Grand Committee
(10 years, 3 months ago)
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National Insurance Contributions Bill
(10 years, 3 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Chairman of Committees (Lord Bichard)
My Lords, welcome to the Grand Committee on the National Insurance Contributions Bill.
Lord Davies of Oldham
“Post implementation review
(1) Her Majesty’s Revenue and Customs must, after one year, prepare a post implementation review of the employment allowance which the Minister shall lay before Parliament.
(2) The review must consider—
(a) what impact the employment allowance has had on the number of jobs;(b) what impact the employment allowance has had on wage levels;(c) overall take up of the employment allowance; (d) the geographical spread of businesses, charities and sports clubs taking up the employment allowance; and(e) the effectiveness of Her Majesty’s Revenue and Customs’ strategy to promote the employment allowance.”
Lord Davies of Oldham (Lab)
My Lords, I am sure that the Committee’s affairs will not be too protracted today, as we clearly have a consensus from the House that the Bill is a pretty good thing. As the Minister already knows, it is the Opposition’s view that in general terms the Bill pursues a good policy and is vastly superior to the sad instrument that was relied on for the first three years of this Administration with regard to the holiday on national insurance contributions—which of course failed dismally in both its reach and its general effectiveness, with every conceivable expectation that the Government expressed before that Bill became law being disavowed by the process over the following three years. We are now in the business of recognising that the principle behind the Bill is far superior and is a position that we broadly endorse. However, it is incumbent on us to ensure that the policy works effectively and that the Bill that is the basis of that policy is fit for purpose in every respect.
The amendment would require the Government to carry out and publish a post-implementation review of the employment allowance, including HMRC’s assessment of its impact on jobs and wage levels, the overall take-up, the geographical spread of businesses that take it up and the effectiveness of HMRC’s strategy to promote it. I emphasise all these points because on every single one of them the previous policy instrument on NICs failed conclusively, and it is important that all those targets are effectively hit. That is why, although I am not underestimating the difficulties of these demands in some areas, we want to see an assessment, as far as the Government are able to provide one, of job and wage levels as a result of the measure.
We certainly want to be reassured on the overall take-up and the geographical spread of businesses taking it up. The previous Bill had a geographical element to it, which we the Opposition never understood —but we did not have to understand it because the Bill had such a limited impact for good anywhere that those who were left out had missed very little indeed. For obvious reasons, as the Minister will appreciate, we are concerned about significant regional disparities in the employment figures, particularly with regard to young people. That is why we want this review to cover a geographical dimension.
That also brings us on to the extent to which the Government will be successful in promoting the measure. After all, a great deal of the expectation is that the beneficiaries will be small and medium-sized enterprises. The medium-sized ones probably do an effective job in keeping up to date and four-square with government initiatives, and we know that the large corporations monitor the Government so effectively that not infrequently—we will come to this later—they pay a great deal less tax than perhaps they ought.
Small businesses inevitably have a problem with legislation. Part of the difficulty with the previous legislation was the conspicuous failure to promote the concept widely enough for take-up to be at the level for which people—certainly Ministers—had hoped. We want to see that rectified as far as this measure is concerned. The amendment, therefore, establishes the necessity for a report that would guarantee a review to provide early indications of the success or otherwise of the policy. We might, as a result, see the Government learning from difficulties that may be developing.
It took a long time for the penny to drop last time. I recall that it was three years before the previous amendment to the legislation on national insurance contributions was finally written off as being unsuccessful, which shows how slow the Government can be, and how blunt their antennae, in picking up the responses of people who are meant to benefit from the legislation. We want this review, therefore, to oblige the Government to face up to these questions—and to do so early.
The amendment we are proposing follows a clause which was retabled on Report in the Commons. We are retabling it in the Lords because of the difficulties of the earlier legislation; we cannot emphasise too strongly how much we want this to be successful. We note that the Government outlined in the Commons the complexity of some of these issues, but we think it is worth trying to measure the impact of this measure on employment and wages. It seems sensible at least to consider the relationship between the employment allowance and job and wage levels. The Minister will recognise that we have seen the benefit of some of the responses in the other place to this major proposition, but I hope that he has had time to reflect, that his officials have appreciated the anxieties that were expressed in the other House, and that today we will get from him a more constructive response than we obtained elsewhere. I beg to move.
Lord Newby (LD)
My Lords, the proposed new clause seeks to require HMRC to publish a post-implementation review of the employment allowance after one year. I would like to explain why this new clause is unnecessary.
The tax information and impact note already commits the Government to keep the scheme under review through ongoing communication with taxpayer groups affected by it. Moreover, in Committee in the Commons on 21 November last year, and on Report in the Commons on 10 December, the Exchequer Secretary agreed that the Government should publish information twice a year about the overall take-up of the employment allowance, including by geographical location. I am happy to repeat that commitment in the Moses Room today.
This amendment focuses on the number of jobs created by the employment allowance. However, while the employment allowance will clearly reduce the cost of taking on new staff for small businesses and charities, it will be up to those businesses and charities to decide how they use the resulting NICs savings. I remind the Committee of the comments made by the Institute of Fiscal Studies and by the Federation of Small Businesses at the evidence session in the House of Commons on 19 November last year, to the effect that it is impossible to get precise numbers. We cannot conduct the equivalent of a randomised trial with tax policy to determine the number of jobs created because of the allowance. As the IFS pointed out, there are a number of factors in the economy simultaneously influencing the number of jobs.
The Government have not set any target for the number of jobs we expect to be created, although survey evidence from the FSB suggests that 28% of small businesses will use the savings to employ additional staff. It would not, therefore, be possible to provide information about the number of jobs created as a direct result of this measure. Similarly with wage levels, the same research from the FSB suggests that 29% of small businesses would use the NICs savings to boost staff wages. However, it would be difficult precisely to quantify that effect, given that wage levels are subject to many different pressures, varying from business to business.
The new clause also requires an assessment of HMRC’s strategy to promote the employment allowance. HMRC has already been proactive in promoting the allowance, having spoken to various stakeholders—including representatives of software providers, charities and small and medium-sized enterprises—about the design and operation of the measure. There is continuing engagement between HMRC and those stakeholders on guidance for employers and publicity. As a result of these discussions, communications to raise awareness of the allowance will begin more widely in February and March this year to maximise impact in the crucial period running up to the introduction of the allowance in April, using a range of HMRC publications and products and the department’s national network of local Working Together groups. As a result, we are confident that employers across the UK will be ready to claim the allowance in April. These efforts will continue after April to support take-up from companies that have not done so at that point.
With these reassurances, and in the light of the Government’s existing agreement to make information about take-up available twice yearly, I hope that the noble Lord will withdraw his amendment.
Lord Davies of Oldham
My Lords, I am grateful to the Minister for the additional information he has given about the reinforcement of the necessary publicity to promote awareness among those who could benefit from the allowance. I recognise that the issue is being taken seriously. It cannot be taken seriously enough. The Minister is absolutely right to cite what the FSB thinks can be achieved, and we recognise that the Government have to set their sights for advantages within a fairly low range in the early days. It takes time for people to appreciate the advantages.
The Minister made one passing reference to charities. We have no anxiety about the ability of very large charities to keep up with legislation, although they tend to be more preoccupied with legislation that will affect them in other Bills before the House, rather than this more benevolent provision. However, the Minister will appreciate that we are anxious about other charities on that score. I am grateful that he mentioned them en passant—although not as strongly as I would have wished. Nevertheless, it was a constructive and helpful reply and, on that basis, I beg leave to withdraw the amendment.
Lord Davies of Oldham
“Administrative and compliance costs review
(1) Her Majesty’s Revenue and Customs must, after six months of this Act coming into force, prepare a review which the Minister shall lay before Parliament.
(2) The review must consider—
(a) whether there are any administrative or compliance costs associated with the employment allowance being reported by those applying for it; and(b) whether businesses, charities and sports clubs are having any problems in claiming the employment allowance.”
Lord Davies of Oldham
My Lords, this amendment would require a one-off administrative and compliance costs review to take place six months after the employment allowance comes into force. We are using this amendment to ask questions about the 10% of businesses that the Government think will not claim the employment allowance, and to explore ways in which they might be engaged more successfully. We are asking whether the guidance will be available in sufficient time for people to get their software ready.
The Minister’s colleague in the Commons indicated that the necessary changes to software and the pressure on businesses, particularly small businesses, would be challenging. Evidence received by colleagues in the other place suggested that normally three to six months is required for systems to be developed, including time for specification and documentation of the changes, development, testing and release to clients. That cannot be started effectively until it is known what is expected.
The indications were that the guidance would be ready early in the new year—in January. Will the Minister update the Committee on where we are? We believe that there has been some slippage from that optimistic date. Will the system be available in sufficient time for the response that we all want to see? A review would enable us to check six months on that software-type issues or unexpected administrative costs have been ironed out and dealt with. That would give the Government an early opportunity to rectify what needs to be changed.
Lord Newby
My Lords, the proposed new clause would require that HMRC should, six months after the Act comes into force, prepare a review to consider whether there are any administrative or compliance costs that have been reported by employers claiming the allowance, and whether businesses, charities and community amateur sports clubs are having problems in claiming it. I hope that I can persuade the noble Lord that this proposed new clause is also unnecessary for two main reasons.
First, as I pointed out when commenting on the previous proposed new clause, the tax information and impact note already commits the Government to keep the scheme under review through communication with stakeholders affected by the measure. As part of this review, HMRC will speak to stakeholders to gauge their views of the allowance and to ascertain the ways in which it is being used. HMRC talked to various stakeholders over the summer and autumn about the design and operation of the allowance, including the claims process. There are continuing discussions between HMRC and these groups around guidance and publicity, and these will continue after the launch of the allowance in April.
A crucial part of this work has been discussions with software developers. As I said, HMRC has held discussions with representatives of charities, payroll software providers and businesses to help inform the design of the new system. In particular, in July last year the 2014-15 RTI technical pack for software developers was published on the HMRC website and specified that an employment allowance indicator would be needed on the employer payment summary. There is ongoing engagement with stakeholder groups around this draft employer guidance with a view to making employer guidance available early next month. However, this does not affect the calculations in the software packages.
HMRC will also target communications to key stakeholders and use HMRC publications, for example, the Employer Bulletin in February and March, to further build awareness. I hope that I can reassure the noble Lord that the difficulties that he is rightly concerned about are likely to be minimised by the fact that the allowance is very easy to claim. Employers will receive it through their routine operation of PAYE. They will simply need to confirm their eligibility via their regular payroll processes. Enabling the employment allowance to be claimed by employers through their payroll software will ensure that it is straightforward to claim. They will simply have to indicate yes, once, in their employer payment summary. The claim will continue from tax year to tax year.
After making the claim, employers will not need to pay their first £2,000 of secondary class 1 NICs. If their secondary class 1 NICs liability is less than that in the first month or quarter, dependent on whether they pay their PAYE liabilities monthly or quarterly, any unused allowance will be carried forward to the next month or quarter until it is exhausted. If an employer does not have an employer payment summary on his own software, he can use the free HMRC Basic PAYE Tools package. For the very small number of eligible employers—around 2,000—who still submit their returns to HMRC on paper, there will be a paper process to mirror the IT process.
The Government are very keen that this new proposal should have the maximum possible impact because we want to see it promote economic development. We have gone to considerable lengths to engage with the industry and provide the private sector and the charities sector with information in good time. We think that we have prepared well. The guidance will be out next month and there will be ongoing discussions with all the relevant stakeholder groups and individual firms and organisations that might claim it. In those circumstances, I hope that the noble Lord will withdraw the amendment with his proposed new clause.
Lord Davies of Oldham
My Lords, once again I am grateful to the Minister for fleshing out some of the arrangements that the Government will put in place to ensure that this operation is as straightforward as possible.
Reference was made to sports clubs. In my previous incarnation before the most recent general election, I had quite a bit to do with sports clubs and their administration. I have not the slightest doubt that the mega-clubs of the Premier League have no need for the Government to advise them on how they should organise their tax affairs. They seem to be pretty adroit in doing so at present. However, sports clubs run by a small number of people, where decisions are generally taken by amateurs, even if there are one or two professional employees, are a different matter. They will need to be provided with the easiest possible transactions to ensure that they benefit from this measure. We want to see sports clubs and charities as well as mainstream employers adopt a positive, outward-looking perspective as regards young people. After all, they are most likely to engage successfully with youngsters through the sport in which the latter engage.
I emphasise to the Minister that this is a probing amendment. I am grateful for his assurances that the ability of even the smallest employer to make the claim when it is due does not come down to much more than ticking one box, or even answering yes or no in that box. I am reassured on that front. I beg leave to withdraw the amendment.
Lord Davies of Oldham
“(13) The Treasury shall publish a review of the level of youth unemployment as at December 2013 and the effect on the level of youth unemployment if the amendments made in this section were required to be brought into force on 6 April 2014.”
Lord Davies of Oldham
This amendment would place a direct responsibility on the Treasury, so I know that the Minister will respond to it creatively, positively and in the full recognition that we will expect him to fulfil all the obligations entered into.
We, of course, see the advantages of this initiative and we hope that it will encourage employers to take on more young people under the age of 21. We all know the difficulties that our society has undergone in recent years in terms of employment, and we all take pleasure in some welcome signs at last of an improvement in the employment statistics. But those improvements are up against a colossally difficult situation for young people. They have the right to expect, after they have been through their educational experience, at whatever level, that they are part of a society that ought to welcome them into gainful employment—but it presents a desperately bleak face at present.
We all know of the numbers of applications that people have to make, even for roles that are far from the massively competitive positions that we expect at graduate or postgraduate level. We are talking about school leavers who have to produce a CV dozens of times to make any kind of progress. Progress for most of the time, of course, is just the adjustment to rejection. We recognise that the Bill represents a contribution towards helping young people. We do not think that it is bold enough. It does not go far enough to tackle the great problems that we have with youth unemployment, but the situation will be greatly improved if we can measure progress. That is what the amendment would do. It would require a review to be undertaken on the effects of the policy on youth unemployment.
Of course, this is a probing amendment. I have no intention of taking it further, but I am asking the Minister to put on record as much as he can about the likely positive impact of this proposal. He will appreciate that we are concerned that many months will elapse before it starts to take effect. As I enumerated in discussing an earlier amendment, the Government’s record in this area is not good. They produced a policy that we severely criticised at the time and thought was destined to fail, but they seemed to take an inordinate amount of time to recognise that its failure had occurred. That is why the Government are in this position. On the national insurance contribution dimension to employment issues, these were wasted years and there is not much time left in the present Parliament for the Government to show real achievement.
We asked questions in the other place about crucial issues, but we did not feel that we got answers that totally satisfied us. On one question we got no answer at all: how will it be paid for? I would like the Minister to comment on that. It also raises the issue of how tight the timeframe is for employers. I recognise that they will have to move with some dispatch to take advantage of these proposals, but that is what the country is expecting. In circumstances of youth unemployment being in such a critical state, we are expecting employers and the Government to act with dispatch, and effectively.
Will the Minister comment on an aspect that was emphasised in the other place—namely, that we have to take care what demands we place on IT systems as regards the ability of receiving bodies to get their systems squared up, and of the Treasury to adjust to the new measure? The Treasury ought to be light on its feet in these terms. If it is slow, that may be occasioned by the number of disasters that have befallen other departments in this context—for which I am sure the Treasury disavows any responsibility. However, given that this policy is urgently needed, it ought to recognise that responses which blame the amount of time needed to get IT systems squared up look a little—I will not use the word “evasive”, as it is a pejorative term in the tax context, but they suggest that the Treasury is trying to excuse a lack of drive at the centre. I hope that the Minister will reassure me on that point.
Lord Newby
My Lords, this proposed new subsection would require the Treasury to publish a review of the level of youth unemployment as of December 2013 and of the effect on the level of youth unemployment if the zero rate of employers’ class 1 NICs on the earnings of employees under the age of 21 were to be brought into force from 6 April 2014 rather than 6 April 2015.
I would like to explain to the noble Lord why I believe that the amendment is unnecessary. The Government are committed to increasing employment levels for all parts of the working-age population. Employment is now at its highest ever level and unemployment is lower than when the Government came to power. The Government recognise the challenges posed by youth unemployment, and dealing with them has long been a priority of ours and of the predecessor Government. For example, around 370,000 young people have been supported through the Work Programme since June 2011. Furthermore, the Youth Contract provides almost £1 billion in funding to support up to 500,000 young people into employment and education opportunities.
The employment figures published yesterday showed another significant fall in youth unemployment. Although it is not enough, it is not the first quarter in which we have seen such a fall, and now the overall aggregate of youth unemployment is falling significantly. As we have already debated, it is extremely difficult to say what proportion of the fall is attributable to one cause rather than another. However, overall, the improved economic environment and the Government’s policies taken together are clearly having a significant beneficial effect on youth unemployment.
The Autumn Statement, which gave another push in this direction by abolishing employer NICs for under-21s, builds on the policies already in place, and has been widely welcomed by industry. Indeed, John Cridland at the CBI said that the policy,
“will make a real difference and help tackle the scourge of youth unemployment”.
However, I see little point in the Treasury publishing a review of the level of youth unemployment. The Office for National Statistics is responsible for publishing statistics on employment, and these regular releases are available to the public through the ONS website. There is a limited case for the Treasury intervening and also publishing a review.
In addition, I do not think that there is any value in attempting to estimate the impact of a policy introduced at a theoretical date, and I am not sure that the noble Lord is pushing this element of the amendment particularly hard. The Autumn Statement announced that employer NICs would be abolished for those under 21 years of age from 6 April 2015. Attempting to deliver this a year earlier on 6 April 2014 would increase the administrative costs to business, and rushing the measure through in this manner would be likely to lead to cost, confusion and the failure of many employers to take it up.
Such a tight timeframe would not give employers, payroll software developers and HMRC sufficient time to update their IT systems. As regards HMRC, there would not be enough time to ensure that the policy was implemented in a way that does not disrupt its other important IT systems. These difficulties were recognised by the Chartered Institute of Payroll Professionals, which commented on the Autumn Statement:
“We … welcome the news that this will not be enacted until April 2015, giving the payroll industry time to plan properly.”
This is not a case of the Government being complacent or lacking in energy and drive; it is simply that I do not want to be at the Dispatch Box under the lash of the noble Lord because the Government have not implemented a policy with the maximum possible efficiency and effectiveness. The timetable that we have adopted, in our view, will enable us to do it in due time, so that employers and HMRC can prepare and, when the policy comes into effect, it will be well prepared for by all who need to implement it. The fact that it has already been announced means that employers can begin to think about how they will choose to benefit from it when it comes into force.
The noble Lord asked how much it will cost and how it will be funded. In its first year, it is expected that it will cost £465 million, rising to £530 million by 2018. Although the policy obviously carries a significant cost, overall, the Autumn Statement in which it was introduced was fiscally neutral and reinforced the Government’s commitment to reducing the deficit. It is worth repeating that this policy represents half a billion pounds-worth of support to young people in employment—so it is very significant and, we hope, will have an equally significant impact on youth unemployment.
In view of all those considerations, I hope that the noble Lord will withdraw his amendment.
Lord Davies of Oldham
I was certainly not underestimating the significance of the programme. We all know the magnitude of the task before the Government in dealing with youth unemployment, so the figures that the noble Lord has cited seem apt for the task in hand—except that we consider the scheme inadequate for the scale of young people’s difficulties, which we can already measure.
I am grateful to the noble Lord for giving us those facts and am reassured by them. On the question of delay, I sometimes think, on the issues that we have raised with regard to the compatibility of IT operations, that in the wonderful world in which we live, the magnificent speed with which computers can bring huge advantages to society have to be balanced against the fact that the introduction of legislation seems to be tied up in a computed timescale which all pen-pushers would regard as unacceptable. After all, what is the Minister saying to me? He is saying, “We recognise that the present policy that we are operating on the role that insurance contributions can make to improve employment is a dead loss to the country. It has such marginal utility that no one will weep for its passing”. But that policy has dominated three years of this Government’s life, and he is saying that its replacement will see the light of day virtually on the brink of the next Government coming to power.
Of course the Minister is right to say that proper consultation has to take place, that we must not add to the burdens on business unnecessarily and that computer systems are mightily complex and vastly costly when they go wrong. The Government are in quite a good place to assess the costs when computer systems go wrong, because they have a few instances on their doorstep at present. However, the implication is straightforward: the policy of using national insurance contributions and elements of alleviation has failed for three years, and it will make only a marginal impact over the duration of this Government’s life. I beg leave to withdraw the amendment.
Lord Davies of Oldham
My Lords, we have taken the strategy of objecting to the clause because as a matter of principle we want to discuss with the Minister what is going on. Of course, it is not that we are objecting to the application of GAAR to this policy; we want to address some issues with regard to tax avoidance. I must say that I will make a note for any succeeding Labour Ministers whose path happens to cross mine in the future that when we produce concepts that will be abbreviated down to four letters, they might like to produce a somewhat more attractive word than GAAR. Life is difficult enough. We do not often speak the language of Shakespeare in the House, but to constantly use initials that grate on the mind the moment they are introduced is misfortunate. However, it is GAAR that we will be talking about and that is the word I shall use throughout my contribution. I like to think that I am giving the Minister due notice that I shall think of something more felicitous for the Government 15 months from now—but that is probably wishful thinking on my ability rather than a prediction about whether we will have a different Government in 15 months’ time.
GAAR is not an answer to all tax avoidance, as is freely recognised. In fact, when looking at the returns thus far, we are all too well aware of how little they measure up to the massive challenges presented by those who seek to avoid tax with dextrous moves and huge resources. We know the ability of multinational organisations to indicate, in any administration that has an effective tax scheme, that very little of their operation is ever tax-worthy and tax-liable. Of course, a great deal of their activity is carried out in administrations that have precious little in the way of ability to abstract tax from them. That is to say nothing of the transfer of tax out of a significant country in which they operate: for example, the UK, which is a very significant market. The loss of tax revenue to any country is to be deplored when the activities of these companies are so significant in this country.
GAAR, as it stands, is so narrowly defined that the number of occasions on which it can be usefully deployed is obviously limited. The scale of the concept that the Government are working on at present is ludicrous in relation to closing the tax gap that we have all exemplified and identified. It will not go anywhere near closing the tax gap of any one multinational whose figures have come to light in recent years, let alone the totality of the position. We want to prevent that kind of abuse being extended. There is no doubt that the public reaction to those who avoid tax in an extensive and often blatant way is to regard it as utterly unacceptable.
The GAAR is in danger of becoming a bit of a fig leaf for the Government in that, when a difficult issue about tax abuse and avoidance is raised, reference can be made to the GAAR and everything will be resolved. However, the figures utterly and totally belie that fact. That is why I am asking the Minister to reassure the Committee that he will keep in mind the effectiveness of the GAAR. A government scheme for closing down tax avoidance should do more to close a tax gap than they suggest this policy will.
Lord Razzall (LD)
My Lords, when I looked at the amendments that the noble Lord had put down and saw this one, I had a wonderful fantasy that what we were seeing here was Labour adopting the stance of being in favour of tax abuse through the use of NICs. I was already beginning to draft the leaflet that would pin this new policy on the Labour Party. Sadly, having listened to what the noble Lord said, I realised that that was not what he was saying at all.
No doubt the Minister will respond to attacks on the GAAR. I listened very carefully to the speech of the noble Lord, Lord Davies, but did not hear any explanation of why, if the GAAR exists and includes provisions in relation to tax abuse generally, NICs should not be included in it. I understand that the noble Lord does not like the GAAR and does not think that it is effective—but, given that we have it, I am not sure why we should not include national insurance in it.
Lord Newby
My Lords, I am grateful to the noble Lord for introducing this debate, because it has given me the opportunity to make a suggestion to him about what we might replace the term GAAR with. I wonder whether he would be happy if instead of calling it GAAR, we called it GREAT, as in Great Britain: the general rule to eliminate the avoidance of tax. If we had done that, we might have satisfied the noble Lord, and summed up our emotion when we think of the new provision.
The noble Lord’s basic argument is that we are not doing enough. As a veteran of debates on GAAR over the past decade, I recollect that noble Lords in the previous Government—perhaps even the noble Lord, Lord Davies—explained to me why the GAAR was totally impossible, completely unworkable and the Government would not countenance it. Indeed, they did not; they did not do anything in this area. The fact that the noble Lord finds this inadequate is slightly sad, given their failure to act in this area.
The noble Lord raised a number of points of failure, as it were, but one of them was in respect of the agreement with Switzerland. The agreement with Switzerland has not brought in as much as was expected, but the Exchequer has received almost £800 million via that agreement. That is £800 million that we would not have had, £800 million that the previous Government showed no inclination to pursue. That is only one of a large number of measures that we have taken to ensure that people and companies who are avoiding or evading tax do not get away with it. In terms of personal taxation, the Lichtenstein disclosure facility has yielded a lot more than was ever envisaged and, along with the Swiss agreement, is part of driving down the ability of those with large resources to avoid tax.
The new automatic information sharing agreements, which have followed the FATCA legislation in the United States, are revolutionising the ability of HMRC to gain information about the tax affairs and bank holdings of British nationals, whether those are held in the Channel Islands or some Caribbean tax havens. Along with the Swiss and Lichtenstein démarche, that will make a big difference to our ability to get the money to which the Government are entitled. On companies, as the noble Lord knows, the work being done in the OECD, particularly on base-erosion and profit-shifting, is aimed to deal with the particularly egregious examples of large multinationals paying very little tax indeed.
As for domestic action, GAAR is only one plank in our overall strategy. HMRC published Levelling the Tax Playing Field alongside Budget 2013 to provide an update on the strategy and to set out the full range of measures being taken in this area. Some people have argued that because GAAR is tightly focused, it will not hit many of the targets and almost gives a green light to other forms of tax avoidance, but if you look at the whole raft of measures that we have taken in Budgets and Finance Bills—most recently, some announcements in the Autumn Statement—it becomes apparent that we have taken measures to protect several billion pounds of Exchequer revenue which might otherwise not have been agreed.
We have, for example, taken firm action to clamp down on stamp duty land tax avoidance, introducing the new annual tax on enveloped dwellings, and continue to close loopholes as quickly as possible after they emerge. In the summer, we publish a consultation entitled Raising the Stakes on tax avoidance, seeking views on proposals for a new set of obligations for promoters of high-risk tax avoidance schemes.
HMRC does an excellent job defeating tax avoidance schemes in court and making sure that people know that many of the schemes simply do not work, but we know that there is much more to do. That is why the consultation also encouraged users of avoidance schemes to settle their tax affairs after similar cases have been lost in court or tribunal. The GAAR is an important step to increase the pressure on the tax avoidance industry, but it is only one step, and we continue to take further action and devote more resources to the fight against tax avoidance in all its forms.
With those reassurances, I hope that the noble Lord will feel that he does not need to press the point.
Lord Davies of Oldham
I am grateful for both contributions to this debate. I particularly appreciate the noble Lord, Lord Razzall, coming along just to discuss GAAR with us in the hope that the Labour Party would make an almighty blunder by the amendment. Far from it; we are guided by safe hands. I also congratulate the noble Lord on finding the time to be present in the Committee when there are so many absorbing issues which affect his party, to which I have no doubt he is devoting an inordinate amount of time to get an effective resolution.
As for the Minister, I recognise that any returns from GAAR are to be appreciated. The fact is that the product thus far in several instances falls far below expectation and will, if we go on for much longer, leave the public enormously dissatisfied because we are not implementing an effective strategy to deal with significant employers, particularly the great multinationals. That disillusionment among the electorate will be so manifest that the Government will be driven to improve their performance.
We used the Motion on clause stand part to look at the way in which GAAR might contribute. A little is better than nothing; that is why I will not oppose the clause; but I tell the Minister that the present rate of progress on GAAR, which is evident in this measure but is certainly the case in much more significant terms across the country, falls so far short of public expectation that the Government will be much criticised on it.
However, that is probably a debate for another day, so I do not oppose the Motion that the clause stand part.
Lord Davies of Oldham
My Lords, if I may, I would like to include Clause 14, which we indicated that we wanted to debate, in this discussion.
The Minister has been constructive in his responses this afternoon, and I thank him for that. If I am less than precise about the issue which I am seeking to identify here, I hope that he will recognise the complexities of the issues involved. We have had one or two late missives. I got my letter from him a mere three-quarters of an hour or so before I came to the debate and, although his prose is lucid and readily comprehensible, I cannot pretend that I am able fully to address that to the Bill in the way that I would like.
If I establish in my argument the broad terms of the issues that give cause for concern, but they lack the absolute precision that we would normally expect, I hope that the Minister will forgive me. I have no doubt that he is both capable himself and will have expert advice to ensure that we have a fruitful discussion about the precise point.
Lord Razzall
My Lords, the noble Lord has proposed that Clauses 13 and 14 should not stand part of the Bill. The clauses relate to tax avoidance and the abuse of limited liability partnerships. The Minister will be aware that there is concern among professional organisations, particularly the Law Society—not in relation to the Bill itself, but about what will happen in relation to the regulations that will be brought forward. Noble Lords will have received a briefing from the Law Society, because limited liability partnerships were introduced some time ago for professional partnerships, not primarily for tax purposes but to limit the liability of what were previously general partnerships to actions for negligence. That was the major driver for the creation of limited liability partnerships. Most significant law firms and firms of accountants now operate as limited liability partnerships, so there is clearly concern among them that the definitions of employees and partners should be clear.
I received representations from the Law Society this morning, but the basic thesis is that the consultation exercise to determine how a limited liability partner should be properly treated as a partner, or how they should be treated as an employee, was based on the wrong assumptions. The consultation went out on certain assumptions and the proposals on the implementation of the regulations, which I have not seen, change that basis. Therefore, the consultation itself is ineffective.
I appreciate that this does not go to Clauses 13 and 14 of the Bill, because they simply provide for the regulations to be brought in. However, between now and Third Reading the Government ought to respond, saying either that the Law Society in its representations is wrong, and why, or alternatively explain how they propose to deal with what I suspect the Law Society is asking for, which is further consultation before the regulations are brought in. I do not know which of the two is correct and I have not had time to form my own opinion on that. This is an important issue because the limited liability partnerships are important structural mechanisms for professional partnerships. We clearly need to get this right before we change the law in this respect.
Lord Newby
My Lords, I am grateful to both noble Lords for their contributions to the debate. I apologise to the noble Lord, Lord Davies, for the fact that he has only just received the letter. As he pointed out and knows very well, it has been a somewhat unusual week in terms of my ordered conduct of business and the letter was sitting on my desk for rather longer than it should have been. It is only fair to point out that this is no failure on the part of officials to respond in a timely manner; it is my failure. I am sorry that the noble Lord has only just got the letter.
Two points have been raised. The second was raised by the noble Lord, Lord Razzall, with regard to consultation. He asked whether the legislation had gone beyond the proposals set out in the consultation document. The Government believe that it does not go further than originally proposed or go beyond the original policy intention. In fact, as a result of the consideration of the consultation responses, the Government dropped the first of the original two conditions which were broadly in line with the employment status tests, which would have meant that even senior partners in major professional firms might have been reclassified as employees. The second condition, which contains ownership or economic interest or risk tests, has been slightly broadened because of this change, but it is still a narrower measure than if both conditions had been implemented as originally proposed. The Government also made clear in Budget 2013 and in the consultation document that the proposals will apply to higher-paid staff in the professional services sector and the lower paid if they are LLP members who receive a largely fixed reward and carry little economic risk or interest.
As regards the status of the secondary legislation and the issue of retrospectivity, the noble Lord referred to two sets of secondary legislation. The first, in Clause 13, had already been published in draft and the second, in Clause 14, was, I believe, enclosed with the letter to the noble Lord and has been put in the Library.
This legislation introduces half of a series of provisions that relate to income tax and national insurance. Slightly unusually, we are legislating for the national insurance part first because we happen to have this Bill before us. The relevant identical provisions relating to income tax will be in the Finance Bill, which will be introduced later in the year and will become the Finance Act 2014. The intention is that the provisions in respect of income tax and national insurance will not apply retrospectively but will apply from April 2014. That is made absolutely clear and set out in the secondary legislation.
I am told that the use of the earlier date in the primary legislation follows precedent in respect of other pieces of legislation and does not mean that the Government will introduce this measure going back a decade or, indeed, going back at all. There are technical arguments for putting that earlier date in the legislation, but the secondary legislation, as I said, makes it absolutely clear that the provisions will come into force from this coming April. Therefore, there is no question of an undue degree of retrospection. I hope that the letter which I sent to the noble Baroness, Lady Thomas of Winchester, set that out clearly and, I hope, satisfies the committee and the noble Lord.
Lord Davies of Oldham
My Lords, if it satisfies the committee, it will certainly satisfy this noble Lord, because I hold the committee in the greatest respect and I know how thorough it is in its work and its cumulative expertise, which I could not hope to match—so I am reassured on that front, which is why I thought that I did not need to go into an inordinate degree of detail. I am grateful to the noble Lord, Lord Razzall. I have seen no communication from the Law Society, but one or two people have made representations to us. They do not represent any particular group or profession, but are people who look at these matters closely and thought that they had identified an area of difficulty, which is what I sought to air under the amendments.
I am largely satisfied with the Minister’s response and will of course not press the Motion. I wanted to give him the chance to identify the Government’s position. He knows that we will ensure that those who have made representations to us and others get the chance to examine this thoroughly. I appreciate that, in the spirit of good will that obtains in the Committee, and obtained on Second Reading, the noble Lord is looking forward to a fairly straightforward exercise on Report and at Third Reading. I think that I can go 97% of the way to promising that, but this issue concerns the 3%. I cannot give a full assurance at this stage, because I do not know what the response of others will be, but I am sure that he will have worked hard enough to guarantee that the response is favourable, particularly from the Delegated Powers Committee. I will not press the Motion.
House of Lords
(10 years, 3 months ago)
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Crime: Metal Theft Task Force
(10 years, 3 months ago)
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Lord Faulkner of Worcester
To ask Her Majesty’s Government whether they will continue to support the metal theft task force.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, no one doubts the success of the metal theft task force. The Government have provided funding from January 2012 to 31 March 2014. With a new licensing regime in place since October, we will take a view nearer the time as to how to take forward our efforts to tackle metal theft in the future.
Lord Faulkner of Worcester (Lab)
My Lords, the Minister is right to say that the metal theft task force has been successful. The British Transport Police, in particular, deserves a lot of credit for the work that it has done. This has resulted in a 44% reduction in metal theft-related crime in 2012-13 and, according to ACPO, has saved the national infrastructure £339 million, an incredibly good rate of return on the £5.5 million that the task force has cost so far. Does the Minister agree that, with the introduction of cashless transactions, which your Lordships added to the Legal Aid, Sentencing and Punishment of Offenders Bill, and the passage of the Scrap Metal Dealers Act 2013, we are at last turning the tide against this awful crime? Would it not be extraordinarily short sighted to cut off the funding of the metal theft task force at the end of March and should we not be building on that success and not jeopardising it?
Lord Taylor of Holbeach
As I said, there is no doubt that the task force has been very successful and, together with the legislative change which this House assisted in bringing in, has made a great difference in the battle against metal theft. A judgment needs to be taken and the Government will consider this. The noble Lord might be interested to know that we received a letter on Tuesday from Paul Crowther, who is the ACPO leader on this matter.
Lord Greaves (LD)
My Lord, I associate myself very much with the remarks of the noble Lord, Lord Faulkner of Worcester, but the Scrap Metal Dealers Act to which he referred contained one major defect. Local authorities which license scrap metal dealing are not able to do it through their non-executive licensing functions but have to do it through their executive or cabinet, which is causing difficulties and problems. When will this be remedied?
Lord Taylor of Holbeach
I had not been aware that that was presenting a particular problem and I should be grateful if the noble Lord could advise me further on it. We do not want to create difficulties in the implementation of any legislation. The measures taken have been extremely effective in reducing metal theft and I am sure that the House will welcome that.
The Lord Bishop of Ripon and Leeds
My Lords, the metal theft task force has been of inestimable value in checking the epidemic of lead theft from churches. Stripping of lead from church roofs has caused extensive rain damage to historic interiors. Will the Minister consult English Heritage, the Churches Conservation Trust and the cathedrals and church buildings division of the Archbishops’ Council as to how the destruction of our heritage can be combated and the work of the task force maintained?
Lord Taylor of Holbeach
I am very pleased to say that one of the effects of the task force and the legislation has been to add greater protection to our historic buildings. I have, myself, been on the roof of Northampton town hall—I did not jump; I climbed down—to see how encoding of the lead on the roof protects that metal. I think the right reverend Prelate will admit that ecclesiastical insurers are now looking at the premiums they have to charge as theft from churches has been greatly reduced. I am pleased to say that a gang of thieves in my own diocese of Lincoln was sentenced very heavily for the damage it had done.
Baroness Whitaker (Lab)
Is the Minister aware that there are many reputable scrap metal dealers for whom the licensing system is so onerous as to be a restraint of trade? I am referring to a number of Gypsy and Traveller firms which make their living in this way. They have not found it easy to get licences and there is little sympathy in the town hall largely because of prejudice. How can the system be made more user-friendly?
Lord Taylor of Holbeach
We want to see the trade legitimised in every way and the licensing process is part and parcel of it. I am aware of the noble Baroness’s interest in the welfare of the Gypsy and Traveller community. We are talking to it about ways in which we can make sure that it is properly integrated into the legal framework we have created.
Lord Laming (CB)
My Lords, as thieves stripped the signalling wire overnight recently on the line that I use, which meant that there were no trains for the whole of the following day, which caused immense inconvenience to everybody, particularly me, could the Minister maintain the momentum of this piece of work? It has done a great deal of good, but there is clearly more to be done.
Lord Taylor of Holbeach
We have not eliminated metal theft and, indeed, the infrastructure damage involved in metal theft led to the British Transport Police being instrumental in meeting us and setting up the task force. The damage was considerable and it was not just the theft of the metal but the on-costs, as the noble Lord said.
Lord Cormack (Con)
My Lords, speaking as a vice-president of the National Churches Trust and the Lincolnshire Churches Trust, I must say how much we appreciate what my noble friend has done in this regard. However, we are all a little apprehensive about 31 March. It is crucial that we do not lose the momentum that has been sustained over the past year. I should be grateful if my noble friend could give us some reassurance on that.
Lord Taylor of Holbeach
I have given the noble Lord, Lord Faulkner, the assurance that we will consider it, and I think I can go no further than that.
Lord Wills (Lab)
My Lords, everyone will welcome the recent decline in this dangerous theft, which does such damage to local businesses and communities. The Minister will be aware that this crime is driven primarily by world commodity prices and all experience shows that thieves respond very quickly to changes in those commodity prices. Given the recent decline in world commodity prices, can the Minister give any assessment of how far this recent decline is due to that and how far it is due to the work of the metal theft task force?
Lord Taylor of Holbeach
I cannot really comment on the noble Lord’s analysis of market conditions in the capitalist market that may underline this matter. The truth is that we were all aware that a lot of illegitimate traffic was going on throughout the supply line of this industry. The British Metals Recycling Association wanted to be a party to making this a proper legitimate framework for a proper industry. We have that framework now and I am sure that noble Lords will support all that is being done to ensure that that is what happens.
Public Sector: Debt
(10 years, 3 months ago)
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Lord Wigley
To ask Her Majesty’s Government what is their latest estimate of the United Kingdom’s public sector debt, and what was the comparable figure in May 2010.
Lord Newby (LD)
My Lords, the latest public sector finances statistical release set out that public sector net debt was £1,254.3 billion or 75.7% of GDP in December 2013, compared to £846.4 billion or 57.2% of GDP in May 2010.
Lord Wigley (PC)
My Lords, does the Minister accept that that is a serious deterioration in the level of debt, and that UK debt now stands higher as a proportion of GDP than does that of Spain? Do the Government accept that, at some point soon, they will have to start reducing that debt? In so doing, will he give an assurance that they will not continually place the burden on the weakest members of our community, who depend on public services and social benefits, but will, at the appropriate time in the economic cycle, raise taxes, so that those with the broadest shoulders start bearing some fair share of this gigantic problem?
Lord Newby
My Lords, the Government are determined to bear down on the level of public debt. Under current plans the debt will peak at 80% of GDP in 2015-16 and will then begin to fall. Whether the fiscal consolidation is dealt with entirely by cuts in expenditure or whether there will be a balance between further constraint on expenditure and additional tax increases, is, I suspect, one of the battle lines that will be drawn in campaigning for the general election.
Lord Kirkwood of Kirkhope (LD)
My Lords, reducing the annual deficit is one thing; eliminating net public sector debt by 2018 is quite another. Can my noble friend give the House an assurance that in future, deficit reduction policies, including the capping of annually managed expenditure, will be pursued by the coalition Government only if protection is made available for low-income households?
Lord Newby
My Lords, sadly, we are not going to abolish the debt by 2018, although I hope that we shall abolish the annual deficit by then. The Government have set out expenditure plans for 2015-16; how expenditure falls beyond that will, as I said, be the task of the next Government. The parties will set out their plans, and my party has already explained that it would expect further fiscal consolidation to take place, but that a proportion of that fiscal consolidation will need to be borne by the shoulders that are broadest.
Lord McFall of Alcluith (Lab)
Is there a case for the Government to establish an education programme to distinguish between the deficit and the debt? Is it not misleading for them to focus only on the deficit, particularly when their actions are making the national debt increase by more than 60% compared with any other European country?
Lord Newby
My Lords, the Government are trying to get under control a disastrous fiscal situation that we inherited from the previous Government. I am not quite sure whether the noble Lord is saying that we should cut expenditure more, but if he is, I would be grateful to hear his specific proposals.
Lord Higgins (Con)
Does my noble friend agree that, although the deficit has been reduced by one third or so, extra borrowing is still increasing at an alarming rate? The Chancellor is therefore absolutely right to make it clear that his intention is to eliminate the deficit completely, if we are not to burden future generations with the terrible task of dealing with the borrowing and also incurring higher interest rate costs. Does my noble friend further agree that it is high time the Opposition recognised the fact that reducing the deficit is the only possible way forward?
Lord Newby
I do agree with my noble friend. I am not sure that it is widely understood that cutting the deficit, which we are doing, will still mean that this Government will have borrowed an extra half a trillion pounds during the course of this Parliament. The party opposite has so far come forward simply with plans to increase that additional borrowing further. That would simply not be credible.
Lord Davies of Oldham (Lab)
My Lords, “the party opposite” is critical of the Government for the obvious reason that, if you run an economy with such abysmal rates of growth as this Government have done over the past three years, you find yourself unable to hit the target for the deficit that the Chancellor himself identified in 2010.
Lord Newby
My Lords, I am sure that the noble Lord is an assiduous reader of publications by the IMF and will have seen that, within recent days, the IMF has upgraded its forecasts for growth to 2.4% next year and 2.2% the next year, which is higher than for France and Germany.
Lord Grocott (Lab)
My Lords, does the Minister recall that during the time when the economy was clearly not growing at all but flatlining, the Government repeatedly said that it was due to the eurozone or the weather but nothing to do with the Government? Can the Minister please confirm that it is his view from the Front Bench that, if there is any upturn in the economy at all at the moment, it will be nothing to do with the Government?
Lord Newby
It is not a question of whether there is any upturn in the economy; there is a very significant upturn. Government policy ensured that, when we were facing very strenuous headwinds, the economy did better than it would otherwise have done, and it will do better in the upturn now as a result of a whole raft of policies that this Government are pursuing.
Justice: Non-custodial Sentences
(10 years, 3 months ago)
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Lord Campbell-Savours
To ask Her Majesty’s Government what assessment they have made of the impact of non-custodial sentences on the safety of the public.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, those who commit serious and dangerous offences should expect to receive long custodial sentences and this Government have ensured that tough sentences are available. Less serious offenders can be effectively and safely punished in the community. However, we have amended the law so that sentences served in the community combine punishment with effective rehabilitation. Since 2010, those who break the law are more likely to go to prison, and to go to prison for longer.
Lord Campbell-Savours (Lab)
I find that very hard to believe. How can the Government claim to be tough on crime when a Ministry of Justice Answer in the other place revealed that in 2012, of 16,000 criminals convicted of rape, sexual assault, manslaughter, grievous bodily harm and robbery, all crimes characterised by violence, according to the government figures 9,600 of them—that is, 60%—walked free without even a custodial sentence and sometimes without even a tag, while nearly 40% of those convicted actually served less than 24 months in prison? These are serious crimes. How can people feel safe in their home or on the streets of Britain in the light of these statistics?
Lord Faulks
My Lords, this Government take the view that the sentencing of a particular offence is best left to the individual judge, who has knowledge and appreciation of the particular facts surrounding the commission of an offence. There are guidelines and, as the noble Lord will be aware, recent sentencing guidelines on sexual offences provided by the Sentencing Council, an independent body. If he cares to read those sentencing offences guidelines, he will realise how lengthy the suggested sentences are. If, in a particular circumstance, a judge passes a sentence which is unduly lenient, of course the Attorney-General can take that unduly lenient sentence to the Court of Appeal for review.
Lord Dholakia (LD)
My Lords, while there is concern that those sentenced to a non-custodial alternative may reoffend, is it not right that the courts should send to prison those whose reoffending makes any other course unacceptable, and that those who are sent to prison should stay there no longer than is strictly necessary?
Lord Faulks
My Lords, I speak as someone who sat as a recorder—a part-time judge—throughout the period of the previous Government, and deciding whether or not to send someone to prison is the most difficult task that we perform. Sometimes people have to be sent to prison; on other occasions, it is considered possible and sensible, in the long term, to provide them with the opportunity of rehabilitation within the community. This Government are committed to providing constructive things for people to do while they are being rehabilitated in the community, and I agree with my noble friend.
Baroness Finlay of Llandaff (CB)
My Lords, can the Minister update the House on the progress of the pilots for sobriety schemes as alternatives to custodial sentences for alcohol-fuelled crime?
Lord Faulks
I believe that there will be an announcement shortly on that but I am unable to give the noble Baroness precise details at this moment. When information is available, I will write to her.
Lord Beecham (Lab)
My Lords, given the risks to the public, highlighted by my noble friend’s supplementary question, and the potential difficulties in managing offenders whose risk category may change, why are the Government not properly piloting their controversial changes to the probation service, as urged by the most recent report of the Justice Select Committee? Is there not a real risk of the Lord Chancellor proceeding in haste and the community and victims of crime repenting at leisure?
Lord Faulks
My Lords, the Government believe that it would not be desirable to introduce a sentencing reform in one part of the country but not another. To do so would risk postcode justice, with some offenders getting different sentences to others. Similarly, having competing services in any one area of the country is not a viable approach if we want to extend supervision to short-sentenced offenders. In every other respect we are carrying out extensive local testing of the reforms in no fewer than 14 probation trusts. The 21 CRCs—community rehabilitation companies—that we are creating will remain in public sector ownership until the conclusion of the competition. This gives us further opportunities to carry on testing and refine the system.
Baroness Gardner of Parkes (Con)
I congratulate the Minister on his first appearance at Question Time. There is a very good rehabilitation scheme run by National Grid, which trains young first offenders who are becoming very valuable members of society because they have been given a way of earning a living in a respectable and efficient way to the benefit of us all. I think that he should be aware of this scheme, which was started by National Grid and is now supported by many other companies. Does he believe that this sort of rehabilitation continues to be valuable?
Lord Faulks
The Government consider it to be valuable, and it is our intention that a range of different requirements will be placed on those who are subject to supervision in the community. It is hoped that a number of suggestions, from both public and private providers, will assist in the rehabilitation revolution.
Lord Ramsbotham (CB)
My Lords, rehabilitation in the community depends on well trained probation officers. Will the Minister tell the House whether there are any plans to insist on compulsory training of members of the private sector community rehabilitation companies that will be responsible for the supervision of medium and low-risk offenders in the community in future?
Lord Faulks
I know that the noble Lord takes a great interest, and has great expertise, in this subject, and I can assure him that that is very much the intention. It is intended to set up a form of probation college that will maintain standards and ensure that all those involved in the project have suitable experience.
Baroness McIntosh of Hudnall (Lab)
My Lords, I am sure that the noble Lord will agree that rehabilitation is not an event but a process. Will he say what other criteria the Government are using to assess the success of rehabilitation, other than non-offending?
Lord Faulks
Non-offending is clearly extremely important. One of the difficulties that the Government have identified is that those who receive sentences of 12 months or less have not been getting the support in the community that they should. This will change as a result of government initiatives. Other factors, such as obtaining employment and making sure that they have appropriate skills, are equally important for the long term.
Health: Confidential Patient Information
(10 years, 3 months ago)
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Lord Hunt of Kings Heath
To ask Her Majesty’s Government what assessment they have made of the likely impact of proposed European Union legislation on their plans to sell confidential patient information to drug and insurance companies.
Lord Hunt of Kings Heath (Lab)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I refer noble Lords to my interests in the register.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, while we have concerns about the EU proposals, there has been no cause to conduct an assessment of the sort suggested at this stage. The Government do not sell confidential patient information to companies. Drug and insurance companies can receive patient confidential information only where they have a legal gateway, either consent of the patient or some form of statutory authority. In these circumstances the cost of providing information may be recovered, but it is not sold.
Lord Hunt of Kings Heath
My Lords, clearly there is great advantage in using patient research in large-scale research projects. However, can the noble Earl assure the House that patient confidentiality can be assured? Also, is it right that projects such as the UK Biobank could be put in jeopardy were the proposed European legislation to be enacted in its current draft form?
Earl Howe
My Lords, under the 2012 Act, the Health and Social Care Information Centre cannot release data that could be used to identify an individual without a legal basis to do so. As a result, there are strict controls about how such information is released. As regards the UK Biobank, the noble Lord is right to be concerned because the proposed text from the so-called LIBE committee would rule out the work of the UK Biobank, in that it would need explicit and time-limited consent for any research project that it undertook, instead of being able to support a range of research purposes, as it now can, using its existing consenting mechanism. So there is cause for concern if this text is adopted, but that is not yet clear.
Baroness Pitkeathley (Lab)
My Lords, many noble Lords will have received recently a leaflet through their letter box, saying that their records are going to be made available unless they opt out. The means of opting out is to contact your GP. First, has anyone noticed how difficult it is to contact your GP in some circumstances? Secondly, would it have been beyond the wit of the department to include a simple, tick-box form for people to use? Does the absence of such a simple process lead us to conclude that the Government do not actually want people to opt out of making their records available?
Earl Howe
My Lords, everybody in the country has a right to object to their data being shared. Those objections will always be respected. A practical way had to be found to enable that process to happen, and we believe that it is not unreasonable to expect a patient to have a conversation with their GP. I will, however, take the noble Baroness’s suggestions on board and feed them in.
Lord Willis of Knaresborough (LD)
Does my noble friend agree that while patients can object to having their records sent, they cannot, in fact, legally prevent the GP sending those records to the central repository? It is at that point that the discussion as to whether those records should be sold on and used by pharmaceutical companies and others is important. Does he agree that it is important that companies carrying out research into new drugs and compounds can access patient records, because they are an important dataset for making sure that we have better healthcare for our people?
Earl Howe
My noble friend is correct. The UK has a unique advantage in being able to link patients’ data records for the purposes of research and for effective healthcare commissioning. It would be extremely concerning if European law prevented that. I believe and hope that patients will be encouraged that there will be no abuse of identifiable information. The controls around this are very strict and, in the main, only anonymised data are required for research purposes.
Baroness Finlay of Llandaff (CB)
Can the Minister explain if there are circumstances in which personal confidential data might be used and analysed, such as in a public health emergency, and what the safeguards are surrounding that access?
Earl Howe
My Lords, there are circumstances in which potentially identifiable data can be released, but they are very severely circumscribed. A public health emergency is one, but Section 251 of the National Health Service Act 2006 could also allow identifiable information to be shared for specific purposes. However, the controls around that are extremely strict and the only people who can take that decision are the Secretary of State and the Health Research Authority—and then only after expert advice from the Confidentiality Advisory Group.
Baroness Manzoor (LD)
My Lords, some patients do not understand the implications and possible effects of the proposed EU legislation. What steps are being considered to ensure that those patients have full understanding?
Earl Howe
My Lords, until we are clear about the text that is agreed at European level, it is difficult to issue public advice on what the effect of that proposed measure would be. The text is still being argued over. While my noble friend is absolutely right that a public information exercise would be advisable once we are aware, we are not at that point yet.
Business of the House
(10 years, 3 months ago)
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Lord Hill of Oareford
That the debates on the Motions in the names of Lord Harrison and Lord Rooker set down for today shall each be limited to two and a half hours.
International Trade
(10 years, 3 months ago)
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Lord Harrison
That this House takes note of the role of international trade in increasing employment and economic growth.
Lord Harrison (Lab)
My Lords,
“all the evidence is that when you open up markets people flourish, businesses grow and you create jobs”.
Thus the former Trade Minister, the noble Lord, Lord Green, put it to a recent meeting of the Trade Out of Poverty group. International trade is central to all our lives, bringing jobs, growth and prosperity to the developed and developing world alike. I want to explore how well Britain is doing in promoting international trade, how well it is rebalancing its economy to emphasise exports—especially manufacturing—and how well we as parliamentarians are doing in holding to account UK, European Union and world decision-makers in doing the big trade deals. It is my belief that for too long politicians have neglected international trade as a job winner and left it on the parliamentary shelf.
How well is the United Kingdom doing? According to the ONS, the UK’s trade deficit on goods and services was some £2.6 billion in October 2013, while our deficit on goods rose to £29.5 billion in the three months to October last year. Eurostat identifies Germany as having the largest trade surplus, while Britain contests France, Greece and Spain for bottom place at minus €55 billion.
The former government adviser Sir Alan Rudge points out that the troubling balance of payments deficit in recent years has largely been financed by the sale of UK debt and assets, not by increasing exports and trade. In contrast, says Sir Alan, small businesses, the real engines of growth and trade, are frustrated by a Government who still have not solved the scandal of late payment of commercial debt or successfully dealt with the drought of investment finance for small businesses. This was evidenced today by the Bank of England’s lukewarm assessment of the UK’s plethora of indifferent schemes for small businesses.
The Prime Minister rightly vaunts the benefits of the purposed transatlantic deal between the European Union and the USA. It could indeed add £10 billion to the British economy, but such aspirations require the back-up of hard work and planned follow-up. I ask the Minister why our embassy in Washington has part sponsored a state-by-state study of the effect of TTIP on US jobs, but Ministers in the UK have yet to sponsor any such similar sectoral assessment for the United Kingdom, from which we might develop a reasoned industrial strategy.
I would be grateful for an update on the EU-US TTIP negotiations, and I ask the Minister to assure us that any potential adverse effects on developing countries will be mitigated. However, President Obama commented that he would have “very little appetite” for a deal with the United Kingdom alone. That brings me to the question of why, oh why, at this time when we are trying to secure this TTIP deal, we are giving the impression that we want to absent ourselves from the European Union, which is the principal negotiator.
We also need hard work on improving the UK’s grasp of foreign languages, instead of lazily relying on English as the world’s lingua franca. This is of the essence. The British Chambers of Commerce has remarked that knowledge gaps and language skills hold back British exporters. A rebalancing of the economy requires expansion of language acquisition in our schools, colleges and businesses. However, we should also mobilise the many pools of language expertise found among our British citizens, especially among communities of recent immigrants. How refreshing it would be if the Government coupled their insistence on immigrants speaking English with a pledge to arm each current UK citizen with the gift of fluency in one other language. In our engagement with the European Union and others, we have had too much British bluster and too little British barter, too much using the English language as a battering ram and too little buttering-up of trade partners in their own tongues.
Last week, the Commons Public Accounts Committee published a report which was critical of UK support for exporters overseas, and also highlighted the failure of UKTI and the FCO to work effectively together. There is also the failure of the Chancellor’s ambition to double the value of UK exports to £1 trillion by 2020, which was a realistic goal in the 2012 budget, and the failure of UK trade to match that of our EU partners, especially Germany, which is the export champion of Europe. How does the Minister respond to the criticisms of the Public Accounts Committee?
Does the noble Lord recognise, and how does he respond to, the changing trade patterns? I remember the vice-president of eBay addressing the WTO Parliamentary Assembly and underlining the importance of having secure WTO rules, whatever the medium of trade—in his case, of course, eBay. A second contributor to that debate reminded us of the increasing use of mobile phones for effecting trade. We have to change with the changing patterns and times.
I also ask the Minister to reflect on the Commonwealth and the CHOGM in Sri Lanka last November. What does he believe can be done through the Commonwealth? Does it have a responsible role in promoting intelligent trade? Indeed, how does he respond to the idea of a Commonwealth trade and investment facility?
I now turn to how well we, as parliamentarians, perform oversight of international trade deals done in our name here in the United Kingdom, in the Commonwealth or in the European Union—which is charged with agreeing the forthcoming TTIP deal with the United States under European Union law—or, indeed, through the World Trade Organisation, where I was until recently the Westminster parliamentary delegate in the run-up to Bali. Parliamentary oversight in the United Kingdom is woeful. We spiritedly examine the Government’s domestic economic policies but often neglect to place under the same forensic microscope their trade policies.
Perhaps the new Minister, the noble Lord, Lord Livingston, to whom I offer a very warm welcome, will acknowledge that trade scrutiny in Parliament is indeed too perfunctory. Would he not welcome being held to closer account by parliamentarians? The last time we had such a debate in the House of Lords was back in 2012, when my noble friend Lady Liddell led an important report. I am told that the only debate held hitherto in the House of Commons on the important EU-US trade negotiations was brought by John Healey MP, who runs the all-party group on TTIP. However, we need to have more than just that.
The Lords, of course, has a Select Committee system, which does very well. When I became chair of your Lordships’ European Union Sub-Committee on Economic and Financial Affairs, as well as trade, in 2010, we were entrusted with clearing trade deals such as the Korea-EU accord on the automotive industry. Perhaps that is why we have heard some good news recently on that front. The newly installed EU Trade Commissioner, Karel De Gucht, came before my committee. We took evidence from him on the new and important EU trade policy communication, Trade, Growth and World Affairs, which promotes a more assertive trade policy being developed by the European Union. However, that was the limit of our parliamentary investigation.
On that point, how does the Minister intend to report to Parliament on the annual EU Trade and Investment Barriers Report, which I am sure his officials have told him about, and the ambition in the 2011 March report to have made progress in extending the opening of government procurement markets and developing successful dispute settlement arrangements for the future? The EU foreign policy committee, led by the noble Lord, Lord Tugendhat, is currently scrutinising the forthcoming EU-US trade deal and it interviewed Karel De Gucht on 13 November last year. Perhaps the Minister can also tell us about either meetings that he may have had with Karel De Gucht or ones that he proposes to have with him in the future.
For 18 months I was the UK delegate to the WTO Parliamentary Assembly meetings, which included my co-chairing a meeting in Brussels with the International Trade Committee of the European Parliament—the so-called INTA—on which sit distinguished British MEPs who are now co-legislators on these important international trade deals. What conversations has the Minister had, or what conversations does he propose to have, with British MEPs to get a better and more thorough understanding of what the European Union and European Parliament will be doing in this area? Regrettably, the WTO parliamentarians were excluded from the final successful assembly concluding the Bali accord unless they were designated as part of the national delegation. That offer was denied me, much to my regret.
Perhaps I may conclude on the successful Bali accord and ask the Minister to report on its outcome. Does he understand that, increasingly, because of the difficulty with the Doha round and its completion, there have sprung up many more bilateral, plurilateral and even bi-regional accords such as the EU-US deal? They are proliferating in the absence of the giant multilateral deal that is aspired to in the Doha round. Do the Government believe that such partial deals undermine the principle of multilateralism, or are they stepping stones on the way to achieving multilateralism which, in the end, must be the favoured way of going?
On Bali implementation, will the Minister report on what discussions government departments have had and what budget provisions are being made to support the implementation of the Bali trade facilitation deal? Will he also report on the continuing economic partnership agreements that are being developed with the European Union and African states and whether we will mitigate any adverse affects that may arise as the deadline of 1 October 2014 comes into sight?
The point I have tried to make is that trade is hugely important. We, the Government and parliamentarians must take it seriously. We must find the road down which we can go to improve the understanding and transparency of trade deals, which have so much influence on our lives and from which those to whom we report will benefit if we get them right. I look forward to a debate in which these matters can be expressed and to the response of the Minister to the questions I have put. If he is unable to respond to everything, I hope he will write to me later. It is an important debate and I hope that we will treat it seriously.
Lord Marland (Con)
My Lords, I was flattered and surprised to receive a generous letter from the noble Lord, Lord Harrison, asking me to speak in this debate. I regret that I shall not be able to stay until the end—I have written to the noble Lord to inform him—because I have not been able to reschedule some of my activities. This will be a terrific debate. It is a very important debate, as the noble Lord has mentioned, and I congratulate him on securing it. I also understand that I am clearly the warm-up act for the noble Lord, Lord Giddens, and I hope that he will say nice rather than nasty things afterwards. He is a very good tennis companion, but not necessarily a good debating companion on the other side of the Chamber.
When we look at the exam question that the noble Lord, Lord Harrison, has set, the answer is, “Yes, of course”. I have just finished being for two and a half years the Prime Minister’s trade envoy and chairman of his business ambassadors. Throughout that time I have had the great pleasure of working with parliamentarians, including the noble Baroness, Lady Symons, who is unique in her tireless work in the Middle East, and with trade envoys who are appointed from all sides of the House. They give of their free time to support the trade initiative. I pay tribute to the noble Lord, Lord Green of Hurstpierpoint, who was an unpaid Minister. It has been a pleasure to work with them all, trying to sort out the problems we inherited and galvanising the United Kingdom back into what it was: a great trading nation.
The Prime Minister has rightly put trade at the centre of our economic recovery and, as the noble Lord, Lord Harrison, said, it is important, and incumbent on us all, to put our shoulders to the wheel to make sure that that happens. But it has been a significant challenge because businesses and Government had been focusing their activities almost entirely on Europe and the internal market. We had been a prosperous country for the past 15 to 20 years and orders were easy to secure both within our own market and overseas. Moreover, the Government themselves had failed to focus on the emerging markets of the world, instead maintaining strong relationships with those countries that had been our friends for ever. I think that the Government had become complacent about their relationships. Not only has there been a huge overhaul of UKTI and its focus, which was needed, but also an effort to tackle the horrendous fact, in my view, that 60% of small and medium-sized enterprises export only if someone comes and knocks on their door, and 60% of SMEs do not export at all. For a trading nation, those are extraordinary statistics. Repositioning, regalvanising and leading the way have all been very important.
It is easy to say, “The Government should be doing this and should be doing that”, but from my experience since I started my first business in 1982, which went on to become a global international insurance broker, the last people we wanted working with us were Government. They were slow and pedestrian, they taxed us, and they took too long to make decisions. As business people we want to be able to trade on our own. What we do want, when we get into sticky situations, is for the Government to intervene at a senior level and to ease the path for us. There are two or three things that the Government need to do in terms of providing access to markets. We should not expect Government to be the commercial, deal-doing arm of business, but we should expect them to have access at senior levels and to understand the routes to market: knowing who are the reliable partners in market that British businesses can deal with and understanding the rules and regulations within country so that businesses know about and recognise the problems they may face when going to market.
The frustration that I found as a trade envoy and chairman of the business ambassadors was that we could take the horses or businesses to water, but we could not make those horses or businesses drink. We would offer endless opportunities, but getting them to the table was difficult. That is changing, but it is an area where progress still needs to be made. To illustrate the degree of change, when I first went to Angola—I was almost the first government Minister ever to visit the country—I took five businesses with me. The last time I visited, I took 30, and deals are now being done with that country. But we should be taking 60 or even 90 businesses because today Angola is per capita the wealthiest nation in Africa. The oil industry is expanding enormously and there are going to be huge infrastructure changes. The other frustration is: why are we three years behind the Chinese and the Koreans in getting into Angola? It is because businesses have not looked at the potential initiatives there.
The most important thing from the point of view of British business and the Government is that we spend a lot of our time criticising ourselves and this nation but the truth is that in every country I visited we were in the top three countries in the world that that country would want to deal with. That is an extraordinary position to be in. It comes down to three or four things. First, business here is underpinned by the rule of law and we should compliment ourselves on that. The rule of law is fundamental to business practices and we are the leading exponents of it.
Secondly, we are transparent in the way that we do our business. I was very concerned about the Bribery Act when it came through but I now recognise it to be a very important and differentiating plank for British businesses when negotiating in the world. Now we see Governments being overturned for being corrupt by their people at the drop of a Twitter—or whatever it is; I am not going to ask my noble friend Lord Cormack because he does not know either—or the push of a button because they are not transparent. That sets us apart from the rest.
Thirdly, I disagree with the noble Lord, Lord Harrison: the reason people want to do business with the UK is that we speak English, which is the desired language of all nations now in terms of commerce. Fourthly, London is a place that everyone wants to come to. I do not say this without humility but for this short moment in our lifetime London is the centre of the world to do trade. That makes it a fantastic place for us to do business.
Finally—and this may surprise noble Lords—we have an enormous bandwidth of skills. We lead the world in e-commerce, as the noble Baroness, Lady Lane-Fox, has led the world in e-commerce. We lead the world in high-tech. We lead the world in low-tech. Our medical capability is the envy of the world. Most importantly, our education system is the envy of the world. That is the thing that everyone wants to buy because we have a very strong education system and we have this ability to transfer skills.
Therefore, the Minister takes on a momentum that is beginning to happen. I support him and any initiatives that he sets about involving Members of this House which continue putting Britain on track to being what we have always been: a significant trading nation with a strong position in the world.
Lord Giddens (Lab)
My Lords, I congratulate my noble friend Lord Harrison on having initiated this important debate. It is a pleasure to follow the noble Lord, Lord Marland, and to see him back here, in such ebullient form as always, even if he is going to desert us half way through the proceedings.
I have been a practising social scientist for several decades. Over that time, a principle of working has always done very well for me. That principle is—this might be the first time this word has ever been uttered in the House of Lords—“think dialectically”; that is, do not think that the future will be like the past; the future will often be the opposite of the past. There are transition points in history when the world starts to look very different. I feel that we are at such a transition point in the world economy today.
Therefore, when people go with the easy assumption that this will be the Asian century, I do not think that is necessarily true at all. The assumption that there will be an inevitable and significant decline in the West is not necessarily true either. The same thing applies to the process of deindustrialisation, which has perhaps been the dominant feature of the western economies for the past 30 years or so and which has transformed them essentially into heavily service-based economies. Although most observers see this as a continuing process, I do not think it will be or that deindustrialisation is a trend which will simply run and run.
I would like noble Lords participating in this debate who are interested in how we can produce a resurgence of global trade in this country to take very seriously the discussion about reshoring which is going on in the United States and several other advanced industrial countries around the world. Reshoring, which I have mentioned in a previous debate in your Lordships’ House, is the opposite of offshoring. It is the idea that industry will come back to the advanced economies and that there will be processes of reindustrialisation. It is very important that the UK is at the forefront of such processes should they indeed take place. We can all see that the “effort bargain” that has dominated the world economy over the past three decades can no longer be sustained. This now pivots on the role of China. Over that period there has been a kind of odd coupling between the United States and China, and to some extent Europe and China, based on the fact that the Chinese produce manufactured goods for the United States and the industrial economies. The United States cannot afford to pay for those goods so it has to borrow, and the situation is much the same for Europe. How does the United States borrow? It borrows from the Chinese, who invest in American bonds. It is surely the case that we have come to the end of that relationship now. It is also the case that China will move back much more towards domestic demand rather than simply exporting. Wages have also gone up significantly in the manufacturing centres in China.
When we look to our trading relationship in the future, we should not suppose that it will just depend on a continuing increase in the export of services. Instead, we should be back making things, which is crucial for the future. There is a kind of convergence between what is happening in the world economy and the emergence of digital production. Reference was made to the noble Baroness, Lady Lane-Fox. It is a matter of the expansion of not just the digital world but digital production in the form of 3D printing and things well beyond that now. These are massive processes of change. With these localised forms of production many things that used to be made thousands of miles away can now be—and in the future will be—made locally.
When we think about the resurgence of UK trade it is a mistake just to make the simplistic assumption that we should turn our eyes to the east or, if you like, that the main driving force should be how to be nicer to China. For that reason, I would like to expand on the comments made by my noble friend Lord Harrison about the significance of the free trade system now under discussion between the United States and the European Union. I see this as a kind of core of the possible pivot of change in the global world economy. It could be a crucial source of transformation for the whole range of industrial countries involved. Looking at the potential impact of the EU-US Transatlantic Trade and Investment Partnership, to give it its full name—it is usually called TAFTA, which is the term that I shall use because it refers to an area—you could say that it might be the most important source of job creation and wealth creation for western economies for many years.
There are some disputes among academics about the implications of TAFTA for GDP, but I have looked at the Commission’s estimates in some detail and think that they are pretty reliable. The Commission’s estimate is that TAFTA will yield €120 billion for the EU states and €130 billion for the United States. I remind noble Lords that trade is not a zero-sum game. It does not follow that a consolidated western trading relationship will have adverse consequences for the developing world. Actually, it is the contrary: according to the Commission’s estimates, €100 billion extra GDP will be generated for the developing world as a result of this process. The implications are huge.
As the noble Lord has hinted, we know that there are significant problems in establishing the free trade agreement; there are problems getting it through Congress; there are problems at a state level in the US; and there are problems within the European Union—for example, at least some French thinkers and politicians are not as enamoured of free trade as other parts of the European Union and have made perhaps not terribly helpful comments on the process. Nevertheless, I think that there is a strong will in the United States to push it through—President Obama has made it a legacy issue for himself—and there is also a strong will in Europe.
The free trade deal has been widely criticised from the left. It is said that it will give more power to footloose corporations and have negative environmental consequences. These criticisms are strongly misplaced and quite wrong. For example, increasing collaboration between the United States and the European Union is likely to be the only way of having a significant impact on tax loopholes, eliminating tax havens and creating greater corporate responsibility. I think that the FTA will bring greater corporate responsibility, not less. There is a sticking point around the precautionary principle environmentally, but I think that the precautionary principle is not a principle and that Europe should be encouraged to abandon it. Not taking a risk is itself a risk; therefore I see a fruitful possible source of collaboration here, too.
I have three brief questions for the Minister. What is his assessment of the progress of TAFTA so far and have the Government made a clear assessment? Secondly, do the Government accept the Commission’s estimate of GDP growth and job creation for the UK and, if not, why not, because it seems to me quite valid? Thirdly, to pick up on what the noble Lord, Lord Harrison, said, do the Government accept that were the UK to leave the EU in the relatively near future its chances of inclusion would be slim to non-existent?
Baroness Miller of Chilthorne Domer (LD)
My Lords, I want to concentrate my remarks in this debate on the agricultural and food sectors. I should begin by declaring an interest as a co-owner of Vignobles Temperley, our family vineyard, which makes and exports wine.
I was moved to speak in this debate because, with food production and the trade in agricultural products, there are two very different and often conflicting goals. One is to maximise trade and, in that case, big is certainly successful. The other is to ensure that the people of the world are properly nourished. In his excellent introduction, the noble Lord, Lord Harrison, spoke of the lack of parliamentary scrutiny of trade. At national, European and international level, there is a total vacuum when it comes to reconciling these two, very different goals.
Here in the UK, the food industry is very important. It employs 2 million people and has a turnover in excess of £70 billion. Farming—primary production—employs around half a million people but is just 0.7% of GDP. However, it supplies 60% of the country’s food needs. Of course, our farmers share many of the same issues with farmers throughout the world, whether that is unpredictable weather, difficulty accessing capital investment, cutting-edge science or markets without middle men taking so much of the profits, or a younger generation who do not see agriculture or horticulture as their ambition of choice. Consumers throughout the world share a surprising number of problems in common, too. Although there are enough calories produced throughout the world to meet the population’s needs, they are incredibly unevenly distributed. Noble Lords will know that roughly 1 billion people in the world are malnourished, and many severely, and about 1 billion people are obese, and some severely. Just this month, the Overseas Development Institute report highlighted the fact that since 1980 the incidence of obesity has almost quadrupled. Shockingly, almost one in three people worldwide is now considered obese.
The trade in agricultural products is massive but many of the poorest people in the world are farmers. One part of the problem is that the transnational corporations—the TNCs—that deal in agricultural products are among the world’s largest traders. The big four—known as ABCD—have an annual turnover bigger than some countries but very limited accountability. Of those big four, two are still private companies so especially unaccountable. They will be familiar names to many noble Lords. Archer Daniels Midland has a turnover of about $80 billion. All four have a lot in common but Bunge Ltd is a good example: it operates in 40 countries with about 35,000 employees. The point is that it buys, sells, stores and transports so much of the world’s foodstuffs, whether oilseeds or grains. It processes oilseeds to make protein meal for animal feed and edible oil products for commercial and consumers. These companies are also involved in producing sugar and ethanol. They are involved in food, fuel and often fertilizer production, too—so they are involved in the whole chain. “C” stands for Cargill, which last year had a turnover of $136.7 billion, and “D” is Louis Dreyfus, whose annual gross turnover exceeded $120 billion. Between them, these companies are said to control as much as 90% of the global grain trade. Other players are emerging in the market, such as Olam, Sinar Mas and Wilmar. Their presence varies from nuts in Africa to palm oil in Indonesia, but they are busy diversifying, too.
A couple of years ago, the Oxford Farming Conference commissioned a study on power in agriculture, which said:
“Consolidation of TNCs has seen some shifting of the focus of power, away from governments/supranational bodies towards corporate businesses. This could be a source of concern for farmers”.
I contend that that is a pretty mild comment. It continued:
“However the exercise of this power isn’t limitless and can be constrained by policy”.
My first question to the Minister is: how can it be constrained? What can the UK Government do to address this? Clearly, there is a role for BIS, Defra and DfID working together in this area of policy. I would be very interested to hear from the Minister just what forum there is for this sort of issue to be addressed.
Leaving a vacuum means that the ABCDs of this world determine where money in agriculture is invested, where agricultural production is located, where the produce is shipped and how the world’s population shares—or fails to share—the food produced. As consumers, we depend on a food chain that we neither understand nor have any power over. This concentration of power is not building a resilient food system—I could have spoken in the next debate—it is not fair on producers, and it is certainly producing appalling outcomes in terms of nourishing the world’s population, as I have outlined, whether obese or malnourished. We need to address these issues.
The food production system is highly vulnerable to weather—we have seen many examples of that this year—and to lack of natural resources, such as scarce water. We need to think about this and create other models of greater accountability to create a balance between a healthy trade that is bringing wealth to producers and their communities and the need of the world for food and resources.
There are models out there. I shall mention one today. There was a sustained fall in commodity prices in the second half of the 20th century, in which many prices halved, and the Fairtrade Foundation was born from that unhappy state of affairs. This year, it has been going in the UK for 20 years. It now has a turnover here of £1.5 billion, so it cannot be said to be a small, niche thing anymore. It has connected consumers meaningfully to producers in the developing world. I welcome the Government’s support for it. DfID Ministers have recently been active in their support for the importance of Fairtrade. Fairtrade farmers have explained to us that one of the problems that multinationals produce for them is that they may buy large volumes one year but not the next, when they need stability for investment. Price volatility is a massive challenge. For example, the price of coffee virtually halved between 2011 and 2013. Price volatility is perhaps the biggest enemy of the smallholder farmer. Fairtrade tends to balance out these issues and make life much easier for the investment we need for future food production if we are to be sure of a food supply.
Finally, I ask the Minister about the bilateral EU trade agreements that have rather taken the place of the failed WTO agreements. Decades of policies weakened small producers in developing countries, and at the moment there is not much in bilateral agreements about poverty reduction. There needs to be some concentration on the content of trade agreements so that the poorest people in those countries, who are often the people producing the goods that we will eat, are protected. There is a reconcilable conflict, but as long as there is a vacuum of governance in this area it will not be reconciled.
Lord Carrington of Fulham (Con)
My Lords, I add my congratulations to the noble Lord, Lord Harrison, for initiating this important debate. I declare my interest as deputy chairman of a small bank and as part-owner and director of a small consultancy doing business in many countries, as in the register of interests.
The UK is dependent on international trade, which is why we have pretty much always supported free trade in a largely protectionist world. In no industry has free trade served us better than in financial services. Of course, within the EU, we have from time to time had difficulty in persuading our fellow members that free trade in financial services is a good thing, as the noble Lord, Lord Giddens, pointed out, coming as they do from a more protectionist culture, particularly where agriculture is concerned.
For all that, one of our main global exporting industries is financial services, which has come in for a lot of criticism, some justified and some extreme. We need to help that industry to overcome its failures, not to shackle it so that it cannot deliver economically for the UK. The financial services sector employs between 1.5 million and 2 million people, many, but by no means all, in London. The contribution to GDP is well over 10% and the tax contribution is more than 12% of total tax receipts, so there is no doubt about the importance of financial services.
That is not to say that we do not need to build up other industries; of course we do. Manufacturing has seen a resurgence in the high-tech and high-productivity end of the industry and, of course, our software design and cultural exports have been hugely successful. However, none of these sectors is mutually exclusive. Indeed, a buoyant financial services industry, if working properly, helps other businesses to be even more successful, with innovative ways of providing financial liquidity and risk reduction. I know from my own experience that one of the greatest headaches in exporting is the foreign exchange risk, which can only be reduced with the help of a friendly banker.
As we all know, banking has been through a torrid time caused by the illegal, unethical and self-serving actions of some banks and bankers. The reasons for this, apart from human nature, have been examined in great detail, not least by the Parliamentary Commission on Banking Standards. Many proposals have been put forward to ensure that this catastrophe does not happen again. Hopefully, we are not making the same mistake that we have made many times previously, of regulating now to stop the transgressions of the past. It has been said that our banking sector is too big for our economy. That is only true if we make the absurd assumption that all banks operating in the UK are seeking business in the UK, and many do not, and that they are a risk to the UK taxpayer in case of their failure, which many are not. In any case, the changes to banking supervision that we have introduced make that even less likely.
However, the UK financial services sector is a fragile industry. Because of the employment it brings and the tax receipts it generates, many other countries would like to relocate the City of London to their city. We see this in the strong hints coming from the European Commission that it wants euro-denominated transactions to be located in the eurozone. Also, only this week, Reto Francioni of Deutsche Börse Frankfurt commented about Germany:
“Constituting the largest economy in Europe, Germany should also host the best financial centre in Europe”.
That is not a fanciful proposal. We have seen it happen before, when financial futures trading in German bonds was successfully moved from London to Frankfurt after a concerted effort by the German Government and Deutsche Börse.
What makes London successful in financial services, and how do we protect the advantages we have? In practical terms, because financial services and risk reduction are so specialised, the world will only ever need three global financial centres, each in overlapping time zones: New York, London—hopefully—and one in the Far East, where the battle continues to decide whether Hong Kong, Singapore or Shanghai will emerge dominant. We have a major advantage in London over our European neighbours, in that we have a large population used to working in financial services and, of course, having as their first language English, thanks to the Americans the language of finance.
It has been said that the assets of a bank go “up and down in the elevator”; it is an American expression. It is the people who work in financial services who make the industry a success or a failure. They come predominantly from the home market, but we need to ensure that the UK is welcoming to other nationalities coming here to build our industries. We need to be open to skilled people coming to live and work here, both for their talent in generating and closing deals and for their local knowledge of the overseas markets our financial services companies need to operate in. We need to continue to be welcoming to the already successful but also to the soon-to-be-successful, who will learn and work in London. That means getting our personal tax regime competitive on an international level and, because of the US dominance in these markets, coming to an agreement on personal taxes with the USA, the federal tax regulations of which work aggressively against employing Americans internationally, and against foreign companies doing business with Americans. We and the European Union are far too complacent about the extra-territorial reach of the US tax regime.
However, financial services do not just need highly paid, international employees at the top. They could not function without the skilled staff who analyse, process, record, ensure compliance and take on the multitude of often routine functions that are needed to support the income generators and deal-doers. In short, we need a highly educated, well housed and well motivated labour force. That is why our reforms in education and housing are so important. However, it is the regulation of financial services which is the biggest challenge. There is always a desire to regulate to a point where any risk banks take is minimised, supposedly to the benefit of the consumer and the taxpayer, but there is a balance to be struck. Banks only make money by taking risk and it is up to the shareholders, in the first instance, to decide the acceptable level of risk, although, as we have seen, this does not always work as shareholders do not have enough real-time information to control their investment. This is where the Prudential Regulation Authority and the Financial Conduct Authority come in, providing hands-on, forward-looking supervision.
I think we have now got the level of supervision about right in the UK. What is more worrying is the seeming intention of the EU Commission to micromanage the banks operating in the eurozone, with the inevitable impact on London. We have to get the regulation of financial services right, as it is only because the market is well regulated and safe that many overseas clients do business in London at all.
There is also a problem where capital is concerned. If banks are required to hold too much capital in low-risk, low-earning assets, this will certainly reduce the risk of bank failures but they will also be unable to make an acceptable return on capital and so be unable to raise more capital. Getting our regulation and capital requirements out of line with the rest of the world would not be a problem if the financial services industry were not able quite easily to move its “elevator assets” to another more welcoming or just more lightly regulated location.
We have a very successful exporting industry in the UK, one that employs a large number of people, makes good profits, pays a lot of tax and has potential for even greater growth. It has had catastrophic failures, caused by problems in its culture of personal reward, perhaps, and certainly by its need to produce an unrealistic return on shareholder funds. The then regulator could not prevent such failures but, I hope, the new regulator will be able to help the financial services industry avoid them in the future.
I believe that the regulatory problems have been addressed and I hope that the cultural attitudes are changing. The industry is a vital export earner and one that we should nurture and encourage. We must not sleepwalk into allowing other countries to take one of our most successful industries, to the detriment of the many people and companies in the UK that depend on the financial sector.
Baroness Thornton (Lab)
My Lords, I congratulate my noble friend Lord Harrison on initiating this debate. International banking is definitely not my territory, but I decided I would join in because of my involvement with social enterprises, co-operatives and the social economy—indeed, I attended a conference in Strasbourg last week. I need to inform the House that I am the founding chair and now patron of Social Enterprise UK and a supporter of the Social Economy Alliance. I am an ambassador for Sporta, the trade association for the social enterprise trust, providing leisure and sport services in the UK, and I work from time to time for Social Business International. All these interests are in the register. I am also the founder and honorary secretary of the All-Party Parliamentary Social Enterprise Group.
As the Minister will know, social enterprises, co-operatives and mutuals are businesses which trade to make a surplus, just like any other business. There are some 65,000 to 70,000 social enterprises in the UK. It is what they do with those profits or surpluses that make them social businesses; that and their governance and social mission, which express themselves in many ways, including community and environmental interests, job creation and support for people with disabilities. Hackney Community Transport, which has bid in the commercial market for red bus routes in London, is one example. Its profits go into supplying transport for the disabled and local communities, creating jobs and apprenticeships. It is a good example of a social enterprise.
The context in which this debate is important for social businesses has already been recognised by this Government. In recent times the British Council, for example, has made social enterprises and support for social entrepreneurs a key plank in its work. So when the Prime Minister recently led a large trade delegation to China the chief executive of Social Enterprise UK, Peter Holbrook, was part of that delegation. Throughout this autumn and winter the British Council has been running seminars and training workshops in China and Hong Kong. I take this opportunity to commend the British Council for its programme in support of social entrepreneurship, which is running not just in Europe but in nine countries in east Asia—China, Indonesia, Japan, Myanmar, the Philippines, South Korea, Thailand and Vietnam. It has trained thousands of social entrepreneurs so far.
There is no doubt that the UK is globally seen as the most advanced. We lead the world, for example, in developing social investment products, with Big Society Capital, Big Issue Invest, Bridges Ventures and the Charities Aid Foundation. They are all developing investment opportunities that exist to help to promote social enterprises and bring together social entrepreneurs and the investment that they need to grow those businesses. My Government invested a great deal in putting through legislation, creating community interest companies, with cross-party support, and creating the circumstances for health spin-outs and social enterprises, which has been followed through by this Government. Indeed, we all supported the social value Act, more recently, which gave more social entrepreneurs the opportunity to bid and tender for public service contracts.
Why is this important for the debate that we are having today? I hoped that the noble Lord, Lord Marland, might have mentioned the promotion of social enterprise when he listed businesses of which he thought the UK could be particularly proud, because this is definitely one of those sectors.
I have mentioned already China and south-east Asia. I now turn to Europe and social enterprise, because last week in Strasbourg there was a refreshing mix of policy-makers, senior politicians, front-line social enterprises, academics, public sector representatives, and social entrepreneurs, including commissioners and Members of the European Parliament, from across Europe, to reflect on the progress and next steps in developing a more social economy in Europe. The UK’s social enterprise sector was well represented, I am pleased to say, with the likes of Social Enterprise UK, Hackney Community Transport, Fusion21, Social Adventures, the British Council, the co-operatives, UnLtd, E3M, and many others, speaking and learning from the diverse mix of policy and practice that was on show. Indeed, I went there myself. The declaration that came out of that conference, which I shall refer to in a moment, was led by Jonathan Bland, who used to be chief executive of Social Enterprise UK. It was a recognition of the great expertise in this country in this field.
We learnt at that conference the difficulties faced in the social investment market here in the UK, which we are familiar with, and we shared it with our counterparts across Europe. We learnt of the European Commission’s interest in social impact bonds and the social stock exchanges, which we have been discussing and pioneering in this country for several years. That demonstrated how enthusiasm for more social investment models is growing inside the institutions of the European Union. We discussed state aid reforms, which are under way, and some of the rules that are emerging, which may free up the ability of national Governments and others to support access to finance for social enterprise.
Emerging from this event was the Strasbourg declaration. I do not intend to read out two pages of the declaration, noble Lords will be pleased to know. Surprisingly, it was not completely written in Eurospeak; it is an accessible document, which recognises the contribution that social enterprise is making to Europe as a vehicle for social and economic cohesion and to help to build a pluralistic and resilient social market economy. Acting in the general interest, social enterprises create jobs and provide innovative products and services, promoting a more sustainable economy; they are based on the values of solidarity and empowerment to create opportunities and hope for the future. They offer a model for 21st-century businesses that balance finance, social, cultural and environmental needs. Social entrepreneurs need to be seen as agents of change, as individuals and groups who are passionate about improving the lives of the communities in which they exist.
Ten recommendations came out of the declaration, but I shall point to just one or two. The European work on support for social enterprises has started already—with the social business initiative, through the Commission, and with the support of the various committees in the Parliament. However, it has to be said that that has been resourced by what we might describe as half a person in a cupboard, and by a lot of political support from across all the political parties.
The initiative was led by Commissioner Barnier. Three other Commissioners from various countries across Europe and from different political parties have also been involved; they were on the platform. Five chairs and vice-chairs of European Parliament committees were also there; again, that representation was cross-party. I emphasise that, because we in the UK have been proud of the cross-party support for social businesses and social enterprise, and I am glad to say that that seems to be translating itself into the European experience.
The declaration includes recommendations that,
“the next European Commission (with a dedicated inter-service structure) and the next European Parliament must take full ownership and deliver on”,
lots of the suggestions that were made about how to support social enterprise, and that the,
“European institutions and Member States should reinforce the role of social enterprises in structural reforms to exit the crisis, notably where the social economy is less developed”.
It also says:
“Public and private players must develop a full range of suitable financial instruments and intermediaries that support social enterprises throughout their life-cycle”.
The Minister will not be surprised to hear that I am asking him to ensure that the British Government support the declaration. They should support this initiative, and because we are the leaders in the field, we should help it to happen.
Lord Sharkey (LD)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Thornton, and I congratulate, as she did, the noble Lord, Lord Harrison, on securing this debate. There seems to be a general, if qualified, consensus among the commentariat that international trade does promote both employment and growth, both in exporting and in importing countries.
However, this consensus is not uncontested. In a 1999 paper, Warzynski and Westergård-Nielsen comment:
“International trade and outsourcing are often blamed for destroying jobs”,
and the current position of China serves as an example of the problems that imperfect international trade arrangements might generate. As Irwin Stelzer wrote in the Sunday Times four days ago,
“China, running its largest trade surplus in five years, manipulates its currency, subsidises its state-owned enterprises and steals intellectual property from America and Germany—or demands it in return for access to its market”.
However, as I said, the balance of expert opinion seems clearly of the view that international trade, provided that certain regulatory mechanisms are in place, promotes both growth and employment. An OECD paper of May 2012 called Trade, Growth and Jobs summarises that organisation’s view. It concludes:
“Trade improves employment and wages through growth … Trade—both imports and exports— contribute to creating better jobs … there is no systematic long run link between import levels and unemployment ... Trade can also improve working conditions”.
In addition to all this, there are some compelling examples of where the absence of international trade damages both growth and employment. The world uses sanctions as an instrument of persuasion precisely because of the damage caused by constraint in external trade. There is a compelling example in the middle of the Mediterranean: Northern Cyprus has been effectively cut off from any significant internationa1 trade for 40 years, and the consequences have been poverty, unemployment, and low growth and investment.
However, the benefits arising from international trade may not be as clear or as straightforward, or as equitably distributed, as a Panglossian reading might suggest. There are, of course, two kinds of international trade: goods and services—and financial services are a major component of the second group. I do not think that anyone would argue that the collapse of 2007-08 has not damaged growth and employment in very many communities. The connectedness inherent in international trade can be a major cause of reversals in growth and employment. That is especially true when regulation proves inadequate, and I shall return to the theme of regulation a little later.
However, I note that even when international trade promotes growth and employment, as it frequently does, it can also have other important consequences. It can have cultural consequences that may be seen as undesirable—France’s attitude to the Anglo-Saxon model, mentioned already by the noble Lord, Lord Giddens, is a case in point. The opening up of new markets may also have unpredicted cultural consequences. For example, I believe that Prince Philip is still worshipped as a god by a cargo cult on the island of Tanna in Vanuatu.
International trade agreements may also significantly advantage large corporations over SMEs and micro-businesses. They may act to reduce economic stability via contagion. We have seen examples of that both in sovereign debt and in the Asian markets. Finally, international trade may act to reduce democratic oversight of the operations of the market. This can take the form of simple distance from the transactions, complexity and lack of transparency in trade agreements and non-accountable dispute resolution procedures. In the time remaining, I shall comment on just three of these areas.
The first is the question of whether international trade agreements should now concentrate more on supply chains than on tariff reductions. The World Economic Forum at its meeting a year ago focused on reducing supply chain barriers, which it is estimated would give a bigger boost to GDP than removing tariffs. Improving border administration and transport and communications infrastructure could increase global GDP by 5% and would have six times the effect of removing all global tariffs. I would be grateful if the Minister could tell the House how the Government currently see the proper balance between reducing supply chain barriers and reducing or removing tariffs.
The second area is the position of SMEs in all this. The CBI reports that, in the UK, only one in five SMEs currently exports. It also notes that businesses are 11% more likely to survive if they export. Perhaps part of the problem is that SMEs are not properly represented in large-scale multilateral or bilateral trade negations. In January last year, the WEF recommended that SMEs be at the negotiating table when there is discussion of the regulatory framework and environment. Does my noble friend the Minister agree with that recommendation, and is it actually happening when the UK negotiates bilaterally and multilaterally through the EU?
My final point is on these negotiations. There is an alphabet soup of these things: FTAs, WTO, TPA, TPP and TTIP. Much of what goes on in these negotiations is complex, opaque and takes an awfully long time. Occasionally, it is all punctuated by a dramatic announcement. For example, a year ago the EU Trade Commissioner suddenly announced that he had personally saved the WTO,
“from the darkness of multilateral irrelevance”.
It may well have been true, but I cannot see that kind of thing quickening the pulse of anyone in an SME in, say, Merseyside.
That begins to illustrate a point. We need all our business communities to understand and feel that they have a part in trade negotiations, but we also need to make sure that Parliament has an effective oversight role. This was a point made forcefully by the noble Lord, Lord Harrison. This is currently a question in the TTIP negotiations which envisage, as they should, dispute resolution procedures. This is obviously vital when trading between different jurisdictions, but the question that has arisen is whether these non-governmental arbitration panels will have the power to override or amend local laws.
In the TTIP negotiations, there is a procedure called ISDS—investor to state dispute settlement. The EU acknowledged on 20 December last year,
“that ISDS, if not properly designed, can raise a number of legitimate concerns about whether legislation can be undermined by investors”.
Put another way, it is possible that in settlement of a trade dispute large companies can rewrite national laws. For example, Eli Lilly is currently suing the Canadian Government for $500 million under the terms of a trade treaty and demanding a rewrite of Canadian patent laws.
George Monbiot said in the Guardian on 4 November 2013,
“Brussels has kept quiet about a treaty”—
he means TTIP—
“that would let … companies subvert our laws, rights and national sovereignty”.
Ken Clarke responded to this a week later. He did not agree. However, the issue is clearly important. What role will Parliament have in determining the final text of the ISDS? What opportunity will we have for scrutiny? I would be grateful if the Minister could reassure the House on these points and on the proposed dispute resolution in general.
Lord Giddens
My Lords, the fact that George Monbiot says something does not necessarily mean that it is true. The Commission is well aware of the issues surrounding this. I do not think that we can say that this is not being discussed, because it is.
Lord Sharkey
I apologise if I suggested that everything that George Monbiot says is true. I did not mean that.
Returning to the issue of ISDS, I was saying that I would be grateful if the Minister could reassure the House on the points that I have made and on the proposed dispute resolution mechanisms in general.
Since I have mentioned Ken Clarke once, I will quote him once more, talking about the advantages of the TTIP deal:
“According to the best estimates available, an ambitious deal would see our economy grow by an extra £10bn per annum. It could see a rise in the number of jobs in the UK car industry of 7%. British companies—of all sizes—currently pay £1bn to get their goods into the US—this cost could be removed altogether. Perhaps most importantly in the long-term, such a deal would safeguard the liberal trading rules which we British depend on—but which the growing economies of the east are less keen on—for generations to come”.
I think that puts a succinct and powerful case for international trade as a promoter of growth and employment—growth and employment abroad and, critically, growth and employment at home too.
Baroness Wheatcroft (Con)
My Lords, I congratulate the noble Lord, Lord Harrison, on securing this debate on such an important subject. I reassure the House that I will not be quoting George Monbiot.
I believe that there is scope for taking a much more upbeat look at the situation than that of the noble Lord, Lord Harrison. The news from the UK on employment is of job creation. Even among younger people who are very hard to employ, the numbers are going in the right direction. Contrast that with what is being said at Davos at the moment, where some people, including the French president of Total, are saying that Europe should be regarded as an emerging market. That is not the situation in this country.
In the motor industry, for instance, to which my noble friend Lord Sharkey just referred, exports of vehicles from this country in November were up by 10.7% on a year ago. That is a remarkable climb in a market that has been very difficult. UK car production over the last year hit a six-year high. Huge investment has made a difference. Nissan in Sunderland is responsible for halving the unemployment rate in that town. It now exports a remarkable 80% of production from that plant. Huge investment in that plant has managed to produce something that is a world-beater.
However, not every sector is as buoyant as the automotive sector. I was struck by the following information from the most recent trade statistics. Reporting our imports from non-EU countries, it was said that in November last year:
“The top five commodities are similar to the previous month although HS2 88”—
their arcane description for—
“Aircraft, spacecraft, and parts thereof … has risen from fifth to fourth place forcing HS2 61 … into fifth place”,
in our imports. HS2 61 is:
“Articles of apparel and clothing accessories, knitted or crocheted”.
I try to keep abreast of trends but I am unaware of an avalanche of crochet coming into the country. Perhaps we would get a better grasp of what is going on in our imports and exports if we were to revisit the basis on which the trade figures are comprised.
The statistics, however, still show some good news. Exports to China have doubled since 2009. That is not enough—it is still only 1% of the market—but is certainly a creditable achievement. As we saw in the recent trade mission, a great deal is being done to build further alliances with China. The digital alliance, for instance, between UKTI and China is aimed at providing up to £2 billion in extra business for our creative industries. That trade mission did not just accomplish big deals for UK businesses but brought investment from China into this country. Chang’an Motors, for instance, is now making a £60 million investment in a West Midlands R&D centre, which will create 300 jobs. It would be really useful if a discipline adopted by the Government was to refer later to what has actually been achieved by these trade missions in the longer term. To hear what the follow-up has been would produce some interesting information for us, but would also probably put a deal of pressure on those businesses that go on trade missions to continue to work hard to capitalise on the extraordinary boost that they have been given.
However, one of the main problems for us is that companies are not investing. I talked about Sunderland, where Nissan’s huge investment has generated a vast number of jobs, made a big difference and made a hugely productive plant that can export. However, in this country and all around the world very few companies are investing and prefer to sit on their cash piles, which is why the employment figures are going up but, I am afraid, the productivity figures look very disappointing. Investment in modern plant and technology creates improved productivity. One thing that I am desperate to see, and to which I have referred in this House previously, is some incentive for big companies to invest at least a bit of that cash pile in smaller companies, thus generating more jobs and helping us to grow businesses.
More can be done. Next week, a report from the 2020 commission, entitled Sweating our Assets, will be launched in the other place and has been led by Laura Sandys MP. I have been delighted to have a small part in the work that it has done, which has been very much in collaboration with the Engineering Employers’ Federation. Some of the ideas that it has come up with will, I hope, help this country to improve productivity. There is a long way to go on that.
The Government are determined to boost trade. As my noble friend Lord Marland said, and put into practice when he was Trade Minister, many initiatives are under way. Last year, in October, the Government launched Grow Online, Expand Worldwide—a scheme aimed at helping small and medium-sized British companies to expand their e-commerce operations. We are already one of the leaders in that field. According to the Business Secretary Vince Cable:
“Britain’s 220,000 online retailers export more than the rest of Europe’s e-retailers combined”.
The Government have been energetic in providing support for exporters, with the aim of doubling exports by 2020. That is a brave aim and one that demands support. It is, however, a very big ask: it requires exports to grow by 8% a year. We are not getting anywhere near that at the moment. In part, to reach that target, there have been dramatic changes in the way in which the support network overseas works. There is increased reliance on British chambers of commerce abroad. This has created a degree of concern among some companies and other business organisations. Some chambers of commerce abroad are effective, strong organisations but vary in quality. Can the Minister assure us that the quality of those chambers is being monitored and that we are confident that this is the best method?
Our chambers of commerce differ from the German chambers, where membership is mandatory. There are some concerns that we may be moving in that direction, as smaller businesses of course want nothing which will involve them having to pay subscriptions to organisations to which they do not particularly want to belong. I understand the logic in taking responsibility for small and medium-sized exporters away from our embassies. I believe that the theory is that the embassies can then concentrate on helping the really big deals go through. I am a great admirer of the skills of our embassies overseas, which do great work. I would like reassurance that we are making the best landscape for encouraging our exporters. I have been particularly impressed, for instance, by the high commission in Delhi and its work building exports in India. The people in those embassies really know their markets.
I return to the undoubtedly good news. Noble Lords will have seen today’s announcement by James Dyson that he will triple the number of engineers working in Malmesbury on creating his brilliant designs. Products will not be manufactured in this country; that is just not competitive. We have to accept that our skills are really on the inventive side. James Dyson says that:
“Competitive advantage rests on knowledge and developing patentable ideas that can be exported—and our intellectual property is owned in the UK”.
We are an inventive race. Over the years we have created some of the most important things in the world today. I do not need to mention Tim Berners-Lee. On a smaller scale, look at Fever-Tree. I would hazard a guess that most noble Lords have come across Fever-Tree, which creates some of the best mixer drinks in the market. Who would have thought, just 10 years ago, that there was a market for a new creator of fizzy drinks to mix with gin? Fever-Tree spotted the gap in the market and now, just a few years later, exports 75% of its turnover. There are a hundred and one stories such as that about inventive British companies, which we need to support.
In conclusion, I take comfort from the fact that, thanks to the determination of our Government to tackle the deficit, no one in Davos this week is saying that the UK should be regarded as an emerging market.
Lord Davies of Stamford (Lab)
My Lords, I add my congratulations and my gratitude to the noble Lord, Lord Harrison, for this debate, which enables the House to focus on this very important issue today. Standard economic theory tells one that economic growth is a positive function of two variables: increases in factors of production and increases in productivity. Increases in productivity arise from the application of technology, changes in work practices and specialisation. The three things go very much hand in hand. Specialisation is what requires trade: trade within the local community, within one nation and internationally.
We can all take pride in the fact that the central economic theory breakthroughs in this area are all achievements of the great British political economists. Smith first identified the importance of specialisation with his memorable analogy in The Wealth of Nations about the makers of pins, who suddenly became more productive when one man ceased to make the whole pin and another man added the head. Fifty years later Ricardo formulated the much more counterintuitive theory of comparative advantage. This demonstrated that a country with an absolute advantage in everything still has an interest in trading with its neighbours, because if it concentrates all its resources on those areas where its absolute advantage is greatest, it will so increase its output as to be able to purchase anything else it needs from the world on very favourable terms. Global output and global welfare will then be maximised. Those theories are now just as embedded and well established in economic science as Maxwell’s equations are in physics, Mendeleev’s periodic table is in chemistry, or Darwin’s theory of natural selection is in biology.
Over the past 50 or 60 years and the lifetime of most of us in this House, there has been a remarkable phase of economic growth. This has been cyclical, as one expects, but nevertheless it is extraordinary. I often wonder whether it can be continued over the next 50 or 60 years. There have been four very special, remarkable and unusual features to the last 60 or 70 years, which have made possible that great growth in output. All of those four developments can and should go further. They should be pushed further, which I will come to in a moment. However, it is not clear to me that they can be effectively replicated or replaced in their totality. We should be quite worried about that, and should not be complacent in simply extrapolating the growth rates of the last 50 years—which in this country have averaged about 2.5% per annum—into the indefinite future.
The first of those great developments and changes was the introduction of the female half of the human population into the labour force of developed countries. Obviously, that was an event of enormous social consequences, but also enormous economic importance. That is a classic example of an increase in a factor of production, of the major factor of labour.
The second great development of the last 50 or 60 years has been what I call the economic emancipation—unfortunately not always accompanied by political emancipation—on free market models of countries in the Far East. The first of these was Japan, followed by Korea, Taiwan and the ASEAN countries, and then over the last 20 years by China and India. China and India alone account for more than 2 billion of the world’s 6 billion population. That is an enormously important development for the future of everybody on the globe. Can it be reproduced? Can an equivalent dramatic event occur in the future? That is a classic case of the rise in productivity which happens when people move from very low productivity activities such as agriculture—sometimes at subsistence or near-subsistence level—into manufacturing and into the cities. That has been the history of Asia over the last two generations.
The third factor, which I do not need to dwell on as everybody knows about it, is the introduction of IT into the economy. Again, I do not doubt that we have much further to go on this, but is it possible to envisage that over the next 50 or 60 years there will be an equally dramatic impetus to growth from new technology? I do not know, but I sometimes worry about that.
The fourth factor, which comes down to the subject introduced today by the noble Lord, Lord Harrison, is the growth in free trade. Since the Kennedy round in the 1960s right through to the latest chapter—I hope it is not the end—in the Doha process, there has been a steady reduction in tariff barriers. This has been a great achievement, and a great boost to growth. The establishment of regional free trade areas or economic areas of co-operation is, in a way, the greatest success. The European Union has been a model for the whole world. It has done something which none of the others has succeeded in doing: addressing the non-tariff barriers to trade just as effectively as the tariff barriers. We all know that the non-tariff barriers are the most difficult to deal with.
It is very unfortunate that the Doha round seems to have run into the sand. Perhaps it can be pulled out, as we all hope. In the mean time we must concentrate on doing what we can. The Government and the European Union in partnership have been very sensible in putting the emphasis on doing trade deals, particularly with other economic groupings around the world. Quite the most important of those is the potential EU-US trade agreement.
I will spend the rest of my time asking the Minister about that agreement, because it is so important that the House of Lords—and, indeed, the House of Commons—are kept up to date. We all know that the negotiations are taking place, and of course practically they can only take place at the level of the European Union. Clearly, this is one of the great things which the European Union can do much more effectively than 28 different countries could do separately. They could not even begin to think about it. I know that mechanisms are in place for national Governments to keep abreast of the developments. It is very important that they in turn keep us abreast of developments, so perhaps I can ask one or two questions.
We should bear in mind that this is an enormous challenge and that the United States does not have a good record as a free trader. On two occasions in the 20th century, or, at least, in the past 130 years—first, with the McKinley tariff in 1890 and, secondly, with the Smoot-Hawley tariffs in the interwar period—the United States led the way in starting a world tariff war, with disastrous results for everybody concerned. We also have to remember that the two Democrat Administrations—the Woodrow Wilson and Kennedy Administrations—reduced tariffs. Thank goodness, both Republican and Democrat Administrations in the United States have been committed to freer trade over the past two generations. However, we are going forward into this negotiation, which I think is going to be enormously complicated and take a very long time. Some of the great challenges are very unclear, so perhaps I may ask the Minister some very precise questions. If he does not know the answers to them, I should like him to write to me, if he would be so kind, and to place a copy of his letter in the Library so that the whole House can be informed.
First, at the behest of the French, as we know, a whole area of cultural products was taken out of the negotiating mandate by the Commission. I should like to know what the American response to that has been. Have the Americans accepted it or are they asking for a difficult, or any, quid pro quo?
Secondly, what scope is there for getting joint recognition of geographical descriptions of products—for example, the preservation of the concept of Scotch whisky or champagne—in the United States? That would mean that no one was allowed to produce New York or Californian champagne. This is an important issue. Is it in the negotiating brief? Is it something that the Minister is confident we can achieve?
Thirdly, what about the ownership rules? The United States, unlike the European Union, has ownership rules in certain sectors. I think I am right in saying that foreigners can own only 25% of an airline or 25% of a broadcasting corporation. Those are important sectors and there may be others as well. Are those issues on the table? Is it practicable and possible that the Americans will change those rules?
Fourthly, the Jones Act always struck me as being one of the most extraordinary pieces of protectionism. It prevents vessels which are not American-owned and American-crewed handling merchandise from one American port to another. It is rather like the navigation Acts that we had in this country and in Europe in the 17th century, but it is still alive and kicking in the United States. Is that on the table and is it going to continue?
Fifthly, I understand that the European Commission has given an assurance that the negotiating mandate will exclude health and environmental protection measures. For example, the European Union would not have to accept the import of American beef produced with the use of growth hormones. That is potentially an important public health issue, so I am told. Equally, in the EU we control GM products for environmental reasons; the Americans do not. Are we going to have to give up our controls on GM plants and crops? What is the American position on this?
Finally, I have a question on the whole area of insurance. This seems to be an extraordinarily difficult area in which to make progress because it is managed and controlled by the states and not by the union of the United States. Each state has its own insurance commissioner. In many states, no foreign insurers are allowed at all in the insurance market. Other states let them in for what they call “surplus lines”, where the local insurance companies do not want or do not have the capacity to handle the business. Obviously in relation to certain things, such as wind storms on the east coast and earthquakes in California, they do not want their insurance companies to bear the whole potential risk burden. What is happening on insurance? Is it going to be opened up and are we going to be able to sell insurance directly, either through binding authorities or on the internet, to retail customers in Eau Claire, Wisconsin, or Kansas City, Missouri?
Those are some of the essential questions on which I think it would be very useful to have an update, and I should be very grateful if the Government could give it to us.
Lord Purvis of Tweed (LD)
It is a pleasure to follow the noble Lord’s theoretical and practical contribution to this debate, and I welcome the opportunity given to us by the noble Lord, Lord Harrison, to speak on this issue. I wish to pick up on a couple of points that the noble Lord, Lord Davies, mentioned and to discuss two export sectors that are of considerable significance to the Scottish and UK economies. I want to focus, in particular, on rural Scotland. For skilled workers in difficulties in the recession that has taken hold in the manufacturing sector in rural Scotland over the past few years, there are two shining lights, but both need support from the Government.
I should like to address some areas where removing barriers to international trade will allow whisky exports to continue to grow and will also allow opportunities for the Scottish textiles sector. Unlike other noble Lords, I have no interests to declare in this debate, other than to point out that my title of “Tweed” relates to the river rather than the cloth, although, incidentally, the latter was named after the former nearly 200 years ago. These are iconic products. “Iconic” is an overused word but I think it is appropriate to describe these two Scottish products—whisky and textiles. They are of the highest quality in both product and brand, and they have a heritage that is surpassed hardly anywhere in the world. They continue to represent key areas of employment and domestic economic activity, and are areas known for their innovation and creativity—the noble Baroness, Lady Wheatcroft, mentioned innovation and technology. I am not resting on their laurels; they are of significance for the economy.
Some 35,000 jobs are supported by the Scotch whisky industry, including 10,000 directly related to production. In textiles—medical textiles and pioneering research for technical textiles—Scotland in many respects leads the world. Often, as I indicated, the jobs are in rural and remote Scottish areas, where there is little alternative employment. Jobs supported by the whisky industry include those in packaging, tourism, logistics, maltsters and cereal suppliers, and this industry shares many of the attributes mentioned by my noble friend Lady Miller. We are often told not to mix grain and grape, but I think that in this context we share many priorities.
Scotland’s textile sector remains a key employer in many parts of Scotland, including the one close to my heart in the Scottish Borders. The sector currently employs in the region of 9,000 people across 600 businesses manufacturing textiles, apparel and leather products. For nearly 1,000 years, woollen and woven goods have been exported from the Scottish Borders. Most noble Lords will have worn Scottish textiles and most will have partaken of the occasional dram. Thankfully, few will have drunk counterfeit whisky, but perhaps more will have worn textiles that were either cheaper and poorer-quality products purporting to be Scottish or were otherwise based on traditional Scottish designs but were manufactured in areas where the quality is poorer and the labour conditions even worse. We do not need to go far back in history to find the awful example of the incident in Bangladesh. Such poor labour standards in manufacturing textiles can make us proud of our standards in the United Kingdom.
That leads me to my first area of concern. It is in our economic interests to protect these exports. The current round of negotiations for the EU-US Transatlantic Trade and Investment Partnership, or TTIP, referred to by the noble Lord, Lord Harrison, gives the UK and its EU partners the opportunity to address some of the areas where support is needed for these sectors.
Scottish textiles, and in particular woollen and woven goods, require protection to maintain brand standards. The mislabelling, and therefore mis-selling, of goods that are not made in Scotland is a continuing concern for the sector and it is an area where the Government can assist in providing support. Clear labelling of the country of origin for manufactured textile goods is of significant importance given that some retailers in the UK—even in Scotland—and around the world sell woollen or cashmere products that claim to be Scottish or from Edinburgh or the Highlands, or they purport to be of a Scottish design and therefore give the impression that they are manufactured in Scotland, whereas they are actually manufactured in other countries, typically China, Pakistan, India or Vietnam. By ensuring that the Government use all the powers available to their offices and agencies around the world, and by encouraging domestic prosecuting authorities, whether it is the Lord Advocate in Scotland or the authorities in England and Wales, we can support and protect this important British product by making sure that customers are aware of what they are buying. .
The Scotch Whisky Association, regrettably but necessarily, has to use considerable resource in pursuing legal challenges around the world against those mislabelling and mis-selling Scotch whisky. The reality for many textile companies is that they do not have the reach or the resources to do this. Therefore, I should like Her Majesty’s Government to explore how they can use their trade representatives around the world to look at how more support can be offered to ensure that there is aggressive and proactive policing of those undermining Scottish exports.
In the latest round, EURATEX, the European trade body for textiles, and its American counterpart, the American Apparel and Footwear Association, sent a joint letter in December to Michael Froman, the US Trade Representative, and Karel De Gucht, the Commissioner for Trade, which said that,
“design, creativity and innovation are at the core of our companies’ strategies and we rely on the authorities to clarify and improve coordination mechanisms on Intellectual Property Rights … in order to better safeguard our companies’ creativity. Maintenance of an appropriate framework of intellectual property protection and effective enforcement of intellectual property rights is vital for individual brands and companies in the context of the T-TIP”.
It would be helpful to hear the Minister’s thoughts on the protection of intellectual property rights.
I do not expect the Minister to respond to that today but it would be most helpful if he would meet myself and representatives of the Scottish Textiles and Leather Association to discuss this and associated issues as they are fundamental to creating the conditions in the world and in the emerging markets for this sector to flourish.
These exports are of real significance already and the opportunities are huge. Scotch whisky leads the way for British food and drink in overseas markets, accounting for about 25% of all UK food and drink exports. The Scotch Whisky Association informs me that 40 bottles of Scotch whisky were shipped overseas each second in 2012. For many Scots that is both a tragedy and something to be proud of. Exports have increased by 87% in the past 10 years and the value of Scotch whisky exports increased by 11% to almost £2 billion in the first six months of 2013.
The Scottish textile sector remains an important contributor to the economy, with an annual turnover of £950 million, and exports of Scottish textile products are valued at £295 million. In fashion and interior textile design, Scotland operates in more than 100 markets worldwide, with major emphasis on the USA, Japan, Russia and Europe. Therefore the trade negotiations and promotion that the Minister will carry out is of fundamental importance to this sector.
Finally, touching on the point made by the noble Lord, Lord Davies, about crippling tariff regimes, there are continuing barriers for Scottish woven exports. Noble Lords may be interested to know that in exporting a lambswool sweater from the Scottish Borders to the USA, a 16% import tariff is applied. That means that a sweater manufactured for $50 in the Scottish Borders, with a fourfold retail mark up plus a 16% tariff, will cost the US customer $232. That is a crippling tariff regime. While it is less for cashmere at 4%, both are above the average tariff rates that are currently being negotiated. I know that my right honourable friend Michael Moore has been pursuing this issue since he was first elected but we have an opportunity with T-TIP to have it addressed.
There are opportunities for both whisky and textiles in the emerging markets of Africa, South America and central America. Opinion formers and fashion and creative leaders in those markets should wish to be associated with these high-quality products. With the continuation of the Britain is Great campaign, with our brand reputation around the world increasing in value and with the support of the UK Government, we can make sure that barriers are lifted, opportunities are increased for whisky and textiles and the vulnerable rural areas, where many of these jobs are so important, can look forward to a positive future.
Lord O'Neill of Clackmannan (Lab)
My Lords, I am very happy to follow the noble Lord, Lord Purvis, into what may be the Caledonian corner of this debate. Unfortunately, both he and I seem to have the same brief from the Scottish Whisky Association, so some of the statistics that I will be quoting may well be the same, although I have a slightly different slant on the matter.
I share some of the concerns expressed by my noble friend Lord Harrison in opening the debate, but I want to talk specifically about the Scotch whisky industry. When I was a Member of Parliament, I had a sizeable involvement in the textiles industry. Sadly, that industry is now gone, with the exception of a small amount of cashmere spinning, which is important for the rest of what you might call the Scottish woollen knitting industry.
Whisky is identified with Scotland. Indeed, the generic term “Scotch” covers all whisky which is not spelt with an “e”. We have already heard of the great importance the volume of Scotch whisky has for the Scottish economy. While it is correct to say that whisky distilling is set in rural circumstances and a lot of the raw materials come from the agricultural sector, it is also fair to say that the 30,000-plus employees in the Scotch whisky industry cover a variety of trades and economic activity across not only Scotland but the whole of the United Kingdom. It is therefore of great importance.
It is one of the few British products that any foreign traveller will see as they pass through airports with duty-free facilities, because there is always Scotch available. Not only is it available, but it is of consistent quality and people can have confidence in what they are buying. This is partly because of the efforts of the industry to maintain high standards but also because it enjoys a degree of support through the common market—and not only the common market of the United Kingdom but the free market represented by the European Union, which has been invaluable in supporting the Scotch whisky industry over the years.
As I have said, I had a constituency interest in the industry. Indeed, when I was a young candidate more than 30-odd years ago, one of the first bits of local colour that I was given was that I was told that the value of whisky stored in Clackmannanshire represented more than the worth of the gold in the Bank of England. I shall not comment on whether or not that was apocryphal but, certainly, when you drive through central Scotland and you look over to the Ochil hills, you will see miles of what used to be called bonded warehouses, where there is stored cask upon cask of Scotch malt whisky. That whisky can be there for anything up to 15 to 20 years. It represents a massive commitment by investors in the industry. Most of it in these warehouses is produced by the Diageo group, but the fact is that the Scotch whisky industry is a long-term industry.
Indeed, not only are taxes paid to the British Government, there is also the “angel tax”, which is the amount of whisky which escapes through the wooden casks and into the air. As you walk through these bonded warehouses, as I have done on occasion, you can have quite a heady experience if you stay there long enough—which I have not had the privilege of doing. However, as Ken Loach showed in his movie “The Angels’ Share”, there is evidence that the Scotch whisky industry requires the persistence and confidence of investors.
What concerns me is that, in the run-up to the independence or separation referendum in September, people will forget the complications with which the Scotch whisky industry will be presented if there were to be a yes vote. For a start, we would not become members of the European Union immediately. In the short term, we would be denied the services of the European Commission in the opening of new markets. The Commission has done a great deal to ensure what it calls the integrity of the product. This includes a consistent minimum level of alcoholic strength and that the “Scotch” name is protected. As my noble friend Lord Davies said a few minutes ago, the word “Scotch” is protected, and that is a consequence of the United Kingdom’s membership of the EU.
There are several complex international considerations, so it is not for nothing that over the past 10 years the trade association of the Scotch whisky industry has been headed first by Gavin Hewitt and now by David Frost, both of whom are distinguished diplomats in their own right, having been ambassadors representing us abroad. This is a serious business and there will be serious consequences for the industry and for the Scottish economy if we are denied, even for a short period, the protection of the EU.
Any member state joining the EU has to accept the level of tariffs that prevail throughout the rest of the EU. At the moment, Hungary and Greece are in a somewhat acrimonious arm-wrestling process over their own tariffs, but I think it is fair to say that the Commission is confident of success. The fact is that, were Scotland to vote yes in September, this industry would be put at a great disadvantage for some time, and that is assuming that in the end an independent Scotland would be allowed to join the EU. However, much of the protection we enjoy at the present moment might well disappear. If that were to happen, I think that the confidence of investors in the industry would be jeopardised in a major way.
Equally, while Scotch enjoys a fantastic position internationally as a luxury product, a number of other drinks would seek to take advantage of the position of Scotland being denied EU membership. A fact that I always find quite surprising is that more Scotch is consumed in France than French brandy. I am pretty certain that the French drinks industry and the northern European white spirit industries would not stand idly by and let Scotland be given some kind of quasi-preferential status outwith the European Union.
When we hear about the strength of an independent, separate Scottish state, and that one of its elements would be the Scotch whisky industry, it is incumbent on the Government to spell out clearly the costs of not being a member of the EU. Perhaps some people will think about this tomorrow when another debate is held in this place. What is equally important is that it is essential to recognise that it would be not be business as usual for the Scotch whisky industry were there to be a yes vote in September.
It is an important industry; it is not some kind of Sleepy Hollow. As has been said, some 30,000 people are involved in it. Quality control and policing are undertaken by people of the highest calibre. Although it may sound a bit demeaning in some respects, the wages of the workers in this industry are now on a par with those of the best paid chemical process workers, who themselves are among the best paid in the UK economy. For a while, employment conditions in certain parts of the Scotch whisky industry were in a bit of a Sleepy Hollow but, led largely by Diageo over the past 25 years, there has been a dramatic improvement. The quality and nature of employment in the industry goes far beyond pouring drink into bottles. It is of a character that the United Kingdom requires and which Scotland would lose at its peril.
I therefore urge the Minister, not necessarily this afternoon but at an appropriate point, to spell out that whisky is as important to the United Kingdom as it is to Scotland, and that without the European Union alongside us, it would be a disaster for Britain and Scotland.
Baroness Symons of Vernham Dean (Lab)
My Lords, I thank my noble friend Lord Harrison for his opening remarks, culminating as they did in his almost impassioned plea for greater recognition of the importance of trade. I declare an interest as chairman of the Arab British Chamber of Commerce and so, perhaps unsurprisingly, I shall concentrate my brief remarks on trade with the Arab Middle East.
In spite of the current upheaval, the Middle East is a region that is full of opportunity for trade and investment—opportunities which are growing. But increasingly our business partners in the region are seeking commercial relationships based on partnerships and joint ventures; in short, based not just on one-off trade deals but on long-term business relationships with our Arab partners in the region. This is a fundamental point for securing not only Government-to-Government business, as I am sure the Minister is well aware, but business-to-business trade relationships.
There is an enormous problem in the region with the shortage of jobs for young people. That shortage is really acute, given that more than 50% of the population in the region is under the age of 25. Accordingly, in all the discussions and trade negotiations that I have had in the past few years, there has been a huge emphasis on two things. First, the transfer of skills—whether those skills are in IT or project management, whether they are specific to sectors such as the law or whether they are manual skills—is very highly prized. Secondly, the deals have to produce jobs, particularly jobs for young people. Can the Minister tell us how we in the United Kingdom are co-ordinating our efforts on those two vital elements as we try to take forward our trading relationships for the future? How are we getting those messages over to our business community?
I congratulate the Minister on starting his new job, and I am particularly delighted that he is concentrating within UKTI not only on high-value business opportunities, but also on trying to help medium-sized British companies develop trading relationships. That is hugely important, and I hope that he will be able to say more about what his plans are in that respect when he sums up the debate.
Finally, I make a plea to the Minister for more joined-up government on trade. My recent experience is that Ministers and their civil servants all work enormously hard but, my goodness, they still protect their turf. I know that it has always been like that—indeed, it was like that under the Government in which I served—but all civil servants still patrol the borders of the silos of their relationships with their own particular Ministers. That has to change if we are to do proper relationship building that goes right the way across government. We need joint initiatives involving UKTI, BIS, the FCO, the MoD, which is also slightly on the silo side, and DfID, which has a real role to play here, as do other government departments where there is enormous export potential, such as education, health, transport and agriculture. Relationship building is crucial to trade with the Arab Middle East, but, to be effective, Government have to act as Government and not just as individual departments.
Lord Liddle (Lab)
My Lords, I thank my noble friend Lord Harrison for taking the initiative in organising this debate and for his very thoughtful speech. We have had many excellent contributions, notably from my noble friend Lady Symons who is experienced in the practice of trade promotion. Earlier we heard from the noble Lord, Lord Marland, and various sectors have been discussed, ranging from the challenge of UK wine by the noble Baroness, Lady Miller, to the reputation of Scotch whisky by the noble Lord, Lord Purvis, and my noble friend Lord O’Neill. The complexities of financial services were considered by the noble Lord, Lord Carrington, while my noble friend Lady Thornton talked about the potential of social enterprise.
It is a great pleasure to welcome to his first debate the Minister, the noble Lord, Lord Livingston of Parkhead. I think he has answered Questions before but this is his first debate. He probably does not remember but I first met him when he was part of a group of businesspeople whom my noble friend Lord Mandelson, of Hartlepool and Foy, sought advice from when he was Business Secretary. We all welcome him to the Front Bench and his new role, and wish him every success in what is a vital national interest.
I start with the central point that one or two noble Lords have mentioned: improving our trade is essential to the rebalancing of the economy which the Chancellor set out as one of his key objectives in 2010. I will focus on trade policy rather than trade promotion, because I think that the Minister has an important role in trade policy. Of course, this all takes place in the context of globalisation. The noble Lord, Lord Davies, pointed out the extraordinary change in economic openness in the past 20 years. The figures I saw were that from 1960 until the end of the Cold War only one in five of the world’s population lived in an economically open society. Now, on some calculations, it is as high as 90%. That is a huge transformation.
Of course, for advocates of openness, this leads to a major political challenge because people, particularly in the developed world, worry about where their jobs are going to come from if we face all this low-wage competition. The Government talk about a global race. I would like to know how the Minister interprets this. Clearly, there are causes for optimism in Britain’s economic and trade position, as the noble Baroness, Lady Wheatcroft, said, but among the general public many people feel that the rewards of globalisation are being appropriated by the few, not the many, and worry that instead of a race to the top, we are actually seeing a race to the bottom.
One of the key political challenges for all the political parties in Britain is how to build public support for economic openness. Of course, we do not help that if we get into a political race to see who can be the toughest against immigration. When we talk about trade, we have to be prepared to make the argument that it is not just our exporters who benefit from more open trade, it is our poorest families—for instance, in buying children’s shoes and clothes—who have greatly benefited from the opening up of the world economy in the past 20 years.
What is the Government’s strategy for trade? How does the current emphasis on regional agreements fit in with sustaining the multilateral trade system? The noble Lord, Lord Davies, asked a lot of very relevant questions about the transatlantic trade initiative. I am not going to repeat them; it is vital and a great opportunity but it also raises lots of difficulties. The noble Lord, Lord Sharkey, talked about people’s fears about how trade arbitration can overcome laws that we have agreed either in the UK or at EU level. That is a legitimate concern. The points made by the noble Lord, Lord Harrison, about parliamentary accountability at both EU and national level are of great importance.
Another question is: does the Minister recognise the key importance of services to Britain’s trade prospects? I am sure he does. But once we say that we recognise the key importance of services, we get straight into the question of migration. For instance, as I know from when I was in the Commission, in the negotiations between the EU and India, a key demand of the Indians was for a more liberal visa regime for their IT companies. How do we handle these questions?
A key economic strength of Britain is in our higher education—I declare an interest as pro chancellor of Lancaster University—medicine, culture and sport. The Minister is a former director of Celtic. In all these areas, British success depends on an open policy towards people from the rest of the world. Where do the Government stand on this?
The key question for trade is that of Britain and the European Union. I know that this is a familiar theme, which I have spoken about many times in this House and we will be debating again tomorrow, but does the Minister accept the point made by several noble Lords around the Chamber that Britain outside the European Union would be in a much weaker position to make representations to China on intellectual property, to countries that are marketing counterfeit Border textiles, which the noble Lord, Lord Purvis, talked about, or to people marketing whiskies that are not genuine Scotch whiskies? I know there has been a problem with that in India. What strength would we have if we were outside the EU? The Government have to come clean on this question. How would we be able to participate in a transatlantic agreement if we were not members of the EU? What would be our prospects for attracting inward investment into this country if we were not members of the EU?
Since we have such an interest in the EU trade agenda, it is vital that Britain maximises its influence in Brussels. I know from when I worked in my noble friend Lord Mandelson’s cabinet that a large part of what the EU member states do on trade is actually to negotiate with each other on what the EU policy in negotiations with the outside world is going to be. But we all know that as a member state, we cannot negotiate with other member states if, as Herman Van Rompuy once put it in a very good speech, it always seems as though we have one hand on the door handle and are about to rush outside. This question of Britain’s relations with the EU is not some fanciful political question; it is a very real question for the Minister’s responsibilities and we greatly look forward to his reply.
The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, I thank the noble Lord, Lord Harrison, for initiating this important debate. I am very much aware of the noble Lord’s contribution in this area, and his expertise has been shown by his thoughtful comments. I will seek to outline our Government’s approach to trade, as requested by the noble Lord, Lord Liddle, and other noble Lords.
International trade is, of course, essential to the world economy. It creates growth and employment, and enhances consumer choice and value. It is not just something for “rich” countries or big business. Trade is the greatest single tool to bring hundreds of millions of people out of poverty and set countries on the path of development. Trade is vital to the UK’s economy. We have an open economy and seek to champion that; we have a global outlook and a strong and proud history of commerce. Exports are equivalent to over 30% of UK GDP and, in the last financial year alone, FDI into the UK supported in excess of 100,000 jobs.
The noble Lords, Lord Giddens and Lord Davies of Stamford, outlined their support for free trade agreements, which I very much welcome. It is important that the whole global community can benefit from trade, and to do that we require a functioning global trade regime. It should reduce or, ideally, remove the barriers to imports and exports and provide convergence of standards so customers around the world can choose the best of what the world has to offer. I hope that they will choose “Made in the UK”, and it is part of my role to make sure that they do that more regularly.
This Government are proud of their position at the forefront of European and global efforts to facilitate free-trade growth. My predecessor, the noble Lord, Lord Green, whose outstanding work in his two and a half years as Trade Minister I commend, was a vice-chair at the World Trade Organisation Conference in Bali in December, where the important trade facilitation package was agreed. This agreement will cut red tape and unnecessary processes and streamline customs procedures at borders. It will benefit the UK by around £1 billion per annum. However, crucially, most of the gain is global, with around $100 billion accruing particularly to emerging nations such as those in Africa.
My noble friend Lord Sharkey asked how we balance reducing barriers with supply-chain issues. Both are important, but I would also mention convergence: in many areas we have already reduced or removed trade barriers in terms of tariffs, but we also have to have convergence of standards so that manufacturers can produce global products and customers can enjoy them. Each and every one has its place and perhaps a different emphasis, depending on which area and which country we are negotiating with.
The UK has used its influence with both our EU colleagues and a wide range of other countries to help create a global consensus—we most definitely have such influence while in the EU. However, it has to be recognised that this was the first multilateral agreement in 20 years. It is appropriate, in the mean time, that the EU and other economies around the world have also pursued plurilateral and bilateral deals as well as regional routes to trade liberalisation. As the noble Lord, Lord Harrison, pointed out, those do not contradict each other; they can be mutually reinforcing and help build overall a system of improved trade, with higher volumes and prosperity.
Again, the UK has been at the forefront of efforts here. We were influential in shaping the EU-South Korea Free Trade Agreement, which was mentioned. This came into force in the summer of 2011 and was widely considered the first of a new generation of EU free trade agreements, in that it is genuinely deep and significantly more comprehensive than previous agreements. It has eliminated 97% of tariffs and addressed many of the non-tariff barriers. It makes doing business with South Korea much more straightforward. The results and successes of this agreement are clear, with trade between the UK and South Korea doubling over the course of the year following the agreement compared to the years before. Part of that is oil, but even excluding oil we saw a 40% increase in trade with South Korea. It may surprise many noble Lords that the UK now runs a £2.6 billion surplus in trade with South Korea. Before the agreement, it was broadly neutral.
Negotiations are also under way with a wide range of markets—east and west, large and small, developed and emerging. The largest of these is of course TTIP, which was mentioned by a number of noble Lords. This agreement was described by the US ambassador to the UK as,
“an important trade deal with a lousy acronym”.
He has a point, but what is more important is that it could be worth up to £10 billion to the UK. It is correct, as the noble Lord, Lord Harrison, mentioned, that we helped to sponsor a study to show the positive impact of the agreement in various US states. Why did we do that? Because it is very easy to spot the losers, but it is important that it is understood, on both sides of the Atlantic, where the winners are. Within the UK we have a clear view of the winners: for example, if we conduct a comprehensive TTIP, we expect the car industry to increase by 4.1% and financial services by 1.1%. There are real benefits for UK industry. However, critically, the point has been made previously in this House, including in Questions I have answered, that it will also benefit consumers, giving them better choice and lower prices.
The noble Lord, Lord Davies, raised a number of questions regarding TTIP, which I will do my best to try to answer. First, audio-visual services are initially excluded from negotiations at the behest of the French Government. The negotiation mandate was, unfortunately, leaked, so the US is of course already aware of it. However, we are just starting negotiations and setting out initial positions, and we will have to see how that is reflected and any interrelationship. The Jones Act might well be one of the quid pro quos but discussions will almost definitely continue and the UK will make its points. UK business is of course keen to see the removal of the Jones Act. We are raising this with the US Administration directly and through negotiations.
GIs are in scope, and the US and EU are taking different approaches to protecting geographical items. As the EU has done in other agreements, such as with Canada, it will seek protection of a list of geographical indications. However, to give comfort to the Scottish contingent, of which I am one, Scotch whisky is already protected in the US.
The US wants the EU to adopt a more science-based approach to treatments of food and the approval, for instance, of GM items. Her Majesty’s Government agree that the EU could improve its currently slow approval system but it is early days for all of these matters and, we should stress, there is a lot to be done on TTIP.
The EU has also launched other negotiations, including with Japan and India. It has also, as I mentioned earlier, reached—
Lord Davies of Stamford
Before the Minister leaves the topic of EU-US negotiations, will he perhaps address the questions I asked about insurance?
Lord Livingston of Parkhead
I will write separately regarding the matter of insurance. I have tried to pick up the various issues that have been raised and if I have missed any other detailed questions put by noble Lords I will be more than happy to discuss them or write separately on them. I will also come back to the role of Parliament in approving such agreements.
As I was saying, the EU has launched negotiations with Japan and India and reached an agreement with Canada. We believe that is worth over £1 billion and could be a good model for the start of discussions on TTIP. Our role in and membership of the EU is important to that, along with, as the noble Lord, Lord Harrison, said, our role in the Commonwealth. Canada is of course a member of the Commonwealth, and discussions are ongoing with India. We also want the EU to use trade policies to support development by putting in place economic partnership agreements with African and Caribbean countries. I hope to see good progress on EPAs this year at the same time as making progress on FTAs.
The role of Parliament is very important and I was interested in comments from noble Lords that they do not feel they discuss trade very much. I have been in this role for about four weeks and have had three Questions here in the House and a debate. It does feel, as a Minister, that we are discussing this issue on quite a regular basis. However, I shall also make an appearance in front of a Select Committee to discuss TTIP. TTIP and any other agreement will go through the appropriate scrutiny process, while it is recognised, of course, that the EU has competence in many of the areas involved here.
We are discussing these matters also with many other lobbying groups; for instance, small businesses and consumer groups. We meet regularly with Which? to hear its views, because it is important that we represent large businesses, small businesses and, of course, consumers in these discussions.
While these trade deals provide real benefit to the UK, the EU remains a cornerstone of our prosperity. The single market remains the most important trading area: 45% of our exports are to the EU and seven of the UK’s top 10 trading partners are EU member states. The UK is a passionate believer in the single market, and a key part of the reforms that we are seeking is to support and extend that. In the negotiations that we seek with the EU, free trade, prosperity and growth will be a cornerstone.
I fully agree with the noble Lord, Lord O’Neill, regarding the risk posed to Scotland by a departure from the UK and consequent departure from the EU and the free trade agreements. I have made this point passionately already—if your Lordships read the Herald and the Scotsman, you will see me quoted—and will continue to do so, as will government and, I hope, noble Lords.
I should also mention Africa, which is one of the fastest-growing regions and will be an increasingly important market for the UK. Many UK-based firms have already spotted the opportunities for business in Africa. Total UK exports to Africa in 2012 were worth £20 billion, which was more than to Russia and Turkey combined. But that is only a starting point. Many more UK-based firms could be doing business in Africa. There are opportunities in all sectors, particularly in energy, infrastructure, healthcare, ICT, professional services, and education and skills. We will work across government, particularly with DfID and the FCO, to maximise our efforts in Africa, and help in the implementation of the agreements reached in Bali on free trade and reducing barriers. Africa will be the big beneficiary; it is important that the UK uses its knowledge, influence and relationships to help achieve this.
Another area that is often raised in regard to trade is human rights. The Government strongly believe that the promotion of business should go hand in hand with respect for human rights. It is now more important than ever for us to help British companies succeed but to do so in a way that is consistent with our values. I believe strongly that personal freedoms contribute to economic development and vice versa. The thread of safeguards running through society that are good for human rights—good governance, the rule of law and property rights—usually go hand in hand with economic growth and trade.
We also recognise the issues raised by my noble friend Lady Miller regarding the impact of trade on food. One of the most basic human rights is the right to eat. Trade and economic development are the most effective ways of raising people out of starvation and poverty. The World Bank estimates that developing countries that have opened up their economies to trade grow three times faster than those which have not. The opening-up of trade particularly in agricultural products will be an important next stage in many of the trade negotiations, particularly between the EU and African countries. I note the comments on food production made by my noble friend and they are well taken.
I note also the points made by the noble Baroness, Lady Symons, and thank her for her very hard and productive work in the Arab world promoting British trade and development. We note the points made about jobs. We will want to raise more trade with the Arab countries. Progress there on various trade negotiations and FTAs falls behind what we are doing in other areas of the world and should be looked at.
I have so far focused on the impact of trade at the global level. A key priority of this Government is to deliver economic growth and jobs in the UK. Business success in international markets is central to our economy. This is as true today as it was in May 2011 when UKTI launched its five-year strategy. That strategy set out how we were going to improve our trade position. We are targeting high-growth companies to encourage more exports and help existing exporters penetrate high-growth and emerging markets. We are winning business contracts for high-value opportunity. These are often in excess of £250 million each. We are delivering high-quality foreign direct investment to the UK, which I shall say more about shortly. Finally, we are building high-level relationships with inward investors and exporters. The Government are committed to build on this strategy and the many good initiatives that we have started.
Having taken up my new role just a month ago, this speech allows me to outline some of our priorities further to strengthen our trade efforts. We will support medium-sized businesses. I made an announcement yesterday that we will commit to contact all 9,000 medium-sized businesses to help them with trade. More than a third of them do not export today and, in an even greater number, exports account for less than 10% of their trade. Only 17% of them export outside the EU. If we are successful with them, the CBI believes that this forgotten sector of our economy could raise UK GDP by up to £50 billion by 2020.
We will enhance our support for small companies through better marketing. UKTI does a great job, but I have to recognise that it is not as well known as it might be. We will conduct targeted marketing exercises and improve our web capability. I note the comments made by the noble Baroness, Lady Thornton, about social enterprises. We will think about how we include them. Small companies, large companies and social enterprises all have their role in the UK’s overall trade efforts.
We will continue to focus on China, India and other high-growth markets. I am told that I am running out of time, so we must conclude. We will do a number of things to improve our overall position. We recognise so many of the opportunities. The UK has had many successes in exporting and we have some great companies. We are exporting cheese to France and spices to India. We will build on that. We will grow exports and we will continue to champion free trade as a Government and move it forward.
Lord Harrison
My Lords, I thank all those who have contributed to the debate. In the words of the noble Lord, Lord Giddens, I have thought dialectically about some of these matters. In listening to the noble Baroness, Lady Thornton, I was taken back to my old stamping ground of Strasbourg. In listening to the noble Lord, Lord Carrington, I was taken to my contemporary stamping ground of the financial services. By the time we got to our two Caledonian colleagues, I was intoxicated on the Scotch Whisky Association. Encouraged by the noble Baroness, Lady Miller of Chilthorne Domer, I should perhaps admit that a scion of the Harrison family is one of Australia’s biggest wine manufacturers and exporters, not only to this country but in particular to China.
I thank the Minister for his response to the debate. When he has the opportunity and the time that the Whip has not yet given him, perhaps he could examine the questions that he was posed in debate, because we need a written reply to many of the substantial points. I was not simply asking—
The Deputy Speaker (Baroness Fookes) (Con)
My Lords, the time for this debate has now passed. I must therefore put the Question that this Motion be agreed to.
Public Services: Economic and Climatic Challenges
(10 years, 3 months ago)
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Lord Rooker
That this House takes note of the resilience of the United Kingdom in the face of economic and climatic challenges and pressures on public services.
Lord Rooker (Lab)
My Lords, I have not come to moan or blame climate change. While all the issues that I shall raise are not the fault of the coalition, they are not the fault of the previous Labour Government either. I shall not deal with threats or malicious actions, but concentrate on hazards, natural accidents policy et cetera. This is also an opportunity to thank emergency services personnel for their magnificent work so far this winter. The statutory services have delivered. Environment Agency staff deserve special thanks if for no other reason than that they do not normally get the recognition they deserve. Then there is the Royal National Lifeboat Institution, funded exclusively by the public so that Whitehall’s hands are not anywhere near it. It has been courageous in coastal waters and vital in the inland floods. I declare an interest as a governor member.
The Cabinet Office, which will answer this debate for the Government, has published each year since 2008 an unclassified version of the national risk assessment in the form of the National Risk Register of Civil Emergencies. It is an incredibly useful tool, though it does not cover all aspects of what I want to raise today, some of which includes the resilience of society at large in a social sense. I am also well aware from my time in government of the massive amount of planning and the exercises that take place to prepare for emergencies and test our resilience. The proof of proper planning and preparation preventing poor performance is the 2012 Olympics, but we seem in some ways to be scrimping along as a nation. That is a worry and why I want to raise these issues today.
On power supplies, the energy bosses from npower and EDF—as well as the former boss of Ofgem—spent a good deal of airtime in 2013 warning of power cuts due to lack of investment. National Grid’s Winter Outlook this winter says that the margins are tighter than we have ever seen. Ofgem says that if we get a 1-in-20 bad winter there will be real trouble as the risk of blackouts has tripled. Yet I opened the paper today only to see that E.ON is about to close one power station and run three others down—now, in the middle of winter. I accept that that is not all the fault of the coalition but it does not demonstrate the urgency that we need in this matter. The national risk register almost boasts that we have never had a total power outage—a point that it makes more than once. On gas storage, it remains the case that, unlike Italy, Germany and France, which can store between 59 and 87 days’ supply of gas, UK storage remains at 16 days. No action has been taken on that.
I also want to raise the issue of animal disease. We are only ever a phone call away from a vet in the field reporting a major outbreak. Heaven forbid that we have another foot and mouth outbreak, but we will at some point. The Parliamentary Office of Science and Technology’s POSTnote No. 392 tells us that measures for dealing with foot and mouth were exercised in 2011 under the codename “Silver Birch”. Do we have the vaccines at the ready and a willingness to use them, or, as was the case in 2001 and 2007, will industry be allowed to call the shots and avoid for a third time using vaccination? We dealt effectively with bluetongue in sheep and salmonella in poultry by vaccination. Are we ready for foot and mouth, as we were—as that POSTnote explains—in the exercises?
Last December, in a panic, the Department for Education made over £2 billion available for the rising school population. The children affected have all been born since the coalition formed—let us get that one out of the way. We are in a crisis where some local authorities will require 75% more places by 2015 than they had last September, and I would cite Norfolk, Thurrock and Croydon. Very substantial increases will be required in several other local authorities by 2016. Can we deliver on that? Local authorities are both a service delivery organisation for schools and a strategic education authority for an area. However, they can only extend local authority schools—they are not allowed to build or open any new schools and have no power to direct academies or free schools to open in a particular area. Who will spend the money on that? Surely we need a single capital pot for an area, irrespective of who runs the school. We are walking into a crisis affecting early years schooling. It is not too late to change that, but we cannot plan to have school places in the right locations quickly enough under the present system.
I do not have an issue with making local authorities and services more efficient, more accountable and better value for money—we are in desperate times—but with some councils it can appear that their own vested or narrow political interest is sometimes put above what the local citizens require. We have got to the point where the cuts now threaten key services—that has not really started yet. Street cleaning, adult social care, children’s services and the arts and libraries are all for the massive chop. Those areas affect our public, physical and mental health. We need the arts and libraries just the same. Much council spending is invisible to the population because most people do not actually use the services and only the vulnerable will feel the impact. For most people, when the services collapse what they see is the rubbish uncollected in the street. Then it comes home to them that someone from the local authority should have dealt with it. There is a problem of visibility there.
I am sure that some noble Lords will raise NHS issues in this debate. I do not intend to go down that road but observe that we are in a national obesity crisis. Yet my question to the Minister is: are we prepared for the increase in malnutrition among young children? That is an inevitable consequence of attacking the poor, both those in and those out of work. We know that Ministers do not like food banks, which makes matters even worse; yet the food banks are now under such pressure that they have to supply cold boxes and kettle boxes for those who cannot afford to use gas or electricity to cook food. There is also some evidence—I do not have the details of this as I heard it vaguely only yesterday—that more people are shopping day to day for food. The supermarkets can track this very tightly in urban areas. That means that if there is interruption from either power or transport our resilience as regards food may not be as good as in the past.
I also want to raise with the Government the issue of science laboratory capacity. I hope that somebody is doing something about it. We actually had a laboratory close at the height of the horsemeat scandal last March and many laboratory tests had to be sent out of the UK to other countries. Our laboratories are the ultimate mixture of academic, private, independent and local authority, and they are a vital UK strategic national asset. In my view, the Government’s chief scientist should lead on this. We need the laboratories for regulation and investigation as well as for the assurances required by industry for all kinds of events—that is, food, human and animal events as well as chemical, nuclear and biological threat events, which I will not raise today. We are on the edge of a real capacity problem as regards laboratories and the numbers of public analysts. The president of the Association of Public Analysts, Liz Moran, has on more than one occasion told parliamentary committees that we are in serious trouble in terms of our capacity. There were 41 analysts in 2007. There are 29 currently and that is due to go down to 28. That is a real problem for consumer and citizen protection, which will be the loser. It is a serious issue and has to be treated nationally.
Housing policy has never been politically sexy, at least not since the time of Harold Macmillan. That applies as much to my own party as to others, and I speak as someone who carried the portfolio for some years in opposition and briefly in government. There is no sense of a national plan. Demand is up due to the open borders demanded by the CBI and others to help keep wages down. Yet supply is so small that the inevitable happens: mobility ceases, debt for individuals goes sky high and we spend billions of pounds supporting landlords’ lifestyles rather than adding to stocks of bricks and mortar. The nearest we ever got to a plan in recent years was the communities plan published by my noble friend Lord Prescott in 2003. The successors of both parties seem to have got quite bored in delivering that.
The coalition appears to be at a complete loss about this major national, regional and intergenerational housing crisis, with millions of hidden homeless people in addition to those on the street. Land is not a problem. Some 1% to 2% of land plus the brownfield sites would solve our problems for 20 years. The reasoning is simple. Urban developments at present amount to about 11% of the land, national parks to 8%, areas of outstanding national beauty to 16% and the green belt to 14%. That adds up to 49%, so over 50% is available to take the 1% to 1.5% that we need to solve our problem. That is simple. Without building on any of the areas I have just touched on, enough land is available. Yet the best summing up of this I have found was a sentence in a very old essay:
“Democratic governments drift along the line of least resistance, taking short views, paying their way with sops and doles, and smoothing their path with pleasant-sounding platitudes”.
That describes the coalition’s housing policy but it was actually a sentence from the seminal 1931 essay by Winston Churchill in the Strand Magazine.
Weather events happen with or without climate change, let us be clear about that. The national risk register covers the lot. Two years ago, drought was a key crisis. We have to think about the serious volatility of changes in climate. The Thames barrier has a limited life. I had already put this in my notes, and I was really worried when I heard yesterday about the delay. The Thames barrier is sinking, and we are going to wait until 2070 before we start having a look at it. Flood defences are more than walls and dams: they should be environmental as well. I commend to the Government—I am sure that someone has read it—the major article by George Monbiot last week. It appeared first on Tuesday in the Guardian and then on two pages in the Mail on Sunday. True, the latter newspaper used it to attack the EU but the article was the same in both. George Monbiot highlighted the methods for preventing floods that UK scientists have being using for years in the tropics—planting trees in the hills to save and protect communities down stream from flooding. Here, we pay farmers to grub up trees and hedges and plant the hills with pretty grass and use sheep to maintain the chocolate box image, and then we wonder why we have floods where we should not really have them and which we could prevent if we took the advice. Monbiot says that water sinks into soil under trees at 67 times the rate that it sinks in under grass, so why are we not doing that in the UK in areas that we know flood unnecessarily?
My last point on floods is to express concern that the plan for sustainable insurance known “Flood Re” has again been delayed. I will not go into detail but the Swiss Re system for terrorism insurance has worked incredibly well, and I do not see why it cannot work for major floods. It could work for major animal disease outbreaks. The taxpayer is protected because the system allows a market in terrorism insurance to operate. If it is a good enough system to cover buildings in the City of London for terror attacks, the principle should be good enough to ensure that insurance is available for householders in major floods. The pool system works at all times except the most catastrophic, which is when the Treasury stands behind the pool. It is cheaper for the taxpayer in the long run.
Did I just mention the Treasury? I think for social resilience we have a problem with the Treasury. Resilience is the process of being able to return to the original state after being deformed, but we know that the Chancellor wants a smaller state. He wants to cut the public sector by making what he calls hard choices. His hard choices are the ones he finds easy to make, and are only hard on those affected who, in the main, are the weak and disadvantaged. His hard choices are to diminish local authorities, set the old against the young and not even talk about doing it in a fairer way. The young do not vote. Their turnout is two-thirds the rate of the rest, so if they do not vote and threaten him at the ballot box, why should he bother? I do not like this approach, to be honest. One reason is the seeming total lack of compassion and comprehension. It is not nice.
I looked around to try to explain the Chancellor’s approach to creating intergenerational conflict and a breakdown in general of the resilience of society, and I chose Donald Rumsfeld. We are all familiar with Rumsfeld’s quote from 2002 about the three categories of the known knowns, the known unknowns and the unknown unknowns. He did not invent them—they had been around for a while—but there is a fourth category highlighted by a psychoanalytical philosopher who I am greatly familiar with, Slavoj Žižek: the unknown known, or that which we intentionally refuse to acknowledge that we know. That is a perfect fit for the Chancellor. He knows what he is doing but refuses to acknowledge it and its consequences.
I was looking around, thinking about what would be a good example of this to finish on, and I found it on the front page of today’s Telegraph, which quotes the police:
“Documents disclosed by the Association of Chief Police Officers show plans have been drawn up for the cannon to be used …Police warn they expect water cannon will be required because ‘the ongoing and potential future of austerity measures are likely to lead to continued protest’”.
If the Government are in discussions with the Home Office preparing for problems on the streets because of austerity and they are preparing to be resilient against those who protest, why can they not prepare for all the other issues I have raised today?
Lord Brooke of Sutton Mandeville (Con)
My Lords, it is a particular pleasure to follow and congratulate the noble Lord, Lord Rooker, on having secured and opened this debate with such a bravura performance. He is such a skilful and persuasive leader of opinion in your Lordships’ House. One of my most vivid parliamentary memories in a dozen years in this Chamber was his retort to a member of the Opposition who essayed a criticism of the Government’s flood plain policy, so the rationale of this debate is no surprise.
I shall pick up two things he said at the end of his speech. First, I would like to advise him in the context of the Treasury that I have been in gumboots down in the cellars of the Treasury where there is, in fact, a great deal of water. Some of it may have been moved since I was a Treasury Minister, but I do not think it is likely that it has all gone. Secondly, I have not read the piece which the noble Lord, Lord Rooker, quoted about water cannon, but out of Northern Ireland experience, I can say that water cannon is a remarkably inflexible weapon. You have to have a particular domain if you wish to use it. I say that simply to inform the debate.
The noble Lord has given some of us, if not all of us, help in joining him in this debate by the wording of the Motion. My Oxford dictionaries are in Wiltshire, but my Chambers dictionary, which is here, defines the word “resilience” as,
“recoil: elasticity, physical or mental … [L. resilire, to leap back—salire, to leap.].
For the benefit of the Hansard writer I mention that that is the Latin infinitive for “to leap” and not Salieri as in Mozart.
My noble friend Lord Ridley will make a much better informed and more distinguished speech than I shall, just as the noble Lord, Lord Rooker, has done, and it is only the elasticity of the Motion that enables me to speak at all. My remarks will be microeconomic rather than macroeconomic, but after 24 years representing an inner London seat, I now no longer live here, but in the east-west Nadder valley in Wiltshire, which contains along its length road, rail and river, the rail being sensibly elevated so that the river causes most of its inconveniences to the roads. I am not proposing to dilate on climate change, although of course I recognise its relevance in this context on both sides of the argument, and I admire and applaud the surefootedness of those who have strong views on both sides of the divide.
In thanking the House of Lords Library for the admirable development of its policy of furnishing speakers in general debates with Library briefing, I will remark in passing that I daily read the Times backwards at breakfast, starting with cricket, then using as a stepping-stone to death, both obituaries and classified, the fascinating daily articles entitled “Weather” which the Times now has before proceeding to the stock market, leaving everything else to read at leisure after 10 o’clock at night. Our Library produced an excellent briefing for today, although I hope it is not going to make a habit of one feature in today’s briefing wherein the Select Committee’s examination of the Secretary of State for Environment, Food and Rural Affairs, Mr Paterson, suddenly jumped without warning from page 7, in the final line of which badgers occurred twice, to page 11, on which deer appear in the second and third lines. Establishing the connection in this instance is relatively easy in terms of what has been recorded in the intervening four pages, and it may have the makings of an ingenious pencil-and-paper game late at night, but it later moves from page 12 to page 19, and some scintilla of forewarning might be helpful.
The value of the briefing, as of this debate, is the concentration on the long term, to which the noble Lord, Lord Rooker, paid tribute. When in the 1970s, I was running a multinational firm in the private sector, I used to take a day off once a year to attend an annual seminar conducted by a futurological polymath from the Hudson Institute outside New York, whose erudition can be briefly indexed by his reply to a question about why the Japanese had settled occidentally more in Brazil than in any other country. He said: “I have always understood that it was because the Japanese found Portuguese easier to learn than any other European language”. At a time when manufacturing was beginning its long decline here, he reassured us that we were well prepared for post-industrial society by the extent of our superiority in education—especially higher education—government and health. I have spent the past 40 years admiring his percipience, but also wondering if we were making the most of our development in these particular salients.
I have also always regretted that constituency pressures in the Commons encourage MPs to enter the ranks of last-ditch defenders and protesters whenever small primary schools or elderly hospitals were past their sell-by dates while still dearly loved by constituents nearby. In this particular era, when communities are threatened by economic or climactic pressures, I can join the regrets of some that the big society has been less than wholly successful in catching on, but that is not a reason for the instincts of the big society not to be pursued by those who favour them. Indeed, on what is, appositely, the “ill wind” principle, flooding brings out the best in all of us in terms of mutual aid. I live in a hamlet, the population of which does not run to three figures, and which is sandwiched within the five miles that separate two National Health Service surgeries, one in a village of more than 600, and the other of more than 2,000. We use the former, which has a high elderly component but, simultaneously, perhaps because of its community vigour, a very low incidence of dementia. If good is best done by stealth, some of us pay our savings from freedom from prescription charges back into the practice’s coffers to be used for the good of local collective health. In the same way, rural parishes have the advantage of centuries-old charities into which, again, some can discreetly feed benefits which they do not need, the determination of need deriving, sensibly, from local personal knowledge.
An area, however, where I hope that we can improve, is actual performance knowledge among national charities. To take the current humanitarian tsunami, one can use the default option for sending one’s mite to the Disasters Emergency Committee for onward transmission to its underlying members. However, we do not, to my knowledge, have an equivalent of Which? in the charitable arena. It would mesh in its productivity component with Nesta’s estimate in the IPPR element in the Library briefing that if productivity growth from 1995 to 2007 were or had been the same in the UK public sector as in the private sector, the UK Government would be spending £63 billion less every year; although, of course, I acknowledge that the comparison is not like with like.
If I break my Trappist vow on climate change and allow that possible acute climate change in the Mediterranean may produce population transfer into Nordic countries, including ourselves, then attention to advanced Nordic practice elsewhere may well be worth early study. Before the wall came down in the 1989 detente, the population and the physical space in West Germany was exactly the same as ours. The reunion of Germany has taken it away from that equivalence and moved it in the direction of France. These are potential equations for us to address in the same category of long-term thinking as this debate.
The noble Lord, Lord Rooker, also referred to the performance of local government. In what is presumably, not yet, but close to, the valedictory analysis of the Audit Commission of municipal data, I was encouraged by its favourable judgment on the clear majority of councils’ resilience, even if there were a handful of parameters which variably put the weaker councils in a minority from 10% to 30% in terms of their being able to cope with the unexpected. Their evidence was the more helpful, in that it effected comparisons between different categories of council. Since I noted that unitary councils were only buoyant and afloat by 53% to 47%, the latter being the highest figure where anxiety was registered, I must hope, as a Wiltshire resident, that we come in the former grouping. That said, the fact that nine out of 10 councils are regarded as well placed to deliver their budgets in 2013-14 gives us some short-term leeway.
As for the private sector, the Charities Aid Foundation reported last year that only one in 34 employees in Britain gave to charity through payroll giving in the prior year, although that is essentially a function of the fact that fewer than 8,500 of the UK’s 4.8 million employers offer their staff the opportunity to do so. However, 31% of employees said that they would be likely to give if the chance were afforded them, which would increase charitable giving by £175 million. Nearly two-thirds of employees believed that more employees would actively support charities at work if they were allowed to nominate a charity to support that year.
To end on a particularly resilient note, I understood orally this morning from the Charities Aid Foundation that, in global research, all things considered, a British subject was more likely to make a charitable donation, which I translate as being more likely to make a pledge, than an inhabitant of almost any other country. I am not going to turn this into a television quiz show, but some in your Lordships’ House may be surprised by the fact that our only superior is Burma.
Lord Maxton (Lab)
My Lords, I thank the noble Lord for being slightly briefer than the time he was allowed. I also congratulate and thank my noble friend Lord Rooker for getting this debate, and for speaking so forcefully on it. Some of us, with not longer memories than that of the noble Lord, Lord Brooke, but with perhaps a more selective memory, of course remember the Rooker-Wise amendment back in the 1970s. Those of us who come from a certain tradition remember with a great deal of pride that he moved that amendment and the Government acted upon it.
I will make the debate a little broader than it is at present.
Lord Maxton
Well, not the debate; the debate is broad but the content so far has been limited. I am not going to talk about floods because, to be honest, I spent the period of the floods in Scotland where, although there were some floods, we did not suffer anything like as much. I spent the new year period on the Isle of Arran, where we have had worse new years than that.
We live in a society that is much changed and improved from the one that was there when the Labour Party—and my own family goes back a long way in the Labour movement—was formed. We ought, on this side of the House, to take a certain amount of pride in what we have achieved in the past 100 years, because we have achieved a great deal. However, one thing above all that we have achieved, which is where resilience comes in, is that there has never in those 100 years been an armed revolution, an uprising, in this country. I sometimes say that, historically, the only party in this country which has ever suggested an armed uprising is the Conservative Party, which in 1913-14 suggested that Ulster would be right if it rose up against the British state and armed itself and fought. Anyway, we have not had a revolution.
One of the reasons that we have not had a revolution is that the Labour Party has been democratic. We have believed in achieving our aims through democracy and not through some form of uprising or revolution. In my own city of Glasgow in 1919, there was a threat; people observed it as a threat and the Government of the day thought that it was a threat, but it never was—there was never a chance of there being a Russian revolution in this country. We must be aware of that fact, but we must also be aware that the world has changed very dramatically and we have helped that change. We live in a world which is changing very fast indeed; it has changed and will continue to do so. It is our job, in political circles, to manage the change that is going on. It used to be when I joined that our job in the Labour Party was to change society; now society is changing, and it is our job to manage that change for the benefit of those we represent.
There are two areas where we are not changing fast enough. One is in our democratic state itself. We are not developing our democracy fast enough and adapting our democracy to the changes. This building itself is representative of that fact. The building is falling down: everybody says it, and what do we do? We are talking about mending it, repairing it, changing it and staying here. This building was built before the motor car was invented, before television, before radio, before computers: it was built for carriages and for a class society that no longer exists, I hope. So why do we stay here? Why do we not build a brand new building for the 21st century somewhere else, designed for the technological revolution that has taken place, where we can genuinely carry out our democratic government processes, while we spend the money to turn this place into a high-class museum based around democratic principles? That is what we ought to be doing.
More importantly, we ought to look at how we carry out our democracy. The Minister will know well what I am about to say. The idea of voting in a general election by going to a school and putting a cross on a piece of paper with a pencil is absurd to many of our young people, for whom mobile technology is part and parcel of their life. It is one reason, only one, why our young people are put off the whole democratic process. They feel it has nothing to do with them. They vote on “Strictly Come Dancing” or “The X Factor” using their mobile phones. I am not suggesting that that is how we proceed. I know well, because my sons have admitted it, that they voted five or six times in some of those contests: there is no checking on it.
If we had some form of ID, some form of smart card technology, to say, “This is how you can vote, as long as you can prove who you are, and you can only vote once”, surely that is the way forward. It is a way to attract young people, a way of both stopping fraud in our electoral system and expanding the numbers of those who are able to vote. One would no longer be tied to going to a school. One would be able to vote in a wide range of places. Eventually, one would be able to vote in one’s own home and therefore the number of people who would be able to vote in general elections should—and will, in my view—increase quite considerably. It would also lead to a greater respect for politics among the young.
I have to ask both those on the Benches opposite and those on our own Benches to accept that the compulsory introduction of some form of smart card identification is going to be absolutely necessary in a modern world. We cannot go on avoiding this issue. Someone once described it to me as “a King Canute issue”, but I think that that is very unfair on King Canute as he said that it will have to come back. At some point we will have to have some form of identification, not just for electoral purposes, but it will be essential for the poor and those whom we represent in the Labour movement. All of us carry some form of ID: our parliamentary pass, our bank card, our passport, whatever it might be. It is the poor who lose out all the time from not having some form of identification which recognises them—through their social security or whatever it might be. We need to have some form of ID card compulsorily introduced, and I hope that our Labour Party will have that as part of its manifesto in 2015.
I turn lastly to the issue of education. I accept that my own experience is in a different education system, in Scotland, but I have a general point. It is absurd that in this day and age, when nearly all the world’s knowledge, philosophy and ideas are available on my tablet—here it is—or one even smaller than this, that we have a Secretary of State and a Government talking about returning to the basic principles of numeracy and literacy, sitting children in school, learning by rote. What sort of world is he living in? It is absurd. We ought to be ensuring that every child has access to learning, teaching them or showing them how to learn.
I would not dream of going to the library and looking up a fact. If I want a fact I look it up on this tablet. If I want to know what a philosopher thought, I look it up on this. I do not go running to a library or expect a teacher to have to tell me; I want to learn. Therefore our basic philosophy in education should be that education is about learning; literacy, numeracy and the other things are tools by which people learn. If they become redundant, as the wringer in the wash-house has become redundant, as all sort of tools have become redundant, then so be it.
I have not picked up a book in two years; I read a Kindle or I read on the tablet. I can read anything I want, and I can get it in two and a half minutes. I do not have to go to a bookshop and look at the books; I get it straightaway. Why is this not being made more readily available to our children so that they, too, can get this benefit in full? Many of them do; they are the middle-class children, the children of those of us who know how to manipulate and use the electronic systems. We must look to turn our education system towards learning, rather than teaching, towards children being able to use electronic devices to learn from, rather than all the time concentrating on the so-called basic skills that they need.
I finish by making this plea again. Please, please, please, we have to have an ID card. Please make sure that it is introduced as soon as possible.
Lord Kirkwood of Kirkhope (LD)
My Lords, it is a great pleasure to follow my good friend the noble Lord, Lord Maxton, who made a very powerful speech. He has convinced me of most of his ideas just by bullying me incessantly on every occasion we meet, but he has not yet convinced me about identity cards. However, the debate can continue. I am also grateful to the noble Lord, Lord Rooker, who is a wise parliamentarian. I have followed his career and, if he thinks that this is an important subject, that is good enough for me. His experience in government puts him in a very good position to take an overview and we owe him a debt for the way he introduced his debate. I confess that I share his sense of frustration and urgency and I hope that this debate will start bringing some much needed focus to this very important subject.
To lighten his reading load a little, I suggest something for him apart from reading his erudite philosopher. I picked up a very interesting book by an American professor, Tim Morton, entitled Hyperobjects: Philosophy and Ecology After the End of the World. It is about ignoring knowns, and he makes a very important point. He describes “hyperobjects”, some of which the noble Lord, Lord Rooker, certainly identified. I have not finished it yet, so I do not know if there is a happy ending, but I would recommend it to colleagues for reading in future.
I suddenly became interested in the subject in autumn last year, when the Grangemouth Ineos dispute took place. Noble Lords will remember that it was a pretty tense moment north of the border. There was a lot of trade union and party-political infighting, and it had a resolution that was, thankfully, reasonably sensible. I was astonished to find that one company was in control of 85% of the petrol distribution in Scotland, a private company with some quite headstrong, controversial directors, who were making personal decisions. I think that it was all part of the war game. I am not completely naive; I think that there was quite a lot of tic-tac going on in the press to gain advantage in the dispute with the trade union. Some 800 jobs were at risk, and that is a very serious blow. But I was completely surprised to learn that North Sea oil could effectively be closed down for swathes of the northern part of the United Kingdom, simply because of the local difficulties of an individual commercial company.
It made me think that we need to think more carefully and deeply about how fast society is changing. The noble Lord, Lord Maxton, is right about that. The rate of change that we have in this country is often underestimated, and we do not think about it carefully enough. In particular, I am concerned about the long-time effect of ageing; it is good, because we are all going to live to 120, and I am making plans. But the resilience of us individually, physically, will change society really dramatically, not only in the dependency ratio in terms of creation of wealth to pay for pensions but the ability to be able to contribute to your local community. I have lived in the same village for 30 years; I used to play football with my neighbours, but we now have book clubs and meet for interest evenings. Intellectually, everybody is as sharp as a knife, but we all have new knees or shoulders, or whatever—and God bless the National Health Service, which provides these things. But with the best will in the world, if something dramatic and untoward happened, the physical ability that we had when I first came to live where I do has gone. That is a really significant change, which we have not bottomed out yet.
On top of climate change and the global integration of society, specialisation is the order of the day and you all know a little bit about the life you live but everything else is done by everyone else, so if a bit of it goes wrong, the resilience of the system fails. The rate of change is something that we must be concerned about in the course of this debate.
Politics does not handle this particularly well. That is a statement of the obvious, but the timeframe is too long for normal party politics. I am in favour of party politics; I agree with the noble Lord, Lord Maxton, by the way, that we need to invest some money in party politics. My 32 year-old son has raised exactly that question about the pencil cross once every five years as being absolutely useless in terms of what he wants to contribute. He is right about that. But the political system considers capital expenditure as an easy target; if there is ever any pressure on any budget, the first thing that goes is capital expenditure—and nobody cares, because they do not really know about it. I am getting much more concerned about the effect of continually salami-slicing long-term plans; you do not see it from month to month or from year to year, but over the distance, you suddenly find that 85% of the petrol distribution in Scotland is in the hands of one man. The political process needs to waken up to that.
It is also a bad thing that it is so cross-departmental. The noble Lord, Lord Rooker, has had experience of many departments, and he is in a very good position to have an overview of this. The Civil Service is still in silos, and society does not live in silos as much as it used to. The Cabinet Office does its best, and it gets high marks for doing the important work that it is doing with big data, and trying to stay abreast of technological issues. But somebody needs to give me confidence that in central government there is somebody like the noble Lord, Lord Rooker—there may be a job for him—who stands back and can say, “In 15 or 20 years’ time we will be thinking of whatever it is”. We have the expertise here; we have the Meteorological Office, for example, which is a world expert at looking at climate change as it affects the weather. We need to think about how the political process deals with this long-term problem, which is becoming more and more of a problem.
The noble Lord, Lord Rooker, was absolutely right to mention housing. If we got a housing policy that was worth the name and were systematic and careful, it would transform the lives of many of our citizens. It would certainly start to seriously attack the housing benefit budget, which is just lining the pockets of landlords, and that is in no one’s long-term interest.
The Cabinet Office is the place where this whole issue is brigaded. It would help me if it could try to co-ordinate across departmental budgets the resources that are in play here. I do not blame Owen Paterson, the Secretary of State, for getting slightly blindsided about what was actually being spent on flooding, because some of it is private and some of it is public. It is an easy thing to do. But I have no sense of what is happening in the pockets of the other departmental budgets, which are dealing with long-term planning for resilience, climate change and the rest, and I do not know if the figure exists. I am well aware of the national risk register, which I remind noble Lords was drawn up in 2008. I know that it has been updated since then, but 2008 was a different world in the context of how we live these days. So I have a plea to my noble friend on the Front Bench, if he can do it today. It would certainly make me sleep more easily in my bed at night if I had more of a sense of what across the piece central government is applying to resources. I am talking not just of financial resources but of the capacity of experts and the scientists in the labs. What is the global spend across central government that deals with this issue? We should know about that, and about the professional experts that we can call on to deal with these crises, as we must in future.
The policy prima facie looks okay. I have looked at some of the documentation, and there is a spread of interest over the phase of prevention, mitigation response and aftermath, with regard to implementation. All those areas are covered and should be covered. However, on the resources issue, how much operational weight is there behind policy? The consultation that was conducted in Scotland found favour with most of the respondents, but people did not actually believe that the money was behind the policy to make it work in the way set out in the documentation, and we should think about that more carefully.
I want to talk for a moment or two about technology. The noble Lord, Lord Maxton, knows more about this than I do, but he is right to say that technology is quintessentially important in education. I want to take that argument further in terms of what it can do in the event of untoward, unexpected environmental crises. There is what is happening with cloud computing and the extra services that are available that are internet-based, and the mobile nature of devices. If you have an internet connection, you can speak to anybody in the world at any time, day or night. I compliment the Cabinet Office for the excellent work that it is doing, allowing big data to be made available to everybody, open source, so that they can take advantage of that wherever they are. I am told that in a few years’ time, 75% of all government information will be online, which is an astonishing change. That is a resource that we have never had before.
Finally, and most importantly in the context of this debate, social media give people the capacity to interconnect in a way that we have never known before. We are not taking enough advantage of that. For example, if my village were suddenly cut off for some reason, we have enough communal knowledge about computing to be able both to communicate within the village community, and to tell the emergency centre, our local government and our regional government headquarters exactly what is going on.
Indeed, as the noble Lord, Lord Maxton, knows, devices will soon be wearable. We will all have Google Glass, and go around wearing specs with cameras on them. I wait for the day when the Clerk of the Parliaments comes in and brings the House to order wearing his Google Glass device, because they will be able to stream that to Hong Kong. No doubt there are people in Hong Kong who would like to know what he is looking at. I am being facetious; none the less, that does make my point. If I am in the middle of a crisis in my village and I want to know what is happening, I can just switch my specs on. We need to invest in that, in the capacity and in the confidence building for people who will happily volunteer in their own communities and try to help their neighbours in an adverse situation. I think that if that is properly planned and worked out, we can transform our ability to communicate in real time.
Feedback is really important. What really cheeses people off in a flood is not being able to get through on the telephone line—and even when they can, getting the message, “We’ve got no information.” That is unacceptable. We should not allow public service contracts to be let to anybody, whether energy providers or anybody else, unless there is a clause in the contract saying something like, “In extremis, you must keep some percentage of resilience available—and you’re not getting your money unless you can convince the Civil Service people letting the contracts that you will run call centres or technological communication systems that will at least say to people, ‘I know who you are. I don’t know what’s going on but I’ll get back to you, and you can rely on that’—and it happens”.
Something else that we do not do well enough is the wash-up procedures and the feedback after the event—the aftermath. So there is a lot to do. I congratulate the noble Lord, Lord Rooker. This is a very important subject, and I hope that the House will return to it in future. I also hope that the political process will get a better handle on the real future risks that we face.
Viscount Ridley (Con)
My Lords, I, too, congratulate the noble Lord, Lord Rooker, on this debate, and on the ingenuity with which he and others have stretched the description to cover all sorts of subjects. It is turning into a bit of a Rorschach test, whereby we can all read our own preferences into the shape of the topic of the debate. I have not followed the good example set by the noble Lord, Lord Brooke, of looking “resilience” up in the dictionary; I wish I had. I was thinking of that word as meaning a combination of adaptation and sustainability—in other words, the extent to which we can adapt sustainably to changes that are likely to happen.
Over the past three centuries, the UK has probably been one of the most resilient countries on the planet—economically, socially, politically, militarily, scientifically and intellectually. We have been written off again and again, yet we have bounced back rather well. Indeed, yesterday’s unemployment figures suggest that we are bouncing back relatively well at the moment, although admittedly that is in a much shorter-term context.
Why is that? Essentially, it is because of two factors about this country. One is trade; the other is innovation. The fact that we have been connected to the world means that we have been interdependent on the world and we have had mutual support from the world, in various ways, over many centuries. That point was made by the noble Lord, Lord Kirkwood. History teaches that reliance on trade, far from making countries more vulnerable, actually reduces risk and increases resilience. A good example of that is world trade in food, which means that a bad harvest, such as we had last year, does not result in famine, or even in hunger, because we are able to adjust through the price mechanism throughout the world.
In the 1690s, there was a series of bad harvests in France and 15% of the entire population starved to death, despite a famous victory in which Jean Bart managed to recapture a convoy of 120 grain ships from Norway that had been captured by the Dutch—even that was not enough to prevent mass starvation. There was no such mass starvation in this country, just 25 short miles away. In those days, there was not enough trade to equalise the supply of food around the world.
Resilience means getting access to products, services and ideas wherever they are invented. That is what world trade does for us—and, conversely, it also gets markets for our own ideas, services and products. It is no accident that countries that cut themselves off from trade suffer terrible shortages and famines. We only have to look at North Korea for a contemporary example. Another point that I want to make, which relates to something that the noble Lord, Lord Rooker, said, is that resilience also includes not borrowing vast sums from our grandchildren, if we can help it. That, essentially, is what we have been doing with our deficit spending.
The other element of resilience is that it requires innovation. If we in Britain cease to innovate, we will become far more vulnerable to global problems. There was a good example of that this week, when Paolo Scaroni, the chief executive of Eni, the Italian petrochemical company, said that the shale gas revolution in the US was not just a massive competitive advantage to the US, but,
“a real emergency for Europe”.
By that he meant that, because of the falling price of energy in the United States and the use of gas as a feedstock there, chemical, steel and manufacturing industries are bailing out of Europe and rapidly rebuilding in the United States. That is a real threat to us, unless we can join in by lowering our energy prices here. That is resilience for them, because of their innovation over there.
While I am on the topic of energy—and here I should declare my interest in various forms of fossil fuels and other forms of energy—I want to make the point that resilience in the face of weather means keeping the lights on when the wind blows too strongly. That is a pretty obvious point, which the noble Lord, Lord Rooker, made. But it also means keeping the lights on when the wind does not blow at all—and that, of course, is a risk we are running by trying to rely too much on windmills for electricity. That is the very opposite of resilience, and puts us at the mercy of the weather as we were in the Middle Ages.
By the way, it is weather, not climate, that we are dealing with this winter. There is no need to take my word for that; a paper published this week by 17 international scientists from five different countries in the Hydrological Sciences Journal, entitled “Flood risk and climate change: global and regional perspectives”, says:
“It has not been possible to attribute rain-generated peak streamflow trends to anthropogenic climate change over the past several decades … Blaming climate change for flood losses makes flood losses a global issue that appears to be out of the control of regional or national institutions. The scientific community needs to emphasize that the problem of flood losses is mostly about what we do on or to the landscape and that will be the case for decades to come”.
So what we are doing with drainage and development is far more significant in terms of the effect on flooding.
It is worth pointing out that blaming climate change when there is a weather disaster has become rather an itch for politicians. We saw this with superstorm Sandy in the United States, when Mayor Bloomberg and Governor Christie were able to cover up what was perhaps a lack of preparedness by saying, “Well, it’s all to do with climate change.” I congratulate not only the Prime Minister but my right honourable kinsman-in-law the Secretary of State for Environment, Food and Rural Affairs for not doing that in connection with the recent floods.
In November 1703, 400 people died in a bad storm that flooded the Somerset Levels. That week, 700 ships were smashed in the Pool of London, 1,500 sailors died when 13 men-of-war went down, the lead was torn off the roof of Westminster Abbey, and the Bishop of Bath and Wells was killed in his bed by a falling chimney. That is less resilient. We can survive storms much better these days because of the adaptations we have made and the sustainable resilience we have added to our society. Globally, someone’s probability of dying as a result of a drought, a flood or a storm is 98% lower than it was in the 1920s. That is not because weather has got less dangerous; it is because globally, people have better transport, better food, better accommodation and better services generally.
While I am on that topic, both here and globally we use about 65% less land to produce as much food as we did 50 years ago, so let us not forget that fossil fuels have made this possible. Without fossil fuels, crop-land would have to increase from about 12% to about 30% of the planet and land transformation—that is to say, the cutting down of forests to provide grazing land and so on—from 43% to 61%. It is fertilisers, pesticides and tractors that have made it possible to keep the resilient wild ecosystems that we so love.
I was at a meeting yesterday where the problems of crop protection were discussed. The wet summer of 2012 was much talked about, where an explosion of fungi and slugs devastated much of the wheat and rape crops—I once again declare an interest as the owner of a ruined harvest in that summer. The chemicals that farmers use to fight these pests and other forms of invasions are getting less and less effective. Resistance is growing rapidly. There is nothing particularly surprising about that; it has happened ever since we developed crop protection systems and is a perennial problem not only in conventional farming but in organic farming. However, today the pipeline of new products is drying up, which was the concern of the speaker yesterday. Innovation in crop protection is failing, and that is making us less resilient. We will face another wet summer at some point when fungicides will not work well enough and the crop will be badly damaged.
Why is this happening? One of the big reasons is because innovators have their hands tied behind their back. The European Commission is causing the withdrawal of about 25% of the currently available active agrochemicals, largely through using really rather feeble excuses about the hazards that those chemicals have. This is causing farmers to go back to older and less effective agrochemicals, and to lose more crop. At the same time safer, more effective and more organic alternatives, such as genetic modification, are being deliberately and directly prevented. I am sorry to sound so uncharacteristically pessimistic. Normally, I am an optimist but I am encouraged because the noble Baroness, Lady Worthington, tells me that she will be optimistic today, so I will leave that to her.
The precautionary principle is behind a lot of these problems because, as presently interpreted, particularly in Brussels and Whitehall, it counts the risks of innovation but not the risks of not innovating. Funnily enough, this point was made in the previous debate by the noble Lord, Lord Giddens. He said that not taking a risk is also a risk, which was kind of Rumsfeldian in its pithiness. So globally, we must embrace change in this country if we are to be resilient. The least resilient and most dangerous thing we can do is to stop innovating and leave it to others. The world is a dynamic place: as the philosopher Heraclitus said, you cannot step in the same river twice as nothing endures but change. That is true even if the river comes through your front door. Can my noble friend the Minister please stress that, wherever possible, future resilience depends crucially on innovation?
Lord Harris of Haringey (Lab)
My Lords, this is turning out to be an extremely wide-ranging debate, as some of us thought it might be. I started by pitying the noble Lord, Lord Wallace of Saltaire, on the range of issues that he would have to address in his reply, but I am beginning to realise that he may be able to pick and choose to such an extent that he can stick to whatever brief he was provided with at the outset. The debate is so wide-ranging that I should probably declare a number of interests: my co-chairmanship of the All-Party Group on Policing and my role in the All-Party Group on Homeland Security; my chairmanship of the National Trading Standards Board; and my chairmanship of the advisory board on the City Security and Resilience Networks.
I am grateful to the noble Lord, Lord Rooker, for his barnstorming introduction to this debate, highlighting the sheer range of issues where our resilience is under question and for which the Government must either have some responsibility or be taking some responsibility. This debate is about the fundamental duty of the nation state to its citizens: to protect their security and secure their well-being.
I was also grateful to my noble friend Lord Rooker for picking up an issue that I raised in the House yesterday about the Thames barrier. When it was first opened 30 years ago, the barrier was raised twice in its first four years. In the latest four years, it has been raised 24 times, which is 12 times the frequency and far more than ever originally envisaged. Yet the Government are happy to agree to reschedule its replacement from 2035 to 2070. I am sure that your Lordships will be reassured that the Front Bench opposite has this matter in hand. The noble Lord, Lord De Mauley, will himself visit to see that the Thames barrier is in fact resilient until 2070. We are all reassured by that news and look forward to him reporting back as to what state he finds the Thames barrier in when he gets there. However, resilience has to be an essential component of the state’s duty to its citizens. How well can society cope with and recover from adverse events? A breach of the Thames barrier would be a pretty adverse, if not catastrophic, event.
I am a member of the Joint Committee on the National Security Strategy. One of our tasks on that committee is to consider the extent to which the national security strategy addresses all of the issues that it should, and whether the Government have in place appropriate responses to threats to the nation’s security and well-being. Much of this inevitably relates to our international standing. The extent to which the United Kingdom can deal effectively with economic changes is a potential consequence of that international standing and, highly contentious though it may be, the relationship of this country with Europe is of critical importance. Our Government’s willingness to give up their ability to influence events and policies across Europe by their constant hostility to all things European, their willingness to alienate our European partners and their happiness to foster uncertainty about our future relationship with the European Union is inevitably damaging to our national interest. I am sure that the Minister will want to defend the Government’s position on all those matters.
What is not clear is whether the Government have engaged in any serious consideration of the consequences of the endless concessions being made to the Eurosceptic tail of the Conservative wing of this coalition. Later this afternoon, your Lordships will debate the implications of the ill thought through opt-out of the EU police and criminal justice measures. Even though there is clear evidence that these measures are necessary to enable our police to tackle cross-border crime and protect our citizens, Eurosceptics are in practice undermining the security of the nation which they claim to be protecting.
This is part of a pattern: a blindness to national security and national resilience, and a worrying insouciance in all sorts of areas. For example, there is increasing foreign ownership of essential parts of our critical national infrastructure. Indeed, there is no evidence of any serious debate about what should or should not be red-lined. What is the level of our dependence on foreign powers in respect of our ports, our airports, our water, our telecoms or our energy? Do the Government care about any of those? What would they be prepared to see under foreign ownership, or is there something somewhere which the Government are not prepared to see sold to foreign Governments or foreign companies?
Let us talk about energy. Is our energy infrastructure sufficiently resilient against, for example, an electromagnetic pulse, whether delivered as a result of a solar flare or a deliberate attack? An intentional attack launched using a Scud missile from a small ship offshore, which could then be scuttled to make attribution difficult, and with that missile detonating a small nuclear device 25 miles above our land, would trigger an electromagnetic pulse over an area with a 100-mile radius. This would have the effect, irrespective of any other consequences, of disabling electronic equipment and destroying the cores of generators and transformers in the electricity grid.
Exceptional solar activity can produce similar effects. In March 1989, the Quebec hydropower network was disrupted by solar flares, causing a voltage collapse, a failure of transmission lines and a nine-hour blackout. That same solar storm led to a transformer failure in New Jersey and 200 less severe incidents across the United States. Effects like that happen on average every seven years, in line with sunspot activity, with much larger impacts resulting from more occasional massive solar storms such as those in 1859 or 1921. Arguably, if we do the maths, one is due. Where is the planning to combat this and to protect our electricity grid against those sorts of electromagnetic pulse interventions?
Is our energy infrastructure sufficiently resilient against a cyberattack? The Wall Street Journal recently reported senior US intelligence concerns about both Russian and Chinese attempts to map and put in place arrangements to control the US electricity grid. The Chinese, apparently operating from what is described as,
“a rather unimposing building in Shanghai”,
have been equipped to do just that. The former Homeland Security Secretary, Janet Napolitano, has said that a cyberattack on the US power network is,
“a matter of when and not if”.
What are the Government doing to protect the control systems of our energy supply and other utilities against attack or disruption?
More generally, where is our Government’s response to safeguard the country’s longer-term energy supplies, for example in response to Russian moves over oil pipelines and the increasing fragility of the Middle East? Closer to home, how concerned are we, or should we be, about foreign ownership of energy infrastructure in this country or about foreign powers controlling nuclear waste on UK soil?
This vulnerability on energy is a reminder that, only a few years ago, MI5 was warning that Britain was only four meals away from anarchy. This may be why, as the noble Lord, Lord Rooker, reported from today’s Daily Telegraph, investment in water cannon is seen as so urgent. That is how quickly MI5 assessed that Britain could be reduced to large-scale disorder, including looting and rioting, in the event of serious disruption to the critical national infrastructure and, in particular, the food distribution network. We had widespread rioting and looting only a couple of years ago, of course, without disruption of the food supply network. These are matters that should be addressed properly by Government. I am not sure that the solution is water cannon, although we will have an opportunity to debate that in this Chamber in a week or two.
More fundamentally—this relates to the remarks made by the noble Viscount, Lord Ridley—how secure is Britain’s food supply? Other countries are buying up farmland around the world to safeguard their food supplies. Have our Government considered the consequences of this? Are we considering the same? If not, what is being done to safeguard our position and the security of our food supplies?
Are we ready for other forms of threat to the food supply, such as volcanic eruptions with severe effusions of poisonous gases? Have the Government considered the implications for food security of something like the 1783 Laki eruption in Iceland that pumped 14 cubic kilometres—think of the scale of that—of basalt lava and vast clouds of hydrofluoric acid and sulphur dioxide into the air, leading to a drop in global temperatures, crop failures in Europe, droughts in India and the deaths of 6 million people? The 2010 eruption that disrupted flights for six days was as nothing as compared to that. So what contingency plans are in place for a major volcanic eruption with that degree of impact on our food supplies, air travel and everything else?
And are we doing enough to protect food quality? We had the horsemeat scandal, which the noble Lord, Lord Rooker, referred to. That was not, on that occasion, a major risk to public health, but it was a wake-up call for concerns about the food supply chain and the need for adequate monitoring. Yet local authority trading standards have already faced a 20% reduction, with much larger cuts in the pipeline in many parts of the country. Where is concern about protecting the interests of the citizen there?
Of course, all local authority services have been cut and much of that has a consequence on society and its resilience. Moving from food to the other end of the digestive cycle, if I may, one in seven public toilets have closed in the past three years as a result of cuts in government grants. In some large cities, such as Liverpool, there are no public facilities at all. The consequences for the elderly, in particular, are severe. Many of them may choose to stay at home rather than risk being caught short. It is hardly a vision of a resilient society if old people feel that they cannot go out because of the cutbacks imposed by this Government.
Regulatory and other services have been cut. Regulatory services have been cut as part of a drive to reduce the burdens on business. Is this really protecting the citizen?
What about the police service? Morale is at an all-time low, police numbers have been cut around the country and neighbourhood policing is disappearing. Ministers are contributing almost gleefully in a collapse in public trust. Why, for example, were Government Ministers so silent following the inquest verdict into the shooting of Mark Duggan? Where were the Home Office Ministers on radio and television saying that the verdict of a jury who had heard months of evidence in that case should be respected and that the police sometimes have to make difficult decisions—that may, with the wonderful benefit of hindsight, turn out to be wrong—to protect the lives of bystanders? Is it really in the public interest to run down our police leaders and our police service, as this Government have done? Where is the resilience in that? Our police will be the first responders when things go wrong and we need them to maintain public order, to intervene to save lives and to protect the public.
Is this not a Government who have forgotten what being a Government is supposed to be about? A Government should protect its citizens and put the resilience of our society first. That is what is missing. There is no coherence in what the Government are doing. There is no overall strategy as far as many of these issues are concerned.
The Lord Bishop of Ripon and Leeds
My Lords, I too am grateful to the noble Lord, Lord Rooker, for securing this debate and for his wide-ranging introduction, which, as the noble Viscount, Lord Ridley, said, suggests that we can talk about almost anything. Perhaps that is the point. Perhaps the fact that we can talk about a very wide range of issues this afternoon will challenge the way in which we all tend to think in silos and fail to link up our thinking on a range of issues. Perhaps we need to return to the age of the polymath. Perhaps the noble Lord, Lord Maxton, has the equipment to enable him to become one of those renewed polymaths in our society.
I return to the subject of floods. On Sunday I was standing above the damaged sea wall at Whitley Bay, watching the high tide submerging it again and reflecting on the costs that that would mean for the borough of North Tyneside. That reminded me of the sheer power of water. It is no accident that the Psalms, from which we choose our prayers here, emphasise that power when they want to describe nature’s devastation and the need to combat it, for example:
“The waves of the sea are mighty, and rage horribly”,
or, from Psalm 46, that I used today:
“Though the waters thereof rage and swell”.
Society has always recognised the need to combat the destruction caused by water, and to do so coherently.
This winter, we have expressed our concern for those who have suffered, particularly in the southern river basins—the Thames, the Brue in Somerset and the Severn, for example. In the autumn we reeled from the effects of the east coast floods. In west Yorkshire, we know the power of Pennine streams, bringing havoc to Hebden Bridge, Sowerby Bridge and other places well known to the Minister. The noble Lord, Lord De Mauley, yesterday spoke of the response to the latest flooding and gave details of the way in which the authorities are responding. That was welcome.
Yet I do not yet sense a national and coherent policy to respond to natural calamities. The noble Lord, Lord Rooker, pointed to the way in which we have not got our agricultural policy working with our policy on calamities over issues such as planting trees and preserving green areas. We tend to go for a piecemeal approach and to patch up, rather than establish national criteria to respond to future challenges, wherever they may occur. In doing so, we often set one part of our country against another—“Why are they being helped when we are not?”.
These issues need to be set in the context of climate change, despite the Trappist vow of the noble Lord, Lord Brooke, over this subject. Our response to climate change needs to be linked with our practical dealing with calamity. I listened hard to and respect what the noble Viscount, Lord Ridley, said about the distinction between weather and climate. He is right; when we naively start to blame climate change for particular problems in the weather, that is clearly much too simplistic. However, given the way in which we are thinking this afternoon by bringing together our thoughts on a wide range of issues, the link between weather and climate change needs to be explored a good deal more than it has been so far. Scientists are working on that. They do not seem yet to have reached a point where they can make specific links, but that work nevertheless needs to continue. The climate change initiatives seem to have flagged over the past two or three years. Unless we respond to the need to reduce our and the world’s carbon footprint, we shall continue to place sticking plasters where damage is caused.
Therefore, the Government need to make it clear that their climate change emphases are a response both to the practical problems that we face and to the problems that the world is going to face over the next century and beyond. We need in particular adequate successors to the millennium goals, and I welcome the Prime Minister’s commitment to those goals. However, I wish that the climate change proposals were more strongly emphasised by the Government and linked in to our dealing with flooding and tidal surges, now and in the future. They need to be part of a single strategy that also includes green energy, rural-proofing, transport issues—we have considered those a little in this debate—as well as issues involving the food chain, to which the noble Baroness, Lady Miller of Chilthorne Domer, referred in the previous debate, and which are crucial to our future as a nation and to the whole world.
We need this vision for the sake of our children and their children. The noble Lord, Lord Rooker, raised the question of whether there were going to be enough school places for our grandchildren over the coming years. I can offer him the support of the Church of England, its dioceses and their education department, which are providing an increase in the number of primary school places, working along with local authorities and academies to grow the size of primary schools and, where necessary, opening new schools that are fully equipped with the technological equipment that children need. It is our children and grandchildren who will suffer if we do not take action.
We have become almost immune to Bangladeshi floods, the spread of the Sahara and the Philippines tornado. They disappeared from our screens within a week or so. The generosity of the people of this country is immense when they are asked to respond to need. We need to channel that generosity much more effectively into a coherent, long-term strategy that includes climate issues and their effect on our future. My basic question to the Government is: what plans do they have to explain the importance of tackling climate change as a response both to current tragedies and the future welfare of our country and our world?
This is my final contribution to your Lordships’ deliberations because I retire next week. I just wanted to say thank you for the help and colleagueship that I have received, both from those who believe that there should be Bishops in this House and those who do not. It has been a privilege to work with noble Lords and to benefit from the immense experience and expertise of this House, in both the careful examination of legislation and the high quality and variety of debates such as this. I wish the House well in all its future work.
Lord Touhig (Lab)
My Lords, I am honoured and delighted to follow the right reverend Prelate and we all wish him every happiness in his retirement, because he has made a major contribution in his service to this House. We wish him well.
Having spent almost 16 years in the other place, I am nevertheless wary about importing the systems, practices and mechanisms of the House of Commons into your Lordships’ House. However, I congratulate my noble friend Lord Rooker on his ingenuity in securing this debate because, as I listened to the many and varied contributions, it reminded me of a good, old-fashioned House of Commons end-of-term adjournment debate. We should be grateful to my noble friend for securing such a debate which would be no bad thing to have from time to time.
The Government must be aware of the remarkable challenges that the voluntary sector has faced in recent years. Its endurance and commitment towards public service, in the face of economic pressures and rising need, has proven unshakeable. The voluntary sector has faced the economic challenge of increasing costs combined, like all public services, with an acute pressure on funding. Simultaneously, these same challenges have led to an increasing need for the services provided by charities. Charities are reporting increasing demand and severity of circumstances. This is concurrent with an unprecedented threat to their ability to respond.
The National Council for Voluntary Organisations described 2012 as its “annus horribilis”, and said that in that year voluntary organisations faced a,
“triple whammy of increased demands, rising costs and an unprecedented fall”,
in income. Over the course of this Parliament, this Government are planning to cut more than £5 billion in funding to charities. More than two-thirds of all spending cuts will fall on the 25% most deprived areas of our country. It is in these same communities that the country’s charities are working to maintain civil society and increasingly providing a backstop and safety net to the welfare system.
In the face of this triple whammy, the response of charities has been remarkable. In order to meet changing needs, many charities have diversified and begun operating in new and creative ways. A prime example is Caritas Anchor House, a residential and skills training centre working with homeless people, not far from here in the East End of London. During the past few years demand for its help has increased, while partner organisations have seen major reductions in their funding. Nevertheless, in the last quarter of 2013 alone it helped 34 people into employment and 17 residents into independent living.
Like many charities, it has increasingly partnered with the public sector. Anchor House has set up a complex needs team, working in partnership with local health services to support people’s well-being. Throughout the United Kingdom such partnering is enabling charities to signpost vulnerable people towards assistance, and help them to navigate their way through the system to access the help which they are owed and desperately need.
In recent years the voluntary sector in the United Kingdom has witnessed not only increased demand for help, but the severity of cases has also increased. One of the greatest tragedies of recent years has been the resurgence of food banks in 21st-century Britain. My successor as MP for Islwyn, Chris Evans, recently told me that when he visited a food bank in the constituency, he could not get in because of the large crowd outside. In the past 12 months alone the Trussell Trust experienced a 170% increase in the number of those turning to it for help. This is on the back of equally dramatic increases in the preceding years.
It is reported that 43% of all those referred to food banks have been sent there because of benefit stoppages, and a further 30% are sent there because of benefit delays. Charities have been forced to respond to this horrific new challenge, which is in large measure a consequence of this Government’s callous treatment of those who rely on the welfare system. These are poor people, whom some Ministers and some in the media portray as liars, cheats and scroungers. Charities have been required to become a safety net for this Government’s actions. In England and Wales jobcentres are now routinely referring people to charity-run food banks.
The response of charities, donors, and volunteers to this intolerable crisis has been inspirational. Caritas Diocese of Salford is now providing good quality, healthy lunches to 200 people every day. It is also working to address the causes that have forced people to rely on them for the bare necessity of a good meal. We in this House have perhaps already enjoyed a good meal today, or certainly will before the end of the day. We take it for granted.
Caritas Salford has become a beacon for sanction support, helping those who lose their benefits or have them delayed. This involves providing advice and accompanying people to meetings with jobcentre officials. Like so many charities, Caritas Diocese of Salford is directly addressing the challenges which have forced people to rely on it for food.
The resilience of British charities has been severely tested in recent years. In 2010-11, 2,000 charities in England had their funding cut or withdrawn altogether. We should not forget that the two poorest and most disadvantaged groups in Britain are at the extreme ends of the age spectrum: the elderly and the young. Charities caring for and supporting children and young people were particularly severely affected. These charities were already doing incredible work with some of the most vulnerable and disadvantaged people in our society. Nevertheless, the United Kingdom voluntary sector has continued to respond compassionately to need wherever it has encountered it.
In recent years there has been a marked increase in the severity and amount of help that charities have been asked to provide. The challenge of reduced resources and increased demand has been met with care and an acute concern to address the causes of distress. I believe that all of us in this House know of the resilience of the voluntary sector in meeting the needs of vulnerable people in incredibly challenging times. I am sure that all noble Lords in this debate want to send one simple message to the Government: future funding to charities should not be regarded as a soft target for spending cuts. The voluntary sector has been resilient in compassionately meeting the needs of the UK’s most vulnerable citizens, in the face of tough economic times and severe pressure on public services.
The voluntary sector has always been instrumental in providing low-level services to vulnerable people which the public sector cannot provide. One example is the voluntary sector’s help for people with autism. Tragically, 82% of adults with autism report that they have not spoken to anyone outside their household for days, and 42% for weeks. These people often struggle to receive all the help and support they need from social services. Vital low-level services, such as befriending or social skills training, are often provided by the voluntary sector, and this is of great benefit.
In my experience, which includes 20 years as a councillor and 16 years in the Commons as well as now being in your Lordships’ House, no matter how good Governments are or local government becomes at providing a range of services to our people, without the voluntary sector the quality of life of millions of our fellow citizens would not be what it is today. We owe the voluntary sector a great debt, and it is time to pay up.
Baroness Worthington (Lab)
My Lords, I also congratulate my noble friend Lord Rooker on enabling such a broad debate to take place on this most interesting of topics. I also extend my thanks to the right reverend Prelate the Bishop of Ripon and Leeds for his contribution. I am sad that it is his final contribution, but I am sure that everyone will congratulate him on making such an important contribution to this debate. As was alluded to by the noble Viscount, Lord Ridley, today I will adopt a fairly upbeat approach to this topic. There is much that the UK can feel very happy and proud about in relation to its resilience in adapting to the changes that are coming.
We have a predominantly knowledge and service-based economy. This means that we are at the cutting edge of new ideas and can adapt quickly to changing circumstances. As a number of noble Lords have mentioned, the pace of that change appears to be quickening, and that can make our ability to plan incredibly difficult. However, given some of the assets that we have and the nature of our economy, I think that we are well placed to be able to do that. It is a diverse economy.
Much concern is expressed in the media and elsewhere about our potential overreliance on financial services and the financial sector. However, official statistics show that the contribution to the economy of that sector, in terms of its gross value added, is in the range of 5% to 10%. It employs only 4% of the workforce and contributes about 6% to 7% of tax receipts. I am not saying that that is not a big contribution—it is—but clearly upwards of 90% of our economic output is generated by a diverse range of other sectors. The service sector, as I mentioned, dominates, with professional, scientific and technical services accounting for the largest part—almost 13%—of the non-financial sector GVA. Other important sectors include entertainment and media, which make a strong and growing contribution to the economy, as do the green technologies and services. These sectors have been able to show growth when other sectors of the economy have been in decline.
One fundamental reason for this resilience and strength in our economy is our academic record and our academic institutions. Given the size of our country, it is quite astounding that the UK is home to four of the top 20 universities in the world and that 15 are in the top 100. This gives us a fantastic foundation on which to build, educating not just our own young people but people around the world. We are able to disseminate into the wider world the principles and ideas that we hold dear using our academic institutions, which themselves are now opening campuses in other parts of the world. Based on that sound academic and research base, we also now have a globally competitive lead in key sectors such as biopharmaceuticals, aerospace and the digital economy.
We also have—the noble Viscount, Lord Ridley, spoke very eloquently about this—a very clear history of innovation. This is an essential component of a modern economy. We do not need to talk about the Industrial Revolution but I mention briefly a recent innovation in the invention of graphene, which is being dubbed the world’s most important new material. It was discovered by two Russian scientists at Manchester University in 2004. The excitement around this material is very great. However, the question remains: will the UK be able to go from research and the fundamental principles of discovery into commercialisation and help to build a business around it? It is clear that graphene can be put to use in a number of different ways—from condoms to super-efficient solar power cells. Therefore, there is much to be optimistic about.
However, there are of course challenges—not least challenges to the public purse, on which my noble friend Lord Rooker cleverly instigated a debate within the topic of his speech. Perhaps primary among those are the demographic changes that we will experience. Average life expectancy is growing. We have reduced infant mortality, and medical advances and higher living standards now mean that we are living longer, as the noble Lord, Lord Kirkwood, alluded to. These are good things that we should celebrate. They are a mark of how much we have improved our lot in a relatively short period. We have seen diseases eradicated, and a number of medical interventions and innovations have helped to prolong life.
However, a top-heavy demographic will create pressures on public spending, increase our pension liability and potentially lead to higher care and health costs, with the added problem of fewer working-age people paying into the pot in taxes. Of course, immigration can help to address this, and a number of noble Lords have alluded to the fact that interconnectedness can help to strengthen us and make us more resilient. Far from bowing to the scepticism and scaremongering about immigration, we must celebrate and praise the resilience that it has given our economy.
Healthcare is going to be a crucial issue. I think we will find that health and social care are incredibly difficult topics. Of course, one method of helping to alleviate the burden on the public purse is to spend more on prevention. More needs to be done in looking at some of the commonplace diseases that perhaps do not grab the headlines as much, such as diabetes, heart disease and obesity. People with these chronic illnesses and diseases can be helped through better education and early intervention. A refocusing on prevention in our national healthcare system would be money well spent.
I should also like to mention the need to clean our air. It seems to me crazy that in the 21st century we still have a problem with air quality. Poor air quality contributes to chronic diseases such as asthma and other respiratory diseases, and it should be a priority for any modern economy to eradicate it. The technology now exists to make our streets and our air far cleaner. There is no excuse for some parts of London currently having triple the legal limits of NOx pollution.
The other great challenge for government—I pay tribute to my noble friend Lord Harris for describing it—is the need to keep a balance in our economy and not to allow inequality. We cannot have an innovation and growth economy that represents only the few and not the many. The whole of our population must be brought forward together. Inequality is a real problem but the answer, as my noble friend Lord Rooker said, is not water cannons. There must be a much more sophisticated response than that. We must address the fact that poverty is now found among those in work as well as those out of work. I believe that the statistics show that poverty levels are now higher among those in employment than those not in employment.
Looking slightly more closely at how we raise finance for public spending, there are a few trends which I think this Government and all Governments need to think about. One, in particular, is that we rely quite heavily on income based on fossil fuel taxation. Fuel levies make up 5% of the revenue but the consumption of fuels is falling as vehicles become more efficient, and North Sea revenues are also falling as production declines. The question is: what will replace that as a source of income? The noble Viscount, Lord Ridley, mentioned shale gas, the impact that it has had in the US and how it has created a challenge for Europe as a whole. I do not dispute that but it is not yet clear that shale gas can deliver the same kind of revolution here as the US has experienced or on what scale. There is also a great need to ensure that we have robust regulation to protect water resources and drinking water when we eventually exploit it.
I would prefer a balanced approach: shale gas if it can be extracted safely and affordably and carbon capture and storage, a technology which could add value to and reinvestment in the North Sea infrastructure, extending the economic lifetime of that investment and enabling us to return to using our own coal-based assets. It would definitely help energy resilience if a higher proportion of our energy came from home production rather than imported fuels. CCS is underexploited and given too low a priority by this Government. I wish we could see as much enthusiasm about CCS as we do about shale gas from our Ministers and leaders. Canada is currently leading the world on this. We had an opportunity to be world leaders and we must catch up.
I am feeling in an optimistic mood: we are currently experiencing an economic recovery and that is certainly welcome. However, it has to be a sustainable recovery: one based merely on increased consumption or housing price rises will not be sustainable in the long run and we cannot risk a repeat of the boom-and-bust cycle that led to this recession in the first place.
The answer lies in innovation at every level. As noble Lords have alluded to, there are now technologies which are revolutionising everything. From education to transport to you name it, a coming technology will change how we do things currently. For example, smart homes: there are now devices that you can put on your mobile phone which communicate with your house so that when you are approaching your home it tells the central heating to switch on and get it nice and warm ready for your arrival. You do not need to do anything: it is simply based on reading where you are using your mobile phone. With LED lighting, huge efficiencies over the current lighting systems are possible. Every local authority in the country should be investing in it, not only to reduce their electricity bills but to improve the quality of services that they offer. Smart LED lighting can adjust to the levels needed automatically and can spread the provision of lighting to help increase security. A great deal of new technology is coming through which will help to improve our lives.
A number of noble Lords have alluded to the fact that we must have a long-term plan if we are going to do this efficiently and well. We cannot allow the short-term thinking which is rife in the private sector, governed as it is by the quarterly cycle of reporting and the desire to meet shareholder demands: we need a longer-term view.
We must also have a longer-term view than the election cycle, where there is always a temptation to worry about the immediate priority of winning an election at the expense of longer-term thinking. The noble Lord, Lord Kirkwood, pointed out that in the desire to cut spending in ways that will not be noticed, investment in the future and in capital is often one of the first things to go. That is regrettable.
That brings me on to perhaps the most negative part of my contribution today—that is, the Government’s plans on flooding defence. It is clear that there has been a little confusion, to be generous, about how much money is going in. It is clear that less government money is going in than has previously been the case and it appears that government plans for the future are a little short-sighted. I am informed that the Government’s Flood Re proposals do not include the likely increased need for flood defence as a result of climate change. We can debate climate change and where we are at the moment, but it is clear that reduced ice in the Arctic means more evaporation, more precipitation and sea-level rise. Many factors will contribute to flooding for which we need to plan; we cannot simply wish them away.
I am concerned about the Flood Re proposals. I have received information today that there are large exemptions to the kinds of property that can have access to this insurance. A group of organisations, including the British Property Federation and the Council of Mortgage Lenders, have said that millions of homes could be left without access to insurance unless that policy is changed.
I am told that I have one minute left and I will end, as I said, on a positive note. The pace of change is quite extraordinary. I am sure that I am not the first person to have said that and that future generations will say it too. It is a matter of perception. With the benefit of hindsight, it always seems as if things used to be more clear and certain. We must resist the temptation to feel that there are many new risks or risks that are unique to our time. It is human nature to perceive, be aware of and try to plan for risk. It is what has made us a successful species. I shall end with a quote from Sir Winston Churchill:
“The future is unknowable, but the past should give us hope”.
That is why I am feeling cheerful today. The UK has great assets and a great ability to respond to these challenges, and I am sure that it will do so.
Lord Wallace of Saltaire (LD)
My Lords, some debates are more difficult to sum up than others, but this one is simply impossible. Let me start by thanking the right reverend Prelate the Bishop of Ripon and Leeds for everything he has done as a Member of this House and for the many contributions he has made. I hope that he will not be losing touch with his diocese entirely, which I know well, having walked across substantial parts of it, and having canvassed in such different areas as the Gipton and Harehills estates in Leeds and the Duchy estate in Harrogate—to take two extreme ends of the social spectrum. Only those who have walked over the Yorkshire Dales know quite how extraordinary are the boundaries between the different dioceses of West and North Yorkshire: Bradford, Wakefield, Leeds and Ripon. I know that the retirement of the right reverend Prelate is partly an adjustment of the boundaries of those dioceses, which will relate more to the 21st century than to the early 20th century when they were drawn up.
Let me start by talking about the Government’s response to issues of resilience. I stress that it is not just about this Government’s response because we have inherited a lot from our predecessors. I hope that we have improved upon it, although as has been said, we are all conscious that Governments tend to think about the period between now and the next election. However, good government apparatus needs always to think about the long term. The Civil Contingencies Secretariat of the Cabinet Office, with the horizon-scanning that various members of the Cabinet Office undertake, always tries to look 15, 20 and 30 years ahead. That did not start with this Government; it is something that any Government should be doing.
When this Government came into office, I was struck by the list in the national security strategy—a document produced mainly by the Ministry of Defence—of what were thought to be the major threats to Britain. What was most striking was how few of the threats identified were primarily military. The first was international terrorism affecting the UK, with hostile attacks against UK cyberspace listed as the second of the really serious threats. It cited a major accident or natural hazard such as flooding affecting three or more regions or an influenza pandemic as the third threat, and an international crisis between other states which might draw in the UK and its allies, as well as non-state actors, as the fourth. Under tier 2 were listed the risk of major instability, insurgency or civil war overseas that might create a surge of terrorists or asylum seekers, a significant increase in the level of organised crime affecting the UK, and severe disruption to information received, transmitted or collected by satellite either as the result of deliberate attack by another state or through the impact of space weather. So the Government do try to think ahead, but the idea that any Government could ever be entirely coherent in their response to every possible contingency is asking for the moon, and possibly even for the sun as well. As I struggle to come to terms with the many different things that the Cabinet Office does, and which I find I am responsible for reporting on to this House, I have to say that this Government are doing a fairly good job.
On two occasions I have been briefed on the question of cyberdefences and the threat of cyberattack. I told my wife that when she visits Beijing in a few weeks, she is certainly not taking any phone other than one she might buy to go there and come away with. Again, the Government are well prepared for many of the risks that we face in this new world: the government structure is in place.
Of course, the Cabinet Office works in collaboration with the DCLG, Defra, DECC and a number of other departments, and in co-operation with local government because many local issues, particularly flooding or other weather events, are dealt with much better in the first instance by local responders at local level.
Incidentally, I am struck that no one has mentioned national or global population increase as a long-term source of insecurity. It evidently is a matter of concern to our population. It is certainly a source of potential problems if there is climate change in other parts of the world or, perhaps, due to the declining effectiveness of antibiotics in controlling disease, which is a problem with which the Government are already actively engaged.
I will make what is perhaps the party point that very few of these threats—indeed, almost none of them—can be dealt with by national action alone. National security requires international co-operation, both European and global. The defence of national sovereignty, about which some newspapers in particular seem to go on at great length, does not fit in well with protection against external, regional and global threats.
The noble Lord, Lord Harris, asked whether or not foreign ownership of key national assets is itself a potential source of national insecurity or threat. That is a very large question, which perhaps he would like to promote an entire debate on. All I will say is that it is very odd that the anti-European right does not focus on that issue when it is talking about the defence of national sovereignty.
The right reverend Prelate asked about UK policy on climate change. Again, UK policy on climate change has to contribute to European and global policy on climate change. We are engaged in an active negotiation within the European Union about how we and the other 27 member states adjust to climate change. The discovery of shale gas in the United States has not made that any easier because the higher price of energy in Europe compared to the United States is clearly a very major issue here.
I say in passing to the noble Viscount, Lord Ridley, who doubts that we should depend so much on renewable energy from wind, if you walk around Yorkshire, you are always conscious that there is an awful lot of unused hydropower available. I have just had to keep my head very low in an argument within Saltaire village about whether or not you could put in an Archimedean screw on our weir, which we are now doing, which will provide a small amount of local hydropower. There are about 100 other weirs on the River Aire and if one were to harness all those weirs that we used to use in the 18th and 19th centuries for power in Yorkshire, we would provide a small additional contribution to renewable energy from land-based fresh water, which incidentally would be most effective at the point where wind power was likely to be least effective.
While I am on the international theme, I will quote the Peer Review Report from the European Commission, OECD and UNISDR on the United Kingdom’s resilience:
“Since the Civil Contingencies Act (CCA) was enacted in 2004, the UK has continued to increase the resilience of society to disasters. Sophisticated mechanisms have been put in place to coordinate the actions of various levels of government and its agencies at national and local levels … In many respects, the UK resilience approach shows state-of-the-art innovations, including: large use of science to support policy … attention to business-continuity issues and full partnerships with the private sector … flexible institutional mechanisms and partnerships focused on delivery through voluntary approaches … professional and dedicated co-workers in the field of DRR”—
disaster risk reduction—
“throughout the country … national commitment to continue improving policy-making and pushing further implementation”.
Again, I say to the noble Lord, Lord Rooker, that of course none of that started in 2010 but we are continuing to pay active attention to this extremely important issue.
It is not only the Government; there is a role for Parliament and for society as a whole in all of this. We talk about government resilience but of course there is also economic resilience and social resilience. There is a role for Parliament in promoting public awareness of challenges to resilience and of the need for the public as well as government nationally and locally to play a part in response. I suggest that Parliament could do more, through debates and committee activities, to scrutinise government on these long-term threats.
The noble Lords, Lord Touhig and Lord Brooke, talked about local communities, local government and the involvement of the public and charities. The revival of local government is one of the things that this Government have begun to make some progress on, although I have to say that we have been frustratingly slow in doing it. Clearly the city deals and getting people back into local engagement are part of the way in which we have to improve social and political resilience. I disagree with the noble Lord, Lord Touhig, on the extent to which charities should be as dependent on government funding as many became in the 13 years of the Labour Government. I have occasionally been shocked in Yorkshire by just how intensely overdependent some charities are on government funding. It is an unnatural dependence. That is a question that we will need to discuss with the charity sector.
In many ways, civil society more broadly has become too passive in Britain. I am a fan of the big society partly because it says, “Government cannot do everything for you. You have to help to do some of these things yourselves”. I remember the shock that my wife and I had when, during a very heavy snow storm some winters ago, one of the many young people who have stayed in our house in London over the years—because it is too large for us and we are away at the weekends—said, “Why haven’t they cleared the paths?”. We both turned on him and said, “Why haven’t you cleared the paths?”. This is part of the problem that we have across too much of our society. We need to get people back into the sense that they share in citizenship and in their local and national community. I will flag up a number of government programmes which help with that. The national citizenship service scheme pilots, as they still remain, have done a very encouraging amount to show to some young people from the deprived sectors of our society that they can, and would be happy to, help and work with others in building local community initiatives. I have also watched the arrival of the apprenticeship programme and have seen in Leeds and Bradford the extent to which young people who thought they were never going to work, have got themselves back into work and are finding that it is an enormously valued part of their life within the community.
The noble Lord, Lord Maxton, remarked how we have a coherent and cohesive society and have never had a revolution. As he spoke, I thought of what my father told me many times. When he was a sergeant in the Gordon Highlanders in 1919 during the miners’ strike and was sent off with a platoon to guard a Nottinghamshire mine, he was sure that the Sherwood Foresters were probably there guarding a mine in the Scottish lowlands—I think we got pretty close to it in 1919. The question of social cohesion and social resilience is one which we cannot neglect in Britain at present. A topic for another debate would certainly be whether the growth of the extreme inequalities which we see in our society, as well as the increasing ethnic diversity, weakens social resilience.
The ageing population, to which a number of references were made, also raises considerable problems. For example, I would say to the noble Viscount, Lord Ridley, that it tends to make society more resistant to change and innovation. As we have seen, it also increases the pressure on all Governments to spend more on the old and less on the young.
Lord Harris of Haringey
I am sorry to interrupt, and I know it is a timed debate, but did the noble Lord imply that increasing ethnic diversity would reduce society’s resilience? If so, could he explain the point?
Lord Wallace of Saltaire
I merely said that it is a risk. It is a risk that we have seen over the past 20 or 30 years. On the whole, we have managed the diversity of British society extremely well, but it is not something—I say this again from my experience in West Yorkshire—that can be entirely ignored. It is one that we all have to be aware of. My noble friend Lady Eaton, a former leader of Bradford council, is actively engaged in Near Neighbours, which works across West Yorkshire in bringing those different communities together. We have to work on these things.
Animal disease was mentioned. Defra and the veterinary agency are dealing with scanning surveillance capability on the threat of animal disease. I assure the noble Viscount, Lord Ridley, that a large number of scientists in universities, in government laboratories and in the private sector are working together on this.
The noble Baroness, Lady Worthington, and others spoke about spending on flood defences. The noble Baroness was absolutely right: spending overall is going up, which is partly because, under partnership arrangements, private providers are increasing their contribution as the Government have squeezed the rate of their contribution. Those who say that there has been a reduction and those who say that there has been an increase are therefore both right depending on whose figures you take. We are all conscious that flood defences are a highly emotive issue. I would contradict those noble Lords who suggested that the Government are not thinking about the future of peatlands and tree-planting in the uplands. We had a Question on peatlands from my noble friend Lord Greaves the other day. These are matters where the Government, local authorities and water companies are working together.
I am conscious that time is running out. I have mentioned the flood mitigation measures which are already under way; clearly, more needs to be done. I was looking up what an earth bund was this morning— perhaps the noble Lord, Lord Rooker, already knows what that is—but experiments are under way to prevent heavy rainwater on saturated land going immediately downstream by holding it in artificially created water meadows. The Government are experimenting as far as they can in all this.
Baroness Worthington
Would the Minister care to comment on my questions about the Flood Re provisions and the number of households which it is feared may not be able to apply for flood insurance under that scheme?
Lord Wallace of Saltaire
I have some notes on this which I have not had time fully to absorb. Perhaps I may write to the noble Baroness. I am conscious that the Government are engaged in active discussions on that. I know that it is matter of great concern to householders who live on flood plains. I think that about a quarter of the population of Wandsworth lives in houses built on the Thames flood plain. That is part of the reason why we need the Thames barrier. Their houses were built 100 years ago or more. This is not a new problem.
Many other issues were raised in this debate. They included the need for innovation; the advantages of greater globalisation—referred to by the noble Viscount, Lord Ridley—and the risks of globalisation in terms of undue energy dependence or undue food dependence. I always think that I am contributing a great deal to Britain’s energy security by the amount of food that we produce on our allotment. We have just finished our last courgettes from last summer and there are still apples in the basement, so we are doing our small bit for British energy security.
Perhaps I may end by saying that government can never anticipate all risks. When the great fire at Buncefield went up some years ago, my wife reminded me of a conversation that we had had with the head of the international energy programme at Chatham House when we both worked there in the mid-1980s. He had said, “I’m not terribly worried about civil nuclear problems; what I’m really worried about is what would happen if one of those oil distribution depots went up”. We had not a clue what he meant by it at the time, and probably very few people even in government were thinking about the potential for that. That was the largest fire in Europe since the Second World War, and a major national emergency that I suspect that we had not entirely prepared for. One of the problems that government faces is how much you insure against risks which would be severe but which are not terribly likely, and how far you insure against smaller risks which are more likely but less severe.
I thank the noble Lord, Lord Rooker, for his, as always, wonderful and extremely wide-ranging speech. I look forward to many more interventions from him in the future.
Lord Rooker
My Lords, I thank everybody who participated in the debate. I will make two points incredibly briefly. First, when the Minister read out the list of things that he looked at when he came into office, I was reminded of the 1931 essay by Churchill that I quoted from, “Fifty Years Hence”. It is almost a modern-day version of that essay. Secondly, I will give him a new risk that I did not raise before, one that comes out of something said by the noble Viscount, Lord Ridley. I was at the launch last week by the Crop Protection Association—which he mentioned—of a new campaign against illegal pesticides. The association estimates that currently between 7% and 10% of pesticides entering Europe are illegal and that most of them start off in China. We could be more damaged by those because they could poison our land if misused. That is another risk to be going on with that needs to be added to the list. I thank everyone for participating in the debate. It has been exactly as intended—wide-ranging, in the sense that my noble friend Lord Touhig said.
EU Police and Criminal Justice Measures: EUC Reports
(10 years, 3 months ago)
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Lord Hannay of Chiswick
That this House takes note of the Reports of the European Union Committee on EU police and criminal justice measures: The UK’s 2014 opt-out decision (13th Report, Session 2012–13, HL Paper 159) and Follow-up report on EU police and criminal justice measures: The UK’s 2014 opt-out decision (5th Report, Session 2013–14, HL Paper 69).
Lord Hannay of Chiswick (CB)
My Lords, the debate today is unusual in that we are debating two reports, not one: the report of 23 April 2013, EU Police and Criminal Justice Measures: The UK’s 2014 Opt-Out Decision, and a follow-up to that report of 31 October 2013.
It is unusual, too, that these reports were prepared not by one sub-committee of your Lordships’ EU Select Committee but two: the Sub-Committee on Justice, Institutions and Consumer Protection, chaired until May 2013 by the noble Lord, Lord Bowness, and since then by the noble Baroness, Lady Corston; and the Sub-Committee on Home Affairs, Health and Education, which I have the honour to chair. We took all our evidence and prepared both our reports at joint meetings. These reports were agreed by consensus. They reflect the views of Members drawn from all the main party groups represented in this House and from these Cross Benches. I pay tribute to the leadership of the noble Lord, Lord Bowness, and the noble Baroness, Lady Corston, who shared the chairing of these meetings with me, and to all members of the sub-committees who put in many long hours of work dealing with extremely complex material. I am delighted to see that the noble Lord, Lord Jopling, who was my predecessor in the chair of the sub-committee, will participate in this debate.
The two reports are unusual for a third reason. Reports from your Lordships’ EU Select Committee are often based on legislative proposals or communications from the Commission but in this case we inquired into a decision to be taken by our own Government: whether or not to trigger before 31 May 2014 the block opt-out from the pre-Lisbon justice and home affairs measures, provided for in Protocol 36 of the Lisbon treaty. Article 10 of Protocol 36 to the EU treaties, which was added by the Lisbon treaty, enables the Government to decide whether the UK should continue to be bound by the approximately 130 police and criminal justice measures adopted before the treaty of Lisbon entered into force or exercise their right to opt out of them all. If the Government do not opt out, these measures would become subject to the jurisdiction of the Court of Justice of the European Union and the enforcement powers of the European Commission on 1 December 2014 in relation to the UK, as they will to all other member states. If the opt-out is exercised, all the measures would cease to apply to the UK and it would have to negotiate to seek to rejoin any measures where it wanted to do so.
Some words about process: it has been clear from the start that the 31 May 2014 final deadline for triggering the block opt-out left far too little time before the cut-off date of 1 December 2014, when any opt-out would become effective, to negotiate with the Commission and Council the necessary decisions to permit the UK to rejoin any of the measures it wished to, especially since the upcoming European Parliament elections and changeover in personnel at the top of the European institutions could complicate matters. Therefore, we have no criticism of the Government for moving well ahead of the 31 May 2014 deadline; indeed, we believe they should, if anything, have moved sooner than they did to allow an adequate period for what will necessarily be complex and substantive negotiations. Time alone will show whether we were right to be concerned at the slowness with which the Government reached a view. Nor did we, or any of the many witnesses from whom we took evidence, question the Government’s unfettered right to trigger the opt-out, a right which was accepted by all the other member states when they ratified the Lisbon treaty. However, that, I am afraid, is as far as harmony on process goes.
During the first half of 2012, both Houses were assured by Ministers in the most unambiguous and unequivocal terms that before any decision was taken on triggering the opt-out, there would be extensive consultations with the relevant committees in both Houses, yet the Prime Minister announced the decision in—of all places—Rio de Janeiro, rather than in Parliament, on 28 September 2012, at a time when, seemingly, no consultation had taken place at all. There had been no consultation with the committees of either House; no consultation with the Ministers of devolved Administrations, two of which—those in Edinburgh and Belfast—are responsible for separate, independent legal jurisdictions; and no consultation with the law enforcement agencies and the professional bodies which would be directly affected by any opt-out.
Nor did matters much improve after the Home Secretary finally informed Parliament of the Government’s “current thinking” by a letter and Statement in October 2012. Explanatory Memorandums were promised in November 2012 but did not finally appear until June 2013. An impact assessment somehow went missing in action and has still not been provided. No indication was given by the time of our first report in April 2013 as to which measures the Government would seek to rejoin if they triggered the block opt-out, and when that information was provided and the list of 35 measures was revealed in July 2013, Parliament was given a few days only before being asked to approve the triggering of the opt-out. The Government response to our April 2013 report arrived a month beyond the two-month deadline for such a response and actually on the day this House was being asked to vote on the opt-out. It is, I fear, a sorry saga of disrespect for Parliament which speaks for itself.
I will not weary the House with too much detail from our first report but will focus on six broad conclusions that we reached. First, we asked all our witnesses whether they had any evidence that any single one of the pre-Lisbon measures which fell within the scope of Protocol 36 had actually been detrimental to the UK. Generally our witnesses—and they included those such as Dominic Raab MP, who not only wanted the Government to trigger the block opt-out but wanted them to withdraw from those post-Lisbon measures to which the UK had already opted in—were not able to identify a single measure that had damaged this country. Some of the measures have had no practical impact because the UK was already applying their provisions under our domestic law; some were defunct and therefore irrelevant to the whole exercise; and many had been of positive benefit to the UK, not least by strengthening the fight against serious international crime. So it was clear that the only matter at issue with respect to the pre-Lisbon measures was whether the jurisdiction of the European Court of Justice and the enforcement powers of the Commission should be extended to cover them from 1 December 2014 as the treaty provides.
Secondly, it became apparent from our inquiry that the Government, quite rightly in our view, had no objection of principle to the extension of the European Court of Justice’s jurisdiction and the Commission’s enforcement powers to other aspects of justice and home affairs legislation. How otherwise can one construe the fact that the Government have opted in to a substantial number of post-Lisbon measures—49 at the last count and mounting—which automatically involve the extension to cover them of that jurisdiction and power? As the Home Secretary told us, the Government’s approach was a pragmatic one based on their assessment of the national interest. We applauded that.
Thirdly, we considered carefully whether the existence of EU competence in the field of justice and home affairs—this is an area of shared competence—in some way undermined or weakened the system of common law as practised in this country. We heard some assertions to that effect, but no evidence was given to us to substantiate those assertions. Indeed, to the contrary, we heard a great deal of evidence on the benefits, most particularly from the professional bodies that might have been expected to be most vigilant in that respect. It is, of course, a simple fact that there are four member states with elements of common law in their systems in the European Union: Cyprus, Malta, Ireland and the UK.
Fourthly, we also gave full consideration to suggestions that, even if the UK triggered the block opt-out and did not seek to rejoin, for example, the European arrest warrant, our national interests could be secured in other ways, by relying on Council of Europe instruments or on bilateral agreements for co-operation with other member states. Our conclusion was that such bilateral systems, even if other member states were prepared to negotiate them, which is far from certain, would be slower, more costly and a less sure protection for our citizens than they have under existing EU legislation; and that the Council of Europe instruments would be no equivalent substitute for that legislation.
Fifthly, we looked more carefully than the Government initially seem to have done into what I would call the Irish dimension: the massively improved law enforcement co-operation that now prevails between the Republic and Northern Ireland. While the Irish Government did not wish to give evidence to our inquiry, we heard quite enough from other sources to convince us that that the improved co-operation and the de-politicisation of law enforcement activity on both sides of the border depends largely on the underpinning of EU legislation. Remove that underpinning—and here the European arrest warrant is of central importance—and one would risk the unravelling of structures of co-operation which have done so much to improve the daily lives of our fellow citizens in Northern Ireland.
These five conclusions led us to our sixth and overarching conclusion that the Government had not made a convincing case in favour of their preferred option to trigger the block opt-out and to seek to rejoin a limited number of pre-Lisbon measures. That sixth conclusion has subsequently been overtaken by the decision of both Houses to endorse triggering the block opt-out, but it remains the view of the two sub-committees and of the EU Select Committee itself.
Our second report, for which the Government specifically asked in the Motion that was agreed on 23 July, did not seek to reopen that debate, but rather to focus on the situation following the Government’s notification to the Council on 24 July triggering the block opt-out. Here, too, I will spare the House too much detail and focus on a few salient points. First, we carefully reviewed the 35 pre-Lisbon measures which the Government had stated an intention of rejoining and which this House, unlike the other place, had explicitly endorsed on 23 July. We concluded that the Government had indeed picked out most of the measures that it was essential for the UK, in its own national interest, to seek to rejoin. However, we identified a small number of additional measures, beyond the Government’s 35, which we believed it was in the UK’s national interest to rejoin; and we urged the Government to add these to their list when they sat down to negotiate with the Commission. These included a number of implementing Europol measures which we believed would be judged by the Commission to be necessary to rejoin on coherence grounds, a view with which we had sympathy. However, we also identified the European probation order, the European judicial network and the convention on driving disqualifications which we believed it was in the UK’s national interest to rejoin; and the framework decision on racism and xenophobia, withdrawal from which we believed would do the UK considerable reputational damage, even if our domestic laws were there to give effect to its provisions. I can just imagine President Putin or the Chinese Government rubbing our noses in that withdrawal.
Turning back again to process, we underlined the importance of the Government giving Parliament regular progress reports on the negotiations, by now, I assume, under way with the Commission and the Council; and of their providing a full and detailed impact assessment in good time before they seek the further vote in both Houses which it is their stated intention to hold on the final package of measures that the UK will rejoin. We expressed yet again the concerns that time is short between now and 1 December 2014 to complete the negotiations for rejoining the pre-Lisbon measures identified, which might necessitate putting in place robust transitional measures to bridge any gaps. This would be particularly important in the case of the European arrest warrant, where any hiatus could lead to extensive litigation and perhaps to suspected criminals escaping justice.
The Government’s response to this second report was full, detailed and on time— just. It arrived on the day it was due; on this occasion, sufficiently well in advance of today’s debate for it to be properly considered. For that, credit should be given, but I have to say that much of its content was deeply disappointing and it did not seem to give a seriously considered reaction to the very modest list of additional measures that we suggested should be included among those the UK should seek to rejoin, and which our committees believed that it would be in the national interest to do. The repeated assurance of some negotiating flexibility over the Europol implementing measures is welcome, but they should surely have been on this list from the outset. The explicit recognition that a future Government might well wish to rejoin the European probation order leaves us wondering why we are planning to drop out of it now.
It is good, of course, that the Government have at last recognised that there could be some reputational damage following our withdrawal from the racism and xenophobia decision. No doubt there will be. Only time will tell whether it will be, to use the Government’s word, “significant”. Why incur such damage at all when the reason for doing so appears to be the rather far-fetched fear that the UK might be put under pressure to criminalise Holocaust denial? The reasons given for not rejoining the European judicial network are so threadbare as to be almost laughable, and on the Convention on Driving Disqualifications, it appears that we are going down the road of negotiating bilaterally with the Irish a provision that will replicate the EU measure while ditching all the practical benefits we get from the EU measure vis-à-vis the other 26 member states. Would it not have been an awful lot simpler and certainly more cost-effective simply to seek to rejoin the EU Convention on Driving Disqualifications?
All in all, I fear that it is hard to resist the conclusion that the Government’s approach to calculating the national interest on these measures is purely arithmetical one and not based on the merits of the measures in question. That is why it is to be hoped that, as the negotiations with the Commission and the Council proceed, the Government will think again about their possible inclusion. It is also a reason to take more seriously than the Government currently do our recommendation that there should be a commitment to review the effect of the block opt-out some years—three, perhaps—after it comes into force.
I apologise for speaking at such length, but the subject matter is complex and the issues at stake are of great importance. I would be most grateful if the Minister, in addition to responding to my contribution and those of other noble Lords, would give a progress report on the negotiations with the Commission and the Council. Will he tell the House whether the negotiations started and, if so, when? Will he say when the next progress report to Parliament will be made and give an undertaking to provide the promised impact assessment early enough before the second debate and vote to permit your Lordships’ EU Select Committee, if appropriate, to report to the House ahead of that vote? Will he give some idea of the timing and scope of that debate and vote?
I realise that I have spoken quite harshly about the Government’s handling of this issue. I have done no more than express the views of the committees but, in concluding, I should add one personal observation. The choice offered to the Government under the provisions of Protocol 36 was an exceptionally unpalatable one and, while the committee believes that they may have made the wrong decision, it would be as well to recognise that the drafting of Protocol 36, posing an all-or-nothing choice, was not in the best interests of this country.
Lord Jopling (Con)
My Lords, the noble Lord, Lord Hannay, kindly referred to the fact that I was some years ago his predecessor as chairman of the sub-committee of the European committee that deals with matters of home affairs and that general area. I am bound to say that I have spent almost all the 16 years that I have been a Member of your Lordships’ House as a member of one or other of the sub-committees of the European committee, as well as a member over a number of years of the main committee.
The noble Lord, Lord Hannay, spoke of speaking harshly, and I shall speak no less harshly, but not quite on the same issues as those that he talked about. I am not a member of either of the select committees that have produced these reports. I am now a member of Sub-Committee C, which deals with foreign affairs and defence. Years ago, I was chairman of that committee. Over the years, I have had a continued disquiet over the Government’s attitude to the House of Lords and its work. The noble Lord, Lord Hannay, referred to a good many of the reservations that the members of the committees have had about how the Government have responded—and I am talking about Governments of both parties. I shall come to that a little later. I do not believe that the departments involved treat your Lordships’ House as they should.
If I were making a sermon, I would take as my text the Government’s response to House of Commons Paper 683, titled, The UK’s Block Opt-out of pre-Lisbon Criminal Law and Policing Measures, in which the Government say that they,
“thought it necessary to reply to one of the principal criticisms running through your report: a perceived lack of engagement by the Government with Parliament on this issue”.
That would be my text, but then one comes to the two reports that we are discussing. Paper 159, published on 23 April last year, in paragraph 280 says:
“We regret that the Government have not complied with their own undertakings to engage effectively with Parliament regarding the opt-out decision”.
In the second report, to which the noble Lord, Lord Hannay, also referred, which is Paper 69 published on 31 October last year—I am sorry to have to keep quoting these things, but it puts things into proper perspective—the committee states:
“We restate our disappointment that important information about the measures covered by the opt-out was not provided in a timely manner to Parliament and was only made available a few days before both Houses were asked to take decision on the Government’s proposed course of action”.
In the same report, in Chapter 2 and paragraph 106, the committee says:
“We regret that the grounds on which the Government made their selection of measures to seek to rejoin were not set out persuasively in the EMs”—
that is, the explanatory memoranda.
Those are just some examples of when the committee has had anxieties. Those anxieties are also spread among other European Union sub-committees, and we have seen much more blatant examples of incompetence by departments and Ministers in the past. When I was chairman of the committee of which the noble Lord, Lord Hannay, is now chairman, we had a case under the previous Government involving Mr Liam Byrne, who took over a year to reply to one of our letters. The then Leader of the House, the noble Baroness, Lady Ashton, actually named him, with a rebuke on the Floor of your Lordships’ House. I have been a Member of one House or another in this Building for just coming up to 50 years, and I can never remember a senior member of the Government publicly criticising a junior Minister, as she did, before.
We have had yet another case in Sub-Committee C, which I raised with the previous Minister, the noble Lord, Lord Green. We wrote him a letter in November 2012. He did not reply. We sent reminders at staff level the following March, May and August. We then wrote again last October, to find out what was going on. We found almost immediately afterwards that the Government had agreed the text, but we still had not had a reply to our letter of a year earlier. When the noble Lord came to give evidence to the committee, on 21 November last year, it seemed to the committee—I cannot swear that this is true, but there was every indication that it was—that the first the noble Lord had heard of this incompetence was as he was in the passage upstairs coming into the committee, when one of our officials told him and his officials that the matter was likely to be raised.
Those are two examples of Ministers in different Governments taking over a year to reply to our requests and correspondence. Frankly, it just will not do. One cannot help feeling that, just because your Lordships’ House is not so politically confrontational as the House along the corridor, they seem to think that they can treat it in that dilatory way. I resent that very much indeed. I am no Eurosceptic—philosophically, I tend very much in the opposite direction—so I am not using this argument to push a Eurosceptic line. That is the last thing I would do.
We get far too many overrides. Departments seem to have an unacceptable lack of urgency. Above all, Ministers do not insist. They do not see to it that they enforce proper attitudes towards your Lordships’ House in their departments. When, a few weeks ago, we confronted the noble Lord, Lord Green, with that delay—I got the impression that the poor man was hearing all this for the first time—I asked him, with regard to ministerial control over departments, “Have you ever heard of Sir Thomas Dugdale?” He said that he had. Your Lordships will remember that Sir Thomas was the Minister of Agriculture in the other House who resigned over the Crichel Down affair, which started in the 1940s, because he reckoned that he was in charge of the department, and dilatoriness and sloppiness in departments—which is what we see now—was the ultimate responsibility of Ministers. Your Lordships’ House should not be fobbed off by lack of ministerial control and sloppy departments.
Baroness Corston (Lab)
My Lords, I am very grateful for the opportunity to take part in this debate as the person who, since May of last year, has chaired Sub-Committee E, which is one of the two sub-committees together with that of the noble Lord, Lord Hannay, who has already spoken and whose expertise in these matters is probably unrivalled in this House. I want at the outset to pay tribute to the noble Lord, Lord Bowness, my predecessor as the chair of Sub-Committee E. He chaired that committee with great distinction and he took it in turns—as I have since May—with the noble Lord, Lord Hannay, to chair the meetings and conduct the inquiries. I associate myself and the members of my committee with the entire content of the speech of the noble Lord, Lord Hannay, particularly on the way in which this House has been treated by the Government. I also echo the comments of the noble Lord, Lord Jopling, who has had a distinguished career in both Houses of Parliament.
The two reports we are debating today represent a considerable amount of work by the two sub-committees, and by the Select Committee, on behalf of the whole House. I know that the noble Lord, Lord Boswell, who chairs the European Union Committee, is disappointed that because of another engagement he is unable to be in his place today. It was therefore something pleasing to note from the Government’s response to our second report, the Follow-up Report on EU Police and Criminal Justice Measures, that the Government considered that the reports represented what they describe as,
“an extremely thorough analysis of a complex issue”.
It was thorough and it is complex.
I will not go on about or rehearse the procedural failings of the Government in their dealings with Parliament on the opt-out. Both our reports comment on all that and it has been rehearsed before. Things went wrong—it may be said that they went downhill— from the Prime Minister’s speech in Rio, which appeared to pre-empt the decision on whether to exercise the opt-out even before our first inquiry began, and have taken a long time to get back on track. I hope that, in his reply, the Minister will tell us that lessons have been learnt.
There are more steps to come in the procedure under the opt-out protocol for the United Kingdom to rejoin measures, and we expect the Government to keep Parliament properly informed and in a timely fashion as the process plays out. In particular, we will need a comprehensive impact assessment to assess the outcome of the Government’s negotiations on rejoining measures. An assessment of the measures covered by the opt-out was promised as long ago as November 2012, which is 14 months ago, and the Explanatory Memoranda published last July do not fulfil that requirement. I emphasise that the impact assessment should not cover just the 35 measures which the Government wish to rejoin, as we can all make a judgment as to the efficacy or rightness of those decisions; they should certainly cover the other 95.
It seems to me, and to my sub-committee, that it is crass to fail to explore the impact of not seeking to rejoin measures such as those on driving disqualifications, probation or racism and xenophobia. It is all very well to say that we have comprehensive legislation in that final instance, on racism and xenophobia. That may be true—I think it is—but it sends out a rather bad signal when that decision was taken at the same time as vans were going round certain London boroughs telling illegal immigrants to go home.
In our first report, we considered whether the opt-out should be exercised. We said that we found the Government’s case for exercising the opt-out was unconvincing. I, and we, remain unconvinced. The Government’s decision to exercise the opt-out was much influenced by their view on extending the jurisdiction of the Court of Justice of the European Union to the 130 measures to which the opt-out applies. We think that the Government’s fears are misplaced. It is highly unlikely that the 130 measures were drafted without thought as to this jurisdiction, as the Government say, given 11 member states had agreed that their courts could make preliminary references to the Court of Justice for the interpretation of European Union police and criminal justice measures from 1999.
Of course, there will be cases from time to time where the Government will disagree with the judgments of any court of any jurisdiction. However, we do well to remember that courts act as guardians for us all and the Court of Justice ensures the common interpretation of European Union law throughout the Union and prevents backsliding from their obligations by member states. The United Kingdom has nothing to fear from an extension of the court’s jurisdiction to these police and criminal justice measures. It would otherwise hardly seek to rejoin even 35 of them.
Unfortunately, although the Government are saying that the reports were helpful in informing their decision on the issues, I echo a remark of my colleague on the justice sub-committee, my noble friend Lord Rowlands, that it appeared to be something of “a dialogue of the deaf”. However, the issue of whether to opt in is now water under the bridge, following the Government’s notification of their decision to opt out in July of last year. We now have to focus on the implications of having opted out of the 130 measures concerned.
We considered the Government’s list of 35 measures that they wish to rejoin. They are set out in Appendix 4 to our second report. These measures contain the most significance in the interests of the UK and other member states. I am pleased that the Government will seek to rejoin them, in particular the legislation on the European arrest warrant and on Eurojust, both of which are particularly interesting and important given evidence to our committees in the recent past about the growing Europeanisation of crime. However, that does not mean that the others have no significance—only that the 35 are the irreducible minimum. They may yet turn out not to be the practical minimum. The Government must convince the Commission, in particular, that the set of measures that we rejoin is one that, as Protocol 36 requires, does not seriously affect the practical operability of the measures and respects their coherence.
This issue of coherence matters. Our second report considers this issue and suggests that some other measures may have to be added to the list of 35. I ask the Minister to tell us what the Commission has said on the coherence of the 35. Do the Government envisage adding to the list for reasons of coherence? It is vital that the decision on which measures to rejoin takes account of the national interest, including the national interest in rejoining a coherent set of operable measures. As our second report says, we hope and expect the Government to respond flexibly to adjustments that the Commission may propose to the list of measures that they wish to rejoin. There should be no place for a numbers game on this important issue.
The national interest is not confined to considerations of practical effectiveness, as the Government seem to believe. Of course legislation is about substance, but our approach to European Union legislation also makes signals of our intent. Opting out risks signalling to our European partners a lack of engagement on the part of the United Kingdom in the application of standards, the operation of investigations and prosecutions and the safeguarding of citizens’ rights in the field of policing and criminal justice—as important for our citizens when they visit the other countries of the European Union as it is for their citizens when they visit the United Kingdom. No matter how good our own standards are in, for example, combating racism, failing to rejoin that measure signals a detachment.
Risks remain. Even if the Government are successful in obtaining agreement to our rejoining measures, there may be gaps in application of the measures that we rejoin. The Government and the Commission will no doubt work hard to avoid gaps but may not be able to do so in every case. Transitional measures may be necessary.
One gap is already apparent: measures for obtaining evidence in cross-border cases will be greatly improved by the directive, to be adopted very soon, establishing a single system for obtaining evidence in cross-border cases, through a European investigation order. We should remind ourselves of some high-profile cross-border cases that have been very much in the public mind in the past few years. Three years will be allowed for member states to implement the directive into national law, so the new system may not be fully effective throughout the European Union until 2017. However, on 1 December this year, the UK will cease to participate in the current EU convention on mutual assistance because we have opted out of it. The Government say that this will not make much difference because there are other available measures. Perhaps so; we shall see. But this example illustrates how gaps may appear despite what I acknowledge may be good intentions.
Finally, the Government—this or another—may wish to revisit the question of whether to rejoin other measures in light of future developments. There is no time limit in Protocol 36 on opting back in, as the Government have acknowledged in their response to our second report. All the more important, therefore, is the last recommendation in our second report that there should be an ex-post review of the impact of opting out, in the same spirit as we support post-legislative scrutiny. I hope that the Minister will give this a more favourable reception than that given in the formal response to the report.
Lord Sharkey (LD)
My Lords, I congratulate the noble Lord, Lord Hannay, on his incisive and analytical opening speech. It is a privilege to serve under his chairmanship on your Lordships’ EU Sub-Committee F. I do not intend to dwell on the rather convoluted chronology of these two reports and the Government’s responses to them. I intend to focus my remarks on the second, rather than the first, report.
However, in dealing with the first report and the Government’s response to it, I simply remark that its conclusion that the Government had made no compelling case for opting out still seems very strong. The Government’s given reasons for opting out still seem unconvincing. I also note that the Government have been less than punctilious in their dealings with the House over the first report. In particular, I point to the extraordinary delay in producing the Explanatory Memoranda, and the fact that the Government’s response was produced one month late, and only hours before the debate on the government opt-out/opt back in Motion. The debate on that Motion on 23 July produced a kind of clarity. As I said in that debate, I thought that the Government’s selection of 35 items to opt back into was well chosen and coherent. I still think that that is the case, just as I still think that whole exercise was completely unnecessary.
The 95 items that the Government have chosen, for the moment, not to opt back into are all harmless, and some are of real value to the UK. As the noble Lord, Lord Hannay, said, the Government have presented no case that any of these items operates against our interest or does any damage. However, we are where we are, and I want to address the remainder of my remarks chiefly to the government response to the committee’s second report.
In particular, I want to focus on some of the measures that we recommended be added to the Government’s list of 35 opt-ins. There are four of these, which have already been mentioned by the noble Lord, Lord Hannay, and other speakers. The first is the framework decision on combating certain forms of expressions of racism and xenophobia by means of criminal law. The UK has long been a leader in this area. Failing to opt back in would abandon that leadership and would send out a completely wrong signal about our commitment in this area. The Government’s reasons for not opting back in, put simply, amount to, “I’m all right, Jack”, with no real acknowledgment of loss of leadership and reputation.
The second measure is the rejoining of the European judicial network. Everybody except the Government seems to think that we should rejoin. The Law Society of England and Wales, the Law Society of Scotland, the Lord Advocate and others all thought that it was a useful measure. The Government’s reasons for not rejoining amount to a recognition that the contact points the network provides are “undoubtedly helpful” but,
“it may be possible to maintain those contacts without formally participating in this Council Decision”.
Why leave a system that works and causes no harm in order to rely on an informal equivalent? It is not a very strong argument.
The third measure is the European probation order. Our report said that we believed that,
“this measure has potential to provide benefits for the management of offenders on a cross-border basis and that nothing is being gained by not implementing its provisions”.
The Government continue to decline to opt back in. Their reasons are to do with the implementation, and with allowing the ECJ to have jurisdiction. We are of the view that the first of these objections—implementation—could be overcome by negotiation at a European level, and the second amounted to an almost irrational fear of the ECJ.
The fourth measure is the convention on driving disqualifications. This enables member states essentially to prevent a driver banned in one member state from driving in another. As the Government acknowledged, our report contains strong evidence of the importance of this measure in supporting co-operation with the Republic of Ireland. However, that is apart from its clear, common-sense benefits in a more general way. Instead of rejoining the measure, the Government propose to establish a separate bilateral treaty with the Republic of Ireland. This is surely a very odd way to go about things when there is a perfectly satisfactory mechanism already on the table.
I have not included in this list of four measures the measures implementing Europol council decisions, which fall within the scope of the block opt-out. The Government still decline to opt back in to these, but in this case not very convincingly. It is reasonably clear that if they have to do so in order to pass the test of coherence, then they will in fact rejoin these measures. This makes it rather odd that they did not agree to do so in the first place.
I strongly urge the Minister to consider rejoining the four measures about which I have spoken. As part of that consideration, I urge him to publish the impact assessments of all the 130 measures which are at issue, as was said by the noble Baroness, Lady Corston. These impact assessments must surely already exist, and must have formed a part of the Government’s thinking. The Government should share them with Parliament without further delay. It is very important that we take forward discussion of the opt-in measures with all the evidence and assessments being made available to us here in Parliament. I hope that the Minister agrees.
Lord Lloyd of Berwick (CB)
My Lords, I am very glad to follow the noble Lord, Lord Sharkey, who has spoken so clearly on these matters. When I put my name down to speak in this debate I knew that I must look back at what I said the last time we debated these matters, to ensure that I do not say something different on this occasion. I find that on 9 July 2013 I asked whether there was not an unjustified risk in opting out of what is good, which is the 35 measures, in order to get rid of the 95 pre-Lisbon measures, most of which are of no real use to anybody.
I am happy to say that the noble Lord, Lord McNally, who we miss today, said that there was a lot of logic in what I had said. I also note that on that occasion I said that it was the noble Lord, Lord McNally, who was missing the whole point in this debate and not, as he suggested, the noble Baroness, Lady Smith, who I am happy to see in her position today.
Of course, things have moved on since then and I think that the best thing I can do today, as one of the few non-members of the European committee to take part in this debate and following the comprehensive speech of my noble friend Lord Hannay and the other excellent speeches that we have heard—above all, from the noble Baroness, Lady Corston—is to say how grateful we should all be for all the noble work that they do and have done since our last debate on our behalf, in particular for providing us with their follow-up report. It is a great comfort to the rest of us while we get on with other things, all of which are much less important than what we are discussing today, to feel that they are looking after these matters on our behalf. Having said that—and I really mean it—the only remaining service that I can usefully perform today is to draw attention to those matters in which I have the closest interest, on which the committee seems to have made out a strong case and in respect of which the Government’s response has been the most feeble.
First, I am delighted that we will opt in to the existing European Council decision on Europol, but I can see no good reason for not opting in now to the new regulations when they come forward. The only reason given by the Government is that they want to wait to see the completed text in case there is something that they do not like. That might be a good answer if we were talking about some non-proven field but it is not a good answer in relation to Europol, with which we are all, happily, very familiar.
Secondly, like the committee, I am glad that we are remaining in Eurojust, but I urge the Government also to remain in the European judicial network. Here, I strongly agree with what the noble Lord, Lord Sharkey, said. The more co-operation we can have across national boundaries the better. The only answer given by the Home Secretary for not accepting this recommendation is that we all already talk sufficiently with each other in respect of these matters, but that is a completely inadequate answer.
Thirdly, I come to the European probation order. It is not one of the 35 measures but I can give no better reason for opting in to it than that it was suggested that we do so by Sir Scott Baker. For the reasons he gave—and there are no better reasons from no better man—I suggest that we should opt back in to it. Once again, the Government have given no reason for not doing so.
Lastly, I want to refer to the question of the court’s jurisdiction. I simply do not understand what the Government’s position is on this and I would be very glad if, in his reply, the noble Lord could give us an explanation.
I have come to the end but my final point is perhaps the most important. I urge the Government to press on with the negotiation with all possible urgency for two reasons: first, to avoid, if possible, the need for any transition arrangements and, above all, to avoid a last-minute gap appearing in the structure, which could be truly disastrous; and, secondly, to give us enough time to prepare for the next debate, which has been promised and at which we will have to make a crucial decision.
Viscount Eccles (Con)
My Lords, given the speech of the noble and learned Lord, Lord Lloyd, and the other speeches, my noble friend on the Front Bench has a number of questions to answer. I can assure him that I shall not ask any questions; rather, I will try to sketch in some of the background that has led to the criticisms and problems that have been referred to extensively. I do not need to add to them.
When we see the manifestos of the Conservative Party and Liberal Democrats, we may be able to analyse why some of these problems have arisen. They are not very far deferred but, when we see them, both manifestos may not read exactly the same. As a general comment on what has been said, it can be quite risky to live in the ivory tower where you think process is more important than outcome.
I was a recent member of Sub-Committee E. The two reports are very professional and admirable, and I am grateful to the two chairmen for the way in which the reports stayed with the evidence that the committee received with great accuracy and professionalism. In the light of the reports, particularly the first, it is quite surprising that the Government—if they had only considered the circumstances of the 130 and the 35 and your Lordships’ report—ever reached the decision they came to. We all agree that it is entirely sensible for the 28 members, 18 of whom are in the eurozone, to co-operate on the matters covered in the two reports. There seems absolutely no argument for not continuing that co-operation, whatever the political situation may be or may become.
As a subsidiary question, the Union does not seem to have a good way of repealing and reforming things, and it may not have been unreasonable to point that out at the time. However, the missing dimension is politics. I do not see how, after a 65-year journey from the beginnings of Europe, any decision now will escape political consideration as well as administrative and sensible co-operation consideration. The degree of political and constitutional change has been enormous since 1949—Strasbourg; Winston Churchill making his speech; the avoidance of war being foremost in everyone’s mind; some formidable political figures; the solution to the relationship between France and Germany, leading to the creation of the iron and steel community and so on; and always, of course, Soviet Russia and the threat of the Cold War.
The France-Germany dimension is now essentially solved. There may be a residual risk but it is nothing like the risk that was experienced by Europe from around 1870 until 1945. With that record, Europe had a lot to answer for, including the global reach of its colonial pretensions, from which we are still suffering today.
Does Europe have the capacity to start the third world war? I hardly think so. Then it was NATO and the Cold War, but if we look at the United Nations, which is comprised of nearly 200 countries, the picture has completely changed, and it does not need me to spell out the details of those changes. There is a big political question, but the question has changed from that of 65 years ago and indeed that of 30 years ago, before the Berlin Wall came down. What is the right place for 28 countries in a relatively declining Europe with around 5% of the world’s population? I do not think that the answer is self-evident, although sometimes when we consider matters European, there is an assumption that it is.
To me, this is no time for being inward-looking and thinking that these 28 countries are as important as they used to be and that nothing has changed in their relationships and potential relationships with the rest of the world. It is not a time when one can be confident that some journey to a Utopian version of western democracy will work. There is no doubt that there are people in the European system who, although they do not always tell us exactly what they are thinking, believe that they are on some Utopian journey to a version of western democracy. Past Utopian experiments have been patchy and some have been disastrous. There is not the same welcome for western democracy all over the world as we expected only a short time ago there might be. Indeed, one of our biggest problems is that there are quite a number of places we can name where there is no prospect of western democracy and the rule of law as we understand them. We have to think with great care about the European Union’s place in the wider world and not concentrate too closely on our own local problems.
The people of Europe are disenchanted, nervous and uncertain about what is happening. I have always been a keen European, but something is wrong: what exactly is it? Responses crying for the populist approach do not seem to answer the question, because who can draw the line with any accuracy between populism and being rightly in touch with public opinion? I associate myself with the big and uncertain question: where are we going? Are 28 disparate European countries to call for the end of the nation state? I think not. Will the world benefit from an inflexible European bloc? There must be doubts about that. We need, I think, a brand of political leadership of which there is no sign at present.
Lord Davies of Stamford (Lab)
My Lords, this is a matter the importance of which goes far beyond the individual sub-committees which have been concerned with these reports, so without any hesitation I feel it right to intervene in this particular debate. I am particularly glad to be here today because I heard in the speech of the noble Lord, Lord Hannay, what I think was the most devastating account of bad government that I have heard in all my 27 years of service in this place and in the other Chamber. I realise that those 27 years only just pass the halfway point of the career of the noble Lord, Lord Jopling.
This is an occasion when the Government would be well advised to listen to what is being said about them. I am sure that the Minister will have listened because I know him very well and he is the sort of person who believes strongly in listening to Parliament and that it is essential for Ministers to do that carefully. I also think I know him well enough to know that he is more than capable when necessary of speaking extremely frankly and effectively in private to his ministerial colleagues. He may well feel the need to do that after this afternoon’s debate. What has been quite extraordinary this afternoon is the complete consensus among all speakers from all sides of the House about the gravity of the situation that has been revealed by the Select Committee’s reports.
That consensus was not in any way detracted from by the noble Viscount, Lord Eccles, who on the whole is always very keen to find a way, if he possibly can, of defending the Government. He made a number of interesting geopolitical observations but he could not find a single defence of the way in which the Government have acted in this matter.
It has not been quoted already so I will read to the House one part of the committee’s criticisms of the way in which the Government have proceeded. I think the whole House will agree that this is parliamentary language, this is measured language, but it is more than justified language. Paragraph 106 of the report dated last October says:
“In our view, this lack of analytical rigour and clarity regarding evidence drawn upon is regrettable. Despite the length of its gestation, Command Paper 8671 showed signs of having been hastily put together. We are disappointed that the Command Paper presented both the 35 measures which the Government intend to rejoin and the 95 they do not intend to rejoin in an unconvincing manner. We regret that the grounds on which the Government made their selection of measures to seek to rejoin were not set out persuasively in the EMs”.
It is very unusual that a committee expresses itself quite as strongly as that. It is quite evident that the Government have done a thoroughly shoddy piece of work.
It is quite extraordinary that there was no consultation or impact assessment on this occasion. Surely consultation and impact assessments are now routinely regarded as essential prerequisites for good legislation in all sophisticated democratic countries. That is true, I am sure, of most if not all of our partners in the EU; it is certainly true in the United States; it is certainly true in the European Commission in its legislative role before it prepares legislative directives. One has to wonder why the Government of this country on this occasion decided simply that they were not required or could be dispensed with.
It is quite clear that there was simply no analysis of the national interest before these decisions were taken about opting out and then opting back in. This whole expensive farce—expensive in terms of not merely the cost over several years of all the negotiations that have been made necessary by this extraordinary decision but the real cost of the uncertainties created, the gaps that occur in capability or in co-operation as we have opted out of something and have not got back a suitable alternative—was gone into in a mood of complete and utter frivolity, without any sense at all of how the national interest was being impacted.
If one reads the individual government excuses for the decisions they have taken to opt out of individual measures, there is not a single occasion where there is an actual concrete argument stating that a specific national interest would be negatively impacted if we remained committed to the original measures in the justice and home affairs deal—not a single one. What actually happens is that on every occasion the Government say either, “Well, we are doing it by some other means”, or, “It does not matter too much”, or, “Maybe there is another way of achieving the same effect if we really try hard”.
I will give the House a flavour of some of that. Under the minimum standard measures, the excuse is that it, “adds little practical value”. The Government do not deny that there may be some practical value. There is no suggestion for a moment that there is any negative value. There is no suggestion that it would be against the national interest to opt in to those measures, but the best the Government can come up with is, “adds little practical value”.
Then, let us take the three Europol council decisions. Following the decision to opt back in to Europol, there was no decision to opt back in to the subsequent European Council decisions. The Government state in their defence:
“The UK has already issued the declaration as required by Article 2 of this measure and has therefore already designated Europol as the central office for combating euro counterfeiting. The measure does not set out any ongoing requirements following the issue of this declaration”.
In other words, there is no cost and no gain. So why waste time? Why waste money? Why waste political good will? Why waste, for that matter, the time of this House, which is just a very small part in this whole sorry exercise? There is no reason whatever. The Government say that the second council decision following the Europol opt-in measure has,
“no material impact on UK participation”
in Europol—again, a complete negative. So it goes on.
Another example, which has already been mentioned, is the racism and xenophobia directive. We were ahead of the game there: I think we may have been the first country to introduce a race relations Act and to subsequently introduce legislation in this country which made an offence of hate crimes. However, we have decided to opt out for the reason that, as the Government put it,
“the UK already meets the requirements of this measure in domestic legislation”.
What an awful pity to take our name away from a convention simply because we are already implementing it. Are we going to do that throughout the whole range of international treaties, so that where we are actually implementing something we take our name off the treaty? What an extraordinary idea. So the sad story proceeds.
What do the Government have to say about the European judicial network? Why do we have to opt out of that? What is the burning national interest that requires us to make an enormous fussation over it? The Government’s answer is that,
“it may be possible to maintain those contacts without formally participating in this Council Decision”.
Why “may” be possible? Why replace the indicative with the subjunctive? Why create an uncertainty where there is now, or could otherwise be, a certainty? It does not make sense at all. Why pay a price for a negative gain? The noble Lord who is sitting on the Front Bench is a logical man and must find it difficult to explain conduct of that kind.
Driving disqualifications have already been mentioned. Here again, it is quite extraordinary. We have got ourselves in a situation where we have said we are going to renegotiate a bilateral deal with the Republic of Ireland, which takes time and uses good will. It is actually a farce, because everybody knows it would be much easier to remain party to the original directive in the first place. If we need to protect British subjects from drivers who have been disqualified in the Republic of Ireland, why do we not need to protect British subjects and residents of this country from drivers who may have been disqualified in France, Belgium, Germany, Spain or any of the other countries from which millions of drivers come here through the Eurotunnel and on the ferries? It does not make the slightest sense.
If anybody had any doubt about the Government’s lack of good faith—I use that serious term advisedly—in this whole matter or that the Government have never actually wanted to look at or make a proper analysis of the national interest before reaching decisions in this area, let me provide absolutely conclusive evidence. The Government have been engaged in an exercise which has been widely promoted as being a great attempt definitively to decide what is the national interest in our relationship with the European Union: where we should better do things on our own and where we can better achieve our national objectives jointly by taking part in EU initiatives or by becoming a party to EU directives. That is called a balance of competences exercise and everybody in this House is extremely familiar with it. The Government, knowing that this particular decision was coming up, deliberately scheduled the examination of the criminal justice and policing aspects of the balance of competences review to start in spring 2014 and to come to an end only in the autumn of 2014—obviously far too late to influence decisions about opting in and opting out over justice and home affairs.
What an extraordinary thing to do. Is that because the Government thought that the whole exercise was a waste of time? Is it because the Government thought that it was not going to be a proper analysis of the national interest and because it, too, was a farce? Or is it because the Government thought that it would be a genuine analysis of the national interest and that it might be embarrassing to have it come out in time to influence a decision on opting in and opting out, because it might well say, “Don’t bother to opt out. There is no reason to opt out; it is not in the national interest to opt out; you’re much better staying 100% in so that you have maximum influence within the institutions and the decision-making structures”? Or is it because it was completely irrelevant and the Government were not interested in the national interest? I feel that that is the only conclusion that we can rationally come to in this House today. All the Government were interested in doing was buying off their Eurosceptics. This has been a party political issue for the Government from day one—100% party political. All they have been concerned about is the minimum price to get the Eurosceptics off their back and how much national interest had to be sacrificed in order to satisfy them. That is what it has been about, and it is about time that somebody honestly faced the facts and was prepared to say so.
Lord Blair of Boughton (CB)
My Lords, I am a very new member of Sub-Committee E, chaired by the noble Baroness, Lady Corston, and am therefore a real novice in this field as it is related to politics. I am just beginning to grasp the fact that there are things called reasoned opinions and explanatory memorandums which float around the various sub-committees and in and out of the Foreign and Commonwealth Office.
However, I am not a novice in criminal justice, policing and home affairs. I have listened with care to the detailed comments made by noble Lords and want to take a different angle from that taken so far. I want to talk about tone, and for a practical reason which I shall explain. During many debates that I have listened to in your Lordships’ House, particularly on education, a number of noble Lords have emphasised the importance of soft skills. Soft skills include language, the right approach to negotiation, facilitation, and concern to mediate and compromise rather than taking a fixed and unmovable certainty.
There can be no doubt that during the past 20 years the UK has been a leading light across Europe in the fields of justice, home affairs and policing. Many of the current structures and approaches in place across Europe have been designed and driven by the British. UK policing is also referenced as best practice across Europe, and I have heard it so referenced many times. Yet now we are seen to be withdrawing.
Last October, I made a visit to Brussels with the noble Lord, Lord Davies of Stamford, and the noble Baroness, Lady Liddell, who is not in her place today. Again and again as we spoke to officials of the Commission and the Parliament, of all nationalities in Europe, we heard sadness and bewilderment about what the UK was doing in relation to this opt-out. This opt-out was at the centre of their concern. They could not understand why the UK Government were moving in this direction. British officials in particular were concerned that this would diminish UK influence which it would be difficult to rebuild.
Of course, as the noble Lord, Lord Hannay, has explained, the Government have the right to exercise the opt-out. Indeed, it was a right negotiated—in my view unwisely, as others have said—by the previous Government. I also welcome the decision by the Government to opt back in to 35 measures. However, I ask the Minister to reflect with his colleagues on language, on their narrative, and on their approach to the next stage of justice and home affairs negotiations.
Let us consider the European arrest warrant. Of course there have been problems, but, on analysis, one sees that almost all those problems are not with the warrant itself but are problems abroad in relation to lengthy pre-trial detention, which would have happened when people had been extradited even if the EAW had not existed.
I just hope that the Minister and his Home Office and Ministry of Justice colleagues will start, as they renegotiate the opt-in, to emphasise the successes of the European arrest warrant, such as the solving of the Irish border criminal justice problem after 70 years. No return to the Costa del Crime is wanted. Or there is the arrest in Italy of Hussain Osman, the attempted bomber of 21 July 2005. These are marvellous successes that the new system brought in. No country in Europe can combat terrorists, paedophiles and organised criminals without the European Union justice and home affairs structures and processes. Putting it bluntly, an argument with UKIP should not be the reason that representatives of a responsible Government do not admit or celebrate the successes of some of those structures.
This is not just political but practical. Over my career, I have watched confidence being built between the police forces of Europe. I know it is there now; it was not there before. There were 90 years of distrust between the UK police forces and the Garda Síochána. There were decades of frustration between UK and Spanish police. There was the obvious sign of rapport when the Greeks called in Scotland Yard to investigate the murder of the British attaché in Athens. The co-operation with the Italians I already mentioned was almost inconceivable in the years before the JHA reforms. We need to hold on to these achievements—and recognise that holding on to them is the purpose of the renegotiation. The renegotiation does not sit by itself but has a purpose to make people safer across Europe.
Viscount Bridgeman (Con)
My Lords, I join other noble Lords in thanking the noble Lord, Lord Hannay, for this debate and pay tribute to the clerks—Michael Torrance and Chris Atkinson, and especially the special adviser Paul Dowling—for the very personal help they have given me. Also, what a privilege it has been to have the noble Baroness, Lady Corston, working so well with this sub-committee.
I have particular pleasure in following the noble Lord, Lord Blair, because I want to say something more about Europol, which is of course one of the success stories of the EU. Let us be thankful that it at least is one of the measures we propose to opt in to. From its beginning in the 1990s, Europol has developed into an organisation with an unrivalled intelligence base and close co-operation with the police forces of the European Union and indeed round the world, examples of which the noble Lord gave. It is fortunate currently to have an outstanding director, Rob Wainwright of the United Kingdom, from whom Sub-Committees E and F heard evidence on two occasions in 2013.
It is important to note that no national police sovereignty is ceded to Europol. The role of Europol is purely supportive. Its effectiveness centres round its database, to which the UK is the largest contributor. Of its many successes in cross-border operations, Mr Wainwright cited Operation Rescue over two years, which involved 32 national police forces in breaking up an internet child abuse ring resulting in over 100 arrests. Another measure of its success is the number of states outside the European Union queuing up to join Europol, including the United States. A particular feature of the Europol set-up is the establishment of national liaison offices within its headquarters, staffed by police officers from each particular member state. Most importantly, it is run on a very lean budget of 0.8% of the total EU budget.
As I have said, the Government have made the decision to opt in to Europol. However, at our first meeting with Mr Wainwright in January 2013—that is, before the Home Secretary’s announcement—both Sub-Committees E and F, because it was a joint meeting, were left in no doubt of the adverse consequences there would have been for the UK had we not opted in. Denial of automatic access to the database would have been a huge handicap involving costly and time-consuming negotiations between the UK, the union and other parties to establish some form of substitute relationship, and it is reasonable to assume that crime prevention with a cross-border element would have been severely affected in the United Kingdom. Of course, none of this will now be necessary so, so far, I have little to criticise the Minister on.
I return to a point referred to by the noble and learned Lord, Lord Lloyd of Berwick. I would just point out that Sub-Committee F expressed disappointment with the Government that, having made the decision, they have chosen not to opt in fully forthwith so that they can play a fuller part in negotiations over a new Europol structure. The Government’s reply to this criticism in our report advises,
“we are actively seeking changes to the new Europol proposal to address these points before making a decision on whether to opt in”.
It goes on:
“We are currently fully engaged in negotiations and continue to work with other Member States to push for the changes we need. We have been present at all meetings when changes to the draft legislation have been discussed and are able to intervene as and when we wish”.
I cannot avoid further quoting so that we sleep easy in our beds:
“While we do not have a vote, other Member States and the EU Institutions value our experience in this area and take our concerns very seriously”.
I am sure Her Majesty’s Government have their own reasons for this somewhat “now we’re here, now we’re not” approach, and I hope the Minister will be able to assure the House that the interests of the United Kingdom in this most important of European institutions, in which it plays so crucial a part, are indeed being fully addressed.
Baroness Prashar (CB)
My Lords, I am a member of EU Sub-Committee F, which is chaired by the noble Lord, Lord Hannay of Chiswick, and I thank him for introducing this debate and for his masterly, clear and comprehensive exposition of this complex and difficult subject and the issues at stake. I agree with what the noble Lord said and the questions he posed the Minister.
As we heard, the scrutiny of the Government’s opt-out decision was conducted jointly by Sub-Committees E and F, and I express my thanks to the noble Lords, Lord Hannay and Lord Bowness, and the noble Baroness, Lady Corston, for their skilful chairing and for enabling the EU Committee to publish the two reports, which the Government have described as,
“an extremely thorough analysis of a complex issue”.
It is, therefore, extremely disappointing that we are debating these two reports so late in the process, when substantive decisions have more or less been taken. Justifiable criticisms have been made by the noble Lord, Lord Hannay, and others about the way the Government have engaged with Parliament, and I very much hope that for the rest of the process there will be timely, proper and meaningful engagement with Parliament and the devolved Administrations.
During the course of our initial inquiry, it was notable that the extensive evidence we took was so overwhelmingly in one direction; that is, opposed to opt-out. The most compelling evidence came from practitioners. As something of a newcomer to the Select Committee, I began to wonder whether the whole thing was necessary. I knew the Government had the right to look at it, but I began to wonder whether, before making the announcement, they should have consulted and saved themselves a great deal of unnecessary work and the unnecessary anxiety that has been caused.
The most compelling evidence came from practitioners. At a seminar organised by the EU Select Committee, Helen Malcolm QC, vice-chair of the Bar Council’s EU law committee and chair of its criminal law sub-committee, said that, as a lawyer and not a politician, she considered it remarkable that every witness with experience in the criminal justice field had considered some of the measures to be vital and that it was equally remarkable that no measure had been identified by anyone as being bad for the UK.
We now have the Government’s response to the two reports. They agree with the conclusion of our first report that cross-border co-operation between the UK and other member states on police and criminal justice matters is crucial. Furthermore, the Command Paper published in July 2013 assessed none of the measures as being harmful to UK interests or having any negative impact on fundamental rights.
The Lord Chancellor and the Home Secretary say that the decision to rejoin 35 measures is based on what law enforcement agencies tell them works, balanced against the Government’s principled concerns about excessive European influence in these areas. A close examination of the reasons why the Government do not intend to opt into some measures, however, shows that concerns about excessive European influence are a dominant factor, rather than the views of the practitioners and the importance of the cross-border co-operation. The grounds on which the Government have made the selection of measures not to join are not necessarily based on evidence or persuasively argued. In some instances, their approach is inconsistent. In the words of the Lord Chancellor and Secretary of State for Justice, they are “philosophical”, and not based on evidence one way or the other.
This inconsistent approach is clear in the case of the Court of Justice of the European Union. Despite expressing concerns about the potentially negative impact of extending the jurisdiction of the CJEU over the measures, the Government have opted into most post-Lisbon police and criminal justice measures, thus bringing with them the jurisdiction of the CJEU. During our initial inquiry, we considered this matter in some depth. We concluded that the CJEU, which has jurisdiction only over matters of EU law, had an important role to play, alongside domestic courts, in safeguarding fundamental rights and upholding the rule of law. CJEU jurisdiction was welcomed by many witnesses as being helpful in ensuring the consistent application and interpretation of police and criminal justice measures, and this is accepted by the Government.
The Government cite the prospect of unexpected judgments, concerns about the drafting of measures, and minimising the possibility of an adverse judgment as reasons for not accepting the full jurisdiction. Any court is liable to make unexpected judgments. Citing poor drafting of measures as a reason for not joining is not convincing, given the rigorous process of negotiation to which these measures were subject and the fact that they were supported by the Government at the time of their adoption.
With regard to minimum standards in criminal law matters, it appears that the Government regard participation in such measures as unnecessary, in the sense that the UK could continue to act in such a way as to fulfil the requirements of each measure even if it did not formally participate in it. This argument does not take into account the fact that any future Government could repeal decisions that made the UK compliant with the current minimum standards. The Lord Chancellor sees these measures as “the Europeanisation of” legal “decision-making” and underplays their practical significance.
For example, Europol said that the minimum-standard measures act to level the playing field for practitioners and eliminate arbitrary differences between jurisdictions. Europol also said that UK’s withdrawal from these measures would remove legal certainty and create a perception among law enforcement practitioners and criminals that the UK is outside the zone of co-operation—co-operation which the Government see as crucial.
In the long run, opting out of these measures would also affect the UK’s ability to influence and participate in law enforcement co-operation. It would diminish the UK’s position and reputation, particularly in areas where it has been a leader. One such measure, which has already been mentioned, is the framework decision on xenophobia and racism. The UK is a world leader in this area and deserves a great deal of credit for its commitment to, and strategy for, tackling racism and xenophobia. We have set a standard, and withdrawal from these measures will send a negative signal, not least to the minority communities in this country, and will inhibit our ability to influence other member states. I therefore urge the Government to review their decision not to join this measure.
On the European Judicial Network, the Government are again at odds with the view of practitioners. The Government say that the European Judicial Network adds little or no value and state that while they believe that the ideas underpinning the network have merit, they do not consider that the network is a measure that underpins practical co-operation. Practitioners argue the contrary. The Law Society of England and Wales and the Law Society of Scotland say that the Government should seek to join this measure as it could help to address the lack of training and awareness of legal practitioners regarding police and criminal justice measures. This view was supported by the Bar Council and the Lord Advocate.
We were told that the network provides Scottish prosecutors with a rich source of advice on national law in other member states and is a valuable tool in the armoury of prosecutors. It is the practical co-operation that is valued by practitioners and the Government should pay heed to that. The Government’s reasons for not joining the European probation order also deserve comment. They say they support the principle behind this measure but do not consider that its benefits outweigh its risks. They say that no evidence has been put forward that outweighs their concerns. The Government’s concern that offenders might not be properly supervised by other countries and that there might be complications should their possible return to the UK arise, can be resolved, as we stated in our report, at European level. Furthermore, the Government have not dealt with the point put forward by the Law Society of England and Wales and the Law Society of Scotland that joining this measure could prove a useful alternative to a European arrest warrant being issued for a sentence imposed in default, thus reducing the potential number of European arrest warrants issued.
In the evidence that we heard, we were also told that this measure would be helpful to offender management and public safety, between Northern Ireland and the Republic of Ireland in particular, and that because there was no meaningful consultation, the unique relationship between the two states has been ignored. This deserves further consideration. Finally, I hope that the Government will take note of the points made in our report about coherence, transitional arrangements, negotiating process and future engagement with Parliament, as well as the comments made by the noble Baroness, Lady Corston, and the noble Lord, Lord Sharkey, about impact statements.
Baroness Smith of Basildon (Lab)
My Lords, this has been an extremely interesting debate. I express my gratitude to the committee and to the noble Lord, Lord Hannay, my noble friend Lady Corston and the noble Lord, Lord Bowness, who cannot be with us today, for their roles in chairing the sub-committees. Although this is the first opportunity for a formal debate on the initial report, we have used that document to inform other debates on this issue. It has been extremely valuable, not just for the debate but for anybody wanting a greater understanding of the issues involved in opting out and opting back in again. I welcome the fact that we have a debate, at last, on the first report and on the follow-up.
Too often it seems to me that debates on anything to do with Europe become pro/anti debates without any real regard for some of the very serious issues involved. That must be very frustrating to many people who may not themselves be intensely political but who want to know and understand what the debate is about. I feel that many politicians would do far better to deal in fact rather than just try to persuade others of their own point of view. These reports clearly fulfil that function of trying to deal purely in facts. They provide a forensic and comprehensive examination of the Government’s decision to opt out of all pre-Lisbon police and criminal justice measures and then seek—and “seek” is the operative word, since there are no guarantees—to opt back in to those that they consider to be essential.
These are not decisions to be taken lightly. A Government’s first duty is to the security and safety of their citizens and, as the noble Lord, Lord Blair, and others make very clear, that security and safety is best served by European co-operation. The Government have to accept that the process of opting out and then, perhaps, opting back in again to some measures is a risk. I share the concerns that the Government’s whole approach to this issue has been more political than practical. No evidence has ever been presented of any harm to the UK from not exercising the permanent opt-out, but a great deal of harm is possible from any failure and delay in opting back in to the 35 or more measures in the analysis given by the committee. It seems to me, as has been said by other noble Lords, that it has had a lot more to do with placating the anti-European lobby inside and outside the Conservative Party. We have had the absurdity of the numbers game between the two government parties about how many measures should be opted back into. Surely, it has to be about the substance and value of the measures, not how many. The first report came to the conclusion that the case had not been made for triggering the permanent opt-out. That was repeated following investigations that led to the follow-up report.
Like the noble and learned Lord, Lord Lloyd, I also looked at previous debates, not so that I would not say something different but to make sure that I was not repeating myself. However, I will repeat myself in this case, as in previous years I have asked different Ministers the same questions but never had a satisfactory answer. Those questions are: how many of the measures that the Government want to permanently opt out of are relevant to the UK? How many are currently being used? I should add, how many are in any way harmful to the UK? If I can get an answer to those today, it would be extremely useful. What I am trying to get to, in an easily understood format, is what the precise impact would be on UK citizens of the measures that the Government want to permanently opt out of. The Government themselves claim that a number of the measures are defunct, so have no impact. So was this ever a serious exercise, or was it always political posturing on Europe?
I am grateful to the committee for the very helpful table at the back of the second report that gives details, including most of the information for which I have asked Ministers on more than one occasion. The follow-up report gives more specific information on the committee’s analysis of those measures. The committee clearly shares my frustration at how the Government presented this information and their assessment of the measures. Paragraph 19 of the follow-up report in response to the Government’s evidence and comments on that is devastating for the Government:
“In our view, this lack of analytical rigour and clarity regarding evidence drawn upon is regrettable. Despite the length of its gestation, Command Paper 8671 showed signs of having been hastily put together. We are disappointed that the Command Paper presented both the 35 measures which the Government intend to rejoin and the 95 they do not intend to rejoin in an unconvincing manner. We regret that the grounds on which the Government made their selection of measures to seek to rejoin were not set out persuasively in the EMs”—
that is, the explanatory memorandums. That is a devastating critique of the Government’s process.
The committee is also highly critical of the Government’s engagement with Parliament. Noble Lords will recall the dismay of your Lordships’ House on the day of the debate, 23 July, when the government response to the initial response was so obviously rushed out just hours before the debate started. Comments that it had been delayed to produce a more comprehensive report did not appear evident from the content or style of the report.
I hope the Minister will take back to the Government the point made by the noble Lord, Lord Jopling, that this House takes these matters very seriously and it wishes them to be taken seriously by government. We want the time to fully consider the implications and to digest and consider government reports. Obviously, nobody wants to see undue delays in consideration, but a House that has the duty of scrutiny and takes that responsibility seriously is understandably offended if unable to adequately fulfil that function. The report does not suggest a timescale but it does indicate what information would be useful, and perhaps essential, in allowing for proper consideration and decision-making.
I want to turn to some of the detail of the follow-up report and the specific measures referred to. As the report reminds us, your Lordships’ House previously endorsed the 35 measures that the Government will seek to rejoin as being in the national interest, and the report welcomes the other opt-ins announced by the Government. Perhaps the most significant and the greatest debate in your Lordships’ House is on the European arrest warrant. We found it inconceivable that the Government wanted to opt out, and I have previously provided examples of cases in your Lordships’ House where it had been invaluable. In a previous debate, I was also critical of the Government’s refusal to implement the European supervision order, which ironically had caused some of the problems about which the Government complained in the European arrest warrant. As I said before, we accept that there were problems and will further consider the Government's proposed reforms, as the Government have now recognised that reform is the way forward and are not just dismissing the EAW as worthless. We also welcome that the Government have now agreed to implement the ESO, so that it is easier for those bailed outside the UK to be brought back and bailed in the UK.
I shall now turn briefly to other areas in which the committee recommended an opt-in. Its argument in each of those areas is that there is a case for saying that the national interest would be best served if the UK were covered by the measures. Clearly, the Government do not accept those arguments, and I would find it helpful if the Minister could expand on the reasons why they support a permanent opt-out from those measures, particularly as there is a recurring theme—from the committee, from noble Lords who have spoken in the debate and from others—that the Government’s explanatory memoranda were inadequate.
The noble Baroness, Lady Prashar, and the noble Lord, Lord Davies of Stamford, spoke about action to tackle racism and homophobia, and the fact that the UK has been a world leader and a trailblazer on this issue. The concern raised is about the message that the opt-out sends, and whether it is appropriate that, as a world leader and trailblazer, we should step back and give the impression that this matter is not as important to us as it is to other European countries.
Another issue of concern in judicial areas, which was raised by the noble and learned Lord, Lord Lloyd, is the European Judicial Network. I am not a lawyer, but I found it interesting to note that the Law Society of England and Wales and the Law Society of Scotland both recommended opting back in, specifically referring to their view that it would help address lack of training and awareness. The network was supported by the Lord Advocate as frequently being used to seek assistance with overseas European arrest warrants. I would welcome a response from the Minister on this subject, because I am not clear whether the Government are saying that it is not valuable, or that the points are being fully addressed in other ways. I would like some clarification of why the Government think it would be harmful, or prejudice the UK’s interests, if we were part of the European Judicial Network.
I would also be grateful to hear far more from the Minister about the proposed permanent opt-out from the European probation order, which the noble Baroness also mentioned. It has had broad support in the legal profession, and the Northern Ireland Justice Minister considers that it would be particularly helpful in relation to border issues between the Republic of Ireland and Northern Ireland. I have to ask the Minister a question, which the noble Lord, Lord Hannay, mentioned specifically: what consideration did the Government give to the part of the UK that has a common land border with another country? It is of interest to hear the detailed arguments on this subject, particularly given the submission by David Ford, the Justice Minister. The noble Lord, Lord Hannay, expressed his concern about the lack of consideration by the Government of such cross-border issues. The European probation order is a significant measure, and I am not yet convinced that the Government have made a powerful enough case for a permanent opt-out. I have to ask the Minister: did the Government’s proposed privatisation of the probation service have any bearing on this decision?
We have heard from other noble Lords about driving disqualifications, and the committee has, very reasonably, asked the Government to reconsider their position on this subject. As a Northern Ireland Minister I had responsibility for road safety at one point, and a significant issue then—it remains one now—was the difference in regulations, penalties and offences between the two jurisdictions. I welcome the fact that the Government are committed to introducing legislation to deal with those, but why are such considerations important for that border but not for those between other European countries? I know that the Government have cited costs, but can the Minister say more about what those costs are, given that we are talking about an important area of public safety, and that we are already taking steps with regard to Northern Ireland?
I shall not go into detail on all the other committee recommendations, because in conclusion I want come back to the subject of process. As the Government move into negotiations, these will have to be intense and focused. Where the Government want to opt back in, it is clear that that needs to be done as soon as possible. What consideration has been given to any interregnum there may be, and what mitigating measures might the Government introduce in such cases?
I entirely agree with the committee about keeping both Houses informed. The committee recommends regular reports, but I must express my concern that “regular” may mean something different to the Government from what it means to the committee. We have been through this before—for example, when we expect a report to be presented in the spring, and then spring moves into summer. Regular reports to Parliament would be very welcome. Can the Minister confirm that that will be the case, and tell us what timescale and method the Government are considering?
The idea, put forward in the report, of a review of the operation of the opt-outs, and of what happens when we opt back in again, is also welcome. What plans are in place to assess the impact? Without greater clarity at the beginning of the opt-out process about the opt-in process, the exercise has always been, and remains, a bit of a gamble.
I greatly welcome the committee’s report but the part I quoted, which has given me the most cause for concern, is its paragraph 19 about the,
“lack of analytical rigour and clarity”,
in the evidence on which the Government have based their decision. I agree that that is deeply regrettable, especially on such important issues as policing and criminal justice, which strike at the very heart of a Government’s first duty to their citizens—that of ensuring their security and safety. I hope that the Government will take note of, and respond in a positive way to, the criticisms and act differently in the future to ensure proper and beneficial consideration of their proposals. In future, I hope that when we have such reports before us we will have timely debates, because these debates contribute enormously and would help the Government in decision-making.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, before I tackle the issues raised in this debate I extend my thanks to the European Union Committee of this House for its ongoing work in this matter. This Government are extremely grateful to the committee; we do not necessarily agree but we are grateful for the work that is being done. I join the noble Baroness, Lady Smith, in the comments that she made about its work. The committee informs this House and the Government, and I am aware of the diligence with which it undertakes its work. We are aware of the role that Parliament has in scrutinising these matters and it should do so informed by the work of its committees, so I pay a genuine tribute to them all.
The committee’s initial report was helpful in informing the Government’s decision about the measures that we are seeking to rejoin, and I found its follow-up report to be particularly thought-provoking. Taken together, and it has been useful to be able to do that today, these two reports represent an extremely thorough analysis of a complex issue. The committee has produced a formidable body of work for the Government to consider.
On 23 July, I set out to the House my openness to debating the committee’s report. I thank the noble Lord, Lord Hannay, for making that possible by calling this debate today. I also thank him for his excellent work and insight into this matter as chairman of the sub-committee. The Government are appreciative of the committee’s continued scrutiny of these important matters and I thank the noble Lords, Lord Boswell and Lord Bowness, neither of whom are in their place today, and the noble Baroness, Lady Corston, for their chairmanship of the committees. These are sincere thanks, in which I join with the tribute paid to their work by the noble and learned Lord, Lord Lloyd.
I hope that noble Lords will accept that some of the questions I have been asked are complex and difficult. I do not want to mislead the House in any of my responses and with the consent of the noble Lord, Lord Hannay, I intend to write to him and to copy in all noble Lords who have spoken in this debate, and place a copy of that in the Library. This will enable me to deal with those matters which I am not necessarily able to deal with today. I hope that noble Lords will appreciate that type of commentary, which we have had before when discussing these issues.
Scrutiny can be an iterative and long-running process, especially on a matter such as this. Some have argued that the Government have not made the case for exercising the opt-out. On that point, I think we have to agree to disagree. The case for exercising the opt-out has been clearly set out and, as the noble Lord, Lord Hannay, set out in his opening speech, the House has already endorsed the Government’s decision. The House has also endorsed the Government’s decision to seek to rejoin the 35 measures set out in Command Paper 8671. I am pleased that the committee is persuaded by the evidence that the Government have set out to Parliament. I am also pleased that the committee has reopened its inquiry. Its views on the measures that we are not seeking to rejoin are welcomed and the Government have responded in full on those issues.
Before I turn to the points raised during the debate, I reiterate the Government’s commitment to holding another vote on the final package of measures that we will apply to rejoin.
Lord Elystan-Morgan (CB)
Does the noble Lord, for whom I and everyone here have an immense respect, agree that the whole issue can be distilled into a single question: how is it sane and sensible and sincere for the Government to place in jeopardy 35 measures of considerable worth in the expectation of, at best, a minuscule advantage in respect of 95 other matters that are either wholly irrelevant, non-operative or in no way injurious to our interests? I respectfully suggest that that is the issue.
Lord Taylor of Holbeach
As the noble Lord knows, the Government are exercising an opt-out that was provided for by negotiations by a previous Government. Noble Lords will expect the Government to exercise their discretion in this matter and to seek the endorsement of Parliament, as they have done on this occasion. I make no apology to the noble Lord for the decision that this Government have made. It was a decision that was anticipated by the previous Government in their negotiations.
As I was saying, before I return to the points raised, I confirm that there will be another vote on the package of measures that we will apply to rejoin. It is important that Parliament is given the opportunity to scrutinise this matter fully. I am very happy to commit myself to replying for the Government during that debate later this year.
I start by responding to some of the points of the noble Lord, Lord Hannay, in his excellent speech. I could not agree with all that he was saying about the Government’s performance or decision-making or role, but he set out a number of important points that have helped to guide this debate and I am happy to reply to them.
The noble Lord, Lord Hannay, and my noble friend Lord Sharkey addressed the point of whether there are measures that are detrimental to the UK and the UK’s national interest. The noble Lord, Lord Davies of Stamford, asked if this were the case. That is one way to assess these measures. However, is not the way in which the Government have assessed them. The Government have looked at how each measure contributes to public safety and security, whether practical co-operation is underpinned by the measure and whether there would be detrimental impact on such co-operation if pursued by other mechanisms. We have considered the impact that the measure has on civil rights and liberties. We believe that the 35 measures that we are seeking to rejoin meet these criteria.
The noble Lord and the noble and learned Lord, Lord Lloyd, asked why the Government have opted in to post-Lisbon measures if we have concerns about European Court of Justice jurisdiction. The Government consider that there is always a risk attached in terms of European Court of Justice jurisdiction. All Governments have faced this when we decide to participate in measures—pre-Lisbon or post-Lisbon. However, in certain cases, it will be in the national interest for the UK to participate in these measures, and the Government will accept that risk, given the wider benefits of the instruments in question.
Lord Davies of Stamford
The noble Lord keeps on referring to the ECJ as a risk—as a cost, as it were. Is it not the case that it is also in many cases a reassurance and an asset? Over time, is it not the case that we have won far more cases before the ECJ than we have ever lost?
Lord Taylor of Holbeach
Of course, but I am just saying that there is an unpredictability about outcomes which all Governments have had to face, and it is a matter that Governments are entitled to weigh in the balance. However, I accept totally that the European Court of Justice also exists to protect things that we consider valuable, too.
The noble Lord, Lord Hannay, and the noble Baroness, Lady Smith, raised the importance of co-operation.
Lord Hannay of Chiswick
My Lords, I apologise for intervening, but I wish one could persuade the Government not to treat the unpredictability of a court of law as a reason not to be subject to its jurisdiction. I hope that every court of law in this country is unpredictable. If it were predictable, we would not have the rule of law in this country.
Lord Taylor of Holbeach
If I say that the noble Lord makes an academic point, I do not mean to dismiss it, but it is a point which is based on a theoretical view of jurisprudence. As a non-lawyer I would say that the law can have an unpredictability about it even in such well established legal proceedings as we have in this country. Indeed, I am sure that the noble and learned Lord, Lord Lloyd, will agree with that analysis.
I was about to talk about our co-operation with the Republic of Ireland. I felt that the noble Baroness and the noble Lord, Lord Hannay, made an important point. That is why we have engaged constructively with the Northern Ireland Executive and David Ford throughout this process. That is why we continue to hold productive discussions about these matters at all levels.
The noble Lords, Lord Hannay and Lord Davies, and my noble friends Lord Sharkey and Lord Bridgeman also raised the associated Europol measures. I should like to reiterate our support for Europol on its current terms and our intention to rejoin the main Europol measure. However, we do not believe that we need to rejoin the associated measures to do so. Many of the provisions in these measures are legal padding and duplicate the detailed provisions of the main measure. As a result, these measures have no material impact on UK participation or, for that matter, on any other state. They have no impact on our ability to co-operate with others through Europol.
The noble Lord, Hannay, my noble friend Lord Sharkey, and the noble and learned Lord, Lord Lloyd, also identified the probation order as one that we should seek to rejoin. The Government’s position on this measure is set out in full in the response to the committee’s report of 31 December. Only 12 member states have implemented this measure and, to the best of our knowledge, it has never been used. As a result, there is no clear understanding as to how this measure will work in practice and thus very little evidence on which to judge its effectiveness. That is why we are not seeking to rejoin this measure.
The noble Lords, Lord Hannay and Lord Davies, my noble friend Lord Sharkey, the noble and learned Lord, Lord Lloyd, and the noble Baroness, Lady Smith, raised the issue of the European Judicial Network. As the Government set out in the response to the committee’s report, we believe that Eurojust is more effective than the European Judicial Network at bringing people together and ensuring that the right tools such as joint investigating teams are employed. That is why we are seeking to rejoin Eurojust.
A number of noble Lords raised the racism and xenophobia measures. These have also not been joined or opted out of, and we are not seeking to rejoin. Noble Lords know that this is a highly sensitive area. However, we are clear that our efforts—the noble Lord, Lord Davies, referred to our lead in these matters—to tackle racism and xenophobia do not depend on a measure that adds little practical value. The UK will continue to be bound by the International Covenant on the Elimination of all forms of Racial Discrimination, and the Government will continue to set a national direction and to work at local level with professionals, the voluntary sector and communities to deal with local issues and priorities.
A number of noble Lords mentioned the convention on driving disqualifications. Let me first address the point about ditching the benefits of working with 26 other member states. Currently, this measure only operates between the UK and the Republic of Ireland, so there are no benefits to ditch. However, there are benefits to the bilateral agreement with Ireland. This will allow us to address some of the weakness of the instrument as it currently exists, which we would otherwise be unable to do.
Lord Davies of Stamford
I am most grateful to the noble Lord for giving way a second time. In the light of what he says, would it not be sensible to extend the directive to include the continental countries? There is an enormous amount of motor traffic between us and them in both directions. As I said in my speech, if we want to protect people from disqualified drivers in Ireland, why do we not protect our people from disqualified drivers coming from the continent?
Lord Taylor of Holbeach
We will be free to do that in the future. I am just reporting the current situation to the House. We have the freedom to do what we will in the future. It is a question of whether we want to be bound by a directive which at the moment is actually not delivering what the noble Lord has suggested.
The noble Lord also asked for an update on our negotiations with the Commission to rejoin measures. I can confirm that these continue at the technical level, and there are a lot of technical discussions involved in these matters. We intend to update Parliament as appropriate, but we must be mindful that this is a negotiation, and thus we cannot prejudice our position in these negotiations. The noble Baroness, Lady Corston, my noble friend Lord Sharkey, the noble Lord, Lord Davies—
Lord Hannay of Chiswick
I would be grateful for a simple answer to a simple question. The Minister said that technical discussions had begun, and he did not wish to prejudice the position in negotiations. Have negotiations begun with the Commission and the Council, or have they not?
Lord Taylor of Holbeach
Exploratory talks have taken place and do so all the time. Formal negotiations have not started, and we need to be able to get some of the technical issues resolved before we enter into full negotiations. That is a reasonable position to take. Noble Lords would expect the Government to recognise their responsibility to the UK national interest in this respect. I hope that Parliament would understand the reasons why, at this point, the Government do not necessarily want to reveal the details of these negotiations. All I have said is that there will be opportunities, as these negotiations proceed, for reports to Parliament and for keeping Parliament and the citizens of this country informed about them.
There was a question about impact assessments, and I was going on to say that the noble Baroness, Lady Corston, was particularly concerned about the impact assessments of the 95 measures the Government will not seek to rejoin. I can confirm that it is the Government’s intention to provide, in good time, ahead of the second vote, an impact assessment on the measures that the Government will rejoin. I can also confirm that the Government will discuss the timing and format of the second vote with the chairmen of the relevant committees. However, at this stage, as the noble Baroness will know, we do not intend to provide impact assessments for those measures that we will not be joining.
I was asked what the Government’s view is of the legal test of coherence in Protocol 36. The noble Baronesses, Lady Prashar and Lady Corston, were both concerned about this. The Government consider that in a number of areas the case law of the European Court of Justice makes it very clear that coherence means “legally effective” and so takes us further than the test of practical operability, also in Protocol 36.
I conclude by referring to two speeches made by noble Lords sitting behind me. The first was by my noble friend Lord Jopling, who took the Government to task in a pretty straightforward manner. I assure him that I take my role in replying to the concerns of Parliament extremely seriously. I will do my best to ensure that the circumstances in which he found himself do not recur, but I can only do my best on that.
I have been handed a correction. The coherence test takes us no further, I am told. I apologise if I misread the messages from the Box but this one has come down in big block letters so that I can correct myself. I was seeking to reassure my noble friend about those matters.
I should also like to comment on the speech of my noble friend Lord Eccles. I felt that he placed the debates that we have in this House on our membership of the European Community in the context of our global life—the global existence of our country. It was an extremely valuable contribution and something which, when we deal with the detail of some of these matters, we should always bear in mind.
Perhaps I may say one further, rather personal, thing. I am committed to making a success of the dialogue between the Government and this House. Mention was made of tone and language. I make a plea to noble Lords: let us please try to keep this dialogue on a good basis. I will be as open as I can be with noble Lords and will seek, as best I can, to keep the committees informed, but it is a two-way street. I would hate to think that we ended up having adversarial debates on an issue which is so important to the future of this country. That is a personal plea on which I conclude my contribution to this debate. I will be writing to noble Lords and I thank all who have participated in what has been a very worthwhile evening.
Lord Hannay of Chiswick
My Lords, I begin by thanking all noble Lords who have participated in this debate. It has provided wide-ranging and effective coverage of a very complex subject, and I am grateful to your Lordships—both those who are and those who are not members of the two committees and the EU Select Committee.
I should also like to thank the Minister and to respond to his final remarks. He has, with the sincerity and good humour that characterise all his interventions in this House, drawn quite a lot of the sting from some of the very legitimate criticisms to which he has been subjected today. I hope he will reckon that he is held in great respect in this House by all Members and that that respect will be even more increased if he takes back the message from this House of the criticisms that have been levied, although not to him personally. I am grateful to him also for the offer to reply in writing. He has done this in previous debates and it is extremely valuable and welcome to all Members.
By necessity, this debate has been a great deal about process and technical detail and someone listening to it from outside might think that it was confusing. However, I wish to conclude by making a couple of remarks about the wider picture here. The internationalisation of crime is proceeding apace, and nowhere more so than in Europe. We may not have a perfect single market but the criminals have a single market from which they are not hesitating to benefit. We need, therefore, a far greater degree of international co-operation than we have ever had in the past. The legislation we have been discussing on which the Government have triggered the opt-out, the 133 measures, was not designed by a mad group of federalists in Brussels: it was designed by the Justice and Home Affairs Ministers of the member states and every single one of them was agreed by unanimity. We must get away from the mindset which says, “This is imposed on us by Brussels and we should get out of it if we possibly can and if it is not going to be too costly to do so”. That is not a good mindset.
The hard fact is that the security of this country neither begins nor ends at the water’s edge any more: it goes far wider than that. The justice and home affairs part of the European Union’s activities is of great value to this country, and it is likely to be of even greater value if we do not wreck it in the process of this tricky negotiation which we have now undertaken. It is an odd negotiation because, in all my years of dealing with the European Union, it is the first time a British Government have deliberately put themselves at a disadvantage and then asked to get back into many things. It is a fairly odd state of affairs for which, as I said in my opening statement on a personal basis, I do not entirely blame the present Government, who had that mechanism foisted on them by the previous Government.
However, whatever it was, it is an uphill task. I end with the following. I am sure that all noble Lords wish the Minister and his colleagues the best chance of success in the negotiations they are undertaking. I was shocked to hear that six months after the Prime Minister notified the other member states of our decision to opt out of these measures, we still had not begun negotiation. We have all been around long enough to know what exploratory talks mean—and they do not mean negotiation. I hope the noble Lord and his colleagues will shortly come to the House and tell us that we have begun negotiation. Six months out of the 16 available have now passed and they have not led to very much. Our wishes are with the Government that they have success in this negotiation. It is in none of our interests that they should be blocked or fail, but that may require more political involvement and effort and energy than they have shown so far. I beg to move.