many strong ones from my side of the House. Obviously, in keeping my own remarks brief, I cannot refer to them all but will just refer to two on our side. First, I thank the noble Lord, Lord Grenfell, for his humour and, secondly, I thank the noble Baroness, Lady Symons, for the originality of her speech. She made a major point of constitutional significance about the Civil Service role in drafting legislation. I hope that the noble Baroness, Lady Warsi, will answer that point in her reply. I also greatly enjoyed many of the speeches from the Liberal Democrat Benches and from the diplomats on the Cross Benches. There were excellent speeches from the noble and learned Lord, Lord Howe of Aberavon, the noble Lord, Lord Bowness, and the noble Viscount, Lord Eccles, on the Conservative side.
There are certain principles that we all accept in this debate. Everyone in this House, except for those who want to get out, believes that Europe needs fundamental reform. We would go along with what the noble Lord, Lord Howell, said about the need for a more dynamic and flexible European Union than we have today. We would support, in general terms, the unobjectionable principles that the Prime Minister set out in his speech. We all recognise that there is a particular problem where we have to seek safeguards—because of the closer integration of the euro area, those of us outside it must have safeguards against discrimination as a result of the euro area acting as a voting bloc.
Having said that those are principles on which we all agree, there is a fundamental disagreement about the Prime Minister’s strategy of renegotiation and referendum. People ask what Labour’s position is on a referendum. One might seriously ask how it is that the Prime Minister thinks that, at this delicate stage in our economic recovery—and that is putting it mildly when GDP is falling—and in an era when business, since the financial crisis, has become extremely risk-averse, a commitment to a referendum five years hence will help our economic recovery. Is it not the case that this is bound to add one way or another to the considerable pall of investment uncertainty which hangs over our economy? If the Prime Minister now believes, in January 2013, that a referendum is in the national interest, why, in October 2011, did he impose a three-line whip on his Members to vote against a referendum? Why, in his press conference after the June 2012 summit, when asked about a referendum did he dismiss it with a sweep of the hand and say what the British people want is a Government who stand up and fight for them in Europe? It was only the uproar in the Conservative Party—let me remind the noble Baroness, Lady Noakes—the day after that forced the Prime Minister to write his famous article in the Telegraph saying:
“For me the two words ‘Europe’ and ‘referendum’ can go together”.
Our position is clear. We have always argued, as we did during the passage of the EU Act 2011, that if there is a major transfer of powers or a big treaty there should be a referendum. At the moment we do not know whether there is going to be a treaty and we do not know anything about its contents or timing. The Prime Minister’s policy represents a unilateral demand to come up with something by 2017 that he can sell to the British people or we will be off.
There are many contradictions in this renegotiation policy. One is whether those who favour it regard a treaty change as essential to its success. Listening to the Benches opposite, particularly to the noble Baroness, Lady Noakes, I have found all this very confusing. On the one hand, the argument is made that we have to secure fundamental change if we are going to be able to recommend the yes vote to the British people, yet on the other, it is said that the treaty change may not be essential. In my view, it is impossible to achieve fundamental change in the way the EU works without treaty change. Of course we may be able to negotiate changes in policies or protocols that protect our position in various areas, but we will not get fundamental change without treaty change. I would like this question to be clarified in the Minister’s reply.
There is a lot of reference to the proposals of the Fresh Start Group as the kind of sensible mainstream view of what needs to change. My noble friend Lord Monks has already dealt with the social and employment aspects of that. This is not acceptable to our partners. On financial services, it cannot make sense to argue for the reintroduction of some form of unanimity on this aspect of the single market when in the other part of our mouths we are arguing that our partners should agree to major extensions of the single market in other areas. That is a completely contradictory stance, and the noble Baroness, Lady Noakes, ought to recognise that.
It was interesting that we had 40 speeches in this debate, with eight from Conservatives broadly in favour of the Prime Minister’s speech, but the question of where they will end up after the renegotiation is unclear. If David Cameron remains Prime Minister after 2015, he is going to face a harsh political choice: win a referendum yes and split the Conservative Party, or bow the knee to his party’s last ditchers, and, even more dangerous, fanciful renegotiators such as the Fresh Start Group, and secure his place in history as the Prime Minister who led Britain out of the European Union. He will have overwhelming support on this side of the House if he puts the country before his party. There were passages in his well-phrased speech last week where I just about managed to convince myself that that was what he might do. However, it would historically require a breach with a whole tradition of Conservative statecraft that the national interest is best served by keeping the Conservatives in power and winning elections.
So much is at stake here for all of us. Who really fancies Britain’s chances, in decades to come, as an offshore island? There is the real risk that five years away that is what we are going to end up as—maybe as a successful tax haven for hot money, various kinds of tax dodger and fleeing oligarchs, but there is no future for Britain shouting across the Channel, “Continent cut off”, at the 400 million steadily integrating single market. That is not going to bring real investors and real jobs in real companies to Britain. We need to be there.
We will end up being politically ignored by Washington and powerless to defend our values and interests against all the multiple challenges that we face, never mind the new ones that pop up in the desert in north Africa. Do we really want what is happening in the world today, which is the rise of the East, to mean that we opt out of the West? Let us hope that the Prime Minister means what he hinted at, that he will campaign to stay in Europe, with his “heart and soul”. Let us hope that those words were not a public oration sop to pro-European opinion, particularly business opinion, which rightly fears that he has set his European policy on a trajectory that he certainly never wanted, in the hope of a positive outcome that he has not the faintest idea how he is going to achieve. There were many fine words in the Prime Minister’s speech, but it was very bad day for Britain.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, I am grateful to the noble Baroness, Lady Noakes, for calling this debate to take note of the Prime Minister’s recent speech on Europe. I will try to address some of the individual questions from noble Lords but am sure you will agree that, with more than 40 speakers, I may not be able adequately to address all the issues raised and all the questions asked. The noble Baroness, Lady Donaghy, suggested a possible further debate with more time, and that may well be an option that your Lordships’ House can consider. The interventions today have been widespread in both view and substance and, like the noble Lord, Lord Liddle, I am struggling to highlight which of them really stuck in my mind. However, the contributions of the noble Lords, Lord Grenfell and Lord Hamilton, were amusing and engaging and brought interesting perspectives.
I will start by briefly recalling the context in which we are having this debate. Europe is facing a time of crisis. The Prime Minister highlighted in his speech the three main challenges facing all of us in Europe: the changes within the eurozone and the crisis that it brings; the lack of competitiveness in the face of a transformed global economy; and the democratic gap between Europe and its people. Faced with these challenges the European Union cannot stay still. For the eurozone to succeed, we accept that the countries that are part of it need to change. How they co-operate and the rules by which they work need to change. As Europe changes, our relationship with Europe will, and should, change. As the Prime Minister has said, we cannot bury our heads in the sand. We must face up to these challenges and ensure that the relationship that we have with the reformed EU at the end of this process is one that better protects our national interests and the integrity of the single market.
The noble Lord, Lord Hannay, is right in some of what he set out as criteria for negotiations. We are not only seeking an improvement in Britain’s position; we are looking for an improvement in the way that the EU works that will benefit all of its members. We want to see a more competitive and flexible EU, to show that power can flow in both directions and national parliaments to have a bigger role. The Government have been clear that we believe that active membership of the EU is in our national interest. The Prime Minister has said that when there is a referendum, he will campaign “heart and soul” for a vote to remain in a reformed EU.
There are many reasons why we are convinced that the best place for the United Kingdom is inside the EU. On the economic side, the EU supports UK jobs, prosperity and growth through increased trade, within the single market and through free trade agreements with non-EU states. The EU represents a market of 500 million people, with a combined GDP of around £11 trillion. It is the largest single market in the world, with a larger economy than those of the US and Russia combined. If Britain was not a member of the single market, UK firms would face export tariffs, reducing their competitiveness in Europe. The size of the EU and its global importance as an export market give Britain much greater influence with international trading partners than would be the case if we acted alone.
The single market also helps the UK to attract inward investment from both inside and outside Europe. The UK is the top destination in Europe for inward investment, attracting one-fifth of all foreign direct investment projects in Europe in 2011, for example. The single market encourages competition and innovation across the EU, bringing tangible benefits to people, as prices for consumers are driven down and productivity levels increase. However, this does not mean that we think the single market is complete. Indeed, further single market reform has even more to offer the UK through simplifying regulation, liberalising services, and developing a single digital market and a single market for energy.
Away from the economy, our membership of the EU can help to advance our national interests, influence and values internationally as part of a 27-strong—soon to be 28-strong—collective voice. I am not just talking about collective negotiation of free trade agreements with third countries, although these bring large economic benefits to member states, including the UK, and are a useful way of encouraging market opening in those third countries; I am thinking about the intelligent use of sanctions, which in the case of Burma have been attributed as one of the most effective levers in encouraging the regime to implement democratic change, and which the EU has implemented in response to the situations in Iran and in Syria, for example. I am also thinking about the common security and defence policy missions, which are a fast-moving response to security issues of real interest to the UK, such as piracy. Successes include training the Bosnian police force and increasing stability in Georgia.
The UK has long been a champion of further enlargement of the EU, which is key to achieving the UK’s economic and security interests in central Europe and the European neighbourhood. In 2011 the UK exported £16.6 billion in goods and services to the newest member states, approximately twice our exports to India.
The right reverend Prelate the Bishop of Wakefield spoke about the contribution of the EU to peace in Europe. The PM recognises the role that the EU plays within NATO in bringing peace and the rule of law to European countries. We hope to continue this through our support for the enlargement process.
There are also less quantifiable benefits, which we now take almost for granted. Membership of the EU provides freedom for British people to live, work, study and retire in Europe: 1.5 million UK citizens live in other EU countries, and UK citizens are able to work anywhere in the EU without requiring a work permit. Around 260,000 UK citizens are employed in other EU member states. There are 435,000 UK citizens claiming a pension and living abroad in an EU member state. Our membership of the EU also helps our students. Between 2011 and 2012, more than 13,500 UK students took part in the Erasmus scheme, studying for part of their degree in another European country.
I welcome the support of the noble Lord, Lord Williamson, for the balance of competences review. The PM has set out the principles of how he wants to change the EU and the UK’s relationship with it, not the specifics. The balance of competences review will give us an informed and objective analysis of where the EU helps and where it hampers. We expect this work to conclude during 2014.
My noble friend Lady Falkner asked what a fresh settlement would look like. All political parties will look at the evidence provided by the balance of competences review and use that to generate ideas for future policies. She is aware that this is being done over a period of four semesters, on specific subjects.
The noble Baroness, Lady Donaghy, spoke about EU measures on social policies, especially in relation to gender equality. I can assure her that there is no suggestion whatever of undermining gender equality and we have clear national legislation to support the current position.
The noble Lord, Lord Giddens, asked some very specific questions. What will the PM do if he does not get his concessions? We are not going into this negotiation looking to fail. We are confident that there are some very clear principles in the wider European Union. We have support among member states which also feel that we can have a better Europe. The answer to everything is not simply more Europe. He asked whether we were simply cherry picking, as did the noble Lord, Lord Kerr. The answer is no. The UK wants reform of the EU for the benefit of all member states. What we will be putting forward will show that. There were a number of other questions and the noble Lord may have to write to me to get the answers to them.
My noble friend Lady Noakes mentioned the Fresh Start report. The Foreign Secretary has written a foreword to this document, as my noble friend is aware. He welcomed its contribution to Conservative Party policy thinking, saying:
“Many of the proposals are already Government policy, some could well become future Government or Conservative Party policy and some may require further thought”.
This report is a valuable contribution to the debate and includes some ideas that are already government policy.
The noble Lord, Lord Monks, spoke of the benefits of EU social policy. The Prime Minister has said nothing about seeking to undermine the European social model. I think all parties agree that we need to look at how the working time directive impacts on our ability to run our health service, and we need to ensure that we remain competitive. As Chancellor Merkel has said,
“If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending”,
surely something has to change.
My noble friend Lord Howell spoke about the need to build alliances. He is quite right. The UK does have alliances. The PM noted in his speech:
“So let us use this moment, as the Dutch Prime Minister has recently suggested, to examine thoroughly what the EU as a whole should do and should stop doing”.
The noble Lord, Lord Blair, spoke about opting out of the criminal justice system and whether this would make things more complex. We have committed to a vote in both Houses before a decision on whether or not to exercise the JHA opt-out. The UK national interest will be at the heart of any future policy and we are committed to a constructive working relationship with other member states on this.
The noble Baroness, Lady Symons, and the noble Lord, Lord Dykes, asked very specific questions about legislating on a referendum and whether that will be drafted by civil servants. Civil servants will not be working on this. It would not be HMG policy. Any work on drafting legislation before the election will be done by the Conservative Party.
We have had a wide-ranging discussion today and I was hoping that, unlike the other place, this is not a place where politics is always to the fore. Unfortunately, the noble Lord, Lord Liddle, was quite passionate in his critique of the Conservative Party. He said that Labour’s position on this was clear. I have to come back at him and say that Labour’s position on this is at best unclear and at worst dithery and confused. He will of course be aware of his leader’s comments at Prime Minister’s Questions on 23 January, where the right honourable Ed Miliband said:
“My position is no, we do not want an in/out referendum”.—[Official Report, Commons, 23/1/13; col. 305.]
Of course, only days earlier he had said:
“Committing now to an in/out referendum has big costs for Britain”.
Labour is clearly still formulating its policy. Worse than the present position, the noble Lord should also reflect on what his party did in government. Let us not forget that Labour waved through above-inflation hikes to the previous EU budget; gave away £7 billion of our rebate but failed to reform the common agricultural policy; signed up to the eurozone bailout; gave away our opt-out on the Social Chapter; and refused us a referendum on the Lisbon treaty. This is not the kind of place where these discussions should happen. We are not like the other place but the noble Lord, Lord Liddle, clearly wants this to be part of the discussions.
With the ongoing euro crisis the European Union is changing. These changes are raising a series of fundamental questions about the future of the EU and Britain’s place in it. The questions will not go away and we should be playing a leading role in shaping that debate. Britain should want to remain in the EU. We need to be in the single market, not just selling goods to Europe but with a say in the rules as well. Public disillusionment with the EU is at an all-time high and people feel that it is heading in a direction for which they did not sign up. We must address these matters, as the result is that democratic consent for the EU in Britain is now wafer thin. This must worry the party opposite as much as it worries us.
We want to negotiate a new settlement in Europe focused on competitiveness, fairness and respect for national democracies, and which allows powers to flow back to member states. We want fresh consent for this settlement. The Conservative manifesto in 2015 will commit us to negotiating a new settlement in the next Parliament. If we win the election we will hold an in-out referendum to stay in the EU on new terms or to come out if those terms cannot be negotiated. We will complete this negotiation and hold the referendum within the first half of the next Parliament.
It is clear that there will be challenges ahead on the road to a reformed European Union and a new settlement for the United Kingdom. But as the Prime Minister said, we believe strongly that Britain’s national interest is best served in a flexible, adaptable and open European Union, and that such a European Union is best with Britain in it. We will strive to achieve the right outcome for Britain and the right outcome for the rest of the European Union.
Baroness Noakes
My Lords, I thank all noble Lords who have taken part in this good debate. I agree with the noble Lord, Lord Liddle, that three minutes did not diminish the quality of the contributions. That is the only thing on which I think that I agree with the noble Lord, Lord Liddle.
A regular criticism made of the Prime Minister was that this was simply a party political move. As my noble friend the Minister has pointed out, however, there is widespread disillusionment in the country with the EU, and in polls there is regularly a majority of the country which does not wish to stay in the EU and wishes to have major renegotiation. That is what my right honourable friend the Prime Minister is responding to, and it is unworthy of other people here to suggest that is solely for party political reasons.
My noble friend Lord Howell made the point that the Prime Minister wants to negotiate changes that benefit all of Europe and not just the UK. Of course it is the national interest that will determine how we vote when we get a referendum. While we want to benefit the rest of Europe we will judge the result against our interests and that is important. As my noble friend the Minister has pointed out, we are still unclear about the Labour Party’s position on a referendum, but I agree with the noble Lord, Lord Watson of Invergowrie, and others that the Labour Party will probably have to come to the table and offer a referendum to the people. Given the popular view of the voters, that will be irresistible and is just a matter of time. To him and all other doubters on this subject I say, “Bring it on”.
Visas: Student Visa Policy
(11 years, 9 months ago)
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Lord MacGregor of Pulham Market
That this House takes note of the impact of student visa policy on admissions to universities in the United Kingdom and Northern Ireland.
Lord MacGregor of Pulham Market
My Lords, I thank the many distinguished noble Lords who have put their names down to speak in this debate. There are several, such as my noble friend Lord Norton of Louth, who for good reasons are unable to be here but would like to have participated. That is a sign of the concern that there still is on this matter. The time pressure put on us means that I will have to be succinct on the issues and there is much that I will have to leave out.
There are three basic points with which to start. I strongly support the Government’s overall immigration policy. I entirely agree with the steps take to deal with abuse and bogus applications in parts of the private sector, the education sector and English language schools. Today we are talking solely about universities. I welcome the helpful steps that the Government have taken to alleviate some of the concerns expressed not least by five Select Committees in both Houses, and in particular the decision to disaggregate the student numbers in the migration figures. That was a big step in the right direction but we need to go further.
The achievements of our universities are one of the major UK success stories. Many are recognised world leaders, comparable to the best anywhere, especially in the United States. Overall our university sector has an internationally high reputation and the demand for places from overseas is strong. Non-EU overseas students contribute over 10% of total university fee income. The contribution to that reputation from overseas undergraduates, postgraduates, research fellows and professors working and studying here is great. The benefits that our universities bring to local economies are substantial, not only in their spending on local goods and services but also in their contribution to key economic developments. The huge growth in the science and research parks in Cambridge is just one outstanding example. The universities are a major expert earner, accounting for £8 billion now and with an expected to increase to £17 billion by 2025 on recent trends. They are the fifth biggest positive contributor to the net balance of payments.
The vast majority of overseas students are not permanent immigrants. They are migrants. The universities have excellent systems for tracking what happens to them. Most eventually return to their own countries or elsewhere. A 2010 Home Office study showed that of the individuals who entered as students in 2004, only 3% had settled permanently by 2009. They do not claim benefits. It is a condition of their visa that they have no recourse to public funds. They are net contributors to the economy and not a drain on public funds. They are unlikely to require NHS care because of their age profile. They are totally unlike bogus applicants and many other immigrants.
There are countless examples of them returning to their own or other countries and becoming permanent ambassadors for the UK. They are our best ambassadors when they leave our shores. They find prominent positions in government, foreign services and defence, industry and commerce, education and elsewhere. This is so-called soft power. In short, these are absolutely not the sort of immigrants that the public and the media have in mind when they call for tougher controls on immigration. They are the opposite, real assets to us, and that needs constantly and regularly to be made clear in the context of policy decisions. In so far as there has been public concern about students, this was related to bogus ones, and I hope that that problem has now been dealt with.
Overall figures of new entrants from non-EU countries are only slightly down in 2012, by 0.4%. Most overseas students are postgraduates and their numbers are down by 1.9%. Not much, one might say, but I suspect that this is only the start of a trend. First, in what is a hugely competitive industry, as many in this House know, numbers in most of our major competitor countries—America, Australia, Canada and some EU countries, which are fast developing courses in the English language —are up.
Secondly, some universities have told me that they found that last September the number of postgraduate applicants who had even paid deposits and then declined to come had increased. Thirdly, the perceptions that the UK was imposing tough new restrictions, being less welcome to new applicants and spouses, and even closing for business, have grown considerably since these figures were compiled. This goes particularly for the Indian subcontinent, where numbers are already substantially down and compensated for only by a rise in China.
Unless action is taken, future years will show a considerable decline in entrants. On the Indian subcontinent and, I am told, in some African countries, this perception has been especially evident as a result of the London Metropolitan issue. I do not have time to go into that in detail. Suffice it to say that the hostile publicity in India after that matter focused on the students who either had to or could not find other places—and it was huge. That, combined with individual stories about visa difficulties with the UK Border Agency, has been immensely damaging.
Fourthly—and this is difficult to explain in a few words, certainly to people outside this House—the claims sometimes made by Ministers that there are no limits on non-EU applications are simply not believed. This is due partly to the perceptions that I have already described, partly to difficulties with the UK Border Agency—of which, more in a moment—but perhaps most of all to the following point. In order to meet the Government’s target of reducing net migration to tens of thousands by 2015—and we are still a long way off that—and since students are the largest category of migrant, a further reduction in student numbers seems inevitable. The Migration Advisory Committee’s report states that a reduction in non-EU student numbers of 87,600 in the period 2012 to 2015 would be required to meet that target. The Institute for Public Policy Research has an estimate of 50,000 fewer non-EU students, translating to a loss to the UK of £2 billion to £3 billion per annum. These figures suggesting limits are becoming widely known and are fed by the perception of the way in which the UK Border Agency is applying its controls and rules to potential and already-in-place students from non-EU countries.
So what is to be done? I will be as brief as possible to enable as many speakers as possible to have a little bit more than the two minutes allowed. I have two points to put to my noble friend. First, it is clear that the UK Border Agency is overstretched, overbureaucratic and underresourced. Universities are highly responsible and want to clamp down on any bogus students and those who break the rules. I have talked to various vice-chancellors, seen the Universities UK submission and read the excellent article in the Daily Telegraph of 24 January by Sue Cameron, which accurately sums up the impressions that I have gained. The stories of unnecessary difficulties are legion. The UK Border Agency seems to be making students feel as unwelcome as it can. The amount of time, energy and costs that universities are having to use up is high, and all this is now being used by competitors in other countries to imply that the UK is closed for business.
I have a list of complaints and suggested improvements from Universities UK which I do not have time to repeat. Today, I shall mention just one or two of them. It makes the following points: that the UK Border Agency requirements of tier 4 sponsors have changed 16 times since 2009, making it incredibly difficult for sponsors to keep track of requirements; that changes have been made to visa requirements in the middle of the universities’ admission cycle, which has led to individual institutions having to review by hand thousands of offers already made to prospective students; that the UK Border Agency helpline is often unable to answer questions about changes to the rules; and—this is a particularly important point—that universities frequently tell Universities UK that they have received no feedback from the UK Border Agency following a tier 4 audit visit, either to inform them that they are compliant or to point out shortcomings or potential weaknesses. Many universities are making this point to Universities UK, and I hope that the Government will take it up.
Secondly, and most important of all in the light of all that I have said, I strongly support the recommendations of the five Lords and Commons Select Committees, including the Public Accounts Committee. It must be rare to have five committees from both Houses making the same points time and again. I am not sure that I can recall that ever happening before in my long period. It is important therefore that the Government take heed of what they have all said and remove international students from the net migration target. All five committees have powerfully argued the case. I quote from just one, the House of Commons Business, Innovation and Skills Committee, reporting in September 2012. It states:
“Whilst we understand that the UN definition of migration includes overseas students the Government is under no obligation to use that definition for the development of domestic policy”.
That is a fundamental point: it is perfectly reasonable to have the figures under the UN definition, but they should not be used for the development of domestic policy. The committee goes on:
“Removing overseas students from the Government’s migration targets would allow universities to compete on a level playing field with their international competitors”.
That is again an absolutely fundamental point. By changing the system, we would come into line with what happens in America, Australia and Canada, where they are making great appeals to overseas students. The report continues:
“It would also allow the Home Office to concentrate on economic migrants and their value to the United Kingdom”.
That is a point that I made earlier. The report goes on:
“We recommend that, for domestic policy purposes, overseas students should be recorded under a separate classification”—
we are moving, thank goodness, towards that—
“and”—
crucially—
“not be counted against the overall limit on net migration. That does not mean that we wish to hide the level of overseas students studying in the UK. The Government could make clear the distinction by publishing, alongside its net migration data, detailed information on the number of overseas students studying in the UK, their country of origin, the number who remain here after they have completed their studies and the number who remain in higher education”.
The committee then makes the following, terribly important point:
“Such an approach would make clear the difference between permanent immigration and study and crucially it would demonstrate clearly that the United Kingdom welcomes overseas students and values the contribution they make to our economy”.
I could not put it better myself. I stress again that such a change would bring our universities into line with the systems in our major competitor countries.
Yesterday, all five chairmen of the committees wrote to the Prime Minister on this point in view of his forthcoming visit to India, where the problem is most acute. I cannot recall an occasion on which the chairmen of five Commons and Lords committees have taken such action. I am sure that, on his visit, the Prime Minister will yet again powerfully and splendidly promote the cause of British exports. This change would be most timely and welcome in relation to one of Britain’s key export sectors.
At the Conservative Party conference in October 2011, the Prime Minister said:
“I want the best and brightest … scientists and students from around the world to get the red carpet treatment”.
I say amen to that. It is precisely what this change would do. My noble friend on the Front Bench has a deservedly high reputation in this House. I am sure that he will listen. I hope that, as a result of this debate, he will feel able to pursue both these points, on the UK Border Agency and on taking the migration statistics out of the target, with the relevant colleagues in government. If he can achieve progress on that front, it will be warmly welcomed by very many in this Chamber.
Lord Lucas
My Lords, may I point out that, on the mathematics of the speakers list that we have in front of us, we actually have three minutes each?
Lord Howarth of Newport
My Lords, it is a pleasure for me today to follow the noble Lord, Lord MacGregor, as it was when he was Secretary of State for Education and I was his Higher Education Minister. Our vision then for higher education, as it remains now, is of a UK universities system that is internationalist and open to ideas, people and collaborations from across the world, with a diversified student body and diversified sources of finance and less dependence on the taxpayer. That remains the vision of Ministers at the Department for Business, Innovation & Skills, but it is apparently not the vision of the Home Office.
The message that comes from government is confused but is interpreted across the world as being that international students are no longer welcome in Britain. As a result, applications are down, particularly among postgraduate students, which is a great worry, and the share of the market in international students achieved by our universities is stagnant when it could be so strong. The best and the brightest, whom the Prime Minister wishes to encourage, are those who can most easily go elsewhere.
Why does the Home Office have a veto over BIS? The Home Office is pursuing in blinkers an inappropriate political pledge at the cost of damaging universities, our economy, our culture and our influence across the world. This is nothing to do with stemming the flow into this country of poorly skilled migrants, which is indeed a threat to employment and public services. It is nothing to do with dealing with the rackets at bogus colleges. There is a systemic failure in government.
Who are staff at the UK Border Agency to second-guess universities as to whom it is appropriate to admit? I fear that staff at the UK Border Agency are not themselves the brightest and the best. I hope that the Minister has had the opportunity to read the evidence given to us by Million+ on behalf of Modern Universities. It is a story of ever changing regulations, constant threats to universities and an absence of guiding principles and a proper code of conduct. There are reports of staff monitoring universities who are ignorant and sometimes in breach of the law and who behave with a rudeness and an incompetence that are entirely unacceptable. The tone of the Home Office and the UKBA in this area has been deplorable.
The Home Secretary has said that there should be an extra 100,000 out-of-country interviews. How is she to ensure that the agencies that carry out these interviews will be competent and not corrupt? One can only fear that this is part of a plan to reduce drastically the number of visas granted in the run-up to the general election.
It is right therefore, as the noble Lord and five Select Committees have said, that these statistics should be disaggregated while complying with the UN requirements so that university-sponsored students are taken out of the net target for migration. In that—
Baroness Garden of Frognal
My Lords, there are only three minutes each. People need to sit down the minute the clock hits three. I am afraid that there is no leeway.
Lord Howarth of Newport
I will simply say then that universities, business, cultural institutions and politicians of all parties are asking the Home Office to listen to what is being said and to change its approach. I very much hope that the Minister will be willing to do so today.
Baroness Sharp of Guildford
My Lords, I thank the noble Lord, Lord MacGregor, for raising this important subject. I declare an interest as a visiting fellow at the University of Sussex and as a former university teacher. I also echo the thoughts expressed by the noble Lord, Lord MacGregor, about how as a House we undoubtedly condemn the bogus student issue and welcome the fact that the Home Office has moved to disaggregate the statistics.
Nevertheless, according to the 2011 figures, 566,000 people came through immigration into the UK and 351,000 left, so net migration was 215,000. As we have heard, the Home Office has a target of reducing this by the next general election, in 2015, to less than 100,000. In 2011, 174,000 non-EU overseas students enrolled to study at UK higher education institutions. We know from the Home Office research based on the 2004 cohort of students that only about 3% of these students actually remain permanently in the UK in jobs after five years. Therefore, of those 174,000 students fewer than 10,000 will be added to the net immigration figures.
However, the UK Border Agency has a target to cut net immigration to the tens of thousands. If it could cut the number of students by 50,000—from about 175,000 to 125,000—by tightening up on student visas, that would mean only a short-term gain, not a long-term one. If the figure is reduced to 125,000 and only a very few remain, that would mean only 3,000 to 4,000 remaining.
I can only assume that this is a Home Office strategy, because it is making it as difficult as possible for those from non-EU countries to come here as students. Only yesterday, when I was at UCL giving a seminar on a masters course, I heard of a student from Lebanon who had been lined up to come here and join the course. She had filled in all the forms and been through the interview but in the end failed to meet the deadline for applications and was turned down because the Border Agency and the company that it uses failed to tell her whether she had passed the interview. This is a cheap, short-sighted strategy and not worthy of this country.
Baroness Prashar
My Lords, following on from the excellent and constructive introduction by the noble Lord, Lord MacGregor, I just want to ask some questions. In the face of such compelling evidence of the damage that this policy is doing to our reputation and long-term benefits, why are the Government not willing to remove international students from their target to reduce net migration as recommended by five Select Committees, including EU Sub-Committee F, of which I am a member? If all the changes that the Government felt necessary have been implemented to tackle abuse of the system, why will the Government not change their policy and use the opportunity to join the British Council, of which I am a deputy chairman, Universities UK, UKCISA, of which I am a president, and others in a drive to say that international students are welcome in the UK?
The benefits that will result from this change in policy are glaringly obvious: it would enable universities, the British Council and embassies to speak with one authentic voice in promoting the UK’s welcoming image to overseas students and it would enable UKBA to work collaboratively with universities to ensure visa compliance. It would be a positive outcome for everyone. At present the negative messages are undercutting the excellent and constructive work of organisations such as the British Council and the universities.
The British Council is creating new partnerships and sustaining long-term ones to encourage students and is building trust. The Government should be capitalising on this work and taking advantage of the growing global market for students. Competition is growing from countries such as Australia and Canada. The best and most innovative research comes from international collaboration; nearly half the UK’s research staff and PhD students are non-UK nationals. We should be ensuring that all policy initiatives support the objective of attracting international students, treating them well while they are here and building long-term good will in the national interest.
Furthermore, the process for obtaining a student visa has become far more extended, complex and confusing. The additional imposition from April of face-to-face interviews for students is yet another example. It is an obstacle race from start to end when the students are here. Why can the government agencies not work collaboratively with universities to improve matters? It is time we were told why the Government are continuing to pursue a policy that is so against our long-term interests.
The Lord Bishop of Wakefield
My Lords, I thank my noble friend Lord MacGregor of Pulham Market for securing this crucial debate and for the clarity of his introduction. My recent association with the University of Huddersfield has been illuminating on this issue. I declare an interest both as a former member of the council of that university and as an honorary graduate.
Huddersfield University has been crucial in supporting community cohesion in West Yorkshire, where there are substantial Asian minorities. One of the keystones has been the university’s work with overseas students. It has welcomed significant numbers, notably from Asia. This has been a two-way process, with the university validating degrees in east Asia. That interplay has emphasised those values for which Britain has been famous, including tolerance and good government.
Overall, we have established a remarkable reputation not only for tolerance but also for offering education to overseas students. In earlier times, other rather less welcoming nations might have been less ready to accept people such as Karl Marx and Sigmund Freud to their shores. Any number of political leaders across the world have spent part of their university education here. As the British Medical Association pointed out in its recent briefing, we have also gained enormously from other countries through medics who have trained here and have stayed.
I turn now to a different scenario. In the 1990s, while I was working at Lambeth Palace, we established the St Andrew’s Trust. This has brought students from Russia, Georgia and other countries to study theology and pastoral care. Those students return to their countries to occupy positions of significant influence. That initiative was intentionally dovetailed with the Government’s Chevening scholarships at the same time as the Government were developing the Know How Fund, for the same objective of soft power.
In a wide-ranging briefing, Professor Edward Acton, the vice-chancellor of the University of East Anglia, pointed to a clamour for the rules on student visa applications to be changed. It is common sense for students to be in a different category, as the noble Lord, Lord MacGregor, suggested, and treated as temporary migrants, so that both they and we can benefit from their attendance at our universities. Operating now in a market economy, our universities need to attract overseas students to help to balance the books.
Saint Benedict, whom I cited in an earlier debate today, called his monks to welcome all into community. They want to welcome them, he said, as if they were Christ. That seems to me to be a principle to which, of whatever religion or none we may be, we might want to adhere. I strongly urge Her Majesty’s Government to review the policy in the ways suggested by the noble Lord, Lord MacGregor, and to once again welcome those who ultimately benefit our economy, as our own policies elsewhere suggest.
Lord Wei
My Lords, I, too, am grateful to the noble Lord, Lord MacGregor, for tabling the debate. I declare an interest as someone who often works with universities, particularly east Asian student communities, organisations and bodies.
When our country is in desperate need of growth, the question of how we treat visitors to it is of utmost importance. As the son of a Chinese immigrant, I support carefully managed immigration and deplore the previous Government’s mismanagement of it. However, I must say that I am unconvinced that today’s Home Office and UKBA approach to student visas will address the two underlying root causes of uncontrolled net migration from Europe and a lack of imagination.
Let me start with Europe. Because we are part of the EU—I welcome the Prime Minister’s recent pledge to renegotiate our relationship with it—we have the ability neither to police migration from within the EU nor to prevent people from engaging in welfare tourism. That is likely to intensify from 2014 onwards. What can we do about it? It seems that the answer right now is not very much. Instead, we attack non-EU university students, few of whom have been proven to abuse the welcome that we give them, as a means retrospectively to deal with excessive EU immigration.
The consequences of that policy are potentially ruinous: lower growth as fewer students come to stay, invest and create jobs; a decrease in trade, with fewer people able to help us to communicate with the emerging economies of the world; and universities declining and less able to rely on exporting education to balance their books. A policy goal and target that in themselves are well motivated better to manage immigration risk becoming tools for protectionism, economic decline and European hegemony over our sovereign affairs.
However, with more imagination, we could reverse the damage being done while still meeting our objective of having better, more carefully managed net migration. We should start with the basics: exclude students from the immigration statistics, like most other developed countries; have simpler, more affordable visa processes; authorise visas for part-time masters; and let students and other immigrants stay to work after their studies, particularly for trade-related roles.
Let us use our foreign aid to help countries where most of our immigrants come from to create better alternative destinations than ours. Let us encourage some of our young people to emigrate and learn how to do business in emerging markets, reducing the net migration totals in the process. It is time to stop making the international student the bogeyman of our dysfunctional EU-directed immigration policy. Are my noble friend and the head of UKBA willing to meet me and others to discuss more innovative ways to help to manage immigration and to help this country to grow again?
Baroness Warwick of Undercliffe
My Lords, I thank the noble Lord, Lord MacGregor, for holding the Government’s hands to the flame on this crucial issue. I declare an interest as a member of the council of UCL.
President Obama made a speech yesterday from which I wish to quote because it shows what we are up against. He talked about the brilliant students studying in the US from all over the world, earning degrees in the fields of the future. who want to turn their big ideas into big business. He wants America to help those students to stay because,
“if you succeed, you’ll create American businesses. And American jobs”.
Other countries appreciate the long-term strategic importance of international education. The risk for us is that we have our priorities wrong—that we are complacent about our leading place in this fiercely competitive field and squander our advantage as a result.
The noble Lord, Lord MacGregor, referred to the unprecedented move of five Select Committee chairs today urging the Prime Minister, if he is committed to growth in the market in which the UK excels, to add action to words, remove students from the net migration target and encourage them to choose the UK. In the light of that, will the Minister urge the Prime Minister to reconsider? I echo the question asked by the noble Lord, Lord MacGregor, about government targets. How will the Government meet the target of reducing net migration if not by reducing substantially international student numbers?
I make one final point about figures. Universities’ real fear is that the rate of growth is slowing, but today’s UCAS figures showed an increase in international student applications, so why the anxiety? Those figures give a very partial picture. UCAS figures represent only 20% of the total intake to universities. They exclude postgraduate students and are figures for applications only; many will not translate into enrolment. A far more accurate picture can be gained by looking at figures for actual enrolment. The statistics agency HESA has just published the figures on the number of new entrants to universities in 2011-12. They show a decrease for both undergraduates and postgraduates. Those figures are a warning of what might happen if we do not change course. Does the Minister acknowledge that the latest, more worrying, figures give us a more accurate picture of what is happening to international student numbers?
Baroness Benjamin
My Lords, I, too, thank my noble friend for securing this important debate and declare an interest as the chancellor of the University of Exeter, where we have had a rapid rise in the number of international students because we have reached out to the world by creating one of the UK’s most successful world-class universities. We are proud to have 5,000 exceptionally brilliant international students from 140 countries, including China, Hong Kong, India, Vietnam and the USA.
These international students make a massive contribution to increasing diversity and have a positive impact on the life of the university and international understanding in the south-west, where celebrations such as Diwali and the Chinese New Year are now firm dates in the city’s calendar. This is vital in an area that does not enjoy the same level of cultural diversity as London and other inner cities. International friendships forged in the south-west will benefit us all long term.
At a time of financial insecurity we should also acknowledge the positive economic impact that our international students have on jobs and local investment. An independent study that we commissioned from Oxford Economics found that our international students contributed over £88 million a year to Exeter’s GDP and supported 2,880 jobs. In the south-west economy, that rises to over £104 million per year and 3,280 jobs.
This success is at risk if we do not continue to provide a warm welcome to international students. Why are the Government proposing to do the reverse? Universities in other countries will take our market share. This makes no sense because in this competitive international market students can go anywhere to study where they feel welcomed. From my personal experience on graduation days, I know that they love coming here. Higher education is a great British success story and we should not damage its future international competitiveness. I beg the Government to reconsider.
Lord Sutherland of Houndwood
My Lords, I thank the noble Lord, Lord MacGregor, for introducing this debate so carefully and for laying out the issues so accurately. I agree with everything that he said. It is not often that a politician hears that, but today one does. I want to take a different route, however, and I must give an account of my own links with universities. I have links with more than a dozen universities, which I would be happy to spell out on another occasion.
I will start with a team list. It is an international team: from Hungary, Edward Teller, Enrico Fermi, Leo Szilard and Eugene Wigner; from Switzerland, Felix Bloch and Otto Frisch; from the Netherlands, George Uhlenbeck and Samuel Goudsmit; and from Germany, Rudolf Peierls, Gregor Wentzel, Bernard Peters, Hans Bethe, James Franck, Charlotte Riefenstahl and Wolfgang Pauli. They were all members of Robert Oppenheimer’s team in the Manhattan project in Los Alamos. They were recruited to that team by Oppenheimer and they were recruited because they clung to Oppenheimer. They were bright physicists—some won Nobel prizes both before and after Los Alamos—and with them the centre for physics research, at a critical time in the history of the West, moved to the USA.
Oppenheimer met all these scientists in his early studies as a postgraduate in Europe in the late 1920s. All of them were willing to attach themselves to Oppenheimer. By then many of them were already working in the USA. What moved them around is the fact that science and physics are international. They worked together, driven by intellectual curiosity and by enthusiasm for their subject and not limited by national boundaries. They were willing, ready and able to move at a time of critical importance and they all were all key members—I am indebted to Ray Monk’s biography of Robert Oppenheimer for this—of Oppenheimer’s team that got access to this important research before Hitler could capitalise on it.
I ask now: where would we be today? That was a climate of opinion that encouraged this international movement, driven by curiosity and intellectual ability. Is that what the Government have in their current policy? As we are hearing all round in this debate, the answer is no. Interestingly—I include a footnote saying that I am indebted to the noble Lord, Lord Hennessy, for this quotation—Churchill said:
“We had better German scientists than the Germans”.
That made the difference and it was a critical difference. I put it to noble Lords that the lumbering system that has been set up does not serve us well. We have a lesson to learn from history.
Lord Lipsey
My Lords, the noble Lord, Lord MacGregor, said it all. I would like to add a couple of minutes-worth from the perspective of my role as chair of the Trinity Laban Conservatoire of Music & Dance. I understand the dilemmas of trying to curb immigration, but extending control to students has gone too far. It is undermining a highly profitable British export while diminishing the intellectual and cultural vitality of our nation. Nowhere is this truer than in music and dance, which by their nature are international. They are for all human beings.
Just as talented students from India and China want to come here to study music, we are slamming the door in their faces. To add a music point, one of the great attractions of our music conservatoires was the two-year rule whereby students could work in music two years after they graduated. Some 29% of our masters students took advantage of that route to the great benefit of our culture and their careers. That is now vastly more difficult. First, you have to show that you can earn £21,000 a year, and that is not easy for a student. Secondly, you have to be able to cite an employer. If you are a musician, you usually have a portfolio career as a freelancer and you do not have an employer. This route is therefore barred to them. Many of them, as a result, are not going to come.
Even the exception for exceptional talent is a not a very good one. You have to go back to your country of origin to apply. You then have to have the application endorsed by a competent body such as the UK Arts Council. There is, in any case, a limit of 1,000 on places. When you take that into account, the attractions for music students are being reduced so that we will become a second-class power where, in many ways, we have led the world. The sooner we exempt students from these rules, the better.
Baroness Howe of Idlicote
My Lords, I join others in congratulating the noble Lord, Lord MacGregor. I thank Universities UK for its invaluable briefing, and I speak in support of three of the issues it has raised.
First, although at 13% we are currently second in the market for overseas students after the USA, there is growing competition for such students. Canada wanted to double the number of overseas students there and not make entry more difficult, as this Government are doing. Secondly, we have already heard about the five parliamentary Select Committees, and their follow-up letter. Let us hope that it works a miracle. Thirdly, we should remember the significant contribution that these students make to their university towns and cities. The University of Exeter has been mentioned. Its report estimated that the GDP generated by its overseas students directly supported no fewer than 2,480 jobs in that city. Contacts with fellow students from overseas can lead to future research or business opportunities for British graduates as well as for themselves in other countries later on.
As a trustee of the internationally renowned Architectural Association School of Architecture, I am reminded of the successes which graduates from that school have achieved. The noble Lord, Lord Rogers of Riverside, has his world headquarter offices in London, from which outstanding international buildings are designed and built; or, to take an example of a younger brilliant generation, Chris Lee, originally an overseas AA student from Singapore, has set up a successful collaborative office for his generation of architects in Britain, from which they, too, are designing buildings all around the world.
However, unsurprisingly, the AA school is even less happy than Universities UK with the current Government’s policy for overseas students. Because the AA school is classed as an independent private school, overseas students with a tier 4 visa at the AA are not permitted to work during term time or in vacations, yet overseas students studying for an architectural degree at a UK University can—all this despite the fact that the AA school has achieved full accreditation by the Quality Assurance Agency for Higher Education, and has the same tier 4 visas. Like other noble Lords, I can only hope that the Government will now agree to remove genuine overseas students from the category of illegal immigrants.
Lord Wilson of Tillyorn
My Lords, like other Members of this House, I am grateful to the noble Lord, Lord MacGregor, for the opportunity to raise this important issue. I have an interest that has expired so recently that I should mention it: until the end of the previous month, I was Chancellor of the University of Aberdeen.
The general points have been made by all speakers that graduate students coming from overseas are extremely welcome, not just for the fees but because they enhance the whole student experience at the university to which they come. Secondly, assuming, as is the case for most, that they have been well treated, when they leave they are life-long friends and ambassadors for Britain, and points of contact.
Nor is there any doubt that we have severely damaged the reputation we have for welcoming overseas students. To pluck one statistic out of the air, the number of overseas students coming to Scotland from India in the past year has dropped by over a quarter. That is just one of the countries involved.
A number of practical things could perhaps be done. I will raise two and ask whether the Minister will look at them. First, there was until recently in Scotland a very good scheme called Fresh Talent, under which my students could stay on and have their visa extended for two years. I know from experience that some of the people who did this were very valuable to the economy in Scotland and very valuable when they went back to their home countries.
There was a similar scheme in England for a shorter period. That was cancelled a few years ago. Is the Minister prepared to have that looked at again? It was an extremely good scheme. It has been to some extent replaced by another scheme whereby MBA or PhD students can stay on provided that they have what is called “skilled work”. That is a very good idea. I suggest that the numbers are much too small; the total is 1,000 visa places.
There is another issue, which perhaps affects some parts of the country more than others. Skilled work means that one is getting a salary of at least £24,000 a year. That seems excessive, since, in the case of Scotland, the average graduate salary is £21,500 per year. I ask the Minister whether that could be looked at again to get a more realistic salary level.
Above all, as other noble Lords have said, we have created an atmosphere that suggests that students from overseas are unwelcome. Many noble Lords have suggested that figures for immigration should not include students. I totally agree. Above all, surely we must give the impression not that overseas students are unwelcome but that they are very much valued and very welcome in this country.
Lord Cormack
My Lords, it is a great delight to follow the noble Lord and to support my noble friend Lord MacGregor. I declare an interest as a member of the council of Hull University, as a senior associate and member of St Antony’s College, Oxford, and as somebody who lives in Lincoln, where we have two new but vigorous universities.
The point made by the noble Lord, Lord Sutherland, can be echoed year after year. At this very moment, there are four recent graduates of St Antony’s College, Oxford, in the new Mexican Government. From that postgraduate college in Oxford, young men and women attain positions of influence and authority in their countries year after year. Are we really saying to those who apply, “You are not welcome.”? That is increasingly the impression that they are getting.
The vice-chancellor of the University of Lincoln said to me that having the “highly trusted” status conferred on it by the UK Border Agency makes it an adjunct to that agency, yet it then finds itself criticised for unreasonable delay and inexplicable changes in rules and regulations. It is a wholly unsatisfactory situation. We are giving a very bad impression that this country, which over the centuries has welcomed so many and nurtured so many talents, is not as welcoming as it should be. It is in flat contradiction to the policies of the Department for Business, Innovation and Skills and to the underlying ethos of the foreign policy of the Foreign Secretary. It is, frankly, wrong to have a policy that is unwelcoming, unhelpful and unimaginative and that does none of us any service.
I do not wish to see illicit immigrants benefiting from the rules of this country, but it is far better that the odd rogue should get in and stay in than that we should turn away someone who may win a future Nobel prize or be a Prime Minister of a Commonwealth or other country. That really imbalances what it is all about. I beg the Government to have a policy that is sensitive, imaginative, understanding and that redresses the unfortunate impression that has been given over the past two and a half years.
Viscount Hanworth
My Lords, a particularly worrying aspect of the figures that have recently become available is the fall in the numbers of overseas postgraduate students that they record.
A reality of UK universities is that postgraduate courses in all subjects are largely sustained by overseas students. There are very few native British postgraduate students. There is virtually no provision for the support of postgraduate students via grants or bursaries. In order to sustain themselves on their courses, students must vie for posts as teaching assistants. It must be acknowledged that the widespread use of postgraduate students to assist in the teaching of undergraduate courses is having a deleterious effect on the quality of the education. An inevitable consequence of the dearth of native postgraduate students will be evident to anyone who visits a university department. There are declining numbers of native British academics within the departments, and they tend to be the older members who are passing into retirement.
Within many departments, the junior staff, who are predominantly recruited from abroad, are staying for periods of only two or three years before moving on, either to their countries of origin or to other English-speaking nations. Nowadays, many European universities are open to English-speaking academics, whatever their countries of origin may be. In the departments in which I have served, the annual rate of staff turnover has rarely fallen below 20% in recent years, and on occasion a full 30% have left at the end of the year.
What I am asserting is that British universities are in peril. My own perceptions, which have been derived from first-hand experience, contrast markedly with the self-congratulatory tenor of some of the accounts of the university system that I have been listening to. Now, we see a Government who are wilfully kicking away some of the props that support the university system, of which the flow of overseas students is a vital one. To me, at least, the motives of the Government are unfathomable.
Lord Phillips of Sudbury
My Lords, I declare an interest as chancellor of the University of Essex. I am proud to say that it is the second most international university in the UK after the London School of Economics. Forty per cent of our students come from outside the UK and, in postgraduate studies, 46% come from outside the EU, so we know a bit about the impact of the changes made in recent times. In a country which is so proud of its internationalism, which has given the world its language and which has a university sector that, as many have said, is the jewel in our crown in many ways, it seems extraordinary that we should have done what we have, knowing what happened when the same thing was done in, for example, Canada and Australia. It seems unhappily bizarre.
I should like to add to what many noble Lords have said, correctly, about the hidden benefits of our universities—the invisible aspect, if you like. Everybody has, rightly, mentioned the experience of our foreign guests, but I put it to the House that the embellishment of the experience of our native students is no less important and, in some ways, more important. It widens their horizons, gives them sympathies they would otherwise lack, and creates relationships that will remain with them for the rest of their lives. Do not ever let us underestimate the sheer human factor of these bonds, which last a lifetime and spell out positive vibes in a strange and negative world.
I want to touch briefly on bureaucracy. The new regime is bureaucratic to a degree. It is demoralising for the universities; it is obfuscating for students at home and abroad who wish to come here; and it is hugely expensive. At Essex we are spending £100,000 a year just on policing what are called the confirmation of acceptance for studies arrangements—God help us. In this world of fierce competition vis-à-vis university students, let us not score this own goal for a minute longer. As the noble Lord, Lord MacGregor, said in opening this debate so well, let us create a level playing field again.
Baroness Valentine
I declare that I am chief executive of London First, whose members include higher education institutions. My brief contribution today will follow the same theme as pursued by many who have already spoken.
I fully endorse the Government’s quest for an immigration policy that supports growth, addresses public concern and clamps down on bogus students. However, our actual policy is based on incomplete data and tends towards populism.
First, we have a net migration target, the paradox of which is that if fewer Brits retire to Spain and more Poles arrive to do our plumbing, we close our doors to international workers and students. Secondly, we base our policy on figures from the Office for National Statistics, which, frankly, has no idea how many students return home after studying in the UK, even though they make up about half our non-EU migrants. All this leaves international students as a random balancing number at the tail end of our immigration policy.
Given that we have four of the best universities in the world and that higher education is our eighth highest export, we are playing a risky game of economic roulette with the £5 billion that those students contribute. That is without adding the valuable diplomatic ties of their alumni—Bill Clinton, Indira Gandhi or Aung San Suu Kyi, to name a few from Oxford.
Encouraging figures regarding more applications from India and China were released by UCAS yesterday, but they are a small sample and should be set against the fuller data for the past two years. Indian and Pakistani students have fallen by about a quarter, and the Financial Times business education league table shows that MBA students have declined by about a fifth. Early research indicates that the policy of reducing post-study work options is a factor. I know of at least one major accountancy firm whose principal non-EU graduate intake is Indian, because it is expanding its offices in India and likes to train its graduates in London beforehand. Are we trying to hobble it? Our closest competitors, Australia and the USA, have no target to reduce international students, have more robust data, and are implementing or considering more flexible post-study work routes.
I understand that the Government wish to ensure the legitimacy and quality of migrants, but we should not create a climate where students feel that they are unwelcome because of the rhetoric around targets or because of unnecessary inflexibility. The fact is that we excel at higher education and make money exporting it. We should shout this from the rooftops and do more, not less.
Lord Hannay of Chiswick
My Lords, I, too, thank the noble Lord, Lord MacGregor, for instituting this debate. For too long we have been playing hide and seek with Parliamentary Questions, and it was time that we had a proper debate. I declare an interest as a member of the council of the University of Kent and as one of the guilty men—I think they are all men—who signed their committees’ reports.
First, I will say a word about the figures, which are frankly not at all as Ministers and the Government have presented them to the House for many months. The latest figures show a drop in the enrolment of first-year non-EU overseas students in 2012 of 0.4% and that non-EU overseas students for postgraduate taught degrees fell by 2%. When the Government said that the overall numbers of non-EU students were up by 1.5%, as they did, they failed to reveal that that figure resulted from increases of students from multi-year courses admitted before the Government’s immigration policy began to bite, and they concealed the downward trend now under way.
The drop in postgraduates was the first for 10 years, and the only reason that the figures were not even worse was because of the continued growth of Chinese students, which has masked, to some extent, the sharp drop in students from the Indian subcontinent. All this will be a lot clearer, of course, once the Government’s welcome commitment to presenting student immigration statistics separately from general immigration statistics takes effect. However, that will not solve the problem. It will simply make it easier to understand and to assess.
Those figures are bad enough in themselves, but they are a lot worse when you realise that the overall market for overseas students continues to expand rapidly and that Britain has, for many years, been a world leader. We are second in the league table, with 13% of the market in 2010. Our figures should have been going up, not stagnating or declining, if our market share was to be sustained. BIS estimates are that the £8 billion contribution of higher education to our economy will rise to £16.9 billion by 2025. A continuation of the present trends on admissions will inevitably lead to that figure being revised downwards.
No one disputes that Britain’s universities are among the best in the world, so higher education has the actual performance and the prospective capacity to be among the most successful invisible exports that we have. Even if, over time, more overseas undergraduates do their first degrees at home, as could very well be the case, we should be well placed to secure a substantial share of the postgraduate market. That makes the recent drop in that category of admissions even more alarming.
We are told a lot by Ministers, from the Prime Minister downwards, that we are in a global race for exports. Why, then, are the Government making the higher education sector, with all its capacity for expansion, an entry in the sack race? What needs to be done to remedy this deplorable situation? It is no good the Government thinking that the odd ministerial statement about Britain being open to business and about welcoming the best and the brightest will do the trick, particularly when such statements are usually heavily overlaid, as was the Home Secretary’s recent one, by the imposition of new layers of immigration bureaucracy, which will inevitably further discourage applications. What is needed is nothing less than to remove international students, both undergraduate and postgraduate, from their target to reduce—
Lord Hannay of Chiswick
Yes. I have been chased around all day by noble Lords on the government Front Bench and I am close to the end.
Otherwise, the fact that students are the largest category of migrants and that 75% of those are university students will act as a chilling factor.
Lord Hannay of Chiswick
I am sorry. I am coming to the last sentence.
What damage will the Government do by doing what all these committees ask? These students are not taking jobs away: they are bringing jobs to this country. They are financing British jobs. I hope that the Minister, who may be feeling a little lonely today and who is well known for his sympathetic responses, will set about changing this disastrous policy.
Lord Judd
My Lords, I am involved in the governance of the University of Newcastle and the University of Lancaster and, after 30 years as a governor, I am now an emeritus governor of the LSE. We live in a highly interdependent global community. To be relevant, each centre of higher education, as a community of scholars, must be a living international community. This is indispensable to the very quality of education that they provide. Present arrangements potentially damage that quality.
Why do we have a one-size-fits-all approach? Why on earth should universities with a strong record of not losing touch with their students and with low dropout rates have to go through the bureaucratic hoops and expense of attendance registers and the rest? It hardly enhances their dignity and attraction as mature communities of self-motivated students. What really is the rationale for treating students as any other immigrant instead of being in a separate category, as happens in many other countries?
An aggravating factor is the regional differences in the operation of UKBA. This adds to the uncertainty. Recruitment from India, especially of postgraduates, is certainly at risk. After China, India is hugely important in this context. The removal of the post-study work experience scheme particularly hits Indian recruitment. There are disturbing differences between what Ministers say about the vital need to win overseas students to the UK and what the too-often insensitive and unimaginative operation of UKBA presents in practice.
It boils down to this: are we determined to appear to the future leaders across the world as a neurotic, bureaucratic, small-minded, defensive little island to the north of Europe, so why go there to study, or as a dynamic, self-confident and welcoming player in the global community, which is an excellent place to be a student?
Baroness Afshar
My Lords, as an erstwhile foreign student in this country, I assure noble Lords that those of us who studied here in the halcyon days when we did not have to be measured by how much money we had took home wonderful memories and remain committed to this country. I guess that the 3% who stay now and those who, like me, returned generally do so for love rather than money. The good will that has been created so painfully over so many years is being completely destroyed by the Kafkaesque quagmire that is being created for the students who want to come here and for those who want to extend their visas by three or six months in order to complete their theses, about whom I particularly want to speak.
I cite the case of a single student, but I know that it represents a large number of others. This student had the necessary £10,000 in her account for the necessary 28 days before and all the rest of it. However, although she transferred the £10,000 from the deposit account into her current account, the day that this was being measured by the Home Office somehow it made a mistake.
The problem is that there is no one person to go to. If there is a mistake in your case, the only way to deal with it is to go to court. So the student had to hire a lawyer and go to court. The first court decided that she should leave. Then she had to appeal to a tribunal, which decided that the first court had erred but it did not give her any money; it did not reimburse her. Nor did it give her any evidence of its decision so that she could legally stay here. So the lawyer had to start again, making phone calls, and it took the student six months to assert her right to be in this country, by which time she was £10,000 the poorer. How she is going to stay here, complete her thesis and live is, for me, a problem. I do not see that students such as this or stories such as this are going to generate good will towards this country or bring back people who, like me, have remained committed for ever to this land.
Lord Lucas
My Lords, we are one country. I hope that we all want some degree of immigration control and we all should want our universities to flourish and bring us wealth now and influence in the future. It is therefore extraordinary that we have ended up with two bits of our country working so diametrically against each other. Universities need the UKBA to be a partner in their marketing, to help them in the recruitment of students and to work with them. As we all know, we are seeing exactly the opposite. UKBA needs universities to help it in controlling immigration. As my noble friend Lord Phillips said, they are extremely unhelpful to the UKBA in doing so. They grouse and some of them really do not do what they should at all. The result has been a total breakdown in trust and in relationships. It meant that, when London Metropolitan University erred severely, the reaction of UKBA was completely irrational, except that there was no trust and no relationship on which to base a better reaction.
We need a fresh start. I know a lot of people are making an effort towards it, as I am—in a small way—along with the British Council and Imperial College. We had a very good meeting with the UKBA in December but things have now gone silent. I am sure my noble friend on the Front Bench knows what is happening. There is still lingering resentment and anger within the UKBA which is preventing these initiatives going forward. I very much hope that he will allow me a meeting with him and with the Minister to see if we can do something about that. Perhaps in many small ways we can build personal relationships by making small changes and experiments and by taking incentives. For universities like Imperial, that should be a gentle move towards something like a most trusted status. We need some way of removing the requirements of unnecessary immigration controls, just as they have been removed for independent schools. You do not find Imperial students wandering off to work as assistants in burger bars; they have far too much to do on their degrees.
There is a lot that can be done and I very much hope that my noble friend will help us do it.
Lord Bilimoria
My Lords, during my childhood in India there was never any doubt that I would study here in Britain. My family has been educated here for three generations and I was brought up to believe that British education, along with that in the United States, is the best in the world. The point that has not yet been made is that foreign students enrich British universities and the experience of domestic students. We are in competition with Canada, Australia and the United States in particular.
I thank the noble Lord, Lord MacGregor, for initiating the debate. I agree 100% with everything he said in his very thorough speech and I am not going to repeat it. When the noble Lord, Lord Adonis, was Education Minister, I fought very hard in this House about the two-year postgraduate work visa and we managed to get unanimous support for it in this House. The Government listened; they changed their mind and it made a huge difference. I do not think the Government realise that for a foreign student, particularly one from India, in purchasing power parity terms it is really expensive to study in this country. Those two years help them to work and thus pay taxes, and save some money to pay for their education and enrich their bridge-building with this country for generations to come.
Let us look at the way the UKBA behaved towards London Metropolitan University, an issue which has already been raised by the noble Lord, Lord Lucas. I studied there for a year before I went to Cambridge, and I am an honorary graduate and visiting professor. That action has set alarm bells ringing for potential foreign students around the world. The perception it created has become a reality so far as Indian students are concerned. The UKBA cannot even keep tabs on illegal immigration, but here it is going around shutting universities and kicking out innocent students, giving them 60 days to find another place. There is a presumption of guilt rather than innocence. I thought that we had a sense of fairness in this country and that you are innocent until proven guilty.
I have a few specific questions to ask the Minister about how London Metropolitan University has been treated that I should like him to answer. First, which agencies and government departments were involved in the decision to revoke London Metropolitan University’s tier 4 licence? Secondly, when was London Metropolitan University informed about the decision to revoke its tier 4 licence? Thirdly, how many London Metropolitan university students did not have the appropriate leave to remain on 29 August 2012, the day the licence was revoked? If the Government keep on including student numbers in their immigration figures because they have a target to meet, they will have to reduce the number of students. A reduction of 50,000 overseas students will hit the economy by at least £3 billion.
I conclude by saying that the Government must listen to the five committees, to the unanimous voice of this House today, and to the unanimous voice of the higher education sector. The Government have performed many U-turns already, from pasties to the aircraft for our aircraft carriers. Steve Jobs said that:
“Changing your mind is a sign of intelligence”.
John Maynard Keynes said:
“When the facts change, I change my mind”.
The facts have changed. I would say to the Government: listen to us and remove student numbers from the target immigration figures right now, please.
Baroness Uddin
My Lords, I, too, declare an interest as an honorary graduate of the University of Exeter and the London Met. I am grateful to the noble Lord, Lord MacGregor, for giving me the opportunity to add my voice to those calling on the Government to change their mind and reconsider the position in the light of this discussion. I also thank the Bangladeshi Students Union UK for its illuminating briefing and description of the desperate plight of students. At some point I hope to be able to raise those concerns in more detail.
Not only do international students contribute to our economy, representing a significant body of income for all our universities, they also become ambassadors for the UK as part of our so-called soft power team players. I agree that we must have effective screening that can manage the processes of student entry and exit alongside systemic monitoring of all educational establishments to ensure that false applicants are prevented from entering the UK. Last summer’s visa policy resulted in large numbers of talented students rejecting our universities, which should be a matter of great concern to this House and all right-minded individuals. The London Met fiasco affected the largest body of African, Bangladeshi, Pakistani and Indian students, which may add to the already-held belief that our policies are deliberately targeting a certain minority body of students and are discriminatory.
Universities UK has said that applications by students from China, Pakistan, India and Saudi Arabia have dropped significantly. These countries send large numbers of government-sponsored students who are important not only vis-à-vis our international engagement, but are a growing source of new markets for our institutions. Indeed, Universities UK highlights that the visa policy impacts particularly on female students with dependent families and where they may be accompanied by a family chaperone. If these students are not allowed these flexibilities, surely they will not choose to study in the UK. Their government sponsors may send students to more family-friendly countries where even their presidents welcome them openly.
The UK has reached a crossroads with this Government’s policy, which ignores at their peril the call of educational establishments for it to be reconsidered. We should not compromise the long-held high reputation of the UK’s education sector.
Lord Rana
My Lords, I thank the noble Lord, Lord MacGregor, for initiating this very important debate. I wish to declare my interests as being associated with Northern Ireland universities, helping them to forge links with India. I also declare my charitable trust, which funds an educational complex in a rural area of Punjab in India.
In the 1970s, 1980s and 1990s, because of the negative image of Northern Ireland, hardly any foreign students came there. We have been working hard for the last 10 to12 years to promote Northern Ireland universities in India and China, which are big markets for students, by introducing Queen’s University and the University of Ulster to their counterparts, creating more awareness about these universities in those countries. We have been successful in enrolling students for graduate and postgraduate courses for both those universities. However, with the present attitude of UKBA, as has been said, that has really come to nothing.
Of any area of the UK that needs foreign students, Northern Ireland is a most deserving candidate. Foreign students are a great benefit in Northern Ireland not only in the fees that they pay to the universities but in promoting tourism. Their friends, parents and relations come to visit them, which helps Northern Ireland’s tourist industry.
Last week I welcomed Matthew Hancock MP, Minister for Business, Innovation and Skills, who was leading a group of principals from UK colleges to develop educational links with Indian colleges. He came to our educational complex and was pleased to see the work that we had done. All these efforts promote Northern Ireland and the rest of the UK for parents to consider the UK as a destination for their children. We are competing against Australia, New Zealand and other countries. Some of them have really relaxed their regulations to invite more Indian students. So I recommend the Government to revisit their policy on students.
Lord Giddens
My Lords, I declare an interest as former director of the London School of Economics. The LSE provides a fabulous example of the kind of a network of students and ex-students that can be built around the world. This is a means of transmitting British values and British institutions around the world. I very much agree with the noble Lord, Lord Phillips, when he said that this was of great value to British students as well.
I can only reaffirm the points made so eloquently by others. First, we should concentrate on attracting international students to the UK, not devise ways of putting them off. We are simply shooting ourselves in the foot—or perhaps an even more vulnerable part of the anatomy.
Secondly, as so many noble Lords have said, we must change the policy of listing overseas students as immigrants rather than as a separate category. We simply lose ground to the US, Australia and Canada, as many others have remarked, when the steps that have been taken so far are simply not enough.
Thirdly, what has not been discussed quite as much is that the worst kind of damage that is being done to universities and higher education is actually reputational. The reputation of British universities is fading in the eyes of potential overseas applicants around the world, and we have quite a lot of evidence of this. Noble Lords will know that once your reputation is damaged, it is very hard to recover. People here might not remember the example of Lancia cars, which used to rust to bits after about two years. No one buys them any more in the UK and they never got back in the UK. Once you have damaged your reputation, it is so hard to recover it, and this is what the Government are doing.
As other noble Lords have said, the Government are supposed to be against bureaucracy; that is one of their main objectives. They have created a monstrous thicket of regulations, which overseas students have to work through. I am one of the people who are mad enough to speak in this debate as well as the previous one on the EU, including the Prime Minister’s remarks that a good economy is supposed to be open, flexible and dynamic. This pile-up of regulations is the very opposite of that. As other noble Lords have done, I say to the Government: please, please rethink your nutty policy, in all of our interests.
The Earl of Sandwich
My Lords, everything has been said but I defend the right to say it all again in three minutes. We have debated the issue many times, and the message has been loud and clear: we are losing students to other countries and are at risk of losing millions in revenue from an £8 billion industry. Education should not be confused with immigration. That is the view, as the noble Lord, Lord MacGregor, said, of all the relevant Commons and Lords committees. Today, with a new and reasonable Minister, we look for a more positive answer. I declare an interest as an unpaid member of the advisory board of a college in Nepal, which is linked with a private London college on the register of approved tier 4 sponsors, with highly trusted sponsor and educational oversight status.
One thing that has shocked me is that non-EU students in our colleges and universities are now fair game for immigration investigators, who seem to have permission to make random checks, search files and interrogate young people at will, on suspicion that they are illegal immigrants and potential criminals. It seems to me, as someone who has visited detention centres for immigrants, to be a policy of deliberate harassment and disruption, which has appalling consequences for all the normal processes of education.
I recognise, of course, that it has been essential to disqualify colleges which cannot demonstrate the necessary standard and that regular inspection is needed. However, this does not justify the level of harassment which is currently suffered by some colleges; nor does it mean, as has been said, that justice is turned upside down, so that all colleges are guilty until they can be proved innocent.
There is a related issue of great concern to private colleges, which is the age-old right of students to work part-time during their course, which is currently only given to students in the public sector. If a private college is shown to have genuine students, why should it be treated any differently from colleges in the public sector?
Another problem is the way that colleges are being compromised and used as agents of UKBA. Reporting illegal students is obviously a joint responsibility of UKBA and the college, but too often this essential partnership breaks down when the college is unwilling to pursue students or the UKBA demands information. All this does a lot of harm to the integrity and reputation of the college. I hope the Minister can take back these concerns and I thank the noble Lord, Lord Lucas, for our extra minute.
Lord Stevenson of Balmacara
I thank the noble Lord, Lord MacGregor, for securing this debate and for framing so well the issues that we are discussing today. Indeed, like many other noble Lords who have already said this, I agree almost entirely with everything he said. He went a little further on the shortcomings of UKBA than I perhaps would have dared—maybe he has special rights and privileges from where he sits—but I certainly recognise the sentiment behind what he was trying to get across.
As the noble Lord said, it is really interesting that five Select Committee chairs have written to the Prime Minister and gone public about the fact that they feel so strongly on this. I hope the Minister will consider the point that it must be very rare to participate in a debate—and after all, this is a Conservative Party debate—where every single speaker excoriates government policy. I will wipe the smile from my face as I go through the motions of going forward.
This is clearly an important topic which is of interest to a very large number of Peers from right across the House who have managed the ridiculous time constraints of the debate with consummate skill. Just as a mosaic can sometimes make as strong an impact as a whole painting or sculpture, so have the 24 short interventions that we have heard today combined to make a very powerful case about the damage that the Government are doing to our precious higher education system. What has been said here this afternoon will be picked up and relayed right across the country and right across the globe. I will say a few general things about immigration and then pick up the main points made in the debate, as well as leaving some questions for the Minister to answer.
Britain has long been, and must remain, an optimistic, outward-looking and confident nation. When more people travel and trade across borders than ever before, no country can pull up the drawbridge. Our economy and culture have benefitted immensely from those who have come here through the generations. We should be proud of being British, and we should rejoice in the confident British diversity that occurs daily right across the country, and which London showed off for us in Olympic year. However, there is no doubt that the pace and scale of migration has created pressure on resources and strains on the solidarity of communities. The fact that the costs and benefits of recent migration were not evenly shared, particularly as a result of low-skilled migration, needs to be recognised.
What this country needs, and what my right honourable friend the leader of the Opposition has called for recently, is a proper debate about the different kinds of immigration we need and can sustain, and the development of evidence-led policies which can get the necessary controls and limits right. Such a debate would also identify the policies which help growth in the UK while at the same time enhancing our culture and society. This is where the Government are failing. As we have heard, focusing on the chimera of cutting the level of net migration leads to the sort of unfair and self-defeating policy measures which we have seen since 2010. Why are they unfair and self-defeating? Well, they are unfair and self-defeating because the Government’s net migration target bizarrely makes it a sign of success if more Brits move abroad. I ask the Minister: what sort of success does that represent?
More importantly, such an approach does not cope with questions about the different kinds of immigration there are, or recognise their different impacts both for the immigrant and for our country. Who would disagree that we must continue to be a safe haven for people genuinely escaping violence or tyranny? In fact, 70% of people in the British Social Attitudes survey agree Britain should offer asylum for those fleeing persecution. Who would disagree that we should recognise the exceptional cases of those who have risked their lives to help British interests and face continued threats now? Cases which come to mind include Afghan interpreters who helped British troops and now face threats from the Taliban as the troops pull out, and the Gurkhas.
As we have heard this afternoon, the impact of the student visa policy is economically illiterate and culturally bankrupt. Bringing more talented students from China, India or Brazil to learn at Britain’s universities not only brings in substantial investment in the short term but helps Britain to build cultural and economic links with the future leaders of the fastest-growing economies on earth. In total, foreign students bring in £8 billion a year, and BIS estimates that this figure could double by 2025—but, of course, only if current numbers are maintained.
The sorry truth is that the Government’s target for net migration cannot possibly be met without a further massive drop in the number of people coming to study in Britain. According to the Migration Advisory Committee, 87,600 fewer non-EU students would have to enter the UK by 2015 if the Government are to meet their target.
An immigration policy based solely on getting net migration numbers down means that legitimate international students and our universities are taking a significant hit—one that we can ill afford. So, can the Minister let us know—what is the target that he has in mind for the reduction in the number of international students that the Government are seeking to achieve by 2015? How do the Government expect this figure to be achieved?
It would also be helpful if the Minister could explain if there is anything else going on here apart from a simple number-cutting exercise. What is it exactly that the Government fear about university-sponsored students attending courses here? There are so many myths flying around that it is worth reminding ourselves that students on HE courses are not likely to be a burden on public service as their visa conditions specify that they should have no recourse to public funds. They usually live on campus; they are generally healthy; and most do not have dependants.
A 2010 Home Office study showed that only 3% of a cohort of non-EU students that they had followed since 2004 had settled permanently in the UK. In some courses, such as medicine and dentistry, non-EU students actually contribute to public services during their training. When one takes all this into account, the Government's current student visa policy does not stack up.
Britain has a long and proud history of being the destination of choice for potential students from around the globe. Our universities are highly regarded, and the UK provides a rich, diverse and safe environment in which to study. Higher education should be front and centre of an active government strategy to generate growth. If we are going to keep up with our competitor countries we need to be bringing more talented students from around the world to learn at Britain's top universities. It not only brings in substantial investment in the short term; it helps build the soft power that people have talked about.
The five Lords and Commons Select Committees which have recommended a change to the Government's approach to including international students within the net migration target are right. In their joint letter, they variously quote from recent reports which are unanimous in calling for a change. I would like to quote just one, from the Select Committee on Science and Technology in your Lordships’ House. The committee says:
“Given the significant contribution that overseas students make to the economy and that the majority leave the UK following their studies and do not therefore contribute significantly to net migration, we recommend that the Government make a distinction in the immigration statistics between HE students and other immigrants and uses only the latter category to calculate net migration for policy-making purposes”.
I could not have put it better myself.
At the heart of this issue is a clear failure to provide joined-up government, with the Home Office and BIS pursuing different policy objectives and using different business models. BIS has launched an education strategy to promote the UK’s education exports. As the noble Lord, Lord Rana, said, the Skills Minister Matthew Hancock recently visited India to drum up business. However, the Home Secretary has just announced that there are going to be over 100,000 more out-of-country interviews of prospective international students conducted by agents of UKBA each year, many of them targeting India.
The Government’s confused policy in this area and their destructive approach to student visa approvals are already having a negative impact all round the world. In an NUS survey of more than 900 international students, 40% said that they would not advise a friend or relative from their home country to come to the UK to study.
Finally, in April 2011, the Prime Minister made a speech on immigration. He said that,
“some say is that our policies on student visas will damage our universities … let me make clear: this government will do nothing to harm Britain’s status as a magnet for the world’s best students. That’s why with us, if you’re good at your subject, can speak English and have been offered a place on a course at a trusted institution, you will be able to get a visa to study here. Put another way, Britain’s universities are free to market themselves globally saying: ‘You can come and study here at some of the finest institutions anywhere in the world, and you can stay and work in a graduate job after you leave’. That makes our country a hugely attractive destination for genuine students who genuinely want to study abroad”.
The discrepancy is obvious. I think it was expressed best by the noble Lord, Lord Cormack, who said that it would be better that the “odd rogue” gets in and stays rather than a system which excludes future Nobel Prize winners or Prime Ministers. It was not Churchill—sorry, it is not even Keynes—but he is surely right.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, I thought today’s debate would be interesting—and not just for the content—but it has been challenging, particularly given the time pressure that noble Lords were under to make their points. I genuinely regret that oratory has had to take second place in this rapid-fire debate. But I do not think that has diminished the effectiveness of the debate. Certainly noble Lords have been able to express their views plainly. I am here to respond to them.
I am very grateful to my noble friend Lord MacGregor of Pulham Market for enabling this important issue to be debated. I hope that I am going to be able to present where we are—because I think there is a strong collective sense about this particular topic in your Lordships’ House—and explain what the Government’s position is.
I hope also that given the very large number of speakers in a relatively short time—I will be acknowledging some of the speakers but I will not be able to acknowledge them all—noble Lords will permit me to write a commentary after the debate, send it to all noble Lords who have spoken and place a copy in the Library. Given the seriousness of the issue we are discussing, I think that would be an appropriate way of handling it, and I hope that noble Lords will agree. I will use the limited time I have to express the Government’s position and to make it plain that there is a lot more that we—the Government and Parliament—have in common on this issue than might be supposed.
It has been a vigorous debate. I wrote down that “many” noble Lords made, to a lesser or greater extent, some criticism of the Government’s position. As we went along, I changed that to “most”.
Lord Taylor of Holbeach
Perhaps I ought to say “all”. But we have in common a sense of regard for the universities of this country. I acknowledge these concerns. I would like to present the Government’s policy, because there are in this area some misapprehensions, which have been manifest to me today, and I hope that noble Lords will understand that I wish to put them right.
The starting position is that the Government recognise the important contribution that international students make to the UK’s economy and society. Many noble Lords referred to this. The noble Lords, Lord Wilson and Lord Bilimoria, and many others did so. Talented overseas students help make our education system one of the best in the world. They contribute to making it one of the best in the world. Only the United States has more universities ranked in the global top 100. My noble friend Lord Phillips of Sudbury said this, as did many others.
The Government want to promote our education system to spread British influence around the world. We want to attract and retain the brightest and best students who can drive growth in our economy. These points were made by noble Lords and are being made by the Government. We want our renowned institutions, our universities, to thrive. I beseech noble Lords to separate our shared objective, which I hope that I have demonstrated, from the rhetoric. We want to see our universities prosper and act as a focus for extending Britain’s influence around the world, stimulating both academic life and our economy at home.
That is why we have not placed a cap on the number of international students who can come and study in the UK. There is no cap. The noble Lord, Lord Stevenson, should know that there is no policy on numbers. The noble Lord, Lord Hannay, talked about a policy biting on numbers. There is no policy on numbers. There is no limit on numbers. Providing that a student is going to a reputable institution—a topic to which we might turn later—has the right qualifications, enough money and adequate English, they can come to the UK and there is no annual limit on numbers. The changes that we have made are reasonable ones to ensure that basic minimum standards are met. The Government take every opportunity to make it clear that talented students are welcome here. I think that noble Lords will support that sentiment, too.
At the same time, the Government have had to take action to address the abuse of the student visa route. I remind noble Lords of the problems that the Government inherited with this particular visa provision. Under the previous system, too many private colleges were selling visas and not education. These arrangements failed to control immigration and protect legitimate students from poor-quality sponsors. The National Audit Office estimated that in 2009 up to 50,000 students may have come to the UK to work, not to study. Student visa extensions were running at more than 100,000 a year. Some serial students were renewing their leave again and again without tangible progression in their studies. A Home Office study in 2010 found that up to 26% of those studying at private colleges may not have been complying with the terms of their visas.
It does our shared cause no good if we cannot build a sustainable role for our universities in educating international students, and it does us no good if Governments ignore that sort of assessment.
Lord Howarth of Newport
Will the Minister also confirm that the Home Office has found that only 2% of international students in higher education institutions are not compliant with the conditions of their visas?
Lord Taylor of Holbeach
That is why the Government have tackled the problem of private colleges being able to sponsor students. This does not apply to universities. I make it clear that there is no limit on the number of students that universities can sponsor.
The Government have overhauled the student visa regime to tackle bogus providers, which I think noble Lords will fully understand, and to drive up educational quality and standards. The fall in the number of student visas has come entirely from those sectors where abuse was most prevalent. As a result of our tighter controls, almost 600 colleges have been removed from the UK Border Agency’s register of providers. These measures have helped improve the reputation of UK education overseas and helped protect students from unscrupulous providers.
All colleges recruiting international students must now pass an inspection of their educational quality by an independent oversight body such as the QAA. Every institution must become a “highly trusted sponsor” and renew that status annually with the UK Border Agency. The Government have also introduced tougher requirements for students. These include higher standards of language competence and limits on the duration of student visas. Students extending their visas must now show that they are making genuine academic progress. We have removed the right to work from those attending private colleges. This was attracting too many students for the wrong reasons. The Government have also introduced a new power to allow UK Border Agency officials to refuse a visa when they are not satisfied that the applicant is a genuine student. These measures to tackle abuse have resulted in an overall fall in net migration, and the number of visas issued is at its lowest since 2005.
Despite this—and this is the key point to make in response what I think was the thrust of noble Lords’ arguments today—these reforms have protected our world-class universities. We have designed our system to favour our higher education institutions. Universities have been given some flexibility in how they test language skills. University students still have very generous working entitlements during their studies—20 hours a week during term time and full time, if they wish, during vacations. They can also undertake work placements amounting to 50% of their course. Postgraduate students at universities can bring dependants to the UK. There are also plenty of opportunities to stay on and work in the UK after study, and we are extending these further for the brightest and best—I hope to come back to that point a little later. When we announced these changes, Universities UK welcomed them as allowing,
“British universities to remain at the forefront of international student recruitment”.
As the Government have reduced the number of student visas overall, the latest Higher Education Statistics Agency figures show an increase of 1.5% in the number of international students at universities, at a time when UK entrants have fallen. Listening to the debate today, some noble Lords unfamiliar with the subject might have been left with the impression that the number of overseas students wishing to come to our universities was declining. In fact, the university sector now accounts for three-quarters of student visas—up by about half in the year to September 2011. I know the latest UCAS statistics are only partial, but the statistics released yesterday show that this year new applications to UK universities from non-EU nationals are up by nearly 10% compared with this time last year. We await the final numbers, but I am sure that noble Lords will acknowledge that this refutes the suggestion that this country no longer has an attractive offer to present to higher education undergraduates.
There has been much discussion today about changes in numbers coming to our universities to do particular courses or coming from particular countries. In fact, last year’s HESA statistics show that of the top 10 originating countries, seven showed increases. From China there was a 17% increase and from the US a 5% increase. UCAS, as I said, has received 10% more applications from Chinese students compared with this time last year, and there is a 19% rise in applications from Indian students. Therefore, nothing inherent in our reforms is deterring international students. We need to consider whether in certain countries there are particular factors in play. We should be positive in our confidence that we have got this matter right. Universities themselves—and, if I may say so, vice-chancellors, chancellors and all the distinguished academics here today—should take the opportunity to make it clear that Britain will always be open to bright international students.
We have also heard today—in particular this was explained by the noble Baroness, Lady Valentine—about the need to remove students from the measure of net migration. The independent Office for National Statistics is responsible for national statistics. In accordance with the internationally agreed definition in place since 1991, these statistics define a migrant as someone changing their normal place of residence for more than a year.
Lord Hannay of Chiswick
In the noble Lord’s latter sentences he was tilting at a man of straw. All of us who have been involved in this understood many months ago that it is not the way the statistics are marshalled that really matters but how the Government apply the policy. This policy has been set out again and again with the Home Secretary and Prime Minister saying that their objective is to get net migration down to the tens of thousands. That is what does the damage. Fixing a separate statistical approach will not do.
The other thing is that the noble Lord has given us a lot of figures. Can he comment on two points in them? First, he has not given any idea of the size of the market and its speed of growth. I think he will find that the market is growing very rapidly and Britain is losing market share. That is surely what matters in business. Secondly, he has not taken on the point that the figures at the moment are being flattered by students on three-year or four-year courses who came to this country before the chilling effect of the Government’s policy took place. I wonder whether he could deal with those points.
Lord Taylor of Holbeach
There is one basic policy—there is no limit on international students coming to this country. That is the fundamental and basic policy. I will not get involved, if the noble Lord will forgive me, in a discussion about statistics. I understand the weakness of arguments based on statistics. However, it is important to emphasise why the Office for National Statistics includes students in the net migration figures. It is because of the international definitions which govern these things. I emphasise to noble Lords that there is no limit on international students coming to this country.
Lord Taylor of Holbeach
I would like to think that it has. I am more concerned whether it has been culturally absorbed by noble Lords. I am doing my best to emphasise to noble Lords that there is no limit on international students coming to this country.
Lord Taylor of Holbeach
Perhaps I may continue, because I, too, am time-limited and I will try to provide a comprehensive reply. I understand noble Lords’ interest in the matter, and I want to assist the House.
One key factor in why we need net migration figures and to note students’ presence in this country is because they are users of services. They form part of the requirements for public services, infrastructure and investment, and we need valid figures on which to base those. If we ignored them as part and parcel of those statistics, that could distort our view of the requirements in those areas. However, I note the arguments of noble Lords on this issue. I can say only that, at the end of the day, there are no limits on numbers.
The UK continues to have a great offer for international students at our world-renowned universities. Just yesterday, Universities UK stated:
“The UK remains one of the most popular destinations in the world for international students looking for a high-quality university experience”.
There is no limit on the number who can come, provided they meet language and academic requirements and can support themselves in the UK. As I said, there are generous work entitlements both during and after their study. Those securing a graduate-level job paying £20,000 a year can switch to a work route, and there are additional opportunities under our graduate entrepreneur scheme.
The Home Secretary recently announced further measures to encourage the brightest and best international students to stay and to contribute to economic growth. All completing PhD students will be allowed to remain in the UK for 12 months to find skilled work or to set up as an entrepreneur. We will add an extra 1,000 places to our graduate entrepreneur scheme.
Baroness Afshar
I beg the Minister’s pardon, but that is not what my students are experiencing. If it costs £10,000 to establish your right to complete your thesis, those good intentions are not reflected in reality.
Lord Taylor of Holbeach
That is not the experience. All the figures seem to show that graduate engagement post-PhD is an increasing area. Indeed, we are doing as much as we can to encourage it through our graduate entrepreneur scheme, as I said, for talented MBA graduates to stay to build businesses in this country. I hope that reassures the noble Baroness and the noble Lord, Lord Wilson, who was concerned about this.
The Government want to send a positive message—not, if the noble Baroness will forgive me for saying so, a negative one—about the prospect of graduate engagement post-degree in this country. The sector needs to take on the responsibility for promoting a positive message. We want to work with universities to protect not just the integrity of the immigration system but the reputation of the British education system around the world, just as my noble friend Lord Lucas said. He made a thoughtful speech and I am happy to organise a meeting for him.
The Government will continue to monitor strictly the adherence of universities as well as colleges to our rules and the UK Border Agency will work with universities on a system of co-regulation to make sure that we enforce student sponsorship obligations and protect the interests of legitimate students. UKBA has had some unreasonable criticism. It is surely right to ensure that we maintain a generous but proper regime for managing these matters. The Border Agency’s decision to revoke London Met’s sponsor licence was the right one. The agency worked with the university over several months to rectify the issues found. The Government took action to protect legitimate students and allow them to keep studying.
It does not serve the reputation of British education to ignore failings of this kind. As we are reducing student visas by tackling abuse, the number of successful applicants to study at British universities is up. This success means we can look forward to a period of stability on student migration policy. That stability will help the Government and universities to give a clear message that the UK has a great offer to international students and that genuine students are welcome here. This offer supports what should be the main attraction for international students—not visa conditions or rights to work but the quality of the education that is to be found in our country.
Baroness Warwick of Undercliffe
Before the Minister sits down, will he answer the specific question about the Government’s targets? Students form the vast majority of migrants coming to this country. The Migration Observatory has estimated that to meet the Government’s target the Government would have to reduce student visa numbers by 87,000. Can the Minister assure us, in assuring us about there being no cap on international students, that the target can be met without reducing by that number?
Lord Taylor of Holbeach
I will answer the noble Baroness but not today. I am well over my time and I think it is proper that I allow the other debates following this to take place.
Lord Phillips of Sudbury
My Lords, before my noble friend sits down, I should be grateful if he would take a brief question.
Baroness Garden of Frognal
I am sorry, but the noble Lord, Lord MacGregor, has the right of reply.
Lord MacGregor of Pulham Market
My Lords, we have all had to be extremely brief in our contributions today and so I will endeavour not to sum up but to be very brief in my final remarks.
Many of us have referred to the fact that the five Select Committees of both Houses were unanimous across party in the recommendation that they made. That is a rare event. We have had a similar rare event today in this House. The messages have been clear, extremely well informed, based on vast experience across party and, as the noble Lord, Lord Bilimoria said, unanimous across the Chamber.
I am most grateful to all who have participated. I have to say that I did not anticipate when I put down the Motion that there would be such a huge response on a Thursday afternoon but I think it reflects the concerns that many directly involved with UK universities have and it has been passionately conveyed.
I sympathise with my noble friend the Minister for having to respond to a lot of very critical comments. I think he did a good job and I entirely agree with what he said about the way in which the Government have tackled the clear abuses in the system which were not doing the reputation of overseas students any good domestically. That was the right thing to do and I am all in favour of it.
My noble friend also put across some important messages which he hopes we will convey to the universities themselves. One of the points that has come out of the debate is that many universities and vice-chancellors are still concerned about some of the approaches of the UK Border Agency and by the fact that our regime is different from those in Australia, America and Canada which have a much more apparent open house.
I am most grateful to my noble friend and I hope that he will convey some of the points that have been made in the debate. I suspect I am putting it mildly when I say that there are sometimes big issues debated on both sides in the Government. It is important that my noble friend should convey the feelings that have been expressed on the two key issues of the UK Border Agency and the difference in the targets compared with America, Australia and Canada. I beg to move.
South London Healthcare NHS Trust
(11 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, with the leave of the House I shall now repeat a Statement made in another place earlier today by my right honourable friend the Secretary of State for Health on the subject of South London Healthcare NHS Trust. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the future of South London Healthcare NHS Trust.
The NHS exists to provide patients with the highest levels of care and compassion and it does so in a way that is more equitable than any other country in the world: comprehensive care, free at the point of need. But to be true to those values, different parts of the NHS need to be financially sustainable. Financial problems left unaddressed become clinical problems, not least because money used to fund deficits cannot be used for patient care.
The South London Healthcare NHS Trust is the most financially challenged in the country, with a deficit of £65 million per annum. It currently spends some £60 million a year, or 16% of its annual income, to service two PFI contracts signed in 1998. For this and other reasons, repeated local attempts to resolve the financial crisis at the trust have failed. As a result, the trust is losing more than £1 million every week. In the three years since it was formed in 2009, it has generated a deficit of £153 million, a figure that will rise to more than £200 million by the end of this financial year—a huge amount money that has to be diverted away from front-line patient care.
So, after consulting the trust, its commissioners and the London Strategic Health Authority, my predecessor as Health Secretary, my right honourable friend the Leader of the House, instituted the special administration process, which includes a period of intense local engagement. Matthew Kershaw, former chief executive of Salisbury NHS Foundation Trust, was appointed as the trust special administrator in July 2012. I would like to put on record my thanks to him and his team for his exceptionally detailed and thorough work.
Mr Kershaw had the extremely difficult task of finding a clinically and financially sustainable way forward for the South London Healthcare NHS Trust. Reluctantly, he concluded that only by looking beyond the boundaries of the trust to the wider health community was he able to put forward a viable solution. I support that analysis.
I received his recommendations on 7 January. Six of his seven recommendations were as follows: first, that over the next three years, all three hospitals within the trust—Queen Elizabeth Hospital in Woolwich, Queen Mary’s in Sidcup and the Princess Royal in Bromley—make the full £74.9 million of efficiencies he has identified; secondly, that Queen Mary’s in Sidcup be transferred to Oxleas NHS Foundation Trust and developed into a hub for the provision of health and social care in Bexley; thirdly, that all vacant or poorly utilised premises be vacated, and sold where possible; fourthly, that the Department of Health pay the additional annual funds to cover the excess costs of the PFI buildings at the Queen Elizabeth and Princess Royal hospitals; and, fifthly, that the South London Healthcare Trust be dissolved, with each of its hospitals taken over by neighbouring NHS and foundation trusts. Sixthly, to aid implementation, he further recommended that the Department of Health write off the accumulated debt of the trust so as not to set the new trusts up to fail; that the Department of Health provide additional funds to cover the implementation of his recommendations; and that a programme board be appointed under an independent chair, reporting to Sir David Nicholson as chief executive of the NHS Commissioning Board, to ensure the changes are effectively delivered. I have accepted each of these recommendations in full.
As a consequence, he also recommended that services be reconfigured beyond the confines of South London NHS Trust, across all of south-east London. This part of his recommendation included reducing the number of A&E departments across the area from five to four; replacing the A&E department at University Hospital Lewisham with a non-admitting urgent care centre; reducing the number of obstetrician-led maternity units from five to four; downgrading the current obstetrician-led maternity unit at University Hospital Lewisham to a stand-alone midwife-led birthing centre—each obstetrician-led maternity unit would also have a midwife-led birthing centre—co-locating paediatric emergency and inpatient services with the four A&E units, with paediatric urgent care provided at Lewisham, Guy’s and Queen Mary’s hospitals; and finally, that University Hospital Lewisham should become a centre for non-complex elective procedures, such as hip and knee replacements, to serve the entire population of south-east London.
The public campaign surrounding services at Lewisham Hospital has highlighted just how important it is to the local community. I respect and recognise the sense of unfairness that people feel because their hospital has been caught up in the financial problems of its neighbour. However, solving the financial crisis next door is also in the interests of the people of Lewisham, because they, too, depend on the services that are currently part of South London Healthcare Trust. None the less, I understand their very real concerns about how any changes could affect their access to vital health services. These concerns are echoed by Lewisham CCG and many clinicians at Lewisham Hospital. I have had in-depth discussions with the honourable Members representing those affected, who have reflected those concerns to me. As a result, I asked the NHS medical director, Professor Sir Bruce Keogh, to review the recommendations and to consider three things: first, whether there was sufficient clinical input into the development of the recommendations; secondly, whether there is a strong case that the recommendations will lead to improved patient care in the local area; and, thirdly, whether they are underpinned by a clear clinical evidence base, as set out in the third of the four tests for reconfigurations.
On the matter of clinical input, a highly experienced clinical advisory group, led by a local GP, Dr Jane Fryer, and including eight trust medical directors, six clinically qualified CCG chairs, the London Ambulance Service medical director, the local director for trauma and three directors of nursing, supported the trust special administrator.
Further scrutiny and challenge was provided by an external clinical panel, which included representatives from the Royal Colleges of Midwives and of Obstetricians and and Gynaecologists. The panel was chaired by Professor Chris Welsh, SHA medical director for the Midlands and East of England. Both groups included respected national and local clinicians, built on years of previous work in this area and held a series of clinical workshops in August and September of last year. Sir Bruce was satisfied that there had, indeed, been sufficient clinical input.
On the issue of better care and clinical evidence, the recommendations provide for the adoption, for the first time in south-east London, of the 2012 pan-London standards for acute care. These are the standards that all six local CCGs have said they want to commission for both emergency and maternity care. These standards define the best available clinical practice and set the bar higher than that provided by most other acute providers in England.
Sir Bruce agreed with the TSA that the adoption of these standards, which mean improving the level of care available to the residents of south-east London, could not be achieved without a reduction in the number of sites delivering acute in-patient care. Such a reduction will enable the necessary concentration of resources and senior clinical staff. A similar approach has already led to significant improvements in stroke, major trauma and cardiovascular disease services throughout London, saving hundreds of lives.
For both emergency and maternity care, Sir Bruce found no evidence that patients would be put at risk through increased journey times. The whole population of south-east London will continue to be within 30 minutes of a blue light transfer to an A&E department, with the typical journey time being, on average, only one minute longer. Accessing consultant-led maternity services will increase journey times on average by two to three minutes by private or public transport. Sir Bruce concluded, therefore, that there should be no impact on the quality of care from the small increase in travel time.
On the issue of maternity services, the expert clinical panel advising the TSA was not willing to support the increased risk to patients of having an obstetrician-led unit at Lewisham without intensive care services. As achieving the London-wide clinical standards will be possible only with the consolidation of the number of sites with these facilities, Sir Bruce supports the proposal for this unit to be replaced with a free-standing midwife-led unit at Lewisham hospital. This will continue to deal with at least 10% of existing activity and potentially up to 60%. Thirty-six million pounds of additional investment has been earmarked to ensure that there is sufficient capacity at the other sites.
Turning now to the emergency care proposals, Sir Bruce was concerned that the recommendation for a non-admitting urgent care centre at Lewisham may not lead, in all cases, to improved patient care. While those with serious injury or illness would be better served by a concentration of specialist A&E services, this would not be the case for those patients requiring short, relatively uncomplicated treatments or a temporary period of supervision. To better serve these patients, who would often be frail and elderly and arrive by non-blue light ambulances, Sir Bruce recommends that Lewisham hospital should retain a smaller A&E service with 24/7 senior emergency medical cover.
With these additional clinical safeguards, and the impact that this is likely to have on patient and clinician behaviour, Sir Bruce estimates that the new service could continue to see up to three-quarters of those currently attending Lewisham A&E.
Allowing Lewisham to retain its A&E would help to reduce the level of increased demand at hospitals with larger A&E services, while an additional £37 million of investment will further expand services at these hospitals for more serious conditions. Sir Bruce advised that patients with those more serious conditions should now be taken to King’s, Queen Elizabeth, Bromley or St Thomas’s, not for financial reasons but to increase their chances of survival.
On the issue of paediatric care, Sir Bruce recognised the high-quality paediatric services at Lewisham and that any replacement would have to offer even better clinical outcomes and patient experience. His opinion is that this is possible but dependent on very clear protocols for primary ambulance conveyance, a walk-in paediatric urgent care service at Lewisham and rapid transfer protocols for any sick children who would be better treated elsewhere. He is clear that this will require careful pathway planning and need to be a key focus of implementation.
With these caveats, Sir Bruce was content to assert that there is a strong case for saying that the recommendations are likely to lead to improved care for the residents of south-east London and that they are underpinned by clear clinical evidence. He believes that overall these proposals, as amended, could save up to 100 lives every year through higher clinical standards.
Yesterday, 30 January, as no viable alternative plan has been put forward, and in the light of Sir Bruce’s opinion I decided to accept the recommendations of the trust special administrator, subject to the amendments suggested by Sir Bruce. It is important to be clear that my acceptance of these recommendations is conditional on Monitor approving the proposals relating to foundation trusts and on my department negotiating an appropriate level of transitional funding with organisations such as King’s partners.
Due to the size of the task, there is a significant level of risk associated with achieving the identified savings. I recognise that the additional clinical safeguards I have put in place will marginally increase these financial risks but, on balance, I have made the judgment that this is worth it if it means that local patients are reassured they will gain from an additional better service, rather than losing their A&E.
I believe the amended proposals meet the four tests required for local reconfigurations. I am therefore content for the process to now proceed to implementation and I expect the South London Healthcare NHS Trust to be dissolved by no later than 1 October 2013.
The implementation of these recommendations will be challenging and complex. It needs to be planned for carefully and will not happen overnight. I call on all organisations, hospitals and commissioners to offer their full support during the coming years to achieve the ambition of these proposals for the benefit of the people of south-east London. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Royall of Blaisdon
My Lords, I am grateful to the Minister for repeating the Statement made in the other place by the Secretary of State for Health.
Let us be clear about what the Secretary of State has announced today. He has at last accepted recommendations that were agreed by the previous Government but then delayed by his predecessor’s moratorium, thereby deepening the financial problems of the South London Healthcare NHS Trust. I am, of course, relieved that he has rejected an outrageous proposal that Lewisham Hospital should lose its A&E—a proposal that should never have been made in the first place, but which cost over £5 million of precious NHS cash on accountants in the process. That is enough to give some of the 5,000 nurses they have sacked their jobs back.
However, I deeply regret that he has accepted the principle that a successful local hospital can have its services downgraded to pay for the failures of another trust. It is simply not good enough for the Secretary of State to say that he respects and recognises the sense of unfairness that people feel because their hospital has been caught up in the financial problems of its neighbour.
The Secretary of State today crossed a line and set a dangerous precedent: that in his new market-driven NHS, finance takes precedence, and any hospital, no matter how successful, is vulnerable to changes; that success can be punished and failure rewarded; and that a community can see its A&E and maternity services downgraded without a proper consultation or clinical justification. I fear that fragile public trust in the way that the NHS manages changes to hospitals will be damaged by this announcement. It will send a chill wind through any community worried about its hospital services.
There is also now utter confusion about the Government’s policy on hospital reconfiguration. Across the country, half-baked, cost-driven proposals to close A&Es and maternity units are being foisted on local communities without evidence of how they can be done safely and without putting lives at risk. Yet, at the same time, A&Es everywhere are under severe pressure. Thousands more patients are waiting more than four hours to be seen, and there are queues of ambulances lined up outside.
In this context it is simply not tenable to downgrade any A&E department without first establishing a clear clinical case for how it can be done without compromising patient safety. However, that is being done in this case. This seems to have been a financially driven process. I would suggest that the clinical justification was patently not independent but was drawn up by the Department of Health, leaving the Secretary of State’s so-called four tests in tatters.
The fourth test is that any proposal for change must have “demonstrable support from commissioners”. I will quote a letter to the Secretary of State from the chair of Lewisham CCG, Dr Helen Tattersfield, who wrote:
“If the TSA proceeds as currently planned it is my belief that not only will this result in a reduction of quality and provision of health services for Lewisham residents with huge risks to health outcomes but also the effective end of clinical commissioning in Lewisham”.
Is it the case that these proposals, which will lead to a reduction in quality and provision in Lewisham, are opposed by the doctors whom the Secretary of State promised to put in charge, and therefore that they fail his fourth test?
Is the noble Earl confident that what has been announced is legal? We have warned the Secretary of State that he is going beyond the powers in the 2009 Act by bringing a neighbouring trust into scope. He said that he was commissioning fresh legal advice on this point. Will the department publish it today so that there can be a proper debate on the legal position?
The Government need to learn some hard lessons from this fiasco, and urgently need to restore some public trust. They need to get back to some first principles on managing change in the NHS. I ask the noble Earl to address some fundamental questions today. Will he confirm that, in future, no proposal to close or downgrade A&E or maternity services will be embarked on if it does not have a proper clinical case to support it? My party will not stand in the way of difficult decisions to close A&E services where lives can be saved. But we will not put our name to financially-driven proposals that take risks with patient safety. Will the noble Earl commit that in future, the rights of any community to a proper consultation and appeal process will not be short-circuited in this way?
Finally, will the Government today issue an apology to the people of Lewisham who have been caused unnecessary distress by this debacle? Thousands of people have put their lives on hold to fund-raise, lobby and campaign. Some 52,000 names are on a petition and 25,000 people went on the march. A community that includes some of my noble friends has rallied together to defend its local hospital and fought valiantly for everyone worried about this Government’s cavalier approach to our country’s most valued institution. It is a community that has stood up to an out-of-touch Government who think they can treat some of the more deprived parts of our country with disdain. The community has achieved something today, but it will continue to fight and it will have our support.
Earl Howe
My Lords, the noble Baroness’s comments echo very closely those made in another place by her right honourable friend the Shadow Secretary of State. I am disappointed that they do, because she seems not to have taken account of anything that the Statement contained. First, I heard no recognition that there is a serious problem to be addressed in south London. A deficit of £1 million a week is a serious matter in any terms. The deficit means that resources, whether people or money but mostly both, are being applied inefficiently. That plays into concerns about equity, which is one of the fundamental principles of the NHS. Not to acknowledge that we had a major problem there and that funds were being diverted into servicing debt that should have been applied to patient care was regrettable.
Secondly, there was no acknowledgement that the process that we had adopted was that laid down by the then Government—of whom she was a distinguished member—in the 2009 Act that amended the 2006 Act. That process is quite deliberately couched in a way designed to bring a rapid conclusion to what, by definition, is bound to be a serious if not intractable situation such as this—a curtailed process that involves public consultation but not the kind of consultation that flows from reconfiguration decisions, which are locally led.
In this case, it was our judgment that only the unsustainable provider regime was applicable, after repeated attempts by local clinicians, both commissioners and providers, to find a way of resolving the problem by looking at the difficulties faced by the trust. In the judgment of the TSA, it was a necessary and consequential part of the solution to look more widely than the trust itself, and that is what we did.
I heard a grudging recognition that the decision to retain an A&E department at Lewisham was welcome. I am glad that the noble Baroness welcomed that. We took that decision, which was not one that the trust special administrator recommended, because we listened to local opinion and to Sir Bruce Keogh’s advice. It was clear that, in some cases, it would not serve the best interests of those presenting at A&E to have to be moved to another hospital. Therefore, we took the decision that there should now be 24/7 cover in an A&E department and the capacity to admit patients from A&E. Neither of those things was recommended by the TSA, but this is what we now propose.
The noble Baroness said that this decision clearly reflected that finance took precedence over patient safety and care. I simply do not agree. Finance is, of course, a major consideration, but the fundamental thing we wanted to assure ourselves of—and this is one of the four tests that my right honourable friend Andrew Lansley put in place—was that there should be clear evidence of clinical benefit. Not only have we had two expert panels advising the TSA about this, we have had reassurance from Sir Bruce Keogh as well. I suggest to the noble Baroness that these are not people whom Ministers have somehow nobbled or interfered with. We have stayed absolutely separate from the process, as is right and proper. This has been an independent process and the results are as I have indicated.
The clinical justification for these proposals is there. All four tests that we put in place—the four tests for any change of services—have been passed, not only in terms of local consultation but also in terms of support from clinicians and of patient choice. On one level, one could argue that any service change that seeks to drive up clinical quality by consolidating clinical skills on fewer sites diminishes choice. Nevertheless, choice is not just about being able to choose a provider; it is about choosing the right care in the right place. At the moment, the London-wide clinical standard that was mentioned in the Statement is not being adhered to in any of the hospitals in that part of the world, so one could argue that the choice of provider is very limited when it comes to choosing the right quality care. It is from the fact that commissioners want to commission that higher standard that all the rest flows. To say that this is being driven purely by finance is incorrect.
By their nature, these decisions are very difficult. The job of a Secretary of State—and I believe that my right honourable friend has performed it admirably, both dispassionately and conscientiously—is to look at the best interests of the population in a region. He has done that and taken independent advice, and I hope that noble Lords will recognise that when they look more carefully at these recommendations.
Lord Tomlinson
My Lords, I join in the thanks offered to the noble Earl for repeating the Statement. One has the feeling that, for someone so highly respected in this House, his heart was not really in the repetition.
Lewisham hospital is a local hospital which produces excellent local care—and I declare an interest as someone who uses its services. What the Minister has announced today is that he is not going to make the cuts quite as bad as they were—not quite as extensive. But, in effect, we are still having a very good service penalised in order to provide resources for the failures. Can I ask two specific questions arising from the Statement? At one point it states that,
“a non-admitting Urgent Care Centre at Lewisham may not lead, in all cases, to improved patient care”.
How does the Minister square that with some of the other statements made about the principles on which this reorganisation is based? With two further tranches of money—£36 million and £37 million—provided to the other sites which need to be improved, I ask him to comment on what the Secretary of State said at the end, namely that,
“there is a significant level of risk associated with achieving the identified savings. I recognise that the additional clinical safeguards I have put in place will marginally increase these financial risks but on balance”—
basically, “I think it might be all right”. Is this not another example of wishing being given a higher priority than factual decision-making?
Earl Howe
My Lords, perhaps I may put on the record my own recognition that Lewisham hospital is an excellent hospital. There is no question about that and there has never been any question about it. The hospital provides good care for local people and it is highly valued. Only this afternoon I had one noble Lord from my own Benches telephoning me to tell me of his personal experience of Lewisham hospital and its excellent maternity care.
The noble Lord asked me two specific questions. He quoted the Statement where at one point it was made clear that a non-admitting urgent care unit at Lewisham would not improve patient care. That is the precise reason why Sir Bruce Keogh recommended something different; namely, an admitting A&E unit with 24/7 cover. He looked at the recommendation and was not satisfied with it in terms of risks to patients. I hope that that is helpful to the noble Lord because I think he misconstrued what I was saying.
On the question of risk, any set of assumptions that relies on hypotheses around patient flows in the future and clinical referral decisions has to be, by its very nature, uncertain. It is the view of the trust special administrator and the review of my right honourable friend that the assumptions underpinning these decisions are reasonable, and that was backed up by Sir Bruce Keogh. But the noble Lord has a point because the implementation of these recommendations is going to be key, and that is why the TSA has recommended a programme board to oversee the implementation of these recommendations over the next few years. It is absolutely essential that commissioners and the providers in that area buy in to these proposals. We believe that they will, but it is important that if the financial risk is to be minimised, we get as close as possible to the forecast and predictions that the TSA has set out.
Lord Kennedy of Southwark
My Lords, I want to draw the attention of noble Lords to my declaration of interests in respect of Lewisham hospital. I would like to pay tribute to the staff of the hospital who serve the community so well, and the local residents involved in the save Lewisham A&E campaign for the fantastic campaign they have run. It is supported by local GPs, local businesses and Millwall Football Club. We have a great hospital that is supported and valued locally. In the past two years the ConDem Government have spent £12 million on funding the refurbishment of the Lewisham A&E unit. We have a fantastic children’s A&E unit. That refurbishment was finished only in April last year, yet today they have downgraded our maternity and A&E services to pay for the failings of a neighbouring trust. Will the noble Earl agree to publish all of the legal advice the Government have received in respect of the decision they have taken today? Can he also tell the House if he has ever visited Lewisham Hospital? I am glad he agrees that it is actually a great hospital. If he has not visited it, will he confirm that he is willing to do so at the earliest opportunity, in the light of his responsibilities for quality and urgent care? Further, can he tell the House what he would have spent the £5 million on?
Earl Howe
My Lords, the facilities at Lewisham A&E are indeed very good, and a lot of money has been spent on them. I would hope that the noble Lord will therefore welcome the fact that we are keeping an A&E department open. That department will be comparable with many other A&E departments around the country. It will be a fully functioning department other than for those difficult and critical cases which, by common clinical agreement, need more specialist care where clinical resources can be concentrated. That is increasingly the view of senior clinicians in the royal colleges around London.
The other point that the noble Lord may need to factor in is that many of the services in an area of the country, whether it is London or anywhere else, depend on networks. What we envisage for Lewisham and Woolwich, taken together, is that they will be part of an active network, with staff rotating between the two. There will be an understanding of what each hospital is capable or incapable of doing, and an understanding on the part of ambulance trusts as to where best to take patients. We have already seen the results of that policy. This is not idle speculation. There is proof positive from the decision to decrease the number of acute stroke units in London from 32 to eight; the mortality rate has more or less halved since that decision was taken. So there is clear clinical underpinning.
I note the noble Lord’s understandable regret that Lewisham has been caught up in the problems of its neighbour. However, as the Statement made clear, the people of Lewisham also depend on the services of South London Healthcare Trust, so to say that there is somehow an island of patients who simply go to Lewisham would not be fair.
The noble Lord asked me about publication of the legal advice. I can confirm that the decision of my right honourable friend has been taken in the light of consideration of the legal issues and advice to him that it is lawful. The normal position is that the Government do not publish legal advice; there is a long-standing precedent. However, I can tell him that the legal advice backs up his decision.
Earl Attlee
My Lords, the Minister answers a question. If the noble Lord wants to ask a supplementary question, he can at the appropriate point.
Earl Howe
If the noble Lord will allow, I will just cover the final point made by his noble friend.
Given the need to reassure local patients that the changes will indeed lead to better outcomes for them, my right honourable friend took the decision proactively to publish Sir Bruce Keogh’s letter to him, setting out his clinical advice, as it has had a large bearing on his decision. So we have been as open as possible about the clinical basis on which this decision has been taken.
Lord Wills
I am very grateful to the Minister and apologise for intervening inappropriately. On the question of legal advice, notwithstanding the convention, will he agree that it is open to the Government to waive legal privilege in exceptional circumstances and that this might be such a case, since these are clearly exceptional circumstances?
Earl Howe
My advice is that there is no case for waiving that practice. As I said, it is a long-standing principle and indeed the practice of successive Governments that legal advice is given to Ministers in confidence. Therefore I am afraid that I cannot accommodate the noble Lord’s suggestion.
To answer the question asked by the noble Lord, Lord Kennedy, about visiting Lewisham Hospital, I have not done so personally. I try to visit as many hospitals as I can. If I am able to fit Lewisham into my programme, I would be happy to do so.
Baroness Wheatcroft
My Lords, I declare an interest—as so many have—in that my three children were all born in Lewisham Hospital. Thus I share the emotional feeling of many that it seems unfair that Lewisham should be penalised for the spendthrift ways of other NHS trusts. However, my understanding is that Sir Bruce was asked to look not at the financial implications but at the patient implications of restructuring. He has done that and is satisfied with the result. One thing he points out is that, in the future, not every hospital would have the capacity to offer intensive care after maternity care. One of my three children needed intensive care. If Lewisham cannot provide the highest of high-tech intensive care, then some hospitals in London will have to. The issue is that, given the high technology that is now coming in to medicine, not every hospital can be a centre of excellence. We have to spread the resource. That means some hospitals will specialise. As somebody who benefited from what was then the best of intensive care, I am very keen to see that London, and in particular south-east London, should be able to offer that. However, I accept that not every hospital that provides maternity services will be able to. Can the Minister tell me whether he can see—because I cannot—any reason why Sir Bruce would have reached the conclusions that he had, in print, if he did not actually believe them?
Earl Howe
I am grateful to my noble friend and agree with all that she has said. In making this very difficult decision, my right honourable friend’s primary concern has been to protect outcomes for local patients. Indeed, the logic behind these proposals comes from the clinicians themselves, who came together from across London—way before the TSA was appointed—to develop a series of standards for certain conditions. These are based on the simple principle that a critical mass of highly qualified specialist consultants in one place, on a 24/7 basis, available to see patients within one hour and backed up by the latest medical equipment, will give patients better outcomes. At present, no south-east London hospital meets all the emergency or maternity clinical quality standards. Achieving those standards will mean accommodating acute in-patient care across fewer sites. The result will be that people in south-east London will continue to have much better access to A&E and specialist maternity units than the majority of the population in England, and the prediction is that up to 100 lives a year will be saved by this rearrangement of services. My noble friend has raised a very important point because this is about better patient outcomes.
Baroness Gould of Potternewton
My Lords, I want to ask the Minister about the next stages and what happens now. I was interested in the paragraph that says:
“It is important to be clear that my acceptance of these recommendations is conditional on Monitor approving the proposals relating to foundation trusts and on my Department negotiating an appropriate level of transitional funding with organisations such as Kings Partners”.
What is the actual process by which Monitor will now do this? When is it likely to report? When is it likely that the transitional funding will be agreed? What is the process if neither of those things is agreed?
Earl Howe
My Lords, the noble Baroness asks some extremely pertinent questions. Matthew Kershaw, the TSA, expects to start a new job as chief executive of Brighton and Sussex University Hospitals NHS Trust in the spring. That will happen before South London Healthcare NHS Trust is dissolved. As we move into the implementation phase, my right honourable friend will use powers in the 2006 Act to appoint a new TSA to provide the management role normally performed by the board of directors. That takes care of the mechanics of management, and the person appointed will of course have to have the necessary skills and experience to lead the trust. The TSA worked closely with both foundation trusts and Lewisham Healthcare NHS Trust to develop his proposals. The trusts are eager for the mergers to go ahead to realise the benefits that I have described. All three trusts are now working towards having signed heads of terms in place that agree the principles of the transaction and set the basis for the final deal.
Looking forward, the organisational changes will almost certainly not occur until somewhere between June and October. Having said that, the trust managers will immediately start making the necessary operational efficiency improvements, as indeed I know they are keen to do. The actual transfers of emergency maternity and paediatric services to other sites is planned to happen in late 2015. That will not be immediate, because it is necessary to spend the funds that I have mentioned to expand the capacity of these other acute centres.
Baroness Gould of Potternewton
I am sorry to interrupt the noble Earl, but will he actually answer the question about Monitor and the transitional funding arrangements?
Earl Howe
I apologise. Monitor is an independent body; it will have to look at, as it is duty-bound to do, the effect of these proposals on the foundation trusts concerned—namely, Kings and Oxleas—and whether it is satisfied that all legal requirements are met. The TSA was confident in that regard, but we cannot take it for granted. As regards the transitional funding, I mentioned that all three trusts are now working towards having signed heads of terms in place, and the principles of the transactions and the basis for the final deal will include the financial aspects of the mergers. It is important for the department to work to get the best deal for the taxpayer in these transactions. Although an indicative sum of money has been quoted in the TSA’s report for this, it would be wrong, I think, for the department to commit a precise sum of money at this stage. It is important that as much money as possible is saved by the trusts working through these proposals for themselves, before the department steps in. However, we will step in to do what is necessary to ensure that these proposals are properly implemented.
Lord Patten
My Lords, I remember a particularly torrid period of campaigning in Lewisham when in the other place which almost led me to seek the assistance of the A&E department at Lewisham hospital. Does the Minister not agree that on every occasion, however understandable, attachments to institutions and to buildings that have been there for a long time are always trumped by patient outcomes and patient care?
Earl Howe
My Lords, my noble friend has raised a very good point. It is entirely understandable for a local Member of Parliament, and local people, to feel an attachment towards a particular building that, for them, represents the best of what the NHS has to offer. However, as my noble friend points out, what really matters in a healthcare economy is the quality of the service delivered to those people. Services can be delivered in a variety of ways. It is the view of local clinicians—five out of the six local CCGs support these proposals—that the TSA’s recommendations will deliver better quality care and will save lives. It is that wider consideration that my right honourable friend has had in mind throughout.
Economy: North-East England
(11 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text
Lord Bates
To ask Her Majesty’s Government what assessment they have made of industry and recent economic developments in the north-east of England.
Lord Bates
My Lords, the north-east of England may be the smallest of the English regions but for those of us who have the privilege to be associated with it, it is very much a hidden gem, or even a jewel in the crown. It is home to Northumberland, voted the most tranquil county in England, and also to Newcastle, the party capital of Europe. However, five years ago the tranquillity and partying were brought to an abrupt end. First, Northern Rock sustained the first run on a bank in 150 years, putting 3,000 jobs at risk and shattering investor confidence. Then, Nissan announced 1,200 redundancies and the viability of the entire plant was under threat as it went on to short-term working. Then, Teesside Cast Products announced the closure of its blast furnace and the lights literally went out on that part of Teesside with the loss of 2,000 jobs. Finally, the promised multibillion-pound government investment in new agility trains was shelved.
The region was on its knees but five years on it is a very different picture. Virgin Money has acquired Northern Rock and safeguarded 2,000 jobs in the region, and over the past year it has added 1.2 million new accounts. Nissan's car production plant in Washington near Sunderland will soon become the first factory in the UK ever to produce 500,000 cars per year. The new £4.3 billion investment will take employment at the plant to 6,000—a record level. The Government have announced the go-ahead for a £4.5 billion investment by Hitachi in Newton Aycliffe for a new generation of agility trains, which will create 730 skilled jobs with a further 200 workers needed to build the test track and the plant itself. In mentioning Newton Aycliffe, I should say that the noble Baroness, Lady Grey-Thompson, a great champion of the north-east, wanted to take part in this debate but was actually required to be in Newton Aycliffe today to open a new 30,000-square foot factory for MediTek, which is the best of all possible excuses.
Finally, in April 2012 the Teesside blast furnace was the subject of a £1.6 billion investment by Thai company SSI and the furnace was relit, providing 1,700 jobs, and 100% of its output is now destined for the fast-growing economies of Asia.
Exports from the north-east of England are a major success story and reached record levels in the year to June 2012, amounting to £14 billion, an increase of 7.8% on the previous year—itself a record. The north-east is now the only region in the UK that exports more than it imports. According to the latest regional trade statistics, the north-east has a positive balance of trade of £1.175 billion in the third quarter of 2012, compared to a negative balance of £328 million in Yorkshire and the Humber, a negative balance of £886 million in the north-west and a negative balance of £10.265 billion in the south-east.
The growth in exports is also fuelling growth in jobs. According to the January 2013 labour market statistics, there are now more people employed in the north-east than at any time since October 2008. Unemployment has fallen by 23.1% in the past year. According to KPMG’s December 2012 jobs report, permanent job placements in the north-east of England are at a 29-month high. The number of apprenticeships in the north-east has more than doubled, from 18,510 in 2009-10 to 37,760 in 2011-12.
Just as important for the long term, the economy is rebalancing away from an overdependence on public sector employment. According to a Written Answer I received a couple of days ago, between March 2010 and September 2012 there have been 43,000 job losses in the public sector. We can all appreciate the pain and hardship suffered by those affected but over the same period the private sector has created 68,000 jobs—a net gain of 25,000 jobs.
The housing and construction sectors are critical to the regional economy, with companies such as Barratt, Bellway, Persimmon and Yuill all having their roots firmly in the region. Here, too, we are seeing some encouraging progress, with the latest figures from the NHBC indicating that new home starts in the north-east were at 3,996 for 2012, compared to 3,227 for 2011 and 2,845 for 2008—an increase of 24% and 40% respectively.
North-east towns are seeing record numbers of new business start-ups. Darlington saw a record number of start-ups in quarter 1 of 2012. Sunderland saw its highest ever level of company formations in quarter 2. In Newcastle and Middlesbrough, quarters 1 and 2 saw a return to pre-2007 levels of company formation. The number of net new businesses starting up in the north-east region last year was 2,406. As someone who has experience of setting up two businesses in the region, I know how challenging those first couple of years can be. It is essential that these new businesses are nurtured and allowed to grow. They are the future of the region—the new Greggs, Vertu, Onyx, Utilitywise, Nifco or Kilfrost—employing potentially tens of thousands of people and securing the viability of the region.
The north-east is blessed with the largest chamber of commerce in the United Kingdom, and it also has the Entrepreneurs’ Forum—I declare an interest as an honorary ambassador—which is a private sector network of entrepreneurs from the north-east who are seeking to put back into the region training and mentoring of a new generation of entrepreneurs.
We have an outstanding network of universities in the north-east of England: Newcastle, University of the Year 2000; Durham, University of the Year 2005; Northumbria; Sunderland; and Teesside, University of the Year 2009. Our academics and students are undertaking ground-breaking research and innovation and acting as a catalyst for local enterprise. Their work is complemented by two government-funded national centres of excellence—the Centre for Process Innovation, home to the national centres for printable electronics and industrial biotechnology; and the national New and Renewable Energy Centre in Northumberland —giving the north-east international leadership in the development of advanced manufacturing processes and materials. According to UCAS data released this week applications for north-east universities have increased by 3.4% over the period last year and against a national increase of 2.4%, and the greatest growth in applications has come in the areas of computer science and engineering, which are exactly where the need is greatest.
One of our greatest weaknesses in the north-east, as a peripheral region, is connectivity. Here too we have seen some welcome progress with the announcement in the Chancellor’s Autumn Statement last year that the A1 is to receive a £378 million investment, bringing it up to motorway status. The north-east remains the only region not to be connected to a neighbouring region by a motorway. I know what a barrier this is to foreign direct investment and to domestic investment, particularly in a region noted for manufacturing.
The Government deserve one cheer for announcing the investment in HS2, which will dramatically cut journey times to London for all northern cities, but they would get a second cheer if they started construction in the north rather than in the south. We have been waiting for over 50 years for connection to the motorway network and we are therefore slightly suspicious of major infrastructure networks whose funding seems to run out somewhere south of Leeds.
Our IT infrastructure is even more important for the north-east. It deletes at a stroke of a key our single greatest economic disadvantage, namely geography. The north-east is a major international centre for graphic design, computer games manufacture and creative media of all kinds. Companies like Sage and Eutechnyx are world leaders in their sectors, based in the north-east. IT can create an information superhighway not just to London but to the entire world, and not by 2033 but within a few years, and at a fraction of the cost. The Government announced a £6 million investment to bring speeds of 80 to 100 megabytes per second in Newcastle as part of a network of superconnected cities, but Gateshead, Sunderland, Durham, Berwick, Hartlepool, Middlesbrough, Stockton and Darlington should and could be added for the price of a few yards of high-speed rail line.
The people of the north-east have always been optimistic by instinct—which, to follow any of our football teams, seems to be a mandatory requirement. They are also resilient, able to adapt, innovate and advance in new economic landscapes, as we have seen repeatedly through our history, emerging to compete as winners on the world stage. I hope I have shown that in responding to the severe challenges presented to it over the past five years, the north-east of England is not a problem to be solved but an example to be followed.
Lord Sawyer
My Lords, I have the honour of being chancellor of Teesside University in which I declare an interest. I am grateful to the noble Lord, Lord Bates, for initiating this important debate. For a long time he has played a serious role in the work of the north-east and was an assiduous Member of Parliament for the old Langbaurgh constituency. I do not know how he feels about catching his breath after his contribution but I am having a job catching mine. He gave us such a whirlwind tour and he is quite right in being optimistic. However, I am sure the noble Lord will agree that within that general picture of optimism there are still lots of problems in the north-east. There are high levels of unemployment, particularly youth unemployment, in the old mining and shipyard areas, and we need to work hard to address those problems.
My interest today is not to take a panicked view, as we have heard from the noble Lord, Lord Bates, but to look at the Tees Valley subregion of the north-east and the boroughs of Middlesbrough, Darlington, Hartlepool, Stockton, and Redcar and Cleveland. This is the area for which I am the chancellor and of which I am also a native, coming from Darlington. It is a subregion served exceptionally well by the Tees Valley local enterprise partnership. It is a new partnership, chaired by a well known local businessman, Mr Sandy Anderson, and it is known as Tees Valley Unlimited.
This is a true private and public sector partnership, with members drawn from companies such as SABIC, which produces chemicals and fertiliser—a bit like the old ICI—and some of the old industries, such as the port authority, which have developed into new businesses. They have got together with Teesside University and representatives of local government to form themselves into an organisation to help to build this subregional economy.
The context is very challenging. There are 259,000 people in jobs but a working-age population of 420,000, so we have a big gap there. Arising from that is the highest level of unemployment of all the local enterprise partnership areas, in particular high youth unemployment. Major reductions in public expenditure are imposing real hardship and distress on an area that has been one of the main contributors to the economic performance of the UK in the past 50 years. I refer the Minister and the noble Lord, Lord Bates, to comments made recently by the elected mayor of Middlesbrough, Mr Ray Mallon, who said:
“The loss of such significant levels of funding over such a short period of time can only lead to further long-term deprivation and serious hardship, issues which will become costly, both in human and financial terms, to redress”.
There are others in the region who, like Mr Mallon, are concerned about the direction of travel. We have to make sure that we listen to them and try to come to terms with some of the issues that they raise.
Teesside is an area where, as with the wider north-east, the decline in traditional heavy industries has led to a big reduction in employment. However, like the noble Lord, Lord Bates, I think that the general attitude there is positive. The Teesside area was often seen to be less positive than the Tyneside area when I lived there, but I think that Teesside people have become far more positive in the past 10 years and stopped depending on the state to solve their problems and started solving them themselves. That is an important and welcome development.
We have seen new companies replacing major employers such as ICI and British Steel. We see great opportunity for growth, built on the legacy of those major industries that transformed the world, in areas such as the process sector, industrial biotechnology and biopharma, renewable and waste-derived energy, and advanced and sub-sea engineering. In that connection, I was very pleased to see the Government last month announce as part of their life sciences strategy a £38 million project for biopharma, to be managed by the Centre for Process Innovation on behalf of the High Value Manufacturing Catapult—a rather unusual name, which is basically a partnership of businesses, public services and universities.
The local enterprise partnership envisages a future in which the Tees Valley builds a critical mass of employment in the new sectors that I have described. It is an aspiration and a direction of travel which I wholly share. I commend to Ministers the Tees Valley City Deal submission made by Tees Valley Unlimited in the past few weeks. The vision for the Tees Valley City Deal is of an area with a thriving and more balanced economy, with integrated supply chains resilient to economic shocks. It will deliver more efficient and effective use of government resources with enhanced inward investment, grow existing global companies and their supply chains, increase exports, and translate research and development into commercial opportunities —all delivering, one hopes, wealth and employment for the region. It is a good vision; it is a good deal; and I hope that it will be carefully considered by the Government.
In order to achieve those ambitions, we must ensure that the skills requirements of present and future employers can be met. The observations of local enterprise partnerships are of particular interest in this regard. They observe very real concerns about the ageing workforce and the sufficiency of understanding among employers about the systems in place to support skills development and they relay a lack of clarity about apprenticeship opportunities. We have talked about these issues in the House previously and we need to give continuous attention to them. I hope that the Minister will keep on talking to colleagues about the need to make sure that we have proper apprenticeships and proper skills enhancement so that these new industries and possibilities can be successful. Some of the skills that I had when I was a young man are no longer the skills required. We need new people and new skills and we have to make sure that the Government play an appropriate role in helping to support that development.
As a result of these concerns, we have to take our own initiatives and not just rely on the Government to step in and do what needs to be done. We have developed a sector action plan for skills in new and advanced manufacturing, looking at logistics, health and social care, digital and chemical processing. Tees Valley Unlimited skills portal has been created to enhance the flow of labour market information and enhanced liaison with careers advisers, teachers, and young employers has been introduced.
Teesside University has business engagement, skills development and support for the local and regional economy as key pillars of its institutional plan. Since 2011, it has created 183 jobs through economic development and it is committed to creating 529 new jobs by the middle of 2014. It is strongly committed to supporting regional SMEs—since August 2012 projects have been started with more than 370 SMEs. In 2011-12 working in partnership with employers some 2,000 regional employees were provided with higher-level skills and qualifications. Some 430 businesses have been set up since 2000 with 590 jobs created; 415 of these since 2008.
I have spoken in the House previously about my university’s partnership with further education colleges as being exemplary in terms of developing ladders of opportunity to enable these things to take place. We were University of the Year in 2010. For Teesside to beat all the Russell Group universities is something we all have to be very proud about. It took some doing but we did it. The noble Lord was quite right to mention it and underscore it because it means that people in the region have confidence in themselves, can do things for themselves and are not relying on other people to lift them out of the unemployment and poverty they have endured for far too long.
These people are making a very real effort. They are working hard and on many occasions putting political differences aside in the interests of economic development. As I have already said, we are working hard to enhance skills by linking employers and education and training providers together to make the best use of government funding. It is very positive case. It is a more localised case than that mentioned by the noble Lord, Lord Bates—it is about Teesside rather than panregion—but I paint a very optimistic scenario as well. The way forward in the north-east of England is to be optimistic. It is to try to help ourselves but at the same time to call on the Government not to put any obstacles in our way and to recognise that public spending in the north-east is probably more important than in the south-east where there is more private enterprise and commercial success.
We need what you might call a pathway. We need a bridge. We cannot do it all straightaway. We need public expenditure not just by universities and colleges but by local councils and all the things that other people do not need as much as we do in the short term. I agree with the noble Lord, Lord Bates, that we are travelling in the right direction and I thank him once again for initiating this debate.
Lord Shipley
My Lords, I, too, thank the noble Lord, Lord Bates, for initiating this debate and giving, rightly, an encouraging picture of the north-east economy. I also acknowledge the contribution of the noble Lord, Lord Sawyer, and thank him for identifying some of the ways in which the Government can help and emphasising the efforts being made in the region itself. Together, there is enormous potential. I welcome the Minister to his role. I hope that this debate proves to be the first of many on the potential for the north-east of England. I declare my role as vice-chair of the regional growth fund independent advisory panel, and my role as an adviser to the Government on their cities policy.
The north-east is a small region with a population of 2.6 million. Nevertheless, as the noble Lord, Lord Bates, told us, it is the only English region with a positive balance of trade, which is getting stronger. At the same time, the region has a lower GVA than others, fewer business start-ups, fewer people with level 4 qualifications, and fewer people employed in the private sector than we would like. Indeed, in Tees Valley, in the five years from 2007 to 2012, the number of private sector jobs declined from 203,000 to 187,000, so we have to be careful.
I look forward to the economic review undertaken by the noble Lord, Lord Adonis, which will cover the north-east LEP area through the commission, which is due to report in the next few weeks and which I hope will address issues such as how to increase levels of business creation, priorities for infrastructure investment, how to increase the region’s skill base and how to improve access to finance. I hope that it will also give us a steer on how to implement some of the recommendations of my noble friend Lord Heseltine’s report on growth, No Stone Unturned, and on what strategic interventions could be made to build or strengthen areas where the north-east does or could excel, such as renewable energy, carbon capture, chemicals, steel, offshore and subsea technologies, process sectors, pharmaceuticals, advanced manufacturing, energy from waste, the digital industries and, of course, the automotive industry. Nissan and its supply chain have such a magnificent record, now producing more than one-third of all UK vehicles.
The north-east is a region with enormous potential to drive growth. If the north-east grows, the UK will benefit and grow too. I am sure that we can build on the work of the two local enterprise partnerships and the excellence of the north-east workforce. The region’s connectivity, although good, does, as the noble Lord, Lord Bates, pointed out, need to get better in its broadband and transport, about which I shall say more in a moment.
The UK and the north-east need an industrial policy. To deliver that industrial policy regionally, there have to be governance structures that complement a region’s strengths. In the north-east, I will be looking for closer collaborative working across local authority boundaries: less competition, more complementary working.
Last October, the Deputy Prime Minister, launching the second wave of the city deals, said:
“You can’t revive the regions just through handouts from Whitehall … Revenues from the financial services sector were recycled round the rest of the country through the long arm of the state, creating the illusion of strong, national growth. Jobs were created but in an unbalanced way, over-relying on the public sector, funded by tax receipts from the City of London”.
The Government are rebalancing the UK economy away from an overdependence on financial services and the south-east. The north-east has been too dependent on the public sector, not because the public sector is too big but because the private sector is too small. It is the private sector that generates much of our tax revenue.
I will say a word about the regional growth fund. In the first three rounds, the allocation to the north-east was £330 million, leading to 71,000 jobs created or safeguarded across 99 projects, eight programmes, and with £1.9 billion of private sector investment leveraged. The growth fund should not be seen as a short-term fix. Eighty per cent of the employment benefits will come within five years, and 80% of private investment will come within 10 years, but crucially the investment is going to the region’s growth sectors. There are indications that those growth sectors are now expanding. In the latest quarter of employment trends published by the ONS, the employment rate of 16 to 64 year-olds was 68.2%, compared with 71.4% for the UK, so the north-east was three percentage points below the UK average. The unemployment rate of 16 to 64 year-olds was 9.1%, representing 119,000 individuals, which was the highest in the UK, and much too high. However, crucially, the north-east also had the biggest drop in unemployment in the most recent quarter, amounting to 0.8 percentage points.
In its overview of regional labour market statistics published on 23 January, the ONS stated:
“Over the past year, the increases in the employment rates for the North East, Yorkshire and The Humber and West Midlands have all been statistically significant”.
It went on to state that the largest decrease in the unemployment rate was in the north-east, at 0.8 percentage points. That increase, along with more modest decreases in Yorkshire, the Humber and London, appeared to be part of a pattern of decreasing unemployment rates. We will see, but, if confirmed, that is a welcome trend.
I pay tribute to the universities for their enormous contribution through increasing student numbers, research and commercialisation. My view is that R&D is not yet commercialised enough and that the Government have to do more to assist that. An example would be acknowledging the commercial potential in marine technologies, which needs to be underpinned by an accessible research base.
I was unable to take part in the visa policy debate earlier in your Lordships’ House, but I regard it as a matter of fundamental importance. The north-east needs inward migration of international students to study at our universities and to stay on to set up businesses. The record of that to date has been marked, and we need to ensure that people feel welcome.
In the past few days, the CBI in the north-east and the North East Chamber of Commerce have produced a report on transport infrastructure, listing priorities for the region. I know that the Government will respond either to that or through their response to the north-east commission’s report. However, there are a whole set of issues around rail, port connectivity by rail and the quality of the rolling stock where lines connect with the east coast main line. In terms of air connectivity, there is an urgent need for a transatlantic link, for the impact of air passenger duty to be understood where it is acting as a disincentive to growth, and for an understanding of the importance for regions such as the north-east but also right across England, Scotland, Northern Ireland and Wales to have a UK hub airport that links us to the rest of the world, because it is fundamental in driving regional growth.
I bring to the Minister’s attention the success of Emirates in its Newcastle-Dubai daily service. In the five years of its operation, trade between the north-east of England and Australasia has risen from £150 million to £275 million. This is proof of the value of better connectivity. We can drive greater growth from the north-east. Staying in the European Union is fundamental to that. We need to be clear that UKTI is delivering the greatest potential for inward investment in the north-east.
I ask the Minister to look at two matters relating to regional jobs. One is regional procurement policy, where regionally based firms have in recent years successfully delivered government contracts. It seems that there is a trend in Whitehall to prefer national procurement, which then limits the ability of regional companies to compete. I hope that the Government will investigate this further because there is some evidence that regional companies lose out to national companies when they have had first-class records, and there is a potential for more regional jobs to be lost as a consequence of that.
On the subject of jobs, could I ask the Minister to look into the contracting by government of international oil and gas companies in fabrication? There have been concerns recently that despite the Government giving tax concessions to such companies, jobs do not come to the UK but go abroad, even though other countries would have clauses in their contracts requiring local workers to be employed. There is a lot of concern about this because it may have lost the north-east some 1,500 jobs in fabrication and some 10,000 jobs across the UK over the last two years.
I conclude by saying simply that the north-east is an asset that can drive substantial growth to the benefit of the UK as a whole, and I hope very much that we will have an opportunity to discuss the report of the commission of the noble Lord, Lord Adonis, when that is published in a few weeks’ time.
Lord Patten
My Lords, in bringing fraternal regional greetings from the south-west to my Back-Bench colleagues on all sides in the north-east, I would like to say that in listening to my noble friend’s tip-top speech, and indeed the speech of the noble Lord, Lord Sawyer, I would like to reflect that there is no silver bullet of an infrastructure sort to help to solve the problems of the north-east. I should say that there is no bullet train which could individually solve the problems of the north-east. I do not believe that if we had HS3 and it was powering into Newcastle tomorrow it would of itself bring about a renaissance in the economy of the north-east.
I was greatly struck, when listening to some vox pop on the media when HS2 was announced coming from what people in the north-east would regard as their deep south—places like Nottingham and Derby—that they regarded one of the benefits of HS2 as being that they would get to London more quickly. Although I am in favour of infrastructure projects, though worried about the environment and capital cost, I believe that one of the effects of HS1 and HS2 will be to increase the dominance of London in the English and Welsh economies.
There was a book back in the 1940s or 1950s by a French scholar called Gravier, Paris and the French Desert. I do not think that high-speed rail will bring about the economic desertification of the UK, but it will do two things. First, it will increase the dominance of London, which is already slipping its moorings as a great global city and flying off into economic global space. Indeed, London would make a good, punchy city state; that might be part of some plot which the Mayor of London is thinking of bringing about. Secondly, having added to London’s dominance, it will not in itself necessarily bring any great blessings to the north-east. The north-east’s problems are of themselves and have to be solved on their own terms.
The noble Lord, Lord Sawyer, talked about the litany of problems in the north-east. I was refreshing my mind with the statistics. At first reading, they are pretty grim: highest unemployment levels, still; lowest employment levels; lowest household income; one in five children living in workless families, sometimes through generations; and I could go on with that. The other side of the story is that, extraordinarily enough, this small region has, as my noble friend Lord Bates, pointed out, been a great success in exporting, having the best ratio of goods to exports in relation to the regional economy of any region in the United Kingdom, measured by gross value added. There is obviously enormous vitality.
We have heard from my noble friend Lord Shipley what is going on, and from the noble Lord, Lord Sawyer, with his own particular beat, what is happening to the north-eastern economy. I suggest two areas in which we should look at the region solving its problems intra-regionally. First, there is connectivity, not to other dangerous places, like London, but connectivity within the region—Newcastle, Gateshead, Sunderland, Hartlepool, Middlesbrough and Durham—is in as great a state of grace as can be produced. I am a strong believer in that. I understand that, extraordinarily enough, no electrically powered train goes in and out of Middlesbrough.
That is not to say that the north-east is the only region which has these problems. When I travel up from the oppressed south-western region at the beginning of the working week and go back again, I sometimes sit in third world conditions on the route from Exeter to London, a substantial part of which is on one line. These problems are not unique to the north-east, but I am absolutely convinced that better intra-regional transport would get more results from infrastructural expenditure than, perhaps, even connectivity to the motorway—although I recognise that that is very important.
Secondly, my noble friend Lord Bates put his finger on it when he mentioned the importance of connectivity not through motorways and railways but through high- speed broadband. I genuinely welcome the contribution of £6 million to Newcastle, to make it a super-connected city, but it is easy to spend a bit here and a bit there. My judgment is that for probably £60 million, and certainly much less than £600 million, if the north-east offered itself as a Petri dish experiment, if there was that super-connectivity between every part of the north-east, within a year or so one would see the Korean effect. The spread of high-speed broadband in South Korea a few years ago has had a radical effect on productivity and has helped to transform the whole South Korean economy.
I greatly welcome the fact that the Minister is answering this debate. I urge him to take the comments from the debate to my right honourable friend the Chancellor of the Exchequer. It has been dominated by the Tory Benches, there having been three speakers here—no, I am sorry, four speakers. After the to-dos of last week, it is hard to say “my noble friend” so I shall say “my noble coalition partner”. Nevertheless, we feel strongly that more should be done in the north-east on the installation of broadband. The north-east does not have as strong a voice in the Palace of Westminster as it should do. I will stand corrected, but I do not think that in another place there is a coalition Government Minister who represents a north-eastern constituency; and I do not know of any Member of your Lordships’ House in the Government who lives in the north-east. So there is no voice. I am not saying that we should have regional Ministers all round the place, and a Minister for the south-west, or whatever. However, it is very important that the clear, balanced and stimulating voices of my noble friend Lord Bates, the noble Lord, Lord Sawyer, and my noble coalition partner Lord Shipley are listened to, because they represent areas in which the Government should be paying far more attention.
The Earl of Shrewsbury
My Lords, I congratulate my noble friend Lord Bates on securing this important debate this afternoon. I shall keep my comments brief. They do not relate specifically to the north-east region, but the type of situation I shall describe is commonplace throughout industry and, doubtless, affects industry in the north-east just as it affects industry in every other region of the UK.
My home county of Staffordshire was closely involved in the roots of the industrial revolution, and today is an area within the West Midlands proud of its reputation for industrial innovation and skills. Unemployment there is considerable, and SMEs are struggling to survive and prosper. This must be exactly the same case as that affecting the north-east.
JBMI Group Limited, based at Hixon, near Stafford, is a highly successful medium-sized business employing 67 people, turning over £33.7 million a year and making a pre-tax profit of a very healthy £2.74 million. Over the years since the company was founded, it has won numerous awards for its achievements. The company therefore makes a very significant contribution to both the local and national economy. Without doubt, this is a true story of commercial success. JBMI's expertise lies, in general, in the field of metal recycling, but more specifically in that of the manufacturing of alloys and the recovery of those metals. Its product is exported to numerous countries and in the UK it supplies product directly and indirectly to Jaguar Land Rover and Toyota—probably also to Nissan as well, in the north-east—to name but two or three global companies.
In addition, JBMI has made significant investment in developing a suite of sustainable products, manufactured from a wide range of waste materials which would otherwise be disposed of in massive quantities to landfill. JBMI's products have to meet the demanding customer specifications and product standards of the relevant construction-related industries that actively seek these products. The JBMI processes exemplify how British industry can effectively and sustainably recycle in order to meet our EU obligations in that respect. They thus make a significant contribution to the vital agenda of landfill diversion—an area where sadly, as a nation, we still lag behind others. This is all highly commendable; good for the environment and good for the economy.
However, as the correspondence in this file demonstrates, JBMI has invested very considerable sums to prove and justify that its processes and recycled products comply with the demanding standards and criteria laid down under EU law. It has sought and received specialist legal advice on this complex area, both from its solicitors, Semple Fraser, and from one of the leading QCs in this field. At almost every stage, however, it has met systematic resistance, long delays in timing of responses, delaying tactics and completely irrelevant questions and arguments from the Environment Agency and specific officers in particular.
It is clear from the dealings between the company and the Environment Agency that the agency is inexplicably hostile to this worthwhile project, and for no sound environmental reason. It appears that we have a government agency working way beyond its remit of regulation and moving into law-making, which is surely the remit of the other place and this House. In addition, it is ultimately driving the company to seek a judicial review—an unnecessary and costly process which will be funded by the public purse.
In the mean time, a competitor has suffered from no such difficulties from the Environment Agency and, it would appear, has been treated by it in a completely different and relaxed manner. It appears that the agency is acting in a manner which even to the most naive would be classed as grossly unfair, inconsistent, discriminatory and anti-competitive. The result to date is that JBMI has lost out on business that is likely to have amounted to over £1 million in lost corporation tax revenues for the Government per annum and, in employment terms, some 15 to 20 extra jobs in an area of the country that is crying out for employment opportunities.
While I have had to oversimplify the situation in the pursuit of brevity, I mention it to bring attention to all such similar problems facing industry not only in the Midlands and the north-east but doubtless in all the other regions of the UK in which industrial activities take place. It is holding back employment and the economy. I am aware that JBMI’s lawyers currently have a number of similar cases of oppressive and unnecessary “overregulation” by the agency of conscientious British companies, for no obvious environmental reasons. This particular case with this particular company is the most obvious but it is not the only one. The fact that this is applied in an uneven and inconsistent manner as between different companies and at a time of woeful economic conditions for the people who create the wealth, and the tax revenues, in this country is nothing short of scandalous. I should be grateful if my noble friend the Minister would use his best endeavours to convey this message to his ministerial colleagues at the Environment Agency.
Lord Beecham
My Lords, I begin with a warm welcome to the noble Lord, Lord Popat, who is answering his first debate. It is all the warmer for the fact that the two of us spent an induction day together some two and a half years ago.
To describe a politician as pedestrian is normally regarded as uncomplimentary but in the case of the noble Lord, Lord Bates, the opposite is true. He has raised £25,000 for charity with marathon walks, and last year walked no less than 3,000 miles to echo and highlight the Olympic peace campaign. I do not know whether, reflecting on the coalition, he had in mind the ancient battles between Athens and Sparta, and, if so, which part was Athens and which Sparta; nevertheless, I congratulate him not only on his pedestrian feat—if noble Lords will forgive the homonym—but also on securing this Conservative day debate.
Some 30 years ago at the height of the severe recession during the Thatcher Government, and with the north-east suffering from the effective collapse of the shipbuilding, heavy engineering and mining industries, councils in the region came together at my suggestion, along with Cumbria, to form what was then known as the Northern Regional Councils Association and which now survives, shorn of Cumbria, as the Association of North East Councils. At about the same time, local government and the private sector, with support from the government office in the region, formed the Northern Development Company—a partnership dedicated to working jointly to tackle the region’s economic and industrial problems. In many ways, this presaged the creation by the Labour Government of One North East, the regional development agency.
During its lifetime, One North East helped to secure £2.7 billion for the region’s economy, creating and sustaining 160,000 jobs and helping the formation of 19,000 new businesses. A remarkable transformation took place in the region’s tourist industry, latterly worth £4 billion a year and becoming the second biggest growth tourist area in the country after London, while great strides were made, as we have heard, in the field of renewable energy. Until the global recession struck, the region had the second highest growth rate, after London, in the country. One North East was abolished in a fit of ideological pique by the Tory-led coalition—despite the initial support of Vince Cable—being effectively killed off with all the other regional development agencies, even while the Public Bodies Bill, which laid the groundwork for this deplorable action, was being debated. I described this at the time as pre-legislative implementation, and I am glad that the Constitution Committee is looking into this and other examples of a similar kind.
The noble Lord, Lord Bates, is a passionate advocate for the region. Indeed, I and others from the region share his pride in what the region has managed to achieve, despite all the difficulties, and we join him in believing that there is huge potential for building on that track record. The noble Lord initiated a similar debate in July 2009, when, again, he lauded at some length and with some passion the strengths of the region, and conceded in respect of the then Labour Government that,
“the Government care deeply about the region, and many good things are happening”.
At the same time he correctly pointed out that more needed to be done in the areas of skills, enterprise and capital investment. He referred to,
“a series of abrupt social upheavals, rather than gradual adjustments to the new realities”.—[Official Report, 14/7/09; col. 1114.]
I wonder what the noble Lord makes, or what the Minister makes, of the fact that the north-east—with unemployment at 9.8%, which is the highest of any region in the country—is sustaining the highest level of cuts in local government funding, with dire consequences which will, of course, impact on the local economy.
Young people and women in the region have been particularly hard hit by the recession and the abysmal lack of growth in the national economy in the last two years, and the much vaunted Work Programme, which replaced Labour’s successful Future Jobs Fund, has been as dismal a failure in the north-east as elsewhere, as the National Audit Office has demonstrated.
The regional development agencies have been replaced by the cut-price regional growth fund, with a much truncated budget; and again, as the National Audit Office and the Public Accounts Committee pointed out in September, the regional growth fund has created few jobs at a very high cost. Meanwhile, the Government’s links with the regions have been weakened by the abolition of regional offices, which were originally introduced by a previous Tory Government, and which in their day provided a useful two-way channel of intelligence and communication.
I remember the association of the noble Lord, Lord Patten, with the north-east during that period and the support that he gave us. I will not say that it is unfortunate that there is no Conservative representation in the north-east, but it is unfortunate that there is not at least a link to the north-east from the Government at ministerial level. Perhaps that is something that could be addressed.
In the debate in 2009 the noble Lord, Lord Bates, complained, not unreasonably, that public expenditure—capital expenditure—on transport in the north-east at £577 per head compared poorly with £1,637 per head in London. Again I have to ask what he—though of course he cannot reply—or the Minister makes of the latest figures in the Autumn Statement. They show planned per capita expenditure on transport—which a number of your Lordships have referred to as key; not the only area of investment, but a key one none the less—is now planned as £2,731 in London as against £5 per head for the north-east. That is 0.4% of the total of £1 billion, against 84% for London and the south-east. That will presumably worsen if HS2 goes ahead.
I share some of the concerns expressed by the noble Lord, Lord Patten, about the impact of HS2. I am inclined at least to wonder whether he—as well as other experts such as Professor John Tomaney, late of the north-east—is not right to wonder whether, since trains go in two directions, the principal beneficiaries will in fact be not in the north but in London.
The Autumn Statement announced £1 billion of investment in roads over the next three years, but even this will give small benefit to the north-east. We get 1.2 miles of new carriageway in Gateshead, costing £64 million, out of a three-year programme of £1 billion —which is 6.4%. Dunstable, on the other hand, will benefit from a new link road with 11.2 miles of carriageway, which is 10 times that in the north-east. That, according to a Written Answer given by the noble Earl, Lord Attlee, to a Question of mine, will unlock the potential development of 7,000 houses—which will no doubt attract new homes bonus at the expense of the north-east, by the way—and 4,000 jobs. Good luck to Dunstable, but we are not seeing that kind of investment with that kind of effect in the north-east.
However, it is not just a matter of money. As the Town and Country Planning Association pointed out some time ago, there is no planning framework for England; no coherent view of what is required to redress the imbalance between London and the south-east—both of which, in fairness, of course have their own marginalised communities, such as inner London boroughs or coastal towns—and the rest of the country. The Government’s abject failure to promote renewable energy policies, in which the north-east is a leader, with Northumbria University pioneering work on photovoltaic cells, and what should be a thriving offshore technology industry, illustrates vividly their failure to promote economic growth and ensure that this is diversified.
Other policies will have the no doubt unintended consequence of weakening the region's prospects. Thus the threat of opting out of Europe is hardly likely to be conducive to attracting overseas investment, as the noble Lord, Lord Shipley, commented, where with government and RDA support the region has done well in the past—witness the success of Nissan.
The Government’s immigration policies, again mentioned by the noble Lord, Lord Shipley, in so far as they discourage overseas students from coming to the UK, will threaten the region’s universities, which have been highly successful in attracting students from the Far East and emerging economies with whom the UK needs seriously to engage. The interminable debate about a third terminal for Heathrow ignores the need for regional airports such as Newcastle’s to be connected to the national hub and the growing international networks.
To be fair, there has been some progress. City deals have been agreed or are being negotiated in the region, for example, although the main benefit—the possibility of tax increment financing, a feature of the Newcastle city deal—looks to be both limited and, in any case, amounts only to permission to borrow against anticipated future business rate income. Indeed, the noble Baroness, Lady Hanham, made clear in her Answer to a Parliamentary Question of mine last year that city deals were about devolving powers, not government funding.
In the absence of a proper national growth strategy aimed at rebalancing the economy structurally and geographically, as advocated by the noble Lord, Lord Heseltine, the north-east is in danger of hobbling into the future when it should be striding into a better situation for its business and people. For all the enthusiasm that the noble Lord, Lord Bates, brings and that we all share about the region, and for all the hopes that we have for its prospects, we need a more deliberate policy on behalf of the Government to facilitate the desiderata that he advances and to which we all subscribe.
Lord Popat
My Lords, I pay tribute to my noble friend Lord Bates for securing this important debate and to all noble Lords who spoke today about the importance of, and the need to support and encourage, a strong north-east economy. I also pay tribute to my noble friend for his long-standing contribution to the economy and education of the north-east.
No one is under any illusions about the scale of the wider economic challenges we face. However, we are determined to tackle the long-standing local economic issues in the north-east, including historically high unemployment.
In recent years, traditional industries have given way to new knowledge-led enterprises, based on innovation, entrepreneurship and international competitiveness. Today, the region is leading the way in sectors from healthcare to life sciences, petrochemicals to low carbon technologies, while still keeping a strong base in such fields as motor vehicles and steel.
People in the north-east are responding to the real challenges of their economy. Whether that response is in the established industries in sectors such as the automotive, subsea, process and pharmaceutical industries, in the developing sectors in aerospace, software and the digital economy, or in the newer low-carbon manufacturing or printable electronics, private sector industries are leading the northern economy.
The north-east is a key part of the national economy; it accounted for over 3% of the UK’s GVA in 2011, worth more than £40 billion per year. It is important for all of us that it is successful and prosperous. As my noble friend said, record export levels tell the story of the north-east’s success—more than £14 billion in the year to end of September, up 6.7% on the previous 12 months. This strong performance means, as my noble friend rightly pointed out, that it is the only English region that exported more than it imports, with the exception of Newcastle’s football team, which imported five French players only last week.
The Government’s local growth policies aim to help all parts of the country achieve their economic potential. The Government are making every effort to support local growth through a variety of mechanisms for local areas, including the creation of 39 business-led local enterprise partnerships. Both the North East LEP and Tees Valley LEP, with strong business leadership, are already having an impact on their local economies.
With the new opportunities for local leadership that I outlined earlier, we are providing significant financial support to local economies, and I will summarise four of these key programmes. The £2.4 billion regional growth fund is helping to rebalance the economy by supporting those areas and communities currently dependent on the public sector. In total, £280 million has been offered to projects across the north-east. Both North East and Tees Valley LEPs made successful bids to round 3.
Secondly, we are investing the £730 million Growing Places Fund to unblock stalled local infrastructure projects and stimulate further private sector investment. The North East LEP has received more than £25 million and Tees Valley LEP more than £8.5 million from the fund to help unblock infrastructure in the north- east. Close to £1 billion from the European Regional Development Fund was allocated to the north of England in the current EU finance round.
Areas outside the greater south-east are also benefiting from our commitments to provide funding for high-quality transport infrastructure, superfast broadband, the Green Investment Bank, apprenticeships and support for science. We welcome the involvement and engagement by the private sector in setting the economic priorities for infrastructure so clearly. We will work with both LEPs to be clear about priorities, but it is pleasing to note that both the CBI and NECC have been positive about the funding that has already been approved for developments on the A1.
Thirdly, the North East LEP and Tees Valley LEP were two of the first LEPs to be awarded enterprise zones which, through a combination of fiscal incentives and reduced planning requirements, will generate both businesses and jobs. The Tees Valley Enterprise Zone is expected to lead to the creation of 3,000 jobs and 166 businesses. The North East Enterprise Zone has already created about 320 new jobs, with many more to follow.
Finally, we want powerful, innovative cities able to shape their economic destinies, boost entire regions and get the national economy growing. The Newcastle City Deal alone aims to create around 13,000 jobs and secure £1 billion of investment over the next 25 years as a result of new financial powers. This is alongside an additional 8,000 potential jobs in the marine and offshore sector and 500 new apprenticeships in Newcastle. The noble Lord, Lord Sawyer, has already welcomed the City Deal initiatives. The second wave is aimed at the next 14 largest cities. Sunderland City Council, working with the North East LEP, and the Tees Valley LEP have both submitted proposals.
Many noble Lords mentioned youth unemployment. The recent unemployment figures do offer some welcome news. Our £1 billion Youth Contract significantly ramps up the support available for young people right from the beginning of an unemployment benefit claim. We are also creating 500,000 extra work experience and training opportunities, a guaranteed careers interview and more intensive support for jobseekers. For those young people still unemployed after nine months, the Work Programme will help them redouble their efforts to find work and to stay in it when they succeed. Apprenticeships are providing a record number of opportunities for individuals and employers. The year 2010-11 showed a record 455,200 apprenticeship starts. Final data for the year show that there were 34,550 apprenticeship starts in the north-east, a rise of 86.6%. The Government are actively encouraging the young unemployed to go into apprenticeships and build a career.
A wide range of points have been made by noble Lords and I shall endeavour to respond to as many as I can, but failing that, I am happy to write. My time is limited so I shall cover a few of the issues that were raised. I have sought to explain in my remarks that the Government are doing everything they can to create a business environment that will give companies the confidence to invest and grow. We are making a significant investment in the north-east. My noble friend Lord Bates has reconfirmed that, as did the noble Lord, Lord Sawyer.
However, it is not just for the Government to take action. It is vital that the public and the private sectors work together to grow the economy in the north-east. This is already happening with BIS Local and UKTI working alongside the private sector-led local enterprise partnerships as well as in partnership with local chambers of commerce. Such collaboration ensures that businesses have a seat at the table and their voice is heard. It is key to achieving economic regeneration and sustainable growth in the north-east and elsewhere. Success will require hard work, the ability to harness innovation, the winning of new business opportunities and effective support from Government.
The north-east is already home to Nissan, which is producing a third of all UK vehicles from its Sunderland plant and is growing its supply chain. We have seen investment by Vantec in Sunderland and Air Products in Tees Valley, both in their enterprise zones. To build on these successes is the reason we are going all-out to create a business environment that will give companies the confidence to invest and grow, and it is why local communities are being freed from central control so they can determine their own economic future in the north-east. The economic outlook for the north-east is good, but we have to do all we can to make it better.
I shall cover briefly some of the points raised by the noble Lord, Lord Sawyer, on the subjects of youth unemployment and apprenticeships. A real transformation is taking place across the whole country that also holds true for north-east England. The north-east was very reliant on public sector employment, but that is now changing. Now it relies more on the private sector. The noble Lord, Lord Beecham, mentioned that the rate of unemployment in the north-east is around 9.1% compared with 7.8% across the country, but that is changing fast with all the new initiatives that we have put together. I am sure that the future for the north-east is good and that it will get better.
The noble Lord, Lord Shipley, said that there are fewer jobs in the private sector and more in the public sector, but again I am pleased to say that that is changing quickly. The Funding for Lending scheme is very much at an early stage but we are seeing some examples of its success. Given time, I am sure that it will play an important role. The noble Lord also talked about implementing the reforms set out in the report of my noble friend Lord Heseltine, No Stone Unturned. A number of recommendations are being implemented. In fact the Chancellor announced in his Autumn Statement that some of my noble friend’s recommendations are already in place.
I turn to the inward migration of students. Education is the third or fourth largest export earner. Lately we have not been doing very well in terms of the numbers coming to the United Kingdom, but that is solely because we have become more strict on students who come here and then sign up to bogus university courses. Obviously, however, genuine educational institutions and universities are open to overseas students. I think that the onus is on universities in the north-east to market themselves and welcome students, especially from the BRIC countries.
The noble Lord, Lord Shipley, talked about the UKTI and inward investment. UKTI is very proactive. It is now led by somebody who was a chief executive in the private sector. The job of UKTI is to help our exports but also to encourage inward investment, and I am glad to say that UKTI is quite active in the north-east anyway.
My noble friend Lord Patten mentioned broadband, which is something that we are now implementing and working on. He also mentioned high unemployment, which we are addressing in the north-east. I can tell my noble friend that the level of unemployment today is much less than it was in the late 1980s and early 1990s in north-east England. So there is a marked improvement. Credit goes to a number of different agencies, working hard and supported by the Government.
I now turn to the comments made by the noble Lord, Lord Beecham, about the north-east. I know that the noble Lord is passionate about the north-east, as are the noble Lords, Lord Shipley and Lord Sawyer, and my noble friend Lord Bates. Despite their different political ideologies, they all have love and affection for the north-east, and work hard for the region in which they have been involved for so many years.
I think that I have covered most of the areas that the noble Lords have mentioned in their speeches. One that was mentioned in particular was the regional development agency, which we have scrapped. However, four different organisations—the regional growth fund, the Growing Places Fund, City and Guilds and enterprise zones—have replaced that one organisation. Perhaps the regional development agency did particularly well in the north-east but, overall, we knew at the time when we scrapped it that it was not value for money for taxpayers. Some areas did not perform that well, while others did. I think we will come with better schemes to encourage enterprise and inward investment and to support businesses.
SMEs were also mentioned. In fact, in your Lordships’ House we set up a cross-party committee to see what we could do to help SMEs to export more. I do not want to prejudge the outcome of the report, which will be published at the end of February, and I am sure that we will debate that report.
I hope that I have dealt with all the issues raised, and I thank noble Lords for giving me the privilege of responding to this debate, which has turned out to be very interesting because there has been a lot of agreement among all the speakers on the subject.