Grand Committee
Intellectual Property Bill [HL]
Lord Clement-Jones
“35ZE Offences committed by partnerships and body corporate
(1) Proceedings for an offence under this Act alleged to have been committed by a partnership shall be brought against the partnership in the name of the firm and not in that of the partners, but without prejudice to any liability of the partners under subsection (4).
(2) The following provisions apply for the purposes of such proceedings as in relation to a body corporate—
(a) any rules of court relating to the service of documents;(b) in England and Wales or Northern Ireland, Schedule 3 to the Magistrates’ Courts Act 1980 or Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981 (procedure on charge of offence).(3) A fine imposed on a partnership on its conviction in such proceedings shall be paid out of the partnership assets.
(4) Where a partnership is guilty of an offence under this Act, every partner, other than a partner who is proved to have been ignorant of or to have attempted to prevent the commission of the offence, is also guilty of the offence and liable to be proceeded against and punished accordingly.
(5) Where an offence under this Act committed by a body corporate is proved to have been committed with the consent, connivance or neglect of a director, manager, secretary or other similar office of the body, or a person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.”
Lord Clement-Jones
My Lords, in moving Amendment 23, I shall speak also to Amendment 24. Amendment 23 is very straightforward. Really, it is a question for the Minister: as regards the new criminal penalties that apply to registered design rights, why has Section 110 of the Copyright, Designs and Patents Act, “Offence by body corporate: liability of officers”, which ensures that company officers are liable if conniving or consenting, not been replicated here for registered designs? I could read out the relevant offence under the CDPA but I am sure my noble friend is familiar with it. However, it seems odd that everything else replicates what is contained in the CDPA for copyright but not the application concerning the liability of company officers. Considering that so much business is conducted through companies, it seems extraordinary that that provision is not included in the Bill.
I see that there will now be a clause stand part debate. I am not surprised because this is clearly a subject that needs airing. Rather more controversially, Amendment 24 is an attempt to advocate the extension of criminal offences for infringement of unregistered designs. As we know, Clause 13 introduces a new criminal offence of deliberate infringement of a registered design right. While this is a welcome move, to be of any benefit to the vast majority of designers in this country, the Bill needs amending so that criminal sanctions also apply to the deliberate infringement of unregistered designs.
Design is of key importance to the UK economy. There are around 350,000 designers in the UK and UK businesses spend around £35.5 billion on design each year. The majority of the UK’s design community are lone, micro and SMEs, with 87% having fewer than 10 employees and 60% having fewer than four. Approximately 4,000 designs are registered annually in the UK and approximately 5,000 are registered in the EU. However, the great majority of designers rely on unregistered rights.
Each year, between 18,000 and 25,000 unregistered designs are lodged with ACID—which represents designers and was mentioned at Second Reading and in these proceedings—by its some 1,100 members. ACID’s design data bank does not add to any intellectual property rights but provides evidence of the date on which it received a design. It encourages designers to keep an IP audit trail from the seed of an idea to market reality, which provides essential evidence if designs are copied. Extrapolating from that figure of 1,100, it is therefore reasonable to assume that the majority of the UK’s designers rely on unregistered design rights, and on copyright of course.
Why, then, is the new criminal offence limited to infringement of only registered designs? Surely criminal sanctions need to apply to unregistered design rights as they apply to copyright, in order to have any real and lasting benefit for UK designers. The introduction of criminal sanctions for deliberate infringement of registered designs is a progressive step. This is the first time that criminal sanctions have mirrored copyright. While I accept that registration offers designers a longer-term and stronger right, unlike trade marks and patents, there is no extensive examination for registration, so design registration is a very different type of protection.
To register a design costs £60 per design. Regrettably for most lone and micro designers, the cost of registering every iteration of a design would be prohibitive. ACID receives between 18,000 and 25,000 designs annually, so it is clear that informed designers take their design audit trail seriously. However, to ask them to pay £60 would be a real barrier. The majority of ACID settlements have been based on unregistered design rights and the ability to provide a design audit trail held on the ACID design data bank. In its 2010 survey, 89.7% believed that design infringement was deliberate and blatant. In a further survey in 2012, 97% believed design infringement was deliberate and blatant. Given the cost, time and scale of opponents in the majority of these cases, deterrence against copying is critical. Extension of criminal sanctions to unregistered design rights for the majority of the UK designers would be a deterrent to persistent copying in much the same way as it is for copyright and trade mark infringement.
Criminal sanctions have been available for copyright infringement since 1862 and for trade mark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Copyright is a property right. A trade mark and an unregistered design right are property rights, as is registered design. Whereas persistent copying of the first two constitutes a serious criminal offence, punishable by up to 10 years’ imprisonment, which exceeds the longest sentence for ordinary theft, currently persistently copying designs is not a criminal offence at all. This is completely anomalous. Persistently copying a 2D drawing of a design or a design document can give rise to criminal liability under Section 107 of the CDPA, but when this 2D work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship, which we have previously discussed, copying that 3D version would not be a criminal offence.
I fail to understand the policy decision behind this. Nearly all designs are copied from the 3D original, not the 2D drawing. How do the Government justify giving a higher level of protection to a 2D design brought than they to the 3D manifestation of that design? A telling point was made by designers when they gave an example of the scale of opponent in the three latest cases involving members of ACID. This demonstrates the inequality of arms between infringers and designers. For instance, one ACID member had a turnover of £50,000 and two employees, and its opponent in this infringement case a turnover of £8.7 billion and 78,000 employees. How on earth can a lone designer gain justice in those circumstances?
In a second case, an ACID member with a turnover of £500,000 and 15 employees was opposed by a major retailer with a turnover of £20.5 billion and 145,000 employees. I will not try the Minister’s patience much further—these are difficult cases, where members are seriously prejudiced—but in a third case, an ACID member with a turnover of £250,000 and 10 employees was opposed by, again, a major retailer with £3.4 billion turnover and 52,000 employees.
If anything, in these circumstances, there are quite honestly stronger reasons for imposing criminal offences for unregistered design right infringement than there are for infringing a registered design. I hope that the Minister can elucidate why this is not being done and perhaps give us some assurance that this is under consideration. I beg to move.
Lord Stevenson of Balmacara
My Lords, I am very grateful to the noble Lord, Lord Clement-Jones, for his lucid introduction of these two amendments. As he says, the first seems to deal with an error. We shall wait to see what the Minister says about it, but we would support it if he chose to take it further.
Amendment 24 picks up the debate where we left it on Tuesday. For most of the time we reflected on why the Government have adopted a two-track approach, although unfortunately in this case the tracks lead in opposite directions. In one there is no attempt to simplify the design rights field. The points made by Ian Hargreaves in his report, and picked up by many commentators, seem to have been ignored. I know that it is difficult to eliminate unregistered design rights; nevertheless the fact that we have five different ways of classifying or approaching these designs is still an irritant and source of confusion for the industry. It cannot be effective in terms of building up the creative industries more generally. It is something that will have to be addressed at some point, if it is not dealt with in this Bill.
The second track is this: why should one penalise on the registered design side but not on the unregistered design side? We will be opposing the question that Clause 13 should stand part in the next group, so my position on this is somewhat complex because I would not want to see criminal penalties brought into this area at all. That is not the right direction of travel and I will expand on that when I speak in the clause stand part debate. Parking that for a moment, I accept absolutely the points made by the noble Lord, Lord Clement-Jones. There is no substantive difference in how unregistered and registered designs are treated. The fact that they are registered does not in any sense imply approval or otherwise of them, or give them any status that is different from unregistered ones. The figures are exactly what they are. Most of the people who operate in these fast-moving areas, particularly fashion, tend to use unregistered designs, and those who do so have no real protection when there is a problem.
I was particularly struck by the points made by the noble Lord, Lord Clement-Jones, about the way in which the design copying process might happen. Most people would take the 3D representation of a design, not the 2D design. As he pointed out, the discrepancy in how such malfeasance is then approached by the courts is obviously a stark example of how the process is not working.
The noble Lord’s final point about parity of arms is one that we will return to. It is clear that there is a real danger in the creative industries these days that those with the resources can use the system to obtain advantage in the knowledge that people will not be able to defend their designs. Yet we rely on these individuals and small companies to provide the design initiative that is necessary to grow our creative industries. For all these reasons, I support the noble Lord in his amendments.
Lord Howarth of Newport
My Lords, consistency is not necessarily a virtue and I think that we should be very careful in the field of intellectual property. We legislate not simply out of tidy-mindedness or a desire to achieve a satisfying consistency by transferring rules and regulations that may have applied relatively successfully in one area to another. However, it seems that the noble Lord, Lord Clement-Jones, has made a strong case for consistency in the treatment of registered designs and unregistered designs in terms of the proposed criminal offence. I would be grateful if the Minister could give us his explanation.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, before I begin, I hope noble Lords will allow me to take the opportunity to correct a reference made in my closing speech at Second Reading. In the context of wider points about infringement and the copying of designs, I spoke briefly about the right to license certain intellectual property rights. This is where rights become available to third parties for exploitation under certain conditions. As an example, I cited a figure of 2,097 applications to use designs in this way, but the example in fact referred to patents.
Now that that formality is out of the way, I shall turn to the substantive points that have been debated about the Government’s proposal to introduce a criminal sanction for the deliberate copying of a registered design. I begin by reminding noble Lords of the purpose behind the Bill, which is pertinent to the points that have been raised in the debate. Our objectives, as set out in the consultation on the designs legal framework, are: simplification; improving the services offered by the IPO; strengthening rights, including enforcement; and improving how disputes are resolved. There is clearly a balance to be reached in some of these objectives. Simplification cannot be achieved at the expense of loss of protections in the marketplace. Equally, strengthening rights cannot be at the expense of follow-on innovation.
Lord Clement-Jones
My Lords, I found the Minister’s reply absolutely fascinating, although the intellectual logic of many parts of it escaped me. He gave a very helpful response to Amendment 23. It just shows that you can trawl through the Registered Designs Act and not find what you are looking for. However, I am impressed that the department found the relevant passages in there. I appreciate that an overlap exists except with regard to partnerships. It is very interesting that there is no reference to partnerships in the existing legislation. Partnerships are interesting bodies. Some of them have unlimited liability whereas others are limited liability partnerships. Therefore, some interesting drafting needs to be done in that regard because LLPs are quite akin to corporate bodies.
Therefore, how does the legislation work? If I divined from what the Minister said that there is intent to come forward with an amendment on Report, I would be extremely happy with that response.
Viscount Younger of Leckie
To clarify, we will give this very careful consideration but I cannot guarantee that we will move an amendment on Report.
Lord Clement-Jones
My Lords, guarantees in Committee are a luxury that Ministers cannot afford. I appreciate the words that he said.
It is a very different kettle of fish with Amendment 24. It is almost difficult to know where to start because the skittles of the argument fall in almost every single case by reference to copyright. On the problematic starting point, the registered design right is of course quite straightforward to prosecute because of the registration but copyright is not so easy. There are relatively few prosecutions for breach of copyright. There would be relatively few unregistered design right prosecutions if my amendment was accepted.
The important thing is the factual basis and establishing the facts. Of course, those prosecuting have the burden of proof on their arguments. That is where it starts from and it is analogous to copyright. There is no register of copyright. There may be one in the States but there is not one here. On the difficulty of knowing when something came into existence, not every 2D document has the date on it saying exactly when it was created and so on. There are matters of fact to be established. Again, it is very similar in copyright to unregistered design rights.
On the point about the inhibiting effect, that is absolutely splendid but I cannot see that that is any greater than would be the case with copyright in 2D. In some respects, you could argue that because 2D is more thematic than 3D, 2D has a much greater inhibiting effect because you can extrapolate from 2D into 3D to a much greater extent. When you spin off and think about software or things of that sort, much of which is covered by copyright, establishing the date, genesis and all those aspects of software creation is fraught with difficult issues but nevertheless people are entitled to the protection of criminal law. That means that those who cynically exploit copyright or design—copyright certainly and trade marks sometimes—are prosecuted.
The fashion industry is not much different from that. I feel quite strongly about this. The Minister mentioned that the fashion industry uses unregistered design but one must think about the economic issues associated with copying of designs in the fashion industry and the cynical way that rip-off retailers take advantage of the original designs by fashion houses and so on. That is an absolutely clear-cut area where the protection and deterrent effect of the criminal law would be extremely useful. I did not make the claim that the voluntary register with ACID would be the killer argument but this is all about evidence. Will it be possible to mount prosecutions using evidence of copied designs or infringement of unregistered designs? The evidence of a register, albeit a voluntary one, would still be extremely useful.
Finally, I am sure that the Minister can recognise that I am somewhat frustrated by the rather circular argument being employed here. The Minister said that this should not apply to unregistered 3D because 2D is not the same, being closer to theft—that is an entirely circular argument. I do not quite see that theft of a 3D design and theft of a 2D design are morally different. In many ways they are not different factually. Why should either of them be closer to theft? I find that a rather interesting argument to mount.
I hope that the Minister will reconsider this issue. It is a matter of huge importance to 350,000 designers, who would cheer the Minister in the streets and bear him aloft through Westminster if he acceded to this, which I am sure would be a great attraction to him. I very much hope that between now and Report he will reconsider but, in the mean time, I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, that was a very interesting debate and prefigured what I am about to say about the question of criminality in this area. The noble Lord, Lord Clement-Jones, has made the arguments and is correct about them, and it is up to the Minister to make the best of if. If the industry is voting with its feet and adopting the unregistered design right as its mode of operation, and if it is true that there is a sense that having criminalisation in this area will improve the quality and quantity of our economic activity in it, it must follow logically that criminal sanctions should apply. However, I shall devote the next few minutes to arguing against exactly that proposition, but then, this is Committee.
Clause 13 introduces a new section into the Registered Designs Act, creating a criminal offence of unauthorised copying of design in course of business. It would apply in respect of UK-registered designs and registered Community designs. As I have said, we are concerned about the fact that this is being introduced as a criminal sanction.
There are two categories of offence, and I shall refer to that as I carry on with my remarks. One is about the making of a product by copying a registered design,
“so as to make a product exactly or substantially to that design”,
and the second offence is dealing in products that have been copied. Both will carry sentences of up to 10 years, which, as the noble Lord, Lord Clement-Jones, mentioned, is very high on the list of tariffs. The arguments for and against criminal sanctions for designs have been extensively aired over recent years, and we should bear in mind that levels of piracy have risen.
To recap briefly, proponents of this move feel that the current civil enforcement is expensive for small innovators and that current civil sanctions are not dissuasive enough for large infringers. Opponents are concerned that unexamined IP rights are a dangerous basis for taking criminal sanctions and that there is a risk of stifling competition in useful products.
We understand the Government’s aim—I have just referred to it—but we worry about whether the proposal for criminal offences in general is the right tool for the job and, in particular, whether it is appropriate and proportionate and would deter those pirates and counterfeiters whose behaviour the public would, I accept, consider to be criminal. There is rather an important discrepancy here. Those who champion criminal sanctions are largely talking about unregistered design rights, which we have been talking about, and, of course, the huge preponderance of design rights are in that category, but the Bill is about only registered design rights and registered Community designs.
Registered design rights are better defined and have a much longer lifetime but, as we discovered, they are not in any sense better examined, so the proposed introduction of criminal sanctions may not work, and I would like to bring some particular problems to the attention of the Committee. The penumbra around a design, which is to be found in the uncertainties about how “exactly or substantially” is defined, makes it unclear what is or is not a criminal act. Unlike parallel trade mark or copyright offences, mere use, whatever that is, of an infringing product, even if no copying is involved, will become a criminal offence. Furthermore, the maximum sentence is very high for what, in fact, could be just a mere business misjudgment without deceptive intent.
The Bill introduces a defence as it states:
“It is also a defence for a person charged with an offence under this section to show that the person did not infringe the right in the design”.
However, the inclusion of the new section contributes to the bizarrely complex nature of the offence. For example, if the prosecution shows that D copies the design, and produces something exactly or substantially to that design, D can attempt to show that the product would not produce, for an informed user, the same overall impression as the registered design. These distinctions are hard for specialist lawyers to comprehend, let alone lay people such as jurors or magistrates. I will return to this point in relation to a recent case. Implied in what I have just said, of course, is the major concern that the courts that will deal with these cases will be criminal courts, which have no real experience at all in design law.
The defence that the registered design was not in fact copied raises difficult questions, as many of the cases on copyright infringements have shown. As already mentioned, there is a concern that the proposed provision could turn into a tool to be used by unscrupulous companies, to the detriment of UK designers. It is reasonably inexpensive to register a design, especially as there is no effective examination, and an unscrupulous company could apply to register designs it copied from a UK designer and then threaten that designer with criminal sanctions for producing his or her own design. The prospect of defending a criminal action might be enough to make the designer give in. What sort of fairness does that speak to?
I have some questions for the Minister on the thinking behind this move. Why does the Bill not state a requirement as to where the act occurs? On the face of it, there seems to be no reason why it should not cover making unauthorised copies elsewhere in the EU, where the acts would infringe an RCD, so the defence that it did not infringe the right in the design would not apply.
Secondly, why does new Section 35ZA define “registered” designs as including “registered Community” designs? Does this not leave open whether the offence might not be committed by copying, or dealing in copies of, a foreign-registered design, for example those with a Benelux registration?
Thirdly, following the implementation of the designs directive, the scope of registered design protection has been broadened. This gives rise to the situation where registered design right is now infringed by use of the same design in different products. Can the Minister confirm that, if a design is registered in relation to one type of product—for example, an image of Bugs Bunny on a mug—that design would be infringed if the person featured it on another product such as a pillowcase? If so, in the latter case, would criminal sanctions be applied?
New Section 35ZA(3) applies to dealers infringing products—both importers and traders. One might wonder how stockists of, for example, Samsung Galaxy phones might have behaved towards what were initially allegations made by Apple in respect of infringement. At that point, if the Bill had been enacted, dealers in those products would have faced criminal liability, and up to 10 years’ imprisonment, if they had made an incorrect judgment call as to whether the Samsung products they were attempting to sell would infringe Apple’s registered design. One can only imagine that this would have done serious—and, as it turned out, unnecessary—harm to Samsung.
New Section 35ZA(3) includes as a criminal act the use of a product in the course of a business and the stocking of the product for use. Does the Minister accept that the word “uses” is an unacceptably vague notion for criminal prosecution? What is the Government’s reason for removing the defence of reasonably believing that the defendant’s design was not an infringement—that the designs were different and would not produce in the informed user the same overall impression? This is often the crux of design infringement cases between competitors. It is worth thinking about what Judge Birss said in the Apple v Samsung case in holding that Samsung products did not infringe Apple’s registered designs:
“This case illustrates the importance of properly taking into account the informed user’s knowledge and experience of the design corpus. When I first saw the Samsung products in this case I was struck by how similar they look to the Apple design when they are resting on a table. They look similar because they both have the same front screen. It stands out. However to the informed user (which at that stage I was not) these screens do not stand out to anything like the same extent”.
If Section 35ZA had been in force, would not Samsung have escaped criminal liability only because it got the judgment call as to infringement—the views of the informed user—right? Had Samsung got that wrong, there would be no defence. Is this what the Government really intend?
Absent either a positive requirement of dishonesty or some sort of broader defence, where a person reasonably believes that they are not infringing, this law could have a significant chilling effect on competition—so much for a Government who trumpet themselves as supporters of competition and opponents of unnecessary regulation.
Lord Clement-Jones
My Lords, I shall be very brief. The beauty of Committee is that entirely opposing propositions can be put forward by the same person. It is only when we get to Report that we have to get serious by being absolutely clear about the propositions being put forward. I therefore do not intend to respond in great detail to the noble Lord, Lord Stevenson, who, I believe, was taking an argument out for a trot. Earlier in Committee, I previously talked about frightening the horses and I am afraid that we are back to horse analogies. It has been an entertaining trot in many respects.
The way that the argument was put together misunderstood what happens in court. It is about the adducing of evidence. It was reassuring that the judge listened to the arguments and evidence and felt as a result that he understood far more about the genesis of the design right. Of course, in a criminal court you add mitigation to all that. It is not worth suddenly locking up people as a result of being prosecuted for design infringement. If you do something reasonable in the eyes of a criminal court in such circumstances, you will be able to mitigate the offence, even though technically you may be guilty of it.
I am afraid that I do not accept the noble Lord’s argument. However, I have wanted to use the expression “a fortiori” for many years in Committee; if you have the ability to prosecute in a criminal court for an infringement of registered design, you should have that ability for unregistered design. If you have it for copyright, you should be able to prosecute for unregistered design. If you have it for trade marks, you should have it for unregistered design. All these intellectual property rights may be complex but they are a vital underpinning for our creators and our creative industries. I am unashamed in my wish for those creative industries to thrive in this country and for their intellectual property protection to be as solid as we can make it, without falling unduly into a monopoly situation, about which the noble Lord, Lord Borrie, is ever vigilant, I am glad to say.
Lord Howarth of Newport
My Lords, the noble Viscount needs to offer us some compelling reasons for the creation of a new criminal offence. It is undesirable in principle to create new criminal offences unless there is a clearly demonstrable need for them. Successive Governments over decades in this country have been promiscuous in the creation of new criminal offences. They have been trigger-happy in this matter. It makes them look as if they are being tough and it is quite popular in certain quarters, but it has not been very good for our national life or our culture. It tends to create a more pervasive culture of distrust, suspicion and fear within our society.
There are also a lot of practicalities to think about. If you have a criminal offence, you must commit policing resources. You are laying another burden on the courts. The police and the courts are already excessively burdened and their resources are diminishing. You must consider the capacity of the prisons, which are bursting. I hope that we will not have to anticipate many people being incarcerated in consequence of the noble Viscount’s measure but that is clearly what it points towards. I do not know what thought the noble Viscount has given to the cost of all this. We understand that the Government are intent on reducing the deficit but he is proposing here a measure that will have clear implications of additional public spending. I can quite understand why the measure is popular with small and medium-sized enterprises in the design field: the burden of the enforcement of rights will be transferred from civil action being taken by them where necessary to criminal prosecution by the police and the Crown Prosecution Service. It saves SMEs troublesome, tedious and possibly expensive activities. I can see why they like that. However, I am a bit surprised that the Minister has been willing to gratify them in this way.
Lord Browne of Ladyton
My Lords, my intention in contributing to my noble friend Lord Stevenson’s debate on whether Clause 13 should stand part is to take advantage of the opportunity to ask some very Scottish questions about the nature of this provision and the implications for the devolution settlement in Scotland. Before I do that, I encourage and cannot resist the temptation to engage in the more general debate that has been conducted so far, simply because of the curtailed response of the noble Lord, Lord Clement-Jones, to my noble friend’s opening remarks.
I have some significant experience of practice in the criminal courts. This was perhaps a long time ago, but I practised in the criminal courts at all levels in Scotland for the better part of 20 years before I became an elected politician. The noble Lord, Lord Clement-Jones, is right. One has to have a proper sense of perspective on how courts operate. The burden and onus of proof in criminal prosecution lie and will continue to lie with the prosecutor. Obviously these offences, although complicated and requiring some understanding of design and design rights that I do not have, will require the prosecutor to persuade the court that design rights have been infringed in the way set out in these provisions.
However, I say to the noble Lord, Lord Clement-Jones, with respect—and, of course, when lawyers start talking to each other with respect, there is a sense among others that it is last thing they have for each other—that after 20 years of practising in part in criminal courts, I resist the temptation to describe convictions as technical. There is no such thing as a technical conviction. You break the law, you are convicted and you have, except with a very few limited exceptions, a criminal record thereafter. There is no such thing as a technical crime. For people who are convicted in the criminal courts, but not for lawyers who appear in them, these are life-changing events. The people who are furthest removed from this culture are those who are most affected by it, which is why jailing people for drink-driving has over time been the most effective use of jails for deterrence because that offence tends to be committed by people who would otherwise not be near a criminal court. I make that caveat. If we are using criminal sanctions in relation to commercial practices or commercial operations, that is criminal law impinging on people who are not normally around the criminal courts and who do not have the kind of relaxed attitude to them that some of us who have practised in them sometimes get.
The point my noble friend Lord Stevenson made was not about whether the courts would be able to deal with the issue of mitigation, which becomes relevant only after a conviction, because they are well capable of doing that; I have some experience. His point was about whether a by-product of criminalising this sort of behaviour would be the fear of the stigma of criminal proceedings. The stigma of criminal proceedings can for some people be as significant as criminal conviction. We are used to seeing in the media that people are arrested, bailed, brought back in, charged, bailed and then, sometimes months later, told that they are not to be prosecuted. We see that pattern of behaviour regularly now because of the nature of some of the public investigations that are going on as a consequence of the interaction of the police, newspapers and other organs of our society, including the BBC. We see that, and we see, from interviews that people who are savvy enough to be able to move in the media give, the life-changing effect that it can have on people.
My noble friend’s concern is that the stigma of criminal proceedings, the risk of a criminal record and the possibility of a quite swingeing sentence—these crimes can carry up to 10 years’ imprisonment—will affect the way in which businesses conduct themselves. If the effect is that they become risk-averse in the way that the noble Lord, Lord Clement-Jones, and those who overtly support the sparing use of criminal prosecutions, hope, their judgment becomes more acute and they are less likely to take the risk of doing something that they instinctively know is wrong, that will be a good thing. However, the risk-aversion results in the stifling of innovation because lawyers tell people who are making management decisions that they are running a personal and much greater risk with their liberty and reputation than they would have been before the Bill became an Act of Parliament. Those people might say, “It’s fine if the business has some risk of a civil penalty, we will make a judgment here and go with innovation as opposed to the conservative choice of not touching this product”. However, if they say, “It’s my head that’s on the line”—that is, to some degree, what the Government are trying to do—“It’s my personal reputation that is on the line, and it may surface in the criminal courts”, that may stifle innovation. If the balance goes the wrong way, this will not be a correct thing to do.
There is one more important issue here to which we need to give some consideration when we agree to criminalise behaviour. It is that the rich and the powerful will threaten or imply the possibility of criminal prosecution. Those of us who have been involved in debates and the consideration of legislation in your Lordships’ House over the past couple of years know about the concept of chilling effect. We were dogged in this country, particularly in England and in the courts, because London was the defamation capital of Europe. The rich and powerful threatened court proceedings and had a chilling effect in stifling free speech, publications, scientific research and other areas. There is no question that if we add this possibility of prosecution to what powerful people can threaten or imply then we run the risk that they will again deploy that threat which stifles innovation.
I have not made up my mind whether adding criminal prosecution to this armoury is a good thing. There are others in our debates who know much more about the way this area of commerce operates. I have some sympathy for people, particularly in the fashion industry, whose designs come and go. If something else is not added to this then they must go through the same processes as they do presently. Civil actions are of no use to them because the fashion season moves on and the damage is done. Within minutes of unveiling their dresses or jackets, they appear almost exactly the same in somebody else’s cut-price window. I have not made up my mind about this area but there are serious considerations about whether we should extend the criminal law in this way. It would be interesting to hear what the Minister has to say about these arguments and where the Government think the balance will lie once the Bill becomes an Act of Parliament. How do the Government intend to ensure that that balance stays there and is not exploited by others?
Let me finish by asking my Scottish questions. There is a well established convention now—thanks to the noble Lord, Lord Sewel, and what has become known as the Sewel Motion—that we will not legislate on matters that are devolved to the Scottish Parliament, Welsh Assembly or Northern Ireland Assembly without their consent. The general answer to this is that international property law is not devolved. I welcome that, and as a unionist celebrate that there are still important parts of commercial life that we control on a UK basis. I believe in the union and we should make more about what we do to improve the opportunities for commercial advantage in Scotland when we can by using UK powers. I suggested at Second Reading that I would have liked the Government to have made more of a presence about what was being done in this area of law in Scotland, so that Scottish people knew the relevance of this Parliament and this area of law in their lives, particularly in the present circumstances. That has not been done and I regret that. I wish it had.
In the detail of this particular legislation, there is a provision on page 13 of the Bill for new Section 35ZD—we must find some better way of numbering sections so we do not get these ridiculous references. It introduces new Section 35ZA, “forfeiture of Scotland”, which essentially amends the Criminal Procedure (Scotland) Act 1995. That legislation predates the Scottish Parliament, which started in 1999, but all amendments to that legislation since then have been in the area of devolved law. Criminal procedure in Scotland is devolved. We are indirectly, if not directly, amending an area of devolved law in Scotland. I think that requires a Sewel Motion. It requires the consent of the Scottish Parliament. I am happy to be corrected on that, but it seems to me that it does. If it does, that implies, as far as I am concerned, that there has been some communication between the Government and the Scottish Government on the subject of a Motion being laid by the Scottish Government and passed by the Scottish Parliament, where the SNP has a majority. Therefore, there will have been some discussions on that matter.
Viscount Younger of Leckie
My Lords, Clause 13 will introduce a criminal offence for the deliberate copying of a UK or EU registered design. This should help to reduce the scale of unlawful design copying in the UK while increasing the level of protection that is available for holders of registered designs. The Government believe that they have achieved a fine balance in the substance of the clause to ensure that the criminal offence targets only those people who deliberately steal someone else’s ideas and creativity. As we have already discussed today, there are a number of reasons why this clause applies only to registered designs, and this decision forms part of the fine balance of protection that it achieves.
The focus of the offence being on registered designs rather than unregistered designs also reflects the majority of responses to the designs consultation. As with other legislative changes, the Government plan to evaluate the impact of the change within five years of implementation. The offence gives registered designs the same level of protection as copyright and trade marks, creating a coherent approach to enforcement and protection. It also brings design rights in the UK to a level with other European design leaders such as Denmark, which noble Lords will know is noted for design in its furniture manufacturing industry, as well as Italy and Germany.
Criminal sanctions already exist in these countries and are considered necessary as a deterrent and to punish those who deliberately copy for commercial gain. For example, in Germany in 2011, a total of 12 trials were held concerning a criminal charge based on design copying. In three of the cases, the charges were dropped during the trial. In eight out of the nine cases in which a sentence was passed, the court issued a fine. In one case, a prison sentence of nine months to one year was imposed. These figures show clearly that the offence is brought forward only selectively, but that a need for the sanction does exist. This may help to reassure the noble Lord, Lord Howarth, in his concerns over the criminal sanctions. He alluded to the fact that they might be a little too draconian.
On the same subject, the noble Lord, Lord Howarth, raised the issue of the costs to this country. In their impact assessment, the Government have estimated a cost of £8.18 million over the course of 10 years. This figure was arrived at by estimating the costs to the police, the Crown Prosecution Service, Her Majesty’s Courts and Tribunals Service, and potential legal aid costs. However, it is difficult to estimate the benefit of the offence to business. The organisation Anti Copying in Design has estimated that the cost of infringement to the design industry is around 5% of the total value of design to the UK economy. Based on the most recent estimates from NESTA of £15.5 billion as the value of design investment in the UK, this equates to an annual cost of infringement of £0.775 billion.
In relation to costs, the noble Lord, Lord Howarth, also asked what the provisions are for maximum penalties. As the noble Lord may be aware, the Ministry of Justice is currently bringing Sections 85 to 87 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 into force. These provisions will increase the fines for all intellectual property related offences in the magistrates’ courts in England and Wales. This work needs to be allowed time to be implemented before further increases in penalties can be considered.
The noble Lord also asked a plain question: can the justice system cope with this? We do not believe that the offence will create a burden on enforcement agencies. Trading standards departments have the resources to pursue only a certain number of intellectual property cases each year. As a discretionary power, it will be up to each department to balance the importance of pursuing a design case against the other kinds of intellectual property crime in which it is interested. This is in keeping with many other statutory provisions under which local authorities have no duty to enforce, but can and frequently do, instruct trading standards departments to take action. The Crown Prosecution Service will treat any new offence with the same approach it does for the other forms of intellectual property, using its usual discretion and margin of appreciation, including such factors as evidential sufficiency and the public interest in pursuing a conviction.
Lord Howarth of Newport
Perhaps the noble Viscount will allow me to intervene. Does the figure of £8.18 million over 10 years include the costs to local government as well as to central government; namely, the costs of trading standards officers? Whether or not it does, the public expenditure cost of £8.18 million that is already cited is a multiple many times over that of the expected cost of infringement per annum. We are going to spend more on enforcement than we will lose on the costs of infringement. On the face of it, that does not seem to be good value for the public purse or for the economy.
Viscount Younger of Leckie
My Lords, the noble Lord has cited certain figures and I think it would be wise for me to give him a fuller answer than I have before me. Although I would say this, I believe that our arguments are robust. However, I will follow up his points and write to him.
Clause 13 specifies that various conditions must apply in prosecuting the offence. In particular, it must be established that the person accused of the offence should, first, have copied a registered design; secondly, knew that the design they copied was a registered design; and thirdly, copied the design without the consent of the registered design holder. Under the clause, it is also an offence knowingly to use a copied design in the course of business activities in order to profit from that copying. This would include acts such as marketing, exporting, using or stocking the design in the course of business. A prosecution will be successful only if the evidence is sufficient to satisfy the criminal legal burden of proof; that of being “beyond all reasonable doubt”. This is a high standard to achieve and will help to ensure that the offence does not affect innovation or legitimate and competitive risk-taking within business. The offence will not apply if the defendant can show reasonable grounds for believing that the design in question was invalid or where the person charged with the offence shows that there was no infringement of the registered design.
The clause provides that a trial may be on summary trial in a magistrates’ court or trial on indictment in a Crown Court. Of course, this will depend on the severity of the case. In a magistrates’ court, conviction could result in a term of imprisonment of up to six months in England and Wales and Northern Ireland and 12 months in Scotland, or a fine up to the statutory maximum, or both. In the Crown Court, conviction on indictment could result in imprisonment for up to 10 years, or to a fine, or both. The offence in this clause will be applicable only to designs registered prior to infringement, not to those registered after the copying has taken place. Under the clause, trading standards departments will have the power to enforce registered design copying, as they do now for trademark and copyright offences. They will also have powers of forfeiture.
Noble Lords raised a number of points. The noble Lords, Lord Stevenson and Lord Browne, raised the issue of the “chilling effect” of criminal sanctions. I reiterate that the clause is not intended to have a chilling effect on innovation or legitimate and competitive risk-taking within business. This is something that we were very much mindful of during the drafting of the offence as our policy intention was to target only those people who deliberately use somebody else’s ideas and creativity. Further, the offence depends on the infringing product having been made “exactly or substantially” to the registered design, and this should catch only those who set out to copy a registered design, not those who make distinguishable follow-on designs. This is why the offence requires the defendant to have known or have reason to believe that the design he or she copied was registered by someone else. Furthermore, this will have to be shown to the criminal standard of proof of “beyond all reasonable doubt”, which is an exceptionally high standard for prosecutors to meet in court.
As I mentioned earlier, this chilling effect has not been seen in Germany and the assertion of a chilling effect does not appear to be borne out by the experience of other jurisdictions that retain a criminal sanction for design copying. Germany is renowned for having a highly effective design system and it retains both civil and criminal sanctions. Although it is difficult to draw direct causality between Germany’s use of criminal sanctions and its successful system, we know that Germany has 10 times as many registered designs as the UK and it is unlikely that the criminal sanction has had an adverse effect on the number of registered designs or on the strong innovation performance of German SMEs, which is so evident to us all.
The noble Lord, Lord Stevenson, asked whether it was fair to prosecute those who unknowingly stock or sell copied designs and cited the examples of Apple and Samsung. The innocent use of a copied design in the course of business would not be caught by the offence; for example, a retailer would be protected if a third party had manufactured the copies and sold them to the retailer as their own. In this case, the retailer would not be acting with the knowledge that the design was a copy and would not be found guilty of committing the offence. The activities that constitute using a design under the offence reflect the definition for “use of a design” contained in Section 7 of the Registered Designs Act 1949. Innocent acts are protected, therefore, under the clause because it contains the test of,
“knowing, or having reason to believe”,
that a design is copied.
Lord Howarth of Newport
I am most grateful to the Minister and apologise for intervening on him again. I just wonder whether the chilling effect may not work in another sense. As the Minister says, there is no evidence from the German experience that the existence of criminal sanctions has had any chilling effect on the registration of designs. But what evidence does he have to reassure us that people who might be uncertain as to whether the design that they wish to develop was so close to another design that it could be proved in court to be sufficiently similar to incur a penalty, they would therefore decide not to bother? Given the difficulties of definition in this field, is it not possible that the chilling effect may be to deter innovation and enterprise on the part of people who are worried that they would be moving too close to a design that was already registered?
Viscount Younger of Leckie
It is not the case that that would never happen but overall it may be of some reassurance to the noble Lord that much consultation has taken place on this. If there were clear indications that the examples he gave were to lead to a chilling effect, that would certainly have arisen during consultation. However, the noble Lord made a fair point and we will review the consultation. I will write to the noble Lord again if we can furnish him with some extra, new information. It is not the Government’s intention to criminalise businesses that use products based on copied designs incidentally in the course of their business but do not profit from any trade in those particular products.
The noble Lord, Lord Stevenson, raised the issue of applying Bugs Bunny to various products and how the law would work. This is probably the first time that anybody has said that Bugs Bunny is a complex issue, but he is and it would be best if I wrote to the noble Lord on the details of that particular point. The noble Lord also asked why it is a proposed offence to copy “exactly or substantially”. It is our intention that very minor modifications—possibly imperceptible ones—should not excuse deliberate copying and the sanctions that would follow. The noble Lord asked if the offence was “appropriate and proportionate”—I think he used those words. We recognise the concerns about proportionality and that is why the defence has been carefully crafted. We do not believe that it will lead to countless people being placed in custody, as can be seen by my previous references to Germany in this particular debate.
In fear of pouring fuel on the fire of the points made on the last amendment by my noble friend Lord Clement-Jones, making comparisons between unregistered designs and copyright and its criminalisation, I will reiterate our position on this. A comparison to copyrighted material, which is also unregistered but attracts criminal sanctions, is unhelpful because the protection for copyright lasts 70 years plus the lifetime of the author. This makes it unlikely that copyright will have expired, and infringement is therefore much more likely to be the result of copying. The shorter period of protection for unregistered design, together with the difficulty of knowing when those design rights came into existence—a point that I made earlier—means that it is more difficult for third parties to be sure they are not infringing. The introduction of criminal sanctions for unregistered rights could lead to a negative effect on business and innovation.
Furthermore, copyright protection is denied to the shape and configuration of industrial designs by Section 51 of the Copyright, Designs and Patents Act 1988. Applying criminal sanctions to an unregistered design right would criminalise some copying that would not be caught under the law of copyright. I am sure that the noble Lord will have some further points to make on this matter but I thought it wise to raise the subject again.
The noble Lord, Lord Stevenson, asked whether the issue of criminalisation was too complicated for magistrates and juries. Provided that it is limited to registered designs, we believe that the criminal courts can decide whether a design has been copied exactly or substantially. Similar issues arise in copyright, as the noble Lord will be aware. The noble Lord also asked why new Section 35ZA includes community designs and asked whether this would cover designs from the European Union. It does, because EU designs have effective rights here in the UK.
The noble Lord, Lord Stevenson, asked whether it is right that the use of a copied design is caught by the provision. The activities which constitute using a design under the offence reflect the definition for use of design contained in Section 7 of the Registered Designs Act 1949. Innocent acts are protected under the clause because it contains the test of knowing, or having reason to believe, that a design is copied.
The noble Lord, Lord Browne of Ladyton, was particularly concerned about those he described as “rich and powerful people” using the threat of criminal sanctions against small businesses. That is a fair point, but I draw on the UK’s experience in relation to other intellectual property rights, which have also been retrospectively subject to criminal sanctions. Although there is no quantitative evidence, the introduction of criminal sanctions for piracy and counterfeiting provides no indication of a chilling effect on creativity, copyright or brand development—trade marks—in the UK. They are generally acknowledged to be in robust health, with the number of trade mark applications at a historic high according to unpublished figures from the Intellectual Property Office.
Finally, I think it would be useful to provide a further response to a point made by the noble Lord, Lord Howarth. He asked how the Government defend setting up more criminal offences. I certainly do not propose to start discussing the wider criminal justice system today—I hope the noble Lord will forgive me for that—but the important point is that there are compelling reasons why we believe this new sanction is right, which I trust I have set out in my response.
I reiterate to the Committee that we believe it is right that deliberate, wide-eyed copying of registered designs is punished.
Lord Browne of Ladyton
Before the Minister concludes, will he remember Scotland? At this stage, I only seek an answer about whether this requires a Sewel Motion. All the consequential questions would arise if it does not.
Viscount Younger of Leckie
The noble Lord is quite right. I think it is best if I write to him on a number of the points that he has raised about Scotland. I could say something now, but I think a full answer is required. The noble Lord raised a number of questions, and we should give a holistic response.
The Government have sought to create a balance between protecting the rights of design owners and ensuring that innovation is not restricted. We believe that in this clause we have drawn the right balance. I commend the clause to the Committee.
Lord Stevenson of Balmacara
My Lords, I thank all noble Lords who have spoken on this topic, in particular my noble friends Lord Howarth and Lord Browne. Between us, including one or two of the points made by the noble Lord, Lord Clement-Jones, we have raised a sufficiently significant question about the desirability of this step being taken by the Government for us to think again before we return to this on Report. On the one hand, there is the question about whether the right approach to protecting the desirable end of making sure that those who design are able to proceed to the manufacture and exploitation of their designs without being ripped off by others is by some simplification of the overall system that might arrive at a better system or whether the criminalisation element will provide the necessary bulwark.
The argument is finely balanced. My noble friend Lord Browne said that he is uncertain about which is the right way, and I join him in that. I was not taking horses out for a trot on this point. I was, to change the metaphor, casting a fly on the water and seeing what would come up. I went fishing last weekend, which is why it is in my mind. I caught myself with my own fly and fell in, which was not a very successful outcome, but I was struck by the efforts of those with rods make to attract unwilling objects, such as fish, to come to the surface and bite the fly. You have to be careful what you are casting for sometimes, and my unease is that the simplicity of the central point—whether to introduce criminal sanctions—is becoming obscured by the complications of what might emerge if it happens. There is the question of the cost of the engagement of the police, trading standards and prisons and the impact on public spending, which my noble friend Lord Howarth raised. My noble friend Lord Browne was supportive in the sense that the criminal courts can easily take this on, as they have taken on many other things that Parliament has opined should be criminalised in the past several hundred years. On the other hand, it is a real change—from a specialist court dealing with well rehearsed topics, with practitioners who are knowledgeable in this area, to the hurly-burly of a magistrates’ court, or a sheriff’s court in Scotland, and then coming up through the system.
This is all quite a big step and I do not feel that the arguments have been as well marshalled as they could have been. The Minister brought forward some evidence but there may be more in his letters. I am looking forward to having many of those as we proceed through this, particularly my one on Bugs Bunny, which I can hardly wait for as the excitement is so intense. Germany is not necessarily the right model for this. We would have been happier if we could have seen more evidence from right across the design community. It is not a small community—we know the numbers, and there are lots of them. The danger in consultations of the type the IPO has carried out is that you hear from those who shout the loudest but do not hear from those who are going to have to make the thing work when the dust is settled. With those reservations in mind, we might have to return to this on Report.
Lord Jenkin of Roding
Part 1ACopyrightExploitation of design derived from artistic work
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In Schedule 1 (copyright: transitional provisions and savings), omit paragraph 6.”
Lord Jenkin of Roding
My Lords, I hope to be able to deal with this very briefly, as I shall explain. The purpose of the amendment, along with the amendment grouped with it, is to try to make sure that artistic works prepared before 1 June 1957 will still be protected despite the repeal of Section 52 of the Copyright, Designs and Patents Act 1988. I remind the Committee that we discussed this at some length during the passage of the Enterprise and Regulatory Reform Bill.
I have learnt that the group of manufacturers who are concerned about this have a meeting set up with the IPO for a week today. It was suggested to me—and I have suggested it in turn to my noble friend and given notice to the noble Lord, Lord Stevenson—that perhaps it would be better to wait to see whether the outcome of that consultation meets the concerns of those companies. If it does not, and the issue turns out to be serious, we can, of course, return to this matter on Report. On the assumption that my noble friend will share my anxiety to let that meeting proceed first, I hope that he will be able to respond with equal brevity. I beg to move.
Lord Howarth of Newport
My Lords, I rise to speak very briefly. One has a pleasant sense of déjà vu when the noble Lord, Lord Jenkin of Roding, tables an amendment in relation to works that he is careful to label as “artistic” created before 1957. However, he then spoke of a group of manufacturers who are shortly to meet the Intellectual Property Office. I am a little puzzled about the relationship of artistic property to the activities of manufacturers. If the noble Lord were able to clarify quite what the relevance of one is to the other, I would find that helpful.
Lord Jenkin of Roding
I apologise if through brevity I omitted some obviously important facts. We are dealing with iconic pieces of design, many of which were created in what is known as the Bauhaus period. These would include such things as the Corbusier chaise, the Wagenfeld lamp and what we frequently refer to as the Eames lounge chair. They are indisputably works of fine art and are protected by copyright throughout the European Union. The manufacturers want to be sure that they will continue to be protected in the UK.
Lord Howarth of Newport
I am grateful to the noble Lord for that clarification. Given that clarification, I have to say that I find myself profoundly opposed to what it is that I think he is seeking to achieve. While of course it is right that designers from the Bauhaus stable—Wagenfeld, Corbusier or Eames, although he was not from the Bauhaus—deserve to be recognised and to enjoy the protection of their intellectual property for a reasonable length of time, we are talking about a period that goes back to before 1957, half a century ago. I cannot see how it can be in the public interest that a monopoly should continue to be held in those designs. That is not least because no protection is being given to the designers themselves. The design rights have been sold on and inherited. Surely it must be desirable to limit the term of monopoly so that more people are able to have the benefit of iconic artefacts created according to these very beautiful and important designs at reasonable prices. The protectionism that the noble Lord is seeking to perpetuate through his amendment is not in the interests of our society, of our culture or, indeed, of our economy.
Viscount Younger of Leckie
My Lords, I turn now to Amendments 24A and 24B. I am grateful to my noble friend Lord Jenkin for the constructive spirit in which he has offered them and indeed that he has agreed to wait for the results of the meeting to which he alluded. These amendments are related to the repeal of Section 52 of the Copyright, Designs and Patents Act 1988 through the Enterprise and Regulatory Reform Act 2013. For the benefit of the Committee, and indeed of the noble Lord, Lord Howarth, I ask noble Lords to let me summarise briefly the reasons for the change.
The Government wish to ensure that all categories of artistic work enjoy the full term of copyright protection; that is, the life of the creator plus 70 years. Some artistic works that were industrially produced had 25 years’ protection. Once the repeal comes into force, which will take place after the consultation on the timing of the repeal and publication of a new impact assessment, these works will have the same term of protection. If a particular type of table is an artistic work protected by copyright, one will not be able to make a physical replica or reproduce an image of that table in a book without permission. Similarly, one will need the rights owner’s consent to make wallpaper that reproduced an artistic work, such as a print. Designers and companies that own rights in classic design furniture have been supportive of this change. As my noble friend Lord Jenkin said, next week my officials are meeting representatives of one such company as part of the Government’s ongoing dialogue with interested parties. We shall see what comes of that.
I am grateful that my noble friend Lord Jenkin continues to pay such close attention to the details of this change and for the intervention from the noble Lord, Lord Howarth, but I am not convinced that any further changes are necessary or desirable until the consultation has been completed.
Lord Jenkin of Roding
My Lords, I am most grateful to my noble friend. Perhaps I may respond very briefly to the noble Lord, Lord Howarth. A month or two ago I was approached by, as it happens, a British company which complained bitterly about Section 52 extending the period from 25 years to life plus 70 years. I took the matter up with my right honourable friend and discussed it with one or two other people. They said, “Ha ha. Yes, of course. They use nothing but Chinese-manufactured fakes. They are simply importing imitations of these hugely important artistic designs. Of course they are cross about it because it is their business”. The fact is that that company has been behaving rather disreputably. The repeal of Section 52 is intended to give the designs the protection that my noble friend has indicated is the intention of the Government. We will have to have this debate later. In the mean time, I am grateful for what the Minister said and beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Baroness Pitkeathley)
My Lords, Amendments 25 and 25ZA are grouped together. I am advised by the Public Bill Office that Amendment 25ZA is a duplicate and has been printed in error, so I will not be calling that.
Amendment 25
Lord Clement-Jones
“(b) which directly displays clearly the product and its complete trade designation and associates the product with the number of the patent or patents which relate to it”
Lord Clement-Jones
My Lords, I am indebted to the Chartered Institute of Patent Attorneys for having drawn my attention to the issues on Clause 14. Generally, the institute welcomes this proposal, but considers that it needs to be tightened up. If a product has a patent number or patent application number on it, it is easy for any third party to identify the patent or application and make any such subsequent inquiry as it needs to. If, however, all that is marked on the product is an internet link, it could turn out to be a considerable job even to identify the patent or application. The internet link, for instance, could be to the home page of a company and the patent number could then be buried deep in the sublevels of the internet site. Alternatively, the link could be to a page where all a company’s patents and applications are listed, but in an unsearchable format. This proposal could provide a way for a company to conceal the information that is supposed to be present on the product. To ensure that the internet link provides the required information directly, I hope that the Minister will see the virtues of this amendment. I beg to move.
Lord Young of Norwood Green
My Lords, I know that imitation is the sincerest form of flattery, and I doubt that the contribution of the noble Lord, Lord Clement-Jones, is copyright-protected. However, it would not be very good if, having found the same source, I repeated exactly the same words. We share the sentiments of the noble Lord, Lord Clement-Jones. We think that the government proposal is good but, in this age of the internet, it could be made even more effective. On those grounds, we support this amendment and look forward to the ministerial response.
Viscount Younger of Leckie
My Lords, Amendment 25 would place a requirement on businesses to provide the complete trade designation of the product, alongside the product’s associated patent numbers, on their websites. It is helpful that my noble friend has raised this issue, as it will allow me to set out some more information about how the Government are expecting the marking of products with the web address to work.
The Bill aims to reduce burdens on patent holders by modernising the ways in which they can provide public notice of their patent rights. Allowing patent owners to mark their patented product with a web address will lead to cost savings for business while making it easier for the public to access up-to-date patent information. Under current UK legislation if, in the event that a patent is infringed, a patent holder wishes to be in with the best chance of being awarded damages or other financial remedies, it must mark its product with the word “patent” or “patented”, together with the number of the patent. It is, therefore, in a patent holder’s interest to ensure that it is straightforward for the public to ascertain which patent or patents apply to a particular product. Doing so will ensure that the public is put on notice about the patent rights, making others think twice before infringing that patent.
Clause 14 requires that, if an internet link is used, it must direct the reader to a web page which clearly associates the product with the number of the patent concerned, as is the case under United States patent law. This means that providing an internet link to the home page of a company website will not suffice unless on that home page there is a clear association between the product and the relevant patent number. It also means that the product must be clearly identified and associated with the relevant patent.
Just to be frivolous, I suspect that noble Lords’ mobile phones are switched off; I hope that they are. However, if you were to take them apart you may find—if the manufacturer operates in the United States—a website address with the patent details is provided. I particularly noted that it appears on my battery. Many hundreds of patents are likely to be associated with a single mobile phone, and listing them on a web page rather than on the mobile phone itself is therefore far easier for the manufacturer.
Amendment 25 would add an additional requirement that the web page must provide the “complete trade designation” of the product. I understand this to mean an identification of the exact product concerned, including, for example, any relevant model numbers and variants that exist. This is entirely the intention of the clause, which I believe already caters for this. The clause requires the provision of a web page address that,
“clearly associates the product with the number of the patent”.
The patent holder must therefore clearly identify the product and which patents apply to it. Currently, the Bill allows businesses to do this in a manner that best suits their circumstances to avoid placing an undue burden on business. Again, I remind noble Lords that it is in the patent holder’s interest to ensure that clear information is provided that makes it easy for the public to ascertain which patent or patents apply to a particular product. Doing so will ensure that they can benefit from the maximum protection available during any legal proceedings. In light of this, I ask that the noble Lord withdraws the amendment.
Lord Clement-Jones
My Lords, I thank my noble friend for that useful clarification. I am sure that it will be carefully noted by all those concerned. Given that it is the patent agents and patent lawyers who are heavily involved in this field, he will appreciate that their concerns are worth taking seriously. However, I take my noble friend’s clarification seriously, too, and I am grateful. I beg leave to withdraw the amendment.
Lord Clement-Jones
Lord Clement-Jones
My Lords, I am afraid that this is a much more serious issue and I dare say that my noble friend is already aware of the strong concerns about elements of the clause that have been expressed not only by the patent agents but by the Law Society in a recent briefing paper.
In 2012, the Intellectual Property Office consulted on an amendment to the opinions service. That was responded to by a number of professional bodies. The CIPA agreed that the opinions service could be usefully expanded in some respects but was firmly opposed to the non-binding opinions service being turned into a binding service in relation to the existence of the patentee’s patent. Currently, the opinions service can give rise to four non-binding opinions: first, where the patent is valid; secondly, if the patent is invalid for lack of novelty or obviousness; thirdly, if the patent is infringed; and, fourthly, if the patent is not infringed. The Bill is proposing that one, and only one, of those four opinions should become something more than a non-binding opinion, while the other three retain their non-binding status.
The Bill proposes at subsection (4) to introduce into Section 73 of the Patents Act 1977 a power for the comptroller to revoke patents of his own motion when an opinion is given that the patent lacks novelty or is obvious. It is of concern that this proposal has not been fully thought through and I ask noble Lords to reconsider whether it should be kept in the Bill. The opinions service is very useful. It provides a low-cost forum for obtaining a first view as to the validity or infringement of a patent. The fact is that it is an opinions service, and a non-binding one, meaning that a certain approach is taken to such proceedings and costs are kept low. Moreover, the opinions are a useful commercial tool because the requester and the patentee can enter into negotiations regarding the patent. However, if the patentee knows that the opinion could lead to revocation of the patent, it is unlikely that any negotiations will be carried out on the same basis and it is less likely that settlement will be reached.
Lord Stevenson of Balmacara
My Lords, although we come at this matter from a slightly different angle in trying to amend the clause to bring out a particular point, our intention is very similar to that of the noble Lord, Lord Clement-Jones. The points I would make on the narrowness of our amendment would rather duplicate what he is doing. It is better to simply say that we associate ourselves with what he said. I agree with what he is trying to do here to unpick a wrong turning proposed by the IPO. Where we are in terms of opinions on patents is well respected, understood and supported across the industry. To add this additional function, or change one of the existing pillars of the operation, would in fact change all the natures of the way it operates and is not to the benefit of where we are. With that, I support the amendment.
Viscount Younger of Leckie
My Lords, Amendments 25A and 25B relate to the patent opinions service. Amendment 25A, tabled by my noble friend Lord Clement-Jones, seeks to remove the power that will allow the Intellectual Property Office to initiate revocation proceedings where an opinion concludes that the patent is invalid. Amendment 25B, tabled by the noble Lords, Lord Stevenson and Lord Young of Norwood Green, seeks to insert the word “clearly” into the clause so that revocation will be initiated only when novelty or inventive step is clearly not satisfied.
Clause 15 allows a limited extension of the IPO’s existing powers to initiate revocation proceedings. It will help in particular SMEs and lone inventors who may simply be unable to afford to bring revocation action themselves. More broadly, it will be in the public interest to allow the IPO to seek the removal of certain invalid patents from the patents register. I reassure noble Lords that the IPO will only initiate such proceedings in clear-cut cases—where there is no reasonable argument to be made that the invention is new or not an obvious replacement of what has gone before. However, in those cases which are not clear cut there will be no revocation action.
I also wish to clarify that initiation of action will not always result in revocation. The patentee can submit observations that may demonstrate that his patent is valid. Alternatively, amendment may reduce the monopoly afforded by the granted claim. The patent holder will also be able to appeal any decision to revoke to the courts. The Explanatory Notes accompanying the Bill make it clear that the power to revoke will be exercised only in the most clear cut of cases. Therefore, I do not feel it is necessary to insert the word “clearly” into the legislation itself, as suggested by noble Lords in Amendment 25B.
Inserting the word “clearly” into the legislation may also lead to argument about what that word means, thus adding an unnecessary further strand to the dispute. For example, if the patent holder disagrees with the revocation and appeals to the courts, the court should not have to decide whether a patent is “clearly invalid” but should instead be free to decide the core question of whether the patent is or is not valid. The IPO is already able to seek revocation of a patent under certain circumstances. Experience shows that its officers would be well placed to assess whether revocation proceedings should be initiated following an opinion that concludes that a patent is clearly invalid.
Before answering a number of questions, I will finish by sharing with you the story of one SME which responded to the consultation in support of the government position. Shortly after it was set up, this SME became aware of a competitor’s patent for a similar product to that which it intended to sell. The SME requested an opinion on the patent, which concluded that the competitor’s patent was invalid. However, despite this alleged invalidity, the competitor continued to contact potential customers of the SME, warning them of possible infringement of their patent, and as a result customers stopped placing orders with the SME. The SME was therefore faced with the stark choice of either closing down or bringing revocation proceedings against the patent. It was apparently told it would cost £100,000 to bring such proceedings, and it simply could not afford to do so. In the end, the SME was fortunate in that it received backing from a much larger company, which enabled it to carry on trading and, indeed, to significantly grow the business. However, I am sure noble Lords can appreciate that such support cannot be guaranteed for all SMEs. As the example demonstrates, it is important that intellectual property does not become the preserve of only those with deep pockets. The clause as it stands, limited as it is and with the necessary safeguards to protect legitimate patent holders, will, I believe, further help to ensure that does not happen.
In his usual perceptive way, my noble friend Lord Clement-Jones raised a goodly number of questions. I will attempt to answer them all. First, he asked whether the procedure was TRIPS-compliant. The proposed legislation mirrors legislation already in place for revocation under Section 73(1) of the Patents Act 1977. The process of revocation will also mirror the process of revocation under Section 73(1). This process means that the revocation will also be considered by a more senior official than the examiner who issued the opinion. He will look at the details afresh and will not be bound by the conclusions of the examiner’s opinion when deciding whether revocation proceedings should begin. The patentee will then have the opportunity to address the alleged invalidity by way of amendment of his patent or by argument. He will also be able to appeal any decision to revoke his patent to the High Court. Further appeals are still possible, and this ensures that the procedure is TRIPS-compliant.
Lord Stevenson of Balmacara
The noble Viscount has just misquoted the section of the Act to which he was referring. If I heard him correctly—I will check Hansard—he referred to the comptroller issuing an opinion under Section 74A that Section 1(1)(a) or (b) is not clearly satisfied, which, indeed, was the intention behind our amendment. I take the point that the noble Viscount said earlier that the notes clearly say that it is envisaged that this additional power to strike off a patent will be exercised only in the clearest of cases where it is indisputable that the patent invention lacks novelty or inventive step. We are not very far apart on this. As I and the noble Lord, Lord Clement-Jones, said, the industry argues that the current phrasing is too bland to get across the sentiment which I think the noble Viscount is expressing—namely, that there has to be a clear exceptionality about the nature of the opinion. I hope that the noble Viscount will reflect on that matter and come back to it at a later stage. We need to get across the concept that the power will be exercised only in the clearest of cases where it is indisputable that the patent invention lacks novelty or inventive step. It is fine in the notes, but the notes are not the law, and the law needs to be right.
Viscount Younger of Leckie
It may be helpful if I clarify for the noble Lord that I was speaking in relation to the IPO’s practice and policy, as stated in the response to the consultees’ comments, in other words, as part of the consultation. However, I will reflect further on the need to tackle the point that he has made, as he has asked me to do.
Finally, my noble friend Lord Clement-Jones asked why patentees cannot recover their costs. If the patentee appeals to the court following a revocation by the IPO and is successful, he may be able to recover costs, but only if the court thinks that that is right.
I hope that I have managed to answer all the questions. If I have not, I will certainly follow up with a letter. I thank my noble friend Lord Clement-Jones for putting so much effort and thought into his range of questions on this important subject. I hope that in the light of my comments, the noble Lord will not press the amendment.
Lord Clement-Jones
My Lords, I am very grateful to the Minister for his very full and careful response. However, the noble Lord, Lord Stevenson, has put his finger on the point. I thought that what the Minister said was entirely reasonable. I heard what he said about TRIPS and two steps. However, when I read the actual wording of the Bill, I do not see that. I see a kind of blancmange where the IPO and the comptroller can take this over and revoke a patent after an opinion without a very clear step between the opinion and the revocation procedure. I am not an expert patent lawyer, and I shall consult a number of organisations, including the Law Society and the Chartered Institute of Patent Attorneys, but it seems to me that they are entirely right to be concerned about the Bill’s wording.
I entirely accept that the Minister, absolutely in good faith, has read out how he and the IPO believe that this is meant to operate. However, we operate on the basis of the rule of law. The Minister, in a way, has made a Pepper v Hart statement whereby, if we were to have a judicial review of the IPO when revocation had taken place and everything had gone pear-shaped for a patentee, the patentee could rely on the Minister’s statement. I would much prefer to amend the Bill, and I cannot for the life of me see why if it is the intention to have revocation proceedings only in clear-cut cases where a patent is invalid for various particular reasons, it cannot be expressed in the Bill.
The bit of the Minister’s response that I found somewhat disingenuous was somewhat like political jujitsu, when he said that this is all for the benefit of SMEs. I thought that that was a cunning reversal of the arguments because, if we are not careful, SMEs will be faced with the power of a determined major company that wants to make sure that it gets opinions in place. It could then bring revocation proceedings that could be extremely threatening to some small patentees. That is not entirely helpful to the SME.
We need to chew over the Minister’s words, but this is a very serious issue for the professionals involved. They really understand the steps that need to be taken. They understand, as I do not, all the intricacies of TRIPS, they recognise novelty and they have to advise on such issues on a daily basis. They are extremely concerned that this is a woolly area that gives the comptroller too much power. However, we will no doubt come back to this on Report. In the mean time, I beg leave to withdraw the amendment.
“( ) In making an order under this section, which confers jurisdiction on a court, removes jurisdiction from a court or varies the jurisdiction of a court, the Secretary of State shall—
(a) ensure he takes into account the views of—(i) HM Courts & Tribunals Service,(ii) the Scottish Court Service,(iii) the Northern Ireland Courts and Tribunals Service; and(iv) any other appropriate body;(b) where the number of patent cases is such as to meet the requirements as set out in Article 7 of the Agreement on a Unified Patent Court, confer local divisional court jurisdiction on—(i) in England and Wales, the High Court;(ii) in Scotland, the Court of Session;(iii) in Northern Ireland, the High Court.”
Lord Young of Norwood Green
My Lords, we welcome the introduction of the Intellectual Property Bill and are supportive of its policy intent and objectives, particularly as it provides for the power to establish a unified patent court, giving effect to the European agreement made in February 2013, which we also support.
Clause 16 amends Section 89 of the Patents Act 1977 and expressly provides the Secretary of State with the power to make an order conferring divisional jurisdiction on, or removing jurisdiction from, a court. With this amendment, we are suggesting that before this power is used, the Secretary of State ought to consult with stakeholders.
At present, under Article 7 of the Agreement on a Unified Patent Court, each contracting member state may request and establish one division of the court of first instance of the unitary patent court within its jurisdiction for every 100 patent cases in each calendar year during three successive years prior to or subsequent to the date of entry into force of the agreement. This is subject to a maximum number of such divisional courts per jurisdiction of four. We note that in the event that the UK jurisdiction as a whole has a sufficient number of patent cases to merit more than one such divisional court within the UK, the Secretary of State will have the power to designate other courts, which need not be in London.
At present, the Court of Session currently has exclusive jurisdiction in Scotland over patent cases, including UK and EU-UK patents. If it were to lose this jurisdiction in respect of the new unitary patent, which is of course designed to eventually supersede the current European patent and possibly national patents, patent litigants in Scotland would be forced to litigate their relevant patent rights elsewhere in the United Kingdom or further afield in the EU. That would add significantly to their costs and to their overall business burdens and administration. We believe that at least two divisional courts might be situated in the UK as a whole and suggest that one might be based in Scotland. There seems to be potential to ensure that future patent litigants who operate in the Scottish jurisdiction are not unduly disadvantaged.
Viscount Younger of Leckie
My Lords, the amendments tabled by the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, relate to the unified patent court. I will address each amendment in turn.
Amendment 25C seeks to ensure that the Secretary of State takes account of the views of the courts services and any other appropriate body when using the power to confer or amend the jurisdiction of a court. These bodies are already closely involved in the implementation of the unified patent court. Establishing this court is an enormous task that requires resources and expertise from across government. It is for this reason that the Government have set up a task force responsible for UK implementation of the unified patent court agreement. This task force is a joint endeavour between the Department for Business, Innovation and Skills and the Ministry of Justice, and I can assure noble Lords that Ministers and senior officials from each department are fully engaged in this matter.
Officials from Her Majesty’s Courts and Tribunals Service are leading on work to establish the UK-based divisions and on the discussions with European partners through the preparatory committee of the unified patent court. Similarly, officials from the Ministry of Justice are leading the work for the UK on the selection and training of judges for the unified patent court. The devolved Administrations in Scotland and Northern Ireland and the courts services in those jurisdictions are represented on the steering board which oversees the work of the task force. Noble Lords may be interested to learn that the Chancellor of the High Court and the patents judiciary in England and Wales are also involved in the work of the task force. The judiciary is represented on the steering board of the task force, and officials meet the judges on a regular basis.
I can confirm that the Government are consulting the Administrations in the crown dependencies and the British Overseas Territories on whether they wish the unified patent court agreement to apply to their territories. This forms part of the usual procedure for ratifying the agreement.
Given this close engagement across government departments and with the devolved Administrations, I trust that noble Lords will agree that the views of all concerned will be taken into account when implementing the unified patent court agreement.
Amendment 25C also seeks to ensure that local divisions of the unified patent court will be set up in each jurisdiction of the UK. I appreciate the arguments in favour of setting up a local division in England and Wales, Scotland and Northern Ireland. Ensuring local access to justice is a key element of the unified patent court, and this is why the agreement makes provisions for setting up local divisions. Let me be clear that no decision has yet been made about how many local divisions the UK will host and where those divisions may be located. Contracting states of the unified patent court agreement are not obliged to host a local division. Local divisions can be set up and disbanded upon request by a contracting state. These requests will be considered by the body that will govern the administration of the unified patent court. Noble Lords may also be interested to learn that it will be possible for a local division to sit in different locations as the need arises. A travelling local division could provide an alternative to hosting more than one division. This amendment would fix in primary legislation the number and location of any local divisions the UK may host. It is undesirable and unnecessary to be prescriptive in this case as it would restrict the UK in the administration of any UK-based local divisions in a manner not provided for in the unitary patent court agreement.
Amendment 25D raises a number of points. First, the amendment would require the Secretary of State to consider the need for “reasonable” access to courts across the United Kingdom. As I have already said, the Government are working closely with the devolved Administrations in Scotland and Northern Ireland to ensure that the needs of users throughout the UK are addressed.
Secondly, this amendment places a limitation on how the power may be used to require the payment of a fee. As it stands, Clause 16 is intended to account for various circumstances where a fee might be required. The Government do not currently anticipate that fees for the court will be paid directly to any government department. However, the details of the financial arrangements of the court are still being negotiated through the preparatory committee that has been set up by the contracting states of the unified patent court agreement. It is anticipated that court fees will be paid directly to the unified patent court. A change to UK law to facilitate the payment of a fee to the court, as proposed by Amendment 25D, is not required. The agreement sets out high-level principles for how the unified patent court fees will be decided, but it will be for the members of the preparatory committee, including the UK, to agree the level of court fees. In agreeing the level of fees for the court, the preparatory committee will need to balance the need to ensure that the court is accessible to users with the requirement that the system will eventually be self-financing. Ensuring the system is accessible and eventually self-financing is a priority for the UK, and the final details will be carefully considered before we ratify the agreement.
Thirdly, this amendment raises the issue of how the power may be used to align UK law with sections of the unified patent court agreement. As it stands, Clause 16 is intended to ensure that provisions of the Patents Act which relate to national patents may be aligned with equivalent provisions in the unified patent court agreement should this be necessary. For example, it may be desirable to align the law on infringement so that the same provisions apply for European bundle, unitary and national patents. This may be necessary to avoid a situation where patents valid in the UK will be subject to different infringement laws depending on whether they were national patents granted by the IPO or European rights granted by the European Patent Office. The unified patent court agreement does not make any provisions for national patents so it is necessary to ensure that the power conferred specifically allows for this eventuality. This amendment would not allow such an alignment to be made because the power would be restricted to giving effect to the provisions of the agreement.
Finally, this amendment would remove the ability to use the power conferred to amend any enactment other than the Patents Act. This would be an important omission from the scope of the power to ensure that the UK can fully implement the unified patent court agreement, which must be avoided. In light of all that I have highlighted, I ask noble Lords not to press their amendments.
Lord Young of Norwood Green
I thank the Minister for that very comprehensive and constructive response. He has shed light on a number of areas that we were concerned about, especially the inclusion of Scotland on the steering board. He talked about judges being trained. Do we have a figure for that yet or are we still determining the need? Other than that, the Minister certainly covered the waterfront, so to speak, and we will obviously read his response carefully. I welcome his openness and the range of the response. Given that, I beg leave to withdraw the amendment.
(3A) No information shall be sent to a patent office outside the United Kingdom (“the other office”) in reliance on subsection (3)(aa) unless the other office provides the application number of a UK patent application and the application number of a patent application being examined by the other office which claims priority from the UK patent application; and no such request shall be acted on before one year from the filing date of the UK application.
(3B) Any information sent to the other patent office must be limited to information on search or examination carried out on the UK application.
(3C) Information shall not be sent to the other office unless working arrangements have been agreed between the comptroller and the other office, including provision for ensuring that the confidentiality of the information sent to the other office is protected.
(3D) The applicant for a UK application for which a request for information has been made by another office shall be informed of the request and of the information sent to the other office.
(3E) Information shall not be sent to another office in reliance on subsection (3)(aa) unless that other office is an organisation which carries out, in relation to patents, functions of the kind carried out by the patent office and which is on an approved list, which may be varied from time to time by statutory instrument.””
Lord Stevenson of Balmacara
My Lords, Clause 17 relates to the exchange of information with other patent offices. The idea behind this provision is, we suppose, to allow the exchange of search and examination results for unpublished applications, as information about published applications is already exchanged. The current exchanges increase efficiency, save duplication and unnecessary work, and are in every way admirable. Perhaps such exchanges are contemplated only with major offices, such as the USA, Europe, Japan and Korea.
The effect of the proposals is much less clear. The new power given by the section is extremely broad. Any information that the other patent office requests may be sent subject to the working arrangements made with the other patent offices, of which only protecting confidentiality is said to be essential. Any patent office, which is quite broadly defined, may request the information. Possibly in the case of smaller countries the information provided from the UK could substitute for a local search or examination, which is not unreasonable, unless such requests would make too much extra work for the UK office.
The working arrangements are completely at the discretion of the comptroller. They do not have to be approved by Parliament, unlike many other powers proposed under this Bill. There is no limitation on the type of information that may be exchanged or the form in which it might be requested. For example, a request might be for details and copies of all applications in the name of company X relating to technology Y. Our amendment suggests that the provision should be substantially limited, in the following ways. Information to be exchanged should be limited to search and examination results. Information should be provided about UK applications only, designated by a UK filing number, from which priority has been claimed in the country of the patent office seeking information. No information should be provided earlier than one year from the date of the UK filing unless the applicant agrees otherwise. The UK applicant should be informed of the request and the information provided. Information should be provided to patent offices of countries on an approved list only, to be added to from time to time by statutory instrument. I beg to move.
Viscount Younger of Leckie
My Lords, Clause 17 will allow the Intellectual Property Office to share patent information on unpublished patent applications with patent offices outside the United Kingdom on a confidential basis for their use in processing similar patent applications filed with them. This will help speed up international patent processing. I hope that noble Lords will bear with me, as I have much to say in speaking to this amendment.
Amendment 25E would place various restrictions on the circumstances in which information may be sent to a patent office outside the United Kingdom. First, the amendment would introduce a requirement that the other patent office must quote the application number of a UK patent application when it requests information. It is absolutely the intention that information will be shared with other offices only where they have specified what information is required and in relation to which patent application, identified by the application number. It is for this reason that Clause 17 applies to such information as that office requests and only in accordance with the agreements made by the Intellectual Property Office. This is the approach taken when the IPO provides information to the European Patent Office in accordance with Section 118(3)(a) of the Patents Act and the European Patent Convention.
Secondly, the amendment would restrict the arrangements so that information could be shared only when an application had been filed abroad following a UK application. In practice, it is only when the other office is dealing with an application, which follows on from a UK application, that it will be able to gain any benefit from seeing the results of the UK work.
Lord Stevenson of Balmacara
I thank the Minister for his very full response to the amendment. I think we are very close on a number of the matters. I did not pick up from his response whether this is for unpublished patents only, but perhaps he mentioned it, so I shall read Hansard carefully. I am grateful for the assurance that he has given, which will be of considerable interest to the patent industry. I beg leave to withdraw the amendment.
House of Lords
Deaf People: Telephone Services
Lord Shipley
To ask Her Majesty’s Government what proposals they have to make it easier for deaf people to access telephone banking and other similar services.
Lord Gardiner of Kimble
My Lords, Ed Vaizey, Minister for Communications, has met representatives from the banks and written to more than 80 FTSE companies engaged with customer services to encourage them to communicate with their deaf and hard-of-hearing customers through a mix of more suitable contacts, be it by e-mail, SMS, text relay, Typetalk or video relay services—VRS. BT, Lloyds TSB, Halifax and the Royal Bank of Scotland have launched VRS schemes, with Barclays and the Post Office currently considering it.
Lord Shipley
I thank the Minister for his reply which I find most encouraging. Given that some 800,000 people in the UK are severely or profoundly deaf and 25,000 rely on British Sign Language, and given also that the technology exists pretty cheaply to provide the necessary communications and security checks, does the Minister agree that implementation of the Equality Act 2010 by all providers should be speeded up?
Lord Gardiner of Kimble
My Lords, we must clearly do better for the many people whom my noble friend has highlighted. I understand that for between 55,000 and 70,000 people in our country British Sign Language is their first or preferred language. The Minister for Communications has been extremely active, working with other departments, Ofcom, banks, service providers and voluntary organisations. The relay services working group has been set up to advance the potential for VRS and I would urge all service providers to see implementation as a matter of top priority.
The Lord Bishop of Exeter
My Lords, does the Minister agree that it is a question not merely of introducing helpful technology such as video links but also of the appropriate human communication skills to accompany it—for example the ability to speak slowly and distinctly with an appropriate background to aid lip-reading or a recognition that those with a hearing impairment might process material rather more slowly, particularly when they are engaged at a distance? What encouragement are the Government able to give to the banks to ensure that the acquisition of such skills and awareness is part of routine staff training?
Lord Gardiner of Kimble
I entirely endorse what the right reverend Prelate has said. It is very important that not only the banks but all those customer service providers are aware of how their employees should be trained. Indeed, the British Bankers’ Association is endeavouring to ensure that these problems are resolved, particularly in terms of training for deaf and hearing-impaired customers. Many concerns have been voiced around faulty hearing loops, for example—about their being in place in banks and about customers being aware of them. However, technological advances cannot replace the most important feature of our existence, which is a common decency and humanity.
The Earl of Courtown
I myself am slightly hard of hearing and I think that one or two other noble Lords are as well. Does my noble friend agree that the problem is far wider than hearing what people are telling you on the telephone or over a counter at a bank? I wonder what more can be done to help with this problem, apart from me getting a hearing aid.
Lord Gardiner of Kimble
I think that the acoustics in certain parts of your Lordships’ House may need some assistance. In truth, the banks recognise that they have a responsibility there, and the Equality Act 2010 is very clear that, with reasonable adjustments, all services should be available to all customers. With the Banking Conduct of Business Sourcebook, which is the way in which the banks are looking at this, they are actively seeing in what ways they can ensure that there is a prompt, efficient and fair service for all their customers, particularly the elderly and disabled.
Lord Low of Dalston
My Lords, the Equality Act 2010 also includes provisions to strengthen the obligation on service providers to make information available in accessible formats for those who have difficulty reading print. Would the Government develop a cross-government strategy for ensuring better implementation of those provisions? Would Ministers be prepared to meet me to discuss what the elements of such a strategy might be?
Lord Gardiner of Kimble
I am most grateful to the noble Lord. The Minister for Communications is already meeting many groups and I would be delighted to encourage him to meet the noble Lord too. I would very much like to attend such a meeting as well. I know that the Minister for Communications is seeking active implementation across the piece on disabilities regardless of whether it concerns those who are hard of hearing or visual impairment.
Lord Cormack
My Lords, does my noble friend agree that one of the curses of the age is the Dalek-operated automated switchboard? What most of us want when we make a telephone call is to speak to a human being. Although it is terribly important to give every possible assistance to the deaf, all people should be able to speak to a recognisable human being as quickly as possible and without going through 10 options.
Lord Gardiner of Kimble
I think that everyone in your Lordships’ House sympathises with the points that my noble friend has made. We have all experienced difficulty in trying to get across what we think is a very simple transaction. Perhaps a message to the banks and to all service providers is, as I say, that providing a human face and human voice very early on is much to be encouraged.
Baroness Thornton
My Lords, Scope tells us that 63% of people with hearing difficulties experience at least one problem compared with 37% of all those who are disabled—so this is a very serious issue indeed for those who are hard of hearing and disabled. It is very encouraging that the Government are having these discussions, and it is quite right too. However, have they set targets for the banking profession and other financial services to bring down that number? Does the Minister agree that that would be a reasonable request for the Government to make?
Lord Gardiner of Kimble
I agree with the noble Baroness. The Government are actively pressing for implementation. I referred to the letter that the Minister for Communications has written to more than 80 FTSE companies, and I know that he has a forward date in his diary for responses to it and will be looking for implementation. I think that this is an issue on which we can all unite. It is a no-brainer, as they say. All people in this country deserve a fair service.
Lord McColl of Dulwich
Would my noble friend be interested to know that in medical schools great attention is paid to teaching would-be doctors how to communicate with deaf people, and that in the final exam they are carefully examined to ensure that they are in fact able to do so? Could this not be extended to schools and universities throughout?
Lord Gardiner of Kimble
Clarity of language and in communication across the board should be in any implementation and indeed from early stages in education in nurseries and primary schools. Communication skills, ensuring that the message you want to get across is understood, are essential.
EU: UK Membership
(11 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Dykes
To ask Her Majesty’s Government what representations they have made to the Government of Germany about recent comments made by senior members of that Government about the United Kingdom’s membership of the European Union.
Lord Wallace of Saltaire
My Lords, the Government discuss a range of issues with Germany and with other EU member states, many of which agree about the need for reform to address the challenges that the EU faces, including dealing with the eurozone crisis, increasing the EU’s competitiveness in the global economy and making the EU more flexible and democratically accountable. Of course, the Government are committed to membership of a reformed EU. As the Prime Minister repeated on Monday, membership of the EU is in the UK’s national interest.
Lord Dykes
Does my noble friend agree that our connection and links with Germany are a key factor for us not only bilaterally but in extending and empowering our greater influence in the whole of the European Union? Can he give some specific examples of how British Ministers have engaged positively with their German counterparts in recent times to further those links?
Lord Wallace of Saltaire
My Lords, this Government have made it a priority to increase our engagement with Germany. We have nearly quadrupled the number of ministerial and senior official bilateral visits to Germany each year compared with 2009-10. We have established joint meetings twice a year of the British-German ministerial committees on the European Union, in which I take part myself. The Foreign Secretary has made many visits to Germany, most recently to the Königswinter conference on 31 May, and the Prime Minister works very closely and regularly with Chancellor Merkel.
Lord Tomlinson
Does the Minister accept that, in the impressive list that he gave of things that we are discussing with our German friends, he did not mention our future engagement with justice and home affairs, on which I am sure that the German Government have strong views, somewhat in conflict with the views expressed from the government Front Bench in the other place yesterday?
Lord Wallace of Saltaire
I thank the noble Lord for his usual extremely constructive contribution. Of course we are discussing co-operation in police and judicial matters with the Germans, as we are discussing all other matters.
Lord Marlesford
Does my noble friend agree that bilateral discussions are one thing, but negotiations on the future of the EU are another? When do the Government expect negotiations to start and with whom?
Lord Wallace of Saltaire
My Lords, the European Union is a continuous process of negotiation. We are pursuing a multilateral reform agenda and, indeed, in the past few months a number of things on that agenda have been achieved. We were committed to containing the growth of the European Union budget and the multiannual financial framework agreement has achieved that. We have been committed, as indeed were the previous Labour Government, to extensive reform of the common fisheries policy; that has now been more or less achieved. We were committed to an EU patent court; that is now here. There is a range of further items that we wish to pursue and we will do so with like-minded member Governments, many of whom share our concerns, through the processes of multilateral negotiation.
Lord Hannay of Chiswick
My Lords, does the Minister agree that one of the best ways of ensuring that great concerns are not caused by British European policy would be to accept the sage advice of the Foreign Affairs Committee in another place? In its report published earlier this week it said that the way to proceed is through a broad, positive reform agenda for the EU as a whole and not by devising new cut-outs for the UK. In the effort that the Government are making to talk at all levels with the German Government, which I strongly welcome, please do not forget—and I hope that the Minister will say that he has not forgotten—about the need to talk to France, too, because unanimity is needed to get many of these changes.
Lord Wallace of Saltaire
My Lords, we have certainly not forgotten about France or the other 25 members of the European Union. Bilateral discussions and multilateral negotiations are a constant process. We welcome the report from the Commons Foreign Affairs Committee and I recommend it to Members of this House.
Lord Grocott
Given that these days we are regularly given the benefit of different members of the Government giving different opinions on government policy, will the Minister, with his academic and political background, give us the latest definition of what he understands by the term “collective responsibility”?
Lord Wallace of Saltaire
My Lords, we are a coalition Government. However, I remember that during the previous Government there were occasions when Ministers—and special advisers—actively briefed against one another.
Lord Pearson of Rannoch
My Lords, as we are the eurozone’s largest trading partner, both for exports and imports, will Germany not do all in her power to ensure that none of our jobs is in danger when we come to leave the failed political construct of the EU itself?
Lord Wallace of Saltaire
My Lords, the idea that countries in deficit have the overwhelming negotiating advantage over countries in credit would not be supported by most economic historians. I trust that the noble Lord noticed the Daily Mail story yesterday on the European Parliament, which noted that three of the five most ineffective and absent Members of the European Parliament are members of UKIP and that the most conscientious, dedicated and hardworking group is the British Liberal Democrats.
House of Lords: Royal Gallery Frescos
Lord Trefgarne
To ask the Chairman of Committees what is the present condition of the two large Maclise frescos in the Royal Gallery; and what are his plans for their restoration.
The Chairman of Committees (Lord Sewel)
My Lords, over the past 12 months a research project with the Cologne University of Applied Sciences has been run by the Curator’s Office to examine the condition of the murals and investigate ways to improve their presentation. At the moment it is too early to say how the murals might be restored, but the results of that research will be available in the autumn, and early indications are positive. A briefing note with further details is available in the Library.
Lord Trefgarne
My Lords, would it not be a shame if these iconic pictures, part of the House of Lords and part of the House of Lords art collection, were to be allowed to deteriorate further, and will the noble Lord the Lord Chairman do his best to see that that does not happen?
The Chairman of Committees
My Lords, I fully anticipate that the curator, once this research has been completed, will be able to come forward with proposals for the conservation, cleaning and lighting of the murals so that they can be restored to their full glory and vibrancy—I hope before any future visit by a French President.
Baroness McIntosh of Hudnall
My Lords, does the Chairman of Committees agree that one of the reasons why it is important that these murals be preserved to the best standard that can be achieved is that Daniel Maclise was himself a very important artist? He was important both in Parliament and outside it, he was a friend of Charles Dickens and he died, as I recollect from my reading, in not very propitious circumstances and in poverty. Part of the reason for that was his relationship with the Houses of Parliament. Is it not the case that we would do well to restore his reputation with his pictures?
Lord Stirrup
My Lords, the noble Lord the Chairman of Committees has referred to future visits of a French President. However, he will, of course, be well aware, as will other noble Lords, that in two years’ time we celebrate the bicentenary of the Battle of Waterloo. Is there any chance that something could be done about the condition of that particular picture before that date?
The Chairman of Committees
That is a very fair point. It would be lovely if we could make progress in time for the bicentenary of Waterloo. It depends on the detail we are given once the research is completed and then how quickly we can move to do the restoration—and, I am afraid, on where the money comes from.
Lord Kinnock
My Lords, can the Chairman of Committees possibly ensure that in any careful restoration of these brilliant pieces of work, somehow a little blood is added to the representations of Trafalgar and Waterloo, since the impression given to succeeding generations is of a rather sanitised version of warfare?
The Chairman of Committees
I think there might be some difficulty in that one. If I can be a little bit serious and give a bit more information to the House, the murals, almost from the start, have lost a deal of colour. They became murky and coloured down, mainly, I think, because of the dirt and coal dust that were in the atmosphere at that time in the mid-Victorian age. It is hoped that by proper cleaning we can get the colours back. I do not think that necessarily means a sanitised view of warfare.
Lord Dobbs
My Lords, does the Lord Chairman accept that there is a lingering irony in these wonderful images next door? They were commissioned by a German, Prince Albert; they were carried out by a wonderful, gifted Irishman, Maclise; and they were almost ruined by the constant interference of bureaucrats. They show a Britain interdependent with its European neighbours but determined to preserve its sovereignty against the overbearing European project; a Britain of men and women, young and old, black men as well as white, and, above all, a Britain victorious. Does the Lord Chairman not agree that while the paint gets darker nevertheless their message gets ever brighter?
The Chairman of Committees
Possibly. I do recollect somewhere along the line that when Wellington and Blucher met at Waterloo, they spoke to each other in French.
Lord West of Spithead
Does the Chairman of Committees not agree that something might be added in the Royal Gallery by a wonderful model of a three-decker like “Victory”? It would add to the impact of what is there and it could be moved out on special occasions. I know that there are a number of museums that would be willing to loan that—and perhaps add in a stuffed-horse or something for the army.
The Chairman of Committees
When it comes to the Royal Gallery, I do not know where my responsibilities end and Black Rod’s begin, but if it comes to stuffed-horses, the noble Lord had better ask Black Rod rather than me.
Lord Pearson of Rannoch
My Lords, the noble Lord mentioned a future visit of a French President. Will he give your Lordships an assurance that on that occasion no shroud of misplaced sensitivity will be placed on the pictures in order to spare the French President’s knowledge of history?
The Chairman of Committees
I do not think that that has ever been the case and the French Presidents that I have ever had any contact with have always remarked on how much they liked looking at the murals.
Lord Elystan-Morgan
My Lords, what Wellington said is not recorded but apparently Field Marshal Blucher spoke the only words of English that he knew and said, “I have kept my word”.
Lord Bew
My Lords, does the Lord Chairman realise that a very important reason for preserving the Maclise legacy is not simply the two great frescos in the Royal Gallery but the two that are in this Chamber, “The Spirit of Justice” and “The Spirit of Chivalry”? All those paintings have one major theme, which is the unity and co-operation of the nations and ethnicities of the United Kingdom in a common cause. That is a particular reason to preserve this legacy.
The Chairman of Committees
Speaking as someone who was born in England, did part of my education in Wales, and have lived virtually all my adult life in Scotland, I totally agree with the sentiments that the noble Lord expresses.
Children: Contact with Fathers
(11 years, 6 months ago)
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Lord Bates
To ask Her Majesty’s Government what assessment they have made of the finding by the Centre for Social Justice that around one million children in Britain grow up with no contact with their fathers.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Government’s commitment to supporting strong and stable families was most recently set out in our Social Justice: transforming lives—One year on report. Families are the bedrock of our society and the Government’s commitment to parental involvement in their children’s lives where this is practicable and safe is clear. This Government are rightly taking action, both to help families stay together and to support an ongoing relationship between parents and their children where breakdown is unavoidable.
Lord Bates
I am grateful to my noble friend for that Answer. Does he accept that this report confirms that the absence of a father figure in a child’s life results in a child being statistically less likely to achieve higher educational outcomes, more likely to encounter the criminal justice system, more likely to have health and emotional problems, to have a higher chance of teenage pregnancy and to be more likely to suffer from severe economic disadvantage? As we approach Father’s Day this weekend, will my noble friend reaffirm the vital role that fathers have to play alongside mothers in raising their children? Should he be in search of an appropriate gift for Father’s Day, I point him in the direction of the manifesto commitment to introduce a married couples’ tax allowance.
Lord Freud
My Lords, I congratulate my noble friend on the alacrity with which he has asked this Question, because I do not think that the CSJ has yet published the report, so I cannot respond in detail on what is in it. Clearly, however, the coalition agreement contained the transferable tax allowance. That remains the Government’s intention.
Lord McConnell of Glenscorrodale
My Lords, a lot of us are confused as to what has happened to the Prime Minister’s big society initiative. It seems that this is an area in which that initiative could find some traction. Will the Government look at the role model of grandparents to address some of the challenges in our society and at engaging grandparents as role models for young children whether they are in single-parent families or not? Those role models could teach young children an awful lot indeed.
Lord Freud
Yes, my Lords. There is huge value in the role of grandparents. One of the encouraging things in a project in which I have been involved is how enthusiastic retired people are in mentoring youngsters—particularly youngsters making that difficult transition to adulthood. There is a lot that older people can contribute.
Baroness Benjamin
My Lords, childhood lasts a lifetime, and far too many children are growing up as victims of family breakdown and lone-parenting households, which appears to be leading us towards a catastrophic social meltdown unless urgent action is taken. Does my noble friend agree that part of the solution is to encourage even more men to become primary school teachers and role models to the thousands of children who are growing up without any male influence in their lives, and put an even greater emphasis on the teaching of relationship, parenting and social and life skills in schools?
Lord Freud
Well, my Lords, there being very few males in primary schools is an important point, although clearly one off my brief. It is a valuable point which needs to be looked at.
Lord Elystan-Morgan
Does the Minister accept that for every case where a man is deprived of access by the courts to his child, there will be at least 20 cases where a father has no interest whatever in the upbringing of those children? Whereas no human agency can force a man to love, respect and be responsible for his children, it is nevertheless a human tragedy of such immense proportions as to demand the urgent action of government. Is there a specific plan that the Government are prepared to consider, and will they consider giving it ample and adequate resources?
Lord Freud
My Lords, we are clearly talking about fundamental social trends which have been going on for many decades. There are two ways of looking at family breakdown: in some ways it is a liberation, and in some ways it is an unnecessary tragedy when you have children involved. Clearly, we have various prevention measures, a fund to get counselling practitioners trained and support for people so that when they separate, that separation is as amicable as possible.
Lord McKenzie of Luton
My Lords, is it not the case that, for many young people with separated parents, overnight stays are made expensive, if not impossible, by the bedroom tax?
Lord Freud
We are clearly in a position where we have a huge deficit and we need to find ways of reducing it. One thing about the spare room subsidy is that if we were to make double provision for children—in other words, a room in two different places—that would cost the state another £50 million. There are lots of desirables that we would all like to see, but we have really got to go to the essentials when we are running the kind of deficit that we are.
Baroness Knight of Collingtree
My Lords, referring back to the question about grandparents, does not my noble friend agree that it will be no use relying on grandparents in a few years’ time? Bearing in mind that the non-mixing and matching of parents, such as we have had in the past, is now disappearing, we will not be able to rely on a grandparental relationship when that extends to that generation.
Lord Freud
My Lords, one thing that happens today which has not happened so much in previous generations is that we have much more complex family networks, with in-laws and step-parents around. It is a more complicated position, but I suspect that it is possible to form relationships at both the parent and grandparent level, even if that is more complicated than it has been.
Business of the House
(11 years, 6 months ago)
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Lord Hill of Oareford
That the debates on the Motions in the names of Lord Trimble and Baroness Wheatcroft set down for today shall each be limited to 2½ hours.
Lord Newby
My Lords, I beg to move that the House do now adjourn during pleasure until not before 1 o’clock to enable those who wish to do so to make their way to the Queen’s Robing Room to hear an address from the Prime Minister of Canada. All Members of the House are welcome to attend, and I encourage them to do so.
G8 Summit
(11 years, 6 months ago)
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Lord Trimble
That this House takes note of the Government’s priorities to be pursued at the next meeting of the G8 in Northern Ireland on 17 and 18 June 2013.
Lord Trimble
My Lords, I begin by thanking the Prime Minister for selecting Fermanagh as the location for the G8 summit. He had scores, if not hundreds, of possible locations throughout the United Kingdom from which to choose, but I am sure that it was simply the beauty and tranquillity of the surroundings, together with the high quality of communication and security available, that led to the choice. I can recommend that noble Lords go and see just how nice it is. I must also thank the nearly 4,000 policemen from other parts of the United Kingdom who are rendering support to the police in Northern Ireland over the coming days. We hope that they have a pleasant and peaceful time, but I am confident that they can cope if anybody tries to disturb the peace.
The Prime Minister set out the Government’s priorities for the G8 in a speech at Davos in January, and revisited the topic on Monday. I will refer to the former, in which he began by recalling,
“we are in the midst of a long struggle against murderous terrorists and the poisonous ideology that supports them”.
We cannot avoid this struggle, for the ideology that drives terrorism is one that hates our society and the freedoms and opportunities that it provides. That hatred is all the greater because most people in the countries and cultures from which the terrorists come desire the same freedoms and opportunities that we enjoy. David Cameron rightly pointed out that our response must be intelligent and patient, and while military action may be necessary, it must be combined with a political response. My own experience is that good intelligence is absolutely essential, but it is unlikely to be obtained on the scale necessary until we have won the ideological war and convinced the communities from which terrorists come that their ideology is wrong and that in a mature democracy such as ours the only valid option is the use of exclusively peaceful and democratic means.
Turning to the question of how to compete in today’s global economic race, this Government have done much to tackle the problems created by our predecessors: the debt, the bloated welfare system, the underperforming education system. But as David Cameron says,
“competing in the global race is not just about what we do at home, it is about the wider economy we’ll operate in, the rules that shape it, the fairness and the openness”,
it needs. So what we need to see from the G8 is a drive to,
“more free trade … fairer tax systems … more transparency on how governments and … companies operate”.
To turn to tax and transparency, on 21 May a US Senate committee heard a report entitled Offshore Profit Shifting and the US Tax Code—Part 2. The report focused on Apple and how it used,
“a variety of offshore structures, arrangements, and transactions to shift billions of dollars in profits away from the United States and into Ireland, where Apple has negotiated a special corporate tax rate of less than two percent”.
It mentioned the movement of substantial funds to offshore entities in Ireland, while claiming that they were not tax residents of any jurisdiction. The report also mentioned companies such as Apple Operations International and Apple Sales International, which together had received hundreds of millions of dollars, the former paying no corporate income tax to any national Government for five years, and the latter, due in part to its alleged status as a non-tax resident, paying taxes on only a tiny fraction of its income.
The Irish Government immediately issued a denial that a special rate of corporation tax had been negotiated with Apple. On 26 May, the Dublin-based Sunday Business Post reported:
“This newspaper has learnt that Apple was one of about six multinationals that reached an agreement with Charles Haughey’s coalition in 1990 ... The deal did not relate to the corporation tax rate. Instead it centred on the tax base on which profits were calculated.”
The following Sunday, the paper added:
“What was negotiated was a deal that allowed Apple and the other multinationals to reduce their taxable corporate profits. This had the effect of reducing the tax Apple paid on profits to 2% or less for a number of years ... This was the ‘double Irish’ system under which income earned by one Irish Company was transferred to another Company—typically via a royalty payment under which the second company was paid for intellectual property—with the second company being incorporated here”—
in Ireland—
“but tax resident elsewhere”.
Under US law, the second company, despite being controlled from the US, was not regarded as tax resident in the US, and so not liable for US corporation tax. The paper thinks that this double Irish arrangement now applies to nine multinationals. It also says that the Irish are under pressure to end this, and I hope that the Minister in replying can tell us more on that point.
Much of Apple’s UK profits are spirited away in a similar manner and, of course, this is done by other major companies. There has been much comment and anger about this, not least in this House last week, but tax avoidance is lawful and a natural instinct that government use to shape popular choices. Directors considering their duty to their company may even think that it is obligatory. I think that the sensible response is to clarify what is lawful and what unlawful—and maybe, indeed, to extend what is unlawful. This will also need action at international level. At least the senatorial report might result in legislation to negate the double Irish device. My noble friend Lord Newby, replying to last Thursday’s debate, outlined some of the current lines of action and said,
“the Prime Minister will take a lead and will push this very hard at the G8 later this month”.—[Official Report, 6/6/13; col.1312.]
Corruption and money-laundering are similar threats to global and national economic health. This is not just a third world problem. At a reception in this House a few weeks ago to launch his book entitled Fragile Empire, Ben Judah estimated that roughly one-third of public expenditure in Russia is lost through corruption. That is an enormous figure. Global Financial Integrity, in a report published in February, Russia: Illicit Financial Flows, said that the Russian economy had lost hundreds of millions of dollars in illicit financial outflows. These outflows represent the proceeds of crime, corruption and tax evasion. The report estimated the size of Russia’s underground economy, including drug smuggling, arms and human trafficking, at no less than 46% of GDP—another astonishing figure. In the past, much of this was laundered through Cyprus, but I understand that now a lot of it is laundered through the UK and its dependencies. This is the preferred route, because money is considered safer here.
I choose Russia as an example, although it is not the only one, partly because of its importance and proximity to us, but also because there are important matters on which we are seeking Russia’s diplomatic support. It would be helpful, and perhaps easier to obtain that, if we were doing something which the Russians would regard as very welcome.
On tax transparency, which would help to inhibit laundering, the Prime Minister has written to the leaders of the Crown dependencies and overseas territories. Most of these have agreed to join in an automatic exchange of information scheme based on the US Foreign Account Tax Compliance Act, and 17 EU members have called for a new global standard based on that Act. Equally important is developing accurate registries of who really owns and controls companies, and being clear about the beneficial ownership of companies. This seems to be developing rapidly; there are reports in the press that indicate that some people are reluctant to join in this scheme. I hope that the Minister can bring us up to date on this, and touch on what revisions the United Kingdom is seeking to the EU’s third money-laundering directive.
I turn to two issues where Russia is in a position to make a positive contribution, one of which is Syria. It is often said of Syria that there are no good options left, but it is not unusual for us to have to sift out the worst from the not so bad. Leaving the Sunni majority in Syria to be crushed by Lebanese Hezbollah, Iranian Revolutionary Guards and Shia supporters from Iraq, all of whom are active within Syria in significant numbers as we speak, must be pretty close to the worst option available.
On Iran, it looks as though the regime there will continue to accumulate 20% enriched uranium, which it has in significant quantities. That can be taken to weapons grade in three to four months at the outside, but it does not look as if the regime will try to do this until it suits it to do so. Therefore, the international community needs to ensure that it is in a position to detect such a dash and to do it in sufficient time for action to be taken by the Security Council, so as to avoid the possibility of others taking their own initiatives. Unfortunately, looking back over other cases where countries went nuclear, it is depressing to see how often the international community was taken by surprise.
Let me turn to more cheerful matters. On trade, it is hoped that the G8 summit will see the launch of negotiations on a free trade area between Europe and the United States. The prize here is enormous, but estimates vary. It is said that a US/EU free trade area would add $60 billion or in some cases $80 billion to US GDP, and $50 billion to $100 billion to EU GDP, including at least $10 billion to the United Kingdom economy, with further worldwide gains in excess of $80 billion. The figures are estimates, but they give an indication of the extent of the prize that is available.
The US Government have indicated that they want to achieve an agreement quickly. But before they committed themselves to it, they asked for, and I believe received, an undertaking from the European Commission that on a certain key issue the Commission would follow the science. I pretty much hope that this lead will be followed by the member states on whose behalf the Commission will be negotiating and that the absurd quasi-superstitious fear of genetically modified crops will not be allowed to deprive us of this tremendous opportunity.
In addition, the EU is in or about to commence talks with Singapore, Canada and Japan, and the World Trade Organisation is working on a deal to sweep away trade bureaucracy at a ministerial conference in December at Bali. It is a pity that, in the midst of all these opportunities, our trade and recovery is, and unfortunately will be, held back by the weakness of our largest market, which is likely to persist until those involved come to the painful, but inevitable, conclusion that the euro was a mistake.
None the less, there are some reasons for optimism. We have some economic successes. The business editor of the Times, Ian King, pointed out last week that this year more cars will roll off Britain’s production line than in any year since 1972, and that four out of five of these cars will be exported—a phenomenon not seen since 1976. Since 2010, while public sector employment has fallen by some 420,000, 1.3 million private sector jobs have been created. Some purchasing managers’ indices—PMIs—have been published recently, in which a figure over 50 indicates growth and a figure under 50 indicates contraction. This week, the Financial Times gave a very interesting regional breakdown of the latest figures. Yorkshire and Humber lead the field with 57.6, a 26-month high for the region. Wales is second on 56.7, which is a remarkable 39-month high for Wales. London comes third on 56.4, a 14-month high. All other regions in the UK show growth, except for Northern Ireland, which on a figure of 49.6 is very close but not quite into the positive field. However, for Northern Ireland, that is an 18-month high. We therefore have a remarkable picture of very significant growth shown by these PMI figures. Of course, they are only possible forerunners of actual growth, which still has to come.
There are still other problems: lending to SMEs continues to shrink; productivity, to quote Mr King, remains lousy; we are still running, proportionately, a bigger deficit than Greece; and exports are rather disappointing. But these weaknesses underline how right the Government are to prioritise tax and trade. We do not expect next week’s meeting to solve all problems, but we hope that there will be progress on what are indubitably the priorities for the country and that this progress will contribute to the continuing recovery of the economy. I beg to move.
Lord McConnell of Glenscorrodale
I thank the noble Lord, Lord Trimble, for securing and opening this debate on the important events that will take place in Northern Ireland next week. I wish Northern Ireland well in hosting the summit, and I praise the Prime Minister for what I think was a brave decision to take the summit to that location. I wish not only the Prime Minister but the First Minister and Deputy First Minister well in maximising the benefits and outcomes of the 2013 G8 summit. I hope that it helps to entrench peace in Northern Ireland and that it is a success which signals that real change has taken place.
The summit at Gleneagles in 2005 was undoubtedly one of the highlights of my time as First Minister of Scotland. Many of us will remember the incredible events in advance of that summit: the 200,000-plus people who in Edinburgh the weekend previously called for making poverty history; the concerts that took place in all eight capitals, creating a global movement for change, perhaps for the first time ever; the work by UNICEF and others to involve young people in the G8 and its discussions in a way that had not happened before; the horrific violence that took place in Edinburgh in the two days before the summit; and the attempts to climb the fence in the fields of Gleneagles as the summit got under way.
However, inside that fence, the discussions involved, for the first time, leaders from Africa and around the world—not just the G8 leaders but others, too—who came together to try to solve one of the great problems and challenges of our age. The next morning saw the horrific bombings in London and Tony Blair’s departure from Gleneagles to come back here to take charge. However, in Gleneagles there was a resolve to finish the summit and make the decisions that were required, including the commitment to $50 billion of new money in aid, the hope of a new agreement on trade, perhaps not yet realised, and action on debt, education and health, all of which contributed to a great pride in Scotland that ultimately the summit had been a success, despite the bombers and those who tried to disrupt it.
The challenges of 2013 are perhaps new. The threats may be slightly different but, again, leadership is required. In my view, the agenda that has been set out to advance trade, to ensure tax compliance and to promote greater transparency, particularly in tax affairs, is the right one for our time. However, on trade, although it is vital that the EU-Japan discussions and the EU-US discussions get under way because they affect us all, it is also vital that we do not forget that agenda of fair trade and ensure that global trade agreements open access to markets fairly for all.
On tax, I want to talk briefly about Caroline Muchanga, who lives in Mazabuka in Zambia. She has two daughters and one son. On a good day, from the small market stall that she has in her village she earns $4, which is not always enough to feed her children or to pay the school fees for her daughters. One of the products that Caroline sells on her stall is White Spoon sugar, made by Associated British Foods. As estimated by ActionAid, ABF makes about $123 million in profits in Zambia alone every year, yet Caroline Muchanga pays more in cash in tax in Zambia than ABF. This is immoral. ABF is not alone, and it is perhaps wrong to single out one company, because there are companies and individuals doing this all over the world and not just in sub-Saharan Africa. However, that lost tax to countries such as Zambia is estimated to be about three times the total of international aid from the developed world to the developing world. That loss of revenue cripples economies, it affects public services and it costs lives. Therefore, when the G8 meets next week in Northern Ireland, it must act on these issues.
First, as the noble Lord, Lord Trimble, already said, the global sign-up to financial information sharing is a vital part of the agenda for this summit. The UK can take a lead in this by insisting both that all our European Union partners sign up to this financial information sharing, and that the UK dependencies and territories play their part, too. I would be interested to know what the Minister can tell us about the discussions with the dependencies and territories that will take place over these next few days.
Secondly, and I think absolutely crucially, a legal register of beneficial ownership is long, long overdue. To make progress on this agenda it is absolutely critical to understand who owns companies and corporations, understand who gets the profits, and understand who is moving them from the countries where they are made to the countries where they are held for tax purposes. I understand that some members of the G8—perhaps including Canada, as was reported in the Canadian press recently—may be hesitant about a legal register of beneficial ownership. The members of the G8 need to show global leadership on this agenda. They must be brave, be strong and ensure that such a register is in place. It must apply not only in the G8 countries but right across the world, so that those countries that are currently losing out on all that revenue have a chance to identify and chase it, and ensure that their economies can benefit more successfully in the future.
Thirdly, it is crucial that the UK’s leadership of the G8 next week does not deal with these issues in the context of Europe or of the strong economies of the world. The summit must also take action really to secure the opportunity for the weakest economies in the world, the poorest countries of the world, to make the most of any changes that are put in place. This includes capacity building, of the sort that Britain has supported over the years in Rwanda and elsewhere, in order to build successful revenue authorities that can create decent tax systems and consistently collect taxation revenues. That sort of action to build capacity in the developing world must go hand in hand with a new global regime for greater transparency, including registers of beneficial ownership.
It seems to me that this agenda, rightly, does not copy or try to replicate what happened at Gleneagles in 2005. Some of the promises made then have not been fulfilled. We should be disappointed by that, and we should continue to press those responsible to meet the commitments that they made back then. This agenda moves that a step forward. It talks about changing the rules, rather than just giving more. It is about making sure the rules are fairer, rather than just allocating more and more money from the developed world to the developing world.
Next week’s agenda could be a real turning point in a new global relationship. I wish the Government well and hope they will be successful. If they are, I hope that Northern Ireland will take as much pride in the 2013 summit as Scotland always will in the 2005 summit.
Baroness Falkner of Margravine
My Lords, I, too, thank the noble Lord, Lord Trimble, for securing this extremely timely debate ahead of next week’s G8 meeting in Northern Ireland. I am going to concentrate on just two of the three Ts that the Prime Minister identified as his priorities for the meeting: tax and transparency. On tax, it has long been argued that bilateral arrangements between countries were never going to deliver. Multinationals simply move to a different jurisdiction, cloak their activities in opacity and pay their teams of lawyers and accountants to devise ever more ingenious methods legally to avoid tax—legally in law at least, if not in spirit.
It is with great enthusiasm that I see the United Kingdom rising to the challenge of tackling tax and transparency in this forum. While these eight countries may not represent the collective might of the world’s main economic centres today—I must say that the presence of Italy seems a little anachronistic—the G8 is a good place to start. Any progress here will surely lay the foundations for a wider debate among the G20 countries, to be hosted by Russia.
The subject of the tax and transparency of large corporations generates public opprobrium like no other. A poll in Prospect magazine recently found that the public hugely disapproved of large corporate tax avoidance—some 88%—while their disapproval of wealthy individuals who cheated to avoid tax was significantly lower at something like 38%. Not paying VAT to the plumber or to the person who came to do the odd job, but paying cash, resulted in only about 6% or 7% of people disagreeing. That may not be entirely rational, but the lesson that I would draw if I were a large multinational is that the large corporations are in the firing line, not small individuals, as the public see them.
It is a hugely ambitious agenda for the Government to take on, and the challenge of breaking down corporate secrecy by seeking to require companies to disclose their beneficial ownership, which is asking who owns and controls them, is to be applauded. By setting up centralised registers with a clear line of sight, which is the minimum available to the law enforcement agencies—I would like public access as well, but I recognise that that may be too much to ask for at this point—the poorest Governments who have the greatest need will at least have the tool with which to begin to look for their stolen assets.
This would not be comfortable for the rich developed countries, nor for their associated tax havens. In the former category, we have the United States where much responsibility for corporate oversight is at state level so the Government may be less willing to act against the state of Delaware, for example, which according to the Economist has more companies numerically than its population. Small countries are the best known tax havens and unfortunately many are UK Crown dependencies or overseas territories. In this regard, the Commonwealth—I am aware that the noble Lord, Lord Howell of Guildford, will speak right after me, so I shall be careful what I say and mute my criticism as I know well to do when he is speaking—has been rather feeble at taking action as a forum that might have been well suited to this task. Among its members are some of the poorest countries of the world, where assets have been plundered and corruption is rife. The ability of these countries is heavily circumscribed by the lack of capacity—having sharp civil servants and revenue officials, schooled in the latest techniques of outright corruption and capable of spotting corporate tax evasion.
At the other extreme, among its members are the offshore banking centres—the relatively rich Caribbean islands where many of these companies are registered. We have only today heard the news that Bermuda, among the richest islands and a strong financial services centre, has announced that it will not sign up to the multilateral convention on mutual tax assistance. This is particularly frustrating as all three Crown dependencies—Jersey, Guernsey and the Isle of Man—have come on board along with the Cayman Islands. Perhaps the Commonwealth could embed a programme of secondment of experts from the rich developed world. Perhaps even the architects of these opaque tax structures might go and work with those poor countries’ tax authorities to try to build up capacity to retrieve those billions owed. It may be a sobering experience for the practitioners in the City of London to see for themselves what the effects of their work reaps in the lives of the millions who are deprived of the benefits of their natural resources, for example.
Turning to extractive industries, US entry along with France and Germany to the extractive industry transparency directive is extremely positive. We cannot continue with a system where secret deals are struck by companies and Governments whereby huge amounts of profits disappear into the ether. It is evident that when we require companies to say what they have paid and Governments to disclose what they have received, it is harder to steal. The United Kingdom is right to press this case more vigorously despite the fight back in the US from the big oil companies. We have also seen the public dismay caused by corporate tax avoidance with the likes of companies such as Google and Starbucks. People often say that when a company provides essential services it is difficult to vote with your feet, as people have been able to do with Starbucks—sufficiently so as to make it volunteer to pay £20 million in tax. But volunteering is surely not good enough. People say that we cannot take similar action against Google because using a search engine is no longer an optional extra in our lives. However, we know that its profits are made from selling advertising and it should not be beyond the wit of the British public to reject the products of those Google advertisers until the company sees that it might need to come into line as its profits go south.
More importantly, those companies argue that it is for the United Kingdom legislatures and the Executive to come up with laws that prevent them from their propensity to avoid. To some extent, I have sympathy with that argument. When we get report after report from the Public Accounts Committee, as we have this morning, it is not entirely clear to me why the Executive—our Government, HMRC and the Treasury—cannot come back to Parliament with some proposals at least to attempt to get to grips with the problem of new and more innovative structures being developed by the financial services sector on a regular basis.
I will use my last minute or so to talk about Syria, which is also on the agenda. For those, like me, who believe that the civil war in Syria will be brought to an end only when the parties are prepared to come to the negotiating table, it is axiomatic that that will inevitably be brought about by success or failure on the battlefield. For the western world to stand aside from supplying arms when all around them are doing so—and to the most unfriendly groups in terms of our interests—it seems that as a country we have become entirely isolationist. That is something completely out of character with our history, our international standing and our permanent membership of the United Nations Security Council.
Moreover, we may eventually be forced to do so under our obligations in humanitarian law. So I say with some regret that I wish we would not go down the route on which we believe we have to ask Parliament to approve every step in our moves to deal with the Syrian imbroglio. I do not understand why an Executive—a Government—are appointed if they feel they are so weak in tackling what is clearly in our interests: ethically, morally and in humanitarian terms.
Lord Howell of Guildford
My Lords, we should all be grateful to my noble friend Lord Trimble for initiating this debate and for his excellent opening speech. I also welcome siting this G8 conference in Fermanagh, which is one of the most beautiful areas of our United Kingdom. I got to know it well during my privileged time as a Minister in Northern Ireland for two and a half years. As my noble friend Lady Falkner has reminded us, the Prime Minister’s priorities for this G8 are the three Ts—trade, tax compliance and transparency. All are excellent issues which we should pursue with vigour.
I shall concentrate mainly on trade, although on the tax compliance issue I merely observe that obviously the efforts are completely commendable. However, in dealing with the hyper-connected world of unbelievable complexity in which we now live, it is difficult to see how Governments will ever catch up completely on a multinational scale with all the devices for avoiding and minimising tax liabilities. I leave your Lordships with this thought: we should be a little uneasy about the idea that the answer is more and more power to the tax-gathering authorities, on almost Bourbon levels. It will not solve the problems, which are undoubtedly there. The complexity is very great.
This leads to my main point which I want to share with your Lordships. In this transformed world, the character of trade has changed almost beyond recognition. Modern trade now follows a totally different path from anything that the world has ever seen. In today’s heavily interconnected world, it is no longer a question of products manufactured in one country being sold to another. The advent of the modern supply chain means that most manufacturers use components from a variety of different parts of the network and from different countries.
In these novel conditions, markets are simply no longer definable in terms of tariffs, quotas and other protections. On Europe, for instance, we hear the current mantra that the single market must be preserved, but the nature and meaning of the phrase “single market” has been completely transformed. The common trading platform of the world wide web is building up a new kind of supranational single market which is highly competitive and very transparent; it is criss-crossed by intricate supply chains and knows no regional boundaries whatever. The often asserted “fact” that the European Union is the world’s largest single market is in fact no longer correct. Cybermarkets on the world wide web are much larger. Pacific rim markets, including the vast market of China’s new middle class, are just as large, with the growing consumer markets of India, Brazil, Mexico, Turkey, Thailand, Vietnam, east and west Africa and a score of other places all coming on extremely fast behind.
Not only have old classifications such as “manufactured goods” ceased to have any statistical meaning but the trade in services—which 30 years ago was hardly worth mentioning—has taken centre stage with its knowledge-intensive products. The driving forces of international business have shifted into a world which is only dimly understood even now. It certainly was not at all understood all those years ago. In particular, the old idea that the path to free trade lay through negotiating down various tariffs and quotas has lost much of its meaning. It is the non-tariff barriers which are woven into countless procedures, customs and attitudes that now stand in the way. Their existence and persistence depends not on tariffs but on deep cultural factors and processes. The assault on them has to begin not with numbers or even with detailed negotiating facts but with the deployment of soft power in all possible forms.
That all, in turn, depends on the power to communicate and persuade and to open up our economies—for which, incidentally, the modern Commonwealth network, with its common working language, its vast and intimate professional links and its dazzling cross-cultural cross-pollination, is of course ideal. When listening to the Canadian Prime Minister just a short while ago I was a little sorry that, in an otherwise splendid speech, he did not mention that aspect. However, I agree totally with my noble friend Lady Falkner in her remarks that the Commonwealth, as a network, ought to be an ideal vehicle for the kind of proposals that she put forward on improving transparency and tax compliance.
We have to recognise, in the background to all the changes I am describing, that we are dealing with a world which is totally transformed, with 2.5 billion people on the internet at all times. Mr Eric Schmidt of Google estimates that there are now more mobile telephone subscribers on this planet than there are human beings. Every morning, 300 million Chinese go shopping online. We are doubling the data we draw out of the system for trade and other activities every nine months. I will share one further blinding statistic with your Lordships. Under the present system we generate in two days more data than were generated between the dawn of civilisation and 2003. We are, in short, in a completely transformed atmosphere in which trade is operating in totally different ways. That is one point that I hope will be understood by the G8 dignitaries when they gather at Enniskillen and in Fermanagh.
My second point is that there has been a lot of talk about the G8 being the top table, but it is not. There are many top tables today. The rioters last Sunday in the City of London were completely deluded when they talked about this being the power centre—the centre of wealth and riches and so on. Not even the G20 is the top table today. There is a new alphabet soup of organisations, alliances and networks springing up all over the planet, and they are beginning to exert as much power and influence as the old G8 and the other institutions of the 20th century, such as NATO, the UN, the IMF and the European Union, all of which are struggling to adjust. New sets of initials are swirling round in this alphabet soup which we have to adjust to: OIC, SCO, AU, GCC, AL, UNASUR, SAARC, ANMC, PIF and Caricom. I will not take time to spell out what all those stand for. I can see the noble Lord, Lord Triesman, shaking his head. Those are just a few. At the end of the list I put the largest and densest network of all, the Commonwealth network, which unites 2.25 billion people in a common system, as I have already described.
Procedures, attitudes, organisations and institutions have only dimly begun to reflect what is happening, and most of the media, with some brilliant and insightful exceptions, have hardly done so at all. A network world—for that is what it has really become—operates quite differently from one of hierarchies and blocs. Relationships emerge of a quite different quality; priorities are reshuffled; new elements, previously ignored, come to signify. Suddenly, in a digitalised network system, everyone has to be kept in the loop, small nations and large. More than that, the networks become part of the legitimising process. Agreement for international action at the United Nations has to be supported by agreement across the networks. All have to be consulted, won over and brought along, because all are now instantly, and in most cases continuously, connected.
I will end by saying that I hope that at Fermanagh our colleagues and leaders engage with these new issues, because they are entirely new, and do so with a suitable degree of humility, fully realising that in today’s world they are not the top table; they are only players in a far larger and newer scheme of things. They are not the bosses; they are the partners. They have to grasp the opportunity to understand that status, otherwise they could well find that they are not players at all but merely spectators.
The Earl of Listowel
My Lords, I, too, am most grateful to the noble Lord, Lord Trimble, for securing this important and timely debate. I will concentrate on the opportunities that the G8 summit offers for increased transparency through taxation and other means. Our chairmanship of the G8 is an opportunity to look at land rights, particularly for smallholders. I have been grateful for briefing meetings from the IF campaign, which has consistently raised these issues. I begin by praising the Government for the example they have set to the leaders of the developed world in their commitment to funding international development aid amounting to 0.7% of annual national income. Their example at a time of global recession must be a powerful factor in sustaining efforts which have proved so successful in saving the lives of children in the developing world.
The importance of strengthening transparency was brought home to me by visits to a sub-Saharan state made with other parliamentarians and funded by UNICEF, Save the Children and Tearfund. Our first two visits were made during the civil war of that nation. The country was blessed, or cursed, with plentiful supplies of diamonds and oil. We saw a nation where an elite of 100 families benefited from much of the vast mineral wealth while the multitude lived in squalor. The charity Transparency International drew attention in particular to the way that the Government of that country failed to share details of the deals they made with oil companies for extraction payments. British Petroleum decided to take a principled position and to make public information about payments, at some cost to its own business. My noble friend Lord Browne of Madingley was chief executive of BP at the time.
The wealth of the country went towards the healthcare of the 100 families, the education of their children in the United States and the United Kingdom, arms for the civil war, and other such areas. Meanwhile, in a large internally displaced people’s camp in the capital of that country, families had no water source and had to pay for the privilege of using tankers. This camp had been in existence for several years and simply been ignored by the authorities.
We saw homes built among giant dumps of rubbish and children playing among the refuse. We spoke to AIDS patients with no prospect of treatment. We heard of people being arbitrarily displaced from one area of the capital to make way for new, profitable developments. We also met the Minister for Health, a Mr De Almeida, a member of the 100 families, who had initiated the first national immunisation programme for children—no mean feat, given the continuing war and the lack of electricity and apparatus to chill the vaccines. So there were members of the Government who cared for the people.
We learnt that this nation was just one of many developing nations in which oil and diamond wealth allowed elites not to consult the people or even bother with their interests because they had no need of the taxes that their people might provide—no need for your taxes, no need for your votes.
I hope that I may encourage the Minister and his colleagues to push hard on the matter of tax reform and to improve transparency. Robust international agreement on these matters would reduce the power of political elites to drain the wealth of the nation for themselves, strengthen the arms of those politicians who wish to act in the interests of the people and do much to address poverty and hunger in the developing world.
We also met a women’s co-operative operating in the capital. The women had joined together to purchase food at better prices for themselves and their families. Through the work of the IF campaign, we have learnt of the importance of smallholders in the developing world in feeding the people, and I understand that most of those smallholders will be women.
I hope that the Government will also be looking for international agreements to strengthen the land rights of smallholders, thereby addressing the continuing scourge of hunger and malnutrition. In our briefings, we heard from Ricardo, a young man from a remote region of Tanzania. He was raised, as best she could, by his grandmother. He experienced malnutrition and there were no hospitals or services nearby to help to remedy the undernourishment. He suffered from kwashiorkor and other diseases related to malnourishment. Starved children suffer impairments that hinder their learning and, later, limit their capacity to work. We really need to do more to prevent hunger, and international treaties on land rights would be a good step in this direction.
I look forward to the Minister’s response. I ask him in particular how the Government will use their presidency of the G8 to push for greater transparency in land acquisitions, to ensure that corrupt deals are stopped and that people have the information that they need to hold Governments and companies to account. I also ask him whether the Government will be supporting greater transparency from Governments in developing nations so that citizens in those countries can hold their Governments to account for the money that they spend. I apologise for not giving him notice of those questions, and if he would write to me and put a copy in the Library, that would be very helpful.
Lord Bates
My Lords, it is a privilege to follow the noble Earl, Lord Listowel. He and I, along with my noble friend Lord McColl, took part in a wonderful debate last Tuesday, initiated by the noble Lord, Lord Empey, on overseas aid. We were on the same side in expressing our pride and delight at what was being done and at how this Government, in very difficult times, were making the care of the poorest in our world an absolute priority. We can take pride in that.
We have already seen the number of under-fives dying from preventable diseases fall quite dramatically over the past 15 years, from an average of 12 million per year to just over 6 million now. Last weekend, the Nutrition for Growth summit, which came out of the Olympic hunger summit and which the Prime Minister has followed along with his responsibilities on the UN high-level panel on finding successors to the millennium development goals, agreed yet more funds that can be directed to that task. That funding should ensure that a further 1.7 million children under five will be saved as a result of these initiatives by 2020. That is profound. I cannot think of anything else that could come out of the summit that could possibly match it. I take pride in our Government’s role. I was struck by Bill Gates’s declaration when he said that the leadership in this area by the Government and the Prime Minister,
“will be a source of British influence around the globe for years to come”.
That is something we can take immense pride in.
I pay tribute to my noble friend Lord Trimble for securing this debate. I was delighted with his introduction and his invitation to visit County Fermanagh. With a following wind, I might reach County Fermanagh on 9 September having walked from London to Dublin—with a little help from the Isle of Man Steam Packet Company between Heysham and Douglas in the Isle of Man and then on to Dublin—to raise funds for Save the Children in connection with this initiative. It is what goes down in government circles as an aspiration. One need only look at my physique to realise that perhaps it is a triumph of hope over experience. None the less, I have always been an optimist; in fact my blood group is B-positive. I look forward to seeing County Fermanagh for many reasons this year.
I want to follow on from my noble friend Lord Howell’s fascinating speech on the global scene to make some structural points about the G8 and to seek some comments from the Minister, who I know is academically and politically well informed in these areas. Any gathering that seeks to achieve anything needs all those present to be capable of acting on what comes out of it. I want to test that a little further. Does the G8 as presently configured meet the global challenge? The group originated in 1975 at Rambouillet when it was convened by President Giscard d’Estaing to bring together the world’s most powerful industrial nations and market economies. It really followed the collapse of the Bretton Woods agreement, which had modified international exchange rates until then and a successor body was needed to bring the industrialised nations together to iron out global economic problems.
When it was initially convened, it was the G5, and then Canada was added the next year. Following the break-up of the Soviet Union, Russia became a member. Then the G8 was extended to the G9, with the EU being given observer status. I want to test whether we need to look at this again. What was right in 1975 does not necessarily reflect the world in 2013. Of the current top 10 economies in the world, China, Brazil and India are not present at the top table, although I accept my noble friend Lord Howell’s point that in a network world such terms are not entirely accurate. Is it right that the EU should have an additional voice at the G8 when it already has four very powerful voices in Germany, France, the UK and Italy, and yet the powerhouse of Asia has only one representative at the table, Japan?
Should the G8 fit more closely with the permanent members of the Security Council? Again, they were relevant in 1946, but with the absence of Brazil, Germany, Japan and India, the composition is limited when agreements are reached that require political and sometimes military action. In short, it seems entirely right that the most powerful political and economic countries in the world should have a special relationship. The helpful briefing document prepared for this debate contains the original 1975 Rambouillet summit declaration, which says:
“In these three days we held a searching and productive exchange … on the world economic situation, on economic problems common to our countries, on their human, social and political implications, and on plans for resolving them … The growth and stability of our economies will help the entire industrial world and developing countries to prosper”.
That makes a clear link between economic growth, the major economic powers and responsibility to the poorest in our world.
It was also refreshing to read the remarks made by my right honourable friend the Prime Minister on 21 November 2012, when he set out what he wanted for the G8. He said that he wanted to,
“go back to those first principles … No mile long motorcades. And no armies of officials telling each other what each of their leaders thinks—or should think. Instead we will build on the approach taken by President Obama at Camp David this year: one table and one conversation”.
That is a very noble thing, which improves the chances of success. Those chances would be improved still further if the G8 included around the table those countries that are absent simply because at the point of formation they were not the economic powers that they now are.
In fact, there is a strong case that the permanent 10 members of the UN Security Council and the economic members of the G10 should be the same. If you ranked countries by economic power, we would have the US, China, Japan, Germany, France, UK, Brazil, Russia, Italy and India. If those countries were connected and represented around the table, the chances of solving some of our intractable international problems would be greatly increased.
Lord Hunt of Chesterton
My Lords, we should be grateful to the noble Lord, Lord Trimble, for this debate about the G8 in Northern Ireland. Of course, the G8 is more than about just trade. As the noble Lord, Lord McConnell, reminded us, it is about people, culture and science. Ireland’s unparalleled contribution to culture, with its great scientists and poets, is familiar to us all. A connection between trade and culture comes to mind. When Oscar Wilde went to New York in the 1880s, he was asked as he went through customs whether he had anything to declare. He replied that he had only his genius to declare.
Of course, I approve of the enthusiasm expressed by the noble Lord, Lord Trimble, for trade and the contribution of the European Commission in those negotiations, which has a dominant role in determining non-tariff barriers, mentioned by the noble Lord, Lord Howell. Without the role of the EC, we would not be in this position of influencing and participating in these extremely important global determinants of trade.
I will not repeat the remarks of the noble Lord, Lord Bates, about a more realistic approach in the international world of negotiation, which I was delighted to hear. I will say only that the extraordinary issue of how the international framework of discussions should be changed cannot be solved by a collection of Prime Ministers sitting around the table. Surely it should proceed by initiating research programmes of many think tanks and universities around the world. The first step would be to put it on the agenda. If we could all agree that there should be an international research programme on that, involving all the countries the noble Lord mentioned, that would be a way forward. We cannot just have a snap decision, obviously. So are the Government thinking about this?
Secondly, as the noble Lord, Lord Howell, mentioned, we live in a highly networked world. At the meeting in Brussels on Tuesday on global systems, organised by the European Commission, a colleague working on energy from University College put up a slide of Buckminster Fuller’s 1939 vision of a global electrical power network. As he commented, in fact we are now having a transfer of electricity from the UK, Europe, Russia to China; before long it will be India. While we are having these extraordinary technical collaborations, which are growing consistently, our political masters are blowing hot and cold about how we should collaborate.
It was rather the same in the Cold War when, for instance, all weather forecasts were exchanged. The only person who did not play cricket about weather was Saddam Hussein, who turned off the weather when he arrived in Kuwait. This was considered a very bad show. It had never happened before. The point is that there is a technical world and a political world. Fortunately, the technical world carries on, but of course we need to connect the two.
The other important point about the 2006 UK G8 meeting, which the noble Lord, Lord McConnell, emphasised, was that despite the terrorist bombing in London—which I heard from my office in UCL; it was very frightening for many people in London—important commitments were made to reducing third-world debt, increasing aid and tackling climate change. One of the important events of that G8 meeting was that the UK Government, with backing from many other Governments, supported a parallel meeting of global legislators that began a sustained programme of introducing new laws and regulations in countries to deal with climate change. That is an absolutely necessary underpinning of international agreements.
That work was extremely controversial when it began. For example, only in 2006, many countries regarded deforestation as a neo-colonial word to stop people cutting down trees. It just shows how concepts have developed and collaboration has increased. Now this kind of approach is very much supported by the World Bank, the FCO, and UN climate agencies. In fact, progressively the G8 has undertaken many of its projects in conjunction with other bodies. It is no longer regarded as just an exclusive body. In Italy in 2007, for example, I attended a remarkable meeting of G8 and UNESCO. It was a meeting on innovation and education which involved innovation from countries all over the world, such as pioneering development of inexpensive medicine in India. This progressive outreach of G8 is something we should continue. Again, this is why, as the noble Lord, Lord Howell said, the notion that G8 is just an in-group of a few leaders is not how it is working out.
I also want to make the sideways comment that Canadian legislators have taken a very strong lead in this idea of legislators working together on climate. I am afraid they have to regret the policies of their Government rather forcefully.
In 2012, the G8 under the United States chairmanship focused on the Arab spring and the contribution of science and technology with natural disasters. Its focus on the former has not been very successful, one might say, but its work on the latter was a continuation and a building on the work of the United Nations report in 2012 bringing together UN agencies and other parts of the United Nations systems in explaining the impacts connecting natural disasters and climate change as well world population. Again, the G8 helped to underpin a very broad United Nations-wide initiative.
This year, as we learn from the House of Lords Library paper, to which the noble Lord, Lord Bates, has also referred, the Government have organised some specialised conferences to deal with specialised issues. Some of them have only involved G8 countries—for example the G8 science meeting—but others have had a broad membership of civil society groups in the G8 and other countries. I hope that theme will continue. There were two separate meetings on nutrition and innovation. However, these two themes need to be connected. For example, there are remarkable improvements in India with people now using social media to learn about the best use of agricultural aids as well as acquire data about weather and climate. This is having remarkable effects. To start with, there was some resistance to the use of social media. The idea of giving people mobile phones in place of seed was, as it were, an issue to be discussed. Now we realise that these two things have to go together.
Despite the remark of the noble Lord, Lord Howell, about too much data, there is not enough data in African countries. African farmers are not collecting and measuring their rain. You must collect your rain if you want to know how your crops will develop during the season—knowing whether you have less or more rain. Many other areas of data are collected by many different agencies in African countries which are simply not exchanged. Some noble Lords will have heard me banging on about this before, but I still find it hard to get that sharp focus on the simple question of data exchange being accepted as an important issue by aid agencies and even DfID. They are very keen on global computer models, and so am I, but I am also keen on people measuring rain.
Finally, this G8 meeting, like others, raises issues and starts initiatives. I hope that the UK will set an example which other countries have not followed very much: reporting on the G8 meeting during the following year, so that we know what has happened. For example, we have our Library document, which covers initiatives this year, but it is difficult to find out how it connects to initiatives in previous years. That would be very helpful.
Lord Brooke of Sutton Mandeville
My Lords, it is a particular pleasure to follow the noble Lord, Lord Hunt of Chesterton, if only because it enables me to thank him publicly, after a long interval, for once telling me that a description of mine of the siege of Prague which I had incorporated into a debate on the arms trade was the only time he had ever laughed out loud while reading Hansard on a train. But his content today was much more noteworthy.
It is difficult to imagine any subject more germane for debate in this week than that which my noble friend Lord Trimble has selected, nurtured and so cogently introduced. It is a most felicitous overture that it should be an Ulsterman, one who has played so large a part in the Province’s history, who is doing it. The 198th anniversary of Waterloo may not be an ideal day for the G8 beginning its business, but at least it was another Ulsterman, in the person of Lord Castlereagh, who did the successful fixing at the Congress of Vienna a year later, and Derry’s/Londonderry’s year as City of Culture is a happy index to underline the happiness of the Prime Minister’s chosen and highly apposite location, through we must hope that 2013 will be an exception to the general Irish rule of thumb that in July Lough Erne is in County Fermanagh while, for the rest of the year, County Fermanagh is in Lough Erne.
For myself, I think that the Prime Minister is to be warmly congratulated on the priorities and preliminaries over which he has presided. From the letter he wrote to his international colleagues in the first week of the new year to the selection of Professor Paul Collier to advise the Government on the preparations and policies for the G8 summit, from the speech the Prime Minister delivered to the World Economic Forum in Davos on 24 January to his subsequent letter to the leaders of the UK Crown dependencies on 20 May about continuing to work in partnership with the UK on internal tax matters, he does not, at least to me, appear to have put a foot wrong. As the noble Lord, Lord Hunt, has just said, the days prior to the full G8 conference are full of events that play to the conference’s themes.
Moreover, the Prime Minister has sought to keep the agenda simple and taut, with its emphasis on trade, on tax and on transparency. The critical issues contained in the letter of 20 May to which I have just alluded—tax, information exchange and beneficial ownership—were at the heart of the agenda. That does not mean that we should necessarily be too optimistic about securing all we seek. The Minister responding to this debate confessed earlier this week that the Government were not sure about the definition of a lobbyist, and some of the briefing we have received from that quarter for this debate has had a peremptoriness about it which some might think was a little unrealistic.
In Northern Ireland, in what we have called our peace process, we had to learn to be patient, but we never forgot what our long-term goal was, and applied patience and policies to achieve it. There is evidence from the overall plan that this has not been neglected here either. Of course the G8 are important, but so, likewise in these matters, are the G20 and their handling should be all of a piece, even if the diplomacy is complicated.
In its briefing for today, the House of Lords Library drew heavily on Professor Collier’s article in Prospect in March this year. However, the briefing uses only part of it, and I strongly commend the entirety of the article to anyone who has not yet read it. Professor Collier has been an Oxford Professor of Economics since 1993, a fellow of St Antony’s since 1986 and he has been director of the Centre for the Study of African Economies since 1991. The latter shows up in particular in the rigour and comprehensiveness of his analysis of the hazards and complexity of the solutions that these problems will require. Happily it is, of course, to his college’s St Antony that we pray when we have lost something and cannot find it. Not for nothing did the head of taxation at OECD aptly refer to the existing arrangements as “double non-taxation”. In the context of the subsequent transfer to the G20 meeting, it is a notable vindication of the Government’s employment of Professor Collier that he was also invited by the Russian Government, current hosts of the G20, to address the major conference on tackling corruption in government and business that they convened in April.
I want to speak only about international tax as that has constituted a serial thread in this Chamber over the past six months. It is a matter of some relief to me that of the UK Crown dependencies, one of those which has, to the best of my knowledge, never been a tax haven is St Helena, where a forebear of mine was a distinguished and gallant governor between 1787 and 1801 and where his nephew, whom he brought out as his secretary, remained until 1834. Thus, a family connection with the island was created that lasted not only through Napoleon’s stay, but in all for almost half a century. However, those British territories which are tax havens have understood our intertwined role and, in the case of Jersey, have given leadership in these tax considerations which the World Bank has adjudged a model.
The fact that Jersey also became the world’s largest exporter of bananas is an index of the sub-plots of this drama. It is 54 years since I was last in Uganda, where it was borne in on me that there are 250 different species of banana. It is 43 years since I was last in Jamaica, another island where bananas are not unknown. At the Negril end of the island there was then a waste—for the benefit of the Hansard writer, I am spelling that word with an “e” rather than an “i”—that was eloquently described on the map as the Great Morass. These are deep waters, Watson, as Sherlock Holmes used to say.
However, to be encouraging, and not least in the context of the G20, there are signs of light. America has made for transparency in reporting a legal requirement for US-listed resource extraction through the Cardin-Lugar amendment to the Dodd-Frank Act 2010. The European Parliament is considering an equivalent of Cardin-Lugar. At a European Council meeting in Brussels on 22 May this year, beyond the general conclusion on fighting tax evasion, it was agreed that rapid progress was needed, and I quote,
“to improve the EU’s agreements with Switzerland, Liechtenstein, Monaco, Andorra and San Marino”,
in line with measures equivalent to those in the EU. Canada is following the United States in clarifying and tightening the application of its equivalent to the US Foreign Corrupt Practices Act, even if Canada has also opposed the introduction of mandatory disclosure standards; for instance, in relation to 330 minerals extraction projects in Africa.
Professor Collier has also earned our gratitude by trumping the African defence of questionable deals done—the defence being that it takes two to tango—by enlarging the duo to a threesome, as in, I think I recall from my youth, the dance “the dashing white sergeant” with a cast of a briber, a bribee and a facilitator. The latter word is one that my noble friend Lord Trimble may remember from the vocabulary of the peace process.
Facilitators can live a long way from Africa, including in this city. A recent experimental study conducted by Griffith University in Australia, which sent more than 7,000 e-mails to law firms around the world, requesting that shell companies be set up, contained a sprinkling of references in random e-mails that included incriminating information indicative of corruption, and offers of a premium on normal fees to maintain secrecy. Regrettably, replies to this random selection demonstrated a fall in the number of law firms demanding identity documents, which are internationally required to allow company owners to be traced. Law firms in G8 countries were not immune from this diplomatic—or undiplomatic—omission.
Professor Collier adduced practical and effective responses to these contingencies, but it remains the case that only 1,000 of the 280,000 annual reports of transactions that give grounds for suspicion in the UK are investigated. On the other hand, the fact that the US now recognises that present practices are adversely affecting US tax revenues is a powerful stimulus to remedial action. It is, however, a combined and united push that is required.
In closing, I go back to where I began, with the moral from our peace process in Northern Ireland. The most important imperative is agreement on the goal and unremitting attention to anything that will advance that cause. The Prime Minister, at his level, and Professor Collier at his, have done an outstanding job in setting out an agenda that addresses these matters. If we can match even a fraction of the results of the Congress of Vienna, we shall have done well.
Baroness Jenkin of Kennington
My Lords, I, too, thank the noble Lord, Lord Trimble, for initiating this very timely debate. As we all know, the priorities for the G8 are to push for practical action to achieve fairer taxes, greater transparency and freer trade. These are essential actions in shaping the rules that characterise a fair and open global economy, ensuring that both developed and developing countries benefit. Like others in the debate, I congratulate the Prime Minister and his team on their hard work and commitment in driving the G8 agenda.
G8 summits have sometimes been seen as places where western nations have pointed the finger at developing countries, but this meeting is also about the G8 countries getting their own house in order. To make a difference to developing countries, it is vital to reach agreement on things such as tax transparency and trade. This will allow developing nations to know, when developed nations go into their country, what they are paying for the contracts, what those Governments are receiving, and what the real benefits are for the people of those nations.
As we have discussed, fairer taxation will be a key priority at the talks. It is important that we get political support for ensuring that global tax rules are fit for the 21st century. As the recent hoo-hah has shown, it cannot be acceptable for companies to create shadow shell companies offshore, effectively meaning that neither the developed nor the developing countries get the benefit from tax revenue that should come from profits.
If these companies are not paying tax on their profits, developed and developing nations cannot provide the public services and support that are needed. We do not underestimate the complexities and challenges, but it must be a key part of what we are doing at the G8 to say to companies, “You have to be transparent about who owns you, where you are owned and what tax you are paying”. As my noble friend Lord Brooke pointed out, research suggests that Jersey is now the world’s largest exporter of bananas. We know that that is not true and needs to be sorted out.
Greater transparency of taxation must also be accompanied by greater transparency of other financial flows. The UK, through DfID, has led the way in becoming the world’s most transparent aid donor. Through its role in the international aid transparency initiative, DfID is ensuring that UK taxpayers, and citizens in developing countries, will be able to track funds right through the aid chain to the point of delivery, ensuring that countries can better manage the aid that they receive, plan effectively, co-ordinate better and, most importantly, make sure that the money gets to where it is supposed to go.
Three of the other seven G8 countries—the US, Canada and Germany—are now also publishing their aid transactions, through the initiative. We hope that the remaining G8 countries will also prioritise the information needs of developing countries, and fulfil these transparency commitments.
Accompanying progress in aid, the UK and French Governments have made a joint agreement in the run-up to the G8 which will mean that both Governments will apply for formal candidacy of the extractives industry transparency initiative, which was set up to help tackle corruption, to improve the way revenues from oil, gas and minerals, are managed, and to make sure that people across the world share in the economic benefits of the natural resources in their country. I am proud that our Government are playing a key role in ensuring that people benefit fairly from the natural resources of the country in which they live. As the noble Earl, Lord Listowel, pointed out, mineral wealth in developing countries should be a blessing, and not, as so often in the past, a curse.
Finally, on transparency, last week the UK Government took a further step in enhancing transparency through the launch of the Lough Erne G8 Accountability Report. The G8 has never before produced such a comprehensive accountability report, showing it being open about where it has delivered against its commitments, and where it needs to do more. The results rate progress as good in six sectors: economic development; health; water and sanitation; food security; governance; and peace and security. It is satisfactory in three others: aid and aid effectiveness; education; and environment and energy. This report demonstrates that the G8 has made progress on its commitments but that there is more to do. It is well worth a read.
Greater transparency and a fairer tax system will go a long way to creating a fair and open global economy, but nothing can match the power of freer trade in improving people’s lives. The EU and the US together make up about a third of all global trade. As the noble Lord, Lord Trimble, said in his opening speech, a deal between these two regions could add—and we could discuss the figures—a huge amount to the EU economy alone. Trade between developing countries and within Africa is growing, and we should encourage that work further. This means continuing to support the multilateral system, and working through the WTO to agree a deal to sweep away trade bureaucracy. That alone could be worth huge amounts of money—$70 billion—to the global economy, and help trade to flow freely across the world.
I, too, highlight the work and achievements that have already happened as part of this year’s G8 agenda. On Saturday, as the noble Lord, Lord Bates, remarked, the Prime Minister held a high level meeting entitled, Nutrition for Growth: Beating Hunger through Business and Science. Undernutrition is a chronic lack of nutrients that can result in death, stunted physical development, and a lower resistance to illnesses in later life. It is the biggest underlying cause of death in those aged under five in the world and is responsible for 8,000 child deaths each day. It stunts the growth of children, reducing their potential, undermining their adult earnings by up to 10%, and in some countries reducing the size of the economy by 11% as a result.
The Global Nutrition for Growth Compact was endorsed by a total of 90 stakeholders, including 24 Governments and 28 business and science organizations. It secured new funding of up to £2.7 billion to tackle undernutrition up to 2020. This money will lead ultimately to enhancing the lives of those most in need: improving the nutrition of 500 million pregnant women and young children; reducing the number of children under five who are stunted, by an additional 20 million; and saving lives of at least 1.7 million children by preventing stunting, increasing breastfeeding, and better treatment of severe and acute malnutrition. As the noble Lord, Lord Bates, said, if nothing else comes out of this summit, that is a huge achievement.
This year’s G8 agenda is ambitious, but it is an agenda that has the potential to shape the rules leading to a genuinely fair and open global economy. Healthy, educated populations in poor countries will lead to poverty reduction and ultimately to trade with us here in the UK. We must ensure that all G8 countries work together over the next few days for the benefit of both developed and developing countries around the world.
Lord Lexden
My Lords, reference has been made by my noble friend Lord Trimble and others in this debate to the splendid place in which the summit is to take place. Perhaps a few further comments may be appropriate, since it is a source of such pride to those of us who are closely connected to the affairs of Northern Ireland, on which I shall focus.
Those attending the forthcoming summit will find themselves in one of the most beautiful parts of our country. The celebrated traveller and expert on agriculture, Arthur Young, was captivated when he visited it in the 1770s. He recorded,
“the promontories of thick wood, which shoot into Loch Earne, under a shade of a great ridge of mountains, have the finest effect imaginable … the whole unites to form one of the most glorious scenes I ever beheld”.
His enthusiasm greatly pleased his host, Sir James Caldwell, who, when they parted, sent him on his way with,
“colours flying, and his band of music playing … on board his six-oared barge for Inniskilling”.
A century later, the anonymous author of a tourist guide to Ireland, published in 1886, described the Fermanagh lakes as the “Windermere of Ireland”, with a pen dipped in purple ink, and went on to lavish praise on Lough Erne. He said:
“Studded with islets, which dip their luxuriant foliage in its waters, it adds the beauties of a sylvan stream to the placid sternness of a majestic lake”.
Now we look forward to the impressions of my noble friend Lord Bates, who is to visit Lough Erne later in the year; I am confident that they will be just as favourable as those in the 18th and 19th centuries. Of course, he must bear in mind always the splendid quotation given to us by my noble friend Lord Brooke.
Let us hope that the leaders of the worlds’ greatest economies appreciate the great good fortune of holding their summit in a place of such outstanding beauty. It has been said many times in the run-up to the summit that such a gathering in Fermanagh would have been inconceivable even a few short years ago. It is a measure of the great progress that Ulster has made towards political stability and success that the summit is taking place in a county that has historically had its share of bitterness and strife, arising from the fairly even balance of unionists and republicans in its population. It is also a measure of the personal commitment of my right honourable friend the Prime Minister to Northern Ireland’s union with Great Britain that he felt so strongly that the meeting should be held in this part of our country. The Prime Minister is a man of generous liberal instincts; he has pledged himself to work for a Northern Ireland in which all sections of the community are fully involved in shaping what he has described as a,
“shared future, not a shared out future”.
He is a unionist by deep conviction.
The prospect of a shared future for the people of Northern Ireland, which the Prime Minister is so determined to advance, would not exist but for the far-sighted work of so many people over recent decades. My noble friend Lord Trimble is conspicuous among them; without him, there would almost certainly have been no Belfast agreement 15 years ago, providing the cornerstone of the new dispensation in Ulster. Without his insistence on proper standards of conduct by members of the Northern Ireland Executive when he was First Minister, devolved government might never have been eventually restored on a firm basis.
It is well known that Northern Ireland faces formidable economic problems, which this House discusses from time to time, as indeed it should, avoiding the grave error made in Westminster after the creation of Northern Ireland in 1920, when the Stormont Parliament was left entirely to its own devices. The sources of Ulster’s economic problems are readily identified: the public sector is unduly large and the private sector unduly small. It is the central aim of this coalition Government in Northern Ireland to rebalance the economy, and in this they have the enthusiastic support of the Northern Ireland Executive. There are now some encouraging signs of progress. Yesterday’s fall in unemployment continues a trend for the fourth consecutive month, the first time that that has happened in six years. The Province’s unemployment rate is now in line with that elsewhere in our country.
Many believed that the devolution of corporation tax to the Northern Ireland Assembly would form a major element of the necessary economic rebalancing. A very low rate of corporation tax could enable Northern Ireland to compete more successfully for inward investment with the Republic of Ireland, where the rate stands at just 12.5%. The Northern Ireland Executive and the Treasury concluded their discussions on the matter last year but the announcement of the Government’s decision has been postponed until 2014.
Other means of stimulating the private sector are needed and the G8 summit could make a valuable contribution. My right honourable friend Theresa Villiers, the Secretary of State for Northern Ireland, has made that clear just today. She said:
“The Government has been working closely with ministers from the Executive to ensure that Northern Ireland gets the maximum benefit from the Summit. One recent study suggested that Northern Ireland could benefit from a £40 million boost to the economy in the short term, while two thirds of businesses believe the Summit will be positive or very positive. I know that a number of local businesses have been able to secure contracts as a result of the Summit”.
It is important, she went on to say, that,
“we do everything possible to ensure the Summit has a lasting legacy. So Invest NI is working with both the public and private sectors to highlight key inward investment and export opportunities. The Executive is planning an autumn investment conference. In addition the Northern Ireland Tourist Board and Tourism Ireland are intensifying efforts to promote the region in key overseas markets and to promote more tourism here. Fermanagh has huge tourism potential and we want to capitalise on it”.
I applaud the Government’s determination to ensure that the summit brings lasting benefits to the wonderful part of our country where it is to be held.
Lord McColl of Dulwich
My Lords, I too would like to thank my noble friend Lord Trimble for introducing this debate. I would like again to draw attention to the devastating effect that undernutrition has on millions of children throughout the world, as my noble friend Lady Jenkin has just emphasised.
The World Health Organisation estimates that half of those suffering from undernutrition are afflicted with diseases or parasites caused by a lack of safe water and a lack of sanitation. Efforts to increase access to these services must be a vital part of efforts to improve nutrition.
Apart from the direct disease link, access to water and sanitation services also affect women’s education and empowerment, which also impacts on their and their children’s nutrition. I was pleased that the UK commitment at the Nutrition for Growth summit this weekend recognised these links. I hope that this will lead to more effective integrated and cross-sector efforts to tackle disease and poverty.
When I visited Kathmandu recently, with the charity WaterAid, I was able to see at first hand these very problems of lack of sanitation and clean water. I also took part in my first demonstration. We marched through the streets of Kathmandu carrying placards with slogans addressing the need for toilets. It was my first venture into this kind of activity—it is never too late to learn.
Last week DfID published the Lough Erne accountability report, which reviews the G8’s delivery against its commitments and is a valuable tool for holding leaders to account on their promises. As it reports on the G8 as a whole, however, it hides individual members’ performance, and those that are doing less well are sheltered from true accountability. On water and sanitation, the report indicates that the G8 has made good progress both on maintaining political momentum and on increasing funding for the sector. It highlights the importance of the Sanitation and Water for All partnership as a way of improving aid for water and sanitation and shows that the G8 countries have increased their aid to water and sanitation projects, including a 16% rise in 2011. Crucially, it fails to show how and where this money is being spent.
G8 members have a rather mixed record on this front. They should direct aid to basic water and sanitation systems and to the countries and populations who are most in need. The majority, however, spend their money on large infrastructure projects. WaterAid’s report entitled Addressing the Shortfall states that less than 3% of French and United States water and sanitation aid goes towards creating basic systems. Germany does a little better, at 17%. As for Japan, only 38% goes towards basic systems but it is by far the biggest donor to water and sanitation aid. The UK is the notable exception, with 81% of its water and sanitation aid going to basic systems.
Moreover, aid for water and sanitation is focused on the wrong countries and seems to be associated with political allies and strategic relationships. WaterAid’s report, Addressing the Shortfall, shows that 20% of United States aid goes to Iraq, 12% of Germany’s aid goes to Turkey and 10% of France’s aid goes to Egypt. The countries in most need of water and sanitation include Côte d’Ivoire, Mozambique and Niger, but they are not among the top recipients of water and sanitation aid from any G8 country.
More than ever, aid must be focused on where it is most needed—the poorest and most marginalised. The United Nations high-level panel report rightly calls for the eradication of poverty by 2030 and for everyone everywhere to have access to water and sanitation. Can the Minister assure us that the Prime Minister will use his leadership of the G8 to continue to push the message that aid money should, first and foremost, go to those who most desperately need it?
The Lord Bishop of Bath and Wells
My Lords, I am most grateful for the opportunity to participate in this debate and to speak in the gap, not least because, due to my impending retirement and relinquishment of my See, this is the last opportunity that I will have to address your Lordships’ House. I express my thanks to the House for its unfailing courtesy and generosity to me during my brief years of service here.
I, too, thank the noble Lord, Lord Trimble, for his introduction to this debate. Fermanagh is very special to me. It was the home of my late and much loved father-in-law.
The Prime Minister indicated on 6 June that the G8 summit would be an important opportunity for him to discuss Syria with the other world leaders. While most of the attention at the G8 will rightly focus on the priorities set out by the Prime Minister and largely debated here today, it is nevertheless customary for the first day of the G8 to be spent on pressing international issues.
There is probably no more pressing concern than the crisis in Syria, which the Foreign Secretary has described as representing,
“the worst crisis affecting world affairs at the moment”,
and the biggest humanitarian crisis today. Few would disagree, and it is clear that for the G8 to meet without due attention to this matter would be unacceptable.
I welcome the remarks made by Justine Greening in the other place in respect of the United Kingdom Government’s commitment to both the short and long-term need for humanitarian aid. Further, with the United Nations appeal for £3.2 billion to deal with the humanitarian emergency, the G8 provides us with an opportunity for encouragement of greater participation in respect of that need. It is clear that we cannot stand by and do nothing.
I declare an interest as the chair of Conciliation Resources. There are competing narratives on Syria, not least in the provision of arms, and there is a real difference of opinion in this House, as evidenced elsewhere. However, the absence of a political settlement in Syria places particular strains on the resilience of neighbouring countries, particularly Lebanon. Every effort needs to be made by the G8 leaders to contain the conflict, and key to this is meeting the humanitarian needs of Syria’s refugees, which are already pushing to breaking point the current UN refugee protection system.
The G8 provides a rare opportunity to offer hope in an otherwise bleak landscape. It provides an opportunity for G8 members to resolve the differences that have emerged since the announcement on 7 May of a joint effort by the US Secretary of State, John Kerry, and the Russian Foreign Minister, Sergey Lavrov, to convene a peace conference to advance a political solution. I hope that the Minister can give this House some assurance that at the G8 the United Kingdom Government will give a real impetus to pursue this rigorously. As the former NATO Secretary-General Jaap Scheffer said, all parties, including the Assad regime and Iran, should be among those present on this occasion.
The G8 summit provides an opportunity to move beyond the paralysis and defeatism that has all too often marred international debates about Syria. I believe that the brutality and bitterness of the Syrian conflict, which mirrors all too many such conflicts in recent times, place before us a deep series of questions. What does it mean to be a human being? How do we value and place significance on every human life? I very much hope that the G8 will get behind the peace initiative. I hope too that we might at some point have a debate in this House on the issue and nature of the significance of human dignity and what it means to be human. Meanwhile, we express the hope that the leaders of the G8 will, as we implore them to, resist the bellicose rhetoric with its threat of regional spillover, and ratchet down the violence to bring an end to this ghastly conflict, with all its dehumanising realities.
Lord Triesman
My Lords, I join everyone in thanking the noble Lord, Lord Trimble, for initiating this debate and for his very powerful introduction. On behalf of these Benches I thank the right reverend Prelate the Bishop of Bath and Wells for his very considerable contributions while a Member of this House. We wish him well.
It is always sensible for a Government hosting a G8 to set out its priorities and achieve focus. The work leading up to a G8 summit needs focus, and the sequence of conferences feeding into the summit are a critical part of achieving a coherent outcome. As the noble Lord, Lord Brooke said, the Prime Minister trailed his programme in detail, especially, I though, at Davos. He has planned the whole process for a long time. It will be a key moment to judge his effectiveness, because in this case I am convinced that he will be judged by real outcomes.
Recent G8 summits have been choreographed as relaxed fireside chats among the leaders of the world, or at least among those who purport to be its leaders. Of course, these are the optics of such a meeting, but the tests are always of the substance. What should we look for in the final communiqué? What will success look like? The first objective is to create a major boost to growth through trade, which I think is a point also made by the noble Baroness, Lady Jenkin. From 2008, following the sharpest decline in world trade since the great depression, the people of this country, as elsewhere, have been looking for a credible plan for growth. They will look to the G8 in its general review of whether that is possible.
In my view, the reality is that the Government are desperate for some good news from the G8. The United Kingdom has flat-lined. It looks much more like the long period of stagnation which the Japanese economy experienced than an economy on the move. David Cameron will want the G8 to point in a direction that he appears to be unable to achieve with his own Chancellor. So trade improvement is mission critical to this summit.
The combined IMF report and the latest Institute for Fiscal Studies report showed that the next two general elections will be played out to the accompaniment of the harsh tunes of austerity. There is no optimism here about debt reduction or other missed targets: they are all going to be missed. The limited data that the noble Lord, Lord Trimble, mentioned on inventory growth has to be placed in context, as I am sure he would do himself. It is about stocks rather than about finished manufacture and growth. The IFS states:
“We should expect not just 2015 but also 2020 to be an austerity election. Spending reductions are set to be a long-term feature of the UK's public finances, rather than a short and sharp experience”.
What on the horizon could lift that gloom? The best bets are on the potential free trade agreements between the EU and G8 partners. The EU/United States negotiations are due to start; if successful, the Government believe that this might add £100 billion to the EU GDP and more than £80 billion to the United States GDP—all stimulating world trade. If all the free trade agreements succeed, the boost to the world economy could be—these are big figures, I know—more than £1,000 billion. Noble Lords will have anticipated the point that I want to make. These are EU negotiations; what an extraordinary moment for the Government to embark on what may be a populist and gadarine policy that could sever the United Kingdom from the EU. That is now a palpable risk. No wonder that some eminent Conservatives look with dismay at the Eurosceptic brigade among them. What a time for those who want to liberalise and reform the global economy, as we do, to pander to the protectionism and nationalism of some of our vocal xenophobes.
I make one further point on the trade priority. Some fireside corner of this G8 must assess the consequences of the collapsed Doha round. The G8 continues to take far greater value from trade out of Africa than we put in. That point was made by a number of noble Lords. The mispricing and underpricing of African commodities is a motor for African poverty, disease and conflict. The inflated prices that the advanced world extracts for sophisticated, not always useful products; our unwillingness to transfer knowledge and capacity; and the willingness of some people to renege on the G8 promises at Gleneagles are all millstones on Africa. My noble friend Lord McConnell was right to remind us of the significance of what was said at Gleneagles, and the noble Earl, Lord Listowel, reminded us of the 0.7% as well, which is very important. There was progress at the hunger summit of 8 June, but if we fail Africa by not recognising its interests in world trade, that would be at best myopic and at worst a betrayal.
Tax evasion and avoidance is, rightly, the second major priority. While the warm-up discussions have revealed some big differences of opinion about where tax liabilities are generated and tax can be collected, these are key issues, and I applaud the Prime Minister’s intent on this. Whether individuals or Google-style companies are involved in evasion or avoidance, these matters need to be addressed. The noble Lord, Lord Trimble, was right to remind of us of the nine multi-nationals in such a position. That is not a critique of fair tax planning, but it is a call for opposition to what may be the Canadian and Russian objections that could scupper the process.
David Cameron should come back to Parliament to report that he has secured five practical steps. First, we need a clear reform of country-by-country reporting where multinationals publish all the key information required to assess their tax liability—revenues, profits and taxes in each country in which they operate. Secondly, disclosure of tax avoidance schemes and systems should be extended to all global transactions. Thirdly, we should seek greater transparency in tax havens, disclosing information on who is hidden behind front companies and trusts. The G8 should launch a convention on tax transparency. Canada is not entitled to block such arrangements. Fourthly, the G8 global assessment of the impact of controlled foreign company rules with attention to developing countries would be helpful. I note that the Government are reluctant to get into this area but it is a global package that would strengthen their own G8 priority. Fifthly, we should seek reform of the corporate tax system to prevent profit shifting and the use of opaque havens. The current system lags far behind global economic developments and the wiles of specialists. I heard what the noble Lord, Lord Howell, said about the perhaps unconquerable barrier of complexity. Tax cannot be put into the “too difficult” box, although I thought what the noble Lord said was intriguing and I intend to read and study it with great care.
Will the Minister respond positively to those five suggestions, designed to bolster the G8 priorities of the Government? The points made about the impacts on transparency are also a priority. We support the focus on land and extractive transparency, and progress would unquestionably be a blow to corruption. I join in commending the African Union’s land policy initiative and commend Kofi Annan’s reports on the imbalances of trade which are impacting on Africa. I am tempted to recommend an initiative on transparency and anti-corruption in international football, but I might be straying a touch too far today.
In general, this is the right time to push for anti-corruption agendas. Many will advise the Prime Minister not to push too hard in case some of those to whom he speaks recoil. Russia’s interests in Cyprus have been mentioned by the noble Lord, Lord Trimble; the noble Baroness, Lady Falkner, has mentioned some of these matters and a quite remarkable set of statistics from Delaware. A commitment to transparent public registries would transform matters. It would never be easy again for international criminals to work the way that they do and have the freedom that they have had. We should not settle for a lesser or cosmetic solution. I hope that the Minister will assure the House that the Prime Minister will put on all appropriate pressure, including on the United Kingdom’s overseas territories.
I started by commending focus and I finish with a word of caution about too narrow an agenda. The G8 provides opportunities to share thinking and it would be a waste if environmental degradation, nuclear proliferation and the death spiral of Syria—as the right reverend Prelate the Bishop of Bath and Wells just reminded us—were not covered properly. The G8 needs to prepare for the tough issues. On all these priorities my greatest anxiety and, in my view, the gravest test for the Prime Minister, lies in split-personality thinking in the United Kingdom Government.
We say that we want co-operation on fundamental propositions from nations with whom we appear to want no real or deep relationship. We tell them that they are consistently wrong about a wide spectrum of things. We raise three melodramatic cheers for every veto we exercise, whether it is a real one or just theatrical. We do not seem to understand that partners become less inclined to work with us each time that we do that. We need to consider that if we want partners, let us behave like partners. This will be the test of the contention of the noble Lord, Lord Brooke, about whether the Prime Minister has put a foot wrong. The dance is not yet over. I wish the Government well and I put these matters in plain terms precisely because I wish them well. There is nowhere better than Northern Ireland to face and resolve the toughest issues.
Lord Wallace of Saltaire
My Lords, I wish to add my regret that, sadly, the right reverend Prelate the Bishop of Bath and Wells is about to retire. Over the past week, I have been thinking about the first Bishop of Bath and Wells whom I was aware of, who stood on the right of the Queen, I think it was, as she was crowned. In some ways I regret—though in others I am glad—that the current right reverend Prelate has not been able to assert that privilege during his time as a Bishop. We shall miss him, but the Bishops keep the House of Lords young, as they say.
Before moving to other topics in this debate, I want to answer the noble Lord, Lord Triesman, on the coalition Government’s attitude to international and European co-operation. I say this as a Liberal Democrat, but what I have heard from the Prime Minister and Foreign Secretary in recent weeks has been outstandingly clear: our national interests rest in international co-operation and in remaining a full and committed member of the European Union. I have heard no such clear statement from any member of the shadow Cabinet.
If we are to have responsible opposition, we also need a clear indication from the Labour Party of its commitment to staying in the European Union and its position on a referendum. We need clear cross-party support in the national interest. I see that the noble Lord is unhappy with my criticism, but I look forward to hearing a clear statement from the Labour Party on those issues. I am happy with the coalition position on European reform and with the way in which we are moving forward with the balance of competences exercise and I reject the idea that we are being blown about by the right-wing press and UKIP.
This has been a good debate in terms of the G8’s broad agenda, particularly about going to Fermanagh. To hear the noble Lord, Lord Trimble, refer to Fermanagh as “tranquil” is an indication of just how far Northern Ireland has moved. Enniskillen was anything but tranquil 20 years ago. Fermanagh and Tyrone were bandit country during the Irish emergency. It is therefore tremendous that the Prime Minister was determined to bring the G8 to Northern Ireland this year to showcase Northern Ireland to the international media, to foreign Governments and as a place to invest.
I note to myself that it is now time for Yorkshire to start lobbying for the G8 summit to be held there when it comes around in eight years’ time, for not dissimilar reasons. Meanwhile, the Tour de France will have to do for next year. I am already discovering that it is impossible to get a hotel anywhere on the route of the Tour de France for next year, so Yorkshire is already beginning to do quite well in that regard.
Let me turn to the substance of what the G8 leaders will discuss when they meet next week and address the question of whether the G8 is the right body to meet. The noble Lords, Lord Bates and Lord Howell, and the noble Baroness, Lady Falkner, raised questions about whether we should now be going with some other body. It is of course always easier to carry on with what you have than to carry on with something new. However, I would stress that in many ways this is the best group we have because it is the only group we have to focus attention on strategic global issues, whether they are economic, political, developmental or environmental.
As the noble Lord, Lord Bates, remarked, the G8 had its origins as the G4 in 1975, when three major European Governments were trying to bring a then rather distracted American Government back to discussing how we managed the global economy. It was then expanded to become the G7 with Italy, Canada and Japan—and with the EU playing a role, because the EU as a collective body has competence in matters of trade, which has always been very important for the G7 and G8. Russia was added in the mid-1990s when, as a post-communist country, it was becoming a much more open society and moving towards a rather more open market economy. This is a group, after all, which is committed to free institutions, open markets and open societies. That is one reason why, as I was saying at the Dispatch Box yesterday, we have some concerns about the direction in which Russia is going. These eight countries are responsible for 50% of global output and 66% of global trade, so in many ways they are still the reliable top table at which one has to discuss many of these matters, in a rather messy response to the need for some form of global governance among major sovereign states.
There is of course the G20 now, the larger grouping which includes the Chinese, the Indians, the Indonesians, the Brazilians and others. The G20 will be meeting in St Petersburg in September, under Russian chairmanship, and many of the issues to be discussed among the G8 will be pursued further there. We all have to recognise that in different ways China, India, Indonesia and Brazil are still reluctant to take on and share the full responsibilities of global leadership and that much of the agenda for global co-operation and future global regulation thus remains to be negotiated between European countries, the European Union and the United States, then to be accepted by others.
The G8 has of course grown more institutionalised. It has grown larger and its agenda has grown amazingly wide. The numbers of officials attending have mushroomed and our Prime Minister is attempting to bring back direct conversation, intimacy, informality and a focus on getting things done. The noble Lord, Lord Hunt of Chesterton, queried the outcome and the follow-through. One of the British initiatives this time is to have an accountability report to look back at former G8 pledges and see what has been done. We have produced a report with checks on what we think has been achieved, or moderately half-achieved, and what has been left undone. It is not that bad a record, actually. Of course, as in all negotiations between Governments, there are some things on which you simply cannot manage to make progress, but we have made a lot of progress, particularly on global development.
Lord Wallace of Saltaire
I do not know whether it is yet in the Library. It was published two days ago. I will do my best, looking hopefully at the Box, to put it in the Library as soon as we can. I must say that I have been briefed by a number of officials who are working incredibly hard for the G8 exercise. I am very grateful that one of them has been able to spare a bit of time out of her 14-hour day to come here and assist me in this and I wish to add my compliment on her remarkably clear handwriting.
The G8 is an informal directing group and the discussions within the G8 then feed out to others. On the final lunch the secretaries-general of the IMF and the OECD will be there and the tax transparency agenda will be carried on quite largely through the OECD. The land ownership agenda, which was mentioned by the noble Earl, Lord Listowel, will be carried out partly through the Food and Agriculture Organisation. Discussions are part of a very intricate network in which we work as we can with others. There are a number of associated conferences now. We have had a Foreign Ministers’ G8 with very active engagement from the Russians on issues such as Syria and elsewhere. We do not always agree but we are actively discussing these issues. There is also the Science and Innovation conference mentioned by the noble Lord, Lord Hunt. The Nutrition for Growth compact has been signed by 24 Governments from the developed and developing worlds, 22 business groups, four science organisations and a number of major international non-governmental organisations.
Sessions at the G8 will cover the global economy, including trade, and the very important bilateral negotiations which have been taking place between the EU and Japan and which will be taking place between the EU and the United States. There will be a session on international political issues and foreign policy, a session on countering international and cross-border terrorism, a session particularly devoted to tax and transparency, and a final lunch at which the delegates will be joined not only by the secretaries-general I have mentioned but also by a number of other senior figures from Africa and South America.
The Prime Minister has focused on the three Ts—trade, tax and transparency. I have already spoken about trade. We very much hope that we will be able to get back to a global trade agenda with the World Trade Organisation. However, some of the leading members of G20 have not been particularly co-operative on a global trade agenda which is why we are having to pursue regional trade negotiations. If we are able to achieve a trade agreement between the United States and the European Union to follow those with Japan, Korea and Canada, we will have made a major contribution to global economic growth. This is about the rules which shape global trade and the fairness and openness which characterise them.
We have also discussed tax. Britain has a particular responsibility here because of the number of overseas territories and Crown dependencies which have become offshore financial centres. The Prime Minister has been in contact with all of our overseas territories and Crown dependencies. They have now all agreed on a number of measures. Bermuda is still discussing the question of a multilateral convention on mutual assistance on tax matters but we hope to resolve that issue with Bermuda before we have sorted out the complete agenda for the G8.
I was asked about the fourth money-laundering directive. This is an EU measure and proposals are currently being negotiated by member states and the European Parliament. They would require that companies obtain information on their beneficial ownership, hold this information and make the information available to competent authorities. The European agenda, the global agenda and the G8 agenda overlap and complement each other. In all of this one has to recognise that tax sovereignty and global markets do not go easily together. That is why we have to pursue these international negotiations on tax transparency in order to regain a degree of our tax sovereignty. The Government have been relatively successful over the past three years at regaining tax from multinational companies. I am told that HMRC has collected more than £23 billion in extra tax since 2010 through challenging large businesses’ tax arrangements and tackling transfer pricing issues, and we continue to hope that we will raise a good deal more through tax transparency.
As noble Lords know, transparency is about not only tax but beneficial ownership. The noble Earl, Lord Listowel, asked particularly about transparency over land tenure. The problem with land tenure in developing countries is that often records do not exist, so in terms of technical assistance, as part of bilateral or multilateral aid programmes, helping these countries to establish clear records of land tenure is a necessary part of what we do to establish who owns what, where foreign companies are buying in and how far we protect local farmers on their own. There is very careful work on greater transparency with less developed countries, starting with proper land records.
On 22 May the Prime Minister announced that Her Majesty’s Government intend to sign up to the Extractive Industries Transparency Initiative, which was set up to tackle corruption, to improve the way in which the revenues from oil, gas and minerals are managed and to ensure that people across the world share in the economic benefits of natural resources in their country. A lack of transparency there, as with land transactions, is very much part of the obstacles that we have to overcome in ensuring that free trade and open markets benefit everyone, including the poor and weak countries, which are often open to these sorts of extractive industries in particular.
The lunch on Tuesday will focus particularly on Africa, looking at the millennium development goals and, as we have already mentioned, talking about the larger issue of nutrition. I am disappointed that we are not paying more attention to population on this occasion. The noble Lord, Lord Hunt of Chesterton, is disappointed that we are not spending more time on climate change, although there will be preparations for a major conference in 2015 under different tutelage—the UN Committee on Climate Change—which will be a main focus.
With regard to our political discussions, I was asked particularly about Syria. At Prime Minister’s Questions yesterday, the Prime Minister said:
“We should use the G8 to try to bring pressure on all sides to bring about what we all want … which is a peace conference, a peace process, and the move towards a transitional Government in Syria”.—[Official Report, Commons, 12/6/13; col. 331.]
This has been a worthwhile debate. I was nervous that the agenda of the G8 was so wide that I would be unable to cope with many of the questions that would come in. I sat here trying to imagine the noble Lord, Lord Hunt, talking to his Soviet colleagues during the Cold War about eastern and western approaches to weather forecasting and whether there was a Marxist approach to it as well as a capitalist one.
We have looked back to the previous UK-sponsored G8 in 2005. Gleneagles was a great success and helped to push the G8 on to the development agenda to a much greater extent than before. It is still managing to push that forward. This Government, as the Nutrition for Growth compact shows, are still attempting to use the combined efforts of the developed democracies, non-governmental organisations and international organisations as such to promote a more open global market and a more equitable global society.
We look forward to a successful G8 summit next week. This is of course only one in a long series of heavy intergovernmental negotiations, but Her Majesty’s Government are using this opportunity to press forward what I hope all noble Lords will agree is a very worthwhile and constructive global agenda.
Lord Hunt of Chesterton
Will the Minister respond on the issue of water? This is the United Nations International Year of Water Co-operation and the water issue has not really had the emphasis it should have had, as was mentioned by the noble Lord, Lord McColl.
Lord Wallace of Saltaire
My Lords, the noble Lord, Lord Alderdice, has sponsored one or two conferences on water in the Middle East in the past year with the support of the Foreign Office. We are all well aware of the many complexities of water. Those of us following the argument between Ethiopia and Egypt over the dam on the Blue Nile will know that water wars are not necessarily too far away. There are a great many complications and the Government understand that not only clean water but also cross-border water supplies are very important matters for us to deal with. It is not neglected simply because it is not a major item on this year’s G8 agenda.
Lord Trimble
My Lords, it is now my pleasant duty to thank all noble Lords who have taken part in this debate. It has been a very interesting debate to listen to. It has been very interesting to see how various contributions complemented each other while some brought in completely new topics and new thinking. I have very much enjoyed listening to it as I am sure all noble Lords here have. I am tempted almost to comment on each contribution but I will eschew that temptation for two reasons. First, I can see that the noble Baroness, Lady Wheatcroft, is in her position ready to go on her debate and I do not wish to detain her. Secondly, my noble friend Lord Wallace of Saltaire has been so comprehensive in his reply to the debate that he has done that job for me. He has also given us a very good insight into what will happen in the next few days in Fermanagh. Finally, I want to add my thanks to the right reverend Prelate the Bishop of Bath and Wells for his contribution to this House. I am sure all of us here are glad that we have had the opportunity to hear his last contribution in the House.
Economy: Culture and the Arts
(11 years, 6 months ago)
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Baroness Wheatcroft
To move that this House takes note of the importance of culture and the arts to the economy.
Baroness Wheatcroft
My Lords, it gives me huge pleasure to be here to introduce this debate on the importance of the arts and culture. I am absolutely committed to that cause and I am delighted to see so many of you here at this stage on a Thursday afternoon to discuss this important subject. I am also delighted to see that my noble friend Lord Gardiner of Kimble will be responding and I hope he will not mind if I remind the House of his response to a Question for Short Debate earlier this year. He said:
“The role of art and culture in the wider economy cannot be overstated”.—[Official Report, 29/1/13; col. 1531.]
They are wise words. I completely agree.
At this stage, I should declare my interests in this subject. I am a deputy chairman of the British Museum and a member of the board of the Association of Leading Visitor Attractions, and for quite a while I was a trustee of the Albert Hall. I take this subject very seriously and in this country we have the most amazing and bountiful supply of arts and culture. At every level and for every taste, this country has something to offer.
Last summer, alongside an extraordinary sporting triumph, our country put on a glittering display of drama, music and exhibitions that would have done any nation proud. We had theatre productions in every language you could possibly think of and a few more besides and what is more, they attracted great audiences.
We do culture well. That is why I am really quite surprised that earlier this week the brilliant architect, the noble Lord, Lord Rogers, was quoted as saying that in the UK:
“We haven’t quite got culture as a concept”.
I beg to differ and I am absolutely convinced that this afternoon that you will all show him that we have indeed got culture. We appreciate his architecture, but we appreciate a lot more besides.
I look forward to some fascinating contributions from such a mix of people with backgrounds in various industry and arts organisations. I am sure that they will all come from different angles, because culture is a broad umbrella. The critic Raymond Williams suggested that it was a “structure of feeling”. I would not dare to go into definitions such as that, and it is probably better not to try. All I know is that you can listen to a Beethoven symphony, which you can hear played to perfection in this country, go to a Mozart opera, which will be done as well as anywhere else in the world, go to an extraordinary exhibition, whether of art at Tate Modern, antiquity at the British Museum, or in a modern gallery—each to their own. Your particular brand of culture may even be Coldplay or Blur, or jazz, but you will find it all in this country, and done to perfection. We are incredibly lucky to have that, and we have to nurture it.
We have a very successful film industry, one of the best in the world, which produces serious and art house films. We have broadcasters—I see my noble friend Lord Grade here, who knows far more than I about that sector—and we can export their productions and earn huge amounts of money for this country. My noble friend who is responsible for Downton Abbey cannot be with us this afternoon, but we all know what he has done for drama on TV.
Today, however, we are not here to extol the mere beauty and enjoyment of the arts, but to celebrate what the arts and culture do for our economy. Therefore, I will begin by wholeheartedly endorsing the view of Ed Vaizey, the Minister for the Creative Industries. In March, he said,
“our creative and cultural sector is such a vital element in delivering economic growth, by encouraging economic investment through tourism and business”.
More wise words from our Ministers, and at such an important time, too. Our arts and culture benefit the economy in so many ways. They create jobs, provide training and are innovative, and the innovations they make often transfer into industry and export for the service sector. Of course, the arts also provide an enormous stimulus for tourism. I will give a few statistics. The numbers in tourism are huge. Inbound tourism is the UK’s third-largest earner of foreign exchange, according to DCMS. Tourism contributes £115 billion to UK GDP. It employs 2.6 million people, of whom 27% are under 25. We cannot overestimate the importance of those young people having jobs. When half the youth in Spain are now out of work, how important it is that we keep our young people working.
Why do tourists come to Britain? Anyone who has been outdoors today knows that it is not because of the weather. They come because we can offer a unique experience. We have heritage which nobody can better, and, as I have said, we have arts on a phenomenal scale. According to the Arts Council, culture and the arts support a creative sector that by 2020 will have grown by 31%. The UK has the largest cultural economy in the world as a proportion of its GDP, and that brings in the tourists. The National Brand Index survey, which covers 20 countries, found that 57% of respondents said that history and culture would be a motivating factor in their decision about where they would go. Half of them said that they would be sure to go to a live music concert if they came to Britain, and 38% said they would go to an opera, a ballet or the theatre. Museums and galleries were a huge draw: 48% of international holiday visits within England include visits to the museum, and 25% go to an art gallery. They come to Britain because of the arts and culture we can offer them.
Museums and galleries are the most popular visitor attractions. There are 50 million visits a year to our national museums alone. According to the Association for Leading Visitor Attractions, more than half the UK’s adult population—many of whom are tourists, of course—visited a museum or a gallery during the past year. That is a very cheering statistic. Remarkably, the cultural Mecca that is Exhibition Road receives more visitors in a year than Venice. The wonderful museums that we have there—the Natural History Museum, the Science Museum, the V&A—bring in tourists in numbers that beat Venice.
At Oral Questions yesterday, we heard of the delights of the nation’s regional museums. There was a spirited defence of the museums that the Science Museum is suggesting might be in danger if it sees its grant cut. Our museums and galleries have learnt to be innovative. Look at what the V&A is exhibiting today—David Bowie’s costumes. It is a brilliant exhibition and is bringing in a completely different audience. Look at Tate Britain and its new hang, looking at paintings chronologically; making more sense to a new generation of visitors. We have learned to approach culture in new, innovative ways.
Noble Lords will have noticed the timing of this debate. It is of course important that we are having it 260 years after the start of the British Museum. It is even more important that we are having it just days before the announcement of the next spending round. I am no spendthrift. I do not want to depress you on a Thursday afternoon, when it is miserable outside and we are having such an uplifting talk, by mentioning the deficit—but it hangs there over all of us. It is hanging now over the arts and cultural sector.
I do not envy my noble friend and his colleagues in government in having to try to deal with that. I support their efforts wholeheartedly. There is, however, time for special pleading. Before those spending cuts are finalised, I want to make a plea for our greatest institutions—our greatest drawers of tourism. If there is little cash to be shared around, sometimes the more deserving cases have to be favoured. In the interests of tourism, we have to be brave and favour the centres of excellence.
Of course, many will take exception to this. They can all argue their case, but from the statistics that I have given it is unarguably the case that it is the major attractions in London that first of all draw in the tourists from overseas. They can then encourage those visitors to go elsewhere once they are here, but London is where they come first. Those institutions in London do more than their fair share for the regions and the economy of those regions.
As I mentioned, I am a trustee of the British Museum. The British Museum is an extraordinary asset for any country to have. I would argue that it is unique in the world. It has 6 million visitors a year, with another 13 million visitors through its website. Its role is not just to exhibit, although its primary role is of course the conservation of that extraordinary collection. It is there also to work on soft power. The museum is doing amazing work all over the world. In Basra, it is helping to create a national museum from the remains of one of Saddam’s many palaces. In India, it is working with local curators to teach them, to learn from them and to build bridges. In Abu Dhabi it is working with the locals who are building their own museums. Wherever you go in the world, the British Museum and our other arts institutions are building relationships that are hugely important in the role of the UK in the developing world and the world at large.
Arts and culture are for all. They are for all internationally and for all in our country. Last year, organised school parties took 240,700 children into the British Museum, and many more into other museums and art galleries throughout the country. Unorganised—probably in every sense of the word—parties took many more children into these museums. Family parties constitute a big part of the audience. It is not just a select, elite group who go to these institutions. When the museum staged its Hajj exhibition, 48% of the visitors were Muslims, largely from this country. As I say, our arts and cultural institutions are for all—and, of course, they are for all because they are free.
I am sure that, like me, your Lordships are committed to our great museums being open to members of the public, wherever they come from, free of charge. There will, however, be a struggle for some of these institutions to remain free if they see their grant-in-aid cut, cut and cut again. Already, in real terms, many of them have seen their grant reduced by 25% in the past few years as spending cuts have hit. Some of them would claim that they are close to the breadline.
To wind up, I can probably best cite a recent article in the Spectator which quoted one man’s view on the charging issue. He said:
“Suppose a Chilean tourist arrives at the British Museum to inspect some of his cultural treasures. He gets in for free and he’s got plenty of cash in his pocket so we can fleece him later at the café”.
The British Museum would never fleece anybody; our cultural institutions do not behave in that way. However, of course, they take the opportunity when they can to make money on their own account. In closing, I should tell you that the gentleman who made that observation was the Culture Minister himself, Ed Vaizey.
Lord Puttnam
My Lords, I am sure I speak for all noble Lords in thanking the noble Baroness for the way in which she has introduced this afternoon’s debate. Her enormous economic credibility as well as the perfect timing make being part of it very welcome.
One of the early and important achievements of the previous Labour Government—in fact, of the noble Lord, Lord Smith of Finsbury, who I am happy to see in his place—was to put the creative industries firmly on the map and to put in place effective policies which helped those industries to grow. That is one reason, for example, why the film industry is now able to contribute £4.6 billion to the GDP of this country—something like five times the comparable figure 20 years ago.
As I have argued previously in this House, the creative industries are sustainable and offer added value in a way that is simply not true of, for example, the financial services. The noble Lord, Lord Smith, was also able to put in place free admission for museums and galleries, and I was delighted to hear the noble Lord, Lord Gardiner, remind the House only yesterday that this remains his Government’s policy.
We should also give credit to the party opposite, notably the noble Lord, Lord Brooke of Sutton Mandeville, and Sir John Major, for ensuring that a portion of the proceeds of the National Lottery was made available to the arts. Later this year, we will be celebrating the 20th anniversary of the National Lottery and perhaps it is time that we took a fresh look at how the proceeds of the lottery are distributed so as to ensure that the arts, as one of the good causes, really is getting the greatest possible share.
Few would argue that the opening ceremony of last year’s London Olympics was anything other than a wonderful showcase for the energy and creativity of this country. That is why it grieves me to predict that history is likely to condemn us for what I believe to be our failure to build a significant legacy off the back of that extraordinary opportunity. Why does having the drive and determination to capitalise on the economic contribution offered by this nation’s creativity matter so much? It matters because other countries are investing considerable sums of money in their own cultural activity and they realise the impact it has on their reputations and their economic growth. Unless we are determined dramatically to raise our own game, we are likely to be condemning ourselves to the status of one of the global also rans.
Am I exaggerating? How about this for an example of seriousness of intent: about a dozen years ago, the South Korean Government, including their educational system, became concerned that while their industrial base was growing well, the creativity, within which so much intellectual property and value added reside, was not developing at anything like the same rate. They decided to invest around $1 billion over a number of years in developing and enhancing what was termed their creative capacity. This programme has been an unqualified success, to the point at which South Korea is now the powerhouse of the entire Asian entertainment products industry; everything from music, to movies, interactive games and television soap operas.
Far from becoming complacent, this year their Ministry of Culture, Tourism and Sport has been given a budget of $3.5 billion, of which $295 million is specifically earmarked for the promotion on the international stage of what they call Hallyu, or the Korean wave of entertainment products. That is almost $300 million simply for its international promotion. That is a very grown-up and serious competitor for the UK to think about taking on.
Here at home, as your Lordships heard from the noble Baroness, grant-in-aid is obviously in short supply. That is why lottery investment has become all the more important in nurturing and developing arts and culture, and driving the kind of innovation that we will need if we are to prove a match for the ambitions of South Korea, Singapore and other Asian nations.
However, we have another fantastic asset which we can draw upon to maximise our contribution to the arts. I refer, of course, to the BBC, which has been one of the cornerstones of support for every kind of art form—music, dance, drama—over many decades. The BBC’s current charter expires at the end of 2016 and, as with the lottery, I argue that this represents a perfect opportunity to review the way in which the corporation supports the nation’s cultural output, and to explore ways in which that contribution can be made even stronger and more effective, notably by helping to invest in new talent and new skills, both of which we are already desperately in need of. As I am sure the noble Lord, Lord Grade, and others will affirm, unless industry and government find ways of working together to invest in our skill and talent base, we will all too quickly become unfit for purpose in a digital world that is changing with quite ferocious speed.
I also think that we will need to find new ways to help support the arts. As many of your Lordships will be aware, there is enormous growth in the gambling industry, particularly online gambling, perhaps even, to some extent, displacing money spent on our National Lottery. I would like to think that the proceeds of a point of consumption tax on online gambling could, for example, be used to supplement the nation’s investment in arts, sport and culture. Many of the companies that operate in the online gaming space are based offshore, therefore making very little contribution to the overall, long-term prosperity of the country. By finding an effective way to use the proceeds of an enhanced tax on gambling to support arts and sport, we would be harnessing what may well prove to be a worrying rise in gambling activity, and allow it to become something which is of economic, social and cultural value to the nation as a whole.
Obviously, any such proposal would require total cross-party support. However, a gambling Bill has just received its First Reading in another place, and I think we would be making a massive mistake if we were to allow that Bill to gain Royal Assent without at least considering its implications and the possibilities that I have just suggested.
I cannot close without reminding the House that the value of the arts and culture can never simply be reduced to economics. Forty years ago, conversations, and even policies regarding the arts and culture, were focused almost entirely on their social and educational value. By drawing attention to what we now call the creative industries, we managed to make the case that they were also making a significant economic contribution to the nation. The case has been made even more strongly by the noble Baroness.
However, I am concerned that this Government are in danger of allowing the pendulum to swing too far in the direction of measurement by balance sheet. This was exemplified for me by a recent speech by the Secretary of State for Culture, Media and Sport in which arts and culture appeared to be viewed almost exclusively through an economic prism. Important as their monetary contribution is, the value of arts and culture can never be reduced to pounds, shillings and pence. They represent something infinitely more valuable than that. They are one of the cornerstones of any society that wishes to consider itself truly civilised—the one important means by which we are able to improve the quality of life for every single member of society—and in debating their economic value, it is very important that we never allow ourselves to forget that.
Lord Brooke of Sutton Mandeville
My Lords, the second debate this afternoon is a happy foil to the one that preceded it, and we owe that agreeable conjuncture to my noble friend Lady Wheatcroft, who was admirably equipped by experience and avocation to launch it successfully. The noble Lord, Lord Puttnam, has forgotten more about these subjects than I shall ever know. It is a privilege to follow him, and a privilege, too, for your Lordships’ House that he is participating in this debate. The only footnote I will add to his speech is that the Greek Government have just been economically obliged to take the Greek broadcasting society off air, which is an index of the scale of that country’s present difficulties.
Arts Council England—I declare an interest because its chief executive was once my admirable Principal Private Secretary—is one of the heroes of this narrative. It deserves great credit for its conduct these past three years: first, for the worthwhile and coherent challenge it set its clients in 2010 to justify its claims on necessarily reduced resources; secondly, for the innovative initiatives that it mounted to assist individuals who, and institutions which, have been confronted by new and testing dilemmas; and, thirdly, for the logic and good sense with which it negotiated the potential impasse in which it is asked to justify itself to public and paymasters alike, without losing its self-respect or the respect of others in the process.
I will make one particular point that I regard as important and that other noble Lords may not make. First, I will illustrate the paean I uttered about the Arts Council with some examples of the initiatives that I outlined. I am drawing on developments since the most recent arts debate in which I participated, in 2010. I am thinking, for example, of the creation of The Space in May 2012, and of the Creative Industry Finance scheme to aid struggling exponents and creative entrepreneurs with development loans of £5,000 to £25,000, repayable over a maximum of three years. I am thinking especially of the Creative employment programme and the £15 million invested in providing 6,500 apprenticeships and internships for 16 to 24 year-olds. I say “especially” because for a quarter of a century I was a trustee of the Wordsworth Trust in Grasmere. Its current chairman, the noble Lord, Lord Smith of Finsbury, will speak later in the debate. The trust used its physical estate and the benefits regime of the Thatcher years—my remark about benefits is a technical one, not a commendation—to allow a series of able graduates in the same kind of age group to prepare for careers in museums while acquiring practical skills in the ordinary, day-to-day functioning of the trust’s activities.
I am thinking of the Arts Council’s partnership with its colleagues in the Creative & Cultural Skills group. I am thinking of the Momentum Music Fund for 50 to 75 bands and artists, with £5,000 to £15,000 loans over two years, similarly managed by a partner music organisation. On a longer and perhaps more traditional timescale, I am thinking of the linkage of creative businesses to cultural organisations close by, so that hubs and clusters may be created. I am delighted by the continuing use of public money to explore the potential of new ideas as a form of creative R&D, and to sustain the seemingly unthinkable.
On the question of self-respect, I like the chief executive’s measured clarion call about the unique ability of arts and culture to fire our imaginations and inspire and entertain us through the contribution that culture makes to our quality of life. Of course, these forces go back much earlier, but it is worth reflecting that it is only just over a quarter of a millennium since Mirabeau coined the concept of—and thus the word—civilisation. What is deeply impressive, in the same breath, is the ability of those involved to afford us a utilitarian justification of the straightforward financial return earned on this programme that can be rendered to the economy without shame or embarrassment. The most recent CEBR report is rich in specific and illuminating detail, and is an anvil for further R&D.
The one question I want to ask the Minister is how the sector is getting on with the opportunity it spelt out for philanthropy back in 2010. There are outstanding instances, like the Royal Opera House, but there are other institutions already surprised by the less satisfactory marks they scored in the Arts Council examination three years ago, and which may not have yet properly remedied their rejection by fundraising themselves, whose success is its own reward in moral as well as financial terms. In another heritage field, the efforts of small parishes to raise the finance to restore their listed churches are a useful signpost towards this goal, which can astonish and invigorate the individual stakeholders who take part in it. Is there an area here, where the Arts Council can enlarge its positive and practical quiver, by helping to teach people how to raise money?
Finally, there is one particular point I wanted to single out. I have not myself lost sight of the phrase, “We’re all in this together”, although I appreciate that some other people have. There are still disciplines in which we can look the world fully in the eye, and the extension of their number lends support to the efforts of those in other similar disciplines. When I was in the private sector, I once had a client who always put his international offices on the continent in cities where there was a good opera house, not just for his own pleasure, but also for that of his employees. Put at its simplest, beyond the ordinary tourism statistics, those foreigners who might have the need to do business with us on other counts, are more likely to do so if our arts, like our fighting forces, are world class. In this regard, I was struck by the disproportionate participation in the recent global lists of world-class cultural institutions in the Times of ones that are very much British.
In the mean time, however, I will close with the dying words of that artist who excelled in portraiture and landscape, and sometimes in both, as in his picture of Mr and Mrs Andrews. Here are the dying words of Gainsborough:
“We are all going to heaven, and van Dyck is of the company”.
Baroness Bonham-Carter of Yarnbury
My Lords, I add my thanks to the noble Baroness, Lady Wheatcroft, for initiating this debate. I also declare an interest as a trustee of the Lowry.
Last week, I chaired an IPT breakfast meeting where the topic was the role of the arts in the 21st century. It was attended by people from across the sector and the political divides, but consensus soon broke out that there is an urgent need to marshal all the arguments that prove the sector’s worth and that too many people have too fragmented a view of what investment in this area provides. As someone from the Arts Council put it,
“we need to have a clear sense of the true value of the arts and cultural industries, and ensure that this value is properly woven into government policy”.
Against the backdrop of the present spending review this could not be more important.
As a country, we have always been blessed with a wealth of creative talents, which have shaped and illuminated our history and national identity. This creativity has also spawned industries that are a significant contributor to our economy. The creative industries come from ideas, innovation and imagination, inspired and fed by the rich tapestry of British culture and the arts. Our creative industries are crucial in contributing to today’s global economy, where capital and labour are mobile and goods and services can be produced almost anywhere. This was evident on a recent trip I made to Guadalajara as the Prime Minister’s trade envoy to Mexico. It has been designated a digital creative city, focusing on attracting companies that produce video games, movies, multimedia and mobile applications, which are all areas in which we excel.
At home, the economic contribution of the arts and cultural sector has grown since 2008, unlike the UK economy as a whole. Our film industry is an example, as the noble Lord, Lord Puttnam, mentioned. The UK is the world’s greatest market for music consumers. We produce more than a quarter of the world’s computer games, while nearly half the world’s top 100 computer games companies are based in the UK.
Support for culture and the arts also feeds through into the economy at regional level, so it is of great concern that in certain parts of the country disproportionate cuts are being inflicted by local government. It is also short-sighted; recent LGA and Arts Council research shows that putting money into culture is an investment rather than a simple subsidy, in that it revitalises local economies and regenerates neighbourhoods. The idea behind the Lowry in Salford was to build a major arts complex as a trigger for the regeneration of the area, and it has been a resounding success in encouraging social cohesion and as a catalyst for the regeneration of the local economy. The BBC’s decision to relocate some of its key departments there, and the subsequent development of MediaCity, are clear evidence of this.
If culture and the arts are to benefit our economy, they need to be funded. John Maynard Keynes, who, let us face it, understood a thing or two about economics, was the first chairman of the Arts Council. He said that,
“the support and encouragement of the civilising arts of life”,
were part of a Government’s duty. The Minister knows that the DCMS is small, receives very little and provides a significant return on what government invests, and I hope that he can confirm reports that the Secretary of State is defending the department’s budget “tooth and nail”.
That said, the business models of arts organisations are and should be a mix, not simply because of pressures on the public purse but because the mixed economy works. I pick up here on what the noble Lord, Lord Brooke, said about philanthropy. The Government have established a match-funding scheme with £80 million from public funds to encourage philanthropy, but I think that there has been a problem with success in this area, because the sector does not really have fundraising skills. I suggest a slightly different solution to his, which is that part of that £80 million should be used to teach small and medium-sized organisations how to raise funds.
On the plus side, thanks to new technologies, there are many new opportunities for raising funds, such as crowd funding, which involves encouraging large numbers of people to give small amounts of money over the internet to causes that they support. We did this as an arts crowd funder and, in its first year, it funded over 40 projects through over 1,600 donations. My favourite model has been developed by RADA. Apparently the skills required as an actor in playing a role, performing in front of strangers and something called status adjustment are also needed by businesspeople, who are flocking to sign on to a day of being taught these things at the cost of £625—so the Treasury should take note that luvvies have business acumen.
As well as finance, the creative economy needs people who are skilled in art and other creative subjects. That is another area in which the culture and arts sector is important to the economy. The creative industries suffer from a skills shortage and can play a crucial role in addressing the problem of youth unemployment. That is why I welcome the fact that a national plan for cultural education is finally to be launched this month. I welcome the many initiatives that are helping young people, such as First Story, a charity run by Katie Waldegrave and William Fiennes, who organise and finance creative after-school workshops for students in state schools. Then there is the Young Arts Entrepreneur programme at Curve Theatre in Leicester, which receives Arts Council funding.
When money is tight and the whole of government needs to make savings, we need to make the case for the arts more than ever. Culture and the arts are the bedrock of the creative sector, worth more than £36 billion a year and employing 1.5 million people, as well as making our country an exciting and dynamic place to live and work. The sector is forecast to grow 31% by 2020, but for this to happen it needs the right support.
In conclusion, like the noble Lord, Lord Puttnam, I want to say that the importance of culture and the arts is not just about their contribution to the economy. Sarah Crompton, a judge for the Art Fund Museum of the Year Award, wrote recently that her trip around the nation,
“has been a revelation … my head has spun with impressive visitor figures, education plans and collection strategies. Before I started on this adventure, I had thought—in vague, general terms—that museums and galleries were A Good Thing … What I had not really reckoned with was the kind of pride they engender”.
The Earl of Clancarty
My Lords, I thank the noble Baroness, Lady Wheatcroft, for the opportunity to participate in this debate. If the Government wish to concentrate at least part of their efforts on maximising the arts’ economic benefits, policy making needs to stem from an understanding of—I say this to Maria Miller—the special nature of the arts. This is not to say that the arts are better than any other area, it is to say that they have a particular character.
Cultural value is different, distinct, from the normal values of business, even if the arts themselves may be economically heterogeneous, often expressed as a spectrum, with the non-commercial at one end through to the highly commercial at the other. This heterogeneity is not a statement of an ideal, it is a statement of fact. The arts that we may think of as commercial are often not wholly commercial at all, most obviously in current West End hits like the RSC’s “Matilda”. Most theatre and most commercial film in Britain uses actors and directors who have worked in subsidised theatre around the country. As has been said many times, if subsidised theatre did not exist, we would have not only an impoverished theatre scene but a lesser pool of talent. Barbara Broccoli joked last year that “Skyfall” was the national theatre of Bond.
However, the subsidised arts are much more than a seedbed for the commercial sector. The argument from those who would wish to have all the arts funded through private money and philanthropy is that the arts can stand on their own two feet; that they can become resilient. But the crucial assumption made here is that it will be the same arts doing this. This is the part that is not true. What is apparent to arts centres since the cuts is that spaces or services are lost or become taken over by more commercial productions. It is the disappearance of the innovative at grass-roots level that will have a long-term and significant effect on our arts economy. It is not the same arts regrouping.
Reducing public investment means that we will lose that cultural value. To treat the arts mainly as a commodity or a branch of manufacturing—which I fear that this Government may intend to do—is not to get the best out of the arts in terms of their intrinsic or economic value.
The uncertainty about the future departmental representation of the arts does not help. Can the Minister throw some light on this? Rumours would not be flying around if we had a strong department with strong leadership, which I add is no fault of anyone’s but the Government. If some or all of the arts got swallowed up by BIS, it would be a disaster for the arts in Britain. It is because of that special character of the arts that they need their own strong voice in government.
In terms of the Government’s attitude towards innovation or R&D, as it is increasingly called, the trend is often towards projects which can be bolted on to existing established structures. Where they are appropriate, this works really well—among many, one can cite NT Live, with hundreds of venues across the world, as a successful project. But project money is no substitute for the day-to-day running of the majority of arts organisations. The furore that occurred with Creative Scotland last year, when 49 arts organisations had their funding entirely removed and replaced with lottery money for what were perceived as prescribed projects, and the concerted rebellion by artists which forced out Creative Scotland’s then chief executive should act as a strong warning that it is the right kind of funding—core funding—which arts organisations most desperately need.
The Government have asked the arts to justify themselves in economic terms. As Will Hutton pointed out in the Observer newspaper recently, the Treasury will be awash with reports produced over the decades in response to this repeated demand and they all say the same thing, which is that, because of the sizeable multiplier effect, the more that the Government subsidise the arts, the greater still will be the economic returns to the country.
The other important point to make here is that this works as a macro effect. The danger of treating every original artistic endeavour as a discrete business, which the Arts Council is already having to do much more than it used to, is that the arts will become micromanaged in a way that will stultify their operation and stultify innovation. There should be no more reports justifying the arts economically. The case is proved many times over. It is an unnecessary waste of money.
So the leading question has to be: why are the Government not increasing subsidies to the arts instead of continuing to cut? I will say that again: why are the Government not increasing subsidies to the arts? In my view, there is no good reason why they are not. The Government say that in these times every department needs to take its own share of the pain. That is a false morality which cloaks what is in effect a divide-and-rule strategy. The reality is that no part of society works economically in isolation from any other. The actor-director Sam West points out that the arts pay for hospital beds.
The second objection that the Minister might raise is that there is no money available to invest. That is nonsense, considering how minute in departmental terms the arts budget actually is. If the public properly understood that greater public investment in the arts would help to create significant economic growth which would improve their standard of living, they would vote for it like a shot.
Germany, for one, is doing that. For the eighth year in a row, it has increased its central funding of the arts—last November, by 8%—and it is starting from a base investment which is already much higher than ours. Germany’s Culture Minister, Bernd Neumann, says that public funding is not a grant but,
“an essential investment in the future of our society”;
in other words, an awareness of both the intrinsic value of the arts and their huge economic benefits, which, bearing in mind that Germany has a population about a third larger than ours, amounted in 2011 to €63 billion compared with our current £28 billion—about twice as much. The main lesson to learn from Germany here is that, if we are at all comparable to it in terms of potential for growth in the arts, Britain has not reached any kind of ceiling.
We have been asked in this debate to talk about economic potential, but that is not what is currently most at stake. For many artists, it is their survival, and the future on 26 June looks grim. Whatever is lost will be a loss to the cultural value which drives the arts, including its commercial wing. Nor should we forget that on top of that are the cuts to local government and the more than chilling prediction given by the LGA last year that by 2020, 90% of our local cultural services will be lost if cuts continue in the same vein. This at a time when many local councils are becoming more switched on to the importance of their arts and cultural industries, according to the recent report published by the LGA.
Many—Danny Boyle is certainly one—believe that the arts and the creative industries, backed up by an effective art and design education, are vital for the future of this country. We sorely need a Government who will rise to this challenge.
Lord Grade of Yarmouth
My Lords, first, I join in the congratulations to my noble friend Lady Wheatcroft on introducing this debate. I hope that the House will take my various interests across the film industry, museums and theatre and my previous interest in the National Lottery as read.
Some years ago during a previous recession—I forget which one it was, but you get to my age and they seem to come round so often—I was with a senior Treasury official. The papers were full of the cuts to the arts and I said to him, “When you look at this desperately bad publicity for the Government that you’re serving and the fact that such a small amount of money”—the money allocated to the arts—“can produce so huge an outcry, what’s the problem?”. He said, “You have to understand, Michael, that we love the outcry because it tells the markets that we’re serious about cuts. Of course the amount of money is pretty small but the markets take seriously that we’re serious about austerity”. Having said that, I look for reassurance from the Minister that that is no longer the case at HM Treasury.
I was very pleased to hear my noble friend Lady Wheatcroft use the word “celebration” in her introductory remarks. The arts in this country are in an extraordinarily healthy state. However, the situation is also somewhat topsy-turvy. The private and public sectors seem to have got confused in my mind. At the Grange, that crumbling ruin of a house in Hampshire, I saw a private sector production of Poulenc’s masterpiece of an opera, “The Carmelites”, which was a quite stunning performance. You would expect to see that in the subsided theatre. If you want the hottest tickets in London for the commercial theatre, you can see “One Man, Two Guvnors”, “War Horse” or “The Curious Incident of the Dog in the Night-Time”, all of which emanated from the National Theatre. They are the three hottest, biggest money-making shows on the London West End stage. So there is cause for celebration.
The arts sector is a peculiar one, because it is where culture clashes, overlaps and competes with commerce, as well as embracing it. Defining that line is always terribly difficult. As always, it is about getting the balance right. It was a little bit depressing, I agree, to hear the Minister talk about value for money and the balance sheet of the arts. The arts are more important than that. Through public intervention in the arts we get greater risk taking. I do not think “War Horse” or “The Curious Incident of the Dog in the Night-Time” would ever have been produced in the commercial theatre. The gestation time was enormous, and the investment and the risk so great, although the reward was fantastic.
To my eternal shame and regret I sat on Alan Milburn’s social mobility committee for many months talking about what we could do to encourage social mobility without having understood or having the wit to push the arts. The arts is the one area where so many of the greatest stars—whether fine artists, conductors, performers, writers, directors, you name it—came from such humble origins and found a way to success through the arts, not necessarily through education. The arts have been proven to be a fantastic driver of social mobility.
Many studies have shown that the arts have a civilising effect. Young, troubled kids who get into music or somehow find a teacher who can show them that they have talent in the arts are able to express themselves and gain a feeling of self-respect and self-esteem through the arts. You cannot measure that on a balance sheet, but we know that it is part of what the arts deliver.
I do not believe that the arts can be immune from the economic downturn and the economic difficulties that we face. As we hear in this House pretty well every day, there are so many worthwhile competing claims on the limited amount of money available. I hope that this debate will serve to underline this for the Government, but all we can do is ensure that when things do get better the Government understand the priority and the benefits of the arts. These apply not only to the economy but also to what the arts say about this country. Obviously the economic contribution is terribly important.
The noble Lord, Lord Puttnam, who is also a friend, made two points which I take very seriously. First, I think it is time for a review of lottery distribution. We have not had one for some time, as it was interrupted by the Olympic contribution. The lottery is one of the great success stories of this country, but at all times we must ensure that if there is a review the lottery is not a substitution for government funding. That is the fundamental that John Major set out when he established the lottery. That could be very important.
Secondly, I agree with the noble Lord that we must pay attention to the looming skills shortage, particularly in the film business. The film business is so important: there are nearly 44,000 jobs in the British film sector at the moment. Those jobs will become fewer and fewer if we cannot replenish skills. There are great opportunities and more social mobility, because there are jobs at every level in the film industry. It is open to everybody, with great opportunities. We must emphasise skills and continue to worry about them.
Overall, I feel great about the arts. I think we are going through a temporary dip. Obviously, regarding funding, the arts always want more money and always should have more money, but there is not more money at the moment. I hope the Minister will reassure us that this Government understand the importance of the arts and the many contributions they make to this country, not only in fiscal terms.
Baroness Kennedy of The Shaws
My Lords, I, too, express my warm congratulations to the noble Baroness, Lady Wheatcroft, on securing this debate. Like other speakers, I have had a variety of roles that reflect my own passion for the arts. I have chaired the British Council, I have chaired the London International Festival of Theatre, I have chaired Arts & Business, I was on the board of the Hampstead Theatre, and I am currently a trustee of the Man Booker Prize and the Hay Festival.
I had the great pleasure of getting to know the noble Baroness, Lady Wheatcroft, as co-trustee of the British Museum and I now count her as a friend. She will agree with me that to be a trustee of the British Museum is one of the greatest privileges that anyone can have. It is an extraordinary institution that is recognised internationally as one of the great wonders of the world. It is why travellers from around the globe make it a first port of call. It belongs not just to us but to the world, housing products of the world’s cultures. Yet Britain has the honour to be the steward of those collections.
To wander in its halls is to go on a great journey through the history of humanity. Its collections tell us what it means to be human and confirm that the peoples of the world are indeed one. A day in the museum leaves you with one overriding sense: what distinguishes the human from animal life is our creativity—our invention of things, our thinking of things, and then our making of things. There are at the museum displays of that incredible creativity from the earliest of times, back to the ice age, as a recent exhibition showed. That making of things—human creativity and invention—is a national asset that is beyond price. Here we are a nation that is small in size—a quarter the size of France—but which dominates the world in the creative industries. Caroline Norbury, CEO of Creative England, said that our inventors think the unthinkable—from Logie Baird to Tim Berners-Lee. We have some of the world’s most successful brands—from James Bond to Harry Potter. We have the largest commercial theatre operation in the world with ticket revenues of £535 million and 40 million visitors a year. It all depends on artists, makers and performers.
Why are we so good at this? It is because we have had an environment that has allowed for experimentation and, at times, for failure. We have in the past invested in the science and technological research that supports and respects artistic talent. There is a delicate ecosystem—an interplay between science and the arts and the cross hatching of the private and public subsidy—that has allowed talent to flourish in this country. When people are asked to think about the arts—theatre, film, paintings—they too often think of them as an add-on that are affordable only in times of affluence. The folly in such limited thinking does not need rehearsing in this House. What is forgotten is the knock-on effect on other sectors that work with the arts to create innovative products and services. All the design elements in our lives feed off art. Architecture looks to sculpture for form; graphic design looks at visual art and photography for new style; advertising looks to film. Steve Jobs was fond of saying that he did not employ geeks but hired poets, musicians and artists who were interested in technology. From that came Apple. However, even the economic value, which is estimated at £50 billion to the economy a year, is forgotten in our efforts to deal with the current debt. Yet a great deal of growth is to be found in unleashing the fund of creativity in this country.
I used to chair an organisation called Arts & Business, which created bridges between the arts and the world of finance. It was not just about sponsorship. It started its life in that way but it became about bringing the skills of the business world to creative endeavours. It was invariably to the advantage of both because there was reciprocity. People in the City loved being brought together with creatives and it changed how they functioned in their own milieux. Creative businesses are small and fragmented, undercapitalised and in need of constant reinvention. They face substantial problems accessing finance and have real problems getting banks or venture capitalists on board. It is a problem that we should recognise. They would often be the first to admit that they lack business skills and need good advice, but once they get the motor running, they can become huge financial success stories. However, we are in danger of doing what we have done in the past: losing out because we fail to capitalise fully on exploiting and distributing our inventions and intellectual property.
The arts have been described as the research and development laboratories of some of our most exportable products and brands. Yet while we are publicly proud of our investment in research for science and innovation, we are petrified at seeming too indulgent with creative people and the arts. We are sidelining art in the curriculum and squeezing the life out of our art and drama schools, while those without private incomes are finding it almost impossible to survive. We have just heard from the noble Lord, Lord Grade, about those from different backgrounds who have the opportunity to find release in the arts, but I am afraid that this does not happen as frequently as we would want.
Somehow art is seen as risky but banking is not. We worry about the risk of investment in the arts, yet have no problem about investing in high-risk derivatives or space travel. I should like to refer to video games. They make £2 billion for the UK in global sales. In some of our new universities there is a great deal of creativity in making those games. The sector is now bigger than the film or music industries. The United Kingdom also leads in visual effects—all that amazing, fancy stuff in action movies. It is the fastest-growing component of the UK film industry, but I am told we are starting to lose our cutting edge because of skills shortages in the UK. Why is that the case? The answer is that we are not supporting appropriate technical training in our schools and universities.
Like the noble Baroness, Lady Wheatcroft, I started by speaking of the British Museum. It was through spending time among the ancient sculptures of the frozen north that Henry Moore took inspiration for his contemporary work. The old feeds the new. There are real anxieties that any significant downturn in public spending for the museum and other arts institutions will have a very damaging impact, which will not just be on the wonderful exhibitions, but on all the incredible scholarship that takes place beyond public view. I echo the plea of the noble Baroness that there should be no short-sighted cuts.
I make a general plea, too, for the places which nurture the ideas and the creativity: our schools, art schools and universities. Subsidising the arts should be up there as a high priority along with health. I also make a plea to Government to encourage banks and investors to support the initiatives. When Roosevelt responded to the Great Depression, he was persuaded to sustain the arts even in the worst of times. New projects were created, public art works for railway stations and post offices were commissioned and creative endeavours were encouraged. The payoff was immeasurable then. It would be now.
Lord Maclennan of Rogart
My Lords, this has been a powerful debate, delivered by those who are highly expert and experienced in the field. I very much hope that what has been said will be taken to heart—as well as into the heads—of those in the Treasury who are no doubt considering future public expenditure problems. Although my vocation has been politics, my passion has always been for the arts. Even year when I played Hamlet and Cinderella at school and had to consider where my future lay, I did not have the guts to pursue what really made me tick. I thank the noble Baroness, Lady Wheatcroft, for her most insightful opening to this debate.
Before I develop my thoughts, I want to draw attention to one or two people who have, through their life’s work and what they are doing now, contributed to a transformation of the possibilities of the arts. Although the field is under pressure at the moment, I agree with those who have said that we are unrivalled in our contributions and in the creative industries. We have been and we have the basis to continue that, but a big change has come about in my lifetime.
I would like particularly to pay tribute to Denis Vaughan, the former conductor-assistant to Thomas Beecham. He was one of those who powerfully advocated that the lottery should be set up and he is still making the case that the money should go more to the arts. I was glad to hear several contributions, including those from the noble Lords, Lord Puttnam and Lord Grade, making that point, which certainly needs to be considered at this time. Another current contributor to the debate is the present lord mayor of the City of London, Alderman Roger Gifford, who decided to make arts and culture one of the central themes of his mayoralty. He has been talking not about the threat to the City from the European Union but about building on what we have. He has committed to establishing the City music foundation, a new charity to support musicians in the early stages of their careers through mentoring and opportunities to perform. It has been claimed on his behalf that the benefits derived from the City’s arts and culture clusters generate a net contribution of £225 million in gross value added and support 6,700 full-time equivalent jobs in the City.
Speaking for myself, in the past I represented a community which could scarcely be more different. It is the least populated part of the United Kingdom: the constituency of Caithness and Sutherland. I am currently presiding over a charity called North Highland connections, which enjoys the patronage of His Royal Highness the Prince of Wales. We set it up with a very clear view of bringing to that remote part of the country the opportunities for individuals to experience and enjoy the arts themselves, to promote tourism and to encourage young artists from all around the country to have the opportunity to display and develop their talents. All these things have come on rather well, although we decided to do it at a difficult time—namely, 2008. We have subsequently demonstrated that it is difficult even for the philanthropic trusts, which are under pressure at this time. Local and central government have been clamping down on the arts but the benefit of such a development is, to my mind, patently clear. I believe that this kind of effort should be given every encouragement to grow all around our country.
Another area of the arts with which I have been involved was as chairman of the European Cultural Foundation, when there was a national branch of that Dutch-based organisation. That also, it seems to me, provided for the modern world a huge benefit in bringing to the attention of all our citizenry, and right across Europe, the cultural identities of people who are sometimes developing very differently. However, it enhances the whole and I hope very much that the Government will recognise that that is an important part of being European.
Finally, I pay tribute to PRS for Music which, since 2000, has given more than £16 million to over 14,000 new music initiatives by awarding grants and leading partnership programmes that support music-sector directives. It has been invited by Arts Council England to deliver the new Momentum Music Fund which will inject more than £0.5 million into the music industry over the next two years by a seed-funding investment for emerging acts to help develop the careers of talented artists and bands. I am also impressed by the work of UK Music which is launching Skills Academy. It has drawn my attention to a matter of detail and, as an acknowledgement of the work that has been done by such organisations, I would like to draw attention to what a number of bodies have said is vital at this time and that is copyright. Government plans to modernise copyright could have a detrimental impact on creators, potentially jeopardising the income of British songwriters and composers. There needs to be an exception to copyright for private copying, but there should be a requirement for fair compensation. As it stands, in most EU member states, private copying is legal and any loss of income is reimbursed by systems of compensation. We must bear that in mind and I hope that it will be brought into consideration in the various other forums which are considering these matters.
There is a vital report which was commissioned by the Arts Council and published in May which we should all read. I had hoped, had we had longer, to be able to read some of its conclusions into our debate. This report by the Centre for Economics and Business Research has shown that the generalities that we have expressed in this debate about the contribution to industry and the economy are absolutely justified and I hope it will be studied and read with care by the Treasury.
Baroness Northover
My Lords, I remind noble Lords that we are in a time-limited debate and we obviously want to make sure that we have time enough for the Minister at the end and also for the noble Baroness, Lady Wheatcroft, to respond.
Lord Berkeley of Knighton
My Lords, I, too, am grateful to the noble Baroness, Lady Wheatcroft, for airing this important subject. I will keep my speech short. I was pleased to read in recent speeches by government Ministers a declared belief in the value of the arts and their importance to the economy. However, by their deeds shall they be judged for, like all good artists, we must be not simply self-congratulatory but also self-critical. Of course, we must applaud and highlight the returns in terms of tourism, reputation and jobs that the arts create but, please, let us not overlook the social dividend, as so eloquently stated by the noble Lord, Lord Puttnam. I will not repeat my recent pleas in my maiden speech about those rewards—human, educational and vocational—which are of course available in Hansard, but will stick to the economic remit of this debate.
Only today the Guardian carries warnings that many small-scale and regional arts companies face losing their grants altogether. This is going to be nothing short of catastrophic for the future of culture in this country. The cultural scene that has been built up since the end of the Second World War is now, as the noble Baroness mentioned, the envy of the world and that feeds, ultimately, into the success of the big flagships—the Royal Opera House, the National Theatre, Aldeburgh which is currently under way, the Sage and Tate Modern, for example. Understandably, they reap the lion’s share of money available to the arts. Probably among your Lordships I have had a pretty unique view of the dilemma that arises since I am a composer who was for a while on the Arts Council music panel where I would regularly wonder how we could justify such a large slice of the cake going to so few august centres of excellence. Then I was on the board of the Royal Opera House where I saw that, in order to be among the best in the world, we needed every penny of available funding. Now I see this dilemma from a wider perspective, and I do not mean simply these distinguished and comfortable Benches, although there are many noble Lords who, I have discovered with great pleasure, feel passionately about the arts, as we have heard today. I look forward to hearing my friend the noble Lord, Lord Smith of Finsbury, who fought so valiantly for free admission to museums, something that I profoundly cherish.
Your Lordships may have noted the point made so recently by my friend and colleague, the actor Sam West—indeed, one noble Lord already has—who said that in terms of the theatre it was dangerous simply to look at the return of large-scale productions in glamorous venues, for it was in small-scale regional theatres that many of our Oscar winners, who are vaunted as being at the forefront of artistic success, cut their teeth and learnt their trade. It is there that innovation and adventure can be tried. The value of small-scale investment may not be immediately obvious but in fact it is vital. “War Horse” was mentioned, but for every war horse there are 12 ponies that fail to make the final fence.
I shall extend this lesson into my own field, musical composition. As a result of devolution, a considerable commissioning cake was cut into tiny slices. This was then compounded, from the point of view of small-scale festivals, performing groups and composers, by the Arts Council’s decision to hand commissioning funds to favoured clients—the big guns, the centres of excellence—and let them decide who to commission. That is not without merit if one wants to keep at arm’s length from artistic policy, but there is a rub and even a contradiction. It in fact creates a policy, an unlevel playing field, so that smaller festivals like Cheltenham and instrumental groups like the Nash can no longer find the funds to carry on the vital work that they have been achieving at the coal face of music-making. There is a disconnect that means that commissioning is confined to a circle of well established names and, for the sake of full disclosure, I have sometimes been among their number. However, some really wonderful and acclaimed composers are actually on the breadline at the moment, names that are very famous in the musical world, and performing groups who would like to commission them find it impossible to access funds because they are not favoured Arts Council clients. This process really must be looked at and I urge the Minister to relay my concerns to the DCMS and the Arts Council—always assuming that it is still in existence in the coming months. Indeed, I suspect that information on its current health would be of interest to the House.
On that subject, I note that a large portion of lottery money was diverted from other areas to finance the excellent Olympic Games, in which I am sure we all delighted, but I gather from Ed Vaizey’s recent speech that this money is to be returned to the arts. If that is the case, surely these small-scale ventures could be protected.
In the arts we are, corporately speaking, a success story, but I beg the Government not to pull the plug on the boiler room where so many ideas, so much training and so much outreach and educational work is started, and where otherwise starved communities are nourished. It is this art for all that makes us a civilized society, and it is so very precious. We are approaching the centenary of the First World War where, writing in the trenches where he was about to be killed, Wilfred Owen asked:
“Was it for this the clay grew tall?”.
When I hear or see a beautiful work of human creativity, I think, “It was for this the clay grew tall”.
Baroness Seccombe
My Lords, I, too, congratulate my noble friend Lady Wheatcroft on initiating this debate and I hope that she and other noble Lords will forgive me for concentrating on a small segment of culture and arts—tourism and the contribution it makes to the economy.
I am more than fortunate to live in Stratford-upon-Avon. It is a town of historic interest and a much-valued part of our heritage. I often marvel at the range of languages one hears daily on the streets and the support for the annual celebration of William Shakespeare’s birthday is remarkable. People come from all over the world carrying flowers with banners displaying their home country. The lengthy and special procession proceeds through the town with the town band playing and the flags of all the countries flying. It is a glimpse of just one day in the year when we can celebrate all that our legendary poet has bequeathed us.
In this country we are indeed fortunate to have so many important sites that attract thousands to our shores but unless these properties are cared for and promoted to their full potential the country misses golden opportunities to increase both the cultural and financial benefit. I pay tribute to Governments over the years who having realised the opportunities have given generous support in sponsorship. The National Trust has also played a major role by restoring and caring for the fabric of properties of differing types, from the grand houses to the comparatively humble dwellings of the past.
In Stratford we are blessed among our treasures with fine theatres, and the redevelopment of the Royal Shakespeare Theatre has been an inspiration. The town thrives on the success of visitors. Some 6,300 people are employed locally in the tourist industry with an additional 1,700 indirect jobs. That generates £335 million annually for the local economy. No wonder that tourism is the fastest growing industry in the land.
It is essential that tourism, as with any other industry, is nurtured and enhanced to ensure that visitors do not only come once but return. This is even more important in financially challenging times when industries have to stand on their own feet and not look to Government for continuous financial support. I was therefore delighted to read that local businesses supported by the adjoining local authorities have launched a campaign called Shakespeare’s England. The aim is to maximise business opportunities in the area. It is particularly apt to launch this now as next year we will be celebrating the 450th anniversary of Shakespeare’s birth.
We are so fortunate to have many historic venues including Warwick Castle and other grand houses set in the wonder of the beautiful countryside with its wealth of leafy lanes. I do not wish to sound like a travel advertisement but it seems to me that genuine enthusiasm and attention to making the most of our heritage is fundamentally important for the wealth of the country.
Successful tourism can be achieved only by offering events for every taste—some may not appeal to me but I am glad they exist as I hope they will appeal to others and no doubt if they do not they will soon disappear from the calendar. I hope that we will concentrate on offering visitors worthwhile and memorable projects that can be a source of great pleasure to many people.
I have referred only to one county but I am confident that there is frantic activity countrywide. Unquestionably, people around the world are hungry to learn about the past. They want to know what made people tick and how they lived, and they want further information about our history and the effect that events of former times have on our lives today. We all share that interest and so I believe each of us has a duty to understand the worst and preserve the best of the past. We see so much beauty around us but we should never take it all for granted. I feel very privileged to be able to share these gifts with visitors as I know it makes such good sense and enriches the lives of everyone.
The Earl of Glasgow
My Lords, as my noble friend Lady Wheatcroft has implied, perhaps the Government do not always fully appreciate the important part that British culture and the arts play in our economy. According to Creative and Cultural Skills, the UK has the largest cultural economy in the world as a proportion of its GDP. Businesses engaged in Britain’s heritage and arts employ several million people and attract 14 million overseas visitors a year, and the creative industries account for 10.6% of UK exports.
In the competition for the world’s leading visitor destination, London’s museums and art galleries are challenged only by Paris for the greater number of visitors each can attract. The London theatre is now doing too well, as the noble Lord, Lord Grade, mentioned. Due largely to the huge number of foreign visitors to London it is almost impossible to get tickets for plays such as “The Audience”, “Othello” at the National, “The Curious Incident of the Dog in the Night-Time”, “Once”, or the admittedly American, “The Book of Mormon”. You have to book ahead if you want seats for the longer-running “Matilda”, “One Man, Two Guvnors”, or “War Horse”, while it seems that “Les Miserables”, “The Phantom of the Opera”, “The 39 Steps” and “The Woman in Black” will run forever. We do not talk about “The Mousetrap” any more. The downside to this success story is that there are not enough theatres available to accommodate some of the excellent productions from our provincial cities that are looking for a venue in the West End. However, with so many successes, I have never understood why ticket prices need to keep going up.
London is unique, and will continue to attract millions of foreign tourists for years to come. The Government need more seriously to consider the countryside, small towns and rural businesses. Britain’s heritage—specifically its historic buildings, stately homes, castles, gardens and designed landscapes—is the single most quoted reason for foreign visitors to come to Britain. According to VisitBritain, in 2011, 9 million foreigners visited one or more of Britain’s historic houses contributing £6,500 million to the economy.
I declare an interest, in that I own a grade A-listed castle and country park in Scotland which attracts 60,000 visitors a year. I am also a member of the Historic Houses Association, whose members still own and live in their historic piles. For many years, the Historic Houses Association has tried to impress on successive Governments the importance of historic houses and castles to the British economy, how many foreign tourists we attract, and how much our presence benefits local hotels, shops and pubs. According to its figures, total expenditure generated by inbound tourist visits to privately owned historic houses is £1.6 billion per annum. Britain has more privately owned houses open to the public than the National Trust, English Heritage and their equivalents in Scotland, Wales and Northern Ireland put together. Our most famous houses—Chatsworth, Longleat, Blenheim, Arundel, Castle Howard and Woburn Abbey, to name but a few—are still privately owned, in the hands of their original families, who struggle to maintain them with little or no financial help from Government bodies.
Contrary to popular belief, the majority of those living in grand historic houses—I speak from personal experience—are not particularly rich. The main reason for this is because they live in grand historic houses. They are very expensive to maintain, and to live in them is both a privilege and a burden. It is a mystery to some people why we struggle to hold on to buildings we have probably inherited and in most cases have learnt to love while continuing to lose money every year. Perhaps it is because we feel we owe it to our ancestors—I do not know.
I think I am right to say that no stately home open to the public actually makes a trading profit. The ones that survive do so because the owner has some other source of income or can resort to selling a Titian or Van Dyck every other year to fill the gap. The income derived from opening to the public only helps defray the costs of keeping the house wind and watertight. On top of that, we must pay VAT on our structural improvements or repairs, while our rich neighbours can build themselves a brand new comfortable warm house next door completely tax-free.
Now we hear that the Government intend to cap sideways loss relief, which was one of the few forms of tax relief which the beleaguered owners of historic houses could avail themselves of. In this time of austerity, many owners of historic houses are holding on to their houses by only a thread. Some are already having to face reality and are forced to close by their banks. For instance, very recently Torosay Castle in Mull has been sold to a foreign buyer. The castle is no longer open to the public and this has put many of the small local businesses in jeopardy. Every time that something like this happens, Britain is a poorer place. The contents that belonged to that house are sold and spread across the world and the value of our country as a tourist destination is diminished. I ask the Government to take the concerns of historic house owners seriously and recognise the important contribution that they collectively make to the nation’s economy.
Lord Smith of Finsbury
My Lords, I join in the warm congratulations to the noble Baroness, Lady Wheatcroft, on securing and introducing this debate so well and on stimulating so many excellent speeches. I remind noble Lords the range of arts organisations with which I am involved, as set out in the register of interests.
Robert Kennedy once wrote:
“The Gross National Product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile”.
He was making a powerful point; the arts are part of the life-enhancing, wonder-making, intelligence-affirming, glorious life of the mind and soul for all of us. In many ways it should be enough simply to say that to justify the importance and significance of the arts. It is important constantly to reiterate this simple truth. The arts bring us joy and sorrow; they tell our stories; they help our understanding; they trouble us; they question us; they make our spirits soar. That, simply, is why they are important. But of course that is not the whole story—or indeed the only story.
When I became Secretary of State for Culture, I sensed that the arts were important together with all the allied creative activities that they generated. They were important because they mattered economically as well as aesthetically. That is why I established the creative industries task force served on brilliantly by the noble Lord, Lord Puttnam. It is why we published the mapping documents in 1999 and 2001 that set out the shape and value and significance of the creative industries. These are things that are now being copied all over the world in terms of the important stimulus for, and sustaining of, the creative sector of economies. It is hugely important for our economy, especially in these times of economic difficulty. This is a sector of the economy that is still growing, still significant, and will become even more significant as the years go on.
This leads me to four specific thoughts. First, the links between the traditional arts sector and the more creative commercial economic sector are fundamental. One of the reasons we are really good at the creative industries around the world is because we have a strong arts base, strong arts organisations and brilliant artistic activity in this country. These lead to the economic success of the creative sector; indeed, without the one you cannot have the other. It is people learning their stagecraft, and learning about stage design and lighting in regional theatres, that leads to success in film and television around the world. It is people learning their music craft in orchestras, in singing and playing, that leads to music that takes the world by storm, meaning that four out of the top five selling discs in the United States last year were from British artists. Strong, traditional arts activity is vital for the economic benefit that comes from the whole creative sector.
Secondly, DCMS matters. There are worrying rumours bubbling around about the possibility that the Government might be considering disbanding the department. This absolutely must not happen. We need a strong voice for the arts and culture in this country. It cannot come from a small offshoot of a much larger department. Indeed, I would argue for putting the whole of the creative sector—the arts, the creative economy, the whole of communications—under the DCMS umbrella and making it a real champion for this vital part of our national life and economy.
Thirdly, copyright matters. I was pleased to hear the noble Lord, Lord Maclennan, take up this point. The economic value of creative activity comes from the value of the intellectual property that is created as part of it. We need to ensure that the creator can be guaranteed a return for their creativity. There have been some worrying signs that the Government seek to water down the importance and security of copyright in recent years—most notoriously, the deeply flawed Hargreaves report. This must not happen. The Government must reaffirm their commitment to strong copyright protection and, along the way, perhaps they might get on with implementing the Digital Economy Act.
Fourthly, the arts, cultural activity and the creative economy are things which, as many noble Lords have mentioned, we are outstandingly good at as a country. We should be very proud of what we have achieved and are achieving in this sector. The first 10 years of this century have been something of a golden decade for cultural and artistic activity in this country. I like to think that I may have played a small part in helping to stimulate that. Please do not put all of that at risk. We currently have warnings from the Arts Council about the possible impact of the spending review and the danger to arts organisations up and down the country. This would be disastrous. Some are already operating on the margins of viability. There is no easy cut that can be made in this sector. For the sake of our economy, our international reputation, our tourism potential and above all for the wonderful experiences that the arts bring for all of us, please do not cut deeply and savagely and destroy this precious thing that we have.
The Government are rightly talking about infrastructure investment being protected and even promoted when the spending review arrives. Investment in the arts is investment in the infrastructure of the mind and the heart. It is crucial seed corn for the future of our economy. That is what I urge the Government to do, and what I urge the Minister to go and talk with his Treasury colleagues about.
Viscount Eccles
My Lords, it is a pleasure to follow the noble Lord, Lord Smith of Finsbury. Way back in 1998, when County Durham was in trouble with the Bowes Museum, the then Secretary of State commissioned a report. It was a very good report, and after he received it he said that he would think about the Bowes Museum every day in his bath. I hope that he still has a bath every day.
If noble Lords will forgive me, I will take the contribution to the economy for granted. I am much more concerned about the effect on society, the educational potential and social mobility, which I find much more difficult and more interesting subjects. Briefly, I will talk about the relationship between the state—central and local government—and arts and cultural institutions. I hope that noble Lords will find that as I go along, I will at least show that I have been in the front line of that quite often.
It does not seem to me that the arts can flourish without a high degree of independence. If they are not independent, then they have problems. I do not see how they achieve inclusion without that degree of independence. That, of course, takes one straightaway to money because it is a question of resources, and that has engaged your Lordships quite a lot during this debate. However, if one agrees that a degree of independence is a necessary condition for the arts to flourish, then one has to look and see about the state.
The state is basically uncomfortable with the arts, and so are local authorities. This makes the job of the public servants in the Arts Council, as my noble friend Lord Brooke said, and in other of the institutions such as the Heritage Lottery Fund, quite tricky. As noble Lords will have seen, there are spats between the Arts Council and government. This is not a political speech; it does not matter who the government were or are. There are spats between the Lottery Fund and government, and changes in position. I think this is because, while the state is comfortable with and understands expenditure, it does not understand income. It gets its own income by a form of legalised confiscation.
Furthermore, the state and local authorities are not happy with risks. They are not comfortable with experimentation and they worry about the electorate’s responses to things which neither they nor their civil servants really know about or understand. We have to remember that 35% of the electorate do not vote, and a lot of other members of the electorate are not too switched on by the arts. So why is the independence valuable?
I will refer briefly to Kew Gardens. I was fortunate enough after the Heritage Act 1983 to be the first chairman of Kew when it came under trustees. There was no “Friends of Kew” at that time; the Ministry would not have thought of it. We now have more than 70,000; it is a lot later, but that has happened. We have had enormously successful exhibitions of, for example, Chihuly’s glass and Henry Moore’s sculptures.
Many other things have happened at Kew; I think it relates much more to what the public like to go and see than it used to. Many of these things would not have happened if it had remained under Defra. Take, for example, the £110 million for the millennium seed bank raised by Kew. Does anybody really think that that would have happened if Kew had still been run directly by the department? There is a serious issue about independence and, with it, a serious issue about why an independent body deserves so much public money. That is a question that we all have to answer.
I will finish, briefly, with the Bowes Museum. In 1998, County Durham had a problem with the Bowes and proposed to shut it for 18 weeks over the winter. The argument was, “We haven’t got a lot of money, we’re subject to constraints”—goodness me, they are subject to more constraints now even than they were then—“we have villages down the coast where there used to be pits, and those villages have community centres and libraries but not much income, so what are we to do? Are we to give the money to the Bowes and Barnard Castle, next to Raby Castle, or are we to give it in grant form to the pit villages?”. One can understand their dilemma; it was perfectly genuine. They were not disregarding the contribution of the Bowes or Barnard Castle to County Durham; they had a problem. Therefore, we negotiated to take the Bowes back to being an independent trust. Since then, we have raised money to mend the roof and we have reorganised the collections. We now have contemporary art exhibitions, and we have had selling exhibitions of crafts. The café is also a great deal better than it used to be. All these things have been done and can continue to be done.
Of course, the basis for them all is an ability to raise money. That is how I will finish. When you go to raise money, people are very good at telling you, “I would have given you money yesterday, and possibly I will give you money tomorrow, but unfortunately I haven’t got any money today”. You have to look at them, give them a villainous smile and say, “I will not leave until I have the cheque”. We need to get a great deal better at raising our own money in order to support our independence, carry out the work of inclusion and solve many of our financial problems ourselves.
Baroness Sharp of Guildford
My Lords, I join others in thanking the noble Baroness, Lady Wheatcroft, for initiating this very important debate. I will speak about one relatively narrow aspect of arts and culture; namely, the conservation and preservation of our cultural heritage. I do so because some time ago I chaired a sub-committee of the Science and Technology Committee, which looked at the role of science in the preservation and conservation of our cultural heritage. Since then I have retained a considerable interest in the subject and continue to play a part. The noble Baroness, Lady Kennedy of The Shaws, talked about the delicate ecosystem between science and the arts, and, indeed, there is.
Like other noble Lords, I will not go into detail about the role of cultural heritage in the economy, because others have mentioned it. The noble Baroness, Lady Wheatcroft, in particular identified the importance of this sector for attracting tourism and £115 billion annually; tourism is the fifth largest industry in the country. Somewhere in the region of 70% of people who come to this country do so because they want to visit our cultural heritage: our historic towns and villages, castles, stately homes, museums, art galleries, theatres, and music and other festivals.
I will concentrate on the issue of preservation and conservation. Why do we want to do it? One answer is that we would not reap the economic benefit from our cultural heritage if it were not there. Further to that, it is of course an essential part of our culture. What do we mean by cultural heritage? Essentially, it is those parts of what we value in our arts and artefacts, and in our ideas, that we want to pass on to other generations. Conservation is vital—and not just of material things such as paper and textiles. I remember the director of the Natural History Museum, Michael Dixon, telling me, “We have a great problem because insects eat insects, so we have to keep the insects away from our collection of insects”.
Even stone degrades over time, as we know so well from what is happening here to our own Palace of Westminster. That is a great problem. Increasingly, many of the things that we create are transient. We are corresponding, not by letter—which can be kept these days—but by e-mail. We record notable events on YouTube or on Facebook. We gather information from websites. The preservation of our digital presence is an increasing part of conservation, and a great problem posed to the British Library, which, for example, has to keep a record of all the websites that are created.
I have an interesting example of the transience of all material things. The noble Baroness, Lady Wheatcroft, mentioned the David Bowie exhibition at the Victoria and Albert Museum. Some time ago, the textile conservation centre at Winchester was charged with repairing a pair of Freddie Mercury’s pants, the bright red ones he wore at a gig in 1979, which sadly were made out of faux leather and had begun to wear away. Later, it was also charged with conserving his famous yellow jacket and white trousers. On one level it was doing this because it was preserving his memory for potentially millions of Queen fans, but on another level, it was undertaking important work into the longevity and vulnerability of degradation in modern materials. As one of the conservators put it,
“everyone has this idea that modern fabrics are indestructible ... But in fact there are some that are very unstable—and polyurethane happens to be one of them”.
Conservation and preservation help to preserve more than just memories and artefacts. They also provide us with a great insight into attitudes and behaviour. We learn so much about Tudor England from Shakespeare plays or, for that matter, about Egypt 3,000 years ago from such artefacts as the Book of the Dead, which was displayed so admirably at the British Museum a couple of years ago. These are not only the things we enjoy looking at and value; they are the stuff of our history and help to explain our present. We did not inherit the past but hold it in trust for our children and our children's children. It is therefore important that we value these things not just because they contribute to the economy, but because our children, and their children and their children’s children should also be able to enjoy them.
I end therefore with a plea that, while recognising the value of these assets, we do not neglect the need to put resources—that means money—aside for their maintenance and conservation. It is too easy in these days of austerity to forget that, as I said earlier, even stone degrades. Unless we are prepared to put money and effort into conservation and into developing new methods of conservation, we shall not be in a position to hand them on to our children. Yesterday, my noble friend Lord Lee raised the question of the possible closure of the Science Museum Group museums in the north of England. The Minister himself noted that last year 19.1 million people visited these regional museums and that they are often at the heart of their region’s creative industries, preserving artefacts and skills which characterise their local history. It would be a tragedy if these museums have to shut. But if we want the Science Museum to continue to maintain and preserve its collections, it has to be given enough money to keep them all in good repair. I hope that the cultural and economic importance of such museums will be considered carefully in the forthcoming spending review.
Viscount Colville of Culross
I, too, would like to congratulate the noble Baroness, Lady Wheatcroft, on securing this moment for us to celebrate culture and the arts in this country. I declare an interest as a director of the BBC in the history and science departments.
I want to concentrate on a very specific area of culture, film and television, which have already been mentioned by the noble Lords, Lord Puttnam and Lord Grade. As they both said, they are world-beating sectors of the economy, and they run a rare trade surplus. “Harry Potter and the Deathly Hallows—Part 2”, “The Pirates of the Caribbean: On Stranger Tides” and “The King’s Speech” have been the most successful British films worldwide. I am sure that many noble Lords have enjoyed watching them as much as I have.
The industry has been very dynamic in attracting foreign and domestic investment. Last year, Warner Bros opened the £100 million Leavesden studios with great studio space and workshop facilities, while Pinewood Studios has submitted a £200 million plan to double its filming facilities, which it says could create up to 3,000 new jobs in the industry. We are also seeing a flurry or cluster of television and film industries in the English regions, and also in Scotland, Wales and Northern Ireland, in an industry that has been traditionally based in London and the south-east. This must be seen by everybody as a great British success story.
However, I am concerned that the British Film Institute, the body which gives funds to the regional film development bodies and is responsible for encouraging exports of the film industry, is being severely constrained by a series of savage cuts made over the past few years. Most of its funding comes from a grant in aid direct from government, although the lottery also contributes valuable funds. In 2010, it was announced that the institute would have a 15% cut over four years; now it has been told that it has another cut of 2% and another one of 1% next year. Nick Mason Pearson, head of public affairs at the BFI, said that,
“any further cuts will have a seriously damaging effect on our ability to support our partners that help us deliver across the UK. That threatens the position of film as a whole and thus the economy”.
Creative England, which is responsible for investment in the development of the creative sectors in the regions, is facing a cut of over 40% of film investment outside London. As most private investment goes to London, we are once again seeing a move away from the regions back to London, which seems ironic at a time when so much political attention is going towards trying to create regional economic development in this country. I echo the words of the noble Lord, Lord Puttnam, that I would like the Minister to see whether he can push for a greater allocation of lottery funds to support film across the UK.
The Government may feel that the cuts in the BFI are fine, because they have done a very good job in extending the film tax relief benefit across the industry to cover film production money spent in this country. That has been rolled out this April to cover the high end of television animation and video game production. Despite this extraordinary support, parts of the industry are suffering. The noble Baroness, Lady Kennedy, mentioned the visual effects industry, which is based in Soho, in London, and after Hollywood is seen as world beating. It houses four of the largest visual effects companies, and is trusted globally for the ability to deliver complex sequences with cutting edge technology for new films. However, a number of these houses are relocating to Canada, which has extremely generous post-production incentives in place specifically aimed at attracting their business. One reason for this seems to be that there is an arbitrary 80% limit on the film tax relief, which particularly affects those visual effects houses, because they have become very much at the end of the spend on film production. It has been imposed by the EU Commission, but it is open for discussion in the new EU cinema communications consultation document. I know that the Government have tried to increase the limit but have been blocked by the EU competition commissioner; I ask them to redouble their efforts to ensure that all the film spend in this country is protected. It seems not to be in the interests of either Britain or the EU that our visual effects houses are relocating to North America, with the consequent loss to our economy and our global reputation.
The success of the film industry has been reflected in our other great media success story, television, with an increase in export in 2011 of 9%. The greatest market is North America, but exports to the rest of the world went up by 34%, and all the surveys show that British creativity is the most important factor driving the UK’s export success. It is a great story and we must go flat out to build on it.
I believe that the Government could still do more to promote television exports. I fear that at the highest level trade missions, the creative industries are not represented nearly strongly enough. On the Prime Minister’s recent trip to India, of the leaders of 40 British companies who accompanied him only one, Premier League, was from the creative industries. Will the Minister ensure that the Government promote one of the greatest economic success stories at the highest level to ensure that the export potential of our companies can be maximised in the future?
I am very proud to have spent my career in the creative industries. They are great centres of international, cultural and economic excellence. We must do everything we can to ensure that we continue to be the world beaters, entertaining and enthralling billions across the globe.
Baroness McIntosh of Hudnall
My Lords, I am grateful for the opportunity to speak in the gap. I will take a few seconds to congratulate the noble Baroness, Lady Wheatcroft, on collecting around her such an eminent bunch of speakers who have created a remarkable debate this afternoon. I agree with virtually everything that has been said. However, I would particularly like to associate myself with the speeches of the noble Earl, Lord Clancarty, and the noble Lord, Lord Smith of Finsbury, both of whom have said most of what I wanted to say—much more eloquently than I ever could, and certainly not in the time I have.
I have spent my whole professional life in and around arts organisations. I have served in senior executive capacities in many and am currently serving in non-executive capacities for several, including the Roundhouse in north London, the National Opera Studio and the Royal Shakespeare Company. Being able to engage with those companies as they grow and develop, even in these very difficult times, is a source of enormous pride for me. Pride is something which has been mentioned several times and we should remember that the arts and culture are legitimately a source of pride, both for us as individuals where we are lucky enough to be associated with them, and for the nation as a whole. We must not let that pride go.
I looked very closely at the Arts Council’s work when it last restructured its portfolio following the comprehensive spending review three years ago. It did an extraordinarily good job. It has not always done an extraordinarily good job, but it did on that occasion and I was very glad that the noble Lord, Lord Brooke of Sutton Mandeville, gave it due credit. But I and the Arts Council warned that if it was forced to deal with another round of cuts similar to those which it was then absorbing, the consequences would be very serious. And lo, today we see in the article by Charlotte Higgins in the Guardian evidence that the Arts Council itself is briefing of the serious damage that it anticipates will be inevitable as a result of the comprehensive spending review, which we are due to hear about. Even allowing for the fondness of journalists for bad news stories, this really is a very grim scenario that we are facing.
I want to say what this feels like to people in the arts organisations that are likely to be affected. It feels like Groundhog Day only much worse. The noble Lord, Lord Grade, mentioned that he has been around long enough to have seen previous depressions, and so have I. I was in arts organisations in the 1980s when they struggled with very hard times. The one thing that is really different now is that the arts and culture, since John Major created the Department of National Heritage, which turned into the DCMS, have had a seat at the Cabinet table. It would be catastrophic if it were now to lose that influence. Will the Minister please stress to his colleagues in the DCMS and the Treasury how very important it is that that seat at the Cabinet table is preserved and that, whatever difficulties the sector faces in the future, it has an advocate at the most senior level in government?
Baroness Jones of Whitchurch
My Lords, I, too, am very grateful to the noble Baroness, Lady Wheatcroft, for securing this debate and to everybody who has contributed. There is enormous art expertise in this House, yet it seems that it is all too rare that we get an opportunity such as this for an in-depth discussion. We have proved our worth with that expertise today.
At the outset, I endorse the central proposition that we are debating. The fact is that the arts and culture contribute enormously to the economy, and that is backed up by statistics from the department and by numerous external assessments that have been made over the years.
A number of noble Lords have cited statistics this afternoon and I do not want to bore the House but I will add a couple of my own. The department itself calculated that the creative industries account for 6.2% of the goods and services in the economy and £16.6 billion in exports. A more recent study has estimated that the sector accounts for 1.5 million jobs and contributes £70,000 a minute to the UK economy. A number of noble Lords have made reference to the Arts Council report. The most recent report on the economic impact makes a very powerful case, showing how investment reaps return, with every per cent of government arts spending yielding four times as much towards GDP.
In addition, as we have heard, the arts are a major reason why overseas visitors come to Britain, with our heritage sites being a major draw and nearly half of them planning to attend a music, theatre or opera event. The noble Lord, Lord Brooke, also made an important point, reminding us that it is also a reason why businesses globally choose to locate here, as they appreciate the artistic culture that we have.
In a recent debate here on the role of arts projects in regional regeneration, we heard about their enormous economic impact on cities—for example, Liverpool, the European Capital of Culture, which generated £800 million for the regional economy; the Birmingham Creative City initiative, which aims to create 100,000 new jobs by 2020; and the Sage Gateshead, contributing £146 million to the north-east economy. The noble Baroness, Lady Bonham-Carter, reminded us today of the roles of The Lowry and the BBC MediaCity in helping to regenerate Salford.
For everyone involved in the arts, those economic benefits have been recognised and celebrated over many years. Indeed, when my noble friend Lord Smith coined the phrase “the creative economy” in the early years of the previous Government, it was precisely to emphasise that, far from being a drain on the nation’s resources, investment in the arts created growth, jobs and economic returns, as well as providing a broader social dividend.
So what are we to make of the recent speeches of Ed Vaizey and Maria Miller acknowledging the value of the arts to the economy? First, it might be said that they have come to the table rather late in the day, when a considerable amount of damage to the arts has already been done. This was, as I understand it, Maria Miller’s first speech on the arts in seven months as Culture Secretary. Set against the backdrop of the cuts to arts bodies made by her predecessor, there hardly seems to be a sense that the interests of arts and culture are being driven from the front.
A number of noble Lords rightly raised concerns about the impact of further cuts. That point was made very powerfully by my noble friend Lady McIntosh. It will be interesting to hear how the negotiations with the Treasury for a further 10% or 15% cut are progressing. Perhaps the Minister could update us on this.
Secondly, it would be interesting to know how successful Maria Miller has been in persuading her colleague, Eric Pickles, the Local Government Minister, that the arts are the bedrock of our future local cultural success. It is at a local level that young people are first exposed to the opportunities that involvement in the arts can bring. It provides training, experience and inspiration, and, yes, provides a platform for the next generation of Oscar winners. A number of noble Lords raised concerns about cultural devastation already occurring locally. We heard from the noble Earl, Lord Clancarty, that the Local Government Association has calculated that by 2020, up to 90% of local culture budgets will have disappeared. That has to be a cause of concern for us.
Thirdly, if the UK is to have a thriving cultural economy, surely it has to start in schools. However, by any measure, Michael Gove’s tenure in education has been a disaster for the teaching of creative arts in schools. Thankfully, we have now seen the demise of the ill conceived EBacc proposals, which had no place at all for arts subjects, but the new proposals for the curriculum are similarly weak. Instead of making space for creativity in subjects such as art, design, music and drama, there is an emphasis on learning facts by rote, and a transmission of knowledge from adults who possess knowledge to children who do not. There is hardly any space for creative knowledge. Under this model, curiosity, interest and experimentation are squeezed out, despite evidence that those are exactly the skills that the next generation need to be successful. What representations have been made to the Department for Education and Skills about the ongoing need for a broad arts education to provide the seed corn for our next generation of artists?
I said at the outset that I agreed with the central premise of the debate. Of course, the arts have a significant role to play in the future of our economy. However, you cannot start from that position. The economic benefit should only ever be one driver of a successful arts policy. If the funding of the arts is to become predicated on a guarantee of commercial success, you inevitably end up with an inferior product. This would be epitomised by a West End full of musical revivals, for example. As several noble Lords have pointed out, who would have invested in a puppet show of First World War horses if the box office had to be guaranteed? I agree with my noble friend Lord Puttnam and others who are alarmed at Maria Miller’s singular focus on economic outcomes. New works, new blood, new thinking, irreverence and risk-taking must be allowed to flourish if we are to maintain our place as a global centre for arts excellence. With risk-taking there has to be the chance of failure or, as the noble Lord, Lord Berkeley, put it, of there being ponies that do not quite make the final fence. That is all part of the experimentation that must be at the heart of the creative arts.
There is something more fundamental and unquantifiable about the contribution of the arts in the UK. As a number of noble Lords have struggled to express, the arts are at the heart of our well-being and our quality of life. They make us laugh, or cry. They unite us in a strong sense of shared emotion at a concert, play or gallery. Books or poetry can provide individual solace, inspiration or relaxation. I could go on, but the point is that the creative arts are a central part of our lives and identity and, yes, our civilisation. As my noble friend Lord Smith wisely put it, they are about everything that makes life worth while. We should not have to put a commercial price on that.
Finally, we need to recognise that creativity is not only the preserve of arts and culture. It also lies at the heart of our wider business success. This is why the CBI has been so concerned about the sidelining of arts subjects in schools. It recognises that future global business success will be built upon creative design, originality, communication skills and an ability to think laterally. My noble friend Lady Kennedy reminded us of Steve Jobs’ words about hiring artists and designers, rather than simply programmers, to create his products. That example is replicated time and time again across the business sector. This is why there is concern that the arts have been left to languish in a diminished DCMS. Their place at the heart of our economic revival should be recognised centre stage, with business and Treasury support. It is not surprising that commentators are beginning to speculate whether DCMS has a future at all, given its seeming inability to fight its corner successfully on these issues. Perhaps the Minister could shed some light on whether there is any truth in these rumours.
We have had a good debate today, with some very eloquent contributions. Quite rightly, we have identified the need for balance when measuring the contribution of the arts. Yes, they make a vast and growing contribution to the economy, but we should equally celebrate the contribution of the arts to our individual and collective well-being. With that in mind, I look forward to hearing the Minister’s response to the debate.
Lord Gardiner of Kimble
My Lords, I, too, congratulate my noble friend Lady Wheatcroft on securing this debate. On the fundamentals, I believe that we are all united. Be it dance, opera, theatre, museums, paintings, design, gardens, historic buildings, sculpture, photography, heritage, film, literature or television production, culture and the arts bring our country alive, stimulate creativity, inspire us, develop a strong sense of community, challenge and entertain us. They are essential to the fabric of our society. Alongside all these important features lies their enormous contribution to the economy.
The UK’s culture reaches out far beyond these shores. It attracts millions of tourists to our country every year, forging international relations and building trade links and greater collaboration with the rest of the world. Culture is GREAT is one of the pillars of the Government’s successful GREAT campaign aimed at promoting the UK internationally. The Government’s priority is growth. Heritage, the arts, the creative industries and tourism are essential to that success. My noble friend Lady Bonham-Carter spoke powerfully about that. The noble Lord, Lord Smith of Finsbury, reminded us, with all his experience and commitment how important the creative industries are. The UK’s cultural sector—both private and publicly funded—has a significant role to play in local and regional economic regeneration. In 2011, the Yorkshire Sculpture Park directly contributed to the employment of 108 full-time jobs and was worth at least £4.68 million to the local economy. We heard from my noble friend Lady Seccombe about Shakespeare and the beneficial impact of Stratford and beyond. Margate, St Ives, Gateshead, to name but a few, all have cultural projects making a huge difference.
This Government, in recognising the value of the arts and culture, increased the share of funding from the National Lottery to the arts so that the Arts Council England is now projected to receive £262 million of lottery funding in 2015 compared with £151 million in 2010-11. Many noble Lords, particularly the noble Lord, Lord Puttnam, and my noble friends Lord Grade of Yarmouth and Lord Maclennan of Rogart mentioned this. Arts and culture in the UK are supported by mixed sources of funding. Nearly £3 billion of public and lottery funding will go to the arts over the lifetime of this Parliament. In the current climate, I believe that that represents a positive settlement for the sector. Public funding of the arts remains a cornerstone and from this many benefits flow. It encourages innovation and that experimentalism drives creativity. Some go on to achieve huge commercial success. My noble friend Lord Grade of Yarmouth confirmed that. “War Horse”, which was mentioned by the noble Baroness, Lady Jones of Whitchurch, inspired by a puppetry show at the Battersea Arts Centre, then produced by the National Theatre, went on to achieve numerous awards and was an Oscar-nominated film.
The latest report published by Arts Council England earlier this week clearly upholds this belief that public subsidy provides the space for innovation, talent development and risk. It shows that there is a significant amount of movement between publicly funded theatre and purely commercial theatre. Public investment today can lead to the blockbusters of tomorrow and the value this brings to our economy. London theatres grossed more than £0.5 billion in sales, selling 14 million tickets last year. Furthermore, 10.6 million people living outside London visit a theatre at least once a year. The UK’s creative industries contribute more than £36 billion or 2.9% to the UK economy; they export £8.9 billion and employ more than 1.5 million people, which is around 5% of the UK workforce.
The UK film industry goes from strength to strength with its Harry Potter films, and films such as “Skyfall”, “The King’s Speech” and “Les Miserables”. British Film Institute research shows that the industry contributes £4.6 billion to the economy, as the noble Lord, Lord Puttnam, highlighted There is a great history of public service broadcasting in this country, which means that the BBC, ITV, Channel 4 and Channel 5 can now invest more than £3 billion a year in TV programming across their channels. That supports the creative industries through direct investment and provides a degree of stability in the market. They commission innovative and culturally diverse programming, and bring the arts and our creative industries to a much wider audience. Furthermore, recently published research commissioned by Arts Council England shows that the UK arts and culture sector had a turnover of £12.4 billion and contributed £5.9 billion to the UK economy in 2011. Research suggests that for every £1 generated by the sector, an additional £1.43 is generated in the wider UK economy through suppliers to the sector and additional spending by those who work in the sector.
Perhaps I may give the noble Earl, Lord Clancarty, some reassurance. The Government recognise that public funding for the arts offers stability and unlocks further funding. Public funding in partnership with other funding streams is the most advantageous for the long-term sustainability of the arts in this country. This includes earned income from commercial activity, private giving and philanthropy, and access to the lottery. This mixed model of funding avoids reliance on any one form of income, allows for risk and builds resilience. I was interested in what my noble friend Lord Eccles said about independence and funding, and his experience of Kew and the Bowes Museum.
In 2014-15, Arts Council England will invest £345 million into the arts. As its chairman, Sir Peter Bazalgette, has said, this funding acts as venture capital, giving confidence to others to invest in the creativity and innovations of our cultural organisations. The creative employment programme, with funding from Arts Council England until March 2015, will provide up to 6,500 apprenticeship placements, helping young unemployed people enter the cultural workforce. The programme aims to approve the first 700 apprenticeships and 500 paid internships by 31 October this year. This is something that my noble friends Lord Grade of Yarmouth and Lord Brooke of Sutton Mandeville were particularly interested in.
The UK is home to a wide and varied cultural offer that distinguishes us from the rest of the world, be it historic ships like the “Mary Rose” and “HMS Victory” in Portsmouth, David Bowie’s clothes to world-renowned music festivals that take place up and down the country every summer. I was mindful of the speech by my noble friend Lady Sharp of Guildford on science heritage, particularly, as it is so current, about the development which has secured the future of the “Mary Rose”. The noble Baroness, Lady Kennedy of The Shaws, mentioned science and the arts and the importance of them riding together.
Four in 10 leisure visitors to the UK cite heritage and culture as the primary motivation for their visit. In 2011, more than 10 million inbound visitors to the UK engaged with some form of arts and culture. Research commissioned by Arts Council England estimates that £856 million per annum of visitor spend can be directly attributed to arts and culture. It is therefore no surprise that with more than 5.5 million visitors last year, the British Museum is the UK’s top visitor attraction and is ranked in the top five museums in the world. I acknowledge the great work which my noble friend Lady Wheatcroft and the noble Baroness, Lady Kennedy of The Shaws, have rightly highlighted. This work is, of course, replicated among the many museums across the land.
The Heritage Lottery Fund estimates that heritage tourism's direct annual impact on the economy is £4.3 billion. Including those that supply the sector and additional spending by those who work in the sector, heritage tourism contributes £11.9 billion annually to the economy. All this demonstrates the very clear benefits the cultural sector brings to our economy through tourism and the UK’s cultural status. This global status was amplified following the Olympic and Paralympic Games of last year. Britain’s overall nation brand improved, with Britain moving up one place to be ranked fourth out of 50 major countries around the world.
Last year’s Cultural Olympiad that accompanied the Games was a vast celebration of the UK as a centre for cultural innovation, creativity and a true showcase of Britain to the world. With more than 43 million visitors, participants, audience members and volunteers, the Cultural Olympiad engaged communities across the UK and inspired people to get involved in culture, including many who attended or participated in events for the first time. There was indeed something for everyone.
The Government are working to build on those great successes and it is essential that we create a lasting legacy from them. To harness all this success, we must look at ways of increasing financial resilience, by building skills in areas such as fundraising and ensuring our cultural sector continues to realise its artistic and economic value. The Government have demonstrated their commitment to the creative industries by working to introduce tax reliefs to support film, TV, animation and videogames, as the noble Viscount, Lord Colville of Culross, mentioned. In this year’s Budget, the Government also announced a package of measures to support growth and jobs in these industries through investing in the development of skills and technology. Cultural and the creative industries, including museums, libraries, publishing, designer fashion, technology and architecture, have been represented on many of the Prime Minister’s trade missions around the world. That has promoted Britain to global partners. I hope this reassures the noble Viscount, but I will look into the point that he made.
My noble friend Lord Brooke of Sutton Mandeville asked about philanthropy. The Government have introduced initiatives to boost philanthropy, including a reduced rate of inheritance tax for legacy giving and the recently launched cultural gifts scheme. This saw its first major gift, one of the best collections of Beatles lyrics and manuscripts, being made to the British Library only last month. We have simplified gift aid, while the Catalyst scheme has also been developed, under which £110 million has already been earmarked for arts and heritage organisations, which will unlock at least as much again from private donors. I hope it will also improve the fund-raising skills which my noble friend Lord Brooke mentioned. We should also applaud the profound generosity of those donors who have contributed almost £700 million to the cultural sector each year.
Another area in which the Government support world-class culture is through the Government Indemnity Scheme. This provides an alternative to the considerable cost of commercial insurance for museums, galleries, archives and libraries. The wonderful “Houghton Revisited” exhibition of paintings that are on loan to Houghton Hall from the Hermitage in St Petersburg is a recent example, and what an uplift that is to the economy of rural Norfolk as well. So from Sir Robert Walpole’s magnificent collection of old masters to digital innovation, there is a place for all kinds of creativity and endeavour.
This year, Derry/Londonderry is the UK’s City of Culture; the next City of Culture for 2017 is due to be selected later this year. Enlightened cities recognise the value which culture has as a driver for tourism in showcasing the best their city can offer. I am particularly mindful of the successes in Liverpool. I was glad to hear my noble friend Lord Maclennan raising the lord mayor of London’s initiative, which should surely be applauded. Beyond the City of Culture, councils across the country are in partnership with cultural groups to deliver music education hubs—a key component of the national plan for music education, which is seeing an investment of more than £200 million in music education. I listened carefully to what the noble Lord, Lord Berkeley of Knighton, said and I would like to consider very much what he said about some particular examples.
In response to the noble Baroness, Lady Jones of Whitchurch, the Government have been working closely with arts sector representatives and the Arts Council as part of the review of the national curriculum. We are due to publish the cultural education plan shortly; I know that my noble friend Lady Bonham-Carter referred to that.
While this Government do not seek to dictate to local authorities how they spend their money, DCMS Ministers are in discussion with the Local Government Association about how local authorities are approaching the pressures of existing budgets. I assure the noble Baroness, Lady Jones of Whitchurch, that Ministers and officials engage regularly with other government departments on cross-departmental policy.
Noble Lords have mentioned the forthcoming spending round and I want to reassure them, particularly the noble Baroness, Lady McIntosh, that I know from my discussions with Ministers that they are being absolutely robust about setting out the vital role that the cultural sector plays and about the manner in which it can contribute to the return to growth. Conversations are still ongoing.
We have had an exceptional debate. There is so much more to say. I have listened very carefully to what has been said and I thank my noble friend Lady Wheatcroft and all noble Lords for giving us this great opportunity to explore the considerable importance of culture and the arts.
Baroness Northover
There is not time, I am afraid. The Minister must finish and we have to conclude within a minute and a half.
Lord Gardiner of Kimble
I apologise to noble Lords. The resounding view from us all is that the cultural sector and all who work within it contribute to the UK economy as well as enriching national life. The arts and culture are part of the route to national recovery. We must grasp every opportunity to allow culture and the arts to flourish and the UK economy to prosper.
Baroness Wheatcroft
My Lords, we are into extra time already so I will be very quick. I thank my noble friend for his reply, best described as very sympathetic and non-committal. I also thank everybody who has taken part this afternoon. The extraordinary variety of expertise that has been exhibited demonstrates what a very special place this is. I thank noble Lords from my heart.