Grand Committee
The Deputy Chairman of Committees (Lord Bichard) (CB)
Welcome to this meeting of the Grand Committee. I remind Members speaking in the first debate that except for the noble Lords, Lord Higgins and Lord Wallace of Saltaire, all speeches are limited to four minutes.
House of Lords: Membership
(11 years ago)
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Lord Higgins
To ask Her Majesty’s Government what assessment they have made of the memorandum by the Clerk of the Parliaments on Membership of the House of Lords, placed in the Library of the House in December 2012.
Lord Higgins (Con)
My Lords, I am very glad to have this opportunity to raise this matter. Unlike many of our debates, which are concerned with specific issues, it is more fundamental; it relates to the way in which this House, in carrying out its duties with regard to legislation and holding the Government to account, actually does its work. Therefore, it is a different sort of issue from those that are more often debated.
I will start by putting the memorandum in context. It was produced after the Government had dropped their House of Lords Reform Bill. It was evolved in consultation with a number of groups in the House, including the Campaign for an Effective Second Chamber, and puts forward a number of very important suggestions and analyses them. We do not know what will happen as far as the wider issue is concerned. My own feeling is that it would be very unwise for parties to put the issue of an elected Chamber in their manifesto because I think the House of Commons has realised the dangers that would present to its position at Westminster and the position of individual Members in their constituencies. In any event, it is essential now that we do everything we can to improve the way in which the House works.
I was worried in the immediate aftermath of the other business that there would be resistance by the Government to any progress on this at all. It appears that is not now so. I am glad to see that a Bill embodying what I think we are still calling Steel Mark 2 has been taken up by Mr Dan Byles in the Commons and is apparently being given a favourable wind. I hope that is also true of the proposal made by the noble Baroness, Lady Hayman, who I am very glad to see in her place today.
This memorandum also needs to be put in context in relation to the report made by the noble Lord, Lord Hunt of Wirral, to the Leader of the House on Members leaving the House, and the House of Commons Political and Constitutional Reform Committee, which has reported in just the past few days on these very issues.
The danger now is that we will not make sufficient progress. Yet it is absolutely clear that the main danger we are facing is the ever increasing size of the House, which the Hunt committee pointed out very clearly as having the effect of, first, risking the reputation of the House; secondly, the difficulty of conducting business effectively; and thirdly, the effect of the additional Members on the resources of the House and their ability to do their job. Therefore, we need to take urgent action and the proposals in the report by the Clerk give us an opportunity to make real progress.
The surprising thing is that many of the proposals the Clerk makes—indeed, most of them—can be done without legislation. At this stage in a Parliament, the Government would certainly be resistant to anything that involves further legislation. But he points out very clearly that a lot can be done without legislation.
I want to concentrate on two particular points: first, the suggestion by the Clerk that the voluntary retirement scheme should be strengthened, which he does in paragraphs 19 to 21. He suggests that the scheme that exists at the moment could be strengthened, particularly with regard to taking action if people are not really acting as a full Member of the House. This, too, he says, could be done without legislation.
My particular concern is the proposal that he makes in paragraphs 36 to 38 of his report, and in appendix A, for a scheme for voluntary retirement. As has been pointed out time and time again—I think in all the reports that I have mentioned—the trouble with voluntary retirement is that there is no incentive for Members to retire voluntarily. The Hunt report suggested that the Government should look at the possibility of some form of retirement package, which it is hoped would result in a number of people agreeing to retire voluntarily.
I will make one quick point in parenthesis about a view that I believe is held by the Leader of the House. What is proposed would not affect the situation with regard to the Writ of Summons, which is regarded by some in a sort of mystical sense as something that it is important to preserve.
My concern is that of a former Treasury Minister—and once a Treasury Minister, always a Treasury Minister. The Clerk’s memorandum makes it absolutely clear that this proposal will be likely to reduce public expenditure. The key policy of the Government is to reduce public expenditure. Therefore, I am sorry that it is not a Treasury Minister who will reply to the debate this afternoon. I do not suggest that the proposal will result in a massive reduction in the deficit. None the less, it is a move in the right direction, and if we do nothing at all with more and more Members being appointed, there will be an increase in public expenditure, which is clearly incompatible with the fundamental economic policy of the present Government.
The Clerk of the Parliaments has helpfully pointed out, in fairly concrete mathematical terms, what the savings might be. They are not insignificant, and this points the way forward. I hope very much that the Government will, as the Hunt committee recommended, take a serious look at the issue. Perhaps, as the Clerk suggests, we should set up a committee to look at all the possibilities.
One particular point needs to be borne in mind. It is the question of party balance. Clearly, if all the volunteers were from one part of the House, that would give a certain amount of concern to the Whips. We will need to take that into account. Therefore, in organising this, the Whips will need to be involved. None the less, we can make significant progress. I do not believe that it is something which is impossible to sell to the public at large. The argument that we will reduce public expenditure is very strong indeed.
I am rapidly running out of time. There are a number of other proposals in the Clerk’s report that are worthy of consideration. All of them, I think, are treated in the Hunt committee report. However, the central issue on which I will focus—although by no means exclusively—is to bring to the attention of the House the possibilities of improving our procedures. All of us are only too well aware of the way in which it is becoming more difficult for the House to work in an effective way as the numbers go on getting bigger and bigger.
Lord Lea of Crondall (Lab)
My Lords, as the noble Lord, Lord Higgins, indicated—and I congratulate him on his timeliness; this is an ingenious way of tabling a debate—the central issue behind the dreadful mess that we are in is the irresponsibility of people increasing the size of the House, on this pretext or that. The connection between that and the memorandum of the Clerk of the Parliaments is palpable. You cannot go through these paragraphs without seeing that this problem would not be so acute or even here at all if we were in a sensible constitutional position. In this country we seem to have been able to make up a constitution through a so-called coalition agreement for Government, but when I lecture on behalf of the Westminster Foundation for Democracy in Mozambique, the one thing I tell them they cannot do is invent constitutions as they go along according to short-term political considerations. That is what we are doing in this country and it is shameful.
To be even-handed, I blame all the three major political parties, but perhaps some more than others. I will just run through the charge sheet because it has a bearing on what we can do about it. The first mea culpa is for the Labour Party, but as my noble friend Lord Hunt of Kings Heath will confirm, in response to an invitation from Tony Blair some six or seven years ago, the Labour Party wrote a memorandum, which I helped to draft, on the future of the House of Lords. It included all the elements that were subsequently picked up by the noble Lord, Lord Norton of Louth, and sold to the noble Lords, Lord Cormack and Lord Steel. It largely became the Steel Bill. There were people in all three political parties with an answer; they were not just whingeing about it.
Now we have this absurdity, and I shall come on to the Liberal Democrats. We stopped kicking the ball in the right direction when there was a change of Prime Minister on the Labour side, but the most absurd formula, of course, is the one written as a holy writ in the coalition agreement. It says that the pattern of this House should reflect the voting in the last general election. What an absurdity; what a shameful absurdity in constitutional terms. Yet Mr Clegg and his followers, with a straight face, express the belief that it is fair. We do not need much of a crystal ball to speculate about what might happen after the next election. If, as I hope, Labour gets in with an overall majority and we were to apply that formula, what would the Liberal Democrats be supposed to do? Half of them would commit hari kari. It would be painful to watch, but that is the logical result of their position.
Finally, the Clerk of the Parliaments is someone who can look at this position dispassionately and for the long term. When he wrote the first draft of this memorandum, which a lot of people saw, it had in it a suggestion that the three party leaders ought to get together and agree a formula on this very question, but then he was nobbled. I do not think that the Clerk of the Parliaments should be nobbled by the party leaders, but the first draft had that suggestion in it, and now it is not there. It was the final paragraph, and it has now gone. I think that this is a case of the politicians getting above their station in this matter. We ought to allow the Clerk of the Parliaments to speak for the constitutional requirements that lie behind debates of this kind.
Lord Steel of Aikwood (LD)
My Lords, my noble friend Lord Higgins has done the House a great service in tabling this debate and I thank him warmly for it. I want to limit my remarks directly to the paper which has been tabled by the Clerk, but of course it originated in the report of the Leader’s Group entitled Members Leaving the House, which was published way back in January 2011. The group was chaired by the other Lord Hunt, my noble friend Lord Hunt of Wirral. Paragraph 47 states:
“We recommend that a reduction in the number of members of the House should result in an overall saving to the taxpayer. We recommend that the possibility of offering a modest pension, or payment on retirement, to those who have played an active part in the work of the House over a number of years, should be investigated in detail, though on condition that this should come from within the existing budget for the House and should incur no additional public expenditure”.
I think we all agree on that, but we do not want to see ourselves pilloried in print for increasing public expenditure. The object of this exercise is to reduce it, as the noble Lord, Lord Higgins, made clear.
The Hunt committee went on to say, in paragraph 67:
“Whilst we cannot recommend that there should be a moratorium on new appointments to the House … we do urge that restraint should be exercised by all concerned in the recommendation of new appointments to the House, until such time as debate over the size of membership is conclusively determined”.
That, of course, has been cheerfully ignored. As we know, not only are the numbers going up but the cost to the public purse is going up. That will continue until we deal with the issue that the Clerk has very kindly put forward in the paper that has been put in the Library.
A couple of weeks ago, the Bill already passed by this House was taken up by Mr Dan Byles in the Commons. It got its Second Reading, and a pedantic Motion to put the Bill on the Floor of the House was defeated, so it has, properly, gone into Committee. We must hope that we will get that Bill back here. As we have already approved it, it should not be a problem to put it through the House. The important point is that the Bill simply confers the statutory authority that the Hunt committee said that it believed was necessary for the House to decide on what sort of retirement scheme should come into effect. The present so-called retirement scheme is nothing of the kind—it is simply an extended leave of absence. All those who think that they have retired from the House will find that, after the next election, they still get the Writ of Summons, because there is no capacity to create a retirement scheme at the moment. That is why we need the statutory provision and why I hope that the Byles Bill will succeed.
In an appendix to the Clerk’s paper, the finance director estimates that even if a voluntary retirement option was taken up by only 50% of those eligible in year 1, although it would cost £4.7 million, it would save £5.2 million. If the scheme kicked off at age 80, it would cost £3.9 million in year 1 and save £4.4 million. Whichever way you look at it, and however low or high the take-up, there would be a saving to public expenditure. We must, as a group, commend the Clerk’s report to the House as a whole and thank the noble Lord, Lord Higgins, for bringing it to our attention.
Baroness Hayman (CB)
My Lords, I echo the remarks that have already been made about the noble Lord, Lord Higgins, and the value he has provided for today in allowing us to debate this subject. As the noble Lord, Lord Steel, has already reminded noble Lords, the size of the House was already a problem when the Hunt committee reported. Far from seeing a reduction in numbers, as was proposed, we have seen a substantial increase, with all the difficulties that have been referred to today, including the effects on the reputation and, indeed, the workings of the House.
I want to take up the theme of party-political balance in the House. We have no agreement about what the relative strengths of parties in the House should be. However, we do have agreement, I think, that much legislation that comes to this House is badly drafted, inadequately scrutinised or not scrutinised at all, because of timetabling in the other place. Given those circumstances, I ask the Government to think very carefully about increasing by large numbers the proportion of party-political Peers in the House. Second Chambers exist to ask first Chambers to have second thoughts. We need to do our job of pressure-testing legislation, both for policy and for drafting, and to ask the Commons to think again when appropriate. The joy of our present system, and the reason why many of us oppose an elected House of Lords, is because democratic power, accountability and legitimacy lie with the Commons, which always in the end gets its way.
I have been a Minister in this place and I know that it is very disobliging and disrupting to lose votes, but in terms of the quality of the legislation that emerges I suggest that it is counterproductive for the Government deliberately to diminish the number of times they are asked to think again in the House of Commons. That can rebound politically, as those who were involved in the poll tax legislation understand very well.
As regards the proposals for not just not increasing the size of the House through new appointments but reducing its size through offering opportunities for retirement and resignation, I echo what has been said about Dan Byles’s Bill because I have always believed that having a statutory basis on which to build in a voluntary manner is tremendously important.
The other development that I think is important is the recently published report of the Political and Constitutional Reform Committee. Many of the proposals in the Clerk of the Parliament’s memorandum are supported in that report and there are specific requests, not just from the Government but from the parties in this House, for the leadership to take those proposals on board and to respond to both the committee and the House as a whole. I hope that the Minister will indicate that the Government are willing to respond to that.
Lord Cormack (Con)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Hayman, and I agree with everything that she said. I, too, thank my noble friend Lord Higgins for initiating this very useful and helpful debate. However, I gently take him to task on one thing: that is, these are not proposals from the Clerk. The Clerk cannot make proposals; he merely set out some alternatives which Members of the House can consider. We ought to put that on the record to defend the total impartiality of the Clerk. In fact, this paper came about as a result of an approach from the Campaign for an Effective Second Chamber, which was formed by my noble friend Lord Norton and I more than 11 years ago. I went to see the Clerk in the wake of the timely defeat of the very ridiculous Clegg Bill and asked him whether he could produce a paper which we could consider. He agreed but on the condition that it must be made available to all Members of the House. Naturally, we readily agreed to that, and that is why it is before us.
This is a debate in which we are rightly limited to a very short speaking time and I want to make just one or two very brief points. The Byles Bill is the filleted version of the large Steel Bill on which my noble friends Lord Steel of Aikwood and Lord Norton of Louth and I worked something like eight years ago. It is a modest proposal but it will help, above all by providing a statutory framework for retirement. However, that is not the end of the matter. Of course, many of these things would have been dealt with had that large section of the Constitutional Reform and Governance Bill, attached as an appendix to this paper, not been dropped in the wash-up prior to the 2010 election. Therefore, we should gently remind the leaders of both parties that they were, indeed, more or less signed up to that three years ago. What they must now do is to exercise restraint. This is crucial for the reputation of the House, which stands high in the public esteem. There was a very good leader in the Times the day after our latest colleagues’ appointments were announced way back in late July or August, which said that this was a great institution but was in danger of being overinflated, or words to that effect. It is crucial that we heed that warning. The noble Baroness, Lady Hayman, was so right to say that party balance should not matter here.
The one disappointment I have had since I came to this House—I greatly cherish my membership of it—is that I think on occasion the whipping is too severe. I say that in the presence of at least one Whip.
We should be here to exercise our judgment because, at the end of the day, we cannot overthrow what the elected House has decided upon, but we can, and we should, say, “Think again”. That is the point and purpose of this place. This is not the overriding legislative assembly. Indeed, as my noble friend Lord Norton has argued on many occasions, we are merely contributing to the legislative process.
I very much hope that following this brief debate the Government will look at the various alternatives proposed in the Clerk’s paper and consider that there is real concern in this House. We welcome our new colleagues and hope that they will be as happy here as we are, but we cannot go on increasing in this way. There has to be provision for reducing over a period the size of the House. We have to look at all sorts of retirement schemes and other things. There is not time to expand now, but I hope there will be in the near future.
Lord Foulkes of Cumnock (Lab)
My Lords, I join in the congratulations to the noble Lord, Lord Higgins, on raising this issue. With respect to the Clerk, who was here earlier, his note is just tinkering with the issue when the reality of what is happening is making a mockery of it. This House is being packed. We now hear that there is going to be a second list. As my noble friend Lord Lea asked, what is the purpose of this? Is it to reflect the vote at the general election or the balance of the House of Commons? Why? This is a revising Chamber. We are supposed to look at and revise the legislation, not rubberstamp what happened down the Corridor, which is what would happen if we reflected the Commons.
What is behind the Government? I can assume only that it is some kind of Marxist or Leninist theory that they want to make us look so ridiculous that the revolution will happen and we will be either directly elected or abolished. That is what they seem to be up to.
I agree that the structure of this House and the way it is constituted needs reform—I do not think there is anyone who disagrees with that—but it needs to be looked at in the long and short terms. In the long term, it needs to be looked at in the context of what else is happening in this country in constitutional terms, particularly with devolution. I favour a federal structure, which the Liberal Democrats have been arguing for. We could be a federal House representing the regions of England, Scotland, Wales and Northern Ireland. That would be a great step forward. That kind of indirect election should be looked at.
We need to set up some kind of UK constitutional commission to look at that and to come up with a long-term solution. In the mean time, we need to look at something more radical than the tinkering that the Clerk has put forward, some kind of retirement scheme, either through age or participation in the House, so that we can encourage people who are not taking part or who are of a certain age to move towards retirement. We need to get a House that is smaller than the House of Commons, not larger. That is outrageous. We are the second-largest legislative Chamber in the world. The only larger one is China, which has billions of people.
We need to look long term and short term. With no disrespect to the Clerk of the Parliaments, the ideas have to come from us, from our groups, from the political groups and from the Cross-Benchers. I hope I am not giving away a secret—especially with my noble friends Lord Hunt and Lady McIntosh here—but the Labour group is looking at this in the short and long terms, and we will be coming forward with some quite sensible, radical proposals. I hope they will be given serious consideration by the Cross-Benchers and by the other political groups. I hope we can use what I hope the Labour group will propose as the basis for some kind of sensible reform so that we can stop the revolution of abolition or direct election, which seems to be the only way that we are moving with the astonishing direction that the coalition Government are moving at the moment.
The Earl of Sandwich (CB)
My Lords, I have joined the noble Lord, Lord Higgins, in this debate because I am another who believes in the modest reforms in the original Steel Bill, unfilleted. The noble Lord, Lord Hattersley, made a few comments in Dublin last month before the Irish people sensibly threw out the Taoiseach’s proposal to abolish the Senate. He said, quite fairly, that you cannot have a modern democracy in which one House of Parliament is appointed by the Prime Minister. We know that already, and we know the Lords is slowly moving away from Downing Street by means of the Independent Appointment Committee. Most people see that committee as the way out of patronage. We would like it to have statutory powers extending to party-nominated Peers and to have a better control of numbers.
The noble Lord, Lord Hattersley, has kept up our interest in Lords reform. I believe that the coalition is beginning to see the sense of incremental change. Today we are concerned only with housekeeping, with whether we can better organise our numbers and be more effective. The Clerk’s paper makes sensible suggestions, and I would like to discuss the more personal side of retirement.
This House has developed quite a range of services to Members, the sort of things you would expect from any modern corporation or institution. There is one service not offered to Members, although it is given to staff, and that is in human resources. You can talk to your party leader or convenor, you can get comfort in the Clerk of the Parliament’s office or chat to colleagues, but there is no one, apart from these offices, with whom you can discuss your future in the House.
I have worked in a number of businesses and charities, large and small. I have even been in a multinational. I have come to appreciate the role of human-resources managers in offices. I am not talking of career advice, because it might be impertinent to give career advice to a Peer, although some of the under-50s might appreciate it. Opening a small, comfortable office in an upstairs room would, I am sure, give Members a chance of opening up that they might not have elsewhere.
I tried to persuade the noble Lord, Lord Walton, to join this debate. He is unavailable today, but he knows that I am mentioning him as someone seriously contemplating retirement. He is an obvious candidate for human resources. I have spoken to others in the same situation, in which we will all be at some future date. I therefore propose that serious thought be given to the establishment of a human-resources officer, with an assistant, for Peers—not a department—who can talk to Members at any time of their parliamentary life.
This might be a suitable job for an existing Member of the House, someone of a sympathetic nature, who has been in the House for some time and already knows most of the characters. It could even be job-shared. There should not be a formal retirement age, but, like the noble Lord, Lord Higgins, I have for some time thought that the House should be able to afford a modest incentive out of internal funds. I remain in favour of the equivalent of one or, at the most, two years’ expenses. This would cost nothing because the Peer would remain for that extra year or two, and it might save the expenses of subsequent years. The Treasury does not need convincing of that mathematics. Nor does the Daily Telegraph.
I am not in favour of the enforced-attendance proposals in the Clerk’s paper, echoed in Dan Byles’s latest Bill, because it would dislodge one of the cornerstones of the House to discourage part-time attendance, especially among Cross-Benchers, among whom there are individuals with experience to offer, who can come in only occasionally. I believe part-time attendance also helps to keep down those extra numbers which come from the good concept of working Peers.
I thank the noble Lord, Lord Higgins, for helping the House to go into some of these apparently minor, but important, reforms.
Lord Norton of Louth (Con)
My Lords, I, too, congratulate my noble friend Lord Higgins on raising this important and timely question. For reasons of time, I turn to the memorandum by the Clerk of the Parliament, which provides some innovative suggestions, some more innovative than others. I commend the suggested amendment of Standing Order 22 as a helpful way of addressing the problem of those who do not attend. I will focus on a proposal designed to address the problem of those who do and place a strain on resources.
As we have heard, the Leader’s Group, chaired by my noble friend Lord Hunt of Wirral, raised the prospect of some Members being offered a modest payment upon retirement. The Clerk’s memorandum examines ways in which such a payment may be made, following the comments of the Leader’s Group, as we have heard, in a way that is compatible with a saving to the taxpayer. The memorandum is thorough in identifying how this may be achieved.
Since the memorandum was first published, the Leader of the House has stated that the Government, and other parties, do not support the idea. Speaking earlier this year, he said:
“I should make clear, as I have done before, that the Government do not support making taxpayers’ money available to Members of the House to encourage them to retire. That would be wrong, and it would be seen to be wrong. I am glad to hear that my view on this is shared by all groups and all parties.”.—[Official Report, 28/2/13; col. 81.]
I have two questions for the Minister based on this statement. First, if it is wrong for taxpayers’ money to encourage Members of this House to retire, why is it not considered wrong to use taxpayers’ money to encourage Members of the other House to retire? It used to be the case that some MPs sat well beyond retirement age because they could not afford to retire. The Government introduced financial packages that, for all intents and purposes, were designed to enable MPs to retire gracefully. Not only is there now a pension, but for the past 22 years there has also been a resettlement grant. Why is this use of public money deemed right, but something similar for this House is wrong?
Secondly, why do the Government find it wrong to use taxpayers’ money to facilitate Members leaving the House, but have no difficulty using taxpayers’ money to enable new Peers to be created? I have seen estimates of how much it will cost the public purse if the latest tranche of new Peers prove reasonably assiduous in attendance. The scheme embodied in the memorandum of the Clerk of the Parliaments is designed to save money in the long term, and help to reduce the size of the House, whereas the current practice of the Government in creating new Peers achieves precisely the opposite. I look forward to the Minister justifying this state of affairs.
The Government appear to have no qualms about creating more Peers, adding to the burden on the public purse, while making no real effort to address the problem of the size of the House. I see no principled reason for the stance taken by the Leader of the House. The Clerk’s suggested scheme is a valuable contribution to the debate, and if it is not to be pursued, we need a much more considered response from Ministers.
Lord Hunt of Kings Heath (Lab)
I, too, thank the noble Lord, Lord Higgins. It has been an excellent debate. I have to say to my noble friend Lord Lea that I plead guilty as charged, although I hope that the Minister will also plead guilty. I notice that he left the Conservative Party office charge sheet, which rather disappointed me, but perhaps he just felt short of a bit of time.
I thought that the Clerk of the Parliament’s report was excellent, particularly paragraphs 36 and 37 in relation to a strengthened leave of absence scheme, including minimum levels of attendance and enforced leave of absence. Will the Minister state clearly what the Government actually intend to do to progress this? As noble Lords have said, the Leader of the House has already indicated that he is not in favour of it, but I think the House and the Committee are entitled to a proper explanation of why this should not be taken forward.
I also ask the Minister about the statement made by the noble Baroness, Lady Northover, at Question Time this morning. She made what seemed to me to be a new statement of government policy in relation to the balance between the parties. I would be grateful if he would expand on what the Minister said in the Chamber.
Thirdly, I come to the point raised by my noble friend Lady Hayman. We have what I think is a ludicrous coalition agreement policy of saying that in one Parliament the membership of the House should reflect the votes cast at the last election; clearly, we have seen lists of new Peers being announced in order to make progress towards that. Our estimate is that the Government will shortly have a political majority in the Chamber of more than 100. What is the point of it? We are a revising Chamber; if the Government cannot be defeated, revisions cannot take place. In my own experience as a Minister, as my noble friend Lady Hayman will know—
Baroness Hayman
The noble Lord is definitely my friend, but in procedural terms in this House he is not my noble friend.
Lord Hunt of Kings Heath
My Lords, I am duly dealt with on that. The noble Baroness was also a health Minister. I would have expected to lose five or six votes on any health Bill that I took through, and I took through rather a lot. This does not happen any more, and I want to ask the Government whether they expect to win every vote. Is this the intention? If it is the intention, frankly, I do not see the point of your Lordships’ House. If the Government are not defeated on a fairly regular basis, we cannot send matters back to the House of Commons and there is no point to us. I am increasingly of the view that in that scenario the only way out is to get rid of the House. I do not think that the Government realise the significance of this. We cannot revise unless the Government are defeated a healthy number of times.
We should look at other reports, as well as the Clerk’s. My noble friend Lord Foulkes has given the game away, in the sense that there is a Labour group looking at some of these issues. The House of Commons Political and Constitutional Reform Committee has produced a very interesting report, with a number of suggestions as to how we might deal with these issues. We may not agree with all of them, but I particularly draw your Lordships’ attention to recommendation 10, on determining the relative numerical strengths of party groups in the House of Lords. In the end, surely we need to have sensible discussions and reach an agreement which will enable us to get a proper balance, allow the House to do its proper job in revising, and keep the numbers at a reasonable level.
Lord Wallace of Saltaire (LD)
My Lords, this debate raises a large number of questions. Let me try to answer as many as I can. I start by saying that the Government remain committed to thorough reform and the creation of an elected House. This is part of the reason why we resist proposals to end by-elections of hereditary Peers. I was here when that particular concession was made by the then leader of the Conservative Peers, now the Marquess of Salisbury, on the basis that it would remain until thorough reform took place.
The Government are committed to thorough reform. However, we now have a number of proposals which I have heard described as housekeeping proposals, which are on an interim basis. We recognise that there will not be another attempt at House of Lords reform until well after the next election, when I look forward to seeing a commitment to an elected second Chamber appearing once again in all of the party manifestos. Having said that, we have to recognise that there are some real problems in the House.
The noble Lord, Lord Foulkes, disappointed me enormously in his speech. I looked forward to him saying that we must tackle the question of retirement age, a topic on which I thought he was intervening the other day. I recognise that at the core of much of this are the difficulty of a retirement age or of encouraging retirement, and the balance of the groups within the House.
When I joined the House, now some 17 years ago, I was told that by entering the House of Lords I was raising my life expectancy by a further two years. It is such an interesting place and it keeps us lively and fit. As I sat listening today I reflected that, if I decide that I really ought to take permanent leave of absence when I am 95, I have only 23 more years of service to go. I will then have served in the House for 40 years. We recognise the problem of keeping the House lively and renewing membership.
Incidentally, there is also the problem of different age balances among the different party groups. The Conservatives are the oldest group in terms of appointments, because many of them were appointed in the Thatcher years. Particularly when I talk to some of the older Labour Peers, I am conscious that the reluctance to retire of those on both the Labour and the Conservative Benches is sometimes expressed in terms of, “I would be letting my side down if I retired but some of them didn’t. We would alter the age balance against us”. Anything we talk about in relation to retirements feeds back into the question of party balance. I remind the noble Lord, Lord Hunt, that it is not just the party groups who vote in this House. We have a very active group of Cross- Benchers. I will check on the incidence of votes lost in this Parliament compared to votes lost in the last Parliament. I was not aware that there was a substantial difference in the number of votes lost. In the Bills that I have dealt with, the concessions which one must make in order to avoid votes being lost, and the number of votes lost, are certainly important matters. I give way.
Lord Cormack
My Lords, I am sorry to intervene, but does my noble friend really believe that the House of Lords should have a significant majority on the government Benches?
Lord Wallace of Saltaire
My Lords, this is for the first time a coalition Government and part of the issue is whether you count the entire coalition of both parties as one or as two. The Government do not have an overall majority in this House because we have a large number of Cross-Benchers. If I may say so, one of the first things I learnt when I entered this House was that if you want to defeat the Government, what you need is a speaker from each of the four main groups, because at that point the Government will recognise that they are about to lose. The noble Lord, Lord Cormack, is occasionally very good at being part of those groups which challenge his own Government. That is the way the House of Lords behaves.
Lord Hunt of Kings Heath
With respect, my Lords, there is one Government and the numbers are clearly added together in your Lordships’ House. I should like to put a question to the Minister. What would happen in 2015 if the Labour Party were to win the general election with a majority? It would be faced with a majority of 100 Conservative and Lib Dem Peers over the Labour group in your Lordships’ House. There would then be a dissolution list, to which I assume both Mr Cameron and Mr Clegg would contribute. What advice would the noble Lord give to a Labour Government about the number of Peers they should appoint?
Lord Wallace of Saltaire
My Lords, we are getting into very difficult constitutional questions here. Again, I have heard discussions about this among some of my noble friends. A Labour Party that wins a majority of seats in the House of Commons on perhaps 35% of the vote and a 60% turnout raises the question of whether that is really a majority or not.
Lord Lea of Crondall
I am sorry to press the point, but is that not precisely the doctrine of the coalition agreement—the formula should reflect the results of the last general election—or is it only to suit this particular Government at this particular moment in time?
Lord Wallace of Saltaire
My Lords, it is that in new appointments, one should head in that direction. I speak for a party which received no nominations to this House for several years under Mrs Thatcher’s Conservative Government. Let me say—
Lord Wallace of Saltaire
We need some quiet discussions among the parties and I am glad to hear people suggesting that what we need is another committee. I am sure that the noble Lord, Lord Hunt, would love to serve on another committee looking at some aspects of Lords reform; he has a great appetite for it.
Lord Wallace of Saltaire
What we are talking about is not just the size of the House; we also have to recognise the issue of attendance at the House. It is the rise in the number of those who expect that appointment means regular attendance, and in some cases we have made a rod for our own back by making appointments, particularly of Cross-Benchers, who are asked whether they will be regular attenders. Our percentage of attenders among the Members has been steadily rising and continues to do so.
Lord Foulkes of Cumnock
I thank the Minister for giving way again. That brings us back to our exchange on the Floor of the House the other day. All of these new Members are going to be working Peers. They will attend regularly. They will receive their attendance allowance and they will need offices and all the other facilities. That, we are told by the Clerk of the Parliaments and others, has to be done within a no-growth budget. How is that possible?
Lord Wallace of Saltaire
My Lords, the question of the overall size of the House brings me to my next point, which is that of retirement.
Lord Foulkes of Cumnock
The noble Lord is not answering my question. How is it possible for this to be done within a no-growth budget? We are getting another 60 extra Peers.
Lord Wallace of Saltaire
My Lords, retirement is essential to this because unless we are going to have a House that grows older gracefully and has very little renewal, we have to have a scheme that encourages retirement. The House has been getting older. After 17 years I have just passed the average age of the House. We need good new Members because we do not entirely want to be a House that represents the wisdom of 25 years ago, and therefore we need to address the question of retirement. I have had one or two conversations with older Peers who have suggested that a more dignified retirement arrangement, in which the House recognises the service of those Members who are retiring, would be of very considerable assistance to them. I am willing to take that back and, indeed, I have already discussed it with the Leader of the House. I think that it is something which we should all attempt to progress as best we can.
On a financial leaving package, let me simply say to the noble Lord, Lord Norton, that we receive allowances in this House; we are not paid. Most of us, the noble Lord, Lord Norton, and me included, have pensions. I think that I can guess what the size of his academic pension will be when he retires. I had a discussion with an older Labour Peer who said that I did not understand how working-class people like him would survive without their allowances. I reminded him sharply that I knew roughly what his academic pension was, and that if he could not survive on a professorial pension there was a real problem.
Lord Norton of Louth
My point had nothing to do with pensions because there is no salary, so it was not premised on that—that was the analogy that I was drawing with House of Commons. The resettlement grant has absolutely nothing to do with pensions.
Lord Wallace of Saltaire
My Lords, let me simply say, because time is short, that service in this House is a privilege which we should not expect to have to be bought out of. That is the view which I and a number of others hold. The Government remain unconvinced that we should attempt to buy older Peers out. I recognise that there is a substantial problem which older Peers think about in terms of party balance. I think that it is also the recognition issue that we are concerned about and very much want to continue.
The noble Baroness, Lady Hayman, asked whether the Government would respond to the PCRC’s proposals for all-party talks. We will certainly respond to that report.
Lord Norton of Louth
Before my noble friend leaves his previous point, is he saying that service in the House of Commons is not a privilege?
Lord Wallace of Saltaire
My Lords, Members of the House of Commons earn their keep and are much more often in the prime of life. Most of us who come here have earned our salaries elsewhere and have pensions from elsewhere. That is part of the distinction that I am making.
Lord Wallace of Saltaire
My Lords, the noble Earl, Lord Sandwich, asked about human resources. My noble friend Lord Gardiner remarked that that is partly because Cross-Benchers do not have Whips. Whips in this House see themselves not as enforcers but as very much a human resources department for their own party groups.
Lord Wallace of Saltaire
I take that response as a deep vote of confidence in the consultative role and psychological support which Whips provide.
We will of course take back all the points made in this Committee. The Government are willing to give a fair wind to the Dan Byles Bill, which I hope will come to this House in good time and provide for some of the housekeeping measures which noble Lords are calling for. We hope that that will assist. We will take further the question of providing dignified recognition for those who wish to take permanent leave of absence for the service which they have given to this House—and some of them, earlier than that, to the other House. However, I am very sorry that I cannot entirely provide the reassurance that some noble Lords are looking for in terms of a financial retirement scheme.
Iran
(11 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Afshar
To ask Her Majesty’s Government, in the light of the recent elections in Iran, what steps they are taking to facilitate closer commercial and educational ties with that country.
Baroness Afshar (CB)
My Lords, I am grateful for this opportunity to speak about the country where I was born, and I thank noble Lords who are participating in this debate and speaking. I would like to raise a few points before the negotiations between the countries start again, in the hope that they might be used as relevant points by the negotiators.
Negotiations between Iran and the six powers in Geneva seem to have been very optimistically received. The noble Baroness, Lady Ashton, the EU’s top foreign policy official, has described them as “substantive and forward-looking”. Iran’s top nuclear negotiator, Mohammad Javad Zarif, has spoken of the possibility of achieving a satisfactory outcome in the next six months. I add my voice to those of the educationalists and economists in the UK who have also welcomed this rapprochement. The UK in general, and the education sector in particular, would benefit from the easing of sanctions. This could be a win-win for all concerned, provided that there is understanding and appreciation of the difficulties on the way.
Education is one of the most effective means of building long-term trust among nations and individuals. It is hardly surprising that it is Ayatollah Rouhani, a graduate of Glasgow Caledonian University, who started the negotiations and secured a level of agreement from the spiritual leader of Iran. Students make a significant contribution economically, academically and intellectually, in terms of building understanding across divides that sometimes prove difficult to cross otherwise.
However, there is a real problem in the banking system as it stands and as it has operated in the decades since the imposition of sanctions. It has been a serious impediment. Students who have been offered places—who are more than willing to pay the fees and health taxes that might be imposed in the future and have the money ready—cannot find a bank in the UK willing to open an account for them. I know of students who have lived in Canada for more than 10 years but who, because they are Iranian, cannot even transmit money from Canada to the UK to start discussions. That seems to result in universities saying that their hands are tied because they cannot proceed with the processes. The University of Sheffield, for example, has been working in Iran and has offices there offering scholarships to Iranian students with exceptional academic potential. Many Iranians, particularly women, have such potential aplenty.
The difficulty is not only that the students cannot open accounts; a further problem is when those students who are already in this country and have accounts here go on fieldwork trips and come back, they find that they have to reopen the same accounts and provide the same information all over again. In the case of one of my students, who made two field trips, this had to be done twice.
These kinds of obstacles make students less willing to apply to British universities. The measures are highly counterproductive and the Government should come to the rescue of these students because, as we all know, most if not all British universities are heavily dependent on foreign student fees in order to bridge the gap created by the cuts. Last year, banking restrictions also resulted in Iran abandoning its conversion rate for foreign students, which gave favourable rates to students studying abroad, particularly in the UK. Now, it is much more expensive for Iranian students to raise the same fees in Iran.
Banking restrictions have also resulted in very serious medical problems in Iran because pharmaceutical companies cannot import the necessary ingredients for producing medication at affordable prices. This has resulted in the deaths of hundreds of people. Political prisoners have even written an open letter asking for the lifting of sanctions. They point out what I have pointed out in the House before: namely, that sanctions only make the rich richer and the poor poorer. It is not the rich who suffer from the sanctions—they get their medication, they come abroad for treatment—but those who are living in Iran. The situation is dire, which is another reason that Iranians are extremely keen to enter negotiations and for them to be successful.
The prospect of detente has already resulted in the freeing of a number of political prisoners: 11 were freed a month ago. They included Nasrin Sotoudeh, the campaigning human rights lawyer and winner of the European Parliament’s 2012 Sakharov Prize for Freedom of Thought, and the reformist politician Mohsen Aminzadeh. A week later, on the eve of President Rouhani’s visit to the USA, 80 more political prisoners were freed, some of whom had been jailed after the mass protests triggered by the fraud- tainted re-election of former President Ahmadinejad in 2009. Last week, more political prisoners were pardoned. The hope is that this process will continue and accelerate.
A rapprochement would be extremely beneficial to the UK. The Iranian economy has not died during this period. In fact, many projects have been set up, including mining, construction, chemical production, car manufacturing and packaging, and are thriving. But the sanctions have resulted in trade relations moving towards Russia and the East, rather than the West. In 2010 China became Iran’s largest trading partner. In 2011 trade between Dubai and Iran was valued at $13.6 billion. Last year Iran’s largest car maker agreed to send 10,000 cars per annum to Russia.
To circumvent the banking restriction, trading partners use hawala, a system of exchanging money without the money ever leaving the country. It is a system completely dependent on trust, in which the bank uses a country that trades favourably with both trading partners. The current favourite is Japan. The Iranian bank leaves money in a bank in Iran and Japan uses its debts to Iran to provide money in any currency to a trading partner on the other side. So trade has continued; it has not diminished. This could be a profit that the UK is missing.
I shall end by mentioning nuclear power and chemical weapons. I am no expert in these matters, but the facts that the Iranians are offering to keep only two nuclear programmes in Natanz and argue that they have no chemical weapons are worth considering. Iran was attacked with chemical weapons. The havoc that caused means that no Iranian would allow them to be used against anyone, not even their enemy.
Lord Lamont of Lerwick (Con)
My Lords, I refer to my entry in the Register of Members’ Interests. I am the unpaid chairman of the British Iranian Chamber of Commerce and some years ago I was a director of companies that did business with Iran. I assure the Committee that I have no direct commercial or financial interests in Iran, although I work for a company whose main shareholder has interests in Iran.
For the avoidance of doubt, I will say that I absolutely condemn the abuses of human rights in Iran and recognise the concern over them. Only this week, Dr Shaheed, the UN monitor of human rights in Iran, highlighted and condemned the continued detention of human rights activists, journalists and the leaders of the green movement. However, as the noble Baroness, Lady Afshar said, 500 Iranian intellectuals wrote an open letter. Eighty of them were or had been in prison. They said that the election of President Rouhani had produced a significant change in the climate, that things were changing and that they felt the offer Rouhani had made ought to be responded to by the West. That was the way they put it.
I congratulate the noble Baroness, Lady Afshar, on initiating this debate. I entirely agree with what she said about cultural exchanges. I am also involved in the Iran Heritage Foundation, which exists to do precisely what she described. For example, it was involved in helping set up two major exhibitions in the British Museum and in taking the scroll of Cyrus back to Iran. The Foreign Office advised that it would be stolen by the Iranians, but we went ahead and did it, and it was returned on time and generated a lot of good will.
I believe that the election of President Rouhani was a significant event to which we should pay great attention. In that election, the economic needs of Iran and foreign policy became one issue. People were very dissatisfied with the state of the Iranian economy and wanted relations with the West to improve.
Despite Prime Minister Netanyahu saying that it is the same old thing with a smile, I do not believe for one minute that President Rouhani could have said the sort of things he said with eloquence in the television debates without meaning them and without intending to try to bring change to Iran. His spoke about the use of social media and greater freedom for individuals, and just 48 hours ago made a speech about freedom in universities. Above all in his comments, he spoke about transparency in the nuclear programme.
There are some people who say that sanctions have brought this about, and therefore that we should continue with them, not relax them. That would be a huge error. People wanted change, but polls show that there is considerable public support for the nuclear programme and that people blame the absence of medicines—something that was highlighted by the UN human rights monitor at the UN this week—on sanctions and foreign powers.
Israel has made it quite clear that it does not want an agreement between the West and Iran. I suspect that it would prefer a country which is beyond the pale. It does not want a large country in the Middle East that has normal or near-normal relations with the United States. Other Gulf states have voiced their anxiety, and although they are our good friends—they invest here, they lend us money—I hope that people will realise that they, too, have their own domestic political reasons for promoting the image of Iran as a threat to them, and that religious prejudice is not always in one direction only. I do not believe that Iran has any territorial designs on any country; I do believe that it has its own security concerns.
People often try to read the mind of Mr Khamenei. I think you need to know only one thing about Mr Khamenei. Before he became the Supreme Leader he was President for two terms. During that entire time he was a president at war—a war in which 500,000 people either lost their lives or were seriously wounded. People do not recognise that Iran is, militarily, a very weak country. I think it was General Petraeus who pointed out the other day that the entire air force of Iran could probably be wiped out in 24 hours by that of the UAE, although we continue to sell arms to the UAE for reasons I sometimes find difficult to understand.
Is a deal possible? There are a number of points that need to be considered. First, obviously, we need the maximum transparency and rigorous inspection. The additional protocol has to be signed by Iran, meaning that inspectors can request to go anywhere in the country. Then there is the big issue of the timescale. The Iranians want a quick deal. They talk of six months. Of course, they want quick relief from sanctions. However, quick relief from sanctions does not mean that there could not be an extended period, perhaps lasting five years or so, in which the suspension of sanctions was conditional or dependent on Iran continuing to honour the undertakings that it made with regard to its nuclear programme.
Then you have the issue of the size of Iran’s enrichment programme. The Israelis say that it should be dismantled completely. I think it is clear that that is unacceptable to the Iranians. I do not pretend to have any nuclear expertise but I have spent quite a bit of time talking to people who have. I believe that by taking measures to deal with capacity, output and the type of centrifuges involved, it would be possible to define the breakout period. The breakout period is what concerns Israel: that is, the time it would take to break out from a civilian programme to manufacture a weapon. That period has to be long enough so that the West can identify and respond to it. I believe that that could be identified.
I do not believe that Iran will accept that there should be an end to all enrichment in that country. That would be very difficult for it to accept politically, and very difficult for it to justify after all the suffering from sanctions and all the billions that have been spent on it. However, its programme should be related to what its need for nuclear electricity is likely to be. We threw away opportunities in the past: in 2003 and 2005. Even the Israeli Defence Minister said yesterday that he believed Iran was genuine in wanting a deal. Israel may be opposed to it, but he said that Iran was genuine in that belief and aspiration. I hope that we will not repeat the mistakes we made when President Khatami was in power.
Lord Ahmad of Wimbledon (Con)
Just before the noble Baroness gets to her feet, I would like to remind all speakers that this is a time-limited debate. When the Clock shows seven minutes, remarks should be concluded.
Baroness Williams of Crosby (LD)
My Lords, I very much agree with what has already been said by the noble Baroness, Lady Afshar, and I congratulate her on calling this timely debate. I also strongly support what was said by my noble friend Lord Lamont, who was absolutely right in suggesting that it is perfectly possible to now open negotiations with Iran on a serious basis. I add only one thing to what he said about that, which is that Iran has already suggested that it could move away from the 20% refinement figure across the front, where it started moving in that direction, and back to the 5% which is compatible with civilian uses of nuclear power. That should be carefully tested, investigated and discussed so that we can find out how much credence there is in what has already been said.
The only other point that I will make is that it is difficult to look at a country like Iran and not recognise that it has profound reasons to be frightened of being attacked. We tend to forget in this country that the Iran-Iraq war brought, as my noble friend said, 500,000 casualties. That is a rather modest figure; my understanding is that it was probably more like 800,000, of which the larger proportion was Iranian casualties. Why? Because only Iraq used chemical weapons; Iran never resorted to them. Iraq used both sarin and mustard gas, which are long-standing and extremely agonising forms of chemical weaponry. It can fairly be said that there is not a single country in the world, not even Syria, which has suffered as much from the use of chemical weapons as Iran. Despite that, Iran has never attempted to build up chemical weapons. Compared to the huge reserves of 10,000 tonnes that we know Syria has, the core of the matter is that Iran has never moved in that direction. It has repeatedly said that it regards chemical weapons as totally unacceptable.
On a more general note, I understand that up until now, the United Nations has not sent an invitation to Iran to take part in the Geneva II negotiations which are likely to happen later this year or, at the very latest, early next spring. I find that puzzling given that Iran is the second-greatest regional power in the whole area, and also given that it is seen as an ally by Syria. Assad has not said himself that he will go to any Geneva II negotiations, but there is surely reason to believe that if his closest ally, Iran, is there, he is much more likely to go than if it is not there. Perhaps my noble friend Lady Warsi will tell us something about the prospects for Geneva II including Iran as one of the countries sitting round the table. It is vital because, like it or not, Iran is seen by the whole of the Shia group of Muslims throughout the world as being the lead country. Therefore, its non-presence would almost certainly undermine the value of those negotiations.
I will say two other things before turning to one or two practical ideas that could be used to create a much closer and mutually constructive relationship with Iran. I fully share what has already been said by the noble Baroness, Lady Afshar, and the noble Lord, Lord Lamont, on the subject of issues that can be taken up and used in this respect. The first thing I will say is that there is a colossal misunderstanding about Iran in the West. I will take just one example, as a woman Member of the House of Lords. It is widely believed in large parts of the United States that Iran is rather like Saudi Arabia: that women walk around fully veiled, are not allowed to drive cars, have no education and are deeply and profoundly suppressed. Not so. Some 55% of undergraduates in Iran at the present time are women, and there are large numbers of women at the very top of both the legal and medical professions.
I completely share what was said by both previous speakers about human rights. We absolutely need to insist that Iran lives up to the highest standards of human rights and that it releases more—indeed, ultimately all—its prisoners who have not been tried. It is vital that we better understand that this great civilisation is not the same as some of the excesses that one sees in other countries. Incidentally, the widely held belief that Iran is Arab is also completely misleading. The fact that it is multifaceted in religious terms is an important point to make. There are still active members of the Zoroastrian community in Iran, which is an ancient civilisation.
Practically, what can we do? I suggest that there are three areas where we could create much better relations with Iran without damaging in any way the serious considerations that have to be brought to bear on such things as nuclear weapons and so forth. First, the noble Baroness, Lady Afshar, mentioned the possibility of much closer relations with universities. My noble friend Lord Phillips of Sudbury recently went to the University of Isfahan, which is a very famous and ancient university, and also to the University of Tehran. In both cases he was told very strongly that they would welcome a much closer relationship with a matching United Kingdom university. They did not specify which ones, but they made it clear that they would be wide open to such proposals.
There is another serious issue which involves the universities. That is, as some noble Lords in the Room already know, that there is a very serious incidence of drug-related tuberculosis in Zahedan, in the south-eastern part of Iran. I will spell it for Hansard. I am not sure I have pronounced it right. The important point is that drug-related TB is not a respecter of borders. It crosses them very happily. We know from our own experience of drug-related tuberculosis among some migrants to Britain how crucial it is to try to deal with this at the source. Iran comes second only to India in the incidence of drug-related TB. We have in Britain university departments that are highly instructed about and knowledgeable about drug-related TB. This is, again, an obvious win-win example of what can be done.
Secondly—and I now look firmly at the right reverend Prelate the Bishop of Ripon and Leeds, who will be surprised that I address him—I strongly believe that a group of religious leaders from Britain would be very welcome in Iran and would do a great deal to bridge the gap between us and this strange country, which is rather like the Holy Roman Empire, in that it is at once both a religious and a political entity. I have always been puzzled why the great advantage that the Church of England has in this respect, as a state-based religion, could not be used to create much closer relations with Iran.
My final point is very important. We have in this Room—I invited him as a guest—Professor Lightfoot, who is the leader of the co-ordinating organisation of international research into disease surveillance. He has set up, all over the world, networks of people looking at surveillance of a disease and how it moves across the world. He has just been approached by Iran, Armenia, Georgia, and other countries with a view to setting up a regional network. I can think of nothing better—less objectionable, politically speaking—than to set up such a—
Baroness Williams of Crosby
I will be finished in a moment. There could be nothing better than to set up an international network of this kind and to support Iran’s being part of it. I commend the idea to the Minister.
The Lord Bishop of Ripon and Leeds
My Lords, I am very grateful to the noble Baroness, Lady Afshar, for initiating this debate and for introducing it so comprehensively. I am aware, through contacts, of Iranian students in Leeds and of some of the difficulties of which noble Lords have been speaking in terms of their education and the way that that has developed, and of the struggle to keep them at Leeds University.
Like others, I have been heartened by the change of political rhetoric following the elections in Iran, and share the high expectations that a more pragmatic stance from Tehran will see progress made on a range of issues, not least the nuclear issues. In view of the speed of recent diplomatic developments and the ambitious timetable set at this month’s talks in Geneva—the six to nine months to which a number of noble Lords have already referred—it would be helpful to have some idea from the Minister as to what she understands to be the end game. What would a normalisation of relations look like? What might be the trade-offs that each party might be required to make? That seems to be at the heart of the question that the noble Baroness has put before us today.
I will take up the references that have been made to issues of human rights in Iran. I want to see progress on the nuclear issue, but I am conscious that in any trade-off we could see a weakening of the Government’s commitment to secure progress on other fronts, particularly that of human rights. Iran appears to be preparing a receptive response to inquiries from international oil and gas companies, in the expectation of the lifting of EU sanctions. That may well be right, and it may well be the direction in which we ought to go. However, it seems premature until we have more in the way of assurances and evidence that human rights will be more respected in Iran than they have been.
I am not yet convinced that a change in Iran’s human rights agenda will come with the Rouhani presidency, because critical decisions continue to be made by the Supreme National Security Council. This remains populated by a cohort of people who spent much of their careers in the military and security services. I listened hard to the arguments, both in this debate and earlier, that Iran has no regional ambitions, and about its place in the funding of rejectionist Palestinian entities. I am not yet convinced by these arguments. For me, there needs to be much clearer evidence of a new Iranian policy in the whole area, as well as new developments at home.
Has the Minister seen any change in the vulnerability experienced by religious and ethnic minorities in Iran, whether by Kurds in Iranian Kurdistan and in Iran, or by people of minority religions? From my own contacts with Iranians in Leeds, particularly those who have fled from Iran, I know that they certainly remain highly on edge as to exactly what the future will hold, for their families back in Iran as well as for themselves.
I am also concerned about the continued fate of the members of the Iranian resistance at Camp Ashraf and the misnamed Camp Liberty in Iraq. What evidence is there of any concern from the Iranian Government for those refugees? Whatever we make of responsibility for last month’s massacre at Camp Ashraf, what are the Government doing to provide for the safety and security of the women, men and children in those camps, whether by means of UN forces or otherwise?
I was grateful to the noble Baroness, Lady Williams, for her challenge on the relationships between the Christian churches here—perhaps the Church of England in particular—and Iranian religious leaders. I will take that back and see how we can develop some of those relationships. I absolutely agree with her that it is in discussions, and in deepening religious as well as academic and educational links, that we shall come to understand one another better. We would then be able to move in the sorts of directions that we have been talking about this afternoon.
I hope that the Government will give us a clearer idea of their strategy for balancing the range of competing concerns, so that we can make progress on the nuclear issue without losing sight of the wider picture. I look forward to developments as the discussions go on, especially in our concern for the upholding of human rights.
Lord Hylton (CB)
My Lords, I join in the thanks already expressed to the noble Baroness, Lady Afshar, for this debate. I start from the fact that the United States has had no diplomatic relations with Iran since 1979. This has moved me to argue for political détente. I will continue to do so, and I welcome of course the first small steps that Her Majesty’s Government have taken in this direction; for example, by exchanging non-resident chargés d’affaires and by the conversation between our Foreign Secretary and his Iranian counterpart in New York.
I hope that relations will continue to be improved step by step. There are two rather obvious reasons for doing so, the first being external and the other internal. Iran is in a position to be extremely helpful in other countries, particularly Syria, Lebanon, Iraq and Afghanistan. That is why, and as other speakers have mentioned, I would like to see Iran taking part at whatever level can be agreed in the second Geneva conference on Syria. I agree strongly with the noble Baroness, Lady Williams of Crosby, on that.
The internal reason is that Iran is a diverse country, by no means monolithic. It contains Azeris, Kurds, Arabs and Balochis—to name only a few of the subgroups. Politically, there are hardline and more moderate clerics, just as there are Revolutionary Guards and pretty extreme politicians. The new president and his Government are somewhat different from the previous Administration. It is therefore important to give as much encouragement as possible to those who hold reasonable views and who care for the common good of the whole population. This has, we know, been much damaged by sanctions, a depreciating currency and rising prices. It is in our interest that the present Government should not be marginalised by their opponents.
Iran has some 75 million people and is therefore of a similar size to Egypt, recognised as the largest Arab country. The noble Baroness, Lady Afshar, is therefore quite right to ask for closer education links. My late mother’s cousin, Nancy Lambton, was for many years professor of Persian at London University. She and others created links which should be developed.
On commerce and trade, Iran could become an important market for our goods, services and expertise. Iranians whom I met just a few years ago in Isfahan were keen supporters of our football teams. We therefore have some goodwill on which to build. I acknowledge of course that major trade links may have to wait until progress has been made on the nuclear issue. I look forward to the Government’s thoughts on the possible means for achieving improved relations and greater détente—some of which, again, were outlined by the noble Baroness, Lady Williams.
Lord Triesman (Lab)
My Lords, this debate is happening at an important moment. I share President Obama’s assessment, echoed by my noble friend Lady Ashton on behalf of the EU, that President Hassan Rouhani is indeed reaching out. The recent exchanges on the nuclear programme, the exchanges of letters and the interface with our own Foreign Secretary are hopeful signs, but so far they are only signs. I therefore join others in thanking the noble Baroness, Lady Afshar, for hitting such a helpful moment to have this debate.
Anyone who knows the Iranian people or who has visited the country will be impressed by the energy and intellectual curiosity, particularly of young Iranians. Anyone who has ever taught Iranian students, as I have had the good fortune to do, will know exactly what I mean, and the noble Baroness, Lady Williams, made key points about the role of women in higher education which I wholly endorse. Iranians are inquiring, modern and hungry to engage with others; they are protective of their country, although that does not mean that they embrace theocratic rule or want to live in a social order resembling a caliphate—that is not true about them. Some are very brave. They faced repression, even if there are now limited changes.
It makes great sense to look at the two outward-facing windows that this debate suggests we look at which offer perhaps the best opportunities to build, for ordinary people, on the process of reaching out. Commercial links have understandably been impacted by economic sanctions. Sanctions were and, in my view, are essential until there is compliance with all United Nations decisions. They have had an impact and have had a much better effect than the alternative forms of intervention which some have advocated. It is easy to understand that the Iranians want them eased. The country is struggling under the current sanctions, not least because of the two-thirds decline in its oil exports, which account for some 50% of government expenditure.
The noble Lord, Lord Lamont, put the case about the economy very strongly, and I can only echo him. In exchange for diplomatic concessions, there is already promising talk about easing sanctions imposed by the UN and the West. Starting from such a low point, almost any commercial link is bound to be an improvement. On 19 October, the United States released $12 billion-worth of sanctions and the EU released $35 billion-worth of sanctions. These are good steps. I know of business opportunities, including some for Iranian state pension providers, many of whose beneficiaries are British. Opportunity is there, so there will be progress, but only if there is progress in the other areas that concern us, not least uranium enrichment and security for the missions of countries, including ours, that have suffered in the recent past. We do not yet know with certainty that this progress is sustainable, and I will return to the strategic judgment we have to make. It should be the core issue of this debate that we look at this issue, and ask the same fundamental questions as the right reverend Prelate the Bishop of Ripon and Leeds. I share his call for clarity.
Education links are invaluable for the future. They reach a new generation of Iranians whom we need to reach. UNESCO tells us that almost 99% of Iranians aged between 15 and 24 are literate and, as a percentage, as many people go to tertiary education as in this country. Support for educational and cultural exchanges between our two countries will form stronger bonds and more mutual comprehension. We have promoted this through the British Council and Chevening scholarships.
Other countries have also recognised the problems in this arena. UNESCO reported interventions—I will not go though all the kinds of courses because of the time—from Germany, France, the Czech Republic, Malaysia, Korea and the United States, and I am sure there are a great many others. Aside from the Chevening scholarships, I am aware of initiatives taken by a number of British universities. There are scholarships at Cambridge, East Anglia, Westminster and Nottingham, and the noble Lord, Lord Hylton, kindly reminded us of a longer and deeper historic link with the universities as well.
All this is positive, but it does not address the key strategic issue. I know how hard negotiating with Iran can be as I conducted the negotiations for the release of our sailors and marines who were seized in the Persian Gulf by the Revolutionary Guard. Everyone is entitled to look for signs of hope—we would feel hopeless if we did not do that—but we will all weigh the changes in top personnel, even if we do not yet know much about them, and the positive words, which are to be welcomed and given weight, while we recognise that the intention of diplomats who utter them is that they should be given weight. The art is to be optimistic, but not to put unsustainable weight on pronouncements or on preliminary stages of a dialogue. These are processes where cautious advance is critical, working out with consummate care what is to be given in exchange for real changes, and for nothing less.
I ask noble Lords not to misunderstand my point. I want hope and positive advance no less than anybody else. I do not want to miss any window of opportunity, but I know that no sophisticated nation or alliance builds a credible foreign policy on the basis of hope alone. It is built in calibrated steps by all parties. It is circumspect and usually involves turning around a huge tanker that is loaded with history, poor experiences and disappointments. To do so as fast as the evidence suggests is, of course, right, but it has to be as fast as the evidence suggests.
I hope that when we hear in a few moments from the noble Baroness, Lady Warsi, what the Government’s current assessment is, the lessons to take away will be that we must move in a timely way; that we should not be star-struck with hope without proof of good intention; and that we should have carefully designed milestones by which to measure proposals. That is the approach I would advocate, and I do not believe that it moves an inch against the direction of doing so with a hopeful spirit.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, I start by thanking the noble Baroness, Lady Afshar, for calling this incredibly timely debate. It is particularly timely because nuclear talks with Iran resumed last week in Geneva, and for the first time in a decade we are seeing serious exchanges between the E3+3 and Iran on the nuclear issue. On the bilateral side, we have agreed with Iran that we will both appoint non-resident chargé d’affaires, which marks a first step towards improving diplomatic relations. As my right honourable friend the Foreign Secretary said on 8 October:
“It is clear that the new President and Ministers in Iran are presenting themselves and their country in a more positive way”.—[Official Report, Commons, 8/10/13; col. 27.]
That is, of course, welcome. However, the noble Lord, Lord Triesman, is right to say that we must advance cautiously. So far, the contact has been thus. On 5 August 2013 the Prime Minister wrote to President Rouhani, and on 23 September the Foreign Secretary met the Iranian Foreign Minister, Mohammad Zarif, in the margins of the UN General Assembly in New York. He spoke to him again on 7 October. The FCO’s political director met the Iranian deputy foreign Minister on 25 September, and again in Geneva on 16 October. However, we remain concerned about a number of Iran’s policies, including regional activity, particularly in Syria, and human rights. We want to see a change in actions, not just a change in words, from Iran.
Iran’s nuclear programme remains our overarching priority. Iran has thus far failed to reassure the international community that its nuclear programme is for purely peaceful purposes and it is therefore right at this stage that the UN and the EU have imposed sanctions on Iran. Given the current sanctions regime, the British Government do not encourage trade with Iran and do not support companies who wish to export to Iran or have a presence within the country. However, trade does continue in humanitarian goods such as medicine and foodstuffs, which are exempt from sanctions.
Lord Lamont of Lerwick
Has the noble Baroness noticed the report of the UN monitor of human rights who specifically said that the relief from sanctions for medicines and humanitarian purposes for poorer people in Iran is ineffective because the banking sanctions remain?
Baroness Warsi
I take the point made by my noble friend. So far as the UK is concerned, we have tried to issue export licenses for these products as a priority, but I understand the challenges that are presented by the banking sanctions. I shall certainly take back the comments that have been made in the debate today, including those referring to CORDS, the organisation that is in attendance here. It is the ambition of the UK Government to resolve the impasse in the nuclear issue peacefully. We therefore hope that President Rouhani’s Government will engage constructively and reach a negotiated settlement with the international community.
I can assure noble Lords, and specifically in response to the comments made by my noble friend Lord Lamont, that we have been open with Iran. We have said clearly that reaching a comprehensive agreement on the nuclear issue would mean the normalisation of political and economic relations with the international community and the end of all nuclear sanctions. Iran’s nuclear programme would be treated in the same manner as that of any other non-nuclear weapon state party to the non-proliferation treaty. A solution to the nuclear problem would mean that normal commercial ties with Iran could resume. It is therefore in all our interests for this matter to be resolved and for us to proceed to the next stage. The E3+3 accepts and respects Iran’s right to use nuclear energy for peaceful purposes. But this remains impossible if Iran continues to expand its nuclear programme in violation of UN Security Council resolutions and multiple resolutions of the IAEA Board of Governors.
Iran’s recent activities go far beyond what is required for a civil nuclear programme. Iran needs to take concrete steps to address international concerns and comply with international resolutions. We therefore welcome the more positive approach taken by the Iranian Government in nuclear talks between Iran and the E3+3 in Geneva last week. Foreign Minister Zarif presented a basis for negotiations and for the first time diplomats have begun more substantive discussions with Iran on issues of concern. We hope that negotiations will lead soon to some tangible results. There is a great deal of hard work ahead and further talks will take place on 7 and 8 November in Geneva. It is important that we maintain the positive momentum of the negotiations while at all times keeping a clear focus on Iran’s continuing efforts to develop its nuclear programme.
The noble Lord, Lord Hylton, and other noble Lords raised the issue of educational ties. We deeply regret that one implication of the lack of progress on the nuclear issue and a consequence of the closure of our embassy in Tehran has been to make it harder for Iranians to apply for visas to travel here as students, and for other visas. While there has been a noticeable drop in the number of students applying for visas, the UK remains committed to fostering educational links and has issued nearly 1,500 student visas via our diplomatic missions in Istanbul and Abu Dhabi. We also continue to run the Chevening Scholarships programme for Iranian students. This scheme is part-funded by the Foreign Office and will enable six outstanding scholars from Iran to study a one-year postgraduate course at a university in the UK.
The British Council suspended operations in Iran in 2009 but, noting President Rouhani’s positive comments regarding engagement with the international community, is now looking again at strengthening cultural and educational links between the UK and Iran. In the mean time, the British Council has supported English language teacher training through the development of digital resources and face-to-face training events outside Iran.
Baroness Williams of Crosby
I apologise for interrupting the Minister and thank her for giving way. Just before we move away from the visa issue, will she consider looking at visas specifically for scientific and medical purposes? I mentioned drug-resistant TB. There is a great deal of expertise in this country and in Iran. That is the kind of area where perhaps a more generous approach can be made.
Baroness Warsi
I will certainly look at that specific issue, and will continue to press for the overall normalisation of relations, which will impact positively on all visa applications.
In May this year, the British Council also hosted a meeting across the Persian Gulf in Dubai, which brought together senior non-governmental stakeholders from the Iranian education sector to discuss language and education in Iran. Such dialogues are continuing; for instance, with a round-table discussion next month, which will explore the role of cultural relations in developing UK-Iran engagement.
The noble Baroness, Lady Afshar, and my noble friend Lord Lamont spoke about banking restrictions. It is regrettable that a number of banks have taken the position that they have. It is not the intention of sanctions for that to have happened. The impact of sanctions on student bank accounts has been as a result of some banks imposing their own restrictions in addition to the sanctions. The FCO has held some initial discussions with the Treasury on how to resolve this issue, and these discussions are currently ongoing.
As my right honourable friend the Foreign Secretary has said, progress in our bilateral relationship with Iran must be on a step-by-step and reciprocal basis. We are open to more direct contact and further improvements in our relationship. It is with this in mind that we are appointing the chargés d’affaires, who will be tasked with rebuilding our relations and dialogue on many issues.
My noble friend Lady Williams is right: one issue where Iran can, and must, play a constructive role is Syria. The new Iranian Government have said that they want to see a peaceful solution to the Syrian conflict. No decision has been made on Iran’s participation in Geneva II. We call on President Rouhani’s Government to match their words with actions and publicly endorse the G8-backed Geneva communiqué, which calls for a negotiation between the Assad regime and the Opposition on a new transitional authority for Syria. Iran has so far failed to endorse that communiqué. Iran’s actions must not prolong the conflict and must not contravene UN Security Council Resolution 1747. However, by supporting the Syrian regime with weapons and financial assistance, unfortunately Iran’s actions continue to do that at this stage.
Finally, as this Committee is well aware, the human rights situation in Iran continues to be a matter of serious concern. We regularly receive reports of serious violations by the Iranian regime against its own citizens and have condemned these. While I accept the comments of my noble friend Lady Williams, Iran does differ in many positive ways on the issue of human rights, women’s rights in particular, but there are still challenges. Women continue to suffer discrimination under Iranian law with a draft Islamic penal code continuing to legitimise disparity between the sexes. We saw a further erosion of women’s rights in Iran in August 2012—
Lord Lamont of Lerwick
I entirely accept what my noble friend is saying, but does she make the same representations equally unequivocally to Saudi Arabia?
Baroness Warsi
I am not the Minister with responsibility for Saudi Arabia, but I can assure my noble friend that when I last met with the Saudi Justice Minister I was incredibly forthright and frank in the discussions on the issue of women’s rights in Saudi Arabia.
We have made many public statements about women’s rights in Iran, too. The death penalty remains to be used excessively, and Iran has one of the world’s highest per capita execution rates. Discrimination and persecution of religious and ethnic minorities continues, as does torture and intimidation. I would be supportive of anything that the right reverend Prelate the Bishop of Ripon and Leeds could encourage the Church of England to do to help foster understanding.
The noble Baroness, Lady Afshar, noted some positive moves, including the release of Nasrin Sotoudeh. This is, of course, a welcome step, but more needs to be done to ensure all Iranians enjoy the rights and freedoms to which they are entitled. I can assure the right reverend Prelate that the issue of human rights concerns is as important to us as nuclear concerns. We have designated more than 80 Iranians responsible for human rights violations under EU sanctions and have helped to establish a UN special rapporteur on Iran human rights. We supported Iran-focused human rights resolutions at this year’s UN General Assembly. In relation to Mujahideen-e Khalq and Camp Ashraf, we have called for a timely Iraqi investigation and for those responsible for these terrible attacks to be held to account. I have answered questions on these matters on many occasions before the House.
In conclusion, we sincerely hope that the marked change in Iran’s public statements is accompanied by concrete actions on issues of concern, not least the adoption of a viable approach to nuclear negotiations. If it is, the UK stands ready to work with Iran. We do not underestimate the difficulties ahead, but must take full advantage of any opportunities. If Iran matches its words with genuine steps to address the concerns that have been outlined in today’s debate, the Government believe that there is a rare and significant opportunity for progress to be made, and for our commercial and educational links to be strengthened as a result. This can only be to the benefit of Iran, Britain and the rest of the international community.
Housebuilding
Lord Stoneham of Droxford
To ask Her Majesty’s Government what progress they expect to make in increasing housebuilding by May 2015.
Lord Stoneham of Droxford (LD)
My Lords, I start by declaring my interest in the register as chair of Housing 21, a housing association. I thank my noble friends Lord Borwick and Lord Oakeshott for taking part in this debate and also the noble Lord, Lord McKenzie, and my noble friend Lady Stowell. I hope what we lack in quantity we will make up in the quality of the debate. I also congratulate my noble friend Lady Stowell on her appointment as Parliamentary Under-Secretary of State for Communities and Local Government and apologise for putting her on the spot so soon after that appointment.
I tabled this debate six months ago. My main motivation was to assess the progress on housebuilding in this Parliament and to monitor the progress on the government strategy as outlined in Laying the Foundations: A Housing Strategy for England. The document was hailed by the Prime Minister and Deputy Prime Minister as a perfect example of the approach of the coalition, which took decisions that were right for the long term and not for the headlines. In the foreword, they committed that the Government,
“will unlock the housing market, get Britain building again, and give many more people the satisfaction and security that comes from stepping over their own threshold. These plans are ambitious—but we are determined to deliver on them”.
It is nearly two years since that housing strategy document was published, and it has to be said that the first year, in terms of the number of houses built, was disappointing. In 2012-13, only 108,000 houses were completed. We have to face the fact that, after the 2008 economic meltdown, which had an overheated speculative housing boom and bust at its epicentre, restoring confidence and getting finance flowing again was never going to be a quick fix. There was also the adjustment of a new social housing programme, which has taken time to bed in and get under way.
However, there are signs of life now in the housing market. The number of new homes completed in the last quarter was up 25%, housing starts were up by a third and stamp duty revenues were up. That is clearly a change from a year ago. Housing was then very much seen, certainly by those who thought we should give greater priority to it, as the best possible kick-start to the economy. Now, with signs of recovery, our main concern must be that demand does not outstrip supply. We have to refocus on the shortfall between the number of houses built and the formation of new households, which requires houses to be built at double the rate we are building them at the moment. I hope the Minister will be able to tell us what the Government’s latest forecast is for new homes this year and whether they are confident that they can build the projected 170,000 affordable homes by 2015 that they set out in their housing strategy. That will represent significant progress on the number built in the last five years of the previous Government.
With signs of recovery, and some initial concerns about house prices rising in the south-east and London, housing strategy requires a long-term focus. We must avoid the quick fix that ends in another burst housing bubble and which will only compromise the chances of more people owning their own home or renting one at an affordable rent. We must not forget the many lessons of past housing cycles, which have occurred under Governments of all persuasions, but particularly under the previous one in the so-called good times between 1999 and 2007. The number of new houses built annually during that period rose by something like 30%, from 120,000 a year to 160,000 at the peak. But prices rose by 173% and mortgage loans increased by 182%. The central problem is that housing is a cyclical industry where price inflation has been the driver of profitability in the short term and land asset appreciation has been endemic to a business model that eventually hits the buffers.
Each boom and bust has not only shaken financial confidence but has sapped capacity in the sector. Each cycle has made the inelasticities of the supply chain even less subtle. Housebuilders are rightly going to be cautious following the experience of the bust times. They are initially going to be motivated to make marginal additions on their most profitable sites. They will even have some interest in allowing prices to rise rather than in providing volume to counter the higher prices. There has been a huge reduction in capacity in the sector, and skilled workers and developers have left the scene. Already there are signs that building costs are moving up with the initial recovery.
I suggest three guidelines for the Government. First, given the very dysfunctional housing market, they will need to intervene more than they want to. Particularly as recovery takes hold, they will have to work on opening up land supply and making sure that our technical colleges provide the new skills that are going to be needed to fill the capacity shortages. They will have to monitor competition in the market with the smaller number of developers in play.
Secondly, they will have to watch like a hawk their demand-led initiatives, such as Help to Buy, to make sure that they do not simply lead to price inflation. Thirdly, although 75% of new build is in the private sector by developers, they need to balance their attention with initiatives for social and council houses and for self-build to develop the full potential of new capacity and affordable housing. Doubling building capacity must be our objective, and it will probably take another full Parliament to get there.
What is needed with these guidelines? It is all there in the housing strategy document, but the strategy now has to concentrate on easing the supply constraints in the sector. Let us look first at the private sector. Planning flexibilities have to show through to release more land to be used. We have to make sure that the new homes bonus for local authorities provides an incentive to release development land. New players have got to be encouraged into the market. The Government were right to give more support to encourage self-build, which has been a weak component of the private sector after the destructive impact of stop-go cycles. Price stability has to be an important objective for living standards. Energy bills pall into insignificance compared with the cost of housing.
We have been very lucky to have low interest rates, but we do not want people fooled into thinking that they can continue. The greatest concern is that Help to Buy will stoke up prices in the south-east, although it will probably still have a role to play in other parts of the country. Will the Government consider reverting to a regionally focused Help to Buy scheme if house prices get out of hand in London and the south-east? Will the Minister update us on the progress the Government have been making with build now, pay later, the Growing Places fund and initiatives to stimulate self-build? Is the announcement on the much needed larger developments for the new generation of garden cities now imminent?
In the social housing sector, there is still uncertainty about future funding. If it delivers the Government’s target of 170,000 affordable homes, it would demonstrate its capacity potential. The Government’s proposal to develop a guaranteed bond scheme linked to potential institutional investment has the potential to fund a further 60,000 homes. What impact on extra housing supply can now be expected from the guaranteed loans for social and private rented landlords provided in the Government’s strategy?
In the council housing sector, now that councils have control of their housing revenue accounts, is the improving economic situation not a good time to review whether council investment in housing should be included in the public borrowing limit? We need to put councils on an equal footing with housing associations. No other European country has as strict accountancy arrangements as we do. Frankly, if we want to tackle some of the problems of our own council estates, they need development, regeneration and investment. Is this not a good time for the Government to review the anomaly that exists between councils and housing associations with regard to the treatment of their investment in the public accounts? If they did, it could be a source of new funding.
Finally, with so much to do and deliver, we must question whether the Department for Communities and Local Government has the resources and leadership to do all this. The Labour Government had nine Ministers for Housing. The coalition is now on its third. Yet the position of Minister of State for housing has disappeared. Can the Minister tell us how, in the face of the many challenges and the need for the housing sector to be galvanised to increase housebuilding, we can manage without a Heseltine or a Macmillan figure to meet the strategic housing needs of the country?
Housing is not just key to improving the social fabric of the nation; it has often been at the heart of the health and the crises of the economy. Never has there been such a requirement for a strong strategic focus aimed at long-term stability. The Government have made a start but they need to prove their grasp in the next 18 months, and we need to show that we take decisions that are right for the long term and not for the headlines.
Lord Borwick (Con)
My Lords, first, I declare my interests as shown in the register, particularly the directorships and shareholdings in two housing development companies—one developing up to 2,500 new houses in Bicester and another with plans for 10,000 houses in Sussex—and ownership of a farm in Scotland that may eventually be developed for houses and rail-related warehouses.
The history of our site in Bicester may be helpful in understanding the problems that beset our planning system. Planning for this non-controversial site, supported by the local authority, took only seven years from preparation of the first application to the grant of conditions and to the ability to start on site. This planning process cost us about £4 million. If the scheme was unusual, even revolutionary, it would probably have taken longer. It certainly suggests that any ambition to build on wholly new sites before May 2015 is impossible, and pretty doubtful before 2020.
In its report dated this month, An Analysis of Unimplemented Planning Permissions for Residential Dwellings 2013, the LGA suggests that the number of unimplemented planning permissions is about 400,000. However, I believe that there are serious flaws in the analysis. At present, our site in Bicester has permission for 1,585 houses, of which roughly 200 are built and occupied. Under the LGA analysis, I understand that the site is counted correctly as unfinished, but also as totally unimplemented, when the truth is that it is partly implemented.
The LGA figure of 400,000 unimplemented planning permissions is indeed scandalous—if true, which I doubt—but it is scandalously low, not high. The NPPF requires that councils should identify five years of housing land supply, of which at least the next three should be deliverable. Five years’ supply at the normal rate of housing production would imply a figure of 1 million houses, not 400,000.
My noble friend Lord Taylor of Goss Moor has been working hard, with tremendous success, to reduce 7,000 pages of planning guidance by 90%. But the problem is that the system does not really want to change. Any shortcut or acceleration of an ancient process is a risk without a reward. The risk is that a mistake will be taken to expensive appeal or judicial review, while the reward cannot be seen. There seems to be no advantage to a town or a council in becoming bigger. The established view is that new residents produce new problems and new costs. Property taxes that would galvanise an American town to growth are seen as irrelevant in the UK.
We all know that the costs of running the Government will require growth in the economy if we are to afford them. Furthermore, there is a shortage of cheap houses for the next generation, and our whole economy is distorted by the high value of houses in the south-east.
The admirable concept of localism has been taken by many as the right to do what they want—that is, nothing—rather than to influence what is really needed. What can be done about it? Perhaps I can make a few suggestions to the Minister. If we are to achieve growth in the production of social houses—and growth in commercial house numbers, too—councils must feel that there is an advantage to their organisation and their community in passing planning permissions.
The new homes bonus is a good scheme but perhaps too small to work. It seems from the figures that the number of planning approvals has gone up, but I am always worried about whether the same definitions are being used. I suggest that the best figures are for houses built and occupied, as there is no advantage to the country in having permissions granted but not used. What would happen if the new homes bonus was trebled, but for one-third of the time of the original scheme—that is, for two years rather than six—and the bonus paid only for new homes built and occupied? Moreover, it should be free to be used by the council, not top-sliced to pay for LEPs.
Will the Minister consider urging her colleagues in the Treasury to do something about stamp duty? Many noble Lords and the Government have been urging the country to build new homes, which is great. Well, how can a tax on new homes, such as stamp duty, help that process? A possible way to slow down something is to tax it. Can we please try the reverse? A route to be studied would be to ensure that stamp duty on residential houses was paid to the local planning authority rather than to the Treasury. That would further incentivise the authority to get houses built and sold. When the Treasury became used to not receiving the income from stamp duty, perhaps after three years, then the tax could be abolished entirely. Would that not be a marvellous development?
Lord Oakeshott of Seagrove Bay (LD)
My Lords, it is a pleasure to follow the noble Lord, Lord Borwick, and to welcome him to this House. He has a distinguished business career in manufacturing but clearly speaks with great knowledge and expertise about the housing market. Abolishing stamp duty is a nice idea, but I do not know where the money is coming from. Perhaps I can say to him that the best way to raise a significant amount of money without stopping housing supply is to have the Liberal Democrat mansion tax, which goes on existing property and so does not affect supply.
I should declare my interests in the register, as did the noble Lord, particularly the fact that I am chairman of OLIM Property Ltd, which is a commercial property investment management company. I have bought about £100 million-worth of property during the past year all over the country, from Belfast to Ipswich, Preston to Leeds and Peterhead to Exeter. Although I am not operating in the housing market, I am obviously pretty close to what is happening in the local economies in those areas.
There is a simple and very serious problem that house prices are horribly and unaffordably high in this country. I go beyond the people who argue for stability, and say that prices are too high and need to come down. There are two simple reasons for this. We have built far too few houses for many years and we have also, in terms of affordability, sold off so much of the social housing stock. Two million houses were sold since Mrs Thatcher introduced the policy in 1979, of which three-quarters of a million—no less—were sold under Blair and Brown.
Under both Governments we had a failure to build, and a failure even to use what houses we have to best advantage. We are therefore left today with £23 billion of housing benefit being poured down the drain. Much of it is actually spent on the same council houses which were sold off, but the rent now goes to private landlords.
The result of this long-term lack of supply can be seen today in the ratios of earnings to house prices, which is the key measure of affordability. You do not, if you are wise, take a mortgage on the basis of this week’s special mortgage offer. Mortgage rates go up and down, but obviously what matters long-term is how your earnings compare to what you pay for the house. If I were to advise someone to rush out and buy a house on very low mortgage rates today, to be honest I would be guilty of mortgage mis-selling.
Going back to 1997, when Labour came to power, English house prices were three and a half times median annual earnings. Ten years later mortgage lending had trebled but there had been no net increase at all in house building, with the same number being built. The cost of housing index had doubled to a ratio of 7.2 at the peak of the 2007 boom. On the latest official figures, which are for April 2012, 18 months ago, it had only slipped back to 6.7 times annual earnings.
It is very likely that, with house prices rising five times faster than average earnings, that ratio is right back up past the 2007 peak. As a very good map in the Guardian last Saturday showed, the ratio is already above that peak in very many local authorities. These are mainly, although not entirely, in the southern half of the country, all the way from Somerset to Suffolk, in Devon and even one or two in Lancashire. It is not just in the centre of London. For example, housing in Welwyn Hatfield, the constituency of former housing Minister Grant Shapps, is now unaffordable. There houses cost eight times local earnings, even higher than at the peak of the boom.
I have also done some work on auction results and the housing auction market. This is a real market where real volumes change hands. The numbers are quite large, about 5,000 houses a quarter. In the last quarter, July to September 2013, the average price of a house sold at auction across the country rose by 14%. It rose by 16% in London, but still actually by 10% in other parts of the country. That statistic is more up to date than the Government’s Land Registry figures, which are on completions, and it goes further back. House prices are rising fast, and I am afraid that that is accelerating.
My noble friend Lord Stoneham asked for a long-term focus on housing. I do not know if 40 years back is long enough, but I remember buying my first home in 1972. That was in rather similar conditions to today, during the Barber boom. There had been a great relaxation of credit, and house prices had already gone up 40% or so over the previous year. I had quite a struggle to buy a house priced at £8,500 with a £7,500 mortgage. Two years later I had to come to London to be a special adviser in the 1974 Government, and mortgage rates had then gone up to 14%. Having saved up on my own to be a first-time buyer, I then had to be a second stepper with the bank of mum and dad behind me to have any chance at all.
We have had many, many experiences in this country of wild fluctuations in interest rates. Rates may be a little more stable today, but there is clearly a great deal of concern about the way they are going. That is being expressed by commentators from all sorts of backgrounds. I have here the HSBC chief UK economist’s research from last week, which argues that house price inflation will not help the UK rebalance and points out the problems of supply.
To return to what the noble Lord, Lord Borwick, was talking about regarding resistance to development, I am not personally against a bit of nimbyism, “not in my back yard”. After all, that is local democracy and people are able to argue that. What we must fight against is the attitude there often seems to be of BANANAism. I do not know if your Lordships’ know about BANANAism, but it means “build absolutely nothing anywhere near anyone”. I am afraid that that is the attitude of some people.
For a variety of reasons, we have had a serious shortage of housebuilding for many, many years. Lately, as my noble friend Lord Stoneham has said, it has been creeping up to 110,000 or 120,000 a year. It was down a couple of years ago to the lowest level in peacetime, since 1923, so, though it is picking up, supply is still far, far below what is needed even to keep house prices stable, given the growth in population, given the growth in household formation. The best estimates are that we need something like 250,000 completions every year just to keep up with increasing demand. To make any impact on the problem and keep house prices down or even make them a bit more affordable, we would clearly need to be up at 300,000 a year.
I very much hope and believe that the Liberal Democrat manifesto at the next election will have a commitment to that. However, a commitment is one thing—getting on with progress towards it now is quite another. There has been quite a bit of talk about Help to Buy and whether that—as I believe it is—is quite dangerous, given the way it has come in, with a limit of 25 times national average earnings, £600,000 a year. Like my noble friend Lord Stoneham, I think it should be limited to areas where the housing market is not so overheated as the south-east of England. It certainly does not need to be at anything like that high a level when you consider that across a lot of the country house prices, certainly for first-time buyers, are much more like £100,000 or £150,000.
We have another problem. There are two reasons house prices did not fall as much as one would have expected during the crash, and why they have gone up faster than they otherwise would have done. One is, of course, quantitative easing—£370 billion of credit pumped into the economy—which was necessary to avoid the economic patient dying of a heart attack at the time but has a lot of serious after-effects. The other is the Funding for Lending scheme. Just in passing, again, if you think this is wild left-wingery from me, the chief executive of Legal & General, no less, was describing quantitative easing as a policy devised by the rich for the rich. There is no doubt that it has helped push up prices of all sorts of assets, including housing.
The Funding for Lending scheme of the Bank of England has significantly failed to do what it is meant to do, which is to get cash to small businesses. Instead, it has led to a flood of cheap credit in the mortgage market, which is not its point. The Bank of England and the Treasury, I believe, must refocus Funding for Lending on its proper task, which is to rebuild desperately needed business job growth, not to get the house price merry-go-round going again.
When Grant Shapps was Housing Minister, he did make a sustained—and, I thought, quite logical—case for stable house prices, even though I would like to see them lower. I am afraid now that he is party chairman, he seems to be almost in denial. The Government, I am afraid—Conservative Ministers, anyway—seem to be washing their hands of the high-house-price crisis, because that is what it is, in a way reminiscent of Pontius Pilate. We cannot pump up house prices unless we are much more radical about supply. I am afraid Help to Buy without far more active help to build is a potty policy.
Lord McKenzie of Luton (Lab)
My Lords, I thank the noble Lord, Lord Stoneham, for initiating this short debate. When he introduced it he referred to the noble Baroness, Lady Stowell, and welcomed her to the Front Bench. She is now a veteran of housing debates. This must be the third in a couple of weeks, with one to come next week. I enjoyed the contribution of the noble Lord, Lord Borwick, although I did not agree with much of it. I have enjoyed the contribution of the noble Lord, Lord Oakeshott, whom I found myself closer to. I am interested that he bought his first house in 1972 with a mortgage of £7,500. So did we. I think we were both at that time members of the Labour Party, so our histories have diverged a bit.
We know that housing is moving up the political agenda, and for good reason. We have a growing housing crisis because we are building less than half the number of homes we need to keep up with demand. The truth, as others have said, is that we have not been producing enough homes under successive Governments for some time. In the past three years the number of homes built has reached its lowest level in peacetime, since the 1920s.
The recent upturn in activity is to be welcomed, but there is a long way to go. Homelessness and rough-sleeping are increasing, and the number of families in temporary accommodation is rising. People are struggling to get mortgages to get on the housing ladder and there is a rapidly growing private rented sector where too many lack security, have to pay ever increasing rates and suffer poor quality accommodation. There are nearly 5 million people on local authority waiting lists and this housing shortage is central to the cost of living crisis. It now takes the average family more than 20 years to save for a deposit, and house prices are, I think, eight times the average wage. It is no wonder that home ownership has fallen for the first time in a century, and that there are now some 8.5 million people in private rented accommodation, spending an average of 41% of their income on rent.
If home ownership is to be a realistic aspiration for working people and rents are to be affordable, we need a step change in the scale of house building in this country. This will not, of course, be achieved overnight, and on present policy certainly not by 2015. We have seen a plethora of initiatives by this Government, but they have not delivered anywhere near what is required. On home ownership we have seen First Buy, launched in 2011 and closed in March of this year, followed by Help to Buy equity loans, followed by the NewBuy Guarantee Scheme and now Help to Buy brought forward from January 2014.
However, there are real concerns about the latest Help to Buy scheme. If the Government simply increase housing demand but do not act to increase housing supply, all that will happen is that house prices will be pushed up and up. The end result is that the very people that the policy should be helping—first-time buyers—will find it even harder to get on the housing ladder. How in touch are this Government who introduce a scheme allowing taxpayer-backed mortgages for homes worth up to £600,000 when the average house price in the UK is £245,000 and the average price paid by a first-time buyer if less than £200,000?
We are not the only ones voicing concerns; the Treasury Select Committee has done so, and the IMF has warned about its impact on rising prices. These issues have particular resonance in London and we have heard from the Business Secretary, Vince Cable, about soaring house prices being dangerous and unsustainable. The new homes bonus was designed to incentivise local authorities to approve new housing developments, but has yet failed to deliver.
In its report in March this year, the NAO concluded that there is,
“little evidence that the Bonus has yet made significant changes to local authorities’ behaviour towards increasing housing supply”.
On coming to office, the Government cut the budget for new affordable housing by 60% and put the strain on increased rent levels to fund such provision. Even then its claim to deliver 170,000 new homes by 2015 includes those commissioned by the previous Administration. However, the programme has got off to a slow start, and anyway, some half of the programme is back-end loaded and is due to be delivered only in the final year.
We will doubtless hear from the Minister about the reduction in the number of affordable homes under the Labour Government; in fact, the figure usually quoted is a reduction in the number of homes rented from local authorities and housing associations over the period, and does not take account of the wider stock of affordable housing. The reduction is a direct consequence of the Right to Buy programme, touched upon by the noble Lord, Lord Oakeshott, which is a policy that this Government are seeking to make more generous. In fact, under the previous Labour Government, nearly 2 million more homes were built in England, including half a million affordable homes, with 256,000 in the last five years.
It is not difficult to conclude in all of this that the patchwork of current initiatives will simply not produce the step change in housing provision which is required. We have a job as the Opposition to criticise, challenge and support where necessary the Government of the day. However, we are now doing more so that in May 2015, given the chance, we will be in a position to start seriously to close the gap between the homes that are currently being built and the homes that we need.
Ed Miliband and Hilary Benn have asked Sir Michael Lyons, supported by a panel of experts, to lead a new housing commission whose task will be to set out a road map for how an incoming Government can help secure a big change in the number of homes being built. Some of the policy solutions to a step change must include tackling land banking and speculation by looking at giving local authorities proper compulsory purchase powers so that they can buy, assemble and grant planning permission on land that is being hoarded and is holding back development and giving councils the power to charge people escalating fees for sitting on land with planning permission.
There must be planning to establish new towns and garden cities. The UK has never delivered a large uplift in housebuilding without large-scale development such as the post-war new towns. This will entail the creation of new town development corporations as public/private bodies with the power to raise finance, undertake building and provide infrastructure. It would also necessitate financial incentives and freedoms for local authorities within the scheme and a fast-track planning process under the nationally significant infrastructure planning regime.
We know that at present some areas want to grow to meet local housing demand but do not have land within their local authority boundary to do so. Neighbouring authorities block the building of badly needed homes and the duty to co-operate has yet to prove effective. We want to establish a “right to grow” status with bids from local authorities assessed by the planning inspectorate. We also consider that there is scope to reform the housing revenue account system and we are not unsympathetic to the proposition to remove the cap. We want to give local authorities greater flexibility so that they can build more social homes. A number of local authorities are already beginning to build again within the constraints they have but we want the commission to look at the obstacles to overcome and the incentives needed to get councils and housing associations back into the business of building again. Despite various attempts to do that through Section 106, the community infrastructure levy and the new homes bonus, we consider that there remains a significant mismatch between the national and regional need for further housebuilding and the incentives which local communities have to accept new developments, especially developments such as new towns.
We need to find ways of ensuring that a larger share of windfall gains from planning permission goes to local communities. One thing is certain: if we carry on as we are, by 2020 there will be 2 million few homes in Britain. Our aspiration is to see 200,000 new homes delivered each year by the end of the next Parliament. That would be a significant improvement but there needs to be a long-term national effort to turn this around.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, I am grateful to the noble Lord, Lord Stoneham, for introducing this debate. As the noble Lord, Lord McKenzie, has just said, far from putting me on the spot, this is my third housing debate in the past two weeks. However, I am far from expert in this area and I recognise and acknowledge the great expertise of noble Lords who have spoken today. I also welcome my noble friend Lord Borwick. I have not had the pleasure of participating in a debate with him until today.
Before getting to the substance and specifics of the points raised by noble Lords, of which there are quite a lot, I shall start by speaking in general terms and move on in due course. The most important point to make at the outset is that the Government are committed to delivering long-term economic stability and economic growth. Our purpose and objective in that area have not changed. Whereas the previous Administration oversaw a housing boom and bust, we have done extensive work since coming into office to pick up the pieces. We have introduced a series of initiatives to boost housing supply, increase the provision of affordable housing and support a healthy private rented sector, and by tackling the deficit we are helping to keep down both interest rates and the number of repossessions. However, we are only at the start of a return to recovery. The housing market has turned a corner, but mortgage lending and loan-to-value ratios on new mortgage lending remain below their historic averages, while, relative to earnings, median house prices across England are at around the same level as they were in 2005.
I was pleased to hear the noble Lord, Lord McKenzie, acknowledge in his contribution that his Government did not build enough homes when they were in power. The housing supply today is at its highest since the end of the housing boom in 2008, with 334,000 new homes built in the past three years. It is worth noting that the Chartered Institute of Purchasing and Supply has said that activity in housing construction has been increasing at its fastest pace for almost a decade, and, as my noble friend Lord Stoneham has already acknowledged, starts are up by a third on last year. Indeed, the Royal Institute of Chartered Surveyors reported this week that housebuilding was picking up across the country, which is an important point since it indicates that recovery is not confined to one particular area.
We believe that we are making progress because of the policies that we have introduced and the investment that we have been able to make, and that that investment has been able to attract private sector investment as well. In the current spending round, we have invested £11 billion in housing, which has leveraged a further £15 billion from the private sector in affordable housing. In the next spending round, government and private sector investment will be in excess of £23 billion in new affordable homes, which will be supported by government guarantees of £12 billion to support homebuyers.
In response to many of the points that have been raised in the debate, if housebuilders are to build, they need to know that people will buy. Since the launch of the Help to Buy equity loan scheme in April this year, more than 15,000 reservations have been made for new-build homes. In total, we have helped nearly 30,000 people to buy or reserve a new-build property through a range of government-backed home ownership schemes, including the most recent initiative that was launched earlier this month—the Help to Buy mortgage scheme. This is aimed at people who, unlike the noble Lord, Lord Oakeshott, do not have a bank of mum and dad to rely on but still have every right to aspire to get on to the housing ladder.
The noble Lord, Lord Oakeshott, and others asked whether some of these initiatives were having the effect of creating a housing bubble. In the course of his contribution, the noble Lord referred to different economists and other experts. He will not be surprised to learn that I am about to quote from others who offer a different view. There are plenty of people who very much endorse what the Government are doing in this area. For instance, Huw van Steenis and Charles Goodhart from Morgan Stanley said recently that Help to Buy could help to stimulate far more housebuilding than many believe, while Ernst & Young stated earlier this month:
“The Government’s well-timed initiatives to revive mortgage lending have borne fruit, with prices and transactions recovering from their recent very low levels, in turn supporting the wider economy. The housing revival has given rise to concerns that the government’s interventions—including bringing forward the Mortgage Guarantee Scheme—risk stoking up a housing bubble, especially in London. In our view these worries are overdone”.
I will not repeat some of the national figures that have already been covered in noble Lords’ contributions, but many areas outside London are seeing much lower average prices today than before the housing boom in 2008. For instance, in my home town of Nottingham, in August 2007 average house prices were £103,000; they are now £86,000, which is 17% lower. In the Isle of Wight, which I know the noble Lord, Lord Oakeshott, is familiar with, the average price is 16% lower than previously. Certainly, transactions around the UK as a whole are way below what they were before the crash.
While I am on Help to Buy, I will respond to the point made by the noble Lord, Lord Stoneham, about reverting to a regionally focused Help to Buy scheme if house prices get out of hand in London and the south-east. It is far too early for me to give any response to that but I emphasise that, as the noble Lord knows, we have a proper regime with the Bank of England to monitor these schemes and ensure that they do not have a perverse outcome.
I think we all agree that owning your own house is an important part of our culture. It is a symbol of security and success, which people understandably aspire to. But increasingly, some people are opting for different choices. There is evidence that renting as a long-term option is something that people want, so we have also been improving the private rented sector so that it offers a real, positive alternative. As has already been mentioned, we are kick-starting the building of more private rented homes through our £10 billion housing guarantee programme and the £1 billion Build to Rent Fund, which means that blocks of flats or new estates will be built with the sole purpose of being for rent. Under the Build to Rent Fund, 44 projects have been shortlisted and the first scheme has been agreed at Southampton Quay. The noble Lord, Lord Stoneham, asked about targets for this scheme. It is important to emphasise that this is a demand-led scheme, not one that we would start off with a target for. We want to see how demand for it develops.
Moving from the private rented sector back to affordable housing, the noble Lord, Lord Stoneham, was right to emphasise the importance of supplying social housing alongside new private sector homes. We are building more affordable housing. As the noble Lord, Lord McKenzie, predicted, I will remind your Lordships that the previous Administration saw a reduction in the stock of social rented homes of 420,000. I am glad not to have disappointed him. He questioned whether our Right to Buy scheme, which supports those in social housing who want to go on to purchase housing, is the right measure. I think that it is, because of the reasons I have just given about the importance to people of owning a home.
It is important that we continue to build new houses. In this spending review period alone, with £19.5 billion of public and private funding, our affordable homes programme is on track to deliver 170,000 new affordable homes between 2011 and 2015. The noble Lord, Lord Stoneham, asked for an update: half way through, 84,000 households have already moved into new affordable homes. In the next spending period, we are looking to build a further 165,000 such homes. So there is real effort and impetus in that area. We are also making a great effort to release public sector land so that it is available for new build.
Noble Lords raised questions about garden cities. Our approach is about supporting local areas to develop large-scale schemes while making sure that they are driven by local areas. We have a fund to support that and there is some evidence of action in that area, which I do not have time to offer in detail.
Noble Lords covered various matters to which I have not responded. However, there are points I would like to make because there is quite a lot of action that is worth sharing more widely. I will write to noble Lords and put a copy of that letter in the Library.
My noble friend Lord Borwick had two innovative ideas, including one of trebling the new homes bonus for a third of the scheme, which I will take back to colleagues at the department. As to his suggestions on stamp duty, I know I was promoted a couple of weeks ago but I did not get as far as becoming Chancellor of the Exchequer, so I hope he will forgive me if I do not comment on that proposal. However, I will of course make sure that my right honourable friend the Chancellor is aware of what he said today, and will follow up any further questions in writing.
Natural Capital Committee
(11 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Miller of Chilthorne Domer
To ask Her Majesty’s Government what changes they will make in resource allocation in the light of the assessments of the Natural Capital Committee.
Baroness Miller of Chilthorne Domer (LD)
My Lords, the Natural Capital Committee is clearly a bit like a bus. There has been no mention of it in either House for ages, and then suddenly this week two debates come along at once. I am delighted about that. We are privileged in this House to have the Defra Minister responsible for it, my noble friend Lord De Mauley, to respond to us.
Although the Natural Capital Committee deals with many Defra matters, it was commissioned by the Treasury and reports to the Economic Affairs Committee of the Cabinet, which is chaired by the Chancellor of the Exchequer. The NCC’s job is to advise the Government on the state of English natural capital. The establishment of the NCC is one of the rather quiet but very significant things that the coalition has done. It is part of a package. In 2011, the Government also introduced the natural environment White Paper The Natural Choice and the UK national ecosystem assessment which shockingly found that one-third of the UK’s ecosystem services was declining severely. If the UK’s ecosystems were protected and enhanced, they could add at least an extra £30 billion annually to the UK economy. By contrast, neglect and loss of ecosystem services can cost us as much as £20 billion a year.
The Government made these moves as part of a plan. Previously, successive Governments and the public have really thought about natural capital only in response to a crisis, some sort of wake-up call, whether floods, droughts or food prices. The coalition Government were certainly reminded early on of just how much the public value natural capital when they announced their plan to sell off UK forests. The coalition Government learnt that the public value natural capital, even if they do not consider all parts of it.
I was moved to bring this debate as a result of a conference on soils. Soils are perhaps the most vivid illustration of our natural capital. The development of soil takes between 500 years and perhaps 10,000 years. Even a centimetre of topsoil takes at least 200 years to develop. Soil is the basis of our food production, but it is much more than that. It is important for carbon storage, water absorption and water filtering, and is crucial as the first layer in the food chain. How have we treated this virtually irreplaceable resource? We have allowed it to be eroded, polluted, washed away and built over. People may own the land, but the timescale that soil takes to form puts it into the category of a real commons for the nation—or natural capital.
Let us take another part of our natural capital that has been the subject of debate in our Chamber recently: bees. Pollinators are—to mix my metaphor—perhaps the canary in the coal mine. We do not know why bee colonies have collapsed; there seem to be several possible contributory factors. Only recently have people begun to appreciate that, beyond the luxury of honey, the pollinator services of bees and their many pollinating relatives are critical to food production. The collapse of bee populations is mirrored by those of frogs and other amphibians. Could it be that the use of substances such as neonicotinoids is having a much wider effect, or is it the cocktail of pesticides that needs further examination? It has always seemed bizarre to me that a product is tested alone when in reality a cocktail is being used out there.
That brings me to the first question for my noble friend. The NCC rightly sees developing a research agenda on natural capital as a priority. The research agenda on the constituents of natural capital is badly in need of some major help and overhaul. I have seen plenty of evidence which suggests that attempts to ensure the future health of our natural capital might be undermined unless research priorities are better aligned to overall needs and move away from the quick buck producing areas. The determinants of innovation and factors that influence research choices, such as science policies, public-private partnerships and the career paths available, all combine to favour technological regimes that tend to suit very focused, reductionist approaches rather than the holistic ecological approach that is needed to address ecosystems and the sort of complex interactions that we get between, for example, soil and water. Can my noble friend confirm that the Government will ensure a move to a more appropriate balance of research?
I have referred to a few other elements of natural capital such as water, minerals, stone, gravel and energy sources, whether oil or gas. They are all part of the natural capital that is fundamental to our manmade economy and society. We could not have a manmade economy if it was not underpinned by all those elements. Our failure to adequately protect our natural capital could well be a fatal step towards an economy that diminishes severely over time.
One of the problems is that efforts to protect our natural capital have too often been made on the basis of the intrinsic or aesthetic value of, say, woodlands, uplands, clean streams or bird populations. I accept that we may succeed in better protection if we explicitly demonstrate the value that society places on our natural assets, thereby protecting and maybe even enhancing them for future generations. The Natural Capital Committee is part of that effort. The first annual report of the NCC earlier this year contained a number of important recommendations, and I wonder if my noble friend would be able to comment on one of them. The NCC stated that,
“the Government’s efforts to reform the Common Agricultural Policy be intensified, with a long-term view to phasing out Pillar one support and moving subsides towards Pillar two and the provision of public goods”,
and thereby,
“securing as much flexibility as possible in how funding can be allocated for the period 2014-2020”.
If my noble friend could tell us how that work is going, I would be grateful. Will he also encourage the NCC to consider who should be the innovators of these approaches? Clearly, there will need to be some pilot areas; the national parks are one obvious example, but what about the Crown Estate? It is also responsible to the Treasury, and there it is with swathes of our natural capital under its management. Surely it should be a cradle of innovation.
I have a few comments to make on the NCC itself. It held a useful open event at the Royal Society and its first annual report is quite readable. However, the minutes of the NCC are dry to the point of desiccation. This is important because it needs to be outward facing if it is to succeed in integrating the thinking that is being developed into the mainstream and make it the discussion of the day in boardrooms. It will also need to develop some work with institutions such as Cranfield because it is disappointing to read that the Committee concluded,
“that it is not currently possible to identify with any certainty precisely which natural capital assets are being used unsustainably, especially given the available data and knowledge about limits and thresholds”.
That seems to be under-ambitious, although the Committee does go on to say that the rate at which natural assets are being consumed is “unprecedented”.
In conclusion, I must say that there are plenty of cynics out there who think that the NCC is just a way to suggest that the Government are after some green credentials. Whether that is the case or not will be proven in whether policies start to shift in decision-making across all departments, and by the Treasury itself in the way it allocates resources. We need some startling, if welcome, decisions and some much more radical policies.
The next debate, which my noble friend is also going to answer, is on the Thames Tideway Tunnel. That is a good example of what I am talking about. Faced with the same sort of problem as London, the city of Philadelphia chose a radically different solution, avoided many costs, enhanced its environment amazingly and brought solutions down to a neighbourhood scale. The NCC is perhaps looking at such worldwide examples of practice that could help its deliberations, and I hope that the noble Lord, Lord Berkeley, may go into the Philadelphia example. The NCC is subject to review in 2014, and I certainly hope there will be no question but that it should continue. We really need its work.
The Earl of Courtown (Con)
My Lords, I thank my noble friend Lady Miller of Chilthorne Domer for initiating this debate. Her speech was very educational, and told me much about natural capital that I did not already know. I read the debate in the Commons earlier this week, and so far today I have learnt a little bit more about it. I look forward to hearing what the noble Lord, Lord Grantchester, and my noble friend the Minister have to say.
In the debate in the Commons on Monday, my right honourable friend the former Secretary of State at Defra, Mrs Spelman, made a very telling and—as expected—well informed speech which emphasised the importance of this subject. She stated:
“We had the lofty ambition … of being the first generation to leave the natural environment in a better state than we inherited”.— [Official Report, Commons, 21/10/13; col. 101.]
This sets the bar very high indeed, but so long as we work towards this aim it must be better for our environment and for the people who come after us.
The United Nations Environment Programme calculated that although overall wealth in the United Kingdom increased up to 2008, during the same period natural capital decreased by 30%. These are similar figures to those already quoted. Much work is required here. It will be interesting to hear my noble friend the Minister’s response to any foreseeable changes in policies relating to natural capital and its future.
As my noble friend said, the White Paper published some years ago also introduced the national ecosystem assessment. This was developed with the help of scientists as a measure of natural capital, which is not an easy job in itself. We must not forget that environmental legislation has done much good. For example, it has transformed watercourses, many of which were very badly polluted but which have now improved in many places throughout the country.
I give another example of how important infrastructure is to natural capital. I had some experience of this in an area of which my noble friend the Minister might be aware, in Priory Vale, north Swindon. There was an extensive development programme there, involving some of the biggest housebuilders in the United Kingdom. I was involved in the planting of native trees, shrubs and hedges, using the old hedge lines and retaining the old hedges and ancient oaks. There are green corridors throughout this development which are so important for the environment, and make it a much more pleasant place to live. There is a lot of benefit from that, which people have been trying to measure as well.
It is welcome to hear that the Natural Capital Committee may be chaired by Professor Dieter Helm. It is relevant to both the Treasury and Defra. The Natural Capital Committee information pack refers to its work programme and in particular to its annual report. It works with Defra, the Office for National Statistics, landowners, academics and the research councils.
I would be grateful if my noble friend the Minister could inform the Grand Committee how the NCC works with other departments. Perhaps he could draw to our attention—I refer to my example of Priory Vale—how the NCC works with planning regulations to ensure that where development does take place the land used is replaced as much as possible with other green areas.
My noble friend reminded me earlier, before we started this debate, about the previous time we were both speaking in this Room, when we were discussing a possible Severn barrage. It is absolutely frightening to think of the debit on the natural capital balance sheet if that project had gone ahead. I look forward to what the noble Lord, Lord Grantchester, and the Minister have to say.
Lord Grantchester (Lab)
I thank the noble Baroness, Lady Miller of Chilthorne Domer, for tabling this debate this afternoon. It gives the Committee the opportunity to debate the first report of the Natural Capital Committee, issued in April this year, following its establishment in May 2012. There has always been a debate around the relative merits of the environment when set against economic development and around how to translate this into public policy priorities. The debate initially focused on sustainability, with the thought that competing claims had to be balanced between two polarities. When English Nature was set up some 10 years ago, sustainability was likened to a stool with three legs: the first leg being the economy, the second the environment and the third, in equal balance, being communities or society. At that time, debates contested whether it was possible to balance these competing aims and whether economic benefit would take precedence or the environment should be given an overriding veto.
The difficulties in settling this debate can be readily appreciated when there is no clear and independent assessment of value. When the environment, or elements in it, can be described, in the classical sense, as a free good, how can it be assigned a value? Meanwhile, the degradation of our environment here in the UK and internationally could not be denied. The effects of waste and pollution in one country are often visited on its neighbours. Nature and the environment cannot simply be seen as isolated elements or units in a biodiversity action plan, such as one to increase songbirds. Instead, the natural environment needs to be assessed and valued as an ecosystem. No longer can this be seen as an either/or debate; instead it must now be recognised that nature and the environment represent a complicated, interrelated system. A properly functioning natural environment is the foundation of sustained economic growth and prospering communities. It bears repeating that we need to create a green economy, where economic growth and the integrity of natural resources sustain each other and the consequences of actions and decisions better reflect the importance of the environment.
Although some may find it reprehensible to try to assign value to natural capital, nevertheless the widening recognition of other assets, such as intellectual property and brand values, perhaps points to natural capital accounting as the best way forward, especially across continents, cultures and national governance divergences. In advising the Government on the state of natural capital in England, the Natural Capital Committee set out to do three main things: first, provide advice on when, where and how natural assets may be being used unsustainably; secondly, advise the Government on how they should prioritise action to protect and improve natural capital and the environment through its methodology; and, thirdly, advise on research priorities to improve future advice and decisions on enhancing natural resources and natural capital.
In reporting directly to the Cabinet’s Economic Affairs Committee, it must work across government and have an interdepartmental profile. It will not be lost on many that this is where it is most needed—under the nose of the Chancellor of the Exchequer. The committee could be seen to have already had an effect on resource allocation and decision-making through its advice on accounting for forest assets in response to the recommendations of the Independent Panel on Forestry, which was set up following the disastrous disregard for woodland assets in the early days of the coalition.
The committee has produced an interesting and thought-provoking first report. The Woodland Trust urged the Government to adopt the committee’s recommendations, stating that the extent to which the NCC informs policy will be a key test of the natural environment White Paper and its ability to achieve a paradigm shift in how nature is valued. With the disastrous lack of border controls and risk analysis of tree diseases in the UK, better protection of our natural assets means, to the Woodland Trust, stronger and better enforced planning protection and robust action on tree diseases. The UK’s woodlands are vulnerable to the effect of historical fragmentation and a continual drift towards decreasing diversity.
The report made reference to trends in UK fisheries but made no reference in its recommendations to the marine environment. This is perhaps a glaring omission that the committee should correct as soon as possible. In the four years since the Marine and Coastal Access Act 2009 was passed, the designation of the first tranche of up to 31 marine conservation zones is still awaited. These sites represent less than a quarter of the sites proposed to achieve an ecologically coherent network, known as an ECN in the jargon. The designation of a network of marine conservation zones is vital to stemming the degradation of the marine environment. Does the noble Lord agree that this is perhaps one of the most pressing issues that his department should be tackling? Will he put the marine environment at the heart of the debate on the EU fisheries policy? Will he ask the Natural Capital Committee to undertake some work on this for inclusion in any report it might produce in 2014?
The committee made 13 recommendations in its report. Will the Government be making a more comprehensive reply beyond the succinct, one-and-a-half-page letter dated 22 May 2013? I believe that the committee deserves better. It is interesting that the committee wishes to develop a framework to define and measure natural capital by drawing on data across departments. If it follows the UN’s global standard known as the System of Environmental-Economic Accounting, will that fall foul of the UK’s data protection laws? It will be interesting to hear the accountancy profession’s assessment of this, as well as of the Prince of Wales’s Accounting for Sustainability project.
The accounting profession will be very familiar with the notion of a risk register as set out in the second recommendation made by the committee. The risk register will identify a range of risks and make assessments against the size of the impact and against the likelihood of occurrences. Will the Minister comment on whether the Government see this as a useful tool to inform practical applications in policy and decision-making? While some may find it difficult to identify the practical usefulness of natural capital accounts, risk registers throughout government applicable to ecosystems and regions could develop into a useful policy assessment tool. Are the Government actively considering this recommendation?
In the thesis undertaken by Mr Christopher Baldock of Imperial College London, Opportunities for Development, he states that the main reasons given for the lack of use and integration of natural capital accounts in decision-making were identified as the lack of a recognised framework of evaluation methodologies, too many ad hoc initiatives hampering development and the lack of recognised uses and application of accounts. Have the Government considered how this could be tackled and improved? How will they identify and embed best practice in the uptake of methodologies across the public estate?
The report identifies the United Nations Statistical Commission of the System for Environmental-Economic Accounts as a major step forward and, importantly, that this system uses the same accounting conventions as the UN system of natural accounts. The report sees UK environmental accounts as limited to a number of physical flows and natural resource assets accounts that include only partial aspects of natural capital. They are not currently aligned with ecosystem accounting and do not provide a fully integrated account of the stocks, flows and changes over time. Can the Minister update us on whether his department has asked the Office for National Statistics to prioritise activity on this?
Will the Government press for an international natural capital accounts body to co-ordinate efforts and collaboration between states and between corporate and international bodies? There is a need to link up and demonstrate the importance and usefulness of accounts if natural capital accountancy is not to fade slowly away from being central to the green economy.
Much debate could be had on each of the other recommendations of the report, not least its comments on agriculture and the natural capital of the countryside in relation to bees and other pollinators, a subject that I know is most dear to the Minister. It must be borne in mind that agriculture exists in a food chain, and that the actions of all in that chain, not least of food retailers in setting the price of food that the consumer pays, have a bearing on agriculture’s ability to respond. These are important matters in the redesigning of the common agricultural policy. The five lines on this in recommendation 13 are incredibly flippant and risk alienating one of the most important communities whose good will is vital in maintaining the nation’s natural capital—the farming community.
I end with one or two remarks on offsetting. The report has merely one sentence on this, which states:
“Offsetting and other forms of compensation are explored after a clear set of principles and a policy framework have been developed”.
Quite simply, offsetting means that if a developer is going to build something that will damage or destroy a habitat of conservation value, it must buy a biocredit to compensate for that loss elsewhere. I find this incredibly dangerous because it sends the mixed message that it is somehow all right to denigrate our natural assets in exchange for making a payment to a good cause. It is the equivalent of having an environmental swear box. Disconcertingly, this was picked up and referred to in the Secretary of State’s page-and-a-half letter to the committee, which stated that the Treasury was particularly engaged in exploring this potential. While the Government may warmly welcome the committee’s ongoing input, I urge them to dismiss this as a very retrograde and dangerous activity to promote.
That said, the committee’s first report is very provocative. The state of natural capital in the UK is at a critical point. Recognition of the committee’s work from the Government who set it up must amount to more than lip service. With the debates over decarbonisation targets and climate change at the forefront of public policy, the Minister’s department should respond more constructively to the committee’s recommendations. I look forward to the review of the Natural Capital Committee in 2014.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
I start by thanking my noble friend Lady Miller of Chilthorne Domer for raising this important issue today. I welcome the chance to discuss the vital topic of England’s natural capital. As my noble friend set out, our natural capital provides a range of essential services to society. We all rely on the benefits of natural capital for our clean air, water, food, energy and well-being.
The contents of my noble friend’s speech and, indeed, that of the noble Lord, Lord Grantchester, draw me to make a couple of declarations of interest. I have a farm with a river running through it and some trees growing on it, so I hope noble Lords will appreciate that I come to this with an interest in, and a limited amount of knowledge of, some of the issues.
Lord Grantchester
The Minister’s comments remind me that I omitted to declare my interests in the farming field.
Lord De Mauley
My Lords, natural capital therefore underpins two of the Government’s key priorities: encouraging economic growth and enhancing the natural environment. These two agendas are not mutually exclusive. In fact, the sensible use of our natural assets is an essential precondition of our prosperity.
In its first report, The State of Natural Capital, published in April this year, the Natural Capital Committee made just this compelling argument: that long-term economic growth will be undermined if we continue to erode our natural capital. The Government agree: long-term prosperity is possible only if we preserve the foundations on which our economy and well-being are based.
It is therefore crucial that we measure, value and protect our stocks of natural capital. Indeed, this is why the Government set up the independent Natural Capital Committee in 2012, the first of its kind in the world. The committee has been asked to provide expert, independent advice to government on the state of England’s natural capital assets. In the past, the benefits that flow from our natural capital have too often been taken for granted, and as a result our assets have become eroded.
The job of the Natural Capital Committee is to highlight where we are not on a sustainable path and advise the Government on how they should prioritise action to protect and improve natural capital. This will help us deliver on the White Paper commitment to leave the natural environment in a better state than that in which it was inherited.
I read with great interest the Natural Capital Committee’s first report earlier this year, which set out its views on why valuing, maintaining and restoring natural capital is important. It also presented initial evidence of the benefits of incorporating natural capital into decision-making at all levels.
As my right honourable friend Owen Paterson’s and the Economic Secretary to the Treasury’s official response to The State of Natural Capital makes clear, the Government welcome and fully support the analysis offered in it. However, the specific issue of what resources have been reallocated in light of the Natural Capital Committee’s assessments is as yet difficult to address. I shall discuss that a little more in a moment.
The committee’s first major publication was a framework-setting document that principally set out what it was going to do to inform its next annual report. It contained no substantive recommendations to the Government that required an immediate change in resource allocation. Rather, the majority of the recommendations referred to work that the NCC is undertaking. For example, one of the key recommendations was to develop metrics to value and measure changes to natural capital. This is a job that the committee is undertaking. It is currently doing excellent work to advance our understanding of England’s natural capital assets. This will be reported on in the second state of natural capital report.
As we have yet to be advised to take specific substantive action, it is not yet possible to attempt meaningfully to hold government to account on the Natural Capital Committee’s recommendations. One potential exception to this is the Government’s work to develop national natural capital accounts.
The Natural Capital Committee recommended that work led by the Office for National Statistics to produce UK environmental accounts should be,
“given the greatest possible support by Government”.
I can confirm that that is the case and, despite the scale of the challenge involved, work is progressing well. My department and the Office for National Statistics are working closely with the Natural Capital Committee to ensure that the accounts are completed on target by 2020. Resource had already been allocated to this work.
The noble Lord, Lord Grantchester, asked whether we will produce a full response to the committee’s next report. We are very much looking forward to it. We will respond appropriately once we have seen what the report contains and have had chance to consider it.
Another area where resources are being committed to the important subject of natural capital is research—my noble friend Lady Miller referred to that. Following discussions with the committee, the Natural Environment Research Council recently announced that it was contributing £5 million to a programme that will deliver on the research priorities of the NCC and its aim to improve understanding of how the state of the natural environment affects the performance of the economy and individual well-being. This is good news and another sign of how seriously the work of the committee is being taken.
In addition to the Natural Environment Research Council’s important contribution, the Natural Capital Committee is undertaking some research of its own to enhance our understanding of natural capital, which it will advise on in its second state of natural capital report. We are very much looking forward to reading that report, the development of which is under way. It will be submitted to the Economic Affairs Committee in early 2014.
It is, of course, too early to speculate what resource implications this may have for the Government, but we will consider them at the appropriate time. I appreciate that there is eagerness to push forward with the natural capital agenda, and that eagerness is shared by Defra and the rest of government.
My noble friend Lady Miller highlighted the importance of soils, and I echo her enthusiasm for them. We recognise that soils are an essential part of our natural resources and support food production, carbon storage, water filtration, biodiversity and wildlife. I can find little to disagree with in what she said about them.
She also spoke about bees and pollinators. The noble Lord, Lord Grantchester, also mentioned them. Noble Lords may like to know that today we are holding a workshop of interested NGOs and other parties on the national pollinator strategy. We are working towards the publication of a document at the end of the year which will go for consultation with a view to finalising it in spring 2014. I am excited about that.
My noble friend asked about the common agricultural policy and the extent to which we are moving in what one might describe as away from subsidising production towards paying for environmental benefit. The United Kingdom has always made clear that we would like to move away from subsidies in the long run. We support a greener cap with the emphasis on Pillar 2, recognising that there is scope for using taxpayers’ money to pay farmers for public goods that the market otherwise would not reward, such as protecting the natural environment and supporting biodiversity. We negotiated hard to secure a final outcome that was a significant improvement on the Commission’s original proposals, but it is very disappointing that we did not get as far as we would have liked. Securing the flexibility to transfer up to 15% from Pillar 1 to Pillar 2 was a good outcome of this set of negotiations. The Government have always made the case that transferring funding from Pillar 1, which is subsidy, to Pillar 2, which is in favour of the environment and the rural economy, represents the best use of taxpayers’ money while supporting farmers to deliver the valuable goods and services that the market left alone would not provide.
As part of our consultation on the implementation of the new cap in England, we would welcome the views of interested parties, including, of course, noble Lords, on how much that transfer should be. That consultation will commence shortly.
My noble friend also mentioned the Thames tunnel, but in the interests of economy of time, I hope she will forgive me if I leave that until the next debate.
My noble friend Lord Courtown mentioned work he has been doing in the north Swindon area, which I know well. He talked about retaining existing features—hedges, trees and so on—while conducting development between them. I congratulate him and thank him on that.
My noble friend asked about co-operation between Defra and other government departments on natural capital. The natural environment White Paper is a cross-government document. It contains a number of important cross-government commitments, and we have made good progress on them. We work closely with the Treasury and have produced new supplementary Green Book guidance for all government departments on valuing nature in policy appraisal. The Natural Capital Committee will report to the Chancellor’s Economic Affairs Committee. In the planning system, the new NPPF is a good outcome. I regularly meet Ministers from the Department for Communities and Local Government. There is also good work in the area of schools and health, so I can confirm to my noble friend that we work across government departments.
The noble Lord, Lord Grantchester, raised a number of issues. In forestry, he will know that we have accepted the vast majority of the recommendations of the independent panel led by the right reverend Prelate the Bishop of Liverpool, who we thank enormously for his work.
The noble Lord spoke about tree diseases and pests. He will know that since concerns about Chalara arose some 12 or 13 months ago, we have developed a risk register of pests and diseases, and we have progressed substantially with contingency planning. Both those elements were recommended in a report by the experts we convened.
He asked whether the Government will provide advice on marine conservation zones. The NCC’s terms of reference are very clear that the committee may not perform a watchdog or advocacy role with respect to government policy decisions or be policy prescriptive in its advice. However, the NCC is interested in all categories of natural capital and will provide advice on whether all assets are being used sustainably.
I am running out of time. If I have not answered all noble Lords’ questions, I will write to them. I ask your Lordships to accept that we have already shown international leadership in this field and no longer take our natural capital assets for granted. We recognise that natural capital is integral to delivering sustained, and sustainable, economic growth in England. As a result, the Government fully support the work of the Natural Capital Committee and are looking forward to its upcoming advice.
Thames Tideway Tunnel
(11 years ago)
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Lord Berkeley
Lord Berkeley (Lab)
My Lords, I am pleased to have the opportunity to debate this important project. It is not the most popular time in the House of Lords weekly calendar, but it is still good to have the opportunity. We have had a number of Questions in short debates over the months and years, but I think it is timely to put some markers down because the Tideway tunnel is at the IPPC for determination. There is a new report from the Environment Agency on SDS—it is interesting, the delay in publishing; I know it has been around for several months. Perhaps this debate has hastened its publication. There is a call by Thamesbank, the Environmental Law Foundation, supported by Sir Ian Byatt, the former director general of Ofwat, and many others for a review of the national policy statement for waste water. It seems a good time to have a debate.
I think the project of the Thames tunnel has become a kind of rollercoaster with its own momentum, but it is based on some seriously flawed and out-of-date data and the failure to properly consult or to consider alternatives which could put £70 to £80 a year on Thames Water’s customers’ bills for perhaps 100 years. It could also possibly incur a large amount of taxpayers’ money because Thames Water’s finances are in a pretty unhealthy state. Before the Government commit to such an expensive project, I believe it is essential that an independent and wide-ranging assessment be made of the alternatives using the latest data—and I mean the latest data. It should take into account the contribution that can be made by better sewer maintenance, the combinations of engineering solutions that can achieve the desired environmental objectives without involving excessive costs, the financial options available to pay for these solutions, the interaction between the choice of scheme and the method of financing, and of course the insertion of conditions that would prevent the recurrence of the payment of excessive dividends by Thames Water.
What are the issues? The first issue is that the data on which all these studies have been based are out of date, and I would suggest they are inaccurate. The baseline goes back to the Thames Tideway Strategic Study group, which worked between 2000 and 2005, when the chair was Professor Chris Binnie. On the basis of this information the Government in 2007 announced that they were going to promote this project and the national policy statement was based on the Thames Water 2010 needs report.
There are a number of serious errors in these reports. It is extraordinary that the Thames Tideway Tunnel website says there are going to be 39 million tonnes of untreated sewage flushed into the Thames in a typical year. Professor Binnie, in his latest report—which I think the Minister now has—points out that, after the various upgrades already in hand, and when the lead tunnel is complete, this will fall to 17 million tonnes. That is less than half. The problem has halved. So why is Thames Water still saying it is 39 million?
Mogden sewage works has been upgraded. It originally had about 110 CSO spills a year. It now has about nine. That is quite surprising because the European Commission has suggested a maximum of 20 spills a year as acceptable, so Mogden passes the test. Binnie also states that Thames Water assumes that sewer flows will increase by about 13% up to 2021. This of course depends on the water delivered to customers which then go to sewage flows, and there is the issue of leakage in the sewer systems. The Thames Water Resources Management Plan says that, despite the population rising in 2021, the water delivered—hence, the discharge to the sewers—will go down, as will the leakage and, presumably, the sewer infiltration. This is another 23% reduction.
Professor Binnie states:
“In my view … the sewer system model should be looked at again to see what would be needed to meet the EC criterion, particularly with the water delivered to households and non-households, and water pipe leakage reducing, and hence sewer flows, reducing in the years ahead. This would provide more sewer capacity available to cater for storm flows, hence spill frequency would reduce further”.
The problem is that Thames Water seems to be in denial about the volume of leakage and the effect of meter installation. It is also failing to maintain the sewers properly to maintain the necessary storage capacity. I recently met Dr Jean Venables, former president of the Institute of Civil Engineers, who commented about the Kingston “fatberg”—noble Lords might like to know was made of wrongly flushed festering food fat mixed with wet wipes—which reduced the capacity of the sewer to 5%. Is Kingston special or is this a common occurrence? We do not know but perhaps we should.
I am convinced that Thames Water and the Government have failed to look at alternatives. The only study of alternatives relied upon was the SuDS Evaluation for Example Areas by Professor Richard Ashley, which is included in the planning application but is not for comment. Professor Ashley recently stated very clearly that the terms of reference were too narrow and the time and resources dedicated to it were inadequate. I could go through the terms of reference but I think that in the time available I should not. He said they were really too narrow and the results could not be relied upon.
Now we have this Environment Agency report, published just yesterday. It needs careful study, but it appears to repeat many of the errors that have made since 2005. Most importantly, it presents SuDS as the only solution. I do not think anybody has really said that SuDS is the only solution; it is a contribution to the solution but there are other things, some of which I have mentioned and some of which Professor Binnie has mentioned, which could also be used. The report does not really help in either way. Before embarking on a £4 billion-plus project, there should be an obligation on government to provide up-to-date and independently verified data, along with an objective comparison with alternatives. We do not have that at the moment.
So what is to be done? I have outlined the strongly expressed views of a number of experts who believe that the problem is much smaller than was originally believed. It is possible to start SuDS in a way that would work in this country. It is a pity that the Environment Agency did not talk to the people in the US—maybe it did but it is not in the report—about the successes in Philadelphia: technical, engineering, and of course the legal and property issues as well. I have talked to the Americans and I think it could be done in this country. Thames Water could lead, fund and organise it, overseen by Ofwat, using separate arrangements for domestic properties, commercial properties and local authorities, with incentives built in through their sewerage charges. I suspect that Thames Water would be highly unenthusiastic about this but it is a regulated industry.
This leads to me to Thames Water the company, and what Ofwat is doing to ensure that the company is fit for purpose. We have discussed its financial situation in this House several times before, but it is odd that there is a problem over who will actually do the work, who will fund it and what the risks are. Martin Blaiklock, an independent consultant who has worked on this, believes that the Government and Ofwat will face an uphill task in financing such an expensive and long drawn-out project with a very high construction/completion risk. Of course, there is also the revenue risk and one has to ask: who is the customer? How much will the tunnel be used? Where is the revenue stream? Should there be a separate tunnel company? If so, what should be its relationship with Thames Water? What happens if the customers do not pay?
I think there is a question of whether such claimants, if they did or did not happen, would be seen as a contingent liability for Thames Water? That could have an indirect negative impact on its financial strength and threaten its investment grade status. Mr Blaiklock even suggests that because the tunnel option is a Thames Water concept derived out of its licence, many will say that the liabilities for this, as an independent company, should reside with Thames anyway. Any proposed structure as set out above may have echoes of Enron economics, which I am sure we do not want to see.
Perhaps it is not surprising that the Government, Thames Water, Ofwat and the others are taking so long to decide how this should be done. Martin Blaiklock concludes that given the alternatives to the tunnel option, which are gaining reality daily, for example SUDS variants, a prudent Government should forget the tunnel and choose the course of lowest financial risk and cost to Thames' customers and the taxpayer. I cannot but agree with him. It really is time for a wide-ranging study of the alternatives.
Lord Stoddart of Swindon (Ind Lab)
My Lords, I support the noble Lord, Lord Berkeley, who has been one of the parliamentary leaders against this particular tideway scheme, and indeed the sole leader of the campaign in the House of Lords. He needs to be thanked for his efforts, so I have come along, not as an expert in any way and not as a Londoner, but to give him moral support. I represented Swindon in the House of Commons and I live in Reading. Although I have no interest as a Londoner, I have some interest as the former representative of the people of Swindon and as a resident in Reading who will be expected to pay an extra £80 to £90 in perpetuity for a scheme which will only benefit Londoners. That might sound parochial, and of course it is, but nevertheless people living outside London have an interest and really need to have their position considered.
I know a little about the water industry because I was elected to Reading Borough Council and served there for 18 years. One of the first committees I served on was the water committee. In those days the water industry was largely owned by the local authorities and they made a reasonable success of it. I was later the chairman of the land and works committee of the Thames Valley water board. We produced a very efficient and cheap water service for the people of the Thames Valley area and south Oxfordshire. My boast was always that we provided water at sixpence a ton. It is of course a lot more now but prices have gone up. Therefore I have a little knowledge of the water industry.
Talking about London, we had a quarrel with the Metropolitan Water Board. London is an important place and we understand that, but what they wanted to do, and what they did do through a parliamentary Bill, was to extract water from the Thames Valley area—our water, as we put it. It came along and stole it and put it into the Thames for the benefit of the people of London. It was not to the benefit of rivers in the Thames Valley area because a lot of them dried up. We have to careful about the needs and demands of London. However, that is just a little bit of history.
As has been explained, there are many aspects to this proposal. It involves people who live outside London having to pay for a project from which they will receive no benefit. All the benefits will go to London. They will be forced to pay the same increase in bills as Londoners, who will be the sole beneficiaries. The population of London is set to increase to more than 9 million over the next few years, so Thames Water will be receiving extra profitable revenue from all those people, part of which I believe should be used to finance this scheme. Also, when the shareholders bought the company, they knew that there was a problem of disposal in London. They knew exactly what the commitment might be and that it would be very expensive, yet they still bought the shares. Having acquired those shares, they should take responsibility for the proposals which, by buying the shares, they actually agreed to. I have said this before and I will repeat it now: this project should be largely paid for by the suspension of dividends for the shareholders. After all, a precedent has been set for this. Lloyds Bank shareholders, for example, have not received a dividend for three or four years because of the intervention by the Government in the bank’s management. I believe that the shareholders should pay.
The noble Lord, Lord Berkeley, has outlined some of the much cheaper and more effective alternatives. I believe that they should be examined more thoroughly than has been the case so far. He has also referred to the Government’s intervention into this privatised industry. It may be proposed that there is to be a government subsidy, but that would be intolerable. This is a privatised industry, and the Government have no business paying a subsidy. I have to tell the Committee that I disagreed profoundly with the privatisation of water, and I blame both parties for it. When the Labour Party had the opportunity to renationalise it and give it back to the local authorities where it properly belongs, it did not do so. It would therefore be outrageous if, having sold the water industry off in order to get rid of any debt and responsibility, they should now expect the public to subsidise a project which the shareholders knew about when they bought the shareholdings. I am completely at one with the noble Lord, Lord Berkeley, and I hope sincerely that the Government will not subsidise this project. It is not their business to do so. They should ensure that the cheaper alternatives are put in place and that if they are not put in place, the shareholders of Thames Water should pay the whole bill.
Lord Grantchester (Lab)
I am so glad that my noble friend Lord Berkeley has secured this debate today on the proposals for the Thames tideway tunnel. Coming as it does after our previous debate, it allows our discussion to transcend from the sublime to the slime. I pay tribute to my noble friend’s persistent challenges to the project, which have meant that it has been critically examined in all its aspects.
We are in familiar waters. To reiterate: London’s sewers carry both raw sewage and rain run-off. They were designed for a capacity of 4 million inhabitants, but London now has in excess of 8 million inhabitants. As much of London’s infrastructure dates back to horse-and-carriage days and therefore rainwater is included, there are 50 or 60 overflows each year straight into the Thames. In a typical year, 18 million tonnes of untreated sewage enter the river through the combined sewage overflows that the Thames tideway tunnel needs to intercept.
The tunnel will remove and treat a total of 39 million tonnes of untreated sewage from the tidal River Thames. These discharges breach the urban waste water treatment directive. Years of independent studies and assessments working up a solution cannot shield the UK and the taxpayer from the prospect of substantial fines if the proposed timetable does not proceed. Delays have already led to an increase in the cost estimate in excess of £4 billion.
Your Lordships’ House last examined the proposals during the passage of the Water Industry (Financial Assistance) Bill in March 2012, when the Government took enabling powers to provide contingent financial support for exceptional project risks, guaranteeing the project even though we still do not know who will finance and build a tunnel. Since then, my noble friend Lord Berkeley has updated the House through his continual questioning, to which the Minister has positively responded.
Labour supports this project. We remain unconvinced by alternative solutions to the problem of London’s sewage discharge. We have examined the Environment Agency’s An Assessment of Evidence on Sustainable Drainage Systems and the Thames Tideway Standards, published this month, which concludes that sustainable urban drainage systems—or SUDS—alone would not be enough to combat the sewage issues facing the Thames and meet the environmental standards for the Thames established by the Thames Tideway Strategic Study in 2006. In 2012, Sheffield University published a further independent study examining the potential to retrofit SUDS on the tideway catchment areas. It concluded that retrofitting SUDS, while technically possible, is not feasible due to the very high costs and disruption that would be likely to be involved. Retrofitting could well complement conventional sewage infrastructure and be instrumental over time in separating rainwater from sewage as development projects slowly rebuild and modernise buildings and areas throughout the capital. SUDS will also play a key role in ensuring that new developments extending London’s footprint do not add to existing problems.
Labour also recognises that the Government have designated the project a nationally significant infrastructure project and that Defra is now in the formal planning process. The Planning Inspectorate will review the plans before they come back to the two departments, Defra and DCLG, for their respective approvals. As the Minister has already had discussions in DCLG, perhaps I might tempt him to say whether he foresees any problems in this joint approval process that might amount to any sense of a battle or veto between the two departments.
Labour will continue to support the proposals for the Thames tideway tunnel, subject to some overall tests being met. Obviously, the plans must be effectual, the expected state of the Thames at the project’s completion must comply with all EU directives on water standards and the Government should select the most appropriate delivery vehicle. Most critically, we want to be able to substantiate that the scheme satisfies value-for-money tests and that costs are assiduously examined. We will continue to challenge the Government about customers’ bills being added to. Labour does not want customers being disproportionately penalised for cleaning up the river when balanced against prices, executive pay packages and dividends to shareholders—in this case, a largely private equity group.
There has been widespread concern that Thames Water has paid out more than £2 billion in dividends in the past six years—more than £650 million in the past two years alone—as well as £1 million in management fees. What discussions have the Government had with Thames Water on this issue? It is a matter of some concern that large amounts need to be set aside for the tideway tunnel.
The Minister has given clear explanations at the Dispatch Box about why the company has not paid any tax. All UK companies are allowed to claim capital allowances when they spend on capital investment programmes. That is understood, but can the Minister categorically confirm that in Thames Water’s case these allowances apply to past capital projects and state whether he has appreciated that it seems that Thames Water can add to customers’ bills? The consumer suffers, as we are now considering social tariffs, the taxpayer in the form of the Treasury will offset capital costs and have no receipts, yet profits continue to support private equity returns.
We will continue to press the Government for more innovative financial schemes that are more environmentally sensible. There was an interesting report in the press this week that Ofwat plans to block Thames Water’s request for a further price rise of up to 8% in customers’ bills next year to cover some of the costs it has picked up from bad debts and buying land for the tunnel—the so-called super sewer. Ofwat’s response was forthright and noted. It stated that this request was in addition to the already assured price hike of 1.5% above inflation for 2014-15. Water bills and the cost of living are critical issues. We will continue to monitor the situation closely and take a keen interest in the outcome regarding the Government’s guarantee for the project.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, this has been a most interesting and informative debate, with a good exchange of views on many aspects of the Thames tunnel project. I thank the noble Lord, Lord Berkeley, for his assiduousness in pressing the Government on this subject. I will try to address as many of the issues raised as I can, but before I do that, I also thank the noble Lord, Lord Stoddart, for his thoughtful contribution, but no one do I thank more than the noble Lord, Lord Grantchester, for confirming that the Opposition support the project.
I believe that there is widespread acceptance that it is unacceptable for a leading European city in the 21st century to have a major river flowing through it that is increasingly taking on some of the characteristics of an open sewer. However, this situation in London is not new. We have known about it for well over 10 years. In that time, there has been much consideration and study of possible solutions to the problem, from all angles by a range of experts.
The noble Lord, Lord Berkeley, asked what assessment the Government have made of the proposals for the Thames tideway tunnel. A tunnel-based solution first emerged from the Thames tideway strategic study. That group, which was established in 2001 and reported in 2005, comprised the Greater London Authority, Defra, Thames Water, the Environment Agency and Ofwat, in an observer capacity, with an independent chairman. The group considered a range of alternative solutions, drawing on the technical expertise of numerous bodies and professional advisers, before arriving at its conclusion that a full-length tunnel was the preferred solution for reducing the number of combined sewer overflow spills and meeting the environmental objectives for the river.
In 2007, the then Government published a regulatory impact assessment of sewage collection and treatment for London which examined these and a range of other proposed options. The overall conclusion was that only a full-length tunnel would provide a cost-effective solution that met the tideway environmental objectives for the river within a reasonable timescale. Accordingly, the then Government asked Thames Water to proceed with developing detailed proposals for a tunnel. Since then, Thames Water has refined its proposals and consulted extensively on them.
Defra officials are working closely with Ofwat and Thames Water to ensure that the costs are tightly controlled, so that customer bill increases over time to pay for the financing of the tunnel are kept as low as possible and provide value for money. In addition, in November 2011 Defra published an updated assessment of the proposed options to address sewage in the Thames and an updated cost-benefit assessment. These were entitled Creating a River Thames Fit for our Future—A Strategic and Economic Case for the Thames Tunnel and Costs and Benefits of the Thames Tunnel.
In 2012, Parliament considered and approved the Government’s National Policy Statement for Waste Water, with debates in both Houses. This set out the need for major wastewater infrastructure, compared the alternative solutions for the Thames, and concluded that a tunnel was the preferred solution. The National Policy Statement for Waste Water will be used by the Planning Inspectorate in considering Thames Water’s current application for a development consent order for the tunnel. In 2012, my department also published its Thames Tunnel evidence assessment, to ensure that due consideration had been given to the full range of evidence available on all the proposed options to address the problem of sewage pollution in the River Thames. This included an annex listing all 36 of the relevant supporting studies and reports.
Earlier this year, in view of representations being made by the noble Lord, Lord Berkeley, among others, that some US cities were implementing sustainable urban drainage systems, or SUDS, and green infrastructure to address their overflow problems, we asked the Environment Agency to carry out an assessment of the evidence on whether SUDS could deliver the environmental standards set for the River Thames. The review, published last week, concluded that all the available evidence, comprising more than 70 relevant studies, shows that SUDS alone could not achieve this.
The noble Lord, Lord Berkeley, referred to Philadelphia. If I may, I will dwell for a moment on what some major US cities are doing, because the US has federal standards which are not dissimilar to those set by EU law. Washington DC has just started boring a deep five-mile tunnel of similar dimensions to the Thames tideway tunnel. This is part of a 12-mile tunnel system that aims to reduce combined sewer overflows by 96%, a similar standard to that proposed for the Thames tideway tunnel.
Major storage and transplant tunnels are also a key feature of solutions put in place to tackle combined sewer overflows in Milwaukee and Wisconsin. Pittsburgh is attempting to achieve a similar standard through the 25-year implementation of sustainable drainage systems. In Portland, Oregon, SUDS have been used to remove approximately 8 million cubic metres of storm water a year. This is 35% of its total sewer overflow volume, but tunnels still prove necessary to meet the required levels of control. Philadelphia aims to tackle 85% of its sewer overflow discharges using SUDS over a 25-year period. The work has been going on for five years now, but a tunnel solution may still be necessary to meet the required environmental standards.
Unlike London, Philadelphia and Portland have a geology which is suitable for SUDS. The soils underlying the cities’ SUDS areas are more porous and more able to soak up excess rainwater. The main point is that each solution reflects the particular building density, geology, rainfall patterns and existing sewer system of that city.
There does not therefore appear to be any case to revisit the case for the tunnel as it is set out in the national policy statement. I have also seen compelling recent evidence of the scale of the problem with wastewater discharges into the Thames, and I am advised that the serious rainfall event last weekend resulted in more than 1 million tonnes of wastewater being discharged into the river over a very short period of time. A tunnel would have captured these discharges, and transferred them for treatment in time to handle any subsequent heavy rainfall events. I do not believe that supporters of SUDS as an alternative to the tunnel have demonstrated how they would handle events of this type.
The noble Lord, Lord Berkeley, also referred to the work of Professor Binnie. We believe that the environmental criteria set in 2007 remain robust, are not gold-plated, and should not be downgraded. Alternatives such as a shorter western tunnel combined with SUDS would not meet the environmental objectives for the Thames tideway in an acceptable timeframe or at lower cost than the full-length tunnel.
A further important factor is the 2012 European Court of Justice ruling that the UK was in breach of the urban waste water treatment directive in London, which means that there is an increased likelihood of very significant infraction fines if we do not comply within a reasonable period of time. The risk of fines has been reinforced by the very recent fines ruling against Belgium for not complying quickly enough with a previous adverse court judgment with regard to waste water collection and treatment.
The noble Lord, Lord Berkeley, asked what the tunnel solution will deliver. The Thames tideway tunnel would reduce the frequency of spills from the 34 combined sewer overflows in London intended to be caught by the proposed tunnel from around 50 to 60 to just three or four times a year during extreme rainfall events, with the estimated overflow volume falling from around 18 million to 2.5 million tonnes. That would improve water quality, with benefits for wildlife and river users. It will also ensure that we continue to meet the UK’s obligations under the urban waste water treatment directive and the water framework directive. We are clear that the overflow volume to be addressed by the tunnel is 18 million tonnes, not the 39 million stated by the noble Lord, Lord Berkeley, as quoted by Thames.
The noble Lord, Lord Berkeley, also asked about the financing of the project. The Government believe that the private sector can and should finance this project. Although the Government can provide financial assistance in any form in relation to the tunnel, we have stated that this will be contingent financial support for exceptional project risks, to help ensure the cost of financing the project is kept to a minimum and offers best value for money for customers and taxpayers. However, we will want to be assured, when offering this contingent support, that the taxpayer is appropriately protected by measures that minimise the likelihood of these exceptional risks materialising.
The noble Lord, Lord Stoddart, asked about customers outside London paying for the tunnel. It is worth saying that London customers have helped to finance major sewerage investments outside the capital that serve a much smaller population. When improvements are needed, for example, in rural Oxfordshire, the cost is spread among all customers of sewerage services, including those living in London. This approach, which is supported by Ofwat, is standard across England and Wales and is the fairest way of apportioning the costs of investment in water and sewerage services.
The noble Lord, Lord Stoddart, suggested that Thames Water should pay for the tunnel from existing funds. Paying for the project from any accumulated reserves would neither reduce the cost to customers nor remove the requirement for some type of government support. This is a major tunnelling project and has a risk profile significantly beyond that typically expected of a water and sewerage company. That is why the tunnel is expected to be financed and delivered by an independent infrastructure provider with its own licence from Ofwat and backed by some form of government support related to exceptional project risks.
The Government believe that the private sector can and should finance the project but accept that there are some risks that are not likely to be borne by the private sector at an acceptable cost. The Government are therefore willing, in principle, to provide contingent financial support for exceptional project risks where that offers best value for money for customers and taxpayers.
Lord De Mauley
My Lords, I am sure I will in a minute. We will want to be assured that when offering contingent support, taxpayers’ interests remain a top priority. The taxpayer must be appropriately protected by measures that minimise the likelihood of these exceptional risks. We are working on the detail with Ofwat, Infrastructure UK, Her Majesty’s Treasury and Thames Water to ensure that there is a minimal likelihood of contingent government support ever being called on.
The noble Lord, Lord Grantchester, asked about the status of planning. Given that Ministers have a quasi-judicial role in the planning process, I hope the noble Lord does not expect me to go into detail at the moment.
The noble Lord, Lord Stoddart, asked about bill increases. We have always made it clear that the estimate of £70 to £80 is, indeed, only an estimate and should not be used, as it was in a recent paper, to reverse engineer a notional investor return. If the project is delivered through an infrastructure provider, the actual figure that appears on Thames bills will be set following the competition for the financing of the project. That will ensure best value for money for customers and keep bill increases as small as possible.
The noble Lord, Lord Berkeley, asked just now what contingent financial support really means. The support will occur in the case of unlikely events such as severe debt market disruption, significant cost overruns due to extreme tunnelling conditions and any caps on commercially available insurance.
Over the past 10 years, the Government have undertaken lengthy and thorough assessments of the Thames tideway tunnel project and alternatives. They have concluded that the tunnel represents the most cost-effective, timely and comprehensive solution to the problem of sewage pollution in the River Thames in London.
House of Lords
Introduction: Lord Finkelstein
Introduction: Baroness Humphreys
Leveson Inquiry
Lord Soley
To ask Her Majesty’s Government what progress they have made towards putting into effect the proposals made by Lord Justice Leveson in his report into the culture, practices and ethics of the British press.
Lord Gardiner of Kimble (Con)
My Lords, on 11 October, a final draft of the cross-party charter on self-regulation of the press was published following further discussions by the three main parties. These discussions helped to make the charter more workable. The cross-party charter will be on the agenda for a Privy Council meeting on 30 October.
Lord Soley (Lab)
I thank the Minister for that reply. After the 20th anniversary of my Private Member’s Bill in the House of Commons, now reborn as Leveson, this is like travelling at the speed of light, although not everyone would agree with that. What do the Government propose to do if the newspapers decide not to co-operate with the new body? What talks have they had with the newspaper industry about that possibility?
Lord Gardiner of Kimble
My Lords, the first thing I will say is that the noble Lord is indeed a patient Lord. However, our purpose is to seek a voluntary process, and we very much hope that the press will, through its independent, self-regulatory body, apply to the recognition panel so that what has happened before does not happen again and we have the right mechanism in place. I emphasise that it is voluntary for the press to apply to the recognition panel. However, as your Lordships know, Parliament has—following through from the Leveson report—made very clear, through the Crime and Courts Act, what the position would be for those who transgressed.
Baroness Bonham-Carter of Yarnbury (LD)
Did the Minister see the Guardian/ICM poll last week, which demonstrated that the public are solidly behind external regulation of the press, underpinned by an outside body? Does he agree that the newspaper publishers should listen to the public, as well as to the victims and Parliament, and support the cross-party charter?
Lord Gardiner of Kimble
My Lords, I very much agree with my noble friend. In the end, we have a duty to the public and to the victims in particular. We have a responsibility to try to set in place a position where this does not happen again and which gives confidence to the public. I am aware of the polls—polls can do a range of things. I hope the press will see that the cross-party charter is designed because of good will and that we wish to protect the freedom of the press while ensuring that people have proper redress.
Lord Sugar (Lab)
My Lords, throughout my business career I have always tried to view things through the eyes of the average man or the average consumer. With that in mind, the Leveson inquiry seems to have been a complete and utter waste of time. I see no change whatever in the attitude of the printed media, a view borne out by the recent behaviour of the Daily Mail—
Lord Sugar
It is coming. The Daily Mail is a newspaper whose only true facts are the price and date on the front page. Does the Minister agree that Lord Justice Leveson should have recommended a proper regulator, the same as we have in the television industry? Self-regulation is not possible with the printed media.
Lord Gardiner of Kimble
My Lords, I do not think the noble Lord will be surprised if I say that Lord Justice Leveson did a very thorough job for the nation. There was great merit in what he was wrestling with because he was trying to balance the freedom of a responsible press—which we all cherish—with putting in place something that enshrines that but ensures that there is redress and gives confidence to the public. I am therefore afraid that I disagree with the spirit of what the noble Lord is suggesting.
Lord Inglewood (Con)
My Lords, regardless of one’s views about the merits or otherwise of any particular charter, does my noble friend not agree that the freedom of the press is a matter of the highest constitutional importance? Will he therefore consider an important request that this House be given the opportunity to debate the text of the charter that is now being finalised? Even if we cannot take part in the legislative aspects of it, there is a political aspect that ought to be debated on the Floor of the Chamber.
Lord Gardiner of Kimble
My Lords, I understand my noble friend’s position, particularly given that he chairs the Communications Committee. However, we have debated the cross-party charter and the Leveson report on many occasions, and I have been delighted to answer—or seek to answer—questions on them. I sense that the public are seeking some conclusion to this and that is why the cross-party charter is going before the Privy Council on 30 October. It is about trying to get some resolution so that we can move forward and set the structure in place.
Lord Grocott (Lab)
Does the Minister detect something that I have not yet detected? The Leveson inquiry came about in the first place as a result of the most appalling treatment by the print media of individual innocent members of the public. It was that outrage that led to the inquiry. In the kind of almost academic exchanges that are going on, I get no sense at all that the leaders of the print industry share or understand that outrage. Can the Minister simply report to the House and reassure me that the Government feel the same sense of outrage that the overwhelming majority of the British people feel?
Lord Gardiner of Kimble
I sense from our exchanges in your Lordships’ House that there is a very strong feeling here which reflects what the nation feels. This is why the Prime Minister was absolutely right to start on the path of asking Lord Justice Leveson to look into these matters, because they should not have happened and responsible people could not possibly justify them. I say to those who are very senior in the press: I see no demons in what is proposed by the cross-party charter. This is about trying to have two very important things in our nation’s life: a responsible free press that can scrutinise and look at all that we and our institutions do, but will also safeguard the rights of the citizen.
Young People: Democratic Participation
(11 years ago)
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Lord Storey
To ask Her Majesty’s Government how they will ensure that young people acquire a practical understanding and awareness of how the United Kingdom is governed, its political systems, and how citizens may actively participate in its democratic systems of government.
Baroness Northover (LD)
My Lords, the new national curriculum for teaching from 2014 includes an improved programme of study for citizenship education at key stages 3 and 4. It is organised around core knowledge about democracy, government and how laws are made and upheld. Citizenship education seeks to equip students with the skills and knowledge to explore political and social issues, and to take their place in society as responsible citizens.
Lord Storey (LD)
I am grateful for my noble friend’s response. She may be aware that various youth democracy groups such as the British Youth Council, Operation Black Vote and Bite the Ballot are organising for next year’s National Voter Registration Day. How will the Government support and promote this initiative?
Baroness Northover
I thank my noble friend for his question. We are very supportive of that initiative. Citizenship education, too, should help to underpin students’ interest in how our democracy works.
Lord Kennedy of Southwark (Lab)
My Lords, with individual electoral registration rapidly coming down the tracks, what are the Government going to do today to ensure that people as young as 14 and 15 understand that it will be their responsibility, not their parents’, to register to vote in less than two and a half years’ time?
Baroness Northover
I hope that the noble Lord has had a look at the curriculum for citizenship study. He will, I assume, know that that will be compulsory for the age groups 11 to 14 and 14 to 16. Within that, there will of course be an emphasis on students’ right to register and later to vote in elections.
Lord Geddes (Con)
Is my noble friend aware—I am sure that she is—of the Lord Speaker’s excellent outreach programme, in which I am very pleased to participate, whereby Members of your Lordships’ House go out to schools in order to give them the information pertaining to this question?
Baroness Northover
Yes, I am well aware of that and I know that a number of noble Lords have taken part. They report back that there is great enthusiasm for discussing politics today. It is notable that the number of students who are then voting in elections thereafter seems to increase.
The Earl of Clancarty (CB)
My Lords, would the Minister agree that one of the traditional ways in which young people get actively interested in political matters is through joining campaigning organisations, not necessarily party political ones, and that the Government should actively encourage and not hinder their operation, particularly in the period leading up to an election, when young people’s interest in political issues will be most easily stimulated?
Baroness Northover
Yes, I am well aware of the fact that young people often get involved in all sorts of campaigns. One of the things which comes through in citizenship education is how the links can be made between those sorts of issues and how you effect change through voting. For example, if young people are encouraged by Comic Relief to be concerned about the plight of children of their own age in another country, actually voting and trying to ensure that there is a commitment to international development is part of how they take that forward.
Lord Tomlinson (Lab)
Does the noble Baroness agree that however good the curriculum is on citizenship, most young people will be singularly unimpressed by what they witness as the practice of government in Parliament? Yesterday’s Prime Minister’s questions in the House of Commons was a thorough disgrace, which most people who were watching will disapprove of, in which they saw a Prime Minister personally abusing the leader of the Opposition while trying to change policy half way through PMQs.
Baroness Northover
I am afraid that I did not see PMQs yesterday. However, when I go and listen in the Commons, I find myself grateful that I was never elected there—even though I tried several times—and that your Lordships’ House is a more tolerant place. There are more women in the House of Lords, and I think that also makes a difference.
Lord Tyler (LD)
My Lords, turning perhaps to safer territory, I return to the issue of the syllabus and the role of citizenship in it. Following concerns from all parts of the House, not least from my noble friend Lord Phillips and the noble Lord, Lord Roberts, on Thursday last week, is it not incredibly important to demonstrate to young people that this is not just theoretical, but that it leads on specifically to active citizenship? Is my noble friend aware that in Northern Ireland, where there was real concern about the transfer to individual electoral registration, it has become the habit in secondary schools to go right through the citizenship course with an end result of registration on the electoral register and for eventual voting?
Baroness Northover
Indeed, it has had a very positive effect in that regard. As I answered an earlier question, the link between what students will learn in their citizenship classes and their ability then to take that forward to register to vote and to vote is very important. I also note that within citizenship education students will be debating all sorts of political and social issues, and they will be encouraged to debate and make reasoned arguments and so on. I imagine that they are going to be very lively lessons.
Lord Hannay of Chiswick (CB)
My Lords, will the Minister and Secretary of State for Education accept my thanks for having acceded to the lobbying by a number of us to include the United Nations in the citizenship curriculum? Can she say whether the department and local authorities will welcome a non-governmental organisation like the United Nations Association, which promotes model UN debates up and down the country and can help the curriculum a good deal?
Baroness Northover
I thank the noble Lord and will pass on his tribute to my right honourable friend the Secretary of State. Indeed, looking at the curriculum, I was struck by how international it was. I am sure that the organisations that he referred to will be encouraged to play their part in trying to inform students; that would be extremely welcome. However, the curriculum reaches in all directions. Internationally, it deals with human rights and international law, and it also looks at the diverse national, regional, religious and ethnic identities within the United Kingdom. Therefore, it extends and it is deep.
Lord Campbell-Savours (Lab)
My Lords, when the Minister says to the House that she prefers to be in an unelected House, as against an elected House, does she think that she is sending out the right message to young people?
Baroness Northover
The noble Lord will be well aware that I belong to a party which is committed to election to the House of Lords, as I think is the case for everybody in this House who is a party member. He will also know that there is cross-party agreement that the effect of an electoral system for the House of Lords should be that no party is in overall control—
Baroness Northover
—as is the case at the moment, so that you then have negotiation, discussion and the kind of debate in the Lords to which the noble Lord’s colleague referred. Therefore, yes, there should be election but under a system which is proportional and ensures that all voices are heard: women’s as well as men’s.
Democratic Republic of Congo
(11 years ago)
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The Lord Bishop of Ripon and Leeds
To ask Her Majesty’s Government on what evidence they consider the Democratic Republic of the Congo to be a safe country to which to return asylum seekers.
The Lord Bishop of Ripon and Leeds
Despite my unelected nature, I beg leave to ask the Question standing in my name on the Order Paper.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, we observe our obligations under the refugee convention and the European Convention on Human Rights. Every asylum application is considered on its individual merits in the light of country information from a range of sources, including fellow European and asylum-intake countries. Returns are made only if it is safe to do so, and the courts have supported our position.
The Lord Bishop of Ripon and Leeds
I am very grateful to the Minister for that response. Following the Unsafe Return report of November 2011 and continued documented reports of ill treatment of those who return to the Democratic Republic of the Congo in the Unsafe Return 2 report of this month, will the Government use the evidence provided to challenge the DRC authorities and to set up a monitoring mechanism for those returned so that there is a minimal safety measure for them in this very dangerous country?
Lord Taylor of Holbeach
My Lords, the Home Office works very closely with FCO staff here in London and with embassy officials in Kinshasa. The embassy staff participated in the DRC fact-finding mission and stated that they were not aware of substantial evidence of any returnee being ill treated. However, I assure the right reverend Prelate that the Home Offices investigates specific allegations of mistreatment on return.
Baroness Kinnock of Holyhead (Lab)
My Lords, can the Minister explain how it can be safe to return at-risk people to a country which has the biggest UN peacekeeping force in the world, when that force has to spend most of its time protecting the local population and its own security forces, and when eastern Congo is known as the world’s capital of rape, which is routinely used as a weapon against vulnerable women? Surely this is a case of the Government having no understanding of the real threats and dangers faced by people in the DRC.
Lord Taylor of Holbeach
I know of the noble Baroness’s interests in this issue and the diligence with which she pursues them, but perhaps I can refute her suggestion that these matters are taken without proper due care and diligence by the Government. Perhaps I can illustrate that best by saying that in 2009 there were 98 enforced removals to that country; in 2012, the number was down to 14; in the first quarter of this year, it was one; and in the second quarter it was also one.
Lord Avebury (LD)
My Lords, does the noble Lord accept what the DRC ambassador told me—that,
“deportees are interrogated on arrival … to allow the Congolese justice system to clarify their situation”?
Does he therefore accept that although we do not routinely investigate or monitor the treatment of returnees, the evidence collected in the report that was mentioned by the right reverend Prelate—of the pattern of interrogation, arrest and ill treatment of refused asylum seekers—is strong enough to warrant an independent investigation of the treatment of these returnees? Can my noble friend say what it will take to get a country removed from the list of safe countries?
Lord Taylor of Holbeach
I thank my noble friend for making sure that I had seen a copy of Catherine Ramos’ report; in fact I had been briefed on the report, and the Home Office is taking it seriously. This report is being considered in detail, just as we considered the first one in the series. It was published at the beginning of this month. The initial view, considered against other evidence, including the information that we have from other European countries, is that it will not warrant a change in our returns policy.
Baroness Smith of Basildon (Lab)
My Lords, does the Minister understand the concerns about the quality of decision-making? Some 30% of appeals against initial asylum decisions were allowed, meaning that nearly one-third were wrong. In more than one in 10 cases reviewed by inspectors, selective information from the country of origin reports had been used to deny claims. We have to get this right because asylum should be granted only when it is genuinely needed, but there is now a serious fear that those at great risk of violence are being denied a safe haven.
Lord Taylor of Holbeach
I hope that the noble Baroness was impressed by the figures that I gave earlier and that she understands that this process is undertaken with proper deliberation. The current country case law from the immigration and asylum Upper Tribunal concludes that there is no evidence that failed asylum seekers involuntarily returned to the DRC face a real risk of persecution or ill treatment merely because of an unsuccessful asylum claim in the UK. This was a conclusion upheld by the Court of Appeal in 2008. In 2012 the Court of Appeal found that country guidance remains the law until it is set aside or superseded.
Scotland: Underoccupancy Charge
(11 years ago)
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Lord McAvoy
To ask Her Majesty’s Government what assessment they have made of the report published by the Scottish Parliament about the effects of the under-occupancy charge in Scotland.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the Scottish Parliament’s report is an interesting and reasoned discussion of the early months of this policy. It suggests that it is difficult to assess impact at this stage, a view that we share. That is why we are undertaking a two-year evaluation on the effects of the policy. Initial findings will be available in 2014, the final report published in late 2015.
Lord McAvoy (Lab)
My Lords, I thank the Minister for his Answer. However, the report indicates that 82,000 households in Scotland are affected by the bedroom tax, with an average cost to those households of £50 a month. Some 80% of those households include a disabled adult. Does the Minister still stand by his advice, as published in the Daily Record, that in order to cope with that cost, disabled people should take in a lodger?
Lord Freud
My Lords, there is a range of things that people can do, as I have said to the House on previous occasions. The best option will depend on the circumstances. The group of disabled people on higher-rate DLA is 17% of the total. We have provided a lot of discretionary housing payments—we topped them up—and it is interesting to read in the report that many councils are saying that they are managing with that figure at this stage but that it is too early to tell.
Baroness Gardner of Parkes (Con)
My Lords, is the Minister aware of the research reported in the press this week on this subject which said that one in 10 of the claimants affected by this policy has moved off benefits? Will he confirm or comment further on that?
Lord Freud
My Lords, I have seen the research to which my noble friend refers. Clearly, it is encouraging. I also note that the report by the Scottish Parliament states that in one area the case load has fallen already by 15%. As I said just now, we need to be cautious about early findings but this one clearly is positive.
Baroness Hollis of Heigham (Lab)
My Lords, the Minister has stated that the bedroom tax will release larger, underoccupied properties for the waiting list but 80% of those on the waiting list want the selfsame smaller properties as the underoccupiers who have priority. This report shows that it will take three years to rehouse underoccupiers. Will the Minister therefore accept that it is false to claim that the bedroom tax will help those on the waiting list? On the contrary, their waiting times will probably double.
Lord Freud
My Lords, I must make the point that while the party opposite likes to use the expression “bedroom tax”, it is deeply misleading. A tax is when you take away money that people earn. We are limiting the amount of money that the taxpayer pays to people. There are 1.4 million one-bedroom properties, which become available at the rate of roughly 100,000 a year. Quite a lot of people are likely to want to keep an extra bedroom because they have the resources and the desire to keep it. Therefore, there will be a period of adjustment, and we are going through it. We are spending the discretionary housing payment to allow that transition to happen in an orderly way.
Lord Skelmersdale (Con)
My Lords, will my noble friend confirm that housing benefit, first, is paid for private sector accommodation and, secondly, that under the previous Labour Government it was restricted to a certain number of rooms in those circumstances?
Lord Freud
My Lords, my noble friend is right that the private rented sector basis is the local housing allowance, which is paid on the shape of the family who occupies. It is paid on the basis of how many rooms are required. Until now, there has been an imbalance between the provision in the social rented sector and the private rented sector, which this policy corrects.
Baroness Sherlock (Lab)
My Lords, the evidence is mounting. On top of evidence from the University of York and the University of Cambridge, in the past week alone the Archbishop of Wales has slammed the effect on Wales and now we have concerns from the Scottish Government. Perhaps most telling of all is a report I read this week in the Spectator by Isabel Hardman in which she suggested that Ministers were now referring to the spare-room subsidy as “Lord Freud’s idea” in an attempt to distance themselves from it? Would the Minister like to take this opportunity to rebut that outrageous slur?
Lord Freud
My Lords, a good idea has many fathers. Clearly, everyone in this Government is responsible for the bedroom tax and I am one of them.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)
It is the turn of the Liberal Democrats.
Lord Storey (LD)
My Lords, I was shocked to discover that on Merseyside councils have left unused hundreds of thousands of pounds of discretionary housing payments. Will the Minister comment on that? Does he think that perhaps that money could be rolled over to future years or used in authorities where it would be used?
Lord Freud
My Lords, we are currently looking very hard at what the support should be in the next year and possibly beyond so that we will have a smooth transition for this policy. One interesting thing is that there is a real economic mismatch, which I have talked about, in what we are building for people: we have 60% of people requiring single bedrooms and we are building only 13% in any one year. There is an economic mismatch so the signals must be corrected and that is one thing that this policy does.
Arrangement of Business
Baroness Anelay of St Johns (Con)
My Lords, my right honourable friend the deputy leader of the House of Commons has made a Statement on the sittings of the other place up to January 2015 and it may therefore be for the convenience of this House if I do the same. To save any Members reaching for their diaries, a note of all the dates I am about to announce is available in the Printed Paper Office and will be circulated with the next edition of Forthcoming Business. I stress that I make this Statement with the usual and, as ever, very necessary caveat that each of these dates is subject to the progress of business: they are provisional dates. Since I am giving such a long forward look to January 2015, I am sure that that will be appreciated.
I have already announced the autumn long weekend and the Christmas Recess. I hope to provide for a short recess in February, rising on 12 February and returning on 24 February. We should rise for Easter at the end of business on 9 April and return on 28 April. For Whitsun, we rise at the end of business on 21 May, returning on 2 June. We will rise for the Summer Recess on 30 July and return on 7 October. For Christmas, we should rise at the end of business on Wednesday 17 December 2014 and return on Tuesday 6 January 2015.
I hope that the House will accept that this is a long-range forecast and I hope that it will be welcome. I know that noble Lords have been anxious to be able to plan their year next year, but, of course, everything is subject to the progress of business. I expect that the Queen will open a new Session of Parliament in State in the course of the spring but the dates of Prorogation and State Opening will be announced later in the usual way.
Business of the House
(11 years ago)
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Lord Hill of Oareford
That the debates on the Motions in the names of Lord Shipley and Lord Greaves set down for today shall each be limited to 2½ hours.
EU: UK Membership
(11 years ago)
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Lord Shipley
That this House takes note of the economic impact of the United Kingdom’s membership of the European Union.
Lord Shipley (LD)
My Lords, I am very grateful for this opportunity to discuss the economic impact of our membership of the European Union and I thank all those Members of the House who will contribute to the debate, particularly my noble friend Lord Wrigglesworth, a colleague over many years, who will be making his maiden speech. I thank the Library for its excellent briefing and acknowledge the excellent set of essays launched this week by Regent’s University London which cover extremely well the issues we shall be discussing today.
I am conscious that we have had a number of debates on aspects of the EU in recent months but there are two reasons why I feel that a debate on the economic benefits is very important now. First, over the summer and early autumn a number of companies and professional bodies have been making their voices heard in support of our continued membership of the EU. Secondly, I have been very concerned that discussion in the media about the EU has tended to concentrate on issues other than economic benefit. Immigration, our net budget contribution, state benefits and health tourism, for example, all feature strongly. Each of these is clearly important but some, such as health tourism, are not just an EU matter. All these areas rightly reflect public concern and so they need to be constantly reviewed and debated but, I submit, we should do this as members of the EU, just as they do in the other countries of the EU, so that we understand better, for example, state benefit rules and how they should apply between countries, given the enormous differences that exist.
However, the issue of state benefits is not just a UK matter. I was interested to note reports earlier this week that in Germany more than 10,000 British people are receiving unemployment benefit—some 10% of the British population resident in Germany. That reflects the fact that we live in a world in which national borders have less meaning. Transport is easier and cheaper than it used to be and both employers and employees want mobility of labour across borders. This is a changing world and we cannot opt out of it.
I congratulate the Mayor of London on his leadership on this matter earlier this week and on several previous occasions in explaining London’s role as an international capital. However, perhaps the Government should think further about how they can invest more quickly in public services in areas where private sector employers recruit workers in significant numbers from elsewhere in the EU, because that can strain public services. I believe that that would build support for the EU.
I mentioned a moment ago our net budget contribution, but that is less than 1% of annual government expenditure. A number of other EU states are also net contributors, but the economic benefits of our membership matter a great deal more than how much we pay each year to belong. Of course we should examine closely what we pay and fight our corner, but it is not the central issue. We should never downgrade the overriding reason for our being members of the EU. That reason is economic, because the size of our economy, our growth prospects and the creation of new jobs in a fast-changing world depend fundamentally on our continued membership of the European Union.
I cut my political teeth in the referendum in 1975, in the all-party yes campaign in the north-east of England. The EU has since then proved to be hugely important to the exporting success of the north-east of England, which is the only part of the UK with a positive balance of trade, a high proportion of which is with the EU. For that reason, I want to draw attention to two firms which have committed themselves to the north-east of England as result of foreign direct investment, both of which have made recent public, unprompted statements about our membership of the EU.
First, Nissan has made it repeatedly clear—again, only a few days ago—that the UK continuing as a member of the EU is very important for the company. More than £125 million has been committed to the Sunderland factory. It is a wonderful success story, with more than 6,000 employees making vehicles which are exported into the EU and across the world. The second firm is Hitachi. The president of Hitachi recently confirmed that he met the Prime Minister last spring and said that if the UK pulled out of the EU, it could jeopardise £1 billion of funding for Britain’s railways and nuclear energy. In August, Hitachi Rail Europe said that its investment in an £82 million factory in Newton Aycliffe resulted from its strategic decision that the UK should be its gateway to the EU single market. I also understand that the Japanese Government have warned that UK jobs could be at risk if we leave the EU.
The Engineering Employers’ Federation, which is a trade body for UK manufacturing, recently reported that 85% of manufacturers say that Britain must stay in the EU, leading from within and not putting investment and jobs at risk. They want the single market to work better, but they do not want to exit from it. They say that the UK must remain part of the EU with “no ifs or buts”. They know that the UK’s relationship with Europe and the EU is vital to our economic success because the single market is our largest export market. The British Chambers of Commerce has reported that although businesses want more decisions made in the UK, most members think that withdrawal from the EU would be bad for Britain. A CBI survey published last month of more than 400 businesses showed that almost four out of five firms favoured staying in the EU, including 77% of small and medium-sized enterprises. Just 10% think it is in their interest for the UK to leave the EU; that is 11% of SMEs. The CBI says that despite frustrations over the current relationship and the burden of some regulations, particularly employment law, the survey shows that most businesses feel that the positives more than outweigh the negatives. Those negatives are primarily seen to be unnecessary regulations. The CBI wants to see rules implemented evenly across all member states, with an end to the gold-plating of EU legislation in the UK.
What then of financial services, which contribute £1 in £8 of our tax revenues? The City of London Corporation made it clear in a note this week that the financial sector based in the UK cannot be treated as distinct from Europe. The reason is that London’s role as a financial centre is international. The corporation points out that financial markets in the EU and the UK are intermeshed in a common regulatory structure. Non-European firms come to London because it is both international and within the single market at the same time. Crucially, and I quote directly from the note:
“The UK’s priority must be to oppose policies that could lead to the fragmentation of that Market. Fragmentation of the Single Market in financial services could drastically reduce the efficiency of the Single Market and European businesses’ access to capital. London’s position as the most prominent international financial centre in the world would be put at risk by an imperfect Single Market in financial services in which rules and access differed by level of membership of the EU. This could also damage the interest of euro-area headquartered firms”.
That is very clear advice. The key question we should ask those who believe that we should withdraw from the EU is this: what problem are you trying to solve? Put another way, is the UK being held back by the EU? A million extra jobs have been created here since 2010—inside the EU. The idea that leaving the EU would boost jobs more lacks evidence and credibility.
We hear it increasingly claimed that the future for Britain lies in the emerging economies; that these days, we should fly over Europe because more business can be done further away. But what those who pursue this line of reasoning fail to explain is why we cannot build trade with emerging economies as well as increasing trade within the EU.
Germany exports four times more to China by value than we do. Germany does it as a member of the EU. Norway is often cited as an exemplar for the UK inside the European Economic Area. Norway has no direct power in the EU, no seat at the table, no votes, but it still has to abide by directives and bills just as the full members do. Norway has to implement three-quarters of all EU legislation, including the working time directive, other employment laws, consumer protection, environmental policy and competition laws. It has to contribute to EU budgets. Norway’s per capita contribution is just over £100; the UK’s net per capita contribution is £128. If we joined the EEA there would be little saving.
Switzerland is often cited as another example we might emulate. But being outside the EEA, it has no right of access to the single market and has to negotiate each and every case separately. Even Switzerland contributes to EU budgets at £53 per capita.
What do other EU countries say about the EU and British concerns, particularly regulation? President Hollande said earlier this year that there might be a “differentiated” Europe. The Italian Prime Minister said in July that there might be treaty changes for a more flexible Europe in the interests of the UK but also in the interests of countries such as Italy. The Dutch Government have proposed defining subsidiarity as, “European where necessary, national where possible”. Chancellor Merkel said in May that it could be that some things “could be better done at a local level”.
All these confirm that the long history of flexible integration is alive and well in the EU today and we should build on it. Lots of people across Europe want us to do that and to show leadership in a reform programme. We should not forget that 3.5 million jobs in the UK are linked to our membership of the EU; or that 47.5% of our export of goods and services goes to other countries in the EU.
I am grateful to the French Chamber of Commerce in Great Britain for reminding me that there are 1,500 French subsidiaries in the UK employing 330,000 people, that the UK is at the top of the European foreign direct investment rankings and that the EU accounts for nearly half of foreign direct investment in the UK. With figures like that, the idea that it is somehow in our national interest to quit the EU defies belief.
There are several reasons why firms want to move into the UK, including the gateway to the single market, the English language, the quality of our legal system and our excellent workforce. For many, the single market is the most important. A single market of 500 million people means that they and we benefit from a common set of rules which enables businesses to generate wealth without having to comply with many different sets of regulations. We need to defend the single market and deepen it to drive up UK jobs and growth. We need a continuous process of reform, but completing the single market would further reduce internal barriers to trade, particularly in services, which our Government think could generate a 7% increase in GDP—a great deal higher than the 0.4% of GDP that goes to our net budget contribution. There are many discussions going on around regulation. Some of them may be justified and there are discussions that will be pursued in Brussels and elsewhere about this matter. However, we should note the success of the Government in tackling regulatory issues and their continuing work in that area. Some 1.4 million UK small businesses are now exempt from certain EU accounting rules, which demonstrates that the EU is willing to reduce red tape for small businesses and it is in the interests of all member states that this process should continue.
If we left the EU, we would probably operate within a “most favoured nation” status. That would mean that 90% of UK exports to the EU by value would face tariffs. As well as that, UK consumers would face higher prices on goods bought from the EU and from those countries with which the EU had trade agreements. These increased prices would be counterbalanced only slightly by lower food prices.
If we were in the EEA, trade would be tariff-free and, as with Norway, we would have to implement three-quarters of EU legislation in which we would have no say. We also need to be careful about the rules of origin. Goods imported into the EU via a full member of the EU can move freely once the relevant entry tariff has been paid, but those that come through an EEA country have to apply the rules of origin, a process that will take time and money.
This week we have seen a trade agreement signed with Canada after four years of negotiation. There are now 46 trade agreements in place, with a further 78 pending. If we left the EU, we would lose access to every EU trade agreement with a third party, and each would have to be renegotiated.
Exit would mean no extra funding for the poorer parts of the UK. Between 2014 and 2020, £6.2 billion will be committed in ERDF and ESF to the UK.
In conclusion, problems with the EU can be addressed. Problems related to the eurozone can also be addressed because it is not essential to be in a single currency to be part of a single market, as we have successfully demonstrated over many years.
In a recent speech at Chatham House, the Deputy Prime Minister said that,
“the idea that we can float off into the mid-Atlantic, bobbing around in a new network of relationships without a strong anchor in Europe, while countries around the world ... are working more and more in regional blocks, is clearly not a sound strategy in a fast-moving, fluid and insecure world”.
He is right. We must strengthen our economy, not weaken it, and we can do that only through continued membership of the EU, with the UK at the heart of EU decision-making. I beg to move.
Baroness Noakes (Con)
My Lords, I congratulate the noble Lord, Lord Shipley, on securing this debate. Like him, I am looking forward to the maiden speech of the noble Lord, Lord Wrigglesworth. The noble Lord, Lord Shipley, and I can at least agree that whether there are any economic benefits from the UK’s membership of the EU is an important issue, but there, I fear, we part company. In my six minutes I will not be able to answer all the points that the noble Lord has erroneously raised today.
I have a pretty clear view. There are no net economic benefits of the UK’s membership of the EU. That is, the economic costs of membership outweigh the benefits and I suspect that this has been the case from the very first day that we joined the EU. Successive Governments—including, I regret to say, the current Government—have refused to commission a proper economic cost-benefit analysis of our relationship with the EU. The dominant pro-European bias in Whitehall, which takes its lead from the Foreign Office, can almost certainly take the blame for this, but I have never understood why the Treasury, where economic reason should reign, has gone along with it.
The Library’s helpful note for today’s debate shows the difficulties in estimating the economic outcome from EU membership. The studies quoted in that note show a big range from plus 6% to minus 5% of GDP. However, the Library does not appear to have seen Professor Tim Congdon’s 2013 estimate of the costs of membership which has just come out. He finds that the cost of the UK’s membership is an astonishing 11% of GDP. That is, we are worse off by 11% of our GDP each and every year that we remain EU members.
The largest single element, amounting to over one-half of the total, comes from the cost of regulation: the Social Chapter, financial services regulation, the renewables’ agenda and a host of other regulations. The Prime Minister is in Brussels today, again attempting to restrain these intolerable burdens. I expect this effort to fail as all others before have failed. Regulation is the Commission’s weapon of choice for preserving its hold over member states.
The second largest element of the 11% is the cost of resource misallocation, which accounts for around 30% of the total. The common agricultural policy, with its protectionism and overt subsidy of uneconomic agriculture, has often been seen as the main villain when it comes to resource misallocation, but that is now only a small part of the overall picture. Much more important are the impacts on both basic and high-technology manufacturing from tariff and non-tariff barriers. In 2005, these were estimated by Patrick Minford and others to be of the order of 3% of GDP. Nothing has significantly changed in the intervening years to moderate that estimate.
Professor Congdon is clear that a withdrawal from the EU would not lead to an immediate boost to the UK’s economy of 11% because much of the damage has already been done in terms of killing business enterprise in the UK. It could take a decade or more to recover—but at least it would start to move in the right direction.
There is a lot of scaremongering about what would happen if we left the EU, but one thing that is completely untrue is that 3 million or more jobs associated with exports to the EU would be at risk. We are a net importer from the EU and so more EU jobs depend on trade with the UK than the other way round. If the 3 million figure is correct, we are probably talking about well over 4 million European jobs resting on trade with us. Therefore it is fanciful to think that the UK would not continue to trade with the EU—it is just that we would probably do so via free trade agreements. We would certainly not need to be tied into the unsatisfactory Norwegian and Swiss arrangements which have already been referred to. Just as now, a minority of our trade would be with the EU. The proportion of our exports going to the EU has been declining for several years and, once we eliminate the Rotterdam-Antwerp effect from the statistics, is probably now below 40%. That it is getting less is a good trend. We need to diversify away from dependence on markets which promise low or no growth.
The single market may have made it easier for UK businesses to do business with Europe but that has come at a huge cost, with UK businesses concentrating far too much on markets which have performed badly compared with the rest of the world. UK businesses would now be in a far better position if they had concentrated on the higher growth markets in the world, including the USA, which remains our largest single trade partner. I congratulate the Government on their emphasis on overseas trade and encourage them to do more to ensure that, in particular, our small and medium-sized enterprises get access to the support, finance and advice that they need to grow in markets outside the EU.
The lack of an economic case for membership of the EU is one reason why I support a referendum on our membership of it. I believe there is no economic case for our membership and that, even if we were to renegotiate its terms, that would remain the case. We would be crazy to remain in membership if the economic case were not made.
Lord Watson of Invergowrie (Lab)
My Lords, I, too, congratulate the noble Lord, Lord Shipley, on initiating this important debate. I am absolutely clear that membership of the EU is very much in the best interests of the UK—in economic and social terms, and in terms of the influence that the country can bring to bear both within the EU and globally. I would be very concerned about our isolation in relation to all of those aspects should we walk out on the family that is the European Union.
The EU and our place within it really are too important to be used as a means of dealing with a little local difficulty within the Conservative Party, which is what is happening with regard to the increasingly shrill voices that the PM eventually answered with his plan for a referendum by 2017. The Prime Minister claims that it will be to decide on changes that he hopes—somewhat fancifully, I suggest—to negotiate. However, if that fails to materialise then pressure from within his party would surely mean that we would be stuck with a “Should we stay or should we go?” vote. I would characterise that as the Clash option, for those of a certain age and musical tastes. It is also an uncertain road down which to travel. Fortunately, the Prime Minister first has to clear a certain hurdle in 2015, which gives us some hope of this vital matter being taken out of his hands.
When those of us who are in favour of retaining, and indeed strengthening, our place within the EU cite the dangers inherent in disengaging, we are characterised rather disparagingly as scaremongers, as the noble Baroness, Lady Noakes, has just done. If that is the case, it is a label that sits rather uneasily on some rather significant public figures. Sir Nigel Sheinwald spent five years as ambassador to Washington and three years as permanent representative in Brussels. He has said that a Britain on the sidelines is not in anyone’s interests, and that a Britain on the sidelines of Europe—and even more, out of Europe—would not be in the US interest or in the interests of our other major European partners. The noble Lord, Lord Browne, a former boss of BP, one of the most senior non-executive appointments by the coalition, has warned that years of uncertainty about whether the UK will remain part of the EU will put off investors, leading major companies to place major job-creating projects elsewhere in Europe.
Expanding on that last point, Sir Andrew Cahn, vice-chairman of Nomura, spelled out how a major company might react when considering a billion-dollar investment in Europe. Its advisers, he said, would tell the company that they,
“do not know if the UK will be in the single market in five years’ time and have no idea what their access terms will be”,
should the UK leave, as there would be no way of knowing whether the UK would find a sustainable relationship with the EU or find itself involved in fractious exchanges. He said that those advisers would say:
“Indeed, we have no idea what Britain’s EU strategy is”.
He then said that while the CEO of that company may well still be tempted by Britain, the balance would have shifted and he or she would now,
“examine the European alternatives more closely”.
Moreover, Martin Sorrell, chief executive of the global company WPP, has said:
“At the very best it”—
a referendum—
“will be neutral in impact; at the worst, negative”,
on foreign direct investment. As the noble Lord, Lord Shipley, said, the CBI has also said that it is essential that we stay at the table to bang the drum for businesses and defend our national interest.
These are not insignificant individuals and they are not bound in any way by party political interests. They unquestionably know what they are talking about. Those of us who are in favour need to start making the positive case for remaining within the EU. We should not just counter the negatives of the doomsayers; we need to talk the case up. Indeed, there is a good, solid case to be talked up.
The noble Lord, Lord Shipley, has already quoted the CBI/YouGov survey announced last month, which demonstrated that eight out of 10 firms say that the UK must stay in the EU. Surely that level of support cannot seriously be questioned. Furthermore, significant numbers of those surveyed believed that the current relationship had a positive impact on their own businesses on issues such as the ability to buy and sell products without taxes and tariffs on trade flows in the EU markets and, indeed, outside those markets as a result of trade deals. Having common product standards across the EU was also cited as being of considerable importance. That is hardly surprising because, of course, the EU single market is the world’s largest trading bloc, worth some £10 trillion a year. It is home to 500 million consumers and is the destination of half of the UK’s exports. Surely being part of this large single market makes our entire economy more competitive. Even firms that do not export face more domestic competition, which benefits consumers. In addition, EU membership gives access, through trade agreements, to 37 other economies around the world. If we were to leave the EU, we would have to negotiate each of these deals again, but this time as a country of 60 million people rather than a continent of half a billion people.
Surely the biggest challenge facing the UK today is not Europe; it is the economy, and the priority is to deliver jobs and growth. I repeat my opening remarks that the UK’s interests clearly lie in remaining at the heart of the EU and I believe that that view should be increasingly argued at every opportunity. At the moment in Scotland, we are involved in a campaign to, we hope, keep the UK together. Those in favour of that position are campaigning under the name Better Together. I suggest that that slogan should also be used in terms of the UK’s relationship with the EU.
Lord Hannay of Chiswick (CB)
My Lords, at a time when many are expressing doubts about or are ignorant of the benefits to Britain resulting from its membership of the EU, and others are campaigning with zeal and hyperbole for us to withdraw, it obviously makes good sense for this House to debate the economic impact of our membership even if the economic arguments can never be the whole story—as, indeed, they were not when the British people voted in an “in or out” referendum in 1975. In that context, I warmly welcome the initiative by the noble Lord, Lord Shipley—and, indeed, his introductory speech—to hold this debate and pay tribute to the way in which the Liberal Democrat party has consistently promoted and supported our membership.
Debates in your Lordships’ House provide neither the time nor the appropriate occasion to marshal the whole econometric case relating to the economic impact of our membership. Those in search of that could do worse than study the Regent’s University report on the costs, benefits and options for the UK in Europe, to which the noble Lord, Lord Shipley, also referred and which was launched earlier this week by Mr Peter Sutherland. Even that sort of detailed study of the subject matter of our debate today suffers from one major weakness: it is not actually possible to calculate with precision where Britain’s economy would stand today if we had not joined the European Community in 1973, and where it would be likely to stand were we to withdraw at some point in the future. That is why, personally, I treat with some scepticism the precisely quantified predictions of both supporters and opponents of membership as to its impact. These have to be qualitative judgment calls if they are not to be easily refuted.
Clearly, one has to start with trade. We saw the removal of myriad barriers that used to impede trade between this country and the rest of Europe before we joined the customs union, and then we took the lead in shaping the single market. Imperfect though that market may be, what we now have has led to a huge expansion in mutual trade to the benefit of our economic actors, in both the goods and services sectors, and of our consumers. Outside the European Union, many of those benefits would not have occurred or would be at risk if we were to leave, as we ceased to have any control over the shaping of the regulations governing our trade—the position in which Norway, which has a smaller and much less diversified economy than ours, now finds itself.
The impact on our trade outside Europe has also been important. As a member of the largest trading bloc in the world, which negotiates as a single unit on trade policy matters, we have benefited both from the protection that that provides against discriminatory treatment by third countries and the leverage that it gives in prising open the markets of others. If noble Lords doubt that, they should talk to the Scotch Whisky Association. Those who say that we would be better placed if we promoted our exports outside the European Union need to explain why the Germans, who have been in the Union for longer than us, have fared so much better in their trade with China than we have. The Mayor of London, trailing his Eurosceptic robe through Beijing, should provide some specifics about why he thinks we would do better if we had to negotiate trade policy with the Chinese on our own. Why is it that Canada, Japan, the US and India are all negotiating freer trade deals with the European Union? That is where the benefit lies for them, and where it lies for the members of the Union.
On investment, this country has often lagged behind, and still does, in the investment league tables among developed countries. However, where would we be if we had not consistently been either first or second among the economies that attract overseas investment into Europe? How much of that investment would come here—and would come in the future, if we were unwise enough to leave—if we were not able to provide a base within the European Union and a strong voice in its councils? A lot of British jobs rely on the answers to those questions, even if they cannot be precisely quantified.
In this country, the European budget is usually regarded as a clear minus in any calculation of economic impact. That is understandable, as we are and will remain a net contributor to the budget, albeit mitigated by the substantial rebate won by Lady Thatcher. However, the programmes funded by that budget in agriculture, in regional and sectional support, and in scientific and industrial research are of real value to important parts of our economy, and could not be easily or straightforwardly replaced by national spending. Try asking any of Britain’s leading research-based universities how they would fare if European budget-funded research was not available to them, and you would get a pretty clear answer.
Almost invariably, policymakers overlook the unintended consequences of their policy decisions. Occasionally those unintended consequences are benign, but more often they are negative, often seriously so. Given the degree of integration of the British economy with those of our European partners that has resulted from 40 years of membership, I suspect that any active withdrawal would fall fair and square into that latter category. Let us hope that debates such as the current one will at least put us on our guard as to the risks we would run if we were ever so foolish as to venture down that road.
Lord Desai (Lab)
My Lords, I thank the noble Lord for introducing this debate. He said that he cut his teeth on the 1975 referendum. Fifty years ago, when I was finishing my PhD, my first job offer was to inquire into the relative merits of the six nations that had joined themselves together under the treaty of Rome as against the seven who formed EFTA—so I have lived with this problem for much longer. The debate about whether we should be in or out of Europe will never be over, whichever way the referendum goes. The 1975 referendum did not settle any of these matters, and neither will the 2017 referendum, which will no doubt decide that we should stay in the EU.
I will talk in particular about the topic of economic impact, not about a referendum, because that is the topic before us. In light of what the noble Baroness, Lady Noakes, said, I will take up that question. As the noble Lord, Lord Hannay, said, one thing is certain—that there is no certainty about the economic impact of the United Kingdom’s membership of the European Union. The excellent document that the Library has produced shows the cost to range from between minus 6% to plus 8%; and as the noble Baroness said, the new UKIP document—written by Tim Congdon, for whom I have great respect—says that the figure will be minus 11%. So the figure ranges from between minus 11% to plus 8%. It is probably anybody’s choice. The problem is that each person answering the question grasps a different part of this elephant.
I want to say two things about the figure of 11% arrived at by Tim Congdon. There are two large items in his calculations. The cost of regulation is 5.5% of GDP, and the other major cost is resource misallocation, which is 3.25% of GDP. That comes to 8.75%, which, subtracted from 11%, leaves about 2%. So those two numbers are worth examining in more detail.
As for the larger item—the cost of regulation—let me just list the social directives that are supposed to be costly. They include the safety and heath at work directive, the works council directive, the parental leave directive, the race directive, the equal treatment directive, the working time directive and the gender equality directive. Let us suppose that we were not in the EU. Would we necessarily not have some of those directives? Would we not have the race directive? Would we actually say, “No, we want a racist society”? Would we not have a gender directive of some kind? Do we not already have health and safety legislation? Are we going to jettison that? A proper comparison would be: if we leave, what sort of regulation will we keep, and what is the differential effect of being inside the EU rather than outside the EU?
Similarly when Tim Congdon costs resource allocation, the one definite number he has is that the cost of the common agricultural policy—which I have long opposed—is about 0.5% of GDP. The rest of the cost is computed from a study of tariff and non-tariff barriers in the EU by Patrick Minford which is about eight years old. I have not had time to look at it in detail, nor do I have time to talk about it in detail, but I believe that some of those tariff barriers have disappeared. We ought again to calculate properly whether there are still such tariff barriers within EU trade, and if so, determine whether they are likely to be removed, or whether we will have to live with them. Also, if we leave the EU, what sort of tariff barriers would we face vis-à-vis the remaining EU?
I believe that on all these questions we ought first to calculate the impact costs, and then ask which bits we can remove, examine the counterfactual and allow for the uncertainty of all calculations. I think we will arrive at the conclusion that there is nothing definite to be said about this issue—but then, that is the nature of economics.
Lord Wrigglesworth (LD)
My Lords, it is a great honour and a great pleasure to address your Lordships’ House for the first time. I do so with some trepidation as it has quickly become apparent that I have a great deal to learn about the workings of your Lordships’ House, not to mention its myriad nooks and crannies. However, that learning process has been made easier and more pleasant by the warmth of welcome from the staff and from all sides of your Lordships’ House, particularly from so many old friends and colleagues, and also by the excellent induction programme provided by officers of the House and by my noble friends.
I am also grateful to my two sponsors for their support and encouragement. In one sense it was my noble friend Lord Rodgers who first got me into all of this. It was in his victorious by-election campaign in my home town of Stockton-on-Tees way back in 1962 that I cut my political teeth. That process was aided and abetted later in that decade by my noble friend and former student flatmate Lord McNally, with whom I was actively engaged in student politics, among other things. It was a great honour and pleasure later in my life to represent Stockton-on-Tees in the other place. I thought it might be wise, before speaking today, to look up the maiden speech that I made nearly 40 years ago. I have to tell noble Lords that the only thing it reminded me of was my age.
The north-east and its history have been responsible for moulding my politics and my attitudes from my earliest days. From up there, Leeds and Manchester are down south. The scourge of unemployment has left an indelible scar on me and many others over the generations, not least on the first noble Earl, Lord Stockton, who, as Harold Macmillan, served as the town’s MP between 1924 and 1945. The region has been transformed in the past few decades and has many vibrant new industries, but it is profoundly depressing that, after all these years, the unemployment rate still remains the highest in the United Kingdom. I have spent most of my life trying to do something about that, serving on bodies such as the Northern Development Company, the Northern Way, the NewcastleGateshead Initiative, as chairman of the Northern CBI and latterly as deputy chairman of the advisory panel for the Government’s regional growth fund. I am sure that if it had not been for these, and the work of many other bodies such as One North East and the new LEPs, things would have been worse than they are today.
When my electorate passed a vote no confidence in me in 1987, I started a new business career in London and the north-east. After a few years of working in industrial property, a partner and I launched UK Land Estates. It has become one of the biggest investors and developers of industrial and commercial property in the north-east with more than 2,000 businesses now as tenants. I declare an interest in that company and in my own business, the Durham Group. Until last year I also had the pleasure of chairing the Port of Tyne. It supports some 10,500 jobs in the region and contributes £0.5 billion to the region’s gross value added. During my time it has grown to become the largest trust port in the United Kingdom by turnover and profit, overtaking the likes of Dover some time ago. It is one of the major trading gateways of the United Kingdom, connecting United Kingdom businesses to five continents via the major European ports.
That brings me to the subject of today’s debate, introduced so ably by my noble friend and fellow Northumbrian Lord Shipley. The north-east region is the only United Kingdom region showing a balance of trade surplus. A large proportion of that surplus is in the £7 billion of exports handled by the Port of Tyne. Most significantly, it is the fourth largest import/export terminal in Europe. The main reason for that is that virtually all the vehicles exported by Nissan from the United Kingdom are shipped through the Tyne. As my noble friend said, the Nissan plant at Sunderland is the largest and most productive vehicle-manufacturing facility in the United Kingdom. It is now producing more than half a million cars a year, 80% of which are exported. It directly employs 6,400 people plus many more in the supply chain. Since it came to the United Kingdom in 1986 it has invested £3.5 billion in the plant and is investing more today. Its contribution to the north-east and to the national economy is massive. It is not surprising, therefore, that Nissan has said that Britain’s membership of the European Union is very important to it and that it wants to see the United Kingdom remain part of the single market, with its uniform standards and tariffs. I believe that its views very much reflect business sentiment across the United Kingdom. The most recent Chambers of Commerce survey showed that most businesses think that withdrawal from the EU would be bad for Britain, and CBI surveys reflect the same views.
All my business experience tells me that confidence is the most important ingredient in any investment or spending decision. I have worked in two banks, served on the boards of many companies—large, small, public, private and co-op—and I sometimes think that the political community does not understand the vital importance of confidence in business decisions. Nothing undermines confidence more than uncertainty, and there is uncertainty at the moment over our country’s future in the EU. If that uncertainty increases, confidence will be damaged, but the consequences will not be immediate plant closures; instead, decisions will be taken to build the next model in Spain and not in Swindon, Solihull, Halewood or Sunderland. That will lead to the plants gradually declining and the jobs decreasing; and who will suffer? The national economy, of course. But most directly it will be those 6,400 people at Nissan, and others like them. Even more tragically, it will be those without jobs, whose hopes will be dashed and whose families will continue to suffer. Talk of referenda and other issues in Westminster is all very well and may be unavoidable, but I hope that we will never forget the potential consequences for many vulnerable people.
Lord Selsdon (Con)
My Lords, I have the great pleasure and privilege to follow the noble Lord, Lord Wrigglesworth, and to thank him for his most interesting maiden speech. He would not know, and I had forgotten myself, that I began my own industrial activity in the north-east. There was the least business there; as a representative, you got commission in your sales, and there were no commissions to be had in the north-east, until we managed to win a contract at Blyth colliery, which was my introduction to the coal mining industry.
I have listened to the noble Lord, Lord Wrigglesworth, before. It is strange that those who come from the northern parts of the country always speak slightly more seriously, but there is something behind the words they say that pricks. I realised what it is today when the noble Baroness, Lady Northover, spoke, and referred to the balance of power within the House and the different departments. I suddenly concluded that it is probable by my calculations that the noble Lord, Lord Wrigglesworth, now holds the balance of power. I refer him to my great-grandfather, who served in the Lloyd George coalition. Coalitions are not necessarily a good idea, because you have that awful phrase coagulation.
Then you come to the referendums, and things like that. I got a phone call, because I found that I had to give up being in industry because I had been summoned to your Lordships’ House after my father died. I did not know that I did not have to come; I had no writ of summons—I had no knowledge of any of this. I had to change my job. A friend of my grandfather said, “You may not be bright, but you ought to be brighter. Why don’t you do some research in a research company?” I joined it, and one of our clients was JETRO, the Japan External Trade Organisation, which we visited regularly and took to London to encourage it to invest in the United Kingdom. We produced a very good report, but we forgot that the Japanese drove on the same side as we did and that therefore it was much cheaper for them to set up a manufacturer here.
One of the main points that I wish to make today is to ask why are going to have a referendum. I was at one time treasurer of the Conservative Group on Europe, and had a lot of problems trying to raise money for the referendum campaign. I remind your Lordships of some of the background to this. On 28 October 1971, there were votes in the Lords and Commons that,
“this House approves Her Majesty’s Government’s decision of principle to join the European Communities on the basis of the arrangements which have been negotiated”.
In the Lords, there were 88.6% in favour and in the Commons 59.3%—an overwhelming majority. That led on to 1975, when the new Labour Government held a referendum and we found once more to our surprise that in response to the question,
“Do you think that the United Kingdom should stay in the European Community (the Common Market)?”,
64.5% were in favour. So why are we now going to have another referendum? Is it necessary, or is it a matter of internal politics? I congratulate the noble Lord, Lord Wrigglesworth, on his speech. If he has the balance of power, we know which way things will go.
My noble friend Lady Noakes and I agree on so many things, but not necessarily on the things she says. Trade has been my lifeblood and fate. The European Union is our biggest trading partner by far, and it also represents our biggest deficit; with the exception of Ireland, with which we have a big surplus, we have a deficit with practically all the EU countries. Our biggest trading partner is still, just, the United States, followed by Germany. But it is not so much the EU that counts; it is the international development and activity that follows on a global basis.
We have managed to attract, in recent years, a sizeable volume of foreign investment in the United Kingdom, not just in manufacturing or in service industries but in pure investment. Our balance of payments deficit in general, without invisibles, would be very significant indeed. On all areas, we have a manufacturing deficit—but the growth areas, surprisingly enough, are those that used to be those of our Commonwealth partners, where the added value is created, in agriculture, minerals or semi-manufactures. At the same time, we have encouraged successful entrepreneurs from those countries to come and invest in the United Kingdom. It will not surprise your Lordships to learn that much of the investment that has come into the United Kingdom in recent years has come from what we would once have called the third world. We can look at the success of India and the development of China and south-east Asia, and even some of the African countries that are producing growth. Our future does not lie within the EU, but it is those markets that are the closest to us and those that foreign investment companies and manufacturers are looking to serve. When they invest, they are looking to invest not in the limited United Kingdom market but in the markets with which the United Kingdom has the greatest relationships.
It is sometimes a good idea to sit and think. I do not propose that we should have a referendum; it is a complete waste of time and money. If you were treasurer of the Conservative Group on Europe and you suddenly found one day that you had a bill for £323,000 and no money, because you could not raise any, you would feel how sensitive it is. I do not know how strong a campaign will be waged, but I wish that the Government would think again and that the noble Lord, Lord Wrigglesworth, with his balance of power, will make sure that we do not have a referendum. I thank him again sincerely for his contribution. I know that we will hear much from him in future.
Baroness Donaghy (Lab)
My Lords, I congratulate the noble Lord, Lord Shipley, on initiating this debate, and the noble Lord, Lord Wrigglesworth, on his maiden speech. He may not remember that we worked together at Hamilton House in the late 1960s, and it is very good to have the opportunity to work with him again now. I am also glad that we have more than three minutes to speak on this debate; noble Lords who took part in the debate on the Prime Minister’s speech on Europe will remember that we were all rather rushed.
Simply putting a case for the benefits of UK membership of the European Union will not convince many people. It is important to recognise the levers that we have and those that we face, and not to argue this in a vacuum. For instance, we will never have a mass-circulation press that loves Europe. It is a fact and—in the words of the noble Lord, Lord Adebowale, on Tuesday—we should “get over it”. The media are more balanced about Europe, but even that leads to hysterical reactions from some newspapers about pro-European bias in the media. We have also to accept that the UK will never love Europe. Except for Guernsey and Jersey, with huge consequences for those islands, we have not had foreign enemy troops tramping across our borders; we are an island, and proud of it. We can never appreciate the strong emotional element that applies to most of continental Europe about the need to bond on economic and social alliances.
That emotional commitment was palpable when I was a member of the European TUC for nearly 10 years. You have only to visit Jersey or Guernsey on Liberation Day—in Liberation Square, for example—to witness the effect that invasion has on people. We have to accept that our hearts will never be in the EU, and that we can live with that. However, if our hearts are not there, our heads are in Europe and I am sure that they will continue to be.
What are the levers which will effect this? One is the number of countries desperate for entry to the club, which will convince people that there must be perks. Another is the support for social Europe from those seeking to protect workers’ rights, which will win arguments. However, it is the support of significant sections of business which will win the day. Others have already mentioned last month’s CBI survey, in connection with YouGov, which indicated that 78% of companies—both small and large—favour staying in the EU. I will not elaborate on that except to say that the majority of companies believe the EU has a positive impact on their businesses without prohibitive taxes or tariffs, recruiting staff from across the EU and participating in EU supply chains. CBI companies were against attempts to create similar employment laws across the EU, working hours being the least popular. This is hardly surprising, since the UK has a higher proportion of overtime worked than most other countries, with employees working longer hours and all the social consequences we know about.
Businesses believe that the UK has influence on EU policies that affect them: 72% felt there was significant or some influence and 27% felt there was not very much or no influence. So support is not enthusiastic but it is absolutely solid. As I have been involved in negotiations most of my life, I realise that you cannot walk away from difficult problems and you cannot opt out when the going gets tough. As I have said before, the TUC and CBI meet as social partners at European level. They know about tackling difficult issues and, for a while, when some of the employment-related directives were being introduced belatedly into the UK, it might have looked as if the unions were making progress and the employers were not. Since then, the boot has been on the other foot. They will have differences on regulation of the market and workers’ rights but no one can afford to throw their teddy bear down just because a problem is difficult.
We can do some things now, without waiting for a referendum or fresh negotiations; I thank Richard Corbett for some of this information. First, there is already a requirement for EU proposals to go to national parliaments first, with eight weeks’ notice before they are dealt with in Brussels. We should implement this, so that Ministers appear before Parliament, or the specialist parliamentary committee, to explain the issues. Secondly, there is already a procedure to check on subsidiarity, to prevent the EU straying beyond its remit. National parliaments can object to European Commission proposals. Thirdly, the Government have a duty to maximise their impact in the European Parliament and are not doing so. Tory MEPs were trafficked onto the goonish fringes and this was an unworthy move.
We are all calling for more transparency in the EU, yet our own Government have failed to strengthen Commons scrutiny of Ministers and failed to publicise their proposals to safeguard the City of London. I could have mentioned the European arrest warrant or cross-border tax evasion, but there is insufficient time. We should not forget that tax fraud, tax evasion and tax avoidance are of such magnitude as to have an effect on government deficits. Acknowledging that employment protections are unpopular with employers, we cannot have a single market where workers’ rights are diminished in a race to the bottom. Unfairness leads to distrust in institutions and, as I have said before, employment protections have been in place for long enough to have become part of the workplace.
Finally, some have accused the Government of being asleep at the wheel on European issues and completely concentrating on the referendum. They are not, in fact, in danger of being asleep at the wheel but of jumping into the boot and closing the lid.
Lord Maclennan of Rogart (LD)
I begin by congratulating my noble friend Lord Wrigglesworth, who has been a colleague and a friend for many years. He has brought to the debate personal experience of great weight and knowledge from industry and from his part of the country where he has striven so hard to make that region more prosperous. I would also like to thank my noble friend Lord Shipley for procuring this important debate which will put on record opinions and facts which will be of great importance if the country is to make a balanced decision about the future of our relationship with the European Union.
Some of the remarks made in opposition to our membership, particularly by the noble Baroness, Lady Noakes, overlooked some facts that others have raised. In particular, the noble Baroness spoke a great deal about the burden of regulation. I recognise that it is difficult to measure the impact of this, but the OECD has produced tables—a little out of date—which show that the burden of regulation in the product market of selected countries puts the United Kingdom at the top of the list of those which are least restrictive. It was even ahead of the United States of America and way ahead of Australia, New Zealand, Poland and Greece.
Our access to trade is not belittled by our membership of the European Union, as I think the noble Baroness implied. The focus of our trade is, rightly, with the 500 million consumers—rich consumers, by and large —in the European Union. This is a highly competitive market which also improves the quality of our production. Access to other countries is greatly assisted by the work of the European Union in opening trade to no fewer than 37 economies around the world, including South Korea, Singapore, South Africa and Mexico. The recent green trade deal with Canada is likely to see British exports increase by an estimated 29%.
Our country could not expect to have such a high rating in attracting inward investment if we were not members of the European Union. I have seen figures which suggest that we are the third largest recipient of direct foreign investment after China and the United States of America and that the stock of inward investment is equal to half the United Kingdom’s GDP.
I have seen in a report from TheCityUK that 60% of decision-makers specifically cited access to EU markets as a core reason for choosing the United Kingdom over other financial centres. Japan in particular—already mentioned by a number of contributors to this debate—has invested huge amounts of money in this country and created 130,000 jobs. The Japanese Government have been very outspoken and clear about why they are doing this, and we would withdraw from Europe at our peril.
I have to say that the alternatives that have been alluded to, particularly in relation to Norway and Switzerland, would certainly not be attractive in that we would be without influence over decision-making and would have to observe regulations and rules. Switzerland does not even have direct access to the financial markets. The arguments for our remaining in the European Union for economic reasons are overwhelming and I hope that this message gets across to the wider electorate. The figures mentioned by the noble Baroness, Lady Donaghy, about the CBI’s views are telling. At the Glasgow conference the Institute of Directors produced figures showing that 80% of its members were also of the opinion that we should remain within the European Union. That did not mean, however, that there should not be changes and, no doubt, progressive Governments will seek change.
Lord Giddens (Lab)
My Lords, I join other noble Lords in congratulating the noble Lord, Lord Shipley, on having initiated this debate. I especially add my congratulations to the noble Lord, Lord Wrigglesworth, on his maiden speech, which was witty, meaty and suave. By “suave” I do not mean to criticise; I mean that his speech was very assured. When I gave my maiden speech, I was trembling all over and could hardly hold my papers. The noble Lord is a welcome addition to this House.
As this debate has shown, all debates in this country about the European Union now take place in the shadow of a future referendum on Britain’s membership. To me it is of the utmost importance that there should be a full and thorough public debate on this issue and I am worried that this might not happen—that is the burden of most of what I have to say. There is a real danger that Britain could sleepwalk towards exit, with many of the public simply being unaware of the seriousness and complexity of the issues involved.
I am a committed pro-European—indeed, something of a passionate one. My noble friend seemed to indicate that we do not exist. We do exist. Many people like me feel an emotional, not just pragmatic, commitment to the European Union and what it has accomplished for the continent over the past several decades. However, I am not one of those who hold that it would be economic suicide for Britain to quit the Union. There are scenarios in which the country could survive quite well, perhaps even prosper, although its influence in the wider world would be sharply and irretrievably reduced.
Leaving the EU would not be the marginal issue that many citizens appear to think. It would be the most consequential decision that the country had taken for 60 years and involve a protracted and wrenching adjustment. To me, leaving the EU would mean the reinvention of the country. The idea that the UK could simply leave the EU and become the same as it was in 1950, going back to having some kind of autonomy in the wider world, is simply ridiculous. An enormous process of reinvention of identity would have to occur. If it did, the country could in principle be successful, but such a course of action should not be contemplated without intensive and, above all, informed public discussion. I hope that this discussion in your Lordships’ House will be the first of many that will involve the wider citizenry, not just a proportion of people in this establishment.
The immediate economic problems to which Britain would have to respond if it left are easy to state but, as my noble friend Lord Desai said, not as easy to quantify as many on either side of the debate seem to think. I hesitate to disagree with a colleague from the LSE, especially an economist who admits to the fallibility of economics—that is something to behold—but I spent the past six months of my life studying the economic statistics of the EU and I know that some of the assertions that are made are robust and some are not. For example, we know that the single market has made a fundamental contribution to the overall wealth—the GDP—of the EU, including this country. The calculation of a 2.2% net addition as a result of the single market before the 2008 crisis is robust. What are not so robust are the employment statistics. We do not really know. Between 2 million and 3 million jobs here depend on the EU, but the counterfactuals are so difficult to state that no one can simply assert that bluntly. It has been demonstrated, however, that the financial services industry would inevitably suffer if the UK left the EU. One can forget the idea that Britain could become a sort of offshore banking centre like Singapore. London could perhaps do that if it seceded from the rest of the UK, but there is no chance of that happening. There is no doubt that leaving the EU would have a serious impact on the financial services industry.
I wish to make the more subtle argument that most of the important economic losses would stem from factors that are not wholly economic. Here I would reverse the conventional wisdom about Britain losing sovereignty as a result of its membership of the EU. It can be demonstrated that every member of the EU gains sovereignty from being a member and does so when acting alone—not just as a member. This can be done easily by reference to the proposal mentioned by the noble Lord, Lord Shipley, for the EU-US free trade agreement. That will be the single most important source of wealth and job generation for both sides that has ever been established. Could anyone think that Britain outside the EU, feebly knocking on the door and timidly asking to be let in, represents more sovereignty than if we were an active participant in the European Union when it negotiates such an agreement? That would be ridiculous.
I conclude with questions for the Minister that lie behind everything that I have been saying and to which I should like a response. What concretely will the Government do to ensure that the open and informed debate that the country needs will actually take place? What concrete measures will they take to make sure that citizens are directly involved?
Lord Stoddart of Swindon (Ind Lab)
My Lords, I join others in congratulating the noble Lord, Lord Shipley, on introducing this debate, and I must congratulate the noble Lord, Lord Wrigglesworth, on his excellent and telling maiden speech. In another place, when we were both members of the Labour Party, he and I used to spar about this issue in the Tea Room and elsewhere, but time is short, so I must carry on with the debate.
As some noble Lords will know, I never wanted to join the Common Market and I believe now that it would benefit this country if we left the European Union. Noble Lords will recall that when Harold Macmillan recommended that we join the then Common Market, or the EEC, he said that one of the major reasons was that Britain deserved to have the chill wind of competition. We have certainly had that. Our manufacturing industry, which in 1973 represented 32% of GDP, now represents only 10% of GDP.
The noble Lord, Lord Shipley, referred to a number of firms, the CBI and other organisations that desire at all costs to remain in the European Union and warn of the problems, difficulties and injury that will occur to this country if we left. When I was a Member for Swindon and fighting the referendum, Lord Stokes—he was then Sir Donald Stokes, the chairman of BLMC—wrote to all my constituents and said that if we left the Common Market they would all lose their jobs and the car industry in this country would be destroyed. We decided to remain in and, of course, the car industry was destroyed by our remaining in rather than the reverse. I might add that many of the people who have been quoted were the very people who recommended that we should join the euro. It is fortunate that we did not take their advice then. Perhaps we should not take their advice now.
I must quote some figures. We have heard a lot about the benefits of being a member of the EU, so let us now hear about some of the disbenefits. For a start, we pay a contribution of between £10 billion and £12 billion for the purpose of being a member of the EU. That represents £55 million per day and translates into £150 per person every year. In the case of a family, it is £500 per year per family. We are arguing about £100 on energy bills, yet every year each family pays £500 to belong to the European Union.
We have heard a lot about the trade figures, so let us look at some of them. In 2007, our exports to the European Union were £318 billion. In 2012, they were £278 billion. That means that, instead of becoming a better market for us, Europe is becoming a worse one. In 2007, exports to the rest of the world were £370 billion and in 2012 they were £394 billion, so our trade with Europe is declining but our trade with the rest of the world is going up. I think that we should take note of that. Furthermore, the current adverse balance of trade is going up—shooting up, in fact. In 2007, the deficit was £40.9 billion; in 2012 it was an enormous £83.2 million. So there are figures on the other side, of which we should take notice. The EU is a declining market.
Unfortunately, I do not have time to deal with more aspects, but I want to refer to the democratic deficit. Of course, I would like to see this reduced to nil and for us to get our own democracy and central government back. Unfortunately, that is not easy. As the President of the Commission, José Manuel Barroso, said, David Cameron’s attempt to renegotiate Britain’s relationship with the EU was doomed before it began. That really says everything about the centralised nature—almost dictatorship—of the EU.
Lord Davies of Stamford (Lab)
My Lords, I congratulate the noble Lord, Lord Wrigglesworth, on a very confident and able maiden speech. It is great to have someone of that experience and background in our House. We look forward to future contributions. I congratulate also the noble Lord, Lord Shipley, on managing to get time for us to debate this matter today—a lot of time, actually six minutes per person; a good deal better than we have ever had before.
It is almost unimaginable to me that any sane or responsible person would want to take his or her country on economic grounds out of the world’s largest trading bloc; a trading bloc which other countries are queuing up to join, which no one has ever wanted to leave and with which those who cannot join for geographical reasons are desperate to sign a free trade agreement—which is very much a second or third best. But so it is. We have people who are entirely sane and responsible—for example, the noble Lord, Lord Stoddart, and the noble Baroness, Lady Noakes—who have been taking that line today.
I believe it is sometimes useful for these debates to be responsive and reactive so I am going to spend all of my time addressing some of the points that they have made. First, the point of the noble Lord, Lord Stoddart, has already been answered. If this country were to remain as part of the single market in any form, it would, of course, continue to have to make budgetary contributions, so there would be no saving. The suggestion of the noble Lord, Lord Stoddart, that we do not have access to the single market, is a very dramatic suggestion and I think one that he might want to think through.
It is possible to talk all day about how many of the 3 million to 4 million jobs in this country which depend on the single market we would lose if we immediately left the single market. Obviously, there would be some and the number would tend to accumulate over time. We will never agree on what that number might be, but it would be a number, certainly. As the noble Lord, Lord Shipley, said, an even greater threat is the future loss of investment, which we would have if we stayed in the single market, which we would not have if we left the European Union. I think that would be quite dramatic. It would be dramatic in manufacturing. It is difficult to see how we would get any manufacturing at all, where manufacturing is generally producing for more than 50 million to 60 million people. People will want to put in a new facility at great expense only where they can address the single market. They would certainly not come here.
However, the loss is not merely to manufacturing. I want to read to the House briefly from the evidence given by JP Morgan and Goldman Sachs, the two biggest investment banks in the world, to the Parliamentary Commission on Banking Standards on this subject. They are quoted in the excellent note we have had from the Library as saying:
“We believe that a key risk to London’s retaining its status as a financial hub is an exit by the UK from the European Union. In common with financial institutions across the City our ability to provide services to clients and engage in investment activities throughout Europe is dependent on the passport that London-based firms enjoy to operate on a cross-border basis within the Union. If the UK leaves, it is likely that the passport will no longer be available, thereby forcing firms that wish to access EU markets to move their operations to within those markets”.
It could not have been put more clearly. It is also quite clear that what they are talking about is being a full member of the single market—a full member of the regulatory system or structure. That is what they want, otherwise business will move across the water to the continent. If we ignore such a warning, I think that we are being anything but sane or responsible.
How is it that intelligent people such as the noble Baroness, Lady Noakes, come to a different view? She is not one of those people whom one can dismiss as being driven by some sort of primitive emotion—the kind of people who get a kick out of waving flags and telling foreigners to go to hell. There are such people in our country but the noble Baroness is undoubtedly not one of them, so I shall try to address some of the points that she raised.
She made a number of very interesting points. Like many Eurosceptics, she is becoming a little more sophisticated. They are saying, “Maybe we wouldn’t go for a deal like Switzerland or Norway because clearly that would involve us becoming”—my phrase, not theirs—“a kind of satrapy of Brussels. We really would be ruled by Brussels then”. That is the rhetoric you get from the Daily Mail today, but that would be the reality because we would have no role whatever in the decision-making structure and no chance of making our views known and influencing events, yet we would have to implement the legislation that came from Brussels. That would not be an intelligent thing to do, and the noble Baroness, Lady Noakes, thinks that she could do better.
Indeed, a Eurosceptic friend of mine—a former Conservative Minister with whom I have been discussing Europe for 20 years—said to me the other day, “We could do better than Switzerland and Norway”. I asked how and he said something very similar to what the noble Baroness, Lady Noakes, has said. He replied, “We’ve got great power because we have a balance of payments deficit with the European continent—with the other members of the EU—so we could really put the pressure on them and cut off their exports to the UK”. I said, “So what you are actually planning is to declare war not merely on the EU but on the WTO—on the international trading system”. He did not really have an answer to that. I do not think that it is a practical possibility. It is extraordinary to think that we would leave the EU with all the risks involved to go into some uncertain future.
There is a fundamental error in what the noble Baroness, Lady Noakes, said about the rest of the world. She seemed to think that there is a trade-off in our trade with the rest of the world and the single market in the sense that, if you have more of the one, you have less of the other. In fact, there is a negative trade-off: if you have more of the one, you have more of the other. The whole point of the single market is that with a greater specialisation within that market, the greater competitiveness that emerges as a result of that specialisation, the economies of scale and the longer production runs, you are more competitive outside the EU. Therefore, far from the EU being an incubus for us in developing non-EU markets, our presence in it is actually a major gain. That is a very important point which should not be forgotten.
I have very little time left in which to speak but I want to say that it seems that we have a difficult and very risky decision to take. It would be extraordinarily irresponsible for us, as a country, to make a decision which could have enormous costs without being absolutely clear about what we were going forward into. Some of the things that have been said today about the Tim Congdon and Patrick Minford studies simply do not stand up to scrutiny. It is quite clear that we would continue to have some regulatory costs and that is not being taken into account.
I am getting signals from the Front Bench and so I shall wind up. Once again, I pay tribute to the noble Lord, Lord Shipley, for giving us the opportunity to have this debate.
Lord Watson of Richmond (LD)
My Lords, first, I join in thanking my noble friend Lord Shipley for introducing this debate, and I add my compliments on the maiden speech made by my noble friend Lord Wrigglesworth—an old friend. Whether he will actually achieve the holding of the balance of power in this House is open for later debate, but we certainly welcome the contribution that he is undoubtedly going to make. He will bring a sharpness in the sense of realism. He has, I believe, been described as “suave”. I do not know about that but he will make a difference, which is excellent.
I should declare two interests which are relevant to the subject. We have already heard about the impact of EU membership on the funding of university research in the United Kingdom. As High Steward of Cambridge University, I should like to say that the real dependence that Cambridge University, which in many ways is the leading science university in the United Kingdom, has on EU funding is immensely significant and would of course be threatened by an EU withdrawal. Secondly, I chair a number of companies, all of which are deeply dependent on trade within the European Union.
There are many individuals, companies and, increasingly, countries whose good will and decisions are going to be vital to Britain’s future and which have warned us of the consequences of withdrawal. That list is perhaps in some danger of becoming a kind of litany, recited by pro-Europeans such as myself; nevertheless, the list stands and it grows: the US State Department, the German Chancellor, Nissan cars and Hitachi. Earlier this month, a survey showed that one-third of British manufacturers said that they would be less likely to invest if we quit, and a further third said that they would have to make significant changes to their business model were we to do so.
However, in this debate on the economic impact of membership, I should like to focus not on that lengthening list and the current benefits which we might jeopardise but on the vast and new opportunities that we would forgo in world trade; namely—and it has been raised already—the momentum of the EU’s bilateral trade and investment agreements, signed, about to be signed and now being negotiated. Taken together, they represent an extraordinary new landscape of trade, and if we excluded ourselves, we would mar and impoverish our prospects as a trading nation for decades and maybe centuries to come.
The first of these new deals was with South Korea in July 2011. As tariffs have fallen with Korea, exports have soared, giving the EU, for the first time in 15 years, a trade surplus with Korea. On the 18th of this month came the comprehensive economic and trade agreement with Canada. It is actually the EU’s first free-trade agreement with a G8 country and it has removed 99% of tariffs. Let us remind ourselves that the EU is Canada’s largest trading partner after the United States.
Under negotiation is the agreement with Japan—the second biggest Asian trading partner of the EU—which could boost EU exports by a third, creating, it is calculated, up to 400,000 new jobs in Europe. The current round of talks this week in Brussels involves powerful EU pressure on Japanese non-tariff barriers, which is probably the key with Japan. Talks with India are under way, although at a much earlier stage, and then of course there is the really big one: the Transatlantic Trade and Investment Partnership, which was born of the EU-US high-level working group on jobs and growth, involving a great many top people from British multinational corporations. It could add £119 billion to the GDP of the EU. It is not going to be an easy thing to negotiate but it is an imperative for both sides. Let us remember: we focus a lot on Asia but the United States and the EU together represent 50% of global GDP and one-third of all world trade. If we withdrew from the EU, this would place us on the periphery of this new international trade landscape—vitally effective but marginalised. It would be an own goal of monumental consequences.
Finally, the balance that we should be looking at is not just an arithmetic calculation of present benefits and penalties. Underpinning all this is a recognition of change. I should like to end by saying that six years ago when I stepped down as the chairman of the British-German bilateral Königswinter conference, a member of the German Parliament got up and attacked Britain’s attitude towards the EU, saying that we lacked vision and commitment. I said in reply, “Look, we started this European journey from very different places. We started it as the bankrupt victor; you started it as a country which had been disgraced, divided and occupied. We began at a different place”. What matters is where we are now, and the place where we are now is a recognition of interdependence in a globalised economy. We must not jeopardise that.
Lord Haskel (Lab)
My Lords, last week I had the privilege of representing your Lordships’ European Sub-Committee B at the 15th European interplanetary space conference in Brussels. I was delighted to attend, as the space industry is one of the eight growth sectors identified by the Government for special support. Indeed, our contribution to the European Space Agency has recently been increased by 25%. How right we are.
The priority of the European Space Agency is not necessarily to encourage space travel to Mars. It is to encourage growth here on earth. This has been done by helping to create new marketplaces, more particularly in Europe, using the satellites and equipment in space —markets that provide improved services to EU citizens through new communications platforms for the internet, TV, telephone and radio; that help agriculture and fishing with better weather forecasting and better understanding of climate change; and that use observations from space in cities and the countryside for better management of road, rail and air.
You must be asking why I am telling you this. I put it to your Lordships that our membership of the European Space Agency is a microcosm—a miniature—of our membership of the European Union. The obvious economic benefits gained from our membership of the ESA reflect the economic benefits gained from our membership of the European Union. It illustrates the arguments put by the noble Lord, Lord Shipley, whom I congratulate on moving this debate. It also illustrates how wrong are the arguments of the noble Baroness, Lady Noakes, and the noble Lord, Lord Stoddart.
The European Union is not a new institution. Times and circumstances change and so do institutions if they are to remain fit for purpose, creative and beneficial. You do not achieve this change by walking away, or even threatening to walk away. That is how you paint yourself into a corner. Obviously it is now dawning on the Government that that is exactly what they are doing. You change by building on what has gone before. You complete the single market by reviewing the rules, bringing them up to date and making them smarter, not by walking away.
As many noble Lords have told us, including the noble Lord, Lord Wrigglesworth, in his maiden speech, this is not only the view of our large foreign investors in car-making, technology and nuclear industries, it is also the view of 85% of the EEF members, who said that they would vote to remain in the European Union if there were a referendum now. This is because people in business know that it takes months and years of hard work to build up the trust, confidence, connections and knowledge to sell and trade successfully in overseas markets. EEF members do not want to see their years of effort in Europe wasted by the incompetent and uncaring short-termism of some members of this Government. This is why, after listening to his members, the chief executive warned us not to gamble on our future in Europe. “The stakes are enormous”, he said,
“it is naive to think that we can simply pull up the drawbridge and carry on as normal”,
and do the business elsewhere. My noble friend Lord Giddens was also concerned about this.
China has been mentioned as an alternative. The noble Lord, Lord Hannay, asked why Germany has been so successful there. The fact is that their Chancellor has been there some 25 times since the open-door policy was announced in 1978, to emphasise their strengths and commitment. This is not as an alternative to Europe, but in addition to it—and so it should be for us.
It seems to me that, instead of surrendering our capability and strengths in the space industry for the sake of appeasing Eurosceptics, we too must take advantage of our strengths. Our companies, our people and our universities are full of new ideas and technologies for the space industry, as a result of our investment in the European Space Agency. We benefit from our participation and our membership fee. This is a model that works. I put it to the Minister that the same applies to our membership of the single market and the EU.
Lord Stevens of Ludgate (Con Ind)
My Lords, we are here today, thanks to the noble Lord, Lord Shipley, to debate the economic impact of being a member of the EU. I also congratulate the noble Lord, Lord Wrigglesworth, on an excellent maiden speech. In addition, contrary to some comments that have been made, I agree with practically everything that the noble Baroness, Lady Noakes, said. She summed the situation up brilliantly, which is why my speech will be somewhat shorter than usual.
No one could doubt that the impact has been of major importance. The European treaties are the UK’s supreme constitution, over and above our laws, as per the European Communities Act 1972. The UK’s cash contribution to the EU is second only to that of Germany. Since 1973, the UK has paid to the EU some £370 billion and received in return £180 billion—this to an organisation whose own auditors say that 90% of the EU’s entire budget has been materially affected in some way by fraud or unaccounted spending. If sending to the EU some £12 billion net in 2013 is perhaps not of major impact in relation to the total UK budget, the economic cost of regulation is. The European Commission itself puts the EU costs of regulation at £600 billion a year for all the members. Business for Britain, supported by more than 500 business leaders, has told us that since the 2010 general election, Brussels has handed down 3,600 new pieces of regulation or directives—some 13 million words—ranging from banning the union jack on packs of meat to changing the generic name of the tomato.
Let us pause for a moment and look at Open Europe’s report on EU regulations that came out last Monday. It says that the top 100 EU regulations cost the UK economy some £27 billion a year and that the costs of regulation outweigh the benefits in impact assessments of a quarter of the 100 cases. Of course, as has been stated, were the UK to leave the EU, some of these regulations would need to be retained.
The EU was sold to the British public as a free trade area. It has indeed brought trade barriers down, as has the WTO. Some 40% of our trade is with the EU—a declining proportion, partly because EU trade has slowed down since the 2008 collapse, but also because the share of the EU in global trade and outputs has been declining and will continue to do so, if for no other reason than the demographic problems of its ageing and declining population.
As has been stated, we have a trade deficit with the EU of more than £80 billion a year, larger than our surplus with the rest of the world. It needs us more than we need it. As far as economic influence is concerned, the euro members can outvote us in any matter not requiring a unanimous vote. As we all know, EU regulations apply to 100% of the UK economy, but our trade with the EU is less than 10% of the UK economy. Our trade with the rest of the world, in spite of these regulations, is growing much more rapidly than with the EU. How much more rapidly would it grow without EU regulation?
I have not commented on unlimited immigration, handouts to illegal immigrants, inflated agricultural prices and many other matters, because time inhibits it.
The original subject of this debate was “economic benefit”. That has changed to “economic impact”. It seems almost to have developed into a debate over “in” or “out”. We heard in Oral Questions today that the majority of the British public support some control of the press. I declare an interest as a former chairman of Express Newspapers. On this basis, the majority want a referendum on the UK’s membership of the EU: in or out. Is it not time that we had one?
Lord Soley (Lab)
My Lords, I welcome the noble Lord, Lord Wrigglesworth, whom I well remember as a Member of Parliament and his struggle as to whether he should stay in the Labour Party or leave. He chose to leave and I chose to stay, although, like a number of us at that time, we toyed with the idea of murder or suicide instead. However, we got through that phase, which I think was beneficial to everyone.
I particularly welcome the full, considered and convincing introduction to this debate made by the noble Lord, Lord Shipley. I shall not repeat all the arguments he made along economic lines but I should like to emphasise one that was picked up by the noble Lords, Lord Hannay and Lord Watson of Richmond, and my noble friend Lord Haskel. The amount of expenditure on science and technology beneficially made to us through the European Union is enormous, particularly in the university sector. We benefit far more than any other country in the European Union from that expenditure.
Science, research and development will drive growth. We will not achieve growth with a low-income economy. We cannot go down that road. If you are to maintain that level of research and development expenditure, and come out of the European Union, you have to answer the question that I think was asked by the noble Lord, Lord Stoddart, and the noble Baroness, Lady Noakes: where does that money come from? It will not be replaced by the private sector or the public sector in Britain. Inevitably, that would impact on us. My noble friend Lord Haskel gave the classic example of the space industry. Although I have said it on a number of occasions in the House, it is not well known that Britain still has the second-largest and second most-advanced aerospace industry in the world. There is hardly a satellite going around this planet that does not have British instruments on it. Often, they are of major importance. A lot of that expenditure on research and development has come from the money that we have received from the European Union. People have a responsibility to answer that point.
I also want to put this in a political context. I am very conscious that when people making economic decisions do not take into account the political circumstances, they often make mistakes. Politicians who make decisions without taking into account the economic world in which they operate can make very big mistakes. If you look back on Britain’s relationship with the evolving European Union, many people would say that we made very big mistakes in our political calculations. You can go back to the famous headline in the Daily Mail around 1908—I cannot remember exactly when—which said, “Fog in the Channel: Europe isolated”, or perhaps it was “Fog in the Channel: Continent isolated”. Either way, it said everything about a mindset.
I often ask the question: Why are the British so diffident about Europe? One of the reasons is that we are an island nation. Another reason, which was alluded to a few moments ago, is that we have never been defeated and occupied. We are almost alone among the European states and certainly alone among the major states. We have always been the victor. If you ask continental Europeans about the importance of the European Union, often they will put first that it has maintained the peace. The majority of British people do not see it in that way; it does not have the same weight here. That is a very important factor in people’s attitudes to Europe.
In the context of the balance between politics and economics, having had a view of ourselves as being separate and having won the two world wars, in the period after the Second World War we looked at where our market was going to be while the European Union was developing as the European Economic Community. Initially, we had the Commonwealth Party, which argued for the Commonwealth as the market, for which I had great support at the time. As an internationalist in that sense, I rather liked the idea. Having failed on that front, we turned to the European Free Trade Area, which we set up. Again, it did not work. People who are saying that we should come out of the European Union now should look at the long history of this issue and ask why we made those political judgments in the face of such dramatic political change.
Enormous political change is again taking place in the world now. The United States will no longer be the dominant world power as it was after the Second World War. That does not mean that it will decline in importance, fail economically or whatever. I do not think that that is happening but the US will not have the same dominance that it had previously. In many respects, it is rather like Britain in the early 20th century when we had lost our total dominance of the world. People used to say that 95% of goods travelling around the world were in British ships. Now we say that about 88% of the advanced technology of the internet is driven by the United States. However, that is changing rapidly. India, China, Brazil and the newly emerging countries—perhaps to a lesser extent, Russia—are eating away at this, which means that we must change too.
Finally, it is time for Britain to stop the half-in, half-out dance. We are doing ourselves enormous damage. My fear about the referendum—I do not support it and I am not a great fan of referendums at the best of times—is not that it will not be won. I am sure that it will be won, but my fear is that there will be a relatively low turnout. Those people who want to take Britain out will continue to fight on that front. There will be the same problem as there will be if we do not win the referendum convincingly in Scotland, although I hope that we will. People take heart, although often it is because people are not voting in the way that one hopes. I hope that the British people have the wit to see that the politics has changed dramatically and, along with it, the economics of the world. We had better face up to that and become a bit more wholehearted and less half-hearted. We are doing ourselves a lot of damage within the European community and in the wider world by appearing to be so negative.
Baroness Falkner of Margravine (LD)
My Lords, I, too, thank my noble friend Lord Shipley for having secured this debate. It is an important debate and it is an important time for our country to have these discussions. Before I move to the substance of my speech, I could not possibly not congratulate my noble friend Lord Wrigglesworth on his fabulous speech, which, as the noble Lord, Lord Giddens, said, was delivered with such verve and conviction. My acquaintanceship with my noble friend goes back to SDP days when he was one of the grandees and I was one of the workers. It is very nice to see him here on slightly more equal terms, which I have to say are to my benefit.
This debate is hugely significant in the sense that, while most speakers have spoken from more or less the same hymn sheet, some speakers have not. Of course, it is important to mention the contribution made by the noble Baroness, Lady Noakes, as well as that of the noble Lords, Lord Stevens of Ludgate and Lord Stoddart of Swindon. These debates on the other side of the fence to most of us will be hugely significant as we move forward to cross swords over the referendum campaign. I was not surprised to hear what the noble Baroness, Lady Noakes, said. She quoted Professor Congdon and Professor Minford who, distinguished as they are, are also known to be very long-standing critics of EU membership. In a sense, it might have been more fruitful if we had heard from more authoritative and more impartial sources on the other side of the camp. I regret that we did not get that. However, the noble Lord, Lord Desai, illustrated ably why their analysis needs further scrutiny and I am sure, particularly since the paper by Professor Congdon is relatively recent, that research institutes will analyse his findings very seriously.
The Department for Business, Innovation and Skills per capita calculation takes a longer-term look at those figures on the basis that:
“EU countries trade twice as much with each other as they would do in the absence of the single market programme”.
That of course was based on the OECD’s estimates.
The noble Baroness, Lady Noakes, also made a point about EU jobs that are engaged in trade from the EU to the United Kingdom. I think she used the figure of 4 million jobs, rather than the widely accepted figure in terms of UK jobs relating to trade with the United Kingdom. There was a difference of 1 million on her side. I would argue that while we are talking about 3 million jobs that may be lost if we disengage from the European Union, the noble Baroness says that there would be 4 million jobs and that therefore the European Union would be loath to disengage from us, which would give us the benefits of non-tariff barriers, free trade and so on. Of course, 4 million jobs spread across 27 states with a population of 420 million is a very much smaller impact than the impact that it would have on a single country—that of the United Kingdom.
I turn now to recent debates on the cost of welfare through inward immigration, because that has become the flavour of the time and it needs rebutting. There is clear evidence to show that EU migrants pay more in taxes than they receive in benefits and services here in the United Kingdom. The Department for Work and Pensions recently published figures for 2011. Of those receiving working-age benefits, it is true that 25% were from within the EU, but Poland, which had the highest figure of those receiving benefits, was in the seventh slot, behind Asia, Africa, the Middle East and several other countries. Of EU accession countries, only one figured in the top 20 of countries from which people claim benefits in the United Kingdom. That compares to the 10% of Britons who claim benefits in Germany alone, so it goes both ways and we must not allow this debate to run away. The idea that migrants from the accession countries and from the wider EU are coming here for some sort of benefit or health tourism needs to be looked at more carefully.
The free movement of peoples is also enormously significant in terms of its impact for us in the United Kingdom. The Centre for Economics and Business Research estimates that if we curbed EU migration—mostly young people, in terms of demographics, who are coming into an ageing society and who will ameliorate the impact of the demographic changes of ageing here in significant proportions—it would cost our economy something like £60 billion, or 2% of GDP, per year by 2050 and increase public borrowing by something like 0.5%. Moreover, we also benefit from inward tourism from the EU. Some 19 million visits were conducted by EU citizens in 2012 and some £7 billion was spent here.
To conclude, I come to the very important point made by the noble Lord, Lord Giddens, that this is not just a dry cost-benefit analysis, not just about how many pounds in and euros out. What matters to our trade and our economic position is not just money. What matters is the future of our young people, the status of our country internationally and the debt we owe succeeding generations if we do not take the right decisions in the forthcoming referendum.
Lord Liddle (Lab)
My Lords, first I add my congratulations on behalf of the Opposition Front Bench to the noble Lord, Lord Wrigglesworth, and welcome him to the House. I have known him for the best part of four decades, I am afraid to say. For me, he has always been a man of solid principle, unfailing good humour and boundless resilience and it is good to see that those qualities are still much in evidence. When he first got into the House of Commons he was at one stage known as Roy Jenkins’s seat warmer, so that the great man could continue to linger a little longer over lunch before he took his seat in the Commons. I would say, on the basis of his performance in this House today, that he is going to be a Lords crowd puller.
I also thank the noble Lord, Lord Shipley, for putting down this debate. He made a very comprehensive, well argued case for Europe, and I do not disagree with a word. We have heard many excellent speeches. It is a timely debate. No one has mentioned that today the Prime Minister is in Brussels at a European Council meeting which has, as one of its main purposes, the discussion of the digital economy, innovation and trade in services, so it is a very appropriate day to be debating the single market. I should like some assurance from the Government that they are taking this opportunity very seriously, because when one looks at the digital economy, economic estimates are that if we had a proper single market in digital this would add 4% to 5% to European GDP. Looking, for instance, at telephones, whereas the US and China have three or four major operators with a single set of rules for their whole economies, we still have hundreds of operators and 28 different rulebooks.
Similarly, when one looks at internet commerce, there is enormous scope for expansion but we have to have common rules on online content and online shopping. If we are going to have online shopping we have to have rules on privacy and data protection, we have to deal with customer worries—a lot of people will not use the internet for shopping because they worry about making payments and their details being disclosed—and we have to have a copyright system for the digital age. Where do the Government stand on all this? It is a legitimate question.
The Prime Minister has gone to Brussels today on another campaign to cut EU regulation. There is nothing wrong with trying to improve EU regulation, but surely what he should have been doing is emphasising the potential, for Britain and the rest of Europe, that real progress towards deepening the integration of the single market could make. Although it is always very nice to see the noble Lord, Lord Newby, on the Bench opposite, it would be so much better if we had a Conservative Minister there who could tell us where the Conservatives stand on the necessary sacrifices of sovereignty and the compromises that have to be made in the European Union if we are going to bring about that deepening of the single market. There is no point just saying, “Wouldn’t it be lovely if we had a digital single market?” Yes, it would be lovely if we had a digital single market, but we have to be prepared to compromise on sovereignty and negotiate. Are this Government really prepared to do that? In fact, what we get from Conservative Ministers is a skulking away from these issues as they try to sleepwalk out of the European Union.
In the package that the Prime Minister has taken to Brussels today there is a document called Cut EU Red Tape: Report from the Business Taskforce, put together by a very distinguished group of businesspeople with a lot of good ideas about improving regulation. We on this side of the House fully support improved regulation, but let us remember that it is much better to have one European rulebook if you are a business operating inside the European Union, rather than 28 separate rulebooks. It would be much more costly to have to deal with that situation.
The document also raises a lot of questions relevant to social Europe; the social side of the single market. It raises questions about the proposed pregnant workers directive, the posting of workers directive, makes claims about inflexible and unclear rules on working time, raises questions about the agency workers directive and the acquired rights directive—a long litany of complaints about social Europe.
I ask the noble Lord, Lord Newby directly: have the Liberal Democrats signed up for an assault on social Europe or have they not? Where do they stand on this list of amendments to social Europe proposed in the document that David Cameron is taking to Brussels today? Do we have another potential Beecroft here? Have Vince Cable and Nick Clegg agreed to these changes on social Europe? On this side of the House, we would like to know.
Of course, all European legislation needs modernisation, but can we hear from the Government that if we have a single market it has to have some social underpinning? In social terms, we are the most lightly regulated country in the OECD—more lightly regulated than the United States. No one who argues for the dismantling of social Europe explains why the Germans and the Swedes can so successfully compete in world markets, facing the same social burdens that we do. Why is our business uniquely sensitive to those questions? In my view, most good corporate practice supports a high level of social standards. A single market has to have social, environmental and consumer standards dimensions.
It is quite possible that the Prime Minister today will get himself into a silly spat with the French when he should be working out with the French how we can use the research money of the European Union to develop a proper industrial strategy for Europe.
The single market is a vital UK national interest, as many Members have said, but opponents like to think that we can have our cake and eat it, that we can somehow leave Europe but retain access to the single market, and that we have a strong bargaining position because they export more to us than we to them. That is almost certainly rubbish. For instance, take the car industry, which is one of our most successful export areas. We would face a tariff of 9.8% if we were not part of the single market. Still, more than 50% of the car production in the UK goes to Europe. I say to the noble Baroness, Lady Noakes, that the relevant point about bargaining power is that only 2.5% of European GDP is exported to Britain, whereas 14% of our GDP is exported to the rest of Europe, so it is not as she presented it.
The single market is essential. I welcome this debate. As the noble Lord, Lord Shipley, said, there can be no ifs or buts about it. As the noble Lord, Lord Giddens, said, our membership of the EU is the biggest issue that we have faced in this country since the Second World War. As the noble Lord, Lord Watson, said, we have to make the case very strongly that we are better off together.
Lord Newby (LD)
My Lords, I thank all noble Lords for their contributions to the debate today and, in particular, the noble Lord, Lord Shipley, for initiating it. It is a huge pleasure to be able to congratulate my noble friend Lord Wrigglesworth on his maiden speech. As his speech demonstrated, he speaks with great authority about the economy of the north-east, and with great authority more generally. The noble Lord, Lord Giddens, described his speech as witty, meaty and suave. It struck me that these are fitting epithets for him as a whole.
Lord Giddens
My Lords, I do not want to damage the life of the noble Lord in the House of Lords, because the word “suave” might chase him forever, but it was intended as a compliment, so perhaps that subject should be dropped—in a suave sort of way.
Lord Newby
I took it as a compliment.
I first met my noble friend 32 years ago, when I went to work in the Whips Office of the SDP. Like my noble friend Lady Falkner, I was one of the workers and he was a grandee. Therefore, it gives me particular pleasure now to be his Whip and to make sure that he is in every respect a model Member of your Lordships’ House—as I am sure he will be.
The Government are clear that membership of the EU is in the UK’s interest. The EU helps to advance UK national interests, influence and values. It provides freedom for British people to live, work, study and retire in Europe, and supports UK jobs, prosperity and growth through increased trade, both inside the single market and through free trade agreements.
The principal economic benefits of our membership of the European Union can be categorised under the headings of trade through our access to the single market, encouraging investment and promoting competition, thus driving down prices for British consumers. I shall deal with each of those three principal areas in turn.
The UK’s EU membership supports jobs, prosperity and growth in this country through increased trade. Our membership gives UK companies access to the world’s largest single market, with a GDP of about £11 trillion and 500 million consumers, without customs or tariffs. Free trade agreements through the EU lower trade barriers and increase access to markets. If the EU completed all trade deals currently under negotiation, EU GDP could be increased by about £275 billion. In particular, independent analysis commissioned by the Government has found that the net benefits to the UK of the EU-US free trade agreement currently under negotiation could add up to 0.35% to the UK’s economy. I absolutely agree with my noble friend Lord Watson that our ability to conclude such free trade agreements in a world where the WTO is a declining influence is immeasurably enhanced by being part of the EU. The idea that you can go into such negotiations with the same strength as a single country is surely completely mistaken.
Europe remains the main destination for UK exporters, with just over 50% of our goods exports destined for Europe in 2012. That has real benefits for UK businesses: 80% of businesses believe that the single market delivers concrete benefits to them and the Department for Business, Innovation and Skills forecasts that the EU will remain the UK’s most important market for at least the next 10 to 20 years. That strong trade relationship due to our membership delivers clear employment benefits, with one in 10 UK jobs to some degree dependent on trade with the EU.
The CBI study and others which have been quoted show truly remarkable levels of support for continuing EU membership. Underneath the fact that 80% of companies, broadly speaking, say that they wish us to remain in the EU, it is interesting that 47%—almost half—said that without EU membership, they believe that it would be more difficult to hire skilled workers. It is not just access to the market but access to workers.
I say two things about trading elsewhere to the noble Baroness, Lady Noakes. First, as several noble Lords have said, there is no trade-off between trading to the EU and to the rest of the world. The more a company trades in one part of the world, the more likely it is to be good at trading somewhere else. Secondly, we want many more companies to start trading, and the logical place for them to start, particularly if they are small, is with the EU. For a small company thinking about foreign trade, the prospect of doing it in Brazil, China and India is almost a bankrupting prospect. You do not have the time. You do not have the money. You do not have the knowledge to do it. The only logical place to start is the EU. That will continue to be the case.
Secondly, being part of the single market helps UK businesses to attract inward investment from both inside and outside Europe, enabling them to operate on a more efficient and global scale. The UK is the top destination in Europe for inward investment, attracting 21% of all foreign direct investment projects in Europe last year.
Our access to the single market is a key motivation for foreign investment in the UK economy, with half of all foreign investors in 2010 citing access to the single market, among other factors, as a key reason for investing in the UK. A number of noble Lords have dwelt on this point. The noble Lord, Lord Shipley, made the point that Nissan, which provides 6,000 jobs in his region, is there because of our EU membership. If we were to leave, the number of jobs would shrink.
The City of London Corporation, in the representation made to us which the noble Lord quoted from, said that many EU European banks locate in London to access the markets in which London has accrued specialities. Many non-UK EU firms choose to list on the London Stock Exchange in order to access the capital on offer there, directly channelling capital to European businesses from London. If we were not members of the EU, the idea that the City would be able to continue sailing serenely along with no threat from competitor centres in the EU seems implausible.
The single market also encourages competition and innovation across the EU, bringing down prices for consumers and increasing productivity in the UK. We are clear, however, that the EU could do better to become more competitive to deliver further economic benefits. That is in the interests not just of the UK but of all member states. The EU must become more competitive if we are to continue to improve the standard of living which Europeans currently enjoy, firstly by completing the single market in services, particularly in the digital and energy sectors. I give the noble Lord, Lord Liddle, an absolute assurance that the Government are committed to promoting the single market. It has been a centrepiece of our engagement with the EU. When my colleague in another place, Ed Davey, was at BIS he set up a group of like-minded countries, which eventually involved a majority of EU member states, to promote the single market in an effective way. It shows, incidentally, how the UK can take a lead in the EU even though we are not in the eurozone area. The completion of the single market is a central goal of the Government.
The second important role in making the EU more competitive revolves around agreeing the international trade agreements to which I have already referred. Finally, we are committed to cutting red tape to allow the engines of growth in the eurozone and across the EU the space that they need to flourish.
Completing the single market by removing all barriers to trade is estimated to increase UK GDP by about 7% and prices would fall by approximately 5% due to increased competition. In this tough economic climate, this would obviously provide a real boost if we could achieve it for UK businesses and consumers.
On the international free trade agreements with both advanced and emerging economies, progress continues to be made. The landmark deal reached between the EU and Canada, to which my noble friends Lord Maclennan and Lord Watson of Richmond referred, will benefit the UK economy and businesses by over £1.3 billion a year. As I have already said, the potential deal with the US would dwarf that.
Cutting red tape from the EU is crucial to allow small businesses to start up and then expand. Last week, six senior business leaders presented a report to the Prime Minister on reducing the burden of EU regulation; the noble Lord, Lord Liddle, referred to this. Their findings are based on research carried out across Europe. They have found that there is potential to save EU businesses billions of pounds by improving the regulatory environment. Their aim is not to abandon all regulation; they want to reduce the burden on small and medium-sized firms who create the vast majority of new jobs in Europe, and employ two-thirds of the workforce. The Government support their views, and are committed to ensuring that EU regulation does not hold UK businesses back.
The noble Lord, Lord Liddle, referred to a number of proposals in this report. The one which seems to be a classic of the kind of change we need, and which should be achievable, is the proposal to press for an urgent increase in the public procurement thresholds which significantly hold back small businesses in bidding for public sector work.
As the noble Lord, Lord Shipley, pointed out, these views are increasingly being accepted across the EU. The days when greater harmonisation was almost seen as an article of faith by member states are now over. We are in a strong position to take a lead in making EU regulation proportionate and growth promoting.
The noble Lord, Lord Liddle, asked whether the Government were speaking with one voice in terms of the single market and in terms of the report to which he and I have both referred. I can assure the noble Lord that the Government are speaking with one voice. He described the Government’s attitude as an assault on social Europe. This is a grotesque caricature of both the Government’s position and the proposals in the report. It does not reflect the Government’s attitude in any respect.
One question that is commonly asked or implied is whether the UK, given its semi-detached nature, is able to make progress with the kind of reform agenda to which I have been referring. We believe that we are and that we can. For example, we have secured the first ever exemption of micro-businesses from new EU proposals from the start of this year. We have also secured agreement on a single European patent after 23 years of EU negotiation, with the new patent court based in London for key pharmaceutical and life sciences sectors. This will be an important engine of growth for the UK’s R&D sector.
We have persuaded the European Commission to review the body of EU legislation to identify existing obligations from which micro-businesses could be exempted. Finally, we have delivered the first ever real-terms cut in the EU’s seven-year budget while protecting the UK’s rebate.
We had an interesting discussion, principally between the noble Baroness, Baroness Noakes, and the noble Lord, Lord Desai, about—
Lord Hannay of Chiswick
I know that time is short, but would the noble Lord not agree that the word “semi-detached” is an extremely unfortunate one to apply to the Government’s policy? We are talking about instances of variable geometry which have existed in the European Union since the 1980s and which are still continuing to develop. Would it not be better to expunge the word “semi-detached”?
Lord Newby
My Lords, I use the word “semi-detached” because that is in the common parlance. I do not believe that it is an accurate reflection of the approach that the Government are taking. It is only reasonable to deal with the criticism of the Government head on, by explaining that our current position enables us to exert influence and to make significant positive progress.
I was referring to the interchange between the noble Baroness, Lady Noakes, and the noble Lord, Lord Desai, about the quantitative costs of EU membership. The noble Lord, Lord Desai, sensibly in my view, suggested that this was an extremely difficult area, not least because it is impossible to state a compelling counterfactual. Many of the rules and regulations against which costs are attached would almost certainly be required in some form or another were we not members of the EU. To count potential costs of such regulations on the assumption that they would not exist if we were out seems, again, to be pretty implausible. Equally, as other noble Lords have said, the suggestion that we could get a better deal from Norway and Switzerland if we were out seems not to be borne out by any logic. Given the circumstances of a divorce, which would be almost certainly politically pretty unpleasant, it is difficult to see how we would find ourselves in such a better position.
The noble Baroness, Lady Donaghy, talked about the role of national parliaments and the importance of increasing that role. The Government strongly agree with that. We are working with EU partners to increase the role of national parliaments. We welcome moves by both Houses to use the tools that they currently have to hold EU decision-makers to account more effectively. We want to consider possibly extending the scope of the “yellow card” system by introducing a red card. We absolutely agree that getting greater national engagement with this Parliament is strongly to be recommended. In saying that, I of course commend the work that your Lordships’ House already does through its European Union Committee and its sub-committee.
The noble Lord, Lord Giddens, asked me a specific question about the debate on the EU and how to promote it within the UK. Apart from the normal business, as it were, of making major speeches on the subject, which both the Prime Minister and Deputy Prime Minister have done in recent months, the Government have initiated a balance of competences review that seeks to engage with a wide range of people—not just think tanks, academics, businesses and Parliament but also the public—to produce as far as we can an analysis of the effect and effectiveness of the current powers and competences of the EU, with a view to deepening the public understanding of the nature of EU membership and reform. This is a difficult business, as the noble Lord will be aware, because we are doing it against the background of a media that find it literally impossible to treat a story about the EU on its merits. Still, the balance of competences review is a significant process and I encourage all noble Lords with interests in some of these areas to engage with it.
A number of noble Lords, such as the noble Lord, Lord Haskel, mentioned the European Space Agency. This is, as it were, a classic example of where working together within the EU serves our interest, and where trying to do it on our own would almost certainly have ceased because we simply do not have the resources to do so. As we look across the piece, we find many similar examples, as many noble Lords have exemplified in their speeches today.
To conclude, the Government believe that membership of the European Union is in our national interest and that there are significant economic benefits of our membership, from the single market through to trade, investment and competition. We are advancing and protecting the UK’s national interest in the European Union and will continue to do so, ensuring that our voice is heard and our interests are protected in order to promote growth and prosperity, which is the Government’s central purpose.
Lord Shipley
My Lords, I am grateful to the Minister for his reply and to all those Members of the House who have spoken in the debate. Mention was made of Roy Jenkins. I am reminded that in 1975, when he was Home Secretary, Roy Jenkins announced when the referendum had been won that it had put the uncertainty behind us. It did for a while, but obviously there is still a debate to be had. On the balance of today’s contributions, those who are in support of continued membership of the EU have the day, but there will inevitably be a continuing debate on that. I thank noble Lords for their contributions.
High Speed 2
(11 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Greaves
To move that this House takes note of the expected impact of High Speed 2.
Lord Greaves (LD)
My Lords, High Speed 2 is the proposal for a new fast mainline railway between London and Birmingham and onwards to the north of England, with a line to Manchester and the west coast main line, and another to South Yorkshire and West Yorkshire. In my view it is a sensible, necessary, long overdue and economically and socially beneficial proposal. It will herald a new era for railways in Britain, and it will form a vital part of bringing together the different parts of England and closing the regional divide. In moving this Motion, I am reaffirming the longstanding Liberal Democrat support for this new line.
Why is it needed? There has been a lot of talk about how fast people want to go, and it has been suggested that HS2 is really all to do with people wanting to go quicker. That is not the case. It is now becoming very clear that the reasons for the line are what are now being referred to, slightly opaquely, as “capacity” and “connectivity”. As far as capacity is concerned, everyone knows that the west coast main line in its present form is already virtually full. For example, it is proving very difficult, in fact almost impossible, to find paths for the proposed new services that Virgin wants to run between Blackpool and London. The east coast main line is perhaps in not quite so congested a state—although it seems pretty full to those of us who use it—but the combination of intercity traffic, commuter traffic, particularly at the southern end, local services and freight services means that the line is pretty full.
People keep saying, “Well, we can tweak the network a bit more and get a bit more capacity out of it; we can improve the situation at Peterborough and provide a freight diversionary line at Lincoln”, and so on, but there is a limit to how far that kind of tweaking can solve the problem. In particular, there is a huge freight potential on both the east and west coast main lines to move a lot more freight on to these main railway lines from the motorways of this country which is simply not possible to achieve at the moment. No doubt the noble Lord, Lord Berkeley, will talk more about this when he speaks.
Is HS2, as proposed, in the right place? I congratulate the Government, in a sense, on their bravery in putting it through the Chilterns, but I suppose that that was originally the decision of the previous Government. However, I want to take an overall view. The network that we have been bequeathed by the Victorian railway builders, particularly the east and west coast main lines, does not actually connect or even go through the main conurbations or the great regional centres. Birmingham is served by a very unsatisfactory loop, and anyone who goes on those services to Birmingham knows how they trundle when they go through the Black Country. Manchester is on a branch line. Derby, Leicester and Nottingham are served by neither the east or west coast main lines, and neither is Sheffield. Leeds is on a branch line. North of London, you have to go as far as Newcastle before you get to a major regional centre that is actually on either of the two main lines. They then of course go on to serve the major Scottish cities of Glasgow and Edinburgh.
HS2’s proposed routes serve all these major conurbations as far north as Lancashire and Yorkshire, and will allow through trains extending beyond HS2 to go on to Newcastle in the north-east, to go on to Preston in Lancashire and to go on to Scotland.
What are the alternatives? We are told by some of the opponents that we can upgrade the east and west coast main lines—but we have been there before. We know that the disruption that it would cause is enormous, and my noble friend Lord Bradshaw may talk further about that. The noble Lord, Lord Faulkner of Worcester, has an upcoming Oral Question asking the Government what their estimate is of the cost of upgrading those two routes. We might get an answer today or next week; I do not know. However, we do know that the previous west coast main line upgrade, which was partial, inadequate and incredibly disruptive, cost over £9 billion.
If we decided to look at a serious upgrade of the east and west coast main lines throughout England, perhaps even to Scotland—a sort of what in my part of the world might be called a “rack o’th’eye” estimate; I will translate that for Hansard later—it might come out at about £25 billion for the two. It is certainly not going to be less than that, and that is getting on for the present estimated costs of HS2.
Of course there have been lots of estimates for the cost of HS2. We have even had some thoroughly discredited and fairly disreputable estimates which have got a lot of publicity from a partisan press. The Institute of Economic Affairs suggested that it would cost £70 billion by including a lot of schemes that are already going to take place and some which, at the moment, are not on the drawing board at all. The government estimate of the cost at the moment is a little over £30 billion, plus £10 billion to £12 billion which has been added on at the Treasury’s insistence for contingencies. That might be a very sensible thing to do, but at the moment those are just contingencies. The estimated cost at the moment is £30 billion to £32 billion.
Then, we are told that we will have to add the cost of trains. Andrew Tyrie, chairman of the Treasury Select Committee, seems to have discovered that if you build a new railway line you have to have trains to run on it. That is an amazing revelation from his committee. However, if we are not just going to build HS2 but going to try and upgrade the two main lines to increase their capacity substantially, we will need more trains for those as well. So, on the point about adding on the cost of new trains, we are going to need the trains either way.
We can compare the estimated cost of HS2 with the cost of some schemes where we know the cost. Thameslink and Crossrail together have cost over £20 billion. The London Assembly transport committee has been looking at the proposals for Crossrail 2, and its proposals for Crossrail 2 would cost £12 billion. The Mayor of London wants a new Thames estuary airport in Kent. I suppose that it is a “rack o’th’eye” estimate at this moment but, nevertheless, it is suggested that that might cost £50 billion—the same as people say HS2 might cost with all its trains. It seems that these kinds of admittedly eye-watering sums are okay if they are about London and the immediate south-east, but if it is about the rest of the country—if it is about the north of the country and the East Midlands and the West Midlands—then we are told that it is unacceptable. I suggest that some of those who have what the Secretary of State, Patrick McLoughlin, describes as a London-centric view of these matters, should get out a bit more and come to the north of England and the Midlands and just find out why we need as much investment as comes in London and the south-east. We are not asking for as much as there is in London and the south-east in every other English region; we are saying, “Let’s share it all out, but at least let’s have it on the same basis as London”.
Then we are told that we cannot afford this new railway line in a time of austerity. This is often said by the people who are complaining that the whole process will take far too long. If we are still in a state of austerity in 10, 15 or 20 years’ time, “God help this country” is all I can say. Surely we are planning now for the sunlit uplands ahead. Maybe the Opposition do not agree that we are going to have sunlit uplands with the present Government, but perhaps they think that they will get in and we will have sunlit uplands of a different colour. That is fine, but surely we are not in austerity for the next 20 years.
Who are the opponents? They are people who are directly affected, and I do not blame them at all for campaigning about the effect it might have on their village or their property or where they live. That is fair enough. Then, we have the road lobby. They are not very prominent in the campaigns but they are behind it all, and they are behind a lot of the pressure groups that are campaigning. They do not want to spend less money. They just want it spent on roads instead of railways.
We have the right-wing economic pressure groups: the Institute of Economic Affairs and the Institute of Directors. Then we have the London-based vested interests. The IEA added on the cost of Crossrail 2 as part of the HS2 project—that is how it got to £70 billion. But then the Mayor of London says, “Don’t spend it on HS2, spend it on Crossrail 2 instead”. You can take either of those points of view but it seems to me that the two projects are quite separate.
We have the London-based media, which seem to have swallowed a lot of this nonsense which is talked, and we have what I consider to be the disgracefully partisan activities of the BBC on this particular issue. I say to the Conservative Party: many of the bodies that are campaigning against this are part of the conservative base of this country. I congratulate the Government, the Conservative Party, the Prime Minister and the Secretary of State on resisting this lobbying from people who would normally be much of their base, and long may they continue to do so.
Then we are told by people all over the country who are enviously eyeing what is a huge sum of money, “Let’s spend it instead on my pet little local scheme”. I even have one or two people in my part of the world saying, “Why can’t we build the Colne-Skipton railway line with a bit of it?”, and we have people in Skelmersdale saying, “We want a railway line and a station please. Why can’t we have a bit of it?”.
More significantly, there are people in places like the south-west who have to suffer a six-hour rail journey from London to Penzance, for example, and I think that they have a very serious point—that they are being missed out in rail investment in this country. I say to them, “If you think that scrapping HS2 will suddenly result in a transfer of all the money to that scheme and to all the other schemes, you are living in cloud cuckoo land”. We are talking here about national infrastructure between the major conurbations of this country and about a very important rebalancing of regional investment and regional economies.
The Independent Transport Commission has taken quite a balanced view of the proposals. It says that HS2 will act as a catalyst for regional development if it is accompanied by smaller schemes to improve local transport links. Those smaller schemes are needed anyway. Anybody who travels by train in Lancashire or Yorkshire knows that the amount of underinvestment simply cannot continue. The ITC also says that there is a need for the Government to explain these things, and to define what it calls the,
“spatial problems it is supposed to address”.
It is quite clear that so long as HS2 is seen as a comprehensive scheme for improving the transport infrastructure of this country, it can do the job.
We also have the KPMG report—I do not have the time to go into it in detail at all—which suggests that there is a £15 billion bonus for the economy. I never know how they work these things out. I have looked at the report and I still do not know how they have worked that out. I think there is a lot of voodoo when people make forecasts like this. However, it says that Cambridge will suffer because we are building HS2. I do not believe it. Even more, it says that Lancaster will suffer. Lancaster is going to get a better, faster rail service to the south and an hour off its journeys to London. How on earth can Lancaster suffer because of that?
Then we are told that the UK is too tiny for high-speed rail—and yet the distance between Paris and Brussels, which I think is the most heavily used high-speed line in Europe, is the same as the distance from London to Manchester and to Leeds. The distances between Paris and Strasbourg, and Madrid and Barcelona, are the same as the distances between London and Edinburgh and Glasgow. People will say that they are not going that far. I would say that the Government have got to be a bit bolder and start to say that HS2 has to be seen as the start. Perhaps it is past the lifetime of many of us here, but it has to be a vision for the future of a high-speed network throughout England and this island. Let the Government keep their nerve. Let us promote the vision, and let the Government accept my personal challenge that in my lifetime I can travel on a high-speed train from London to Leeds or to Manchester—and preferably in that direction.
Lord Faulkner of Worcester (Lab)
My Lords, we are all indebted to the noble Lord, Lord Greaves, for giving us the opportunity to debate this really important issue. I congratulate him on the way that he successfully corrected some of the more absurd misconceptions about High Speed 2 which its opponents are attempting to put about.
First, though, I should like to welcome the noble Baroness, Lady Kramer, to the Dispatch Box for her first debate in the Chamber. Hers is a promotion much deserved and we look forward to her speech greatly.
The case for High Speed 2 is not primarily about the length of time that it takes to travel from London to Birmingham, although it is obvious that if we build a new railway, it should be built to 21st-century standards using technology that is tried and tested throughout Europe and Asia, rather than that of the Victorian age, and that means high speeds and shorter journey times. No, this debate is about something much more important: it is about what sort of transport infrastructure we are to bequeath to our children and grandchildren. We could go back to the thinking of the 1960s, 1970s and 1980s, when it was assumed that private motoring and heavy lorries would reign supreme. The transport imperative then was to build motorways on a predict-and-provide basis to serve them. The railways at that time were expected to decline gracefully, with many more lines being closed and services replaced by buses, passengers being discouraged by ever higher fares, and the rail freight business being largely abolished except for heavy-haul bulk loads and some container traffic.
However, the British public were not prepared to see their railways decline and die, and by July 2001 the distinguished City correspondent Christopher Fildes was able to write in the Spectator:
“Railways are a growth industry. Their most sustained attempts to drive away their customers have not succeeded”.
Let us look at what has happened since then. In July this year, Network Rail published a report, Better Connections—Options for the Integration of High Speed. Let me quote one or two of its findings. First, it says:
“Over the last decade the number of journeys made by rail has increased by almost 50% … But demand is still increasing. By 2020 another 400 million rail journeys will be made every year”.
Indeed, there are a million more trains running each year, while the busiest stations individually handle more passengers than Heathrow Airport. Network Rail makes the point, as the noble Lord, Lord Greaves, did, that it has done its best to make the best use of its remaining capacity and squeezed every last incremental change out of what it has. To quote again from its report:
“As demand continues to grow, this becomes harder and in some places impossible ... parts of the existing network will be unable to accommodate the forecast demand leading to significant overcrowding; in the peak, passengers may not even be able to board a train on some routes. Further, there will be no opportunity to accommodate the expected levels of increased freight traffic on the network”.
There you have the essential case for building High Speed 2—not as a separate line, physically and operationally away from the current railway, but as a crucial part of a reshaped and improved national network.
Some of those opposed to High Speed 2 argue that the money it will cost would be better spent on upgrading the present network and in trying to add capacity piecemeal to the west coast and east coast main lines. To add to the point made by the noble Lord, Lord Greaves, let me remind those opponents that the last time we upgraded the west coast main line it was supposed to take six years, cost £2 billion and deliver 140 miles per hour trains. What actually happened was that it took nine years, cost almost £10 billion, and we still have 125 miles per hour trains, with unimaginable disruption of existing services in the process, with endless closures and bus substitutions at weekends, and sometimes longer. Does anyone believe that more than a fraction of the funds allocated to High Speed 2 would ever find their way to funding new investment on the existing network if High Speed 2 were to be abandoned?
Let us be clear: many of those arguing against High Speed 2 have no interest in growing the railway. The author of the Institute of Economic Affairs’ pathetic publication on HS2 makes clear his preference for an investment in roadbuilding—a transport policy which is 20 years out of date—and rubbishes the construction of the Jubilee Line and High Speed 1. It is inconceivable that London could function now without the Jubilee Line and the success of High Speed 1 is also clear. The economics consultancy Volterra produced a report in 2009 showing that the benefit to the UK economy of High Speed 1 over 60 years is estimated at £17.6 billion, plus a series of development, trading, housing and transport benefits.
I have no doubt that the benefits of High Speed 2 will be even greater. Looking just at the jobs which will be created in the life of the project, Albion Economics, working for Greengauge 21, estimates the total job years to be almost 890,000—the equivalent of creating 89,000 full-time jobs. We have to recognise that the future of inland transport in Britain belongs to high-speed rail and in having a world-class transport system that brings Scotland, north England, the Midlands and the south closer together; that drives opportunity and economic growth; and that makes sound environmental sense too. After the success of High Speed 1, it is time for the whole of Britain and for your Lordships to embrace High Speed 2.
Lord Mandelson (Lab)
My Lords, I strongly welcome this debate and congratulate the noble Lord, Lord Greaves. Like my noble friend who has just spoken, I have been an ardent pro-railway supporter all my adult life but it is precisely for that reason that I do not support HS2, because its sheer cost will suck the very lifeblood out of the rest of the country’s rail system.
Originally in government, I, along with my colleagues, took the default position in favour of anything with an engine at its beginning, a guard’s van at the back and a lot of sleek carriages planned in between. However, I think that the Labour Front Bench is now right to have become more sceptical of the project. I am not going to dwell on how we reached that decision as a government but, frankly, there was too much of the argument that if everyone else has a high-speed train we should have one too—regardless of need, costs or alternatives. As a party, to be frank, we did not feel like being trumped by the zeal of the then Opposition’s support for the high-speed train. If anything, we wanted to upstage them.
Since then, I have had a lot of time to think about this decision and to face the fact that no empirical case has been established for HS2, despite repeated attempts. The so- called business case, when the original justification for HS2 was all about speed, duly collapsed under scrutiny when it was discovered that in real life people actually work on trains, and sometimes even better than when they are in the office. Now the whole justification has shifted to assumptions about increased overall capacity, reduced crowding and the economic benefits to a handful of the nation’s cities—none of which assumptions, I might say, have been authoritatively quantified or verified, academically or otherwise. They all depend on forward projections of passenger loads which are uncertain, famously unreliable and greatly affected by the future price of tickets and elasticity of demand.
What has been forgotten in all this debate is that in 2006 the then Labour Government asked Rod Eddington to undertake one of the most comprehensive studies ever of transport in the UK. That study, after a great deal of very thorough examination, firmly rejected HS2. Eddington concluded that Britain’s transport infrastructure needs would be much better met by a wide range of incremental improvements rather than a few high-profile extravagances. He ended with one very important point of wisdom:
“The risk is that transport policy can become the pursuit of icons”.
I fear that HS2 has become precisely that—a political trophy project, justified, on flimsy evidence, as being about modernity and prosperity, with, I might say, a lot of pressure being put on those conducting the cost-benefit analysis to come up with the answer that Ministers want.
Even so, I would be prepared to put up with a lot of the uncertainties of the case if I thought that HS2 stood a reasonable chance of helping to rebalance the UK economy, lifting regional growth and creating jobs outside London and the south-east, but there is absolutely no conclusive evidence that any such things will happen. It might give some short-term boost to those cities on the line of the route but, equally, the easier you make it to get to London, the more people are likely to end up working and living in London. The readier the access to the facilities provided in the capital, the greater the likelihood that facilities in provincial cities will be undermined.
It is not surprising that KPMG, on a closer examination of its research—as the BBC did last week—found some very patchy results indeed for the benefits of HS2 for the regions. More places stand to lose than gain from HS2. That is hardly surprising. Indeed, £50 billion spent on HS2 is £50 billion—or anything like it, for that matter—that will not be spent on upgrading the east coast main line, which serves Humberside, Teesside and the north-east, and on lines to Bristol and the south-west or to East Anglia. Importantly, it will not be spent on the links between cities outside London. This is something on which we need to focus.
Having represented a constituency in the north, and now having the privilege to serve as the high steward of Kingston upon Hull, I know the difficulties that people have in using public transport not just between conurbations outside London but into and out of any northern city, and in particular in getting to a job within any extended travel-to-work area outside London when depending on public transport. There are literally dozens of rail and public transport projects urgently needed across the country that would make a significant economic and social impact. All these and more could be extracted for the price tag of HS2.
I will say one last word on the capacity arguments that, it is claimed, will be magically solved by HS2. Rail demand may increase substantially or it may not. However, we know that if HS2 goes ahead, the economic case put forward—
Lord Mandelson
I would like to continue, but I will give way to the noble Lord.
Lord Lea of Crondall
My Lords, it is a question of clarification of what the noble Lord has just said. Does he think it a normal part of cost-benefit analysis on a project to say that you count against it? For example, can you say that if it does not go to Cambridge that is a cost to the project? Is that the noble Lord’s view on how cost-benefit analysis is normally done?
Lord Mandelson
Yes, of course it is part of it. However, my point is that the Government’s own economic case, if HS2 goes ahead, has made clear that this will involve nearly £8 billion-worth of cuts to existing intercity services. That means, for example, that Coventry’s services to London will be cut from three to two per hour, Stoke’s from two to one per hour and Stockport’s from three to one per hour. All Wilmslow’s intercity services to London will be axed, and journey times from Oxenholme, Penrith and Carlisle to London will be lengthened. So much for the capacity case for HS2. If it goes ahead, we will see a shrinking of the rail network in this country, and that should be the very last thing that pro-rail supporters in this House should want to see.
Lord Popat (Con)
My Lords, I remind the House that this is a time-limited debate of six minutes maximum without any interruptions.
Lord Rodgers of Quarry Bank (LD)
My Lords, I, too, welcome this debate, carefully chosen by my noble friend Lord Greaves. There has been too little serious and sustained discussion, pro and anti, in this House of the project launched in the House of Commons by the then Secretary of State for Transport, Geoff Hoon, nearly five years ago. At that time, on 15 January 2009, there was only one modest paragraph about High Speed 2 out of 25 in a Statement on transport policy. Within little more than a year, the noble Lord, Lord Adonis, seized the opportunity with enthusiasm to publish the White Paper High Speed Rail Cm 7827. However, I am not convinced about the priority of High Speed 2 within the railway system and I am sceptical about benefits. In this respect, I agree with the remarks made by the noble Lord, Lord Mandelson. I am, however, an agnostic, and many agnostics want to believe. I hope that my noble friend will be persuasive this afternoon.
With the initial momentum of the project, it was said—or so it seemed—that the chief merit was to reach Birmingham from London half an hour faster. Not everyone was sure that this was a recommendation, but, by definition, a high-speed train meant going faster and getting somewhere sooner. The relevant paragraph of the January 2009 Statement referred only to faster journeys, but by the publication of the March 2010 White Paper by Gordon Brown and Andrew Adonis, there had been a major shift of emphasis from glamorous speed to workaday capacity within the railway system; this has since become the dominant theme.
It is now approaching 40 years since I became Secretary of State for Transport. The 1970s was the most depressing era for the railways. It was often said that my civil servants were anti-railway, but that was not the case generally. Passenger miles had dropped steadily since 1945 and flattened out for a decade, which was bad for the morale of those who cared about the railways. November 1976 was also the time of the visitation of the IMF, from which followed deep cuts in public spending, including transport. There was no prospect of taking any new initiative. As far as I could, I continued to introduce the HST Intercity 125, which was then a high-speed train, to improve the existing urban network and to encourage light railways. I also saved the Tyneside Metro when the Treasury was about to axe it. Then, rather to my surprise, in the mid-1990s, the passenger miles began to grow, and this growth has continued. I recognise the trend, and it is right to provide additional capacity. I also recognise and welcome faster trains on the existing network—or, as we are now required to call it, the classic network.
In the latest Department for Transport glossy, one of the virtues is connectivity—a word I cannot find in my Oxford Dictionary. The boast is that HS2 will link eight of Britain’s 10 largest cities, as if there has been no such link since the days of the canals and the stagecoach.
I would like to believe—and this is now a central argument in the White Papers—that HS2 will be the engine of economic growth and help the deprived regions, but I cannot find secure evidence for this. It is claimed that HS2 will be a bridge from the north to the south, but the railways have been such a bridge since Victorian times.
An article in the Economist last week said that the worst urban decay is found not in big cities but in small ones. It mentions Hartlepool, which has grown far more slowly, as being typical of Britain’s rust belt. Can we really believe that HS2 will significantly help Hartlepool—or Barrow-in-Furness or Hull? We should not be deceived that it will wave a wand over deprived towns and villages.
Earlier this month, my noble friend Lady Scott of Needham Market opened a debate on the railways in East Anglia. Unlike the experience of much of the north-east, she said that this was a thriving region. However, she made a strong case for significant new investment, as there had been no modernisation of many parts of the railway network during the past half century. The route of HS2 is 100 miles or more from the heart of East Anglia. Are we to take seriously the fact that we can both finance HS2 and the different needs of East Anglia or, for that matter, the south-west of England or important parts of Wales?
The railway passenger, or the potential passenger, has an interest in several considerations. He or she wants good or better access to the places they wish to go, a reliable service, on time and without cancellations. He wants to travel in comfort and at a reasonable fare with an option at every hour of the day and on every day of the week. Above all there is the importance of safety. It is not axiomatic that travelling fast—faster than ever before—is a priority. It is time to scale down the hyperbole of the vision and to offer a more rigorous and sceptical analysis of the case for HS2.
Lord Grocott (Lab)
My Lords, I welcome not only the fact that the noble Lord, Lord Greaves, has introduced this debate, but also his splendid, comprehensive opening speech, which covered so many of the arguments. Inevitably, a debate such as this will be pretty polarised; you cannot be half way in favour of this, stopping it half way along the tracks somewhere—you are either for or against it, and I am unequivocally, unashamedly, massively for it. I hope that there is no uncertainty about that.
I thought it would be helpful to look at some of the objections—and of course we acknowledge that people who are directly affected by the route will be very concerned indeed. Whether you are for or against this proposition, you will acknowledge and recognise, as with other major developments, that there must be proper compensation and recognition for those who are directly affected.
It is worth taking a little trip down memory lane, because when the original proposal for a London to Birmingham railway was put forward in 1832, the House of Lords threw it out. We know, due to a splendid article by Nick Serpell, that many of the grounds for that were stunningly similar to the objections that are being presented today. The effect on wildlife was mentioned, as well as the demolition of rural communities and the big estates.
I would richly enjoy reading out all these quotes, but here is just one, from one of the contributors to the early part of the debate:
“You are proposing to cut up our estates in all directions … If this sort of thing be permitted to go on, you will in a very few years destroy the nobility”.
That is the kind of objection that was going around at the time. Most of the objections were very similar. Why do we want to go so fast? By the way, the first trains took five and a half hours. I am sure that whether you are in favour of HS2 or not, you will prefer the present service to one that would have taken five and a half hours. Thank heaven—I hope we can all agree on this—that the objections that were originally presented were overcome and that at least we had a railway from London to Birmingham. We did not require the people of the 19th century to get from here to Birmingham by canal or stagecoach; there was a mechanism other than that, which was terrific. So many of the objections proved to be false. The wildlife comes back amazingly soon after the cuttings and the embankments have been built. Of course, the investment has been repaid—I was going to say 100 times over— 1,000 times over. I could not begin to calculate the economic benefit of the original London to Birmingham railway.
I mentioned that it was a Victorian railway. Essentially, we rely, in the 21st century, on a Victorian railway. It is a marvellous railway; wonderful engineers built it, and phenomenal engineers kept it patched up over all the years and made improvements, keeping the trains running, by and large, while they did all that. However, a Victorian railway serves us today. There is one big exception—that it is not even as good as the Victorian railways because large chunks of the system have been closed down. Routes, railways and stations all over the place were closed. One railway in particular that was closed down was a fine north-south route between London, Leicester and Nottingham—the Great Central Railway—that was closed down in 1969. Therefore in proposing a new railway we are not revolutionary in adding to what has historically been available; we are trying to repair some of the damage that was done by the vandalism of the Beeching era, when so much damage was done. Therefore I say, “Thanks very much” to the Victorians, but that will not do for the 21st century.
I now come to the very common argument from the people who are opposed to this new line. I am sorry that there is no easy way. They say, “Let’s improve the existing railway. Let’s make some modifications to it so that trains can run through at greater capacity levels, with bigger trains”. We have been doing this for more than 80 years. We have kept on patching up, making do and mending, and amazingly, we have kept the trains running while we have done that. However, that is saturated. That argument has gone—there is no easy solution to that proposal. Interestingly, people do not ever say that about the motorways. I do not remember people saying, “We should not have built the M1 or the M5. We should have built loads of bypasses, strengthened the bridges and got more traffic running through on the old roads”. There comes a point when that proposal becomes ridiculous, and as far as the railway that we need for the 21st century is concerned, it is a ridiculous proposal.
If people are serious about massive improvements on the north-south routes in this country to be done on the existing system, please do not travel by train while it is being done. You have seen nothing yet of weekend closures, bus substitute services and holiday closures. You cannot rebuild a railway to 21st-century standards while you are trying to run the trains on the existing routes. There would be huge dislocation if that approach was adopted.
This is a visionary proposal. I salute my Government —the previous Labour Government—for introducing the proposal in the first place. I congratulate the coalition Government on sticking to their guns and acknowledging that this essential part of our country’s infrastructure has to come about. I salute the people involved: the former Secretary of State, the noble Lord, Lord Adonis, and the present Secretary of State, Patrick McLoughlin. It is not an easy thing to do, because the opposition is so widespread in so many ways, and so personal. However, I appeal: let us think for a moment of the astonishing vision and engineering skills of the Victorians who built our rail network, which, as I have said, miraculously serves us today. Our railway-engineering expertise was exported all over the world. They had that vision which we massively benefit from today; it is part of our responsibility to have a similar vision to ensure that future generations have a modern, 21st-century rail network.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the noble Lord, Lord Greaves, for securing this debate and I welcome the noble Baroness, Lady Kramer, to her new responsibilities. I declare an interest since I live in Little Missenden which is directly on the current route and therefore I qualify under a number of people’s acceptance to plead my special case. I will do that a bit, but the interesting thing about being a nimby is that because you spend a lot more time working out why these things are happening to you, you understand the overall picture a lot better than many others. It is for that reason that I want to speak today, not particularly because of the problems in Little Missenden, although there are many, not least the appalling compensation proposals which do not measure up to the rhetoric.
Like the noble Lord, Lord Faulkner, and others, I am a supporter of the case for investing in improving transport services in the UK and in particular of upgrading our rail capacity using the most appropriate technologies. However, as my noble friend Lord Mandelson says, the supporters of HS2 have to do better than rely on dodgy forecasts and puffed-up consultancy reports. This is not an icon; it is a major investment decision for the UK, so it is right that, at a capital cost of £50 billion with ongoing subsidies, everybody should be convinced by the case before it is approved. To achieve that, we must debate and agree a proper economic argument which explains convincingly not only what problem we are trying to solve and why HS2 is the answer but also why other cheaper solutions do not do the trick. The Government have caused a lot of confusion on this point. First it was green and then it was speed, or was it the other way round? Then it was the need to fuel economic growth in the regions, recently clarified as “some regions but not others”. Now it is capacity on the west coast main line and connectivity with HS1, albeit that that constitutes an embarrassingly large gap in the current plans.
This debate is on the economic case for HS2. On the facts so far available to us, there is no doubt that the economic case for HS2 is very weak. A project that costs £50 billion in capital needs a better case and value-for-money justification than we have seen so far. No wonder it has so many critics, ranging from the press to the Institute of Economic Affairs and the TaxPayers’ Alliance, from Alistair Darling to David Davis and many others, including the National Audit Office whose value-for-money report suggests a number of problems with the existing cost-benefit study and the Treasury Select Committee whose report published on the 2013 spending round concludes that only when HM Treasury has decided its own comprehensive economic case for supporting the decision should the Government formally reassess the project before deciding whether to proceed. In other words, there are very substantial blocks to moving forward on this proposal.
So far all we have seen from the Government is the KPMG report, which, as has been said, far from proving the Government’s case, suggests that there will be as many losers as winners in the regions. The problem is that HS2 has been designated solely as a point-to-point railway line, lacking any proper integration with the classic rail network, the UK’s only hub airport or HS1. As such, the project exemplifies the silo approach of UK transport planning where decisions on aviation, classic rail and high-speed rail are taken in isolation, let alone thinking about the implications for things such as high-speed broadband. Current HS2 proposals need to be improved to ensure that the route connects into more of the UK, integrating with other transport networks and co-ordinating with the work of the Airports Commission.
Surely we should not be considering in the early 21st century a transport solution which inflicts serious damage on our natural heritage. These may be old arguments but they are still real. The Woodland Trust has demonstrated that the Government’s preferred routes for both phases of the scheme will cause loss or damage to at least 67 irreplaceable ancient woods. The Chilterns AONB, which is where I live, is now the only AONB along the entire HS2 phase 1 and phase 2 route that would be adversely impacted by the proposed project. Actually, it would be destroyed. The draft environmental statement consultation published on 16 May accepts that a tunnel through the Chilterns AONB would perform better on environmental grounds compared with the current tunnel option. It would also reduce the operational noise impact and, for certain locations, would result in a reduced construction impact. It is feasible in engineering terms and I recommend it to the Minister.
Lord Alton of Liverpool (CB)
My Lords, as one of the sceptics, I congratulate the noble Lord, Lord Greaves, on giving the House the opportunity to have this important debate and for the way in which he introduced it. Since first arriving in Parliament in another place in 1979, I have been a regular user of the west coast main line from both Liverpool and Preston. Virgin provides a superb service and most journeys to London take just over two hours. It is specious to suggest that we need a faster rail link, which is no doubt why Patrick McLoughlin shrewdly sought over the summer to alter the terms of the debate away from the question of journey times to that of capacity.
If the raison d’être for HS2 is a moving target, so are the estimated costs. In 2008, it was estimated that the project would cost £17 billion. By 2010 the figure was £30 billion. By this year it had reached a staggering £42 billion, according to some estimates, and nearer £50 billion once the cost of the rolling stock has been added in. The Financial Times—hardly part of a disreputable conspiracy—reported a private Treasury calculation of £73 billion, and all of this before a single sleeper has been laid. Having said that he has been changing his mind about HS2, the former Chancellor Alistair Darling is right to warn that this is a project that could easily run out of control. He says the business case has been exaggerated and that there are better ways of encouraging growth outside London. That is the main reason why I share his view.
For the avoidance of doubt, I believe in public transport and have always supported the enhancement of our railway network, like the noble Lord, Lord Mandelson. I have supported capital projects that improve infrastructure, provide demonstrable economic benefits and create jobs. It is claimed that the region I live in will be a principal beneficiary of HS2. However, for reasons I will explain, and not simply because of the runaway costs, I have been opposed to this project in its present form from the outset.
For a fraction of the cost of HS2 we could enhance the capacity of our railway system, by upgrading stations and platforms, lengthening carriages, improving railway stock, using new technologies and through timetabling and the reintroduction of services such as overnight sleepers to northern cities and towns. We could make significant improvements to our railways. Think of the opportunity costs at stake. A far higher priority for railway improvements should be commuter services and town-to-town links. Travel times between northern cities and towns are diabolical. To travel from Preston to London takes just over two hours; from Liverpool to Preston takes one hour, and from Leeds to Liverpool takes one hour and 47 minutes. Liverpool to Sheffield takes one hour and 41 minutes, and Liverpool to Hull takes three hours and 13 minutes. Those cross-Pennine, east-west services, not north-south services, are impeding economic development in the north.
If we were really serious about the north of England, we would reopen passenger railway links in north Lancashire and link Manchester and Liverpool airports with express trains. I welcome the news, which the noble Baroness, Lady Kramer, whom I welcome to the Front Bench, gave me in a parliamentary written reply on 21 October, that there will be some improvements to those services. Perhaps she will tell us today how much money will be put into those projects compared with the investment in HS2.
Liverpool will be placed at a serious disadvantage by HS2, which is why some of the colleagues of the noble Lord, Lord Greaves, in that city recently tabled a motion to the city council pointing that out. The CPRE suggests that,
“it could risk Liverpool’s longer term regeneration”.
Why? Because, unlike Manchester, which will have a direct line to the city centre, Liverpool will not, and there will be a requirement to change trains to reach some important destinations. At the very minimum, reconsideration should be given to the decision to build a second HS2 station outside Manchester in the green belt.
I am also certain that, if these proposals go ahead, the magnetic appeal of London, with its fabled streets paved with gold, will suck people and businesses away from the north. KPMG’s report may point to overall benefits but, strikingly, it says that Greater London will be a £2.8 billion winner while 50 places in the UK, such as Aberdeen, Bristol and Cardiff, will be worse off. They estimate that Dundee and Angus could lose as much as 2% of GDP.
Many of us will have heard from some of those already affected by HS2. Tim Ellis, a Staffordshire farmer whose family have farmed there for three generations, wrote to describe how the project, just 145 metres away from his land, has already blighted their property and business. He wryly commented:
“What we really need is super-fast broadband—any broadband would be nice—not super-fast trains”.
I do not live in one of the 70 constituencies through which HS2 will pass. If I did, I would deeply resent being accused of nimbyism for questioning the effects of this project on some of our most beautiful countryside. Alison Munro, chief executive of HS2, is wrong to characterise opponents as “a noisy minority” and imply that anyone who questions this project is an antediluvian luddite. Taken with the Government’s road-building plans, which will impact on five national parks, I am glad that many are in open revolt and demanding protection for our landscapes and the tranquillity of the countryside. We are too obsessed with bigger, faster, better and more. There needs to be further reflection before HS2 is allowed to proceed. The CPRE is right when it says:
“Deliverability is trumping all other considerations”.
Attempts to push through enabling legislation by May 2015, without due process and adequate consultation, would be an abuse of Parliament, and should be fiercely resisted. I hope that today’s debate will serve notice on the Government of your Lordships’ determination to do precisely that.
Lord Rooker (Lab Ind)
My Lords, I, too, congratulate the noble Baroness, Lady Kramer, on her new appointment and look forward to the wind-up.
If we did not already have the motorways, canals and, I dare say, the railways, we would never be able to build them. We have no aircraft runways under construction, and no high-tech nuclear green power stations under construction—mainly because of a catastrophic energy White Paper in 2003. In the days of the great engineering projects, approved in private Bills by this Parliament, the likes of Brunel and Telford got on with their vision and won through in the end, and thank goodness they did. They would be ashamed and astonished to see us today, a scrimping nation getting by—or, at least, we think that we are. We pollute the overcrowded roads with congestion and cause the inefficient use of today’s very efficient car engines because of that congestion. We pollute the sky with internal flights. It will all come to a stop; there is not enough capacity on rail, so even more freight gets on to the roads. Then they clog—and it will end up as national gridlock.
Is HS2 the complete answer? Of course it is not. Is the planned route the best? I cannot say—although it appears fairly straight, which I assume is a key factor for high speed. Should it be built? Most certainly. However, success will require better leadership of the project and I am not clear who is in charge. Major infrastructure projects by definition reach across the Parliaments and, while I would not insist on 100% agreement, there has to be a degree of operating outside the tribe on these projects. I do not see that at present. It is a pity that one of the first acts of the coalition was to abolish the Infrastructure Planning Commission before it had a chance to get going.
In the recent HS2 publications, I am at a loss to understand why freight effects have not been considered. Is it because freight will not be on HS2 but, because of HS2, more of it will use the extra capacity on existing lines? That seems to me a major failure of communication on behalf of the project. I have been informed that HS2 could take 500,000 lorries off the roads.
I much look forward to seeing Sir David Higgins as the chair of HS2 in the new year. I declare that I briefly worked with him when I was Regeneration Minister a decade ago and he was the chief executive of English Partnerships. He is impressive and he delivers, as his record shows. I hope that he will review all aspects of HS2—and that has to include the board. The Opposition had better give him full support. The Labour Government started this project, and it would be inconceivable to withdraw support. I am getting cheesed off listening to ex-Ministers swanning around the political salons pouring cold water on the project. I agreed with every word of the Secretary of State’s 11 September speech at the Institution of Civil Engineers. As such, I urge the shadow Cabinet not to quit on the project but to fight for it, and I urge HS2 to make its communications and operations a bit more transparent. I also have some news for the BBC: I do not expect Land’s End, Great Yarmouth, Anglesey or John o’ Groats to benefit as much as the great city regions. I thought the way the BBC treated the KPMG material on last week’s “Newsnight” was a journalistic disgrace, but it should not have had to use an FoI request to get the figures explaining the map in the report.
HS2 is not about minutes off journey times. It is about capacity and not relying on lines laid over 100 years ago. It is about serving one in five of the UK’s population. It is about, not serving, but creating city regions on a par with our EU partners, because we have not got any at present. That is why there is a constant drift to London. According to Sir Albert Bore, leader of Birmingham City Council, the West Midlands could see a minimum of 20,000 extra jobs and 50,000 with the package of local transport connectivity. Phase two could deliver up to 70,000 jobs according to Sir Richard Leese, leader of Manchester City Council. Some 70% of the extra jobs will be outside London.
As for the line, it must end in Glasgow and Edinburgh. There is no question about that: there has to be a phase three. I hope we can then stop the environmentally wasteful, polluting internal aircraft flights. I would be happier if the Bill included the line to Manchester and Leeds. I would hope and expect construction to start in more than one location. England is not the wild west frontier that the great railways opened up in America. We should be able to start in London, Manchester and Birmingham and meet in the middle, as we did with the Channel Tunnel.
Lord Bradshaw (LD)
I congratulate the noble Lord, Lord Rooker, on his firm speech. I am speaking because I was responsible, at some time in my career, for the management of all the four main lines which go out of London to the north. They are now at least 85% full. When a system—a railway, water pipes, gas or anything—is at 85% capacity it is full, because just a small incident can spill over and cause havoc with punctuality or supply of service. So the capacity enhancement is urgently needed, but I am sorry that this thing ever got called High Speed 2 because it is not a high speed railway in international terms: they are not talking about going at about 250 mph.
The upgrading of existing routes is a hopeless proposition. I have just read that next year the west coast main line will be shut for 36 days for urgent engineering work at the London end, running through Watford. That will bring back the horrors but this time it will affect more people because more people are now using the railway. The London end of this project needs rethinking because the way it has been drawn up is wrong. I do not believe there is any need, at least in phase one, to demolish houses in the Camden area. I must cast doubt on the quality of leadership of the project because it has not gone for the most sensible option. We do not need to demolish lots of houses for phase one: we can do that quite easily by other means.
I was also responsible for the first stage of the HS1 extension. At the time people talked—in this House, I am sure, although I was not here—about the rape of the garden of England: it would never be the same again. However, a week or two ago I met a Labour MP from one of the constituencies affected. I asked him if he was getting a lot of trouble from HS1. He said, “No, none at all, but if you ask me about gay marriage I will bring you a few bags of letters”. That is the way in which the ill effects of this project have been grossly exaggerated by various opponents. There will be disruption while it is built but, as someone remarked, the wildlife and the birds come back. The railway does not have lots of service stations, garages and posters. It fits into the countryside and I am sure that noble Lords who travel around by train know many places where the significant Victorian railway buildings are not a blot on the landscape but blend beautifully into it.
The new line will free up a lot of existing capacity and the talk about Coventry, Rugby and Milton Keynes not having as good a service is just not true. This month the Desiro company, which has built many of the excellent suburban trains used between London and Birmingham, has been given permission to increase the line speed of these trains to 115 mph. They are more comfortable and will be nearly as fast as the Pendolinos, and I am sure that customers will like them better. I am certain that all the places affected will have a far better service than they have now.
I have a few requests for the Minister. Will she please facilitate the ongoing discussions about the London end? The Secretary of State knows about them and the noble Lord, Lord Berkeley, and I have been to see him. We believe that we can save a lot of money, not the odd million but the odd billion, by these proposals. Look again at the appraisal methodology that these people used. They used the old-fashioned cost-benefit analysis that was invented by the Standing Advisory Committee on Trunk Road Assessment in the 1960s and 1970s that compared the value of road schemes to see which was best. The process was never intended to value a project such as this. A recent publication by High Speed 1 has shown that the value of HS1 over 60 years is £17.6 billion. Will the Minister look again at the external benefits? This has been done by HS1, which looked at the effect on the value of property. Recently at Ealing Broadway it found that property prices are increasing sharply in anticipation of Crossrail. None of that value gets into the public purse but there is no doubt that it is of value, and it is time that the department looked at this issue to find a way to ensure that some of that value gets into public hands.
Finally, I ask the Minister to reiterate the commitment to the continuing expenditure on the rest of the network, such as the ongoing improvements at Reading and Birmingham New Street. They are a compliment to what our engineers can do but there is a limit to what can be done within the confines of the existing railway.
Baroness Mallalieu (Lab)
My Lords, like the noble Lord, Lord Stevenson, I must declare that I live in the Chilterns but not in an area affected by the proposed route. However, for most of my life I have known that stretch of countryside from where the line drops off the escarpment and cuts a swathe through Oxfordshire, Buckinghamshire, Northamptonshire and Warwickshire. It is not picture-book pretty. Unlike the Chilterns, it is not an area in which walkers such as the noble Lord, Lord Greaves, to whom we are indebted, come out in numbers at weekends or visit for its views. It is old England, big blackthorn hedges, pasture, beef cattle, hidden woods and coppices, and small villages and farms in which people have been born and lived all their lives. Through that countryside the route goes past Grendon Wood, in which Shakespeare is said to have been inspired to write “A Midsummer Night’s Dream”, and—this is for my noble friend Lord Grocott—Doddershall, a remote moated house built in 1520. The route also goes through 24 sites of special scientific interest and 67 irreplaceable ancient woodlands. It is proposed to drive HS2 through that, and for what? I will come to that.
The project was agreed by the Government in 2010 without any strategic environmental assessment having been carried out, probably quite deliberately because this is an act of sheer environmental vandalism. A judge has already described that as “an egregious breach” of the guidelines. Litigation is going on at the moment and there will, no doubt, be a Supreme Court judgment next month. For that tract of our countryside and its people the impact is quite devastating.
However, that was not the only flaw in the original decision-taking process. The business case was flawed, as is now generally accepted. The cost-benefit analysis, whether it should have been used or not, never supported the proposal. The budget was hopelessly understated, as has now become clear. I am aware that the lack of any proper consultation and the weakness of the economic case concerned a number of those at the heart of government at the time. I would like to pay tribute to the noble Lord, Lord Mandelson, and to Mr Alistair Darling in another place for having the courage to speak out about this. I am quite sure that others will follow.
The decision to support this project in the first place by both main parties was a political one, not an economic one. I do not for a moment dismiss the genuine passion for the project of some, including the noble Lord, Lord Adonis, for whom I have the greatest admiration, but it is a passion which I believe led to a very expensive mistake. Nor do I underestimate the pressure that was put on politicians of both sides to go ahead from others who stand to profit: mainly the rail and engineering firms and also from a number of local authorities on the direct route who stand to benefit. They make up a rich and powerful lobby, but they are not succeeding with the public and nor must they. To misallocate transport investment to a high-risk, low-return scheme such as this instead of putting the money to low-risk, high-return infrastructure investment with far greater economic benefits in the long run is sheer madness.
In the mean time, before the plug is pulled, the resources of the Department for Transport are being drained by efforts to try to create a new and better case and generate public support, while also delaying decisions on other necessary investment in our transport system. As we know, the original argument was speed—we will get you there quicker—but that failed, so the department is now trying the capacity argument in a desperate appeal to those standing in the corridors of our creaking infrastructure, where investment really is needed.
It will not work; nor will the unconvincing assurances about future cost, because the public simply do not believe it. They have seen the figure going up and up. I think the public will be astonished to know that the figure which we are currently being given, £42.6 billion, does not include trains, without which the railway cannot operate, nor, as I understand it, does it include the essential infrastructure to create links to the city centres where the station is on the outside. Estimates that I have seen go higher and higher. Even in the north, last year’s polling showed that only 32% of the public thought it was a good use of money. If the people who have to pay for it do not want it, do not do it.
This debate is about the expected impact of HS2. There will be some who benefit: the big rail and engineering companies and their employees and the towns and cities with stations on the direct route. But there are rather more places that believe they will lose out, and badly. The biggest losers of all are the poor souls who have to pay for it, who are the British public. What is more, HS2 is unlikely ever to generate enough income to cover its running costs. Construction has to be taxpayer funded, because it is unlikely ever to make a profit and no private money would touch it. The Public Accounts Committee in another place—its report is in the Printed Paper Office today—is utterly damning.
I would like to hope that the impact of this whole saga is that no major infrastructure project will be handled like this ever again, determined by political expediency and not sound economics. HS2 is not yet the dead duck that it ought to be, but it is looking terminally ill. A huge amount of money and energy, much of it paid for by the public, is being devoted to try to breathe some life into it again. It has been called a vanity project, a white elephant on wheels, and a high-speed gravy train. Will someone with political courage please come forward and put it out of its misery?
Lord Lea of Crondall
My Lords, this debate produces a most unfortunate degree of polarisation among people who are normally much more sober in their analysis. I am on the same track as my noble friend Lord Rooker. When we talk about £8 billion being a lot of money, we are not talking about a project that will last for only 10 or 20 years; HS2 is going to be there for 100 years. Does anyone think that the Channel Tunnel will not be around then? The Victorian railways are still in place and HS2 will still be there. It would be interesting if a few leading Victorians were around today to look at what has happened over the past 200 years.
Let us put this into some sort of context. First, what is our national income and how does it grow? At the moment, our national income is £1.5 trillion per annum, or £1,500 billion—so in 10 years’ time it will be £15 trillion and in 100 years it will obviously be £150 trillion; that is without any underlying rate of economic growth. Secondly, can the rate of return capture all the benefits? Of course it cannot. I hope that the noble Baroness, Lady Kramer—I, too, very much welcome her appointment—will take on board the comparison with Crossrail on this. We do not expect Transport for London to capture all the benefits that accrue at Farringdon or Tottenham Court Road. It would be nice if it could, but it cannot. The benefits for everybody in London are huge.
In my first job with the World Bank in Africa I was involved in transport infrastructure investment. I know that there are rules—cost-benefit analysis is just one of the ways of describing what is done—but there are private benefits and externality benefits. As Alastair Morton, the first co-chairman of Eurotunnel said, economies are created through transport infrastructure. Therefore, you cannot capture all this with just one figure, and I am not surprised if people come up with very different numbers. It is easier to demolish the figures than to be absolutely dogmatic about how the arithmetic should be done.
Although I am an economist, I do not have any difficulty in having an act of faith and saying that this project is a good idea. I know that capacity cannot be increased by building more motorways any more easily than it can by building more railways—it is far more difficult—but I ask the noble Baroness, Lady Mallalieu, to think about the alternatives. She may be a zero-growth person but I do not think that the rest of us are. We are 2% growth people around here, as you should be if you do not want unemployment and if you want to keep up the growth in technology and productivity. We are running out of capacity on the motorway system at a devastating speed. As well as road closures, we as a nation are facing a crisis from pollution on the motorways. A bit like Heathrow Airport, the railways need some new capacity.
All the points have been made about trying to further improve the west coast main line and so on, but why should you want the trains to go at 100 miles an hour when they can go at 200 miles an hour? That is absurd. It is said that this is a densely populated island. However, it is no more so than Belgium, and Belgium has four high-speed train services. It is precisely because we are a densely populated island that we need HS2, and it is not counterintuitive to say that. Many speakers for whom I have the most enormous respect, including the noble Lord, Lord Alton of Liverpool, talks as if we will not be improving journey times from Birmingham to Sheffield, but actually we will be.
No one is challenging the fact that the cluster of Midlands and northern cities—I come from Manchester originally and have lived in Nottingham—will be the area receiving the most remarkable improvements. As any transport economist would tell you, the most dramatic changes are in the 3-4 hour zone. If you halve travel times in the 3-4 hour zone, you can have a mega economic success story for the whole of the Midlands and the north, which is not possible with the motorway and railway systems that we have now. We shall see what happens in the next 30 years—only time will tell.
I hope that we can have something like an infrastructure commission where people can give evidence and make sure that the cost-benefit analysis is done in the correct way. However, it is difficult to argue that there is only one way to capture the externality benefits.
The Earl of Glasgow (LD)
My Lords, I have long been an enthusiast for high-speed rail and therefore I will be reinforcing some of the arguments that other enthusiasts of this House have already made. I am concerned that the growing opposition to it, some of which we have seen here, from a number of powerful pressure groups and some prominent politicians on both sides of the House may cause the Government to lose their nerve and fall back on a compromise.
The truth is that HS2 has been sold to the public very poorly. To begin with, much too much emphasis has been put on the high-speed element of the project. The faster speeds are one, but one of the less important, of the advantages of HS2. Why, ask our opponents, are we spending so much money merely to take 20 minutes off a journey time from Birmingham to London? Besides, they say, we need that extra time to work on the train. We then get into this argument about what people actually do on trains: work, read, look out of the window or go to sleep. Personally, whatever my original intention, I usually end up going to sleep.
However, the high-speed element only really becomes significant when the line gets as far north as Carlisle and Scotland. Regrettably, that will still be some considerable time in the future. What is significant is that we are planning to build a brand new railway line, the first major new line since Victorian times. The main reason it is needed is to relieve pressure on the existing network and to increase capacity. Our opponents ask how we can justify spending so much money on a brand new railway line. As many noble Lords have asked today, would it not be better spent on upgrading the existing network? However, this is not an either/or situation. The Government promise to spend money on upgrading the existing network at the same time. It is all part of the same process, the same overall plan.
The Government need to get across to the doubters and waverers that rail is the only practical, and potentially civilised, mode of transport in Britain for distances of more than 100 miles. More and more people are travelling by train now, and with the anticipated rise in population, there could be 20% more passengers by 2025. The fact is that there has been precious little capital investment in the railways for more than 100 years. With the regrettable exception of Beeching’s ruthless scrapping of so many of our branch lines in the 1950s, as the noble Lord, Lord Grocott, mentioned, Britain’s railway network is much the same as it was in 1910. At certain times of day, in many parts of Britain, it is already inadequate to accommodate the existing number of passengers. One can only imagine what it will be like in 15 years’ time if nothing is done.
Now, at last, something is happening; something is being done. The Government, with Labour Party support, have recognised the future importance of rail and that in order to free up capacity on our existing railway lines we need to build a brand new one, linking London with major cities in the Midlands and the north. As we need a new line, it surely makes sense to build the most advanced and up-to-date model available, which has been tried and tested on the continent. That model is high-speed rail.
Therefore HS2 is not a one-off, speculative gamble out on its own, as some of our opponents seem to suggest. It is an integral part of a long-term plan to modernise our whole railway network. That is the message that the Government have to get across to the public and to some of their Tory sceptics. Of course, there will be people, like some of the citizens of Camden Town, whose lives and outlooks will be considerably disturbed and disrupted by the construction of high-speed rail. It is right and essential that they should be generously compensated. However, I believe that fears of long-term damage to our countryside and wildlife are greatly exaggerated. Within 10 years, the scars will have healed, and the disturbed woods and farmland will have been reshaped and relandscaped.
The advantages of high-speed rail greatly outnumber the disadvantages of temporary disruption. Although HS2 is not exactly squeaky clean environmentally, it is considerably less polluting than the hundreds of aircraft from Heathrow, Gatwick or Stansted which fly overhead and whose internal flights, I hope, will eventually be made redundant by high-speed rail. Britain’s major cities will feel much closer together and Britain in general will feel less dependent on London. Of course, the construction of the line will provide much-needed employment in times of austerity.
I need assurance from the Government and the Minister that they will not get cold feet over high-speed rail and will not be tempted to compromise through fear of rising costs. The cost seems almost irrelevant when compared with the value and importance of the whole enterprise. We need a modern and efficient railway network. It is no longer an option; it is an essential. This is the most important and far-sighted transport project for more than a century. By the time it is completed most of us here will be dead but it will provide a greatly enhanced quality of life for our grandchildren. That is what we should be considering. Surely, the Government can better get that message across.
Lord Watson of Invergowrie (Lab)
My Lords, I am a long-time supporter of rail travel and hold to the belief that trains are so important that they should be seen as a public service. They are an essential part of any country’s infrastructure and, as such, should be run as a service and not for profit. If that requires nationalisation and/or government subsidy, so be it. Surely it ought to be seen as a wise investment in economic terms.
Is it not ironic that although none of the main political parties favours renationalisation of our railway infrastructure, none is opposed to our trains being owned and run by the state, just as long as it is not this state? The state-owned railway companies of France, Germany and the Netherlands regularly bid for our rail franchises, sometimes with success. I did not know this until I did some research, but the royal train is now operated by EWS, which is owned by Deutsche Bahn.
My support for railways is often sorely tested. There are 28 different train operators and too often, it seems, they do not speak to each other, at least not in the same language. Perhaps that harks back to the point that I have just made. For years I used commuter services between Edinburgh and Glasgow, and it was rarely a pleasant experience. I do not do that now and I rarely use the commuter trains that serve London. However, I feel that it is a failure of the service when I am forced to stand and cannot get a seat that I have paid for. Just last weekend that happened in Scotland on a journey that I made between Aberdeen and Edinburgh.
High-speed rail exists in all major EU countries—France, Germany, Italy, Spain and, of course, here—as has been referred to by many noble Lords today, so I am naturally inclined to support the concept of HS2. Yet there are two basic reasons why I have doubt in my mind. One is the spiralling cost. The figures I have seen suggest that when the project was first announced in 2008, the projected cost was £17 billion. By 2010, that had gone up to £30 billion. This year, it is at £42 billion plus £7.5 billion for rolling stock. The Financial Times has estimated that the final cost could be as much as £70 billion. I do not know the veracity of those figures but it seems that the projected costs are spiralling out of control.
I certainly agree with my noble friends Lord Faulkner and Lord Grocott that transferring some of the cash—certainly not all of the cash—to upgrade existing infrastructure is not the answer. But surely some form of guarantee has to be given to control costs, otherwise support will gradually wither and die.
In opening this debate the noble Lord, Lord Greaves, talked of the need to close the regional divide. I certainly support him in that. Anyone who looked at today’s Guardian will have seen figures on the front page showing that during the boom from 1997 to 2006, London and the south-east were responsible for 37% of the UK’s growth in output, and since the economic crash of 2007-08, London and the south-east were responsible for 48% of that growth. Every other region except Scotland has suffered relative decline over that period, which highlights the need to ensure that economic benefits are not concentrated, as they have all too often been, in London and the south-east. Regional benefits are the second reason I have doubts about HS2.
I thoroughly agree with my noble friend Lord Rooker on the need for HS2 to be extended eventually to Glasgow and Edinburgh, but I think it highly unlikely that that will happen, certainly in the lifetime of most noble Lords, because the numbers that would use it would be held not to justify the cost. It is for the same reason that the motorway network stopped at Carlisle for 20 years before it was extended to Glasgow. I wonder how many noble Lords are aware that not only is there no motorway between Newcastle and Edinburgh, two major cities in the UK, but that there is not even a dual carriageway for a considerable part of that journey, which is a disgrace.
The recent figures prised from the Government—and I use the term advisedly—through an FoI request on the question of the benefit of HS2 show that the coalition had attempted to withhold the bad news: the information in the KPMG report that, as the noble Lord, Lord Alton, rightly said, demonstrated that Aberdeen and Dundee would lose heavily when HS2 is in place, as, indeed, would other places such as Norfolk, Cambridge, Bristol and Essex, among others. That seems to stand to reason because there cannot be winners all the way. Not everybody can win from HS2. It is quite clear that there will be displacement of business and of travel, so to say that everything will be better with HS2 just does not stack up. I am prepared to accept that there will be considerable benefits, but certain parts of the country will undoubtedly lose as a result and that has to be faced by those who are particularly enthusiastic about HS2.
I am not as yet prepared to call for HS2 to be abandoned, but I do believe that we need much greater certainty on costs and detailed proposals as to how those areas likely to suffer financially would be compensated in other ways.
Lord Snape (Lab)
My Lords, like other noble Lords I, too, am grateful to the noble Lord, Lord Greaves, for allowing us the opportunity for this debate, and I congratulate him on what he said in opening the debate. It is the first time in the decade or so that I have been here—I do not know whether he will be pleased about this or not—that I have agreed with every word that he said. Perhaps he will not be, but it happens to be true.
There was one thing he did not say that he might have done. He talked about the west coast main line being full, as have other noble Lords on both sides. We ought to recognise that the west coast main line, particularly the southern section, is not just full, it is in a pretty poor condition too, despite all the money that has been spent on it. The recent £9 billion overhaul has held off some of the decay on that route, but the last stretch in particular, from Watford to Euston is in a pretty poor state, as was revealed earlier this year. A report was published in the railway industry’s in-house magazine, Rail News, about an inquiry led by Virgin Trains’ chief operating officer, Chris Gibb, who had been seconded to Network Rail, about the state of the track, particularly that stretch from Watford to London. Chris Gibb reported to a joint board chaired by Sir David Higgins, then chairman of Network Rail, about whom many complimentary comments have been made during the course of the debate. Mr Gibb’s report says that,
“trying to gain access to maintain and repair a railway built 175 years ago, largely through open countryside then but which now passes through many developed and densely-populated areas”,
is extremely difficult. Yet opponents of HS2 appear to believe that by declassifying a couple of coaches on Pendolino trains and adding a few more trains, a junction here and a flyover there, we can somehow cope with the projected increase in traffic which will take place on the west coast main line if HS2 is not built.
I fear that life is not like that. Chris Gibb’s final recommendation is that the line from Bushey, just south of Watford, into Euston should be closed every Saturday and Sunday night for between five and 10 years in order that all the infrastructure can be renewed. That is a pretty unlikely prospect, but I have to say to those who oppose the building of HS2 that we cannot go on, in David Higgins’s words, pounding the west coast main line. He said that by the time the first stage of HS2 is due to open in 2026 the route will be—his exact word—“trashed”.
We cannot go on pretending that we can increase the number of trains out of London to some of our major cities on the existing infrastructure network. I listened carefully to what my noble friend Lord Stevenson had to say. I must say that I was not too impressed by some of the people whom he prayed in aid in support of his opposition. I do not regard the Institute of Economic Affairs as a particularly credible organisation, nor, although I will be careful out of deference to some of my near neighbours, could I bring myself to be too complimentary about the Countryside Alliance. Both my noble friends might like to read a document produced by Centro, the passenger transport authority in the West Midlands, explaining why the West Midlands needs HS2. I will leave it on the board for both of them if they like; whether they find that any more credible than the two organisations they cited remains to be seen. The fact remains that Centro believes that 50,000 more jobs could be created in our part of the world and a £4 billion economic boost would be given to the West Midlands if the project goes ahead.
If HS2 does not go ahead, what happens to the growth in traffic forecast by all sectors to occur on our railway system? Presumably, it will go by road. My noble friend spoke emotively about the Chilterns. We are not talking about the four horsemen of the apocalypse going through the Chilterns, we are talking about a two-track railway. What happens to the M40 motorway? Do we extend and widen that to cater for the extra traffic which we all know will come? If the traffic does not travel by train, it travels by road.
Earlier in my undistinguished career, I served on no less than three committees on the Channel Tunnel: the first abortive Select Committee in the 1970s, the Select Committee that gave the go-ahead in the 1980s and the Standing Committee that prepared the legislation. All the arguments that we are hearing today about HS2 were used then about HS1. The garden of England was going to be destroyed. The phrase “cutting a swathe” was one I heard from many a high-paid lawyer as I sat on the committee when they were talking about what was likely to happen in Kent. As the noble Lord, Lord Bradshaw, said, Kent has not been destroyed. Indeed, many of the previously peripheral towns in Kent have been enormously boosted economically by HS1, and there is no reason to suppose that the same effect would not happen when HS2 is completed.
Fifty years ago, I was a signalman on the west coast main line, so I have some experience of what happened when trying to run trains when the line is being modernised. At least we had many alternatives in the 1960s. For example, Manchester trains ran from St Pancras to Manchester Central. The line from Matlock to Manchester Central was closed in their wisdom—by, I suspect, a Labour Government, I must say—in the 1960s. The noble Lord, Lord Alton, talked about trains to Liverpool. They went up the great western line from Paddington to Birkenhead. That is not available to us any more. As my noble friend Lord Grocott said, there was always the great central line, which ran to Leicester, Nottingham and on to Manchester, which could also be used as a diversion. None of those lines are available to us today. There are neither locomotives nor rolling stock. It must come as a surprise to my noble friend Lord Mandelson to find that loco hauled trains are very rare in most parts of the country and guards vans do not exist at all. He must have missed that during his sojourn in Brussels, but the railway has changed somewhat. Pendolino trains will not run anywhere else. If there is no 25 kilovolt overhead wire, they will not get out of the depot, so they are no alternative. It is not often that I pray in aid the late Baroness Thatcher, but there really is no alternative.
Lord Truscott (Non-Afl)
I thank the noble Lord, Lord Greaves, for initiating this debate. It is high time that this House had a full and lengthy debate on this very important but, in my view, flawed project. During the debate last February in your Lordships’ House, I said that I feared with HS2 we are in danger of developing a huge and costly white elephant; with an ill-thought-out business case, social disruption and a catastrophic environmental impact. Sadly, nothing I have heard or read over the subsequent months and nothing that has been said in today’s debate has changed my mind. In fact, it has hardened my opinion.
The noble Lords, Lord Stevenson and Lord Grocott, mentioned compensation. I can only guess the anguish of those affected by this scheme faced with the offer of wholly inadequate compensation or no compensation at all.
This debate is really about the supposed benefits or otherwise of HS2. We have a project that has split views more or less down the middle; it has its supporters and detractors. The ranks of the latter, however, are swelling while the cohorts of the former are visibly shrinking. Here we have a scheme whose costs seem to go ever upwards. As a number of noble Lords, have said, the Secretary of State for Transport has already increased the cost of HS2 from £33 billion to £42.6 billion, excluding the £7.5 billion for the rolling stock which has been mentioned. The Treasury predicts that this will rise to £73 billion. The noble Lord, Lord Snape, has told us that some of the people criticising HS2 are not credible. He mentioned the Institute of Economic Affairs giving a figure of £80 billion or above. I hope that the noble Lord thinks that the Treasury is a capable source, otherwise we are all in trouble. The noble Lord, Lord Greaves, earlier mixed up his millions and billions, but we are talking here about tens of billions. These are indeed serious matters. On the face of it, HS2 looks like heading the way of Blue Streak and the TSR 2 programmes, both abandoned by the Ministry of Defence in the 1960s because of their spiralling costs over a number of years.
Quite apart from the fact that cross-party support faces collapse if the costs rise above £50 billion—either now or around the time of the next general election—we have to ask whether this scheme provides value for money. The Department for Transport now seems to be moving away from the benefit-to-cost ratio analysis. Now we are told to look at the bigger picture. No wonder, as the BCR is currently one pound for every one pound spent on phase 1, and the latest figures will bring it below that.
The public subsidy currently required is £33 billion. In congratulating the Minister on her appointment, I pose a question. Do the Government have a limit to how much public subsidy they are prepared to allow for HS2?
Apart from the bogus arguments about increasing passenger capacity and claiming that no one works on the trains, only 2% of rail passengers travel on the west coast main line intercity trains—the only route to benefit from phase 1 of HS2. The rest of the national network will be largely ignored. That is the reality.
The other issue rarely mentioned, but raised by my noble friend Lord Mandelson, was that HS2 will require £7.7 billion in cuts to existing rail services. The reality will be that a number of towns will experience worse services, not improved ones.
KPMG, as mentioned, reported on behalf of HS2 Limited that the country would benefit to the tune of £15 billion. What HS2 suppressed, however, was the fact that KPMG’s report also showed that many areas of the UK, such as Aberdeen, Bristol and Cardiff, would significantly lose out to HS2. The noble Lord, Lord Alton, mentioned Liverpool missing out as well. It is obvious when you think about it.
In short, we have a scheme that, if built, will primarily benefit the capital city, not the north. My noble friend Lord Mandelson, outlined that point. This has been the experience of all other high-speed trains in Europe, if we look at the lines to the capital cities Paris or Madrid. The scheme will devastate parts of our irreplaceable environment—I emphasise the word “irreplaceable”—including 67 ancient woodlands, as referred to by the noble Baroness, Lady Mallalieu. The scheme will not even be the best use of the money to upgrade our rail infrastructure. Targeted, more widespread, upgrades would be more effective, and I say that as a regular rail user. Worse, it will make such upgrades unaffordable in the future.
Finally, can this country afford such monumental financial recklessness when there are other, greater national priorities, not only in terms of the rail network infrastructure but also such as developing airport capacity in the south-east?
I understand from the Minister—I thank her for her Answers to some of my Written Questions—that the forecast spend for HS2 for 2013-14 is already £378 million. For 2014-15, it will be another £442 million. These are huge levels of expenditure very early on in a programme whose costs are only going up and up. In conclusion, the Government need to think again before a penny more is wasted on this mother of all follies.
Lord Berkeley (Lab)
My Lords, I very much welcome this debate and I welcome the noble Baroness, Lady Kramer, to her new position. I am sure that we will have some interesting debates now and in the future. I declare an interest as chairman of the Rail Freight Group.
I shall start by discussing the issue of capacity. My noble friend Lord Rooker mentioned freight. I shall quote from a paper from the HS2 Action Alliance. With a name like that, I would have thought that they would have been supporting HS2, wanting to make it go faster, but, surprisingly, they do not. It says:
“Improving the existing West Coast Mainline is a more cost effective and risk-free way to meet future rail capacity needs”.
Where are they living? Many noble Lords have spoken about the problems on that line, and I will not repeat what they have said. One of the problems is that if you improve a line, you either dig it up and close it or you extend it sideways into people’s properties. That will have just as much opposition as building a new line—in fact, probably more—because people will want compensation, as they do. Yes, the line is going past their property and has been there a long time, but their property is very valuable. That idea just does not work.
The real problem that I want to mention with regard to capacity, though, is freight. Freight is different from passengers because it runs only if the customers and the train operators want it to and therefore, hopefully, it will make a bit of money. There is no subsidy. The industry has forecast a doubling of demand for rail freight on the west coast main line in 20 years. That is because the type of traffic that goes up that line is mainly containers from retailers. That is what retailers like—noble Lords will have seen some of the supermarkets giving green credentials on a packet of cheese, or whatever they are selling—so they have asked for this. Freight is growing by leaps and bounds; it might treble, for all I know. However, if you want a doubling of traffic in 20 years, that is the equivalent of an extra two trains an hour on the west coast main line. It is full already, as other noble Lords have said, and we are having discussions with Network Rail about how this can be accommodated, particularly when phase one is built and it stops near Tamworth. Still, it is a wonderful challenge to have.
What is the alternative? There are two options. One is that it could go by road. Let us have a motorway through Little Missenden; I am sure that my noble friend Lord Stevenson would not like that. I was brought up in Great Missenden, and I would not like to see a motorway go through there; there is a railway there already, and a horrible road. If freight is not going to go by rail, therefore, it will go by road—or, the other option, it does not go at all. Do we want it not to go at all? What would be the consequences for the economy if it did not?
I reflect that the latest route through the Chilterns is going to affect about 100 properties, whereas in Camden it will affect 2,700. That is why the noble Lord, Lord Bradshaw, and I have come up with our alternative route through Camden that will, we hope, significantly reduce the demand for demolition, perhaps down to nothing at all. I look at HS2 as adding two more tracks to the west coast main line, for reasons of capacity. It is pity that it did not start off being sold that way, but it is indeed for capacity. We need HS2, otherwise the traffic will not go, or we go by road.
I conclude by commenting a little more on my noble friend Lord Snape’s comments about HS1, which I was also involved in. There is a study by Volterra consultants about the economic benefits of HS1, which could therefore apply to HS2. Apart from generating extra rail and car park revenues of £3.4 billion, which we may or may not want, the transport benefits include more than £100 million of congestion relief, an increase in rail revenue of £3.4 billion, while earnings per annum across the study area—Kent—have increased by between £62 million and £360 million due to the commuting facilities. You may not want to commute but perhaps you do. Overall this is estimated at a very significant benefit to the UK of HS1 over 60 years—it is a long-term project—of £17.6 billion. I think this is worth having.
I support the way that this project is going forward. I welcomed it when it was launched by my noble friend Lord Adonis. I welcomed this Government taking it up, and I agree with my noble friend Lord Rooker that it would be unthinkable to cancel it. I would like to see it go to Scotland in some shape or form.
I shall support this project. I want to see the costs come down and I shall work towards that. I think there should be better leadership and communication and I welcome Sir David Higgins to that role. I see no alternative to creating the necessary additional capacity if we want our economy to grow.
Lord Low of Dalston (CB)
My Lords, I was not planning on speaking in this debate, which is why my name is not on the list; this is not really my issue. I crave your Lordships’ indulgence for just one minute to lob a single point into the gap which, to my knowledge, has not featured in the public discussion and certainly has not featured in the debate today. I feel that it needs to be addressed, if not by the Minister today then in due course by the department and the promoters of the HS2 project. I am referring to the question of the kind of technology to be used.
I have tended to lean towards being in favour of HS2 on the sort of grounds that the noble Lord, Lord Watson, was instancing: keeping up with, or catching up with, or limping rather lamely along behind our European equivalents who have had high-speed lines for 20, 30 or 40 years in some cases. It seemed to me that to turn our back on that kind of development was to hammer yet one more nail into the mounting number of nails in the coffin of UK plc. If we are to turn our back on that it is simply to unashamedly acquiesce even further to the long-term decline of Britain.
I had this discussion with my son recently. I asked him what his view of HS2 was. He said that he was against it. I said “Oh dear,” and advanced the argument to which I have just referred. He said, “Yes, but if you want to base your support for HS2 on embracing the latest word in modern railway engineering and technology, why on earth are you thinking of doing it on the basis of 50-year-old technology that has been adopted by old Europe? You should be looking to the East, to the way in which they are building their high-speed lines now—in China, for example, between Shanghai and Beijing. It is the maglev technology to which you ought to be looking to represent the future, if it is the future you want to embrace”. I have not heard that point raised in public debate and I genuinely think that the proponents of HS2 need to address it.
Lord Davies of Oldham (Lab)
My Lords, I express my gratitude to the noble Lord, Lord Greaves, and congratulate him on his opening speech. As my noble friend Lord Snape indicated, we have not always been in agreement with the noble Lord, but his opening remarks today set this debate off in a most constructive and interesting fashion.
The Opposition support HS2. We believe that a new north-south line is needed. The issue of speed or whether it is a trophy has nothing to do with it. We need the speed because it increases the capacity. It is not a trophy because we did not ask and are not asking the nation to embark on this major construction because we wanted some kind of trophy like the French or Germans had with their high-speed lines. That is not so: it is because there is a real need. The need, which is quite clear, is one of a dramatic requirement for additional rail capacity in this country. This is one clear, strategic way— in fact, it is the only clear, strategic way—in which we can increase that capacity.
Various figures have been cited in this debate. I am grateful to my noble friend Lord Faulkner who, in his usual hard-headed manner, indicated some crucial figures. The growth of rail has been double that of gross domestic product in the past 30 years. As the country has expanded over that time, rail has expanded much faster. Even in this past decade, when we all recognise the difficulties there have been in the economy, there has been a growth of 4% per year in the demand for rail services in terms of passenger numbers. This is not a passing fancy; it is a real need, to which we need to address the resources of the nation.
My noble friend Lord Faulkner, expressing it in his usual cool manner, and my noble friend Lord Grocott, in his rather more expansive way, compared to this project with the 19th century. It is the case that the Victorians faced great challenges to their infrastructure projects as well but we have to face up to that challenge, too. People might say that the Victorians had a head start and all sorts of obvious advantages. Even the Great Exhibition, which was one of their triumphs—although the Crystal Palace did not survive too long afterwards—has been surpassed by the success of the structure and organisation of the Olympic Games in 2012, so we can do it too.
The Games were an infrastructure project that was delivered on time and on budget. It had a contingency element in it, of course, as indeed this project has. What people often talk about as the enormous expansion of costs is a contingency of £14 billion, which may not be called upon. Of course, the pessimists will say, “Oh, but it will be”. They said that about the Olympic Games but the Games were delivered on budget. They were a much smaller project than this but we should not underestimate our capacity as a nation to rise to this challenge.
Nor should we underestimate the need, which is often expressed in terms of the enormous pressure of commuting. For the London conurbation, it is always expressed in these terms because we know about the vast numbers of people who commute into London. Anybody would think that Birmingham is a speck on the map, yet the West Midlands have a commuting problem as acute for the people involved in it as at London Euston and the other great terminals of London. The West Midlands have had massive growth in commuter traffic. The demands of rail passenger numbers have increased by 105% in the past five years. Let us not pretend that this is an issue solely for London and the south of England; the pressure is exerted elsewhere, too. That is why we need to address those issues, and this is the most obvious way to do it.
I also agree in every way with what my noble friend Lord Rooker indicated. On major infrastructure projects, which are bound to extend way beyond the lifetime of any one Parliament, there is no hope for this country unless we have a commitment across the parties and across Parliaments to deliver. Otherwise, we are trapped within a four or five-year perspective for the great needs of this nation. We will be selling everybody short if we fail on that.
We can deliver. Crossrail has been an infrastructure project for more than a decade. It is still some way off completion, but it has survived elections and changes of Government because the commitment is there to meet an obvious and clearly expressed need. Some doubting Thomases in the House may say that is because that expressed need is among the London and south-east community with their greater leverage. The important thing about High Speed 2 is that it recognises the leverage that is being exerted from the regions and the cities of the north. That is why, when my right honourable friend Ed Balls, with his usual judiciousness, examined the figures of this enormous and significant increase in the projected costs, settled down and said that he wanted to look at the figures very closely and intended to scrutinise them in the future, he was doing what we would expect any responsible shadow Chancellor to do, let alone a Chancellor.
Examining the figures and making sure that budgets are adhered to and that Governments are meeting the requirements of the projections is different from suggesting that there was any reneging on commitment to the project—far from it. From this Dispatch Box today—and I know that this will be done in a debate very shortly in the other place, too—we will reassert our commitment to HS2.
However, I have words of warning for the Government because, my goodness, they are skilled in the arts of delay. We saw this exercised with regard to the problems of airports in south-east England. We have delay built into that until after the next election, even for any definitive stance on the matter. I am concerned about the delay on the HS2 project. Do the Government realise that HS1 was in Committee for two years and one month on the hybrid Bill? Anyone who has been anywhere near a hybrid Bill, either at this end or at the other end with regard to issues, knows how difficult hybrid Bills are. On HS1, it took more than two years to get the Bill through. On Crossrail, it took more than three years—in fact, nearly three and a half years—to get the hybrid Bill through; and we have not seen the hybrid Bill yet because we have not even got the paving Bill through Parliament. Therefore, as this construction was meant to start in 2017, the Government are already taking great risks on the timetable. I hope that the Minister will be able to give some reassurance that he and the department appreciate this point.
This has been an absolutely fascinating debate, one of many that we are destined to undertake over the next few months and years. I very much welcome the noble Baroness, Lady Kramer, to the Dispatch Box, for the first time on an occasion where I have addressed these issues, and we all look forward to her response.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, I join noble Lords in thanking my noble friend Lord Greaves for obtaining this important and timely debate. However, before I begin, I pay particular tribute to the noble Earl, Lord Attlee, who is suddenly in his place—he did not know that I would say this. He managed transport business in this House with great knowledge and skill and I know that your Lordships will wish me to express our respect and our thanks.
Baroness Kramer
I feel rather redundant. The case for HS2 has been made so powerfully by the noble Lords, Lord Greaves, Lord Faulkner—whose book, Holding the Line, which he modestly did not advertise, sits on my desk as a bible—Lord Bradshaw, Lord Grocott, Lord Rooker, Lord Lea of Crondall, Lord Snape, Lord Berkeley, the noble Earl, Lord Glasgow—what a list. Every one of them is an expert, respected by this House, and I know that this House will listen to them. I welcome the words of the noble Lord, Lord Davies of Oldham, who reaffirmed from the opposition Front Bench his party’s commitment to this project. He is right that this issue must stretch across the politics of these Houses—it concerns the long-term infrastructure of this country—and I thank him for his words. I will touch on three key issues and will then respond to some of the remaining challenges raised in this debate.
When I joined the board of Transport for London in 2000, London was running out of transport capacity. “Make do and mend” was no longer sufficient, and we had to commit to Crossrail. As I came to the department, therefore, it was with a sense of déjà vu that I saw that we face the same problem but on a national scale. Without HS2, key rail routes connecting London, the Midlands and the north will soon be overwhelmed. Demand for long-distance rail travel has doubled in the past 15 years to 125 million journeys a year. By the mid-2020s the west coast main line will be full. As any user of the line knows, the pressures are obvious now, as they are on the east coast main line.
We cannot simply run more trains. Each new service has to be planned around what runs already. It is nearly impossible to find new train paths, and there simply is not scope for future demand, even if we use the very modest forecast of 2.2% growth in demand every year. Already, in my first two weeks in the department I have had to take note of two turn-downs by the Office of the Rail Regulator, for routes from Shrewsbury to London and Blackpool to London, because it is simply not possible to find an adequate train path for those services. However, HS2 gives us the capacity we need. It doubles the number of seats between London and Birmingham; it is capable of carrying a number of passengers equivalent to the population of Nottingham every day; and it will run 18 trains an hour when we finish phase 2, each of which carries 1,100 passengers.
I will leave your Lordships with one set of numbers to remember. If we look at all the proposals for enhancing the existing rail network as an alternative to HS2, the most we can squeeze out of those enhancements is 53% new capacity from London to Birmingham—and as the noble Lord, Lord Snape, and other noble Lords have said, that is despite years of disruption to the routes on which that work will have to be done. We would gain 53% that way, but if we build HS2 we will add 143% more capacity, and that is the transformation we have to achieve.
Transferring long-distance passengers to HS2 frees up the west coast and east coast main lines to develop significant additional regional and commuter rail services. We very much need those for the future, but we could even use many of them now. Very importantly, as the noble Lords, Lord Berkeley and Lord Rooker, have underscored, it leaves room to move far more freight onto rail. The west coast main line is especially crucial as we anticipate growing freight demand as the economy expands. Frankly, the road network simply cannot cope so rail has to take its share and only with that transfer of long-distance passengers and the ability to use those main lines can we achieve it.
HS2 will be an engine for economic growth and jobs. The current estimates are that HS2 will contribute £60 billion to the economy. That is actually quite a narrow calculation and the wider effect could be much greater as we link key northern cities to each other and to the south. Incidentally, those who referred to the KPMG report must have misread some of the lines. It shows benefits to far more areas than those which suffer a relative disadvantage. It will help to rebuild our economy. The noble Lord, Lord Greaves, used that key phrase, “closing the regional divide”, because although London gains, the big winners are the northern cities like Sheffield, Wigan, York and Wakefield. I understand the demands to look at the case of Scotland. Scotland will benefit from phase 1 of HS2 and even more from phase 2, but there are ongoing discussions and we have all undertaken to examine this area.
HS2 will also be a catalyst for city-centre regeneration. We have seen that with Crossrail and Kings Cross. The HS2 growth taskforce led by the noble Lord, Lord Deighton, who I know is so widely respected in this House, is now working to make sure that we maximise all of those opportunities. Frankly, if the noble Lord, Lord Mandelson, doubts that the north is going to benefit, I recommend that he have a conversation with the leaders of Manchester, Birmingham and Leeds. They want this line sooner because they recognise the benefits that are coming. Of course the line does not serve every city and region and the boost is naturally greatest in the places it serves directly. That is the character of infrastructure. We were right to build Crossrail even though the main winner was London and not elsewhere.
HS2 is only one part of a much bigger investment programme which includes the electrification of the East Midlands, the west of England and Wales. There will be a £1 billion electrification of the Great Western main line to Cardiff and Swansea with intercity express trains from 2017. There will be a dualling of major road links in Cornwall and East Anglia. The noble Lord, Lord Alton, asked about the north. I have such a long list, I will read only some of it. We are electrifying the line between Liverpool, Manchester, Preston and Blackpool. We are also electrifying the trans-Pennine route from Manchester to York via Leeds. We are introducing electric trains between Manchester airport and Scotland. It is crucial that this House understands that the overall investment in transport infrastructure in the next Parliament is £73 billion and that of that, HS2 is only £17 billion. I can confirm that in response to a question from the noble Lord, Lord Bradshaw.
Lastly, let me make a couple of comments on actual delivery. The upper limit of the cost is £42.6 billion. As others have said, that includes a very considerable contingency of £14.4 billion, so we have genuine scope to bear down on that number. The cost of £7.5 billion for rolling stock also includes a contingency. Let me assure the noble Lords, Lord Watson and Lord Truscott, that we are much better today at understanding how to work out cost and how to manage and build, which is essential to the HS2 project.
The noble Lord, Lord Bradshaw, raised the question of using property uplift values as part of the way to pay for that. That is very interesting and we will look at that going forward. There is going to be a significant private-sector contribution because the stations, other than the operating part of the stations, undoubtedly can be provided by the private sector. We have seen the capacity to do that in places like Kings Cross. And after HS1 was completed, although it is a 100-year railway, a 30-year concession for that line was sold which paid for at least a third of the actual cost of construction. We have mechanisms in place to make sure that the cost is controlled and that we can turn to the private sector for significant parts of the financing. I intend to become very much more involved and look intensively at that issue.
The Government are also committed to fair compensation for those along the route who are impacted. I say to the noble Baroness, Lady Mallalieu, and the noble Lord, Lord Stevenson of Balmacara, that the consultation is under way now and that they should contribute to it, as it is crucially important that they do. The package—and the Government are committed to this—will go above and beyond what is required by law. This will be a fair and generous package. We are looking at issues, and part of that consultation includes things such as property bonds, voluntary purchase and rural support zones. I recommend that the noble Lord encourage his neighbours and others interested to participate, because we need that dialogue.
HS2 will also be built to the highest environmental standards, with, for example, some 70% of the surface lines between London and the West Midlands insulated by cuttings, landscaping and fencing. I say that again partly in response to questions raised by the noble Baroness, Lady Mallalieu, and the noble Lord, Lord Stevenson. I accept that when one builds a piece of infrastructure, there is an impact. It is impossible to do it without an impact, and it is difficult if it impacts on an area that you either live in or know and love. This project has made a real effort to minimise the impacts, but it must pay attention to costs, and the balance that we have struck is, frankly, the right one.
The noble Lord, Lord Low, brought up the issue of Maglev technology. In China, Maglev goes between Shanghai airport and the city of Shanghai. For the kind of long-distance services that we are looking at with HS2, the Chinese are using very similar technology to that which we are proposing. We are choosing it because it is safe and proven. I think that we would all think that that was an appropriate approach to take for that size of infrastructure project.
There are opportunities to build British capacity for business and to build jobs around this project. It is by far the largest infrastructure project in Europe. One focus that I and others in this Government will have is to look at how we can build the British supply chain to make sure that we reap benefits in gathering expertise and experience in business and then put those businesses in a position where we can export that kind of expertise to other projects across the globe. With all that come jobs for young people and highly skilled jobs; this is a fantastic job opportunity. To look back over the kinds of numbers that we have seen, the Core Cities Group alone predicts that HS2 will underpin the delivery of 400,000 jobs. Construction jobs, at their peak, will be in their thousands—50,000 at peak and probably 19,000 over the average of the project.
HS2 is simply the most significant transformation of our infrastructure in a generation. It will link eight of the 10 largest British cities, serving one in five of the UK population; two-thirds of the population of northern England will be within two hours of London. As others have said, there will be interconnectedness between those communities as an additional base for stimulus within the north itself. This is a time for ambition; make do and mend will not serve this country.
The noble Lord, Lord Mandelson, may have viewed the decision on HS2 as a vanity project, but he does not do justice to his colleagues when he says that. We have heard discussed again and again the requirement for capacity, and it is simply incontrovertible. We have to be able to move people in the modern era, and to move freight. To have a project that focuses on bringing prosperity to the north of England, so often forgotten in previous schemes, is critical and important. So although it is all right that the debate should continue, this Government remain—and I assure those who have asked—committed to this transformational project. I thank the noble Lord, Lord Greaves, and others for having this debate today.
Lord Greaves
My Lords, I thank my noble friend Lady Kramer for her excellent response to the debate and wish her every success in her new job. Not all government reshuffles are regarded by everybody in every party with great glee and joy but when my noble friend became the Transport Minister we were proud that she had taken the job and have complete confidence in her ability to do it really well in the remaining year and a half of this Government.
I also want to thank everybody who has taken part in this smashing debate. I congratulate everybody on both sides. “Both sides” tends to be a description of the Labour Party in this debate but I will not press that too far. I thank the two noble Lords who—for once—found themselves able to agree fully with my opening speech for their compliments. I particularly thank my noble friend Lord Bradshaw and the noble Lords, Lord Faulkner of Worcester and Lord Berkeley, for saying exactly what I thought they would say and fulfilling my forecast.
I cannot respond to the whole debate in the one or two minutes I have left. However, the noble Lord, Lord Mandelson, whose contribution I very much welcomed because it gave us a real debate, provoked me a little—not for the first time in my life—with one or two of his comments. He said that, “Its sheer cost will suck the lifeblood out of the rest of the country”. In my opening speech I mentioned a few of the infrastructure projects in London and the south-east where people do not come along to your Lordships’ House, or anywhere else, and complain they are sucking the lifeblood out the rest of the country. Crossrail, Crossrail 2, new railway lines—London seems to get a new railway line every few years—nobody says these are sucking the lifeblood out of the rest of the country.
We all agree that, as the capital city of the country, London has to have a brilliant public transport system and by and large it has got one—I am green with envy every time I come here—but that is no reason for not continuing to do a good job. I do not know how much London’s new runways or new airport—or whatever it will ultimately be—will cost, but it will be the same kind of eye-watering amounts that HS2 is costing. However, the proponents of it, the corporate interests and the right-wing pressure groups who are trying to get rid of HS2 will not be coming here and saying they do not want it because they are leading the calls for more airport capacity in London. So there is hypocrisy here.
The noble Lord then went on to refer to “a handful of the nation’s cities”. Are Birmingham, Manchester, Leeds, Sheffield, Derby and Nottingham a handful of the nation’s cities? They are the great regional powerhouse capitals in the West Midlands, the East Midlands and the north of England. I am sorry, it does not wash. These cities do not need to be served by HS2: they are the centres, the capitals, the hubs of the economy, commerce, finance and transport for those regions. That is why they are getting HS2.
As I said, I accept that the south-west and East Anglia need better links. However, I do not accept the point made by the noble Lord, Lord Alton of Liverpool, that Liverpool will miss out. In due course, Liverpool may get a spur off High Speed 2. This may be after our time, though who knows, some of us may live for ever. That is unlikely but we can try. Bordeaux, in France, is not on the TGV lines but you can get a TGV train from Paris to Bordeaux. It travels on TGV high-speed tracks as far as Poitou—or somewhere in the intermediate region on the edge of the Paris basin—and then on ordinary express lines as far as Bordeaux. Some of them go as far as Tarbes and end up on little trundly branch lines. That is exactly what will happen for Liverpool and Newcastle: there is absolutely no problem about this.
There is a lot of hot air being talked. I welcome all the people who spoke against HS2 because it exposes the paucity of their arguments and I have great pleasure in moving the Motion to note the impact of HS2. I do so because I believe it is very substantially positive.
Deaf People: Public Services
Lord Hunt of Kings Heath
To ask Her Majesty’s Government what action they will take to promote the needs of deaf people in the provision of public services.
Lord Hunt of Kings Heath (Lab)
My Lords, I am glad to institute this debate on public services for deaf people. I very much welcome the noble Baroness, Lady Jolly, who is going to respond for the Government. I am sure that I speak for the whole House in expressing our best wishes to the noble Earl, Lord Howe.
I am raising this matter because Parliament needs to put much greater focus on the issues facing deaf people and I hope that the debate will be the start of a much more considered engagement in thinking about what kind of services are most appropriate to support deaf people. I do not speak from any particular expertise but my father was a welfare officer for deaf people in Oxford. In fact, he worked for the late Baroness Faithfull when she was director of the first social services department created out of the merger of children’s and welfare services. We have now gone back to that split and I am not entirely convinced that that was a good thing.
My main concern is that the life outcomes for many deaf people are not as good as they ought to be. Public services are not sufficiently focused on deaf people and there is probably a lack of drive within government and an over-reliance on local government without it being given the means to deliver the kind of support that is required. Perhaps I may provide some statistics. It is reckoned that one in six people in the UK are affected by deafness and hearing difficulties; more than 45,000 deaf children live in the UK; and 25,000 deaf people in the UK use British Sign Language as their preferred language Deafness is of course not a learning disability but half of all deaf people have special needs compared to one quarter of non-deaf people; over 50% of deaf people have experienced some form of abuse as children; and one in four deaf people will experience a mental health problem at some point in their lives.
Of all the statistics that I could draw attention to, it is those on educational achievement that are the most important and worrying. In their GCSEs in 2012 just 37% of deaf children achieved five GCSEs at grades A* to C, including English and maths, compared to 69% of children with no identified special educational needs. The attainment of deaf children actually fell in 2012 from nearly 40% in 2011. That is not surprising because there is a direct connection between lack of educational achievement and lack of employment opportunities. Whereas 80% of the non-disabled population are in employment—it may be a bit less than that now—just over 50% of deaf people of working age are in work. An awful lot needs to be done to improve the support given to deaf people.
The National Deaf Children’s Society report Stolen Futures demonstrated the disproportionate effect of public spending cuts on the lives of deaf children. It identified reductions in services across education, health and social care, and said that inconsistent decisions by the Government are setting children up for failure. The society says that to achieve their potential deaf children are dependent on multiple smaller specialist public services such as teachers of the deaf. The children need consistent co-ordinated support from an early age through to adulthood across the public services. Yet in 2012-13 25% of councils said that they planned to reduce one or more of the education, social care and speech and language therapy services for deaf people. What do the Government intend to do about that and the squeeze on resources and support services for deaf people? Will the Minister consider asking Ofsted to inspect specialist educational services for deaf children? Unlike schools and early year providers, apparently these services are subject to no formal scrutiny, despite their vital importance. The Ofsted inspection of SEN services would surely help. What are the Government’s plans to improve the educational outcomes for deaf children?
There are similar issues when it comes to access to health services. This is a challenging problem. An Action on Hearing Loss survey in 2011 found that 35% of deaf and hard of hearing people experienced difficulty communicating with their GP or practice nurse and 24% said they missed appointments because of poor communication, such as not being able to hear staff calling their name. Have the Government thought of having national standards for access to healthcare for deaf and deafblind people? Are there any plans to provide all NHS staff and students with deaf and deafblind awareness training?
That brings me to the question of the British Sign Language and alternative communication methods. I am sure all noble Lords were delighted when, after many years, British Sign Language was officially recognised as a language in its own right. That was a very significant movement which received a lot of all-party support. However, there are only 800 registered sign interpreters in the UK and my understanding, coming back to the health service, is that 70% of British Sign Language users went without an interpreter during visits to A&E in 2010.
There are some solutions to the problems. We need to have more registered sign interpreters and support for family sign language classes. Clearly, if a child who is deaf is to communicate effectively with their parents and families, the whole family needs to have an understanding of sign language. Access to family sign language facilities becomes very much more important. I know that some organisations for the deaf think that having a named Minister responsible for driving a cross-government approach towards supporting British Sign Language would be a major advance. Will the Government consider how they could drive forward a number of initiatives to ensure that, following the decision to recognise British Sign Language, it will be put into practice in a very practical way? Will they make sure that it is used as much as possible, that public services recognise it and that there are enough people, both in family sign language facilities and among qualified interpreters, to provide the kind of support that people need when they come to embrace public services.
Deafness and partial hearing are issues that affect people throughout their lifespan. We need to recognise that many older people have hearing loss. We know that, if their hearing loss is managed effectively, there is a real chance of improving the quality of their lives. However, we know that diagnosis is currently opportunistic and ad hoc. If an adult hearing screening programme could be introduced for everyone over the age of 65, it would deliver long-term savings to the health and social care system. That would enable people to adjust to wearing and looking after hearing aids at a much earlier stage. Early identification and remediation would be much more effective than dealing with some of the issues that now arise from people who lack a diagnosis at the appropriate time.
Other noble Lords who will be speaking in this debate have far more expertise than I have in some of the issues that face deaf people. However, what unites us is an effort to raise in Parliament the question of services for deaf people and I hope that we will continue to do so in the future. I urge the Government to recognise that there is a need for a drive from the centre—from government—due to the diffuse nature of the services and the fact that people are spread around the country, which means that there may not be many people needing a particular service in a particular local authority area. I very much look forward to noble Lords’ contributions and to the noble Baroness’s response.
Baroness Eaton (Con)
My Lords, I thank the noble Lord, Lord Hunt, for bringing this important topic for debate to the House today. It is a matter that can too readily be defined as a health issue. However, as we have already heard, deafness has a profound effect on the life chances and well-being, and not just the health, of those suffering from the condition.
I speak from very limited experience but I now have a two year-old grand-daughter who has an as yet unknown level of impairment. As a family, we have seen some of the initial difficulties for her and are experiencing the challenges facing a family in understanding the issues and how we might learn to develop ways of helping her.
With almost one in six of our population living with such an impairment, I am pleased to see the Government taking action on the matter with the development of the national action plan on hearing loss. They are working with NHS England and Public Health England, and engaging with organisations that specialise in this to develop a pathway in this important and growing issue.
However, as a resident of Bradford and a member of the city council, it is deeply concerning to me that the rate of deafness among our children, at 2.3 per 1,000 children, is double the national average of one per 1,000 children. The number of active cases known to the service for deaf children in Bradford between 2012 and 2013 stands at 678, of whom 76 are classified as being profoundly deaf—that is, entirely deaf. Of the 678 children in Bradford who have a hearing impairment, 548 are in mainstream schools and an additional 89 are in schools with additionally resourced centres attached. A further 41 children are in specialist schools, not necessarily as a result of a hearing impairment.
Also of concern is the fact that this is a particular issue for our city’s Asian population. It is encouraging to see the steps being taken by our schools and authorities to allow our deaf children to benefit from a full and satisfying education.
Working with the University of Leeds, the teachers of the deaf service in Bradford are researching the development of language and literacy in multilingual and multicultural families. With a staff of more than 60 personnel, the service is able to provide specialist assistance to multilingual households with everything from full-time teaching to liaising with parents and providing speech and language therapy. It is worth noting that, of the families working with this service, 67 do not speak English but communicate with their children with hearing impairments by using sign language. Understanding the language barriers and working around them will be key to ensuring that these children have the best possible chance to advance just as other children do.
There is a protocol of transition from children’s social care to the sensory needs service in adults’ services. This will provide a specialist service to young people who are over 14 years old and are British Sign Language users. This service will routinely attend all the education reviews of these young people in order to provide advice and information. By doing so, it is hoped that the transition from children’s educational services to adult services will run more smoothly.
The noble Lord, Lord Hunt, has already mentioned the underachievement of deaf children. Certainly, the survey by the National Deaf Children’s Society showed that deaf children in Yorkshire suffered huge disadvantages in terms of GCSE grades. It is therefore concerning to note that among those qualified as specialist teachers for the deaf, the average age is now over 50, something that is sure to create a greater problem in years to come and to impact on the education of children with hearing impairment.
Responses to a DCMS seminar paper addressed the wishes of those within our society who are deaf, stating that it is far preferred that an inclusive manner in services and policies be adopted rather than an exception-based rule. This means that the mainstream should, indeed must, wherever possible, cater for the community as a whole and not simply the majority for whom hearing is not yet a problem.
An issue that frustrates those who are hearing-impaired is the general lack of knowledge, understanding and training around the issue. The Guardian newspaper published an article on 10 May highlighting the issues that deaf members of society face. In one case, a deaf patient at a hospital was unable to communicate with his doctors, nurses or those around him for 12 days because no sign language interpreter was provided.
Action on Hearing Loss published a policy statement entitled Access to Services for People with Hearing Loss in June 2012, directly addressing the issue of contacting services. They observed that people with hearing loss face very basic but fundamental hurdles when contacting organisations that only provide telephone numbers in their contact information and highlighted their awareness of the fact that staff simply hang up regularly on text relay telephone calls because the operator does not understand how to use the technology.
Further on the lack of the use of appropriate technology, the Lancet published an editorial in March 2012 highlighting the issue of deaf people physically having to go into GP surgeries in order to make an appointment, due to the lack of provision of e-mail and text software. This is something that may not be too much of a difficulty for a younger person, but for those who are ageing it becomes a real issue and something that could be solved very easily by implementation of basic technology and training of staff to understand what considerations or differences should be considered when assisting someone who does not have full hearing capacity. Aside from this, it is surely to be hoped, or rather expected, that those within our society who cannot communicate in the same ways as the majority of the population be afforded the same basic services. Access is one of the biggest barriers to deaf adults. This includes all areas of life where there is a need for communication.
In my own authority, Bradford, there has been a vast improvement in accessibility for deaf people. Deaf people now have representation on the Strategic Disability Partnership, providing a forum for full engagement, as representatives on this forum feed information from the deaf community into the partnership. There are BSL and subtitled theatre performances, opening up the world of entertainment to deaf people. Hearing loops are provided to give access to those who are hard of hearing. Representatives from the Deaf and Hard of Hearing Group sit on the Bradford theatres users’ group and have been influential in generating improvements to services. Our museums have BSL videos that provide detailed information about exhibits. Our libraries have full internet access, enabling deaf people to access online information. Excellent work has been done with the police service, which now provides much improved access to communication, particularly in areas such as hate crime. Adults’ services include statutory assessment and support services where staff work in inspirational ways to support service users. An example of this is an individual budget to purchase care where the worker can communicate in BSL and has an understanding of deaf culture and community. There is also a technical service, which provides flashing or loud doorbells so that older people are not put at risk by leaving the door open or not being able to hear when the home care worker calls.
While there have been great strides in improving access for the deaf to services in many areas, there is still much room for improvement. There is a high correlation between sight and hearing loss and learning disability, which needs much greater research and provision. Video-conferencing services enable deaf people to have BSL interpreting via a web link. Skype is being tested but the quality needs improving. Participation for deaf people in CCG user forums would greatly help the deaf.
Despite improved access to communication and information, social isolation and exclusion continue to be major factors for deaf and hard-of-hearing people. Work towards more integrated pathways, with transitions between education and children and adult services, is vital, and must be part of plans for service development. Local government, working with the local community and other appropriate organisations, often are best placed to develop services suited to the needs of service users who have special requirements. Legislation often can be too prescriptive and can prevent flexibility and creativity.
Baroness Brinton (LD)
My Lords, I congratulate the noble Lord, Lord Hunt, on securing this debate. I also have an interest in this topic. For 10 years, I was chair of governors of Mayfield primary school in Cambridge, which has the hearing impaired unit for the southern half of Cambridgeshire. My sister is a BSL interpreter at a university and I have deaf friends. I am proud to say that the Liberal Democrats passed some policy at a key debate at the recent conference in Glasgow. We are committed to the principle that deaf people are entitled to identify with their own language and to have this respected, regardless of minority or majority language status. We also want to see better awareness of information needs and services for BSL users, particularly in health, education and employment, as has been outlined by the two previous speakers.
In the time available, it is impossible to cover everything, so I shall focus specifically on education and family services. All children at Mayfield, whether they have hearing or are hearing impaired, learnt all songs for assembly both in sign language and singing. My adult daughter still remembers some of it. Children in the hearing-impaired unit were fully integrated into class with their hearing contemporaries, while also becoming fluent in British Sign Language and lip reading—but that is really for the second part of my speech, about the education of children with hearing impairment.
Research shows that early communication within the family is the strongest influence on language development at the age of two. However, if a deaf child needs to communicate in sign language, many hearing parents may struggle to communicate with their child because they have no knowledge of deafness or sign language. Many families who need to use sign language with their child are not getting the services that they need. Often, they are forced to pay hundreds of pounds just to learn to communicate with their own child. In several Scandinavian countries, that service is provided automatically and free of charge to all parents of deaf children.
It is good that the Department for Education is funding the I-Sign consortium to improve the availability of sign language courses to families. The work of the consortium has been recognised by even the Prime Minister as a success. One family commented:
“It is not always easy having a deaf child in the family and the opportunity like this course helps us to be positive about deafness and reflect on different ways of communication with a deaf child, this course has made a huge difference to the family”.
However, in 2011, a telephone survey by the National Deaf Children’s Society revealed that 56% of local authorities surveyed did not provide any support to families wanting to learn sign language, nor did they provide the society with any information. The support provided by other local authorities varied considerably and it is clear that not all families can rely on ready access to family-friendly sign language classes. What further steps will the Government take to ensure that families get the support that they need to promote early years communication for deaf children? Given how important that is, is there some scope for considering following the example of Scandinavia and placing a duty on local authorities to provide that support?
On education, many deaf children rely on support from their local education service. This support is often provided in the form of a teacher for the deaf who might support families in the home with early language and communication, visit deaf children in mainstream schools, support deaf children directly and/or advise mainstream teachers on how to adapt the curriculum and use technology effectively, or contribute to specialist assessments of deaf children and intervene to promote good outcomes. There is real concern that these services are being severely undermined by public spending cuts. The department repeatedly tells us that it has protected funding for the most vulnerable learners, but, as has already been mentioned, the NDCS’s Stolen Futures campaign has established, through a freedom of information request to all local authorities, that 29% of authorities plan to cut specialist education for deaf children this year. A further 28% are at risk of cutting services, or undertaking a review of them. These cuts are having a critical impact on deaf children.
The Government say that local communities should hold authorities to account and suggests that the Children and Families Bill will enable families to do this. Surely this is complacent. The NDCS has found that many local authorities do not disclose information nor involve parents in decisions about spending cuts. As currently drafted, the Bill will not directly improve accountability in this area, not least because it does not require local authorities to disclose expenditure on SEN support services as part of the local offer. How will the department ensure that its SEN reforms can be successfully implemented in the absence of any action to ensure SEN funding is adequate and not being squeezed out by other funding pressures?
I, too, am very concerned about a shortage of teachers for the deaf across the UK. Anecdotal evidence from services suggests that it is becoming increasingly difficult to recruit to vacant posts. Some of the detail has been outlined earlier, but I ask the Minister whether the department has carried out any assessment of the teacher for the deaf population. Is there a need for a national recruitment process? While I welcome the local offer outlined in the Children and Families Bill, I am concerned that it does not go far enough in recognising the importance of specialist education support for deaf children and other children with sensory impairments. The NDCS, RNIB and Sense are all calling on the department to make improvements to the Bill before Committee.
The key issues are also relevant to this debate. There is no explicit requirement to publish information about the local offer and neither is that offer published by type of need: local authorities only have to provide generic information about special educational needs. It is also not clear that the local offer will follow a set format. That can be difficult for parents trying to compare provision in different areas. The also local offer needs to be underpinned by a minimum provision. Too many children with a sensory impairment are being denied the support they need, at a considerable cost to families. The department argues that minimum standards would lead to a race to the bottom and stifle the development of local offers. Surely the opposite is true: in the absence of any expectation on minimum provision, local authorities with better provision will reduce it in line with poorer neighbouring provision. Can the Minister provide explicit reassurance that local authorities must include information about specialist support services for deaf children in their local offers? Will the department establish clear expectations for minimum provision to be included in the local offer, in line with a call for action on this from the Education Select Committee?
Finally, on an important note that I have not yet heard covered, outside the range of education, what are the Government doing to develop a vaccine against cytomegalovirus, one of the main causes of congenital deafness and blindness? Some 50% of the population are estimated to be carriers, but it is only dangerous if contracted in pregnancy and transferred to the foetus. The medical advice that a mother carrying the virus should not touch anything—including her other children—that might mean she contracts the virus is, frankly, ridiculous. If there were a vaccine for this virus, it would be targeted at a very specific group: mothers and women planning to be mothers. Surely, with such a small target group, it is worth doing in order to prevent the dreadful congenital deafness and blindness that some children have when they are born having suffered from this virus.
In conclusion, services for deaf children and their families have some strengths, but there are a number of worries that could affect these children, now and in their future lives.
Baroness Howe of Idlicote (CB)
My Lords, I, too, thank the noble Lord, Lord Hunt, for introducing this important mini-debate, and particularly commend his comment that the older you get, the more likely you are to have problems. As we all know, we are all getting older. Therefore, this is definitely an issue that has to be tackled.
In my case, my hardness of hearing began when I had children. I think that that was inherited, too. Over the years, it has got to the point where there is no further help other than good amplifiers, such as we have in this Chamber. Indeed, I was perhaps one of the victims of an early mistake, which in those days was called mobilisation of the stapes. That also happened to me, and that one is my really deaf ear.
Today, I should like to speak first about the importance of health services for deaf children and young people and, secondly, about support for their families with communication.
I start by highlighting the importance of the newborn hearing screening programme. Many regard that programme as one of the major health successes of the past decade. Prior to that programme, many children born deaf were not diagnosed until as late as three and four years old. Such late diagnosis does significant damage to the deaf child’s language and communication skills and, obviously, to their future prospects. Early diagnosis provides the opportunity to put in place a central support as soon as possible, so that deaf children can achieve their full potential. The National Deaf Children’s Society is clear that that has led to improved outcomes for deaf children already.
It is therefore important that we continue to maintain that programme at the highest possible level and standard. What steps has the Department of Health taken to monitor and protect that service in the context of the Health and Social Care Act and significant changes to health services? Is the department monitoring whether the programme continues to be adequately funded and whether, when their children have been diagnosed as deaf, parents continue to experience a joined-up service between public health and the NHS? Will the existing quality assurance programme continue to include both diagnosis and follow-up interventions in audiology services, the latter being as critical as the former? It is vital that we do not take our eyes off the ball and let the service wither away, so I would welcome the Minister’s assurance on that point. If the noble Baroness, Lady Jolly, cannot give us a response today, perhaps she will see that someone from the department writes to me.
I also highlight the need for health services to be more accessible to deaf young people. The National Deaf Children’s Society’s youth advisory board spent the past year working on a new campaign to improve deaf awareness in health professionals. I understand that it hopes to launch that campaign, called “My life, my health”, early next year. Deaf young people have provided NDCS with numerous examples of poor practice. We have heard of some already. One deaf girl had missed several appointments at her GP because she is unable to hear her name being called. She has now, ironically, been given a final warning not to miss any more appointments. Another deaf person aged 18 no longer wants to rely on her family to access information. She told NDCS:
“My family and friends are fed up with coming with me to help with my communication support”,
but until and unless action is taken to ensure that this information is given in an accessible way, she will continue to be unable to access appointments independently.
Many will be appalled by both of those examples and the continuing existence of poor practice in delivery of health services to deaf children and young people. Do the Government agree that action is needed to promote deaf awareness among health practitioners as well as the provision of accessible information? Maybe the noble Baroness, Lady Jolly, will urge the Government to support this campaign and its aims.
Finally, I would like to highlight the importance of communications support to families with deaf children. I have tabled an amendment to the Children and Families Bill that would require local authorities to ensure that there is sufficient provision of sign language courses to families with deaf children. There is widespread concern that the current provision is far from sufficient or adequate.
Children cannot develop effective language skills if their families cannot communicate with them. This communication support is vital for the social development as well as the educational development of deaf children. However, where sign language is the best option for the child, too many families are being forced to pay huge sums to learn sign language to be able to communicate at all with their own child.
I am aware that the Department for Education has funded various projects to address these concerns. This funding is certainly welcome and appreciated. Is this leading, however, to the step change in sign language provision that we need? I question whether local authorities truly appreciate and understand all the needs of deaf children.
There needs to be a much stronger expectation on local authorities that support on sign language will be provided to families if they need it. We would now regard it as unacceptable if local authorities did not provide short breaks for families with disabled children. Many believe that the Government need to act to make it equally unacceptable for local authorities not to provide support for families wishing to learn sign language.
I hope that the Government will give my amendment to the Children and Families Bill the strongest consideration when it comes for debate before the House. I look forward very much to hearing what the noble Baroness, Lady Jolly, says in her reply.
Lord Rogan (UUP)
My Lords, I, too, thank the noble Lord, Lord Hunt of Kings Heath, for initiating this important debate. In our modern society we excel when it comes to discussing rights, but my experience is that we are usually better at discussing them than doing anything about them.
In this media-driven era, there is a natural temptation and pressure upon government and its agencies to satisfy the rights of those who are most adept at securing air time, and media interest, rather than the rights of those who are most in need. Deafness is nothing new. It is clearly an issue which affects a significant number of people. In Northern Ireland alone, there are more than 200,000 people who are deaf or hard of hearing. That is 15% of people living in Northern Ireland; a significant proportion of the population—and no doubt a rising proportion, given the increasing numbers of people who are living well into old age. I find it perplexing, therefore, given the scale of the issue and society’s familiarity with it, that we seem to fail so miserably at even the basics of providing adequate access to public services, let alone equality of access.
Access to the health services is a special area of concern. As has been mentioned twice, it is particularly disappointing to note that deaf charities in Northern Ireland have raised instances of deaf people being left in the waiting room of audiology clinics because their name was called out. Their name was called out verbally, even after staff had been notified that they were deaf. It is daft.
In 2009 the British Deaf Association in Northern Ireland and the RNID contacted GP practices throughout the Province to ask them about hearing, blind or partially sighted issues. Some of the results were rather concerning. Half of the GP practices were yet to provide any training to staff about deaf, visual, or general disability awareness. Only 15% of GPs had had disability training. Half of all the responding practices also said that, although they had induction loops in their waiting rooms, only 16% had loops in consulting rooms.
Getting an appointment to get to the surgery, however, also seemed unnecessarily difficult, with a general lack of provision to make contact or arrange appointments by e-mail. Deaf people also complained that GP practices and hospitals often did not respond to calls to their minicom system or to faxes. Out-of-hours and emergency access seemed even more problematic, as did the ability to book interpreters. All these issues create a reliance on friends and family, which in turn undermines independence and leads to feelings of isolation and even despair.
The charities have suggested that this collectively points to a lack of general awareness, understanding and insight concerning the needs, circumstances and experiences of people with disabilities. It would also appear that there is an inadequate grasp of the legal obligations placed on public service providers by the Disability Discrimination Act. While access to health services is of most concern, the complaint applies across the board, from jobcentres, benefits offices and leisure facilities to issues such as interpreters for deaf parents at teacher/parent meetings, school correspondence, emergency telephones on the motorway, arts and cultural events—indeed, the entire spectrum of life in a modern welfare society
As the British Deaf Association in Northern Ireland put it, deaf people are currently not afforded access to public services on, or even near, a par with hearing people. Deaf people simply want to be included in everyday society and given the opportunity to make decisions and choices for themselves. Surely it is incumbent upon our Government to play their part to facilitate that process and to ensure that deaf awareness is given greater focus.
Baroness Wilkins (Lab)
My Lords, I congratulate my noble friend Lord Hunt of Kings Heath on securing today’s debate on the needs of deaf people in the provision of public services. Parliament is currently giving a flurry of attention to the needs of deaf people. Let us hope that this results in some strong, positive action and that it will achieve real gains. It is so vitally necessary. I am afraid it is inevitable that I will repeat many of the points that have already been made, largely as a result of the excellent briefing given to us by the National Deaf Children’s Society, but I hope that that will only serve to persuade the Minister to respond positively.
Last week Sir Malcolm Bruce, the right honourable Member for Gordon and chair of the All-Party Group on Deafness, led a debate in the other place asking for recognition of the importance of services for deaf children and young people. This followed a petition, signed by more than 50,000 people, calling on the Government to protect the funding for these vital services. Happily, his Motion was accepted, and I hope that this debate will send the same strong signal—that we should protect services for deaf children and young people.
Yesterday in this House we started the scrutiny in Grand Committee of Part 3 of the Children and Families Bill, which deals with special education. The needs of deaf children and young people will be highlighted by a number of the amendments that I and others have tabled. There needs to be considerable movement by the Government if the support for deaf children and young people is to improve. For instance, the Bill currently relies on parents to police the SEN system but does not provide them with any substantive new rights to hold local authorities to account.
It is on the services for deaf children and young people that I will be focusing today. As we have heard, it is of great concern to us that, according to government figures, only 37% of deaf children achieved five good GCSEs last year compared with 69% of children with no identified SEN. Thirty-seven per cent is a dismal and unacceptably low figure—it is shameful. I acknowledge that improvements have been made in this area over the past five years but, when we consider that deafness is not in itself a learning disability, it remains outrageous that the gap between deaf children and other children is still so wide. There is no reason why the majority of deaf children should not achieve the same as other children, provided that they get the right specialist support. But too many deaf children are not getting the specialist support they need.
Worse still, according to evidence collated by the National Deaf Children’s Society, that support is now being cut in many areas. As we have already heard, freedom of information requests to all the local authorities in England have established that 29% of them plan to cut specialist education services for deaf children this year. A further 25% are either at risk of cutting or undertaking a review of their service and these cuts are happening despite the commitment from the Department for Education that it has protected funding for vulnerable learners.
Surely there is more that the department can do to ensure that local authorities do deliver high-quality services and are held to account when they fail to do so. One such action would be to require Ofsted to begin inspecting these vital services for deaf children. When we consider how much scrutiny mainstream teachers and schools are subject to by Ofsted, it is shocking that teachers of the deaf in specialist support services are subject to virtually none. That can only send a signal that deaf education is less important.
When we consider all the competing pressures that local authorities face, it is hardly surprising that the lack of external scrutiny makes it even easier for local authorities to cut services. A sharper eye of scrutiny would also incentivise local authorities to improve services that are inadequate. I am very pleased to see that the noble Baroness, Lady Brinton, has tabled an amendment to the Children and Families Bill which will address this. I strongly support the amendment and I hope that the Government will give it their strongest possible consideration.
Separately, I am concerned that we need to do more about the recruitment of teachers of the deaf. Teachers of the deaf undergo two years of additional training to gain a mandatory qualification in teaching deaf children. Their important role has been recognised in the new draft SEN code of practice. However, we are recruiting far too few teachers of the deaf if deaf children in the future are to get the support they need. Evidence suggests that around 80% of these teachers are over the age of 50 and, in addition, the number of training departments appears to be reducing. There is also anecdotal evidence that in some areas services are already having to rely on teaching assistants to do the job that would otherwise be done by teachers of the deaf. What steps have the Government taken to assess how many teachers need to be trained as teachers of the deaf to meet future demand and what action is being taken to ensure that they are in place? Does the Minister agree that there needs to be a national recruitment programme?
In last week’s debate, the Children’s Minister referred to the national scholarship fund for teachers’ postgraduate training, which is available to people wishing to train as teachers of the deaf. That is a welcome first step. How many people are currently using this fund to train as teachers of the deaf? Can the Minister reassure me that this fund will be expanded to meet future needs? It is vital that we take action now to ensure that there is an adequate number of teachers of the deaf before it is too late.
I have discussed just two of the areas where action needs to be taken to improve public services for deaf children. I strongly support the points raised by other noble Lords and hope that the Minister will do all she can to persuade the Government to take urgent action. The needs of deaf people have been sidelined for far too long.
Baroness Jolly (LD)
My Lords, this has been an excellent debate. It has been wide-ranging and based on experience and expertise, with many recurring themes. I promise that I will be positive where I can be.
The Government recognise the scale of the issue. One in every 700 babies in England is born with some form of deafness and there are just under 10 million adults living with hearing loss. All these people will, at some point, be in contact with public services. In fact, we know that there are 35,000 children and 1.6 million adults with hearing loss being managed and supported across health and other public sector services. It is therefore absolutely vital that these public services are geared up to support their needs.
The public sector equality duty means that public bodies must have regard to the need to eliminate discrimination and to advance equality of opportunity when making policies and delivering services. Public bodies must make reasonable adjustments for disabled people to ensure that they can use a service that is as close as reasonably possible to the standard usually offered to everyone. I would like to take your Lordships through some detail on how different areas of the public sector are addressing this very important issue.
First, on health and social care, we know that there is a need to improve in the commissioning and integration of health and social care services for people with hearing loss, as well as in the provision of new and innovative models of care. This is why we are looking to develop a new action plan on hearing loss. The action plan will identify the key actions that will make a difference in improving health and social care outcomes for children, young people and adults with hearing loss. The Department of Health is currently engaging with a range of organisations, and aims to publish the action plan as soon as possible.
The new health and social care structures provide the framework to improve access to services and outcomes at a local level. The national adult social care, public health and NHS outcomes frameworks enable us to hold services to account for how they are tackling health inequalities and improving health and well-being. NHS England is developing an information standard around the provision of accessible information and communication support to disabled patients, carers and service users. It is intended to be finalised in late 2014, with organisations being required to comply in 2015. Once implemented, the standard will ensure that disabled patients, service users and carers receive information from NHS bodies and providers of NHS care in formats that they can understand, and that they receive appropriate support to enable them to communicate. All this should help people when they visit their GP. Certainly, at my GP practice, a name comes up: for example, “Jolly to go to room 4”. This is not rocket science. Plenty of practices do it.
The health service has already delivered considerable improvements in services, including reduced waits for the assessment and treatment of hearing problems in adults. Most patients on direct access audiology pathways are now treated within 18 weeks. There is greater choice of hearing aid services through independent high street providers and the new “any qualified provider” model, which offers even greater choice and convenience. We have rolled out a system of voluntary accreditation of hearing service providers to drive up service quality and introduced a payment-by-results tariff for hearing services, which should lead to service innovation.
The noble Lord, Lord Hunt, asked about plans to provide NHS staff with awareness training. What I have just outlined certainly covers that; NHS England will publish guidance on making reasonable adjustments to meet the communication needs of service users. That is expected next year. All NHS staff should have disability awareness training, and within that must come British Sign Language. The noble Lord also asked about annual screenings for over-65s on hearing loss. There are no plans at the moment to introduce such screening, but everyone in that age group should be invited for an annual health check that offers the opportunity to address such problems as hearing and vision, as well as other key health issues.
It is of course not just about assessing and treating deafness. My noble friend Lady Brinton asked what the Government are doing to develop a vaccine against cytomegalovirus. While there are currently no licensed vaccines, possible vaccinations are still being researched. She will appreciate the stringent safety checks that all new medicines and vaccines have to go through, so it will be several years before any vaccine becomes available.
In services for children and young people, we are taking forward measures to support children with sensory impairments, including giving parents in England the opportunity to have their babies’ hearing tested shortly after birth as part of the NHS newborn hearing screening programme. There will also be a more joined-up approach to assessments, which gives clarity on responsibility across the areas of education, health and social care services and a commitment from all of them to provide their services.
To answer the question asked by the noble Lord, Lord Hunt, new school inspection arrangements mean that inspections of schools with resourced provision or specialist units for pupils with sensory impairments are assessed by inspectors with the necessary specialist advice. We are committed to improving the training of teachers and school leaders to help them identify where pupils with hearing loss face barriers to learning and offer the appropriate support. The Department for Education is funding the development of an early support guide for parents of deaf children and giving money to support I-Sign, hosted by the National Deaf Children's Society. This should develop access to sign language for families and education professionals.
My noble friend Lady Brinton made the point about I-Sign not being consistently employed and asked whether we should place a duty on local authorities to provide this support, as they do in some Scandinavian countries. The Children and Families Bill already places duties on local authorities to identify, assess and secure special educational provision for all children and young people with special educational needs. This could include sign language support for those who need it.
My noble friend made a number of additional points on the issue of specialist education support services for deaf children being hit by cuts. We can confirm that we have protected the resources available for SEN provision, including support for deaf children. The Children and Families Bill will include a new duty on local authorities to require them, with their partners, to publish a local offer of services available to families of children with SEN and disabilities.
On the issue of whether we need a national recruitment campaign for qualified deaf teachers, or for teachers to qualify for teaching the deaf, the National Scholarship Fund is available through the Department for Education and provides funding of up to £3,500 for teachers’ postgraduate qualifications and their training, including specialist training for teachers of the deaf. Funding of £2,000 is available to support teaching assistants and support staff to improve their skills. Indeed, 600 teachers have achieved or are working towards a qualification related to special educational needs and a further 500 have applied for the current funding round.
To answer the point made by the noble Lord, Lord Hunt, about the attainment gap, we have ensured that funding is protected. In 2011-12, 71% of deaf children achieved five or more A to C grades in their GCSE, compared with 43% in 2007-08. Over this period, deaf pupils progressed at approximately twice the rate of their peers, closing the attainment gap significantly. This is not to say that we are complacent, but there has been progress. The Government recognise the importance of deaf people being supported and enabled to communicate through BSL where they wish to do so. Schools can offer BSL programmes to pupils with a range of vocationally related BSL and other signing media qualifications, from a simple awareness certificate up to more advanced levels, and there is work to develop a GCSE programme in BSL.
However, it is not just in the areas of health, social care and education where good work is going on. Work is going on across the Government to support the needs of deaf people. We have heard from my noble friend Lady Eaton about the sort of work that has been going on in Bradford.
We have had a few examples of where great progress is being made. Good work is being done to make services more accessible for people with hearing loss across the criminal justice system, welfare, higher education and many other parts of the public sector. I pay tribute to the work of the voluntary sector. We have heard today about organisations such as Action on Hearing Loss, Signature and the National Deaf Children’s Society, which campaign tirelessly to ensure that the needs of deaf people are not forgotten and, in many instances, work alongside the Government to help us develop our policies and ensure that those policies are put into practice.
I hope that in the time allowed I have provided reassurance of the Government’s continued commitment. I will write to noble Lords to answer those questions that have not been covered, and I am more than happy to meet noble Lords to discuss these issues and to see whether we can progress them further.