Queen’s Speech
(10 years, 6 months ago)
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The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, it is a privilege to open this debate on Her Majesty’s gracious Speech. We will be considering the Government’s priorities for business, employment, pensions, welfare, agriculture and the environment for the year ahead. The Government are committed to fostering and assisting the entrepreneurial spirit which thrives in the UK today. The measures in Her Majesty’s gracious Speech will open up new opportunities for businesses to innovate, compete, grow and, of course, to export.
The Government plan to introduce a small business, enterprise and employment Bill. This will contain a number of specific measures to better ensure a business environment that is supportive of small businesses, as well as further enterprise and employment measures. There has never been a better time to start, grow and operate a small business in the UK. Small businesses, as noble Lords know, make a huge contribution to the UK, accounting for around half of jobs in the UK and a third of private sector turnover.
In December last year, the Government published Small Business: GREAT Ambition, which set out our commitment to make it easier for small firms to establish and grow in the UK. The small business, enterprise and employment Bill will help deliver on that commitment and will further enhance it. Furthermore, the Bill will ensure that the UK continues to be recognised globally as a trusted and fair place to do business. It will deliver on the UK’s G8 commitment to introduce new rules requiring companies to obtain and hold information on who owns and controls them, which will encourage trust and growth within the UK.
The Bill will make it easier for small businesses to access finance. It will help improve payment practices between small businesses and their customers, particularly through greater transparency. It will provide small firms with better access to the £230 billion spent each year in public procurement contracts. The Bill will also aim to cut red tape by ensuring that there are frequent reviews of regulations which impact on business in particular.
The changes proposed to UK Export Finance’s powers will make it easier for small businesses to access export finance, which they so often need. The Bill will widen the powers of UK Export Finance, enabling it to support exporters itself, rather than, as is currently the case, only in relation to specific export contracts. UKEF will also have more flexibility when providing support for small businesses, such as instances where they are part of a wider and larger supply chain. The Bill will also enable UKEF to support exports of intellectual property rights and other intangibles. All this means that UKEF will be able to increase the number of small companies it can help.
The Bill will also introduce a number of measures to reduce unfairness. There will be tougher rules to make sure that public sector workers do not get high payouts if they are re-employed in the public sector. It will tackle misconduct by directors and unfair employment practices and will provide reforms to increase the efficiency of the employment tribunals system and further reduce its burden on businesses. It will increase the penalty for failure to adhere to the national minimum wage and prevent abuses of zero-hours contracts. Honest, hard-working businesses can be more confident that they will not be disadvantaged by those who do not play by the rules.
The Government are already playing a key role in supporting the success of small businesses. Last year alone almost 500,000 new businesses were created in the UK, a testament to the business environment that we have created. The measures outlined will help them prosper in a UK that prides itself on being very much open for business.
The Government’s long-term economic plan is working. We are seeing more people in work than ever before and unemployment is falling rapidly. To confound our detractors, it is the private sector that is providing these jobs, the number rising by more than 1.7 million since the general election. Government should be about creating the right environment for jobs, not about being the employer. We are committed to building on this outstanding progress and continuing our work to reduce long-term and youth unemployment.
The Work Programme is growing and transforming lives. Nearly 250,000 people have been helped into lasting jobs, but we are determined to improve the results still further. We are rewarding better performing providers and expecting weaker providers to improve. Nearly 200,000 young people have benefited from our work experience and pre-employment training. We are trialling new types of help for young people, including intensive support for 16 to 17 year-old NEETs—that is, those not in employment, education or training, and not in receipt of benefits.
We are piloting new day-one help for unemployed 18 to 21 year-olds to help improve their maths and English skills and thereby their employability. We are requiring some young people to undertake work-related activities at the six-month point of their claim. We are committed to supporting young people to expand their skills and long-term employment opportunities through apprenticeships and newly introduced traineeships. At the same time, the Government are delivering the biggest welfare reforms in 60 years. The Government have brought in universal credit, personal independence payments and the new Child Maintenance Service, alongside employment initiatives such as the Work Programme, Help to Work and Disability Confident.
We have capped benefits so that households no longer receive more in out-of-work benefits than average earnings. At the same time we have delivered employment programmes that have seen record numbers of people in work. We are delivering programmes that make work pay, encourage personal responsibility and deliver a fairer deal for the taxpayer.
In the past, welfare spending was not subject to firm controls and we saw the benefit bill rising under the last Government, even at a time of economic growth. We are determined to ensure that this does not happen again. The Government have already taken significant action since 2010 to bring welfare costs under control. To build on this programme, we have for the first time introduced a welfare cap that will bring over £100 billion of welfare spending under control. This cap will ensure that welfare spending remains on a sustainable footing for the future.
On pensions, we want very much to build on our achievements so far. Around 12 million people are not saving sufficiently to achieve their desired level of income in retirement, especially given—we hope—longer life expectancy. It is therefore vital that we ensure that there are high-quality, value-for-money pension schemes to encourage people to save sufficiently.
We have already made significant pension reforms: the new single-tier state pension from April 2016; automatic enrolment which will see millions more savers joining pension schemes; capping charges on default funds in defined contribution schemes; and setting minimum quality standards to ensure that savers get value for money. However, we are planning to do more still. Defined benefit schemes, where the employer bears all the risk and the employee is promised a specified pension, are, of course, in decline. On the other hand, defined contribution schemes, which are more flexible for employers but have no promise for the employee, are on the rise.
The best employers, of course, still want to offer good pensions, and for some, defined benefit or defined contribution schemes may still be the right pension arrangement. However, for those who want an alternative, our pensions Bill will allow a greater range of options. It will give employers and pension providers the opportunity to create defined ambition pensions, which will encourage greater risk-sharing between parties and allow savers to have greater certainty about their pensions. The Bill will also allow for new collective pensions, recognised in many countries as providing high quality, and enjoying support across the political spectrum.
The Budget announcement on new flexibilities in how savers can access their defined contribution pensions has been warmly welcomed. A Treasury consultation on this, named Freedom and Choice in Pensions, is due to close very shortly. The necessary changes to the tax regime will be via a Finance Bill later in the year. Those with a defined contribution pension will be offered free and impartial guidance on the options available to them at retirement. We will implement related measures through the pensions Bill.
I turn to environmental matters. The Government will publish a draft national parks Bill, which will enable the composition of national parks authorities and the Broads Authority to be widened in future, by an order of the Secretary of State. The main purpose of the draft Bill will be to provide for holding local elections to the authorities to improve local accountability.
We are also committed to reducing the use of plastic bags to help to protect the environment. Discarded plastic bags blight our towns and countryside; they are a waste of resource and a very visible form of littering, and can cause injury to marine wildlife and harm the marine environment. Over 7 billion single-use plastic carrier bags were given out in England by supermarkets alone in 2012; that is 133 bags per person. I am sure that noble Lords will consider that next time they stand in a Tesco self-service queue and they are asked the question, “Are you using your own bag?”. I hope that the answer will be yes, next time. In October 2015, the Government intend to introduce a 5p charge on all single-use plastic carrier bags in England. In another measure, the Government will allow for species control orders to control the invasive, non-native species that pose serious threats to biodiversity.
The measures in Her Majesty’s gracious Speech will help make the UK the most attractive place to start, finance and grow a business. The Government’s pension reforms will allow for innovation and give greater control to employees, and the Government will introduce measures to help protect the environment. I am most grateful for the opportunity to introduce this part of the debate on Her Majesty’s gracious Speech and I look forward to listening to the contributions to the debate from all around the House. I know that I speak for the whole House in saying how much we look forward to hearing in particular from the right reverend Prelate the Bishop of Durham and my noble friend Lord Bamford, who will make their maiden speeches today. They have contributed much to the spiritual and economic welfare of this country.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for that introduction to today’s debate. We have many interesting speakers to come and I, too, am looking forward to the maiden speeches. I am sure that the noble Lord, Lord Bamford, with his wealth of experience in business, will have much to share with us. I am particularly pleased to be here for the maiden speech of my own bishop, the right reverend Prelate the Bishop of Durham. I know that he has a strong interest in many of the subjects that we are discussing today, and I look forward to hearing what he has to say about them.
Although the Minister’s presentation was very enthusiastic, I confess that I struggle to share the enthusiasm that he has displayed for this Queen’s Speech. The 11 Bills announced here contain some things that are welcome, as far as they go, but, taken as a whole, I find the programme a bit underwhelming. I realised early on that two of the 11 Bills are actually about private pensions, at which point I had a strong sense of déjà vu, as it feels as if the noble Lord, Lord Freud, and I have spent most of our adult lives talking about pensions in this very Chamber. I went back to my diary and found that the last Pensions Bill got Royal Assent only four weeks ago. I understand that things move on—but that quickly? In practice, most of the measures in the pensions tax Bill were flagged up in the previous Budget while the Pensions Bill was still going through this House. In fact, many of us started debating the annuities market while having no idea that the Government were about to unveil measures which would totally change the context. I completely exempt the noble Lord, Lord Freud, whose integrity is beyond reproach. Frankly, I do not think that he knew any more about it than I did: I think that it was all done on the hoof. However, I struggle to conclude that a strategic approach to reforming pensions needs three Bills just on private pensions in one year, but perhaps I lack imagination. I look forward to hearing more about them.
We have had the headline—namely, that the pensions tax Bill is aimed at people who are 10 years below retirement age with defined contribution pension schemes. In future they will no longer have to buy an annuity with their pension pot to give them a guaranteed income during retirement; instead they can access the money and spend it as they choose. At the time this caused speculation that people might take the whole pension pot and blow it on a cruise or a Lamborghini. Indeed, the Pensions Minister, Steve Webb, said that he was relaxed about the prospect of Lamborghini purchases. I confess that I had no idea how much a Lamborghini cost, so I googled it. I do not want to disappoint some people but, as the average pension pot is about £30,000 and you can easily spend £300,000 on a Lamborghini, I do not want anyone listening today, at least those at home, to get too excited. As I googled this information, it occurred to me that in future the targeted advertising that pops up on Google might be directed less at discounted filleting knives and more at Lamborghinis. What a disappointment I will be to those advertisers, that is all I can say.
For some people the idea of taking out their savings will be very attractive but others, especially those on middle incomes, might be better off with an annuity which gives them a guaranteed income throughout retirement provided that the charges are reasonable and the returns are good. We support giving people more flexibility but there have to be real options from which they can choose. I regret that the Government have failed to meet the challenge that Labour laid down during the debates on the Pensions Bill to sort out the dysfunctional annuities market once and for all. All they have done is to sidestep the issue by letting people take their money out, but that does not solve the problems so we will return to that issue as the Bill goes through this House.
Most importantly, these reforms have to meet three crucial tests. First is the advice test. It is essential that people get good independent advice. It cannot be a 20-minute chat over a cup of tea, as some in the industry fear. The Government need to provide a comprehensive and costed plan for delivering robust, high-quality advice and Parliament must be able to scrutinise those proposals to make sure that we do not end up in the midst of another mis-selling scandal. I remind the House of my registered interest as a senior independent director of the Financial Ombudsman Service, and mis-selling scandals and PPI are ringing in my ears as I say this.
The second test is the fairness test. The new system has to be fair to all savers, ensuring that those on middle and low incomes can still get the products they need to get certainty of income and that the billions we spend on pensions tax relief do not benefit just the very rich.
The third test is the cost test. We need to be fair across generations and to be careful that costs are not passed on to the state—for example, if somebody spends their pension pot and then the state is asked to pick up the tab for social care or for means-tested benefits such as housing benefit, which then falls back on taxpayers. Incidentally, when this measure was announced, the Telegraph pointed out that if everybody over 55 took their income as pension contributions it could cost the Treasury £24 billion a year. Obviously, that will not happen but, if just 10% did that, that is £2.4 billion in lost tax and NI receipts. The Government have a serious risk assessment to do first.
Then there is the private pensions Bill which, as the Minister explained, provides for new collective pension schemes, something called for repeatedly by Labour. The Dutch and Canadian models have shown that those kind of schemes can outperform individual defined contributions by some 30%, so in our view the potential for lower charges and the benefits of a pooled investment strategy can be desirable. As we have pointed out in previous debates, they also offer the potential for addressing the pension challenges in industries which have a high staff turnover and lots of small stranded pension pots. We on these Benches support the principle of the proposals on collective pension schemes but we will look for decent caps on charges and other measures to make sure that they deliver secure returns on the pensions in the future.
Labour is determined to ensure that the pensions market works for everyone. To that end, my honourable friend Rachel Reeves set up an independent taskforce to be chaired by Professor David Blake from the Cass Pensions Institute to look at how we can ensure that low and middle-income savers can get good value products in retirement and avoid mis-selling scandals. I call on the Government to provide a full impact assessment of the costs and risks of all the pension reforms together. I ask the Minister to assure the House that the Government will do both those things and also publish a distributional analysis of the reforms, including pension tax relief. Labour has said that we would lower the rate of tax relief for the top 1% of earners. I hope that the Government might agree to that. If they do not, we should at least expect the House to have all the details of the impact of the reforms before being asked to assent to them.
Moving on, reluctantly, from pensions, of the other nine Bills, most are not relevant to today’s debate but I should mention those that are. I will not detain the House on the Defra front with the draft governance of national parks Bill and the Broads Bill but would like to touch on the 5p charge for carrier bags. I am pretty sure that I do not use 155 bags a year so somebody else is using an awful lot—I will talk to them later. I certainly agree that far too many plastic bags are made and used in Britain and that a charge on all plastic bags is the best way to control their use. However, I worry that the policy announced by the Government is actually not quite that and, arguably, is an unscientific mess that could do some damage to the environment. The reason for that is that the Government decided to exempt biodegradable plastic bags, against all the best available scientific advice and despite repeated requests from the Environmental Audit Committee to explain their position. I think that Defra has now accepted that there is no such thing as a really biodegradable plastic bag. There is not: the bag may degrade but the plastic does not. If the bags get washed into rivers they produce microplastics which absorb marine pollutants, are then ingested and work their way up the food chain. Could the Minister please explain why the Government ignored the scientific advice and decided to exempt biodegradable plastic bags from the charge?
There are plenty of other areas Defra could have acted on and I am disappointed not to see any in the Queen’s Speech. There is nothing for those whose homes are blighted by flooding, and nothing on sorting out rural broadband or protecting the health of children in high pollution areas. There is nothing for the 2 million households in England and Wales which spend more than 5% of their household income on water. Defra has responsibility for food banks. Food aid charities are handing out a record number of food parcels to people who are poor. Why could Defra not take the opportunity to investigate and do something about the underlying causes that drive people into food banks, including those in working families?
Next is the Childcare Payments Bill. Any help with the eye-watering costs of childcare is welcome but it does not begin to make up for the losses that working families face. Childcare costs have gone up 30% since the last election but these proposals would have nothing on the table until autumn 2015. Even then, just one in five families would receive enough help through tax-free childcare. It is welcome but not enough.
Finally, there is the small business, enterprise and employment Bill. My noble friend Lord Stevenson will talk about this more—and with considerably greater expertise, I am relieved to say. However, I want to touch on the principles behind it. It contains some measures that are welcome if rather late and a bit half-hearted. That makes me think that one of the themes of this Queen’s Speech—and of much government policy-making of late—is that, in a number of areas where the Government are acting, they have belatedly realised there is a problem and that something needs to happen, often provoked by a Labour announcement. We adopt a policy, it is popular because it is badly needed, then the Government rush out a cut-price version to try to counter it. It is always flattering to be copied but the danger is that these rip-off versions of our original designs look okay at first glance but you should not look too carefully at the seams. We have already seen the position with energy pricing. There are two more today in housing and zero-hours contracts.
Even more importantly, taken as a whole this programme does not do what is needed for the country. The Queen’s Speech seems to be predicated on an analysis that we have had a tough time but it is all getting better so we do not need a major legislative programme. I could not disagree more. The biggest problem is that the Government’s approach is still predicated on the assumption that a rising tide will lift all boats and that wealth will trickle down to all. If that was ever true, it is certainly no longer a safe assumption. The Government’s own record makes that clear. Working people have seen their pay fall by £1,600 a year on average. By the end of this Parliament, people will be worse off than they were at the start. Something very serious has happened to the British economy: the link between our national wealth and the state of family finances has been broken. It is no longer safe to assume, if we see recovery, that it will benefit most working families in Britain. If anyone doubts that, talk to the people out on the doorstep. That has real implications for the way we go about the challenges ahead: restoring real growth, tackling debt and getting the economy working for working people. Low wages, insecure work and the hope of some wealth trickling down is not the way forward; it is actually part of the problem. A Labour Government would take action to correct that and drive us towards the sort of higher skill, higher wage economy we need.
This Parliament unfortunately has seen a rising tide of insecurity. A record number of people are on zero-hours contracts. I am delighted the Government have woken up to the issue—slightly late, despite the best efforts of my noble friend Lady Hollis, who pushed the Minister very much on this during the passage of the Pensions Bill. What is being offered is not enough. As well as ensuring that those employees have greater clarity on their terms and conditions and can work for other employers, Labour would give them the right to demand a fixed-hours contract if, in practice, they had been working regular hours for the preceding six months. After a year they would have an automatic right to a fixed-hours contract. Labour would also ensure that employees on zero-hours contracts are not obliged to make themselves available outside their contracted hours and that they have the right to compensation if shifts are cancelled at short notice.
A Labour Government would then tackle the scandal of low pay in Britain. The Government have previously dangled the possibility of a £7 minimum wage, but nothing has ever materialised. Labour would set an ambitious target to increase the value of the national minimum wage and would drive up much more robust enforcement, including penalties of £50,000 for failing to pay the minimum wage, and new powers for local authorities. We would incentivise employers to pay the living wage through “make work pay” contracts. This makes straightforward economic sense. For every extra pound employers pay to raise a worker from the minimum wage to the living wage, the Treasury saves 49p in lower social security payments and higher tax revenues. It is win-win.
Thirdly, Labour will tackle the problem of youth and long-term unemployment. I disagree with the Minister. I accept that he cares about youth employment—however, the Government’s record has not been good at all. The youth contract has been an absolute disaster. Labour, by contrast, has pledged to create jobs for six months for all young people who have been out of work for more than a year—proper jobs—and for every other person after two years.
Finally, Labour will address the failures of our social security system, on which there is nothing in detail in the Queen’s Speech. We will make the system fit for purpose by reforming the tests for disability benefits, by abolishing the disastrous bedroom tax and by introducing a basic skills test for the newly unemployed, so we intervene early to avoid further long-term unemployment.
We will get serious about housebuilding. By 2020 we pledge to be building another 200,000 houses a year at least. We will protect renters by legislating for longer-term tenancies and by stopping letting agents charging them fees. The lack of housing supply is causing so many problems, from asset bubbles to huge housing benefit bills, overpriced and poor quality rented accommodation, and the inability of so many first-time buyers to get on the ladder. What does the Queen’s Speech offer? I am sorry to say it offers nothing at all for families renting, and a plan for a one-off new town with 15,000 homes, when we need at least 10 or 12 times that.
There is so much more I could say: about the need for reform of banking, finance for SMEs, but most of all a recognition that we need serious action to get the British economy fit for purpose. We are at a point in this extraordinary economic cycle where we have a chance to think about what kind of economy we really want and what kind of country we want to be. I want to live in a country where the economy works for everybody—not just the gilded few at the top—where the welfare state functions properly and where people who are working all the hours God sends can feed their kids without having to resort to food banks. That is the kind of country Labour wants; that is what we will build, and that is what the Queen’s Speech should have done.
Lord Stoneham of Droxford (LD)
My Lords, in 2010 the Governor of the Bank of England warned the negotiators of the coalition Government that anybody who was going to be in government for the next five years was likely not to be in government for another generation. Anybody coming into government in that situation knew it was very serious. I am too modest to predict now what this will mean for my party, but at least I can take comfort from my noble friend Lord Ashcroft’s poll today, which shows the Conservatives and Labour neck and neck, fighting for 60% of the electorate. That suggests that the governor’s prediction was too pessimistic and that, in reality, hope springs eternal for everyone.
It is easy to forget just how severe the problems were in 2010. I think that some of the solutions for the future put forward by the preceding speaker should be put in the context of the crisis in business confidence and the shattered financial economy that we found in 2010. The coalition has provided—and provided at the time—much needed stability and certainty. It is important that we recognise that it has retained its determination to get the deficit under control. It has also provided a fixed-term Parliament, which means that we have five years to do the job. It is worth recalling how things were at a similar stage four years ago. We spent most of the last year of the preceding Parliament trying to anticipate when the general election would come. Now, if we did not have a fixed-term Parliament, we would undoubtedly be trying to predict whether the election would be in the autumn or next May. At least we now have the certainty of knowing that we will not have an election until a year’s time, which is good for the economy.
We have also had continuity in ministerial appointments. I note that the Business Secretary has now served for the second longest time in that position since the war. He has just beaten the three years and 11 months of Patricia Hewitt but has yet to beat the record of Peter Thorneycroft, the longest-serving DTI Minister in the 1950s, who served for five years and three months. In 13 years, Labour had eight appointees. In the previous Conservative Government of 18 years, there were 11 appointees, averaging 1.6 years for each appointment to the equivalent Business Secretary position. At least longer, more stable appointments and better experience provide for consistency, determination and the time to bring about real achievements in office.
Today, I cannot talk about the whole range of matters covered by the debate. I should like to talk about this Government’s radical proposals for pensions under the leadership of my honourable friend Steve Webb, the Minister for Pensions. However, in the short time available to me, I want to concentrate on the business area. When we look back on the coalition, there have been two real achievements in that area. The first has been predominantly in apprenticeships, of which we have created 1.6 million. We built on the foundations left by the Labour Government and have doubled the number of apprenticeships being created each year throughout the coalition Government. Certainly, we hope that by the end of this Government we will have created more than 2 million apprenticeships. These have been linked to a renewed interest in the whole area of technical education to perhaps counter- balance an overemphasis in the recent past on academic success and investing in universities.
The second area where there has been great achievement is jobs and the role played by business in creating jobs. Back in 2010, everybody thought that unemployment was going to go through the roof. That is what the Governor of the Bank of England almost certainly expected as the economy restructured and public spending had to be cut. After four years, we are now seeing the lowest level of unemployment since 2009 at 6.8%, or 2.2 million, plus a reduction in youth unemployment. It has to be said—I say this to the opposition Benches—that all recessions are painful: unemployment hits disproportionately the less skilled, the more vulnerable and the poor in the labour market. If the predictions had been forthcoming in actuality, I am sure that there would have been a threat to social cohesion in this country. What we have done in the employment field has at least relieved some of the pressures on the poorest in society, who would have suffered if the real ravages of the recession had taken hold.
One of the outstanding contributors to jobs growth has been the role of small businesses, and I will say something in a moment about how they are going to be very important to the ongoing recovery of the economy. However, although there are encouraging signs that good economic growth will come, in the final year of this coalition we have to ensure that it becomes sustainable growth which lasts and that it does not just lead to an overheated economy and a return to the renowned stop-go situation.
Two indicators need to pick up in the economy. The first is business investment and the second is labour productivity, which has performed poorly. Since 2007 it does not compare well with our competitors: the USA, France and Germany. There are signs of a pick-up in business investment and certainly surveys have shown that bigger companies are now beginning to use their cash reserves to invest as confidence returns.
The Government have put in place a number of welcome schemes to counter the reluctance of banks to lend to small businesses, which I hope will now play a crucial role in stepping up our capacity to innovate and develop new markets, and will support growth in the economy. There are encouraging signs in pharmaceuticals, aerospace and the motor industry, but we have to recognise that although manufacturing has to play a major part in recovery, it is not sufficiently broadly based in this economy now as it is in Germany. Therefore, we have to look for other areas to provide growth and jobs.
There are good opportunities still to strengthen links between universities and small businesses and to build on their research innovation and scientific developments. For a nation that is the second biggest exporter of services in the world—behind the USA—there remains huge potential for export growth. Services exports are still restricted by national regulation and competition imperfections. Stepping up our initiatives on trade liberalisation, not least in the European Union, will open up huge opportunities for service companies.
There are three further important considerations for growth. We must not be satisfied with just making improvements in our education system. We are not just in the business of catching up, which we are trying hard to do; we need to strengthen our technical education and battle hard to do better so that we are ahead of other countries in improving competitive advantage. We have to be vigilant on the supply side of business and we also need a stable outlook for the economy and consistent government policy towards business which strengthens confidence and encourages investment in facilities, jobs and apprenticeships in the UK. That will be the task for the coalition Government in the coming year.
Lord Tugendhat (Con)
My Lords, I believe that every so often an event occurs that should lead Governments to reconsider well established attitudes and policies. Recently one such event has occurred in the area of responsibility covered by the Minister and his department. In fact, there have been two: one is the annexation of Crimea and all that Mr Putin has done in Ukraine and said about how Russian policy in its near abroad is likely to develop; and the other is the Pfizer bid for AstraZeneca.
Let me take Russia first. In recent years, all EU member states have done business with Russia as if it is a country much like ours and becoming more so. Little or no thought has been given to the extent to which deals and relationships that EU member states regard as part of the normal course of business may become hostages to fortune in diplomatic, strategic and even military disputes. The most obvious example of this vulnerability is the massive dependence of Germany and some other member states on Russian gas supplies. It is hard not to conclude that this plus of course Germany’s massive industrial exports to Russia have not played a part in determining German responses to recent Russian actions in Ukraine. However, Germany is only the most obvious, as distinct from the only, major EU member state in this position. Has not the French contract to supply warships to Russia, including one aptly named “Sevastopol” influenced French attitudes? Has not the British attitude to possible financial sanctions been influenced by the massive Russian involvement in London’s financial and other markets?
In the time available to me I cannot deal at length with these issues but in the light of recent Russian actions and statements, our own policy and that of the European Union as a whole should change. A set of criteria within which economic and commercial relations with Russia should be conducted must be developed. Whether in relation to imports and exports or inward and outward investments, account must be taken of our political and strategic interests and the possible risks as well as purely business considerations. With vital imports, such as gas, this means not becoming overdependent on Russian supplies and ensuring that there are alternatives available. With exports, it again means avoiding overdependence and not supporting Russia’s armed forces. With financial investments, it means ensuring that sufficient is known about them to enable whatever action might be required in an emergency to be taken with the minimum disruption to other market operations.
We, the EU in general and Britain in particular, should also bear in mind our experience with Russia in our dealings with that other great autocratic power, China. As it has demonstrated on many occasions, China does not hesitate to use whatever leverage it has in relations with other countries in pursuit of its diplomatic and strategic aims. Her Majesty’s Government have had experience of that when they were frozen out by Beijing after the Dalai Lama incident. Now I am very much in favour of doing more trade with China and encouraging Chinese investments in the United Kingdom. We are a long way behind our EU partners, notably Germany, in developing economic links with China and we should try to catch up. However, we must also be aware that in China commercial and financial relations are always subordinate to diplomatic and strategic considerations and that Chinese companies are instruments of the Chinese state, not free-standing, independent entities.
So, as with Russia, and in conjunction with our EU partners, we need to develop a framework of rules and criteria within which to conduct our economic relations with China. As with Russia, the aim must be to ensure that we do not lay ourselves open to pressure and blackmail. Unfortunately, I feel that we are at the moment tilting in the wrong direction. I refer in particular to the bending of the rules to enable Chinese banks to set up branches rather than subsidiaries in the City of London. We have offered Chinese nuclear power station suppliers the inducement of high, guaranteed returns. It is difficult to think of an industry more sensitive than the supply of nuclear power stations and it seems strange that we should particularly invite investment into that area by a state with the characteristics of the Chinese People’s Republic.
I conclude with some thoughts arising from Pfizer’s abortive approach to AstraZeneca. Over the years, Britain has derived great benefits from foreign direct investment—the auto industry being the classic example. However, we have also seen too many great and successful British companies disappear—including two with which I was once connected, BOC and Blue Circle—because the German and French companies that took them over wanted them for their long-term value whereas the shareholders were more interested in short-term gains. Both those companies were world leaders, they were not bailouts, and they were bought precisely because they were world leaders. Since then, I am afraid, with the rise of hedge funds, shareholders have become even more short-termist. Other factors unrelated to the underlying soundness and long-term interests of the target company and its employees, suppliers and customers have also arisen.
The Pfizer/AstraZeneca incident illustrates this very well. Whereas the companies that took over BOC and Blue Circle were driven by long-term industrial goals, Pfizer was, above all, driven by tax planning—or, should I rather say, by plans to minimise taxation. In these circumstances, the Government need to take a much broader view rather than simply letting the market decide. They must recognise that the interests of shareholders who trade shares are not, and cannot be, coterminous with the interests of the target company’s employees, suppliers, customers, research programmes and all the rest of it. The long-term national interest needs to be taken into account in a very important way.
The Government should also recognise that, given shareholder pressure on managements, and the fact that this year’s predator can very well be next year’s victim, no assurances, however well meant, about future employment and research can be binding for more than a very short time. I must say that the way in which government Ministers appeared to react to the assurances that Pfizer was making showed a certain unawareness of contemporary industrial realities. As a representative of the Government, will the Minister look again at the public interest test in relation to takeovers of all kinds, with a view to strengthening it as necessary?
Baroness Drake (Lab)
My Lords, employment is up, the growth rate is up but, still, too many ordinary people are not getting fair access to the benefits. Regional imbalances have increased, household debt is rising and income uncertainty abounds. The real- life experience for too many is declining labour productivity, increasing casualisation, growing low-wage self-employment, zero-hours contracts, part-time working and low pay.
Self-employment accounts for 44% of all employment growth since 2010. Between March 2013 and March 2014, the number of employees increased by 351,000 and the number of self-employed by 375,000. Of the active workforce, 15% is self-employed, twice as much as in the US. The Resolution Foundation concluded that self-employment growth is not correlated with strengthening labour markets—rather, the link is between self-employment growth, a falling number of employee jobs and rising unemployment at the regional level. London has experienced the lowest proportionate growth in self-employment, while the highest has been in the north-east and the West Midlands, where unemployment is highest. In January, there were some 2.7 million zero-hours contracts, of which 1.4 million provided work to people and 1.3 million did not. The problems go beyond the exclusivity clauses that are the focus of the Government’s consultation, to low pay and changes without adequate warning. ACAS chief executive Anne Sharp said about zero-hours contracts that,
“we know from calls to the Acas Helpline that … Employee callers in particular identified strong concerns about their terms being changed at short notice”.
Insecure employment brings insecurity of income, no pension savings, restricted access to the national insurance system and difficulties with mortgages, tenancies, personal credit and debt. The Resolution Foundation found that 15% of self-employed people were prevented from accessing credit or loans because of their status and one in five were prevented from getting a mortgage—difficulties echoed in the Bank of England’s NMG survey. The Council of Mortgage Lenders stated that it is,
“difficult to determine how lenders will be able to continue to lend”,
to self-employed borrowers.
The employment rights of those on casualised contracts can be ambiguous. Do they have continuity of employment? Should they be paid for being on standby? Are they employees, or workers with no rights to notice periods or protection against unfair dismissal and so on? The single-tier pension will improve the position of the self-employed but not of those in mini-jobs. Auto-enrolment will widen the gap in private pensions between the self-employed and employees.
There is a need for a far greater focus on how public policy on welfare, pensions, employment protection, the minimum wage and access to finance is responding to these fundamental labour market changes. There are still too many British businesses operating on the basis of low wages and low productivity, whose wage bills are subsidised by the taxpayer through the benefits system. People want economic growth but most of all they want a vision that makes them feel hopeful about their family’s future and their employment.
The Government introduced fees for access to unemployment tribunals. In the debate in this House on 8 July 2013, the noble Lord, Lord McNally, said:
“It is important that noble Lords understand that introducing fees into these tribunals is not an attempt to deter individuals from bringing claims … we do not believe the provisions of this order will do so”.—[Official Report, 8/7/13; col. 74.]
It took just six months for the Government to be proved wrong. The number of claims received in employment tribunals between October and December 2013 was 79% fewer than in the same period in 2012. This massive drop will have contained many meritorious claims and bad employers will witness that workers have been deterred from claiming.
When the Chancellor announced that people could access their defined contribution pension savings as they saw fit, it was met with acclamation in the media, not least because savers were not getting a fair deal on annuities. As the Treasury has not published an analysis of the impact of these reforms, there are many unanswered questions. The Government are simultaneously introducing freedom for people to withdraw their savings as they see fit while promoting the principle of pooled risk through collective DC schemes, where workers’ savings are pooled with those of others and accessing savings will be subject to rules and restrictions. Is it not possible that the individual freedoms in the former reforms will undermine building the collective schemes?
The tripartite relationship in private pension provision between the Government, the worker and the employer appears subtly to be changing. Historically—and integral to the original auto-enrolment reforms—the deal was that workers saved and the employer contributed, supported by state tax and national insurance relief, because pensions delivered an income stream for the pensioner that benefited the pensioner and society. If we are now building a national savings scheme rather than a pension scheme—and we hear calls to go even further, such as integrating ISAs and pensions—successive Chancellors will take a very different approach not simply to the distribution of relief but to the principle of tax incentives, and employers will feel increasingly remote from any tripartite responsibility to pensioners. Yet for many millions, who are the future generations of pensioners, choice is important but the biggest—and huge—challenge remains building up a pot of pension saving in the first instance.
The consensus now seems less clear. Giving greater choice to pension savers has been applauded but has protecting ordinary savers been sufficiently addressed? People need to know that they can trust the industry and those looking after their money. People will now have a combination of choices: take the cash and pay the tax; stay invested; draw down income; or buy an annuity. The gracious Speech says:
“My Government’s pension reforms will also allow for innovation in the private pensions market”—
the same dysfunctional market that delivered poor-value annuities, hidden charges, complexities and conflicts of interest. What will be the nature and quality of the new products? Will they be subject to the new quality standards and transparency requirements? Will people understand what they are buying? Will there be new presentations of the pensions liberation abuse? Unrestricted choice may change the potential for savers to make better decisions about their retirement lump sum but it also increases the potential to make worse decisions.
The Government intend achieving engagement with the saver by providing everyone accessing their savings with free, impartial, face-to-face guaranteed guidance, but we have yet to see how realistic that is and to understand what is proposed. We do not have a definition of what the guidance will be, the detail of the requirements, who will receive it—whether it will be everyone aged over 55 or 65—who will deliver it, how it will be paid for and the extent of provider involvement, but a delivery system must be built in time for the April 2015 changes.
My further concern is that many people with modest pension pots cannot afford regulated financial advice. I hope that, in trying to engage consumers, the Government will not push thousands of ordinary people into inappropriate, expensive advice, so depleting their modest pension savings.
Lord Holmes of Richmond (Con)
My Lords:
“And this our life, exempt from public haunt,
Finds tongues in trees, books in the running brooks,
Sermons in stones, and good in every thing”.
That perhaps gives a somewhat overstated sense of the pastoral idyll, but may give some glimpse of what retirement can be. And yet, how little and how often do any of us think about our pensions—how much, when and in what product to save—in our 50s, never mind in our teens and 20s?
I must confess at this stage that before joining your Lordships’ House not only was I a lawyer, I was a pensions lawyer. I understand people’s problems with pensions: they are complicated, they make your head hurt a lot. Generally, there is a cycle of disinterest, boredom, trying to grapple with it, confusion, disappointment and panic—and then you go round the track again. But it matters. It matters now and it has always mattered—particularly, as has been mentioned, as we enter what could certainly be seen as a post-defined benefits world.
Before turning to the measures in the gracious Speech, I should like to say how much I am looking forward to the maiden speech of my noble friend Lord Bamford. As a six year-old, coming from the Midlands, I was lucky enough to drive one of those iconic diggers and not crash it. The memory will certainly stay with me for the rest of my life. What a fantastic brand that is: what a fantastic British success story built by my noble friend and his father before him.
The gracious Speech contained two Bills concerning pensions: two opportunities to create increased focus, involvement and potential engagement with the whole issue of pensions. To take the pensions tax Bill first, it is about liberation, not Lamborghinis—other makes of sports car are also available on the market. I do not believe that it is about whether somebody takes all of their pension in one slug; it is more about whether people will understand the tax implications of their actions, because this is not a free hit. If someone goes above the 25% tax-free lump sum, the additional income will be taxed at the marginal rate. For many people, that may well not be in any sense the most efficient way to access their pension pot. A year by year, drip-drip release may well be better. Some form of annuity product may well be the best bet for an individual. I certainly think that the much talked of death of the annuity has been dramatically overstated to date.
Now to the advice. It is likely to be generic, with 300,000 people a year potentially requiring it. I believe we will need to do more than that. Pre-2014, the majority of people indulging in significant drawdown at retirement would have had more significant pension pots and taken bespoke, paid-for advice. Alongside that generic advice, no matter how good it will be, we should consider an obligation on providers to at least try to gain some assurance from the member that they understand the tax implications of the decision that they may be proposing to take. What plans do the Government have to consider such an obligation on the provider in that respect?
I turn to the second Bill, the private pensions Bill. Much has already been said on CDCs. I will not go into that issue in detail, as others will no doubt unpack it later in the debate. The key there will really be about scale and levels of interest, both of which are largely unknown at the moment. However, it is the beginning of the process and is a useful vehicle to provoke and further open the debate about kinds of provision and types of scheme, and about whether there is the potential to drive efficiencies and secure better returns for scheme members. On that point, all we can say at the moment is that collective DC schemes may do that.
All the issues within the Queen’s Speech are to be analysed in incredible amounts of detail—which is why pensions hurt our heads so much. There is a lot more to be laid out but it is opening up the debate. That has to be a good thing for such an important aspect of what it is to live in a western liberal democracy and have a level of retirement that enables people to live for years with some sense of comfort and dignity, once their working life has come to an end.
This is a post-defined benefit era, but I would like to look at the provisions in the private pensions Bill concerning defined benefits and the proposal to ban transfers out of private-funded and unfunded public sector defined-benefit schemes. On the face of it, this seems a sound move, but is it coherent or consistent to have a ban on DB transfers out at the same time as we are liberalising the market for DCs? Nobody wants to see a mis-selling scandal or anything of that nature and people may well determine, in conclusion, that their DB benefits are better. They may decide to stay with the DB pension promise. But should we ban those transfers as a matter of law? Consider, for example, someone who may have built up a tiny DB provision and a number of DC schemes but who wants to consolidate all their pension provision into one block. That surely makes sense, so what plans do the Government have to consider how that will be taken account of in their current plans?
In short, anything which provokes more discussion in the pensions arena has to be a good thing. In the words of Robert Frost:
“The afternoon knows what the morning never suspected”.
In terms of pensions, perhaps some pre-lunch if not breakfast conversations around the whole issue would be gratefully received across the country from the earliest possible age at which someone enters the labour market—because pensions matter, and grey matters.
Lord Liddle (Lab)
My Lords, I cannot possibly match the knowledge of the noble Lord, Lord Holmes of Richmond, on the subject of pensions, nor that of my noble friend Lady Drake in her wonderful speech. I would like to talk about what I see as the central problem in the Queen’s Speech and the Government’s policy, which is a woeful inadequacy in addressing what I think is the central challenge facing Britain: how our nation earns a living in this harshly competitive global age. Unless you answer that question there can be no decent jobs, no fairness at work and no opportunity for the many.
The gracious Speech had a few glancing nods in this direction—we are promised a small business and enterprise Bill, and we wait with interest to see what it contains—but to my mind it is a disparate group of nods on the competitiveness agenda: a deregulation target here, an infrastructure initiative there and a bit of licence for fracking as long as it is not in too many people’s back gardens in Sussex. What is lacking in the Speech and in the coalition’s policy is a comprehensive agenda for partnership between Government and business, a partnership that would address the major problems of stagnant productivity and the quite terrible balance of payments deficit that the nation now faces, that would pursue the rebalancing of our economy, which was promised in 2010 but on which we have yet to see any significant result, and that would build a new progressive capitalism that tackled the fundamental flaws in our economic model that were exposed in the 2008 crisis.
I believe that the coalition had a huge opportunity to build such a partnership in 2010. It could have done more to develop the agenda of industrial activism that, in a lowly capacity, I worked with my noble friend Lord Mandelson to develop. The coalition could have taken advantage of the widespread consensus in business that fundamental reform of our economic model was necessary, not least to rebuild public confidence and trust in business itself. The speech of the noble Lord, Lord Tugendhat, was an example of how we need to think again about many of the assumptions that we have taken for granted in the past three decades.
Yet despite the best efforts of the Business Secretary, the Chancellor never seems to have been very serious about this bigger agenda. Yes, he made some speeches, but essentially Mr Osborne took a bet on a “business as usual” recovery, created by a quite unprecedented monetary stimulus and supported by a fiscal deficit that remains unsustainably high. What we are seeing is a lifting of the economic boats that have run aground on a rising tide of mortgage, household and public debt, and that will not go on. I remember that Mr Osborne used to make great fun of Gordon Brown’s hubristic boast that he had abolished boom and bust; my fear is that the coalition is creating the conditions for a return of boom and bust on an epic scale, which will once again weaken the productive base of our economy.
I hope that on this side of the House we can develop this kind of critique of the coalition in the coming year. In my view, Labour now has a great opportunity to restore its reputation as the party of business. Part of that is because of politics. In the recent elections UKIP did well, but not so well as all that; it may have reached its ceiling in Newark, and I suspect that it may be downhill all the way for UKIP now. However, the impact of UKIP will be to push the Conservative Party in a UKIP direction, both on immigration and on Europe. On both of these issues, that is contrary to the vital interests of both business and our nation.
With business and the Conservatives drifting apart, Labour has now to show that it has credible policies to back up the call for a more responsible capitalism that Ed Miliband made in 2011. I emphasise the word “capitalism” there. We need flesh on the bones of how we are going to reform corporate governance. What are going to be the new rules for mergers and takeovers? How are we going to get greater transparency in the way our savings are managed, less extravagant fees extracted and more responsibilities of ownership exercised? How are we going to rethink our financial system, because there is a real problem of finance for growing companies when banks struggle to satisfy capital adequacy requirements and to meet prudential limits on their operations? Labour has got to have answers to these questions and put them forward.
We have also got to build on the many positive initiatives that the coalition has taken, such as the Catapult centres, which actually come from the Mandelson era, to help research discoveries turn into marketable products and services. I also believe that the expansion of higher-level apprenticeships should enable us to create a non-conventional ladder of opportunity to technician status and university degrees. Labour has to demonstrate how it can break the terrible confusion and deadlock at present holding back essential infra- structure investment.
So there is a golden opportunity to build a partnership with business, but Labour has to show that it understands the world in which business leaders operate, how their survival depends on making a profit, where often the bulk of those profits are not made in Britain, and where the world is awash with alternative investment opportunities to investing here. Of course, business cannot escape criticism where its actions are contrary to the public interest, and it is right that it should be so criticised, but Governments cannot force private businesses to invest. They can only create the framework conditions in which business can respond.
I see this as a great opportunity, a great moment. All my political life, I have believed in a Britain that works together, in a party of the centre left that reaches beyond the confines—now outdated, I think—of class in order to work with business and construct a social and industrial partnership for the good of the whole country. That sense of urgency and partnership is totally absent from the coalition’s policies, and it is the ground on which I dearly hope Labour will stand in the 2015 election and beyond.
Baroness Parminter (LD)
My Lords, as someone who has campaigned on the issue of plastic bags for many years, I strongly welcome the commitment in the gracious Speech to reduce their use. Discarded plastic bags are iconic symbols of waste, be they catching the wind in high streets or flapping in rural hedgerows. However, the issue is bigger than just the visible litter on our streets and in our countryside; it is about the dangers that plastic bags pose to our wildlife—if they are discarded on the beach and into the sea they can choke or poison fish, animals and birds—and about the contribution that they make to our carbon emissions. Their creation and transportation consumes non-renewable resources, including oil, and their disposal contributes to our greenhouse gas emissions, taking 500 to 1,000 years to degrade.
As the Minister reminded us in his opening remarks, supermarkets in England gave out 7 billion single-use carrier bags in 2012 alone, and that figure has been rising here year on year, but not elsewhere in the United Kingdom. In the Republic of Ireland, plastic bag use fell by 90% following the introduction of a plastic bag charge in 2002. An equally dramatic drop in usage of 76% came after Wales introduced a charge for single-use plastic bags in 2011, and a charge of 5p in Northern Ireland introduced last year resulted in £1 million going to local environmental projects.
The coalition Government are therefore to be applauded that next year a 5p charge on single-use plastic carrier bags will be introduced in England. Given that Scotland is bringing in a minimum 5p charge this October, shoppers will have an incentive not to use plastic bags wherever they shop in our—we hope—still United Kingdom.
There have been mutterings about this initiative outlined in the gracious Speech. At a time of tight budgets, should we really be asking people to pay more when they go shopping? If shoppers take their own bags, however, they do not have to pay—and they are already paying in their council tax the huge hidden costs of disposing of these bags in household waste. That is not even counting the cost of cleaning up littered carrier bags on our beaches, which Keep Britain Tidy estimates costs us taxpayers in England around £10 million every year.
What is really good news is that our Government’s plans to charge 5p for our carrier bags will result in vital funds going to local good causes. The proceeds of this charge will stay with the organisations that collect them and not come back to the Treasury. To that end, I make a plea today to fellow Peers who sit on the boards of supermarkets, or who have influence within them, to challenge them to think now about how they can donate the profits of these schemes to local good causes.
Politics and legislation are sometimes about big-picture, sweeping changes which revolutionise our country, like the same-sex marriage Act. However, politics is also about changing everyday life in small ways that actually make a big difference. I firmly believe that a charge on plastic bags has the potential to make all of us think a bit more about our impact on the planet, raising the national consciousness about the role that each of us can and must play if we are to tackle collectively the problems of a wasteful society and respond to the challenges of climate change.
Baroness Wilcox (Con)
My Lords, following the gracious Speech, it is a privilege for me to take part in the debate today. I am delighted to start by congratulating our Government on the measures they have taken to bring our economy firmly back on course, and delighted to have heard those measures so well outlined by the Minister, my noble friend Lord Livingston.
We now know that education, training, business and the industries and services of the future are what will provide the wealth that is so necessary for the safety, social provision and happiness of our people. It was therefore a disappointment to me that our space industry was not mentioned at all in the gracious Speech. I shall take this opportunity to encourage the Government to press forward with their work of identifying space as one of Britain’s great eight technologies.
Those eight great technologies are—as I am sure your Lordships know, but I will name them—big data, synthetic biology, regenerative medicine, agriscience, advanced materials, energy and space. By supporting the British capacity for brilliance and invention, and by encouraging our vibrant small businesses to develop their ideas much further and drive into this new sector, in which we are already enjoying great success, there will be a great opportunity for our country. Our space industries already support 95,000 full-time jobs and generate over £9 billion for the economy each and every year. The Government are planning to achieve a £40-billion UK space industry by 2030, a coherent approach to protecting the UK’s space assets and—I must add, because it is an area in which I am very interested—to look carefully at protecting our intellectual property, our field of gold.
The outlook for the UK space industry is extremely positive for us, a fact which cannot be better illustrated than by the recent achievements of two UK companies: Astrium and Surrey Satellite Technology Ltd. Astrium was selected by the European Space Agency as the prime contactor for the Solar Orbiter mission in its close-up observations of the sun. Astrium UK will lead the European companies making the spacecraft parts; it is one of the largest ever contracts between ESA and a UK company. Surrey Satellite Technology Ltd, with OHB System, will work on the construction of eight navigation payloads for the European Galileo programme. Those two companies will co-operate to build the 14 satellites under the supervision of the ESA.
Britain is surely open for business. Space is a global market, international collaboration is the norm, and we must encourage inward investment, creating jobs and opportunities for the wider UK supply chain. Here lies excitement and adventure for our next generation of apprentices and graduates, to fire their imaginations, to lead them to wonder and dream, to work, think and discover. I am with the Royal Society of Chemistry, which urged that we must have qualified science subject leaders in our schools, particularly for the young.
We all have and need our heroes. We are remembering those of D-day even now. Andy Green is preparing to drive the Bloodhound, a jet- and rocket-powered car designed to travel at 1,000 miles per hour, which his team hope to do in South Africa in 2016. I have promised my seven year-old grandson, who is a supporter of that great venture, that he and I will go there to see it happen. It is time for people like Tim Peake, who will be the first British ESA astronaut on a mission to the international space station in November 2015. I am with David Willetts, the Minister for Universities and Science, in encouraging businesses and schools to follow these space heroes and to find other heroes where they can.
In recent times we have so often heard that British industry is in trouble, that it is finished, that we do not make anything any more and there is nothing for us to do. Here in this short speech, however, are new horizons. We should embrace them and rebuild our confidence as manufacturers again, reaching for the skies.
Lord Northbourne (CB)
My Lords, I will speak briefly this afternoon about one very important aspect of employment: employability. Today too many of the nation’s young people are failing to develop, as they grow up, the social skills they will need. Those are the soft skills—self-confidence, social and interpersonal communication skills and character capabilities—which in today’s labour market are very important indeed. That the Government are proposing a new law to make emotional abuse of children a punishable offence is symptomatic of the problem which our society is experiencing as regards children growing up in the family.
I have a letter from Sir Michael Wilshaw, head of Ofsted, in which he says that it is almost impossible to overstate the importance of a child’s early years in setting the pattern of their education, achievement and success in later life. Of course, who looks after those children in their early years? In most cases it is their parents. So many of those parents who are emotionally damaging their child today are, unfortunately, themselves emotionally damaged; often they have been overwhelmed by drug or alcohol addiction, domestic violence or other emotional challenges, or by poverty or lack of hope. Many have themselves been abused as children, which is a major problem.
I suggest to the Government that another, perhaps more effective way of protecting children from emotional abuse might be to prepare their parents better, while they are still teenagers in school, for the parental responsibilities which may lie ahead of them. There is much evidence that, as they grow up, young people and teenagers are very keen to learn about what adult life means. That is the moment when we have to take advantage, to help them. Should we not be doing more to help those future parents during their teenage years in school to develop the self-confidence, the social and emotional skills and the character they will need as they grow up into adulthood, both in the workplace and as they become parents? Incidentally, those skills are essential for social mobility.
In many of the best secondary schools today these soft skills are being learnt through a wide variety of extracurricular activities such as team games, music and drama, adventure journeys, challenges such as the Duke of Edinburgh’s Award scheme, appropriate involvement in school discipline, debates, visits and guided reading. The best schools are doing these things already but too many schools are not, and the role of schools in preparing their pupils for the challenges of adult life is not clearly set down in law. Today secondary schools are required by law only to teach the national curriculum, which involves a small core of academic subjects, and to promote the spiritual, moral, social and cultural development of pupils. Noble Lords will notice there is no mention of building pupils’ self-confidence, developing personal and social skills, or character development, yet these soft skills are the qualities and capabilities which are so important today, in the workplace and in raising a family.
Many recent statements by the Government suggest that they are interested only in raising academic standards to the same level as, or to be superior to, those in Hong Kong, Tokyo or wherever it may be. Surely education is about more than that. I accept that the Government’s early years programme is a good start, but it kicks in only when the baby is born, which is far too late to build the social and emotional skills of the parents. For genuine change to happen, the Government will have to make it absolutely clear to all secondary schools that they are responsible for developing the self-confidence and the social and emotional skills of their pupils. I recognise that this would cost money.
The Centre for Social Justice—I do not know how it did it—quite recently brought out a very carefully calculated figure to show that the cost today of family breakdown to the taxpayer is £46 billion a year, which is more than the defence budget. I cannot guarantee this; I have not seen how it was worked out, but it is a figure that has been widely accepted. A very small percentage of that reinvested in schools could make a great difference.
Ofsted should have to factor the dimension of emotional and social development into its inspection reports when it inspects schools.
Lord Bamford (Con) (Maiden)
My Lords, I am an engineer and a manufacturer—a manufacturer of construction and agricultural machinery. I have spent my whole life making things—things that enable other people to make still more things. On this occasion, I am happy to be making a speech, my maiden speech to your Lordships’ House. I am happy for many reasons, not least because it gives me an opportunity to thank publicly my sponsors, the noble Lord, Lord Lloyd-Webber, of Sydmonton, and the noble Lord, Lord Tebbit, of Chingford, for their support, advice and friendship during my introduction to this House. They deserve all our thanks for their contribution to the national fabric, to British industry, to British culture, to British business, to British exports and to British life. They are an example to us all. To my great and noble friend Lord Shrewsbury and Waterford I extend my heartfelt thanks, not just for our lifelong friendship, but for his wise counsel as I enter this noble House. Indeed, I am looking forward very much to contributing to the work of this great House on behalf of the country whose success and well-being matter so profoundly to me.
Membership of this House is an extraordinary opportunity and a great privilege. My sense of gratitude is equalled only by my sense of responsibility. It reminds me of how I felt when, nearly 40 years ago, I had the good fortune to take over the reins of the company, JCB, to which I owe my presence here today, and so much else. That was in 1975. I was 30 years old and, as it happens, so, too, was JCB. It was founded on the day that I was born, in 1945, just after the war, by an engineer and inventor of genius—my father—in a 12 foot by 15 foot garage, in Uttoxeter, Staffordshire. The Bamfords were blacksmiths in Uttoxeter in the 1820s; two centuries on, we are still there, only we do not shoe horses any more. We make diggers—lots of diggers.
Britain has changed since 1975. It has changed for the better in countless ways. It is a freer, happier and more prosperous country. However, some changes sadden me, and would indeed sadden and disturb any lifelong manufacturer. In 1975, manufacturing represented over 27% of our GDP; today, it represents just 11%. In 1975, manufacturing employed over 7 million people, more than 30% of the total workforce; today, it employs 2.5 million, less than 8%. In 1975, manufacturing contributed to a healthy balance of payments; sadly, this has been in deficit since 1984. These are concerning numbers for those of us who want a strong, vibrant, stable and balanced economy.
But I believe that there is much to celebrate about UK manufacturing. Britain has many world-class manufacturers, making innovative, high-quality and high value-added products. We have companies, in other words, that make products that the world wants to buy—small, specialist and world-class businesses, as well as much larger industry leaders, such as Rolls-Royce, GKN, BAE, Jaguar Land Rover and, yes, JCB, which exports 80% of its UK-manufactured products. So manufacturing still matters to the British economy. In fact, it matters a great deal. Financial services account for just 12% of UK exports; the figure for manufacturing is 46%. So manufacturing is neither dead nor dying. On the contrary, it is showing every sign of life, with clear potential in value-added industries.
I applaud the fact that manufacturing and engineering are back in favour with Ministers. I would simply emphasise that the support needs to be far-reaching and substantial. The Government are right to set their sights high; they are right to seek to double exports to £1 trillion by 2020. We must reverse the trade deficit that we have been carrying for over 30 years, but we will not get there without manufacturing or without a coherent, long-term industrial strategy.
The year 1945 was not just the year of my birth and that of JCB. It was also the year of Germany’s rebirth. Today, Germany is the world’s largest net exporter—not China, as you might expect. Is it any wonder that Germany has enjoyed a healthy balance of payments for many years? How did they do it? They did it in part by having a coherent, long-term industrial strategy and by focusing on high value-added products. They did it by spending more on R&D than we do—70% more. And they did it by backing their exporters. Over the past 10 years, Germany’s export credit agency backed 10 times as much export business as ours did. Germany did it by supporting family businesses under its Mittelstand model. We should do likewise in Britain, where family businesses provide more than 9 million jobs—far more than public companies.
Finally, and crucially, Germany did it by showing a real commitment to technical education. Technical education is a subject especially dear to my heart. I believe that we have a duty to identify and nurture young talent. That is why, in 2010, we opened the JCB Academy in Staffordshire. The academy is now giving 500 14 to 19 year-olds a hands-on technical education: 40% of their curriculum is devoted to engineering. They spend half the day in overalls working with state-of-the-art equipment, not just for the benefit of JCB but for British industry as a whole. Many of our leavers are now choosing higher apprenticeships as a sensible and practical alternative to university. We are creating real opportunities in industry for our young people. In recent years there has been much progress in the field of technical education. We need, however, to do more—much, much more.
I started my career as an engineering apprentice at Massey Ferguson in France. It was then that it first hit me that behind every product there is an army of talented creators, makers and engineers. Somebody somewhere designed, engineered and made these red Benches on which we sit, the lights by which we see each other, the microphones which help us to hear each other and the telephones in our pockets which keep us in touch with each other. We need more such people. We need more people like my father—more inventors and makers. We need their brains, hands, knowledge, creativity, design and technical skills and, most importantly, we need them to know that they are valued by society as a whole.
As a young man at JCB I came to realise how deeply rewarding it is to turn an idea into something that you can touch, something with form and texture which works and does things, and to use the best of yourself—your energy, know-how and talent—to make things that shape the world in which we live and, yes, even to contribute to human progress. Fifty years on, I am as excited by the making of things as I was at the very beginning of my career. I end where I began. It has been, and continues to be, a real privilege to call myself an engineer and a manufacturer and to be heard in this House.
Lord Macdonald of Tradeston (Lab)
My Lords, it is my privilege to congratulate the noble Lord, Lord Bamford, on such an attractive and authoritative maiden speech. His mastery of business is evident in the outstanding global success of his family business, JCB, which I think is now the world’s third largest construction equipment manufacturer. His expert report, commissioned by the Prime Minister in 2012, argued persuasively for improvements in the Government’s engagement with business. One recommendation was for a better system of training and education for young people in technical fields, which I shall advocate today, although not so eloquently as the noble Lord. Like him, I was an engineering apprentice, so I particularly look forward to him championing the cause of manufacturing in future debates in your Lordships’ House.
The Queen’s Speech stated that the Government would increase the total number of apprenticeship places to 2 million by the end of this Parliament. Provisional figures show that under the coalition there has already been a total of 1.7 million apprenticeship starts in the past four years. However, with the annual number of starts now running at half a million a year, getting from 1.7 million to the target of 2 million in the next year should not be too challenging.
That said, I welcome the cross-party consensus we now have on the need to improve vocational training and revive apprenticeships. From the 1970s, under successive Governments, traditional craft apprenticeships collapsed. When New Labour took office in 1997, the number of apprenticeship starts had fallen to only 65,000 a year. Although priority was given to boosting student numbers, the Labour Government also worked to improve vocational training including apprenticeships. By the time Labour left office in 2010, new starts had risen from 65,000 to 280,000 a year. However, the unsatisfied demand for vocational training was highlighted in a recent debate in your Lordships’ House. My noble friend Lord Layard said that in 2012-13 some 800,000 young people between 16 and 18 registered as applicants for apprenticeships and only one in seven was successful. Surely priority should be given to putting school-leavers into jobs, especially into apprenticeships.
The concern is that the coalition has for the past four years markedly increased apprenticeships but for the over-25s, in part perhaps to boost annual totals. The Local Government Association worries that more than 80% of the recent increases in apprenticeships has been in sectors generally associated with low skills while starts in key engineering sectors remain low. Indeed, the Institution of Mechanical Engineers said in response to the gracious Speech that hitting the 2 million target was not enough when the UK needs to double its intake of engineering apprentices to keep pace with demand.
There is real concern, too, about skills in the construction sector. Recently, a group of cross-party parliamentarians published some alarming figures in their report, No More Lost Generations: Creating Construction Jobs for Young People. The report said that this £100 billion industry would create 180,000 extra jobs and need to hire 400,000 building workers to replace those retiring over the next four years. By contrast, the number of completed apprenticeships in construction last year was 7,000. That was half the number of the year before. Can the Minister tell us if construction training will get the urgent attention it clearly needs in the last year of the coalition Government?
There is also concern about the estimated 30% of apprentices who are not paid the minimum wage to which they are entitled. The welcome news is the legislation promised in the gracious Speech to impose higher penalties on employers who fail to pay staff the minimum wage.
Since 90% of employers do not train any apprentices, popularising apprenticeships with employers is surely our biggest challenge. The Labour Party has an independent skills task force whose reports reinforce the view that employer groups must take more control over how public funding for apprenticeships is deployed and how skills standards are set. Another key taskforce recommendation is to increase further the number of higher apprenticeships with progression to degree-level status—a policy that also deserves to be embraced in cross-party consensus.
The fact that almost 50% of young people are now in higher education generally is to the credit of successive UK Governments. A challenge for schools, though, is, through better career advice and curricular reform, to make the study of science, technology, engineering and mathematics—the STEM subjects—more attractive to more pupils. However, it should also be emphasised that the UK benefits greatly from the more popular subjects in the arts and humanities, which attract the talent driving the growth of our world-class creative industries. These are expanding at an encouraging rate and offer exciting career prospects. Despite that, the number of apprenticeships in arts and culture jobs seems strangely stunted. If I read the figures correctly, only 1,000 of that total of 500,000 apprenticeship starts per year are in the arts and culture subset of the creative industries. Does the Minister agree that employers in the creative sectors should, as a priority, create more apprenticeships, so that those from less privileged backgrounds can better compete with well connected graduates and those able to work on unpaid internships while also opening up entry to a range of craft roles?
Finally, it is surely regrettable that half the UK’s large companies do not offer apprenticeships. We can no doubt change that if we sustain the cross-party consensus and support for vocational training. We should also look again at the proposal that the Government use the leverage of their billions of pounds spent in public procurement of goods and services to boost apprenticeship opportunities by requiring companies bidding for larger contracts to offer apprenticeships. Regulators could also be asked to assess what scope there is to add apprenticeship training to the contractual obligations of their large companies. Does the Minister agree that that approach deserves further consideration as parties prepare their manifestos for next year’s general election?
Baroness Greengross (CB)
My Lords, as chair of the all-party group on responsible business practice, I look forward to being involved in legislation related to business and enterprise. However, today I will confine my remarks to the two Bills related to pensions. I welcome any changes designed to improve the circumstances of people in later life. However, I am not sure that these two Bills will achieve exactly what the Government want, as they are rather contradictory in their aspirations: one seeks to bring flexibility, the other certainty. It can be very difficult to provide both.
The pensions tax Bill will let older people with defined contribution pensions withdraw their savings and spend them as they wish. No one will be required to buy an annuity. We all hope that any funds so withdrawn will not be included in the means test for publicly funded care provision. Can the Minister clarify the position regarding the non-inclusion of any cash withdrawn in the care fees means test?
The private pensions Bill will encourage people into new defined ambition group schemes, where members’ contributions are pooled and, rather than any form of annuitisation, the pension will be paid as income from the collective fund. These schemes are still a long way from the defined benefit guaranteed gold standard, as the payout on retirement remains uncertain. Critics complain of a loss of control for the individual investor. Others have warned that with DA schemes the benefits of scale are rather exaggerated. What is certain is that there are no guarantees—not even the certainty of a fixed income you get with an annuity.
How does such a scheme decide how much pension to pay each member? It would be obliged to maintain records of each individual entitlement, just as it would for conventional DC schemes. I hope the Government will be able to tell us where they anticipate any DA scheme operational savings will be made. Also, how do the Government propose to ensure take-up of the DA schemes, given the support for DC schemes implicit in auto-enrolment? DA relies on scale, but achieving scale may be challenging, given that DC schemes are now the main vehicle for the occupational pensions market. Who will provide the DA schemes? Perhaps we can also learn about that from the Government.
Bearing in mind the low level of financial capability in the UK, many commentators might argue that, for individuals to benefit from these new freedoms and minimise their exposure to risk, the degree of advice surrounding DA and DC schemes and pension fund transactions may need to be very extensive. If the Government agree, do they have any proposals as to who will provide and pay for such provision?
On this contradictory point, and underpinning the major emphasis on DC schemes, under the pensions tax Bill the Government want pension savers to have unrestricted access to the money in their DC schemes. This could not work with defined ambition pooled funds because no set sum of money is assigned to each member, who has no personal pot. Can the Minister clarify remarks attributed to the Government which imply that significant cash sums can indeed be withdrawn from DA schemes?
Finally, there is no mention of the coherence of DA schemes with care fees funding, which is very important, and the absence of a personal pot could make such compatibility difficult to achieve. How are the Government going to achieve that compatibility? I hope that the Minister can enlighten us.
Baroness Hollis of Heigham (Lab)
My Lords, the Queen’s Speech promises Bills on pensions and on zero-hours contracts, or ZHCs. With regard to pensions, I favour a lifetime savings account, combining ISAs and pensions. Many people want and need some limited early access to their savings—a 25% slice perhaps, equivalent to the tax-free lump sum—for divorce, disability or debt. However, in my view, allowing full access at 55 is not about pensions but about easy wins for HMT. Why? As the noble Lord, Lord Holmes, said, proceeds are taxed as income. The standard rate taxpayer with an annuitised £100,000 pot may pay no tax in retirement, but cashing it in he donates £30,000 to HMT. That is justified as the right to do what you want with your own money—making a donation to the Treasury.
Yet we have just abolished the identical right of someone who deferred their state pension for two years to take it as a lump sum of £14,000. Now, they can take it only as an annuitised addition to their state pension, and that was justified because people could not be trusted with their own money. What is the real reason? HMT has paid out that £14,000 lump sum up front but it no longer has to.
With a private pension, you are trusted and HMT gets the extra income tax; with a state pension, you are not trusted and HMT keeps the extra money following the abolition of the up-front lump sum. I suggest that that has nothing to do with pensions policy but everything to do with short-term and, in my view, cynical gains for HMT.
More generally, however, the Queen’s Speech poses wider questions of how we harmonise a flexible labour market with an inflexible social security system. The daughter of a good friend works for McDonald’s. She does not know until the previous Friday what her hours on Monday may be. She cannot plan her life, budget or study, and she cannot in practice take a second job. She cannot rent a flat as she has no reliable income and she cannot plan childcare. She is on a zero-hours contract. A call centre worker told Unite that she has worked for a multinational firm for five years. Her hours range from 48 to 0. She worries,
“whether I will be able to pay the rent and put food on the table”.
She is paid nothing while she waits for the phone to ring. She is on a ZHC. A cinema attendant works 30 hours one week, 10 the next. She, too, is on a ZHC.
In a 24/7 economy, we need people working non-standard hours: shift work, agency jobs and part-time jobs. The flexibility suits both employer and employee. However, what are new and too often exploitative are zero-hours contracts—those ZHCs that guarantee no hours and no income. As my noble friend Lady Drake said, the ONS calculates that 1.4 million or even 2 million workers in cleaning, retail, fast food, hotel work, domiciliary care, construction, call centres and customer service are on ZHCs, often at or around the minimum wage. More than half earn less than £500 a month—below the NI level—with no right to a state pension, or their employer avoids paying his NI. These are not entry-level jobs—two-thirds of the people who hold them are over 25—and they do not lead to better jobs. Half stay for two years or more and more than a quarter stay for five years or more. They are low skilled, low paid and dead end, and 75% find that their hours vary every week. Two-fifths of ZHC staff—40%—are not allowed to work for anyone else. They are on call and unpaid until required at perhaps one hour’s notice. Labour—that is, people; my friend’s daughter—is hoarded, not used or employed, so not paid. A sort of just-in-time stock control is applied not only to tinned tomatoes but to staff as well.
Inevitably, debt smooths their income. The Resolution Foundation reports that 870,000 households are spending more than half of their disposable budgets on debt repayment. Three and a half million are spending more than a quarter of theirs. When interest rates rise those numbers will soar. Social security is 15 years behind the new labour market. It assumes you are in work or not—either/or.
The lone parent on a ZHC who works for Boots, Cineworld, Sports Direct or Burger King may in a month work for 20 hours in her first week, 15 in her second, 10 in her third and 22 in the final week. In weeks one and four she will get working tax credit—WTC—to top up her wages; in the middle weeks, working for fewer than 16 hours, she may get JSA. Each week she has different earnings to report to HMT for her WTC and to DWP for her JSA. Benefits are, of course, paid in arrears, so the money does not come when she actually needs it. Each month she has different earnings to report to her council for her housing benefit and for her council tax reduction. Those take weeks to process and payments are made in arrears. Her rent arrears grow and her fear of eviction deepens.
It gets worse. If she works for one of the 40% of exclusive employers who tie her into working only for them, she may that week get six hours pay from him, but cannot work in any other job and cannot get JSA either as she does not meet work conditionality. What does she live on? More debt. She is carrying all the risks of the flexible labour market without a social security system able to help her and to underpin it. It is a nail-biting struggle that we should not ask of her. Understandably many lone parents prefer the security of a low but reliable benefit income to the snakes and ladders—mainly snakes—of ZHCs.
In a 24/7 economy we need a flexible labour market, but fluctuating demand, according to the Pickavance report, can be largely predicted. Why does Lloyds apparently need ZHCs but not Barclays? Why Boots but not Marks & Spencer? Why Sports Direct but not Halfords? Why Cineworld, I am told, but not Center Parcs? Why McDonald’s and Burger King but not Pret a Manger?
Leaving aside the need for occasional cover, or in arts or education, permanent ZHCs are lazy management at best and exploitative management at worst. How then can an inflexible social security system support this flexible labour market? To put it another way, how can we use social security to de-risk the dangers and difficulties of this just-in-time labour market to suppress its snakes and strengthen its ladders? UC which integrates in and out-of-work benefit could and should help. It has real-time information and is owned by just one department. But it will not de-risk this labour market as it should unless it changes its processes. Why not? UC pays a month in arrears. The Minister says that is to prepare people for the real world of work—steady, monthly paid jobs. I wish. Twenty-seven per cent of the jobs advertised in Jobcentre Plus offices are for ZHCs.
UC must, on request, therefore pay fortnightly, otherwise she will always be needing loans to smooth her income in the middle of the month. Currently, if she refuses a ZHC she may be leaned on but not officially sanctioned. Under UC, she will be sanctioned if she refuses. Yet a ZHC with unpredictable hours cannot allow her to sustain childcare arrangements as the child carer, in turn, cannot afford unreliable income either. It is like dominoes tumbling. No sanctions should happen.
UC pays HB to the tenant. It must, on request, be paid direct to the landlord, otherwise delays caused by constant changing of claims lead her to arrears and risk of eviction. Council tax reductions must be brought into UC to reduce parallel means testing.
UC is digital. Many in your Lordships’ House do not even want that to pay utilities. Her entire income will depend on her not making any mistakes in assessments which vary in almost every respect every week. Forty per cent of tenants affected by welfare reform have no access to the internet. How can she be sure she gets it right? I know I could not. There has to be parallel paper systems until the computer is secure and digital is inclusive. DWP has ditched the Social Fund. It must expand to offer budgetary loans for safer credit.
The flexible labour market is here to stay and we, as customers and consumers, want it. However, none of us wants a low pay, low skills, low productivity economy—and yet that is what ZHCs’ fluctuating hours and earnings offer and what social security finds so difficult to support. Unless we eradicate the abuses of ZHCs and reform the processes of UC, unless we read across and work across the shared landscape of BIS and DWP, we will still be making the call centre worker, the McDonald’s cook, the domiciliary care worker carry all the risks of both the flexible labour market and an inflexible benefits system so that we can enjoy their services. BIS and DWP have to get their act together. They are not doing so and your Lordships must help to ensure that they do.
Lord Patten (Con)
My Lords, sometimes the socially and economically desirable clash head on with the environmentally undesirable. Today’s debate links business and the environment, explicitly and implicitly, whose activities are intertwined with and crystallised by the effects of housebuilding or, for that matter, road and rail building. This is because such construction activity is, by definition, indelible; it is pretty irreversible in most cases. By comparison, some changes in the natural world as opposed to the built world are reversible—happily, as we now see, for example, in the population explosion of the otter, once thought 50 years ago in the United Kingdom to be heading straight for extinction. Once built, however, changes to urban and rural land are permanent. I can think of very few examples in which the clock has been turned back to some silvan or rural idyll, outside of the airfields of East Anglia where the nissen huts have vanished and the concrete airstrips have reverted to the ploughland of pre-World War II times.
One of the ways that more housing, more building, will be made more acceptable—this is a great political challenge for the age—and less prone to protest and thus delay, is if those concerned with the social need for more roofs over heads and the economic need for more growth contributed to by the building industry pause to reflect that these rightful ends make indelible marks on the landscape of our country—“No turning back”, to borrow a phrase. It is critical, therefore, that the irreversible is well designed, well landscaped and well lit in the interests of those who are to live there and of those who live nearby and perhaps have a new housing estate in their view. It should also, for example, inform the mind of a passing motorist, whose rapid glance produces a “Dearie me, look at those brick boxes—that blot on the landscape over there” reaction.
The reverse should be the case in order to promote a new consensus that new housing is needed just as much on some greenfield sites as on some brownfield sites. Good design is not a matter for limp-wristed aesthetes but a matter for political concern. It is practical politics, as we are going to find in the run-up to the next election. It is a vacuous cop-out by those who—like me, I have to admit—wish to see brownfield built on first, and greenfield sites only when necessary, to say that everything will be solved if only all new housing is on brownfield sites. We see this most tellingly when we look at the new building that surrounds us in the capital, which is going so slowly, in an area where brownfield or renewal and rebuilding are the only options. That is the case for London itself, but certainly not for the rest of the country.
Land is owned by central government—noble Lords will know the old refrain—and by the NHS and local government that is at least brownish-tinged and could be built on. There is a mass of sites that must be called brownfield in other forms of ownership. However, I have absolutely no idea, as there is an information blackout, of exactly how much brownfield land there is in this country. The debate on “brownfield building” would be so much better informed and so much more realistic if we had, à la William the Conqueror, a Domesday Book of brownfield land. I do not know whether that exists in some ministerial cupboard or other, but if the Minister responding to the debate—my noble friend Lord Freud—has any idea of the amount of such land, and whether there is a definitive map of it, might he kindly let your Lordships know? It would better inform our debates and, unless we have it, nimbyish arguments about there being no need to build on greenfield sites because there is so much brownfield land will continue to dominate the debate. That said, because of such arguments and the need to build more houses—which I of course recognise—I strongly support proposals in the new Infrastructure Bill contained in the gracious Speech to end the unfortunate delays caused by local authorities blocking progress on projects already granted planning permission.
However, the argument about building seems to be a competitive bidding war now between the major political parties. My own has made a pledge to have so many more houses built as soon as possible. The noble Baroness, Lady Sherlock, in her feisty speech, gave a clear commitment to see that 200,000 houses a year will be built by 2020 if there were a Liberal Government—
Lord Patten
A Labour Government. That was a deliberate mistake—you never know how these coalitions will be formed. As for their possible coalition partner, the noble Lord, Lord Stoneham of Droxford, did not give quite such a ringing endorsement of his leader’s new pledge yesterday that 300,000 houses would be built per year. What fun it will be in Liberal party meetings when they discuss the implications of, “Vote Liberal, vote concrete”. I am sure that shortly after that has sunk in, we will see our fun-filled Nigel Farage produce a pledge of probably 500,000 a year. We are all in this together.
The noble Lord, Lord Macdonald of Tradeston, who is not in the Chamber at the moment, called for a new consensus on getting more people into higher forms of apprenticeship. I agree with him entirely. Equally, I think that we all have to speak honestly and outwardly about the effects that new building can have and about our determination to have new-build houses and flats of a high quality. I am afraid to say that sometimes the quality is very poor. It is legendary in my area of the south-west. In a housing estate that has just sprung up quite close to me, one of the new house owners put a three-pin plug into a socket and nothing happened. She asked the builder, who came round to the freshly built and quite expensive house and said, “We seem to have forgotten to put any wires up to the socket” into which the plug went.
I also think that builders themselves sometimes pay scant attention, and local authorities even less, to high-quality design. It tends to be the rolling out, in this housing bonanza that we have, of four or five different sorts of houses, which they stick a porch on the front of—if it is in a half-timbered area, the porch is half-timbered; if it is in a stone area, it is built in stone; and if it is in a plaster area, it is covered in plastering—but we get the same low-quality, very often cramped housing across the land. I remember someone in the building industry telling me some years ago, “One of the best ways, son, to sell a house is to make quite sure that in your show house you take all the doors off inside so it looks much bigger”. The dimensions, we have to say, are rather limited.
None of us in the political world, including my noble friends in government, can get away from the fact that we need to use our bully pulpit to promote among the building industry and others involved the need to build the sorts of houses that improve the landscape and do not diminish landscape quality. The newly built can be landscape enhancing, not destroying, as it all too often is, whether it is on a brownfield or greenfield site.
In his introductory speech, my noble friend Lord Livingston of Parkhead, when referring to the role of government in job creation, said quite rightly that it is not the state’s task to create new jobs; it is the state’s task to provide the framework and the environment in which more jobs are created. I urge my noble friends and noble Lords in all the other political parties represented here to be absolutely clear that one of the critical ways of persuading people to accept new housing is if it is well built, environmentally responsible and nothing more than that.
Baroness Warwick of Undercliffe (Lab)
My Lords, it is one of the essential roles of any Government to ensure that the conditions are right not just for economic growth but for economic growth that is sustainable, long-term and provides high-quality jobs for as many as possible. This requires the Government to invest in infrastructure, whether concrete or intangible, because much of that infrastructure would simply not be built if it were not for government investment. Other agents lack either the financial clout or the incentives to ensure that this infrastructure is in place.
The Infrastructure Bill announced by Her Majesty deals in part with one such major project, the second phase of high-speed rail, but as the UK increasingly becomes a knowledge economy, the infrastructure we need is not just rail, bricks and mortar but world-leading research facilities to conduct basic research and conditions to support the conversion of that research into innovative projects and businesses.
I want to talk about the research base but first, in declaring an interest as a non-executive director of the Pension Protection Fund, I want to make a brief comment about pensions and about stable long-term funding. Pension funds and other long-term institutional investors represent a potentially major source of long-term funding for illiquid assets such as infrastructure. Indeed, the Government have supported initiatives such as the Pensions Infrastructure Platform. However, recent OECD survey results show that there is still a low level of investment in infrastructure, which can only mean that there are considerable barriers and disincentives that limit such investments. There is an opportunity with the Infrastructure Bill to remove some of those challenges and I hope that the Government will do so to make Britain a world leader in this area.
The strength of our science and research base has been responsible for so much of our economic success as a country. In a globalised labour market, a research sector that maintains that strength is surely an essential element of an economy that grows sustainably and provides high-quality jobs. It is essential that the Government bolster that research strength, particularly to provide the infrastructure on which it relies: laboratories and other research facilities, which only government funding can support. They must also ensure that the conditions are right for businesses and universities to collaborate effectively so that the research can benefit the economy as a whole.
We start from a position of strength. The UK is one of the world’s top research nations, second only to the USA on most measures. But although we are rated second in terms of output, when ranked on level of investment we fall to 21st in the world. I hope that the Minister took note of the comments of the noble Lord, Lord Bamford, about Germany’s greater investment in R&D, and I congratulate the noble Lord on an inspiring and wonderfully robust maiden speech.
The Government have made a welcome commitment to an increase in capital spending of just over £1 billion per year for each of the next five years. If well directed, it will make an important contribution towards ensuring that we have the research infrastructure necessary for the decades ahead.
The critical matter now is to ensure that it is well directed. On this point, I suggest that the Haldane principle is still a good one: in other words, that the academic community is best placed to make decisions about research priorities and funding. That means that the Government and Ministers should resist the temptation to fund eye-catching announcements of large-scale trophy projects at the expense of ensuring the quality of our broader research infrastructure.
Indeed, investment in large-scale projects should be modelled on the Crick Institute: targeted, strategic initiatives that add value to the research base but do not divert resources away from wider investment. It is essential that government funds are used to ensure that our wider research infrastructure is up to scratch, because although universities have become increasingly adept at working with charities and businesses to fund research, that is often not an option for capital spending. Quite reasonably, most charities or businesses want to ensure that they get as much for their money as possible. They want to be sure that it is not being spent on merely maintaining the research infrastructure but is directly contributing to research that otherwise would not occur.
The higher education innovation fund, or HEIF, supports universities in working with businesses—in particular, SMEs. That funding leverages additional resources. The Government have recognised that for every pound spent via HEIF, about £6.30 is generated in total. Just as importantly, businesses benefit from their knowledge exchange activities with universities as a result of that funding. That facilitates the development of exactly the kind of innovative products and businesses that will help the UK to compete in future.
The Minister kindly wrote to me when I last talked about HEIF in this House, but only to communicate the decision that HEIF funding would not be increased—despite recommendations in Andrew Witty’s report that the Government should do exactly that. That is short-sighted, and I hope that it will be reconsidered. Whether that happens or not, there is an urgent need for a commitment to the long-term security of the hypothecated HEIF funding stream for, say, at least three to four years, so that universities do not now need to dismantle the infrastructure that they have built, which has delivered substantial economic benefit. I urge the Government to give that commitment today.
Universities are a major UK industry in their own right, directly and indirectly providing employment for more than 600,000 people. Much of that employment relies on the fact that international students can study at our universities. With the public concerned about the level of immigration and its effects on the country, fuelled by UKIP’s rhetoric, it is understandable that the Government are looking at ways of addressing it.
However, let us remember that the largest group of those entering the UK—and also the largest group leaving again—are the students who have come to study at our universities and colleges and, in doing so, support a world-leading export industry. Not only are international students a particularly attractive category of migrant in economic, social and cultural terms, they are also a category of migrant that the public is not generally concerned or alarmed about.
The Prime Minister has a particular responsibility to speak up much more forcefully and show that the UK welcomes well qualified students. The continued ability of our universities to recruit international students, with all the benefits that they bring, must not be sacrificed in an attempt to satisfy a public concern that, in the case of student migrants, does not exist. I therefore hope that the Government will relent, after all the arguments in your Lordships’ House, and at least remove students from the net migration target.
Finally, on the new pensions proposals, I echo the words of so many other commentators and Members of this House: without access to good advice, there can be a real risk of mis-selling or some of the other mistakes of the past being repeated. I welcome innovation to improve pensions outcomes. I am aware that the Minister has been looking at models in the Netherlands and Denmark. Scheme members will need a clear insight into what they are signing up to and, specifically, what guarantees and protections they can expect at the end of their working life. When considering what kind of protection regime is suitable for this new structure, I urge the Government to discuss it not only with the industry but with all those concerned, including the PPF and the Pensions Regulator.
Lord Addington (LD)
My Lords, in a long debate such as this, covering so many subjects, it is probably reassuring if you are the first person to raise a particular area. Before I start this speech, I have one or two interests to declare because I shall talk about the changes to the disabled students allowance proposed by the Minister, David Willetts. I have already raised this once but I think I might have to raise it again, or indeed repeatedly over the next few months, because whenever a Minister grabs at something and says, “We’ll change it”, but has clearly not been that well briefed they will get themselves into a bit of trouble. We have a situation where dyslexics or people with specific learning difficulty—I repeat that I have never been a person with specific learning difficulty but am somebody who is dyslexic, as I do not know why we use four words when one will do, even if it is a long one—get a specific mention here, as we did in the Written Statement that came out.
It is true that this fund has expanded dramatically over the years and has not been reformed since it was created in 1990. However, I find it very worrying to be suddenly stating that we are to get rid of lots of it and make lots of savings, when one clearly does not have a hold of its real function or how it works. That is what has happened here. The first interest, which I should put on the record straightaway, is that I am chairman of a company called Microlink, which was one of the first companies to deal with this back in 1990, if not the first. However, I am not totally against any form of change in this field. I can safely say that this is an increasingly small part of that company’s activity; indeed, we would quite happily get rid of it because what we have left has been loss-making in the past couple of years. There is a degree of knowledge there not wedded to the current system.
We have been taking on dyslexics, who are the biggest disability group in the country. They are 10% of the population, to use our definition, but 20% if you use the American one. They are one in five in the United States. It is stated that this group has expanded and is using a computer as standard to get hold of this technology, which will now run on a standard computer, and that everybody has a computer. Just to pull that apart, it is true that access to the software is the vital bit. Without a computer that functions and can handle that software, you do not have access to the software so you cannot use it. The voice-to-text or text-to-voice technology does not work unless the computer gets down there. People will tell you that it is just about okay. We have all had a computer that can just about handle the program—until it gets a bug or is a little old, or a little overloaded with its memory going down. If the software you are using is slightly updated, it is incompatible. You must have something reliable to get the benefit out of it. I do not think there is any great rocket science involved in that; it is just the way it is.
Now we are being told that the universities will provide the software and support, and that if you cannot afford to have that computer there will be other funds, such as hardship funds or bursaries and so on, to meet it. However, those hardship funds or bursaries were not created for this and do not have the capacity. If you meet this cost here, you will inconvenience somebody else. It is true that it has expanded in size and has greater recognition, and that there is waste in it. There is the fact that you get X number of hours of non-medical help, if I remember the term correctly, given to you. If the computer works for a dyslexic properly—let us stick to “dyslexics”—they probably do not need 30 hours a year of extra support, as they might have had in 1990 from an amanuensis acting to get them through, because the computer does it for them. There could have been a change there.
Regarding the assessments, which are expensive and take time, if you have identified somebody in the school system whose brain will not radically change between, let us say, the ages of seven and 19, they will still be dyslexic. They will have learning strategies in place and will presumably have learnt to cope, if they have got through, so they do not need another assessment. However, you do under the current system so changes could be made. Something has to be done to allow these students to access the system. Why? Because if you do not, people will fail or underachieve—or, if they succeed, do so at an immensely high personal cost.
It may be morally wonderful to say to somebody, “You worked twice as hard to get your degree”. I do not think that is in the spirit of the Equality Act or the Disability Discrimination Act in front of me. Why should a person have to flog themselves half to death to get through? Why should they take a greater risk of underachieving or failing? Underachieving at university is probably the great one as if you are two grades down, you miss all the jobs that you are supposed to get afterwards. Does a bad degree qualify you for as much as having done another course? I doubt it, so how are we to make sure that that level of access is provided?
There is considerable room for reform and change in this field but just picking on the computer is ridiculous, as it is about 5% of the total cost but the thing that can guarantee that the technical aspect comes through. It is possibly less than 5%, according to the figures that I have. Other forms of help could be looked at more but please can we rethink this to make sure that the technical assistance that goes through can be used? That applies to all disabilities that use technical aids and assistance. If we cannot get that through, we will be getting people who will not achieve and who, under those circumstances, would not get there when they probably should.
Just to put the cherry on the cake, your Lordships will of course realise that other departments, such as the Department for Work and Pensions, do give assistance with similar types of technology and access to work. So there is school and access to work but the bit in the middle that links it all together is to be changed and probably removed from people. Please can we get some coherence going through this system? It is not too late to change it and get something coherent but it will have to be fairly soon so as to be ready for the 2015 intake. Can we have another look at this? If we do not, we will end up getting people half way through but dropping out or underachieving. This will basically mean saving a little here and wasting a lot somewhere else.
The Lord Bishop of Durham (Maiden Speech)
My Lords, I begin by thanking your Lordships for the way in which I have been welcomed and supported as I have entered this noble House. That support has been full of wisdom, including guiding this Bishop as to how to kneel correctly during Prayers, for which I was extremely grateful.
I am told that I am a rare breed; I am twice summonsed to this House. Last autumn, I was still serving as the Bishop of Southwell and Nottingham when I received my summons to enter this House. However, it was just before Christmas and I had stopped actively working in Southwell and Nottingham. By a bit of devious working of my diary and guidance from certain staff in this place, we worked out that I could not accept the summons. I had to leave on 20 January, when I was elected and formally confirmed as the Bishop of Durham.
Now I am here as the Bishop of Durham and I serve a wonderful area, from the Tyne in the north to the Tees in the south. We have the wonderful Teesdale and Weardale in the west and beautiful coastline in the east—at least, it is beautiful now that the coal dust has been cleaned up. We have the brilliance of Durham city with what is—in Bill Bryson’s words, not mine—the world’s finest cathedral. It is a wonderful area in which to serve and I am proud to do so. However, I have to add that 30% of the parishes in which I serve are among the 10% most deprived parishes in England. That is the level of poverty which we also have to tackle in the north-east. I am the 74th Bishop of Durham, and I am very grateful to my friend the most reverend Primate the Archbishop of Canterbury for being here today.
One of the proudest days of my life happened in the summer of 1977. It was my graduation day from Nottingham University, where I studied English and history. It was not my graduation that I want to point out, though, but my granddad, Granddad Giddy. After the ceremony, he took hold of my mortar board, put it on his head, took my certificate in his hand and pointed to it, saying to me quietly with a tear in his eye, not something that my granddad did very often, “This is why I left Cornwall when I was 17 years old. I left for a better life, not for myself but for my wife, my children and my grandchildren”. I was the first person in my family ever to go to university and get a degree, and this was the fulfilment of my granddad’s hopes and aspirations. It was not a question of what he had achieved in the Metropolitan Police, which he had joined because he believed in public service and serving the common good and in which he had risen to the level of superintendent; no, it was about the wider family and the common good that he was most concerned.
When I talk to young people in the north-east now, I am both inspired and deeply concerned. The vast bulk of children and young people in this country are fantastic; they are brilliant, they work hard, they want to achieve and are polite and engaging. It is a very small number who cause us slight anxiety. However, young people in schools and colleges tell me of their concern that they will never work, or certainly that they will never get work that they believe is fulfilling or is in the area where they want to work. They see their older siblings and friends not finding meaningful work that they really want to pursue. That concerns me deeply. Some have lost all hope and aspiration long before the end of school, and certainly before the end of college or university. They have been told that their value and contribution to the world is in work and their economic contribution. They have been told a lie. Their worth and contribution is in being great human beings, which is not necessarily always worked out in paid employment. We have to help our young people to understand their true value as human beings first and foremost—but yes, we have to help them to find good, meaningful work.
The noble Lord, Lord Bamford, made excellent points in his maiden speech about manufacturing. The north-east makes a massively significant contribution to the life of this nation: £14 billion-worth of exports every year. We are the only region with a positive balance of trade in the export market. Yet I regularly hear people in business, local government and local communities say that they feel not listened to or even forgotten. There is great news on employment: Nissan continues to be hugely significant for Sunderland and the region; we are the world leaders in the developing sub-sea exploration sector; Hitachi’s new train production factory is bringing new jobs; Rolls-Royce has just opened something; and there are other signs of hope. Proposals around apprenticeships and encouraging small and medium-sized businesses are hugely welcome. So, too, is the proposal to be tougher on firms not paying the minimum wage. However, there is much concern in my region that apprenticeships are established in a way that ensures they really do turn into long-term jobs. Small and medium-sized businesses, often family ones, need greater encouragement to take the leap of taking on apprentices, for it is this sector that is really going to create the new jobs that we need.
While the minimum wage proposals are welcome, I hope that in the longer term more serious consideration will be given to implementing the living wage. It was my privilege to announce the new national living wage in Nottingham last autumn. I look forward to the forthcoming report of the Living Wage Commission, and I hope that it will be taken deeply seriously. Assisting people to move away from welfare dependency, which must be a laudable aim, would be greatly helped by ensuring that decent wages were paid to all and by continually helping with the creation of new jobs in every part of this nation.
I have a passionate concern for children and young people; I have had a lifelong engagement with them as a volunteer and now in my calling. I serve as the bishops’ advocate for children and as co-chair of the Church of England and Methodist safeguarding work. I also serve as a patron of the Prince of Wales’s Step Up to Serve campaign, encouraging young people into volunteering. My safeguarding role means that I take a very close interest in all matters relating to safeguarding and child welfare. This work is challenging for us all, and within the church we continue to have to face up to not only our current responsibilities but, in some areas, our serious past failures. It is very uncomfortable work. I welcome the proposals in the Serious Crime Bill to tackle the question of the systematic emotional abuse of children. The impact is horrendous, and I promise to work hard on this. I am grateful that the Government have had the courage in the gracious Speech to tackle this issue at last.
Before concluding, I would fail to introduce myself properly if I did not refer to my engagement in the wider world through the Scripture Union and the Church Mission Society, my time as a vicar in east London and as Bishop of Southampton, of Southwell and Nottingham and now of Durham. I have had the particular privilege of visiting many countries but particularly Rwanda and Burundi. In Rwanda, memorably, there were no plastic carrier bags anywhere; it has banned them completely. They even take them off you as you enter the country.
I have learnt a great deal from Christian Aid and others about working in the aid field. Last summer I was privileged to take three Members of the other place on a visit to those two nations. We learnt a great deal about each other, I can tell you. What impressed us most was local communities taking responsibility for themselves, working hard on reconciliation at every level and seeking to build a better future from the bottom up, not waiting for people to do it from the top down. We have a great deal to learn from the poorest nations of the world.
I look forward to serving with your Lordships in the work of this House. From the person doing their shopping stopping me in the street to local community and local government leaders, head teachers, principals of colleges, university vice-chancellors and key business people all across my diocese, I have been given a very clear message about my role in this House: “Bishop”, they all say, “speak up for us here in the north-east. You can speak up for us in a way that very few can. Please try to help them in Parliament to listen to all the good things in the north-east, and to hear our needs”. They expect me to speak for the whole community, and that is what I will seek to do.
Lord Bhattacharyya (Lab)
My Lords, it is a pleasure to speak in this debate and to have heard the outstanding speech by the noble Lord, Lord Bamford. It is an even greater pleasure to follow the right reverend Prelate the Bishop of Durham. On his arrival in Durham, he made it a priority to take the church’s message into the most difficult, challenging and inaccessible places. No wonder, then, that he has arrived in your Lordships’ House.
The right reverend Prelate’s history of ministry in our inner cities and deprived communities, his desire to speak for his new home county and his passion for Africa, particularly for Rwanda, remind us of the great value that religion can bring to our public debates. Perhaps his desire to spread the good news explains why he maintains both a blog and a Twitter account, bringing the message of the church into the most virtual, though perhaps not the most ethereal, of spaces. Indeed, it was thanks to his Twitter account that I learned that he was a fan of “Strictly Come Dancing”, and that today he was nearly kept from this debate by a delayed train—another reminder of the need to invest in our national infrastructure. Durham Cathedral is famously,
“Half church of God, half castle ’gainst the Scot”.
Whatever happens in Scotland this year, I am sure that he will focus on the first description, not the second.
The right reverend Prelate’s maiden speech was a fine example of a great tradition with a modern emphasis; the gracious Speech itself was also a fine example of tradition. After all, there is no political tradition greater than a Prime Minister seeking to win an election. I do not judge the speech drafters of Downing Street harshly for this. After all, it is hardly a trait limited to one party. It does pose a challenge, however. How do we debate in a non-partisan way a speech developed more for electoral success than for legislative purpose?
I would like to suggest one or two areas where we might scrutinise the Government’s progress against the ambitions set out in the gracious Speech. First, there is the pledge of 2 million apprenticeships by the end of this Parliament. Declaring my interest as both a former apprentice and the chairman of Warwick Manufacturing Group at a Russell group university, the University of Warwick, I can assure your Lordships that big, round numbers are not what we should focus on. For example, we should not be increasing the number of apprenticeships for those over 25, who are already in work, which is where the growth has been over the past few years. Such people are rarely learning a new trade but are simply getting on-the-job training paid for by the state. That is not apprenticeship. Nor should we see apprentices as a way of keeping the unemployment statistics down.
Rather, our objective should be delivering a better skill base for the British economy, just like the German economy. For this, the total number of apprentices matters little, but the quality of skills training each apprentice receives matters a great deal. The truth is that this can vary widely. Young people know this, which is why the best apprenticeships are massively over- subscribed. To improve our skill base, we need better vocational and technical education for school and college leavers and a better integration—that is very important—of higher and technical education, even if that means a smaller overall total of apprenticeships. The Government made a worthwhile step forward here in the Budget by expanding the apprenticeship grant for small businesses for 16 to 24 year-olds.
However, a renewed focus on quantity may lead funding bodies to neglect the importance of quality. It would be better to get our best institutions involved in delivering vocational education. That is why I decided at Warwick that I would set up a university technology college, which was also sponsored by the noble Lord, Lord Baker. We take these people, get them into the automotive sector, because it is designed for the automotive sector only, and while they are getting their higher apprenticeships in the company, we, in a Russell group university, get them into part-time graduate education so that they have a career from school to there. I learnt this entirely from a very big German car company which shall remain nameless. That is what it does because the skills it requires are what make Germany what it is today. We do not have that.
The second area where we should monitor the Government’s progress is how their plans to deliver growth over the long term might conflict with restraining the booming London property market. With property prices up nearly 9% this year, we already hear calls for higher interest rates. The noble Lord, Lord Livingston, is working flat out to help British exports, and I wish him well. However, higher sterling makes his life much harder by sending a chill through our manufacturing sector, just as it finally begins to show signs of vigour. For a British manufacturer in the automotive sector—the biggest in this country—exporting finished goods to fast-growing markets, for every £1 billion of export revenue, a 10% appreciation of the pound reduces income by £100 million. That damages profitability and competitiveness in markets such as China and the US, which have both seen sterling appreciate by more than 12% this year. This reduces the amount that is available to be invested in the UK.
Of course, people tell me that international businesses can mitigate this by sourcing supplies and materials overseas, but that reduces investment in the UK. I have helped bring many industrial investors to Britain, and the largest are here. I know how rising sterling makes the UK a less attractive place to invest, especially when coupled with a long-standing lack of skills. For smaller businesses, too, higher rates and higher sterling limit their ability to invest in the future, leading to a worsening of the British disease, an economy with low business investment. Some people talk about productivity. People do not understand that unless you invest you cannot increase productivity. It cannot be done by workers working harder or more. You have to have the technology to get the productivity up, and if you cannot get that, your productivity will never go up.
These are not partisan points. Indeed, I think the agenda to deal with this is shared right across the House. Ahead of potential rate rises, the Government must press ahead with their plans to support manufacturers and exporters by investing in developing skills. They must make progress on their ambitions for deregulation and deliver on their promises for lending through an expanded British Business Bank, which we have talked about in this House for the past five years. This would represent an excellent programme of scrutiny for the final year of this Parliament. It would not be partisan or electorally divisive but would represent a common agenda for a long-term economy. If a gracious Speech about plastic bags tells us anything, it is that there is little else to occupy us. This would be a worthy programme of work. Surely, on this issue, we can all be in it together.
Lord Plumb (Con)
My Lords, we have been extremely fortunate to hear two of the most outstanding maiden speeches ever heard in this House. Of course, they varied in their content. Noble Lords will not be surprised that I want to relate my remarks on the gracious Speech to the role of agriculture and the food, forestry, farming and fracking industries in the economy of the United Kingdom—a kingdom which I hope will stay united.
There are those among us who are well qualified to talk of industrial growth. We had a very fine example of that this afternoon; I used Bamford haymaking machinery before my noble friend Lord Bamford was born. That is where it all started, as he told us as an engineer. It just proves what can happen and what can develop from those very early stages.
Many might say that in the interests of economic growth agriculture does not even appear on their radar. Let me disabuse them. First, I shall give some potted history. There is a farmers’ club in this Parliament, with joint membership from both Houses. It was created in 1795. In the early 19th century, British agriculture was 2.5 times more productive than that of France, and in 1851 agriculture accounted for 20% of national income. Now it is much less than 7%, but everything is relative.
In the first speech I heard Churchill make, many years ago, he said that,
“30 million people, all living on an island where we produce enough food for say 15 million, is a spectacle of majesty and insecurity this country can ill afford”.
We now produce enough for 30 million, but that is of course less than half of the population. In 2014, we are therefore facing an ever-growing population and our priority must be food security. We need, as we have heard, land for housing and various forms of development, but we need to maintain the beauty of the countryside; we have heard about that in areas such as Durham. It is a difficult balance. There are so many pressures for land. It is becoming so expensive—because they are not making any more.
From that work-bench, which we need to produce food, agriculture’s contribution to the economy increased by a staggering 54% between 2007 and 2012. It held up well during the recession, and increased the value of output from £16 billion to £24 billion during that period. It is obviously the foundation stone for the food and drink industry, with an equivalent of £96 billion and 7.3% of GVA of the United Kingdom economy. Food and farming as a business provides 3.7 million jobs. Add the production of energy and forestry, the work at universities and colleges and thousands of research workers, and that makes it by far the largest industry in the country. For every £1 farming contributes to the economy, food manufacturers contribute a further £5. It is the fourth largest exporting sector, which grew by 5% to £12.8 billion last year. The downside is that we are still slaughtering 90 cattle every day—every day—which react to the bovine TB test.
The dairy trade shows an incredible deficit of £1.27 billion, and in 2013 we imported £40 billion-worth of food and drink overall and exported only around £19 billion, so there is work to be done. That seems crazy economics when we have such potential growth in food production in this country. Many were shocked at the degree of food waste shown so clearly in the report of the sub-committee chaired by my noble friend Lady Scott, which I hope this House will debate in the not-too-distant future.
Today, more farmers and growers are using wind, the sun, farmed by-products and energy crops to produce clean low-carbon energy. A number of farm-based renewables provide electricity for home farm use and supply electricity for local businesses and homes in rural areas. It is estimated that climate-friendly energy produced on farms could reduce greenhouse gas emissions by 17 million tonnes of CO2 by 2020. Agriculture could be the source of more than one quarter of national renewable energy needs. Biogas digesters, wind turbines, solar roofs and fields and biomass boilers are all becoming a commonplace part of the future of the economy, so farming is now a modern industry facing a future of competition and, I hope, closing the gap on imports.
As I think everybody recognises, however, the future depends to a large extent on research. We are only starting to regain our world leadership in food research but, if we can build a car with robotics, picking strawberries or an iceberg lettuce is not beyond the realms of robotic possibilities. Robotic milking plants are increasing, with both man and cow satisfaction, and at least 70% of new farm equipment has some sort of precision farming component. Sat-nav tractors are commonplace, the state-of-the-art combine harvesters have up to eight computers and new technologies are continually delivering cost-effective spraying and fertilising equipment. New technologies will help to improve yields, reduce costs and protect the environment. Sustainable intensification is always dependent on innovation.
Much of the present farming community has the necessary skills, particularly the young farmers who believe that there is a great future in British agriculture and are keen to follow the motto of “practice with science”. I have seen much of this recently. It is still imperative, however, to protect the health and welfare of plants and animals. Excellent work by various organisations continues in our woodlands and forests, for which we should thank Defra and woodland interests.
It is a continuing struggle, particularly after the difficulties of last year with floods in various areas, to control the weeds that are beginning to show this year. The Minister will realise, and I am sure will advise the Government, that we must protect and preserve the work-bench—our land—which can be flooded or suffer from drought, as we witnessed in recent times; but the business of food production is long-term and we must prepare to play our part in feeding a hungry world. Future changes must relate more to growth. We need greater simplification of rules and regulations. We need less red tape and more subsidiarity in order to move forward freely to face the problems the world over.
All the changes before us at the moment, which of course the Prime Minister is pressing for overall, are there for our benefit. I know that the Prime Minister will get support from many other countries in bringing about something that is workable, which people understand and can accept, and which will be of benefit against the overall problems facing Europe.
Baroness Hayter of Kentish Town (Lab)
My Lords, the Queen’s Speech demonstrated the Government being dragged, I am afraid reluctantly, into helping consumers to get a fair deal, whether from their elected representatives, from service providers or from business. Our ambitions, by contrast, are greater. It was Labour—indeed, in this House—which saw an extension of the ombudsman scheme from estate agents to letting agents. It was a Labour Government who introduced the legal services and financial services ombudsmen, and regulators’ consumer panels.
However, there is more to do. We must support consumers, the poor and disadvantaged, by repealing those parts of the lobbying Act that gag rather than enhance the work of those who give voice to the voiceless, and by improving the Government’s apology for a statutory register of lobbyists—of which, incidentally, we have failed to see anything so far. Labour, by contrast, would put power in the hands of consumers, be they tenants, borrowers or people troubled by nuisance calls.
Take “generation rent”, where the number of private renters, now 9 million, has surpassed those in social housing for the first time. Private tenants face an insecurity that few of us would tolerate. They are 10 times more likely to move home per year than homeowners, and a third of them moved last year. Yet surely they deserve the same stability as homeowners. So Labour will legislate to make three-year tenancies with predicable rents the norm. This is not rent control; I am old enough to remember that. This is about certainty and fairness.
Tenants are now paying £1,000 a year more than when this Government came into office. That is great for letting agents, but what is unfair is not letting agents’ legitimate business but double charging, when both landlord and tenant pay for the same service. More than 90% of letting agents impose charges on tenants on top of deposits and rent in advance, and charge them high fees for simple tasks such as renewing a contract. Labour will ban letting agents’ fees for tenants, which will save families up to £500.
I congratulate my honourable friends in the other place, Stella Creasy, Hilary Benn and Emma Reynolds, whose efforts on this got the Consumer Minister in the Commons to announce just yesterday that the Government will amend the Consumer Rights Bill to force letting agents to display their fees, with a civil penalty of up to £5,000 to be paid by any agent who fails to do that. That is a welcome move. However, landlords, not tenants, choose the letting agents, so there is still nothing a tenant can do even if the letting agent is double charging.
Movement for Change’s “Home Sweet Home” campaign in Brighton saw tenants who were stuck with broken back doors, broken bedroom windows, or no hot water or heating over Christmas. Such conditions are unacceptable. In addition, we want landlords to put smoke alarms in all rented houses, and we want to reduce deaths from carbon monoxide poisoning. Can the Minister say what the Government’s response is to Consumer Safety International’s call for alternatives to carbon monoxide detector sensors where they have proved unreliable?
We must raise the standards of letting agents. Anyone can set up as an agent, including people with no qualification in landlord and tenant law and, more seriously, people with convictions or even those on the sex offenders’ register. There is not even a requirement for clients’ money to be kept in separate accounts. As I said, thanks to this House we have legislated to require agents to belong to an ombudsman, but the Government held back from enabling repeated poor behaviour to lead to a letting agent being struck off. Will they rethink their refusal over that?
Because individual consumers have little bargaining power when up against business, we will seek to improve the carried-over Consumer Rights Bill, not simply to codify rights but to enhance such rights, to allow for collective redress where consumer law has been breached and to make retailers and service providers signpost access to an ombudsman. Our aim is for consumers to have information, advocacy and redress across all markets. That is good for shoppers but also good for business, as it drives up standards.
Small businesses are already seen as consumers in some areas. The legal services and financial services ombudsmen treat microbusinesses as consumers, as do Ofcom and Ofgem. However, the Government have failed to treat small businesses as consumers in the Consumer Rights Bill, despite calls from the FSB. Will the Government continue to rule out such rights for small businesses?
It is also hard to understand why the Consumer Rights Bill omitted the EU directive on alternative dispute resolution, despite the fact that it has been sitting on the Government’s desk for two years and needs to be introduced next year. Its tardiness will make it difficult for businesses to have time to prepare, to sign up to an ombudsman and to train their staff. Will the Minister tell us when we will see plans to implement the directive and explain why ADR should not be compulsory?
The Government have failed to do much to help charities. They promised that the big society would play a part in the provision of services, but a quarter of public sector outsourcing went to offshore companies, squeezing out UK companies and UK charities. Furthermore, we have only a draft protection of charities Bill in the Queen’s Speech, which means that the Charity Commission is unlikely to get its strengthened powers this Session. We will undertake to work to ensure that voters—in the recall of MPs Bill—get a proper say, that consumers get a better deal, and that charities are helped to do their work.
Lord Aberdare (CB)
My Lords, I shall focus on the commitment in the Queen’s Speech to,
“increase the total number of apprenticeship places to 2 million by the end of the Parliament”.
I welcome that. Good-quality, well designed apprenticeships that meet the needs of employers and apprentices across a wide range of business sectors are surely one of the most effective means of tackling the blight of youth unemployment while increasing the UK’s productivity and competitiveness in the global economy as a whole. In March, the Government published for consultation proposed new arrangements for delivering and funding apprenticeships, which are largely based on the recommendations of the Richard review of apprenticeships. I attended a conference yesterday morning at which both Doug Richard and the Skills Minister, Matthew Hancock, spoke, and was on the whole encouraged by what I heard.
However, there are some concerns, particularly about persuading more small and medium-sized businesses—the importance of which we have heard so much about today—to take on apprentices. Most of the initial trailblazer initiatives being used to pilot the new approach are in sectors dominated by larger businesses such as aerospace, automotive, energy and utilities, and financial services, while sectors such as construction and creative and media, which have a much higher proportion of smaller firms, are unrepresented.
I will enumerate some of the concerns which need to be addressed to ensure that the 2 million target is reached and that it does not exclude large numbers of younger apprentices or specific sectors such as construction. First, under the proposed new rules, employers will have to make a cash contribution of a third of the training cost of their apprentices, with the Government paying the other two-thirds. Apparently no allowance will be made for the extra, non-cash costs involved in taking on apprentices, such as additional supervision, on-site training, mentoring time and the costs of slower work rates and needed rework. Extra incentive payments will be available for businesses with fewer than 50 employees, but the overall cost of providing apprenticeships under the proposals seems likely to put off some, and perhaps many, SMEs.
Secondly, there will also be extra payments for taking on younger, 16 to 18 year-old apprentices, for whom until now the full costs of training have been paid. Assuming that those extra payments will fall short of the full cost, that could act as a further disincentive for firms to take on apprentices at those younger ages, as against using either older, more job-ready or more experienced apprentices, or just using the supply of cheap labour often available in sectors such as construction. Given that most of the increase in apprenticeships so far has been among over-25s, with under-19 apprenticeships hardly growing at all, that seems particularly ill advised. It certainly will not do much for those young people who fear they will never work, who were mentioned by the right reverend Prelate the Bishop of Durham in his fine maiden speech.
Thirdly, there are significant concerns among SMEs and others that the payment options being considered by the Government, which are based either on using existing PAYE mechanisms or on a new apprenticeship credit model, may prove far from simple for small firms to implement, and unpredictable in terms of the exact amounts and timing of payments. In addition, they are likely to result in serious cash-flow challenges, which are, of course, the absolute bane of all small businesses—as I can vouch from my own experience.
Fourthly, many SME apprenticeships are managed through apprenticeship training agencies—ATAs—whereby the ATA acts as the employer for a group of businesses and undertakes most of the administration and bureaucracy involved, to lift that burden from the small employers for whom the apprentices actually work. It is not clear how the proposed new funding arrangements will affect ATAs, but at least one of them, Building Lives, is concerned that its delivery and funding model may be put at risk by the proposed new arrangements. Building Lives is a community interest company which currently runs six academies across London which offer training and employment for up to 300 apprentices a year, who work mainly in small to medium-sized construction-sector firms. It featured as a case study in the cross-party report No More Lost Generations, which was mentioned earlier by the noble Lord, Lord Macdonald of Tradeston. It has set itself a target of expanding to 10 centres and offering up to 1,000 construction apprenticeships each year. However, despite the fact that its whole raison d’être is to make it possible for small contractors to take on apprentices, it seems that it may in future have to fund a third of the training costs for all those apprentices upfront, without even being eligible for the small employer incentive payment—a double whammy which may jeopardise its entire award-winning operation.
I applaud the intention to increase the number and quality of apprenticeships, but I urge the Government to ensure that there is sufficient flexibility in the funding and other arrangements to meet the specific needs of smaller employers, and of sectors such as construction, and of younger apprentices. The system must be genuinely simple, able to accommodate firms of all sizes in all sectors, and be thoroughly piloted before being rolled out.
Almost as important as providing more apprenticeship places is the other side of the coin: ensuring that there are enough candidates, especially 16 to 18 year-olds, coming forward to take up those places. Schools need to do a much better job of making their students aware of the apprenticeship opportunities available and encouraging those for whom they might be appropriate to pursue them. This seems unlikely to happen unless and until Ofsted inspections include formal assessment of the careers services offered by schools, often deficient at present, and of the range and quality of progression routes followed by their students, including into apprenticeships and other forms of employment, not just into further or higher education.
Finally, I hope that your Lordships will forgive me if I stray from the topics of today’s debate to add a brief welcome to the proposed social action, responsibility and heroism Bill, providing a degree of legal protection for good Samaritans and have-a-go heroes. I declare my interest as a trustee of St John Cymru Wales, which is dedicated to helping people save lives through first aid training and support, and pursues the vision of a first-aider on every street in Wales. It would be even better for the Government to provide more of these potential heroes with the tools to do the job, as it were, by making first aid training a mandatory part of the school curriculum, so that the UK could begin to match the life-saving outcomes of those other countries where that is the case.
Lord Monks (Lab)
My Lords, I start by adding my congratulations to the noble Lord, Lord Bamford, and the right reverend Prelate the Bishop of Durham on what I regarded as really excellent maiden speeches.
The gracious Speech has been criticised from the Opposition Benches as something of a fag-end speech, a lowest common denominator programme from a riven Government, a zombie effort with minimal content—in fact, one could say we are competing on this side of the House to find the right compliments to pay. I will content myself with saying that it is somewhat thin gruel given the scale of the problems the nation faces, as my noble friends Lord Tugendhat and Lord Liddle and others spelt out earlier. However, it is not a total non-event and there are important points which will need the close attention of this House.
On pensions, I confess to some confusion in my mind about the direction that the Government are taking. On the one hand, pensioners in DC schemes will be able to extract the cash value of their savings; on the other, collective defined-contribution schemes will be promoted. Are there not two different philosophies at work here—freedom to blow one’s pension savings on a jazzy Italian sports car or whatever, ranged against the collectivism inherent in those Danish and Dutch pension schemes with all their rules and mutual obligations?
I declare an interest. I am a trustee of NOW: Pensions which is part of ATP of Denmark. ATP provides four out of five occupational pensions in Denmark and is a much respected non-profit-making institution. Denmark has lessons for us to learn in terms of low charges, simplicity and generally excellent investment returns. I hope that we now can turn that experience to benefit British pensioners.
I accept that the annuity market has been unsatisfactory in the UK, but we are entering unknown territory when we encourage pension pots to be blown on property, sports cars and the rest. I hope that pensioners will not come to lament as the late great George Best did. When asked about what he had done with his money, he replied, “I spent it on gambling, women and drink. The rest I wasted”—probably on a Lamborghini. We all know in this House what the consequences for the public finances could be of people not having occupational pensions who actually were in a position to have them and the cost that will fall on the taxpayer for that.
Collective defined-contribution schemes are a good idea and a step in the right direction, but perhaps the Minister can bring us up to date on why there is some Dutch pressure to modify its system probably more towards our individualistic direction. There seems to have been a revolt among some pensioners there against what we could call intergenerational solidarity—benefiting one age group against another.
As a champion of auto-enrolment and how that has been developed in the UK, I would not like to see it hampered by too many extra complications and requirements added on to it. We are signing up employers as quickly as we can and there will be an awful lot of employers who are late or would probably never get round to doing it without significant pressure. We have a mountain to climb to build up a strong pensions culture in this country among employers and employees —a mountain made higher and steeper by the fact that, regrettably, we are less inclined as a country to go for mandatory or quasi-mandatory pension savings than, for example, the Dutch or the Danes.
Let us not try to run before we can walk. Can the confusion between more individualism, on the one hand, and a more collective approach, on the other, be cleared up? Can we do this in a consensual way? One of the successes of auto-enrolment has been that generally it has all-party support and all the key players in the country have supported it. Therefore, it feels rather firmly embedded as an approach. I feel these other points, too, should be subjected to a big effort to find consent.
I turn to the proposed small business, enterprise and employment Bill. The Bill certainly needs to recognise that casualised work, offering low pay and poor working conditions, was certainly expanded quickly during the recession we have just been through. It is continuing to grow even as the economy has started to recover. The proposals on zero-hours contracts are rather weak and will not end most of the abuses. There is a thin, sometimes invisible line between the UK’s deregulated labour market and exploitation—and zero-hours contracts often cross it. They are the dark side of the flexible labour market. There are other dark sides, by the way, including low pay, low skills and low productivity. When we are talking about the undoubted successes in job creation, we should remember that if this country is to earn its living properly in the world and not rely on deficit funding, we are going to have to deal with those quickly.
The tougher penalties for employers caught dodging the minimum wage are welcome, but the key question is what resources will be deployed to catch the offenders. At the moment we know the inspectorate arrangements are wholly inadequate.
I note the TUC supports moves to strengthen regulation on the disqualification of directors and to improve transparency on company ownership. However, the Government's proposals as yet do not really scratch the surface of this big subject and do not address the need for others to have a view on corporate governance—voices for long-termism, for investment and for responsibility. That seems to be an important area that is very much underdeveloped at the moment.
My final point is to warn the Government not to use the social action, responsibility and heroism Bill to water down UK safety law. Yet again, we are tending to hear the tired refrain about stripping out unnecessary red tape. Careless employers should not be let off the safety hook, encouraged to loosely hurl charges of a jobsworth culture without being contradicted by people in government. Our laws stand up well to those in other countries; our record on health and safety is good. Very often the people with the best health and safety have the best productivity and the best quality outputs from their businesses. These laws build good practice and are essential protection for the UK’s 30 million people at work.
Lord Higgins (Con)
My Lords, this Queen’s Speech gives us an appropriate occasion to take stock, as we enter the finishing strait for the coalition agreement, ahead of the general election, before we become preoccupied with manifestos, and so on. The central piece of the Queen’s Speech is certainly on the economic side of things. Indeed, it begins,
“my Government’s legislative programme will continue to deliver on its long-term plan to build a stronger economy and a fairer society”,
and to,
“strengthen the economy and provide stability and security, my Ministers will continue to reduce the country’s deficit”.
It is now apparent that the policy that this Government have pursued on the economy was the right one, unlike a number of others advocated by the Opposition, and it is fortunate that we have a fixed-term Parliament so that we will have a period in which the fruits of the improvement in the economy can become more apparent. Nevertheless, it is important to recognise that progress in reducing the deficit has been slower than we hoped. Indeed, the target has been put back. In that context, it would be very important for the manifesto of the Conservative Party and, I would hope, of the other parties, to make it clear that we are determined to reduce the deficit entirely and to get around to reducing debt and reducing the burden on our children and grandchildren. There is still a long way to go in that regard. None the less, we have the fastest-growing economy. We have seen the IMF radically change its view of the British economy and the policy that we are pursuing; it is now very much in favour of what we have been doing and, indeed, have done.
Of course, there are still a number of dangers ahead, not least the rather precarious international political situation, and with regard to the eurozone. We are inclined to think that the eurozone crisis is over. The problem is that the eurozone structure and the extent over which it is operating geographically are fundamentally flawed. They may sort it out for the moment, but inevitably, as time goes on, it will continue to suffer very serious strains. That may jeopardise the future of the UK economy.
I say all this because I see no very clear alternative being put forward by the official Opposition. We have had a number of particular initiatives on fuel prices or whatever it may be, most of them abandoned very quickly after being put forward.
This is also an opportunity for us to take stock of a number of other matters. Perhaps inevitably, I shall mention one constitutional matter and some institutional matters. The constitutional one is, of course, the question of an elected House of Lords. As we approach the election, while the Liberal Democrats will no doubt include something on this subject in their manifesto, both the main political parties would be very foolish to do so. The reality is that the House of Commons has spoken; it now understands this issue, and it is not going to go ahead in agreeing to an elected House of Lords. Therefore, it would be very foolish for parties to endanger the programme that they wish to implement otherwise by including that in a manifesto. We ought to have learnt the lesson on that issue.
I am also slightly concerned about the position with regard to the House itself. I rather despair of hoping that some Members will stop referring to “the noble Minister”, when noble Ministers do not exist. There are noble Lords, but not noble Ministers. Indeed, even in this debate the same thing has turned up. But there are other important issues. We agreed some while ago to the use of iPads in the Chamber, but we have a very clear rule that speeches should not be read. Therefore, I was rather appalled to sit in on a debate recently where I regret to say that a Member of the Bishops’ Bench read his entire speech word for word from his iPad. I do not know whether he was in communication with any higher authority but, at all events, I thought that it was a rather unfortunate development.
It is tremendously important that we do something to adjust the balance in this House between legislation and general debate. My noble friend the government Chief Whip is very clear that the length of recesses recently has not been greater than normal. At all events, they have certainly seemed longer than normal, and there are a number of important issues that we could have spent time debating in that period—not least the crisis in Ukraine and the problems in Europe. I pay tribute to my noble friend Lord Tugendhat in this regard. It is quite extraordinary that we have not debated Ukraine in this House, and the problems arising with regard to Russia. My noble friend dealt with the issue very clearly. I managed to get a topical Question in the ballot, which came up a couple of weeks ago, but that is the only occasion when we have really tackled this problem. We have to face the fact that there is a change in our relationship with Russia. Whether it is true or not, it is widely reported that Mr Putin’s doctorate was on the use of economic power as a political weapon. We also ought to have a debate on NATO. We seem to have a defence organisation that is concerned with military matters, totally ignoring the fact that economic weapons are being used as well. As a result of that, we have been very ineffective in taking action on the position in international law and the treaty agreements with regard to Crimea. We have been pretty powerless, given the dependence of Germany and other countries on gas supplies, and so on.
Equally, we could have a very important debate on Europe, ahead of any proposed renegotiations. Again, we have not done that. So I would hope that we can have more time given to general debates.
The problem is in part a very fundamental one: we in the House of Lords have suffered from the way that the Labour Government, in a practice unfortunately followed by the Conservative Government, programmed their business. The result is that, as we well know—the noble Baroness, Lady Hollis, is not in her place, but she and I know this—Bills came here time and again with much of them not debated at all. There have certainly been a number of very big debates where that has been the case. The result is that we are spending all our time on legislation and virtually no time on general debates that might be of great use in holding the Government to account and informing them, given the level of expertise in this House.
Finally, I want to make a specific point with regard to a proposal in the gracious Speech for a Bill to,
“bolster investment in infrastructure … to improve economic competitiveness”.
I am very worried, as an economist, about the way in which we look at investment proposals. Traditionally, we have done it by raising capital, investing the capital and hoping to get a return on it, using discounted flow and all the other technical issues, with which I shall not burden the House now. Instead of that, we have seen increasingly with infrastructure projects, whether it is the renewal of railway equipment or wind farms, the use of the pricing mechanism to raise the money to make the investment. Those higher prices will very often be paid by people who will not live to see the benefit of that investment. Perhaps one can argue from an intergenerational point of view that this is only fair, given that we are in danger of landing our children and grandchildren with a lot of debt, but we will also give them a lot of infrastructure for which we have paid a far greater sum than is proportionate to the benefit we will derive from it. The Treasury uses the so-called yellow book as the basis for making these investment decisions. I do not think that they are being made correctly at present. I do not think that it is right to raise money by putting the cost on existing suppliers for the reason I have mentioned. This is a Bill that we will have to debate carefully and there are a number of others in the programme. However, I also think the case for having rather more general debates in the run-up to the general election is very strong indeed.
Baroness Donaghy (Lab)
My Lords, a week ago I enjoyed an evening with the Involvement and Participation Association, of which I am vice-president. Employers from top-rank organisations talked about employee engagement, trade unions were respected and HR directors were committed to encouraging a voice for workers whether or not they were in a union. However, I noted that this is an unusual experience in the UK, where the world of work is more likely to witness increasing levels of inequality in our society and no consultation. It was reported at that AGM that an alarming number of employers cited e-mails as the main method of communication and even consultation with their employees. Fairness and dignity at work are not just about money. An example was given of a FTSE 100 company that sent a standardised retirement letter to an employee after 40 years’ service and managed to get the spelling of his name wrong as well. His colleagues were more agitated about this than any other more tangible grievances about pay and conditions.
The world of work is central to all of us, whether it is the 30 million people in the UK who are in work or those who are seeking it. Work provides an income essential for living, helps to place us in society and sometimes provides dignity and enjoyment, but when is it ever discussed as a central issue in this Parliament? It is referred to in terms of statistics to show how successful or otherwise a Government are in providing jobs, when loosening worker protections on the premise that employers will grow their businesses on the back of it and when employers want to make it easier and easier to dismiss workers. You would think that employment tribunals are the only things that matter in the world of work, when they are in fact the rarest element—something that the vast majority of workers never experience and never will. However, the tail continues to wag the dog. Having said that, I believe that the changes to employment tribunals made by the coalition Government are a disgrace and the sooner they are repealed the better.
However, the fundamental issues in the world of work are what kind of society we want to be, why we are less productive in this country, why there is growing inequality and diminishing fairness at work and why the relative pay gap between workers and executives has stretched almost beyond belief. Job insecurity and casualisation have not, and will not, improve productivity. As my noble friend Lady Drake said, that does not help with applying for mortgages, planning for one’s children’s future or saving for a pension. We are building a legacy of long-term poverty and giving future generations a choice between increased state dependency or a return to the dark ages.
I am not saying that casual working should be abolished: it has always been with us. I remember that at the University of London in the 1960s the Senate House had a pool of what were referred to as “call girls” to assist at the busier times. In some industries the workforce prefers to opt for a flexible system which suits both employee and employer—although not necessarily the collection of tax. However, I am talking about the wholesale abuse of casualisation. I applaud the proposals in the Pickavance report, commissioned by Ed Miliband, which calls for a code of practice to be drawn up, in conjunction with ACAS, protecting workers after six months if they work regular hours and banning compulsory standby and exclusivity. An amendment to the Employment Rights Act 1996 to require employers to provide information about basic terms and conditions to all workers within two months of commencing work would also be welcome—in other words, extending the right which employees already enjoy.
The increasing pay gap between worker and executive represents a massive corporate failure in the UK and is a threat to the public’s trust in business. Seventy-six per cent of voters think that big business has too much power over government. In 1980, the pay for a FTSE 100 chief executive was 20 times the national average; in the late 1990s, it had risen to 60 times the national average, and today it is 160 times the national average. The exasperation of the public with our political system, although manifested in our newspapers as exasperation with the failure to deal with immigration or with politicians on the make, may really be about inequality and a feeling of powerlessness. I find it interesting that 80% of UKIP voters are as likely as the wider population to demand government action to reduce inequality.
The Government have no programme to make this a priority or even to tackle increased inequality; instead, they search for ways to deprive people of their rights. For instance, why on earth are they proposing to take the police out of health and safety legislation? Are the police not workers, too? I congratulate the leader of my party, Ed Miliband, on saying that low pay will be a priority for the next Labour Government. It is important to retain the independence of the Low Pay Commission and in doing so and to strengthen it.
Similarly, why not have a statutory requirement for workers to sit on boards? It is only a tiny aspect of worker involvement but it will be resisted as if it was the equivalent of the peasants’ revolt. It was resisted by employers in Germany but is now part of the country’s culture and its successful economy. Relativity should be central to every enterprise. Unfair pay differentials have consequences—more sickness absence and higher staff turnover as well as lower productivity.
It is good news that we have 30.43 million people in work in the first quarter of this year, but then we have more people due to demographics and immigration. However, 2.2 million unemployed is not good news. The number of unemployed women aged 50 and over has increased by almost half since the coalition came to power: 162,000 older women are unemployed. They have talent and experience and they vote. We need an honest appraisal of what kind of jobs will be needed in the future. The Edge Foundation has said that nine of the 10 occupations most in demand in the future will require vocational skills.
Finally, the references to employment in the Queen’s Speech were predictable, with some being good and some bad depending on the detail. However, as the noble Lord, Lord Higgins, said, there is also a reference to,
“work to build a fairer society”.
I have seen no evidence of this yet but, if the Government are sincere, they should come forward with proposals to ensure that workers have a voice, are not treated as commodities, are paid fairly, are given appropriate job security and are not paid 80 times less than their boss. That really would be a fairer society.
Baroness Sharp of Guildford (LD)
My Lords, I start with the sentence in the gracious Speech that,
“Legislation will be introduced to help make the United Kingdom the most attractive place to start, finance and grow a business”.
The legislation that will follow is the small business, enterprise and employment Bill.
For a long time, I have had a considerable interest in science-based small firms. As the noble Baroness, Lady Warwick, mentioned, the UK has a very strong science base. We also have a surprisingly strong record in the development of spinout companies from our universities. Our problem has been that, long term, we failed to grow these small spinout companies into the Microsofts and Googles of this world. A particular problem arises in the bridging of the gap between pilot projects and getting a business up and running. I do not very much like the phrase, “bridging the valley of death”. In the days very long ago when I worked at the National Economic Development Office—NEDO—we called it the pre-production development gap and we had a pre-production development scheme to bridge it. It is the same problem. It has been with us for a very long time.
When I was at the University of Sussex, I belonged to a group that called itself the triple helix group. It maintained that successful innovation required three players all interacting with each other: universities linking up with the private sector, but the Government also had an important role. They all played a part in the process. I was therefore very interested in the complementarity between these three players being emphasised again in a recent report issued by the Campaign for Science and Engineering, The Economic Significance of the UK Science Base. That was written by three economists, including the son of the noble Lord, Lord Haskel—who will follow me in this debate. The report shows very clearly that investing in public sector research helps to stimulate private sector expenditures and that the two are very complementary. As Professor Alan Hughes—another of the three authors —puts it, the two,
“should not be seen as substitutes in the drive to enhance the productivity performance of the UK”.
The report suggests that there is a virtuous circle in which an increase in public sector investment in research leads to an increase in private sector research which in turn increases the capacity of the private sector to benefit from and use public sector research, thus amplifying the overall economic benefit to society as a whole.
I have also been quite interested to see that over time the coalition has come to adopt a somewhat similar philosophy towards innovation. There was a time when my friend in the other place, Vince Cable, who led a working party on industrial policy for the Liberal Democrats, advocated the total abolition of what was then the DTI and is now BIS—his own department. Above all, that working party wanted to see the abolition of all policies of industrial support. Yet, over the past four years he and David Willetts, the Minister for Universities and Science, put together what might be described as a new industrial policy built around the exploitation of the science base and the development of new industries associated with new technologies. That followed very much this triple helix model where the Government play an important intermediary role in helping bridge the gap between early and late-stage development. Measures announced in the Queen’s Speech seem to take this one stage further. The Government set up, through the Technology Strategy Board, Catalyst and Catapult centres, influenced by the German and US models. Opening up access to public procurement for small and medium-sized businesses is something the Americans have done for a long time and which the Science and Technology Committee of this House has long urged upon the Government. That is a new, important and very welcome step.
However, I also urge the Government to think further about the implications of the triple helix model of complementarity between Government, universities and the private sector in promoting innovation. In our report last year on regenerative medicine, the Science and Technology Committee examined the role of the cell therapy Catapult centre set up in May 2012 as one of the then seven TSB technology and innovation centres that aim to help businesses adopt, develop and exploit innovative products and technologies. It was described as,
“a new approach to bridging the investment ‘valley of death’”.
The Technology Strategy Board put £200 million into the seven Catapult centres—approximately £30 million into each centre. This contrasted with the $3 billion put into the California Institute for Regenerative Medicine. It is not surprising that one of the report’s main conclusions was that the Technology Strategy Board funding was insufficient and that the Government could not rely upon the private sector and venture capital to fill the gap.
In both Germany and the US, the state or regional level of government plays a substantive role in helping fund applied research, often putting together a package of private and public funding and mobilising local financial intermediaries. This level of funding is largely absent in the UK but the committee suggested that the Technology Strategy Board and the Economic and Social Research Council get together and fund an evaluation of innovative funding models in this and other countries to see if more effective methods could be found. This suggestion was welcomed by both the research council and TSB, and by the Government. That was last autumn. Is it proceeding? I realise that the Minister will not have the information to hand but could he write to me with the answer on what is happening with that suggestion?
I finish by endorsing the remarks of the noble Lord, Lord Aberdare, about the new apprenticeship proposals coming forward from the Government. Like him, I find myself very worried about the sheer complexity of the payment mechanisms, the five different levels of apprenticeship that will be created and the sheer impossibility of small and medium-sized companies handling these new apprenticeship positions. I have just been reading and enjoying the book by Professor Anthony King and Ivor Crewe, The Blunders of Our Governments. It seems that we may be replaying two of those blunders: the individual learning accounts and the tax credit accounts. I recognise that there are currently pilots and trailblazing. I hope very much that we will learn the lessons that can be learnt from them.
Lord Haskel (Lab)
My Lords, when opening this debate, the Minister said that his proposed legislation would encourage trust. I am very glad he said that because during April there were two popular polls about people’s trust in business, one for the BBC and one for the Financial Times. Both said that 61% of us did not trust business. I am not making a political point. Half of those who felt this way identified themselves as Conservatives. The Minister is right: there is a warning there that it would be wrong of us to ignore.
Most of us know why this is happening. My noble friend Lady Donaghy just said that it was to do with conditions of employment. For years, some of us have been victims of mis-selling by the banks. We have not been getting a square deal from energy companies. As my noble friend Lady Hayter told us, we have not been getting a square deal from landlords. We have not been getting a square deal from rail operators or pension managers and suppliers of public services from the private sector have been disgraced. This is in contrast with booming executive pay and a long line of companies which arrange their affairs so that they almost cease to pay corporation tax, leaving the rest of us to foot the bill.
My noble friend Lady Sherlock reminded us in her opening speech that for years there has been little alignment between the financial markets, our long-term interest, jobs and the common good. This dissatisfaction applies to Government too. As problems arise, so they are dealt with on an ad hoc basis, reacting to events—or to labour policies. This is what my noble friend Lord Liddle called a disparate agenda. This fiddling only adds to uncertainty. It also contributes to the complexity and inefficiency of our public finances. Noble Lords can read the whole depressing story in the recent Institute for Fiscal Studies paper, Tax Without Design.
What can we do to help bring back public trust in business? The answer lies in an intellectually coherent strategy that provides a framework for all of these activities. In his memorable maiden speech, the noble Lord, Lord Bamford, called it a coherent industrial strategy, and I agree. It provides a basis for long-term decision-making. BIS likes to think that we have a long-term strategy, but that is news to everybody else. To succeed, this strategy has to be respected. To make sure it is adhered to throughout government, I would like to see it enshrined in law. We have laid out a strategy in law for health, for climate change, for education and for austerity for our public finances, so why not for business?
What should this business strategy—a strategy with teeth—contain? In part, my noble friend Lord Liddle told us when he called for a comprehensive ethical agenda. We know that most business leaders are committed to high ethical standards: they know that this builds trust. The problem is to convince and communicate this to everybody else in their organisations. Well, there are UN global guidelines that respond to this. Those guidelines, as part of a business strategy in a legal framework, will help rebuild trust in business. We are virtually having to do this with the banking industry.
Quite rightly, business organisations call for certainty so they can plan for the longer term. This means that long-term institutions, such as the Technology Strategy Board, which is so important in developing the technology that the noble Baroness, Lady Wilcox, told us about, have to be given protection of law so that, like the RDAs, they cannot just be abolished on a whim. Part of the answer is not just to regulate, but to rebalance.
Whatever the outcome of the Scottish referendum, surely significant to all of us is the need for more local accountability, which means getting away from the culture of doing deals with central government. I join the Public Accounts Committee in asking why, of the £309 billion set aside by the Government since 2010 for promoting growth in the regions, only £400 million has been allocated. The noble Lord, Lord Heseltine, in his paper, No Stone Unturned, speaks to this. We see many contributing to economic progress, but fewer benefiting. A proper, legal industrial strategy will help us break free from markets that work only for themselves. The noble Lord, Lord Tugendhat, spoke about this. Read the speeches made by the Governor of the Bank of England to the recent inclusive capitalism conference: that will convince noble Lords, even if I do not.
Public investment must also feature, as the noble Baroness, Lady Sharp, just told us. After all, we know, on very good authority, about the benefits of public investment in science. Of course, the strategy must also protect the public interest, by, for instance, stating clearly that tax allowances and incentives are for investment, not for financial dodges. The gracious Speech mentions fair pay and job security, and yes, the Government are trying to stimulate manufacturing, which is so important to the right reverend Prelate the Bishop of Durham. However, all of this is insufficient, random and, most importantly, it lacks coherence.
What about the politics of this? A strategy of this kind reflects the politics of hope. It challenges the insecurity created by blanket austerity. It connects with Europe 2020 and completing the single market. It puts immigration into a non-racial context. Most importantly, it faces up to the huge scale of the challenge facing us, instead of just tinkering with it. Of course, no law will build economic revival and growth—business will. However, the task will be infinitely harder if we fail to win back that 61% of the population who no longer trust business. I am certainly content with the Motion to thank Her Majesty for the gracious Speech, but like many noble Lords—some of whom I have mentioned—I regret that it does not contain an industrial strategy. That will obviously have to be left to a Labour Administration.
Lord Howe of Aberavon (Con)
My Lords, I follow the noble Lord, Lord Haskel, with a similar approach to the problems we are all trying to face. He started off by saying that there was no agenda. I would add something that is almost more serious, where, for our society and for our economy in particular, there is no forum or framework and where we have a double shambles. I have a particular emphasis on the absence of any coherent, comprehensive system of weights and measures.
British weights and measures are in a universal mess: litres for petrol and fizzy drinks; pints for beer and milk. We use metres and kilometres for athletics and miles per gallon for cars. The metric system is used in schools, yet all too often pounds and ounces are still used in the market. It is impossible to argue that this chaos does not matter. The fact is that it increases costs, confuses shoppers and managers, leads to serious misunderstandings, causes accidents, wastes our children’s education and, quite bluntly, puts us all to shame.
Almost 800 years ago, Britain’s first charter of human rights, Magna Carta, proclaimed that there should be,
“one measure of wine throughout our whole realm … one measure of corn … and one width of cloth”.
Before then, and ever since, every civilised society has recognised the need for one set, and only one set, of standard measures. How did we get into this curious mess? We have been dithering for almost 150 years. As long ago as 1862, a Commons Select Committee unanimously recommended the adoption of the metric system. A century later, in 1965, the decision was finally taken to go metric over the next 10 years. However, it is still shambling along beside the old system. Alas, the Government then, of whom I was a member, foolishly accepted the recommendation to go that way. We are still stuck half way, while the rest of the world sensibly and quickly moved on. Australia, Kenya, New Zealand, South Africa, India and Jamaica—members of what we used to call the British Commonwealth—have long completed the entire change, and Ireland, our neighbour, completed the process as quickly as those countries did.
Quite frankly, the proposition that I wish to emphasise to the House is that plainly we cannot stay where we are, with two confused, competing systems. It would be madness to go backwards. The only solution is to complete the changeover to metric as swiftly and cleanly as possible. It is long past time for us to summon up the will to get ourselves out of the present wasteful, untidy mess.
Lord Desai (Lab)
My Lords, it is a great honour to follow the noble and learned Lord, Lord Howe of Aberavon. In the short time that I have, I want to do two things. The first is to try out a somewhat novel idea, and maybe it will be one for the Government to take away and work on, and the second is to talk a little more about the manufacturing strategy that has been discussed.
We have now had four years of austerity. By and large, the deflationary move has been successful inasmuch as the economy has now revived. However, there is a particular anomaly which I want to point out and which has not attracted much attention. Our debt is about £1,300 billion, give or take £100 billion here or there. The surprising thing is that the policy of quantitative easing followed by the Bank of England means that the Bank owes £385 billion of that debt. Therefore, we are in the peculiar situation of the Government paying interest to the Bank of England, which the Bank of England returns to the Government with thanks.
Nobody has said this yet, although my noble friend Lord Myners mentioned it in the debate on the Budget, but the Government could take that £385 billion of debt owed by the Bank of England and cancel it. However, there is a snag: against the £385 billion of assets, the Bank of England has created a liability—that is, it has printed money. Therefore, I think that the best thing for the Government to do would be to sell the Bank of England £385 billion-worth of zero-interest bonds so that the books could be balanced and the Government could say what interest should be paid on the £385 billion. This is a very simple, effective device which nobody has thought about but I offer it to the Government out of the goodness of my heart.
By and large, monetary policy has not worked. At best, you could say that it has prevented things getting worse, but only active fiscal policy can do things which monetary policy cannot do, and a device such as that would release funds for fiscal policy to do more than it has been able to do so far. In a sense, it would give the Government a clever escape hatch through which they could save £30 billion or whatever, depending on how much interest they pay on the debt. That is something that I hope somebody will think about.
It may be said, “You can’t do that because you’ll have to print money against this debt”, but the money has been printed and is out there. With QE, the Bank of England bought £385 billion-worth of debt from the market. One alternative would be for it to sell it back and withdraw the money, but we do not need that. Inflation is very low. The central banks are competing with each other to raise the rate of inflation up to 2%. I thought that I would never live to see it, having lived through the great monetarist days when the noble and learned Lord, Lord Howe, was cracking the whip with his policy. So we already have a situation where the money is out there. We want the money to go out and stimulate the economy. The Government are paying too much interest— about a quarter of it to the Bank of England, which makes no sense—but if they think slightly outside the box, they could improve the prospects for the economy.
I shall now get a little more down to earth. When I came to your Lordships’ House roughly 23 years ago, on 18 June 1991, my maiden speech was on manufacturing and why there was no future in manufacturing at all. We ought to stop getting obsessed about manufacturing because it diverts attention from the economy. In his brilliant maiden speech, the noble Lord, Lord Bamford, pointed out that manufacturing is very valuable. Of course it is very valuable—there is no doubt about that—but it does not need to be expanded. Over the past 23 years since I made that speech, manufacturing has shrunk and the economy has become more prosperous.
The point is that in manufacturing we have concentrated on genuinely high-value-added jobs in high tech, which is the only place where we can survive in international competitive business. The UK economy cannot survive in labour-intensive manufacturing. You cannot create millions of jobs in UK manufacturing—there are people in China, Indonesia and Malaysia who will beat us at that—so we have to concentrate our manufacturing on high-value-added, high-tech products. It is a very competitive business which requires as a minimum, as noble Lords have said, a lot of research on the triple helix and so on. A good higher education sector is also required. Along with that, we have to be quite ruthless about eliminating non-competitive business and not subsidising it.
If we are to have a prosperous economy, we need a small highly valuable manufacturing sector whose contribution to national income in percentage terms is way above its contribution to employment in percentage terms—that is, we have to have the most productive people going into manufacturing. That is why this song and dance about apprenticeships surprises me. In around the 1880s, there were government reports that we were falling behind Germany. It was asked why the Germans were ahead of us. It was said that they had apprenticeships and we did not. Some 130 years later, we are still talking about apprenticeships. Nobody needs 2 million apprentices—certainly not in manufacturing.
Talking about apprentices produces a false concreteness —it looks as though people are doing something useful and highly skilled. We need a lot of people in healthcare, for example. Our real labour needs are going to be in what we might call the soft industries: healthcare, education and the arts. The arts are a very valuable and profitable part of the economy and one in which we have a comparative advantage. Therefore, when thinking about apprenticeships or the economy, we should not think too much about expanding manufacturing. Economic prosperity depends on doing what we do best, and very often that is not the concrete but the abstract. Britain is very good at abstract things—one has only to think of Shakespeare. We can sell good, expertly made products abroad. Let us stick to that and not get into metal bashing.
Lord Mitchell (Lab)
My Lords, I was going to apologise to the noble Lord, Lord Higgins, who I see is just leaving his place. As he will hear, my speech is indeed on my iPad but I promise him that I will try to interact with the Chamber as I am giving it. Anyhow, as an ageing geek, I have to show my younger colleagues that I am still cool.
Your Lordships’ House is always at its best when it is fortunate to hear outstanding maiden speeches. To have heard two in one day from two giants in their field, such as the noble Lord, Lord Bamford, and the right reverend Prelate the Bishop of Durham, is a very special treat.
This evening I want to talk about a huge British business success story—or I was going to before the screen went blank; it is how you react under fire that matters. It is a story which in fact started under the previous Government and has flourished under this one, and it concerns an industry with which I have been personally associated for nearly 50 years. I refer, of course, to the digital economy.
When I started all those years ago, it was all about massive computers costing hundreds of thousands of pounds. Input was by way of punch cards or paper tape and storage was on massive disks and whirring tape drives. It has changed just a tad. I remember reading a book in the 1990s on the projected winners and losers in the data processing industry, as it was then called. The only names it got right were IBM and Hewlett-Packard. Not included were Apple, Google, Microsoft, Facebook and Twitter. Most of them did not even exist. Google, the third-largest company in the world by capitalisation, is only 16 years old. Has there ever been such a dramatic structural change in such a massive industry?
The UK—which, to be honest, used to be a small participator—has now become a major player in the new digital economy. For evidence we can do no better than to look here in London and, in particular, at Tech City in Shoreditch. Of all the new jobs in London, 27% are in the tech and digital sector; 600,000 people in London work in this sector. Between 2009 and 2012, the number of digital tech companies in London grew from 50,000 to 88,000—a growth of 76%. Tech City took hold during the Labour Government and it has blossomed during this Government. It was not planned by government; it was not financed by government; it simply happened.
Throughout the UK, the digital economy is also world-beating. It has a value of £121 billion, which is equal to 8.3% of GDP. It is expected to grow at a rate of 11% per annum. Over the next five years it will employ more than 500,000 new entrants. On the consumer side, the UK is the number one user of e-commerce in the world. In the Government Digital Service, set up under this Government, we have an online service that any country would be proud of. This may sound strange coming from these Benches, but I believe that this Government have done a good job in promoting entrepreneurial drive in this digital tech sector. Certainly if we on this side win the next general election, we will continue that good work.
My biggest criticism is to do with broadband, and I am sure that if the Minister were here—which he is not—he would be able to comment on this. Many infrastructure projects are being contemplated: HS2, Crossrail 2, new motorways, new stations, new runways and so on. It is all good stuff and it all helps to ensure that the UK is fully equipped for the 21st century. However, I do not hear enough about broadband and mobile connectivity. Of course the broadband project rolls forward, but it is ponderous, and it does little for those living in rural communities. On a recent visit to Norwich I was staggered to hear about the snail-pace broadband that they have and the mobile phone connections that in many areas are non-existent.
It took only a brief meeting with the Minister responsible, Ed Vaizey, for me to understand the problem. There was no sense of urgency about a situation that is very critical. Can somebody please explain to me why a project with such infrastructure implications is located in the DCMS? What does it know about rolling out mega projects? As exciting as the digital revolution may be, there really are some dangers from the misuse of technology in general and the internet in particular. Online payday lending is just one such danger. Noble Lords will know that I have campaigned to control online payday loan companies. Yesterday I introduced a Private Member’s Bill that will ban TV advertising of payday loan advertisements before the 9 pm watershed. I hope that I will have the House’s support on it.
There are also dangers to employment. Let us look just at the retail sector. Last Christmas, 20% of all retail sales were online; it was a massive increase on the year before. Retail employs 3 million people. If this online trend continues—and it will—there will be massive redundancies on our high streets. We have already seen the demise of HMV, Jessops and Blockbuster, each one of them outflanked by rapid technological advance. What is true of retail is also true of banks. They, too, are under threat by new online competitors. Our response must be to anticipate these dangers. Our people need to be taught digital skills at every level.
I shall end my remarks on the subject of privacy. Snowden has shown us just how exposed we all are. The European Court of Justice opined two weeks ago that we all have the right to be forgotten. If you have an up-to-date iPhone, then every location you have visited is recorded on that phone—when you arrived there and when you left. If anybody would like me to show them, I can do so. Who gave them permission to store this very private information without our explicit permission? Do they have access to it? They say not, but can we be sure?
The next big thing in the digital world is wearable technology—devices on our wrists which can store data about our health. These data can be sent to our doctors but perhaps also to our insurance companies, and to who else? Protection should be in place to ensure that only people whom we personally authorise are allowed to have access to such sensitive information.
In five days’ time we will be celebrating the 799th anniversary of the Magna Carta—the contract which began the process of our civil rights. Maybe for the 800th anniversary, next year, we should have a digital Magna Carta that guarantees all of us protection from all unauthorised snooping into our private lives.
Lord Elton (Con)
My Lords, I am a refugee in the sense that this is the only night on which I can be present for the start and finish of the debate. I apologise for the fact that my three very short subjects are not on what might be considered the notional Order Paper for tonight.
I congratulate both the noble Lord, Lord Bamford, and the right reverend Prelate the Bishop of Durham on their contributions. I was particularly heartened by the right reverend Prelate’s plug for the north-east as the sole region in profit on its overseas account, and regarding the charming nature of almost all the population. Coming from the south-east I am not familiar with the latter condition. In fact, I decided some time ago that I wanted to address the extraordinary change that has come over the nature of British society during my lifetime. I could go into lengthy detail, but it is worth condensing it by saying that one’s default expectation of anybody who one was dealing with was that they would be honest, spoke the truth, kept the law, kept their word, honoured their cheques if they were the sort of people who had cheque-books, be faithful to their spouses and, of course, would know the difference between right and wrong and would stand on the side of right. That is what one expected and anything else was a disappointment, and quite a severe one on some occasions.
An illustration of the extent of the change is simply the length of the traffic jam going to primary schools in the mornings—parents cannot risk their children going to school on their own. In my youth children of six were expected to be able to walk four miles to school and four miles back every day unaccompanied, and people did not worry. They played in the street and people did not worry. They played in the fields and people did not worry. In many rural communities the way in which you told your neighbours what was going on at home was that you locked the front door to show that you were away and left the back door unlocked to show that they were welcome to come in, even so.
Life has changed and one has to ask why. The reasons are many and complex; they are economic, political, and so on. However, right at the basis is the difference that in my youth and until my middle age—decreasingly towards my middle age—the lifeblood of this country flowed through its churches, chapels, cathedrals, synagogues and meeting houses. People could not escape the repetition and emphasis of the moral truths which sustain the civilised society we wish to sustain—a safe, stable and mutually respecting society.
If noble Lords doubt my emphasis on the extent of the influences of the religious establishment at an appropriate point in our history, I should say that I remember clearly Sunday 26 May 1940, when we went to the big church near to where we lived in Old Headington in what is now north Oxford. We went 20 minutes early but could not get in without a struggle—many people could not get in at all—because King George VI had issued a call to the nation the previous week to pray for our troops surrounded at Dunkirk. I will not go into the history of the miracle that followed, but the nation went to pray—and the nation knew its morals because the nation went to church.
It is not the business of Government to fill churches but it is their business to ensure that there is some connection between the morality of the individual and the ethics of society. Indeed it is their business to see that individuals have a morality. I want to put an idea into the heads of the Ministers in the Department for Education that perhaps the time has come to reinstate religious studies in schools up to the sixth form and to give it the same status as the STEM subjects now have. If you make a subject an examination subject there is a great enthusiasm to study it and you do not damage your educational career by doing so. On the other hand, if it is not of that status and does not carry examination weight—it is not examinable in some schools—you lose customers. And it should then be connected to the teaching of civics so that people can see a connection between the morality which gives the reason for ethics, and the ethics which give stability to society. That is all I wish to say about that.
I chimed a little with the noble Baroness, Lady Donaghy—with whom I also communicate via Hansard—when she spoke about the necessity for a fair society. I am an unashamed Tory. There must be inequality—you cannot have competition without inequality—but you also need fairness, and it worries me that there is no apparent restraint on the increasing vertiginous gap between the richest and the poorest in this country. My tiny suggestion is that we need more effective charitable giving in this country. At present we use gift aid, but that only provides motivation for the charities to ask donors to subscribe to the gift aid scheme. We want to motivate people who are not yet donors to become donors. This means that they want to get some benefit from it too. If what I am about to suggest was carried out 100% it would probably cripple that part of the Treasury that depends on income tax but, done proportionately, if mega-rich people were given a fractional percentage reduction in the income they do not give away, they would have a large incentive to give a proportion away. If you want to find a way of moderating it—we were talking about the connection of the churches, ethics and society—there is a good biblical example of 10% being a suitable amount to encourage people to give away. Anything more, of course, would be welcome.
On the Queen’s Speech, I find it extraordinary that we, in seeking to strike a figure on the world stage and influence policy despite our reduced military strength, stand as the founders of the greatest commonwealth ever seen. Our population is 64 million and the Commonwealth population is 2.2 thousand million. It embraces almost every ethnic group and just about every religion in the world and spreads around the globe. It was our invention and we are part of it. Ministers write speeches declaring the situation in this country and how we are going to deal with it. They prepare it for delivery in this House, with the other House present below the Bar, by the head of that great institution—who has been for decades the head of it—with not one word mentioned of what it is achieving, what it has achieved, what it could achieve, or how we are to exploit it or improve it. It does not mention the fact that CHOGM commissioned and received a report on the restriction of sexual violence in conflict, which is one of the flagship policies the Foreign Office is promoting. I find that extraordinary.
I hope that the Minister, through his colleague, will let us know the importance that the Government—and other Governments have not done any better—this country and all parties give to this great organisation, which could give us so much influence and support around the world. What do they really think of it and how often has it figured in the Queen’s Speech in the past 10 years?
Lord Morris of Handsworth (Lab)
My Lords, I, too, pay tribute to the gracious Speech. It scanned the horizons of the social and economic landscape of our country. However, the economic landscape experienced by millions of our fellow citizens is a very different place. The strategy of the coalition Government remains unchanged: it is to reward the rich through the tax system and punish the poor through policies such as the bedroom tax. However, figures from the Office for National Statistics are an indictment of the Government’s policies. They show that 1% of Britain’s richest individuals have accumulated as much wealth as 55% of the poorest.
The coalition Government believe that they can eradicate poverty by making work pay, and it is true that the unemployment figures are coming down and more people are in work. That is to be welcomed. However, yesterday we heard from the coalition’s own watchdog on poverty, the Social Mobility and Child Poverty Commission. Its report states that the Government’s belief that they can end child poverty by 2020, mainly through the labour market, does not look remotely realistic. The Commission shows that 3.5 million children are expected to be in absolute poverty in Britain by 2020—almost five times as many as the goals set by the Government. The report states that even if parental employment reached 100%—
“far beyond what has ever been achieved anywhere in the world”—
there would have to be a substantial increase in hours worked, and current policies would not enable that to happen.
Many parents are the victims of in-work poverty, unable to command sufficient earnings to escape low incomes and moving in and out of insecure, short-term and low-paid employment. We hear similar stories from organisations such as the Trussell Trust, which recently reported that, of the 900,000 adults and children who visited its food banks last year, 30% were in financial trouble because of benefit delays and 17% had problems caused by benefit changes, while 20% of referrals at the food banks were a result of low family incomes.
Last year, the annual report of the New Policy Institute gave a comprehensive picture of poverty in the United Kingdom. It showed that, of 13 million people living in poverty, more than half were from working families. It is just not true that people who are living in poverty are shy of work. We have heard too much about those who draw the curtains at 9 am and get back under the duvet. No one bothered to ask about the bus drivers or those in our hospitals working very late and coming home in the morning, who are entitled to their rest. The New Policy Institute report concluded that the changes to the welfare system actually made poverty worse. For work to be the route out of poverty, work must provide a living wage. You can work as much as you like, but if your earnings do not equate to the accepted level of sustenance, you are in poverty. Although I welcome any sanctions against employers not paying the legal minimum wage, I look forward to the legislation or to any proposals that would lift the minimum wage to become a living wage.
I was also pleased to note that attention was promised regarding the reform of so-called zero-hours contracts. I am old fashioned and have always been led to believe that a contract has rights on the one hand and obligations on the other. It seems that this is a one-sided development for contracts in our employment sector. An employer has all the rights and the ability to exercise them, and makes all the demands, while the employee has no rights—only an obligation to respond to the employer’s demands. These contracts are misnamed. They are not zero-hours contracts but “no rights” contracts, and they should be described as what they are. How do you organise the family budget that depends on the uncertainty of a zero-hours contract, which means you have no idea when you will work or, indeed, how much you will earn? On this side of the House, we look forward to seeing the draft proposals that would make a difference to families and individuals and give some certainty in respect of the obligations that they may or may not take on.
There is a pattern throughout the policies that we are experiencing. The Government pursue families and individuals who have no means to fight back. Legal aid and access to justice are restricted, including for workers who might have a fair claim for unfair dismissal. As we heard earlier in the debate, the sanctions start with the inability to pay the fees for hearing a case of alleged unfair dismissal.
As I reflect on the gracious Speech, I wish that I could have heard how we can help those of our citizens in greatest need. It leaves me to conclude that Britain can, nevertheless, do better. For the sake of all our citizens, Britain must do better.
Lord Clement-Jones (LD)
My Lords, in many respects the Queen’s Speech is to be welcomed, precisely for the fact that it does not contain a huge amount of new legislation. None the less, I welcome the carryover of the Consumer Rights Bill and the Deregulation Bill. Curiously, I note for the aspiring statesmen among us that it will, among other things, make statues easier to erect. I do not know whether your Lordships noticed that.
In particular, I welcome the introduction of the small business and enterprise Bill outlined by my noble friend Lord Livingston because today, among other issues, I want to deal with the key question of start-ups in the tech and creative sector and what we need to do to ensure their success. I enjoyed the digital speech of the noble Lord, Lord Mitchell. According to official figures, the creative sector grew by almost 10% in 2012 and outperformed all other sectors of UK industry. It accounted for 1.6 million jobs in 2012. However, this underestimates the contribution of the creative industries. Many would say that they employ at least 2 million, so I welcome the Government’s intention to reclassify their contribution to GDP to bring back in software. We should not forget, too, the key role that arts and culture perform in providing the creative industries with talent. The approach to their funding needs reappraising, particularly in the light of the CEBR report on their contribution to the economy.
A crucial factor in one area of growth has been the tax treatment of film production, followed by high-end television and animation. In April, video games relief was cleared by the EU, which was excellent news. The new theatre production tax relief and patent box will have a major impact too. From a recent presentation at the Google Campus in Tech City to the Communications Committee, it is clear that we have come a long way since Silicon Roundabout morphed into Tech City. The noble Lord, Lord Mitchell, gave some very interesting figures. There have been more than 15,000 start-ups there in each of the past two years.
More widely, Trip Hawkins, who founded Electronic Arts in 1982, recently said that Britain is the most creative country in the world and can lure top technology businesses away from Silicon Valley. However, to fulfil that promise, we need to ensure they have access to the skills and finance they need to grow. It seems they now have good access to early-stage finance with a variety of angel investors through the Government’s enterprise investment schemes. Indeed, these schemes in the UK are now said to be among the best in the world. Tech companies have also benefited from the business growth fund, enterprise capital funds and the enterprise finance guarantee. Crowdfunding is beginning to have a real impact. Exceptionally among the banks, Santander has introduced its imaginative breakthrough programme for fast-growing start-ups. The important thing now, as the Creative Industries Council has identified, is promotion of these schemes.
However, we were told that it is in the later stages, where hundreds of million of pounds are required for investment or a venture capital exit is needed, where we are behind the US. Are UK financial institutions too risk-averse? If so, there is a danger of business moving to the US at this funding stage. None the less, US institutions are now moving here which understand the potential of tech and creative start-ups. There is also good evidence from recent listings on the Stock Exchange that we are making progress. The creation of the new High Growth Segment to encourage companies to list here is having an impact.
The talent available, however, is far below what we need. Start-ups in Tech City need a mixture of technical and creative skills to develop their new digital services. Knowledge of digital technologies is particularly crucial. We need 1 million tech jobs to be filled by 2020 to keep up with demand. So I welcome the inclusion in the curriculum of coding, or computer science, from this September for five to 16 year-olds. But even if the pipeline from schools and universities is there, finding the right talent can be tough. Training and proper apprenticeships are hugely important.
Even if we fill the gap in the long term, we will in the short term still be reliant on overseas undergraduates and postgraduates. I welcome the developments with the exceptional talent visas, which show some increased flexibility, but as Policy Exchange’s recently published Technology Manifesto makes clear, we must ensure our visa regime is fast and user-friendly, to attract them into both employment and our higher education institutions.
If we get it right the prize is very great. Policy Exchange says that the internet economy will be 16% of GDP by 2016. We are already the highest net exporter of computer and information services among the G7 countries. Already our online retail surplus is larger than that of Germany and the US combined. This also means that we need to break down the barriers to e-commerce across the EU to create a genuine European digital single market.
Clusters, or hubs, are of huge importance to the tech and creative industries and, as Policy Exchange says, there are many more than just those in London. In terms of innovation, creativity, finance, promotion and skills, clustering is now the name of the game. But this raises the whole question of whether our cities operate on the right scale, especially when compared with cities in emerging markets, and whether they have the necessary powers and control over their own finances. After all, more than 90% of tax is collected by central government.
I was at the opening of the International Festival for Business in Liverpool yesterday, and a great showcase it was for both Britain and Liverpool. We had contributions that demonstrated real commitment to the creative sector from the Prime Minister, my noble friend the Trade Minister and the Culture Secretary. I was also delighted that my noble friend acknowledged the value of professional services, but it reminded me of the words of the noble Lord, Lord Heseltine, in the paper No Stone Unturned: In Pursuit of Growth, which he wrote in 2012 about cities and regeneration. He said:
“What Liverpool forced me to confront was the extent to which these conditioning qualities had been driven from municipal England. The dynamism that had built the city was gone”.
There is a major RSA project under way, the City Growth Commission, chaired by Jim O’Neill, which will report in October this year. As the commission says, too many of the UK’s urban areas outside London are failing to achieve their growth potential. How can we make our cities competitive in the global economy? How can we strengthen our clusters? How can we tie in our universities as incubators? It is vital that we build on initiatives such as the LEPs, city deals and the regional growth fund.
As the Lords Select Committee recently concluded, our creative industries are increasingly part of Britain’s soft power. They are a vital aspect of our international trade and investment. A few days ago I took part in the third Technology Innovators Forum—TIF-IN—in Qingdao, opened by the Secretary of State for Business, which reflects that with the growth of digital platforms and applications there is a symbiotic relationship between the tech sector and creative content, as well as the need to promote our UK creative industries in emerging markets, especially China.
At TIF-IN, my right honourable friend launched the Global Digital Media and Entertainment Alliance with China, which will promote long-term relationships in the digital media and entertainment sectors. I am optimistic that it will greatly benefit the UK’s creative industries. We have a terrific team of UKTI people in China, with increasing sector specialisms. They have done an excellent job post-Olympics in developing Britain through the GREAT campaign. The FCO is very supportive. We now have an expert IP attaché in Beijing and other major markets.
However, UK companies, particularly SMEs, need persuading to be bolder. We need to demonstrate the benefits of trade and investment with emerging markets more effectively, and we need a much longer pipeline of SMEs lining up to do business in emerging markets. That means more UKTI resource in the UK, especially in the English regions.
Finally, as I cannot take part in Thursday’s debate, I want to mention the tourism sector. In that context I very much welcome the announcement last week at the British Hospitality Association summit of the creation of a new tourism council along the lines of the successful model of the Creative Industries Council. I hope that this will lead rapidly to a range of measures that will ensure the competitiveness of our tourism industry compared to other European destinations. That is also a vital part of our soft power.
Lord Hodgson of Astley Abbotts (Con)
My Lords, one of the glories of these four days of debate on the Queen’s Speech is the wide-ranging nature of contributions from all sides of the House. I want to pick up one point made by the noble Baroness, Lady Sherlock, and supported by the noble Baronesses, Lady Drake and Lady Hollis, and the noble Lords, Lord Monks and Lord Morris: the question of zero-hours contracts. This is not a defence of zero-hours contracts. I think there are things that need to be done to make them better, but many noble Lords would be astonished by how popular they are. I was for a number of years until a couple of months ago a director of a major brewery and pub company—we had 2,500 pubs—and the demand for zero-hours contracts from students and men and women who wanted to be able to work evenings and weekends when they wanted to was very considerable. It would be a shame if we shut off that opportunity for people to better themselves economically by overregulating the sector. That would be a grave error and I hope that the Government will not allow the regulatory burden to become too great.
For my part, I want to congratulate the Government on the progress they have made. Unsurprisingly, the record has a blemish or two, but overwhelmingly the story has been one of steady progress in the face of a range of extremely intractable problems inherited in May 2010. My noble friend Lord Stoneham of Droxford made an excellent series of comments about that in his remarks earlier. Now in this final year we are going to continue that programme with hard graft. I would like to pick out two Bills that we are going to be looking at: the protection of charities Bill and the social action, responsibility and heroism Bill—the SARAH Bill. I have to say that I think the noble Baroness, Lady Hayter of Kentish Town, was less than generous in saying that the Government were not interested in the charities sector.
Noble Lords will know that I have done quite a lot of work for the Government on the charities and voluntary sector, and I have prepared a couple of reports. I share the view that charitable or voluntary effort is a very important part of the glue that underpins the cohesion of our society. The first of those reports, Unshackling Good Neighbours, revealed that many people are put off volunteering, whether as a trustee or as a worker, by the perceived potential threat of legal action. This has been the result of some very well publicised legal judgments that appear entirely counterintuitive and some well publicised cases that in the event turn out to be myths. Whatever the reason, I am delighted that the Government have decided to put in statute that people have a responsibility for their own safety and that, so long as people seeking to help them behave responsibly, they will not be held liable by the courts if something goes wrong. I fear that this will not please the lawyers, who will argue that the case law and the precedents already established are entirely adequate. Further, lawyers find it extraordinarily difficult to accept that judges ever give counterintuitive judgments. But public perception on this issue is different, and in this case public perception is the critical factor. I hope that the Government will stick to their guns.
The second report I undertook was a review of the Charities Act. The charities sector does tremendous work but it has come in for a lot of criticism in recent years—the Cup Trust, executive salaries, aid going to fund extremism and so forth—so it is more important than ever that public trust and confidence in this sector are maintained. This requires vigorous action by the Charity Commission and, of course, appropriate action by the trustees of individual charities. My research found that the Charity Commission is underpowered in that regard, so I hope that the Bill will plug the gaps. I think that it is due here in the autumn. Once it is in place, I very much hope that the Charity Commission will not hesitate to use it in a proactive as well as a reactive way.
For the remaining few minutes of my remarks, I want to refer to an issue that I have raised several times in the past: that is, the future demographic shape of this country. Today, we are debating business, employment, pensions, welfare, agriculture and the environment. The policies in every one of these departments will be radically affected by the future absolute levels of population in this country. As is always the case, I need to start by making two things clear. This is not a debate about immigration or about the racial make-up of our country; I am not interested in those. My interest is in how future levels of population will affect every member of our settled population. Indeed, some strongly argue that it is the more recently arrived who will be the most affected. I continue to raise this because, of all the challenges that Governments face, demography has the longest lead times. A nudge on the demographic tiller has no immediate impact at all. Its effects are felt in 10, 20 or even 50 years. That is why it is so important that all Governments look to the future and decide what, if any, steps are necessary today.
The basic facts are these. The population of the United Kingdom increases every day by 1,150 people. That means that we are putting onto the map of Britain a large village or a small town every week for 52 weeks a year. Currently, 60% of those people are what is called the natural increase—the excess of births over deaths—and 40% from immigration. Should we mind that increase? Well, it is certainly going to have an extraordinarily dramatic impact on our country. We have heard a lot of speeches from noble Lords talking about housing. Currently, 2.4 people live in every dwelling. I think it will be accepted around the House that it is our duty as a civilised society to house our fellow citizens properly. If we assume that the ratio persists—it has been falling gradually over the years—we need 480 houses every day. We need some immediately to deal with adult immigrants and some over a slightly longer period to look after children as they mature. Noble Lords can do the mathematics: 480 houses every day means 20 houses every hour, a house every three minutes, night and day. That is going to make an impact.
In fairness to other Members of your Lordships’ House waiting to speak, today is not the occasion to address the other complex aspects of the subject, such as the relative population densities—England has now overtaken the Netherlands as the most densely populated country in Europe—or the relative economic advantage of immigration. It seems likely that the richer you are, the more immigration benefits you; the poorer you are, the more immigration is to your disadvantage. It is, however, worth asking one final question: where might this all end? The Government Actuary’s Department and the Office for National Statistics suggest that by mid-century—40 years from now—our population will be just below 80 million, that is, about a third higher than it is today. The bulk of that increase is likely to come in London and the south-east. Using the yardstick of housebuilding that I used before, we shall need to provide another 3.6 million homes.
To conclude, I think that this is a fantastic country to live in. That is why people want to come to live here. They have the chance to learn English—the world’s lingua franca, especially in the world of technology. Of course, they come to take advantage of the economic opportunities that exist here. However, I think that they also come because of what the Greeks would call our demos: that extraordinary mixture of the rule of law, the absence of corruption, the ability to speak your mind, the ability to follow your faith, the extraordinary breadth and depth of our country’s environment and cultural heritage and, last but not least, the prevailing atmosphere of tolerance and good humour. At heart, what has given this country its social cohesion is a sense of fairness. The Government and all parties need to reflect on whether the demographic challenges, which are coming as surely as night follows day, will put at risk that sense of fairness, and so partially undermine what has made our country such a distinctive and attractive place to live.
Lord Soley (Lab)
My Lords, I shall focus my comments today on the environment. I know that the Minister who will respond will not deal with this issue, but I should be grateful if he would draw my comments, particularly what I am going to say about defence forces and biofuels, to the attention of the relevant Minister, the noble Lord, Lord Astor.
The Queen’s Speech is too thin on environmental issues. I welcome the policy on plastic bags; I do not think that it is a laughing matter—the noble Baroness, Lady Parminter, made the point well about the impact on wildlife. My noble friend Lady Sherlock made a very interesting point about the degradation of biodegradable bags, where the plastic itself does not degrade. That brings me to the heart of what I want to say. We still do not do enough in this country to put science and technology in the driving seat on climate change. I have expressed concern about climate change since I first wrote about it in the early 1980s, but I have never believed that the way to deal with it is to try to stop people driving, flying or whatever. When the developing world looks at us, they ask us—forcefully at times—why, when we cut down all our forests several hundred years ago, we are lecturing them on reducing their forests now. That is a powerful point, although of course it does not alter the factual situation that we have to address.
Science and technology are also important because, at times, people forget that Britain has been at the forefront of some of the science on climate change precisely because we are an advanced scientific nation, and particularly the advances made by what is still the second largest, second most advanced aerospace industry in the world. That is how we know about climate change. If we did not have the measurements available from the science learnt from the aerospace industry, we would not know a fraction of what we do about climate change. It is crucial to have science and technology in the driving seat.
Although it is now a declining number who deny the dangers of climate change, I make two passing points. The first is that if you are warned of a danger of this type, it is foolish to do anything other than adopt the precautionary principle and address the issue. If it turns out not to be as fearful as you expect, the damage is relatively little; if you do not do anything, the damage could be very severe.
The second common-sense reason for wanting to do something about it is that, by and large, it is a bad idea to encourage production without doing so in a non-polluting way. Think of the dramatic expansion in the world’s population, who are all going to want to fly, drive and have a living standard comparable to that of the UK, the US and western Europe. We cannot do that without the application of science and technology.
That brings me to my point about the defence forces. I make no apology for asking the Minister to draw it to the attention of the noble Lord, Lord Astor, because I tabled a Question on this issue, which I shall refer to in a moment. I also hope to get a short debate on the issue. Let me give my examples in very bald form from the various scientific journals and the Governments concerned. Our allies in the Royal Australian Navy make it clear that it plans to make all its ships and aircraft biofuel-capable within six years. The United States Navy plans to launch what it calls a “biofuel-enabled Great Green Fleet”—a bit of a dramatic title that—by 2016, a couple of years away,
“complete with fighter jets, helicopters, destroyers, and other ships”,
able to use biofuels.
It is not commonly known that many of the advanced fighter jets deployed by the United States in Afghanistan, and indeed many of their other aircraft, were using biofuels in the form of algae. A large part of the reason was not cost, because they are not cheap to produce, but security. If you are having your fuel lines blown up as it is brought in through Pakistan and Afghanistan, it is easier to produce the fuel on site—and that is what they did. The Italian navy currently has a ship deployed off the Baltic states, partly as a result of the NATO response to Crimea, which is a biofuel ship. They are also planning to increase the use of biofuels through one of their major companies. The Dutch air force is also now flying Apache helicopters with a mixture of biofuels.
I give those four examples—I could give others from other countries—because I want to read out the Question for Written Answer that I put down in January this year to the Ministry of Defence. I asked,
“what is their policy on the use of biofuel by the Royal Navy, the Army and the Royal Air Force”.
The Answer was:
“The Ministry of Defence … uses biofuels in road transport (petrol and diesel) where EU legislation obliges fuel manufacturers to include a percentage of biofuels in the fuel they produce. The use of biofuels in marine and aviation fuel is governed by the requirements and approvals of MOD equipment manufacturers. The MOD is encouraging these manufacturers to work towards adopting biofuels in the future”.—[Official Report, 16/1/14; col. WA 37.]
That is an awfully sad reply. I then turn to our Royal Navy’s Rear Admiral Neil Morisetti, the UK’s former climate and energy security adviser, who went to the United States a couple of years ago and came back recommending that the US and UK collaborate more closely on the development of strategic, high-performance biofuels.
These biofuels are not the ones that take up land use—that is, some of them are but the majority are designed to be renewable. One extremely important point that I have made to this House before is about algae, which can be produced in any type of water—salt water or dirty water—and is a very powerful additive. Why are we not doing anything and why is there nothing in the Queen’s Speech to put this science and technology drive right in the front seat? If you took out the green argument and just asked who would develop these fuels if we do not use them for our defence forces, they would be developed in the United States, Italy, Holland and other countries.
We are losing that high-tech bit which we won on when, through the aerospace industry, we spotted the dangers of climate change. People forget it now but quite a few years back when the ozone layer was being depleted by the use of chlorofluorocarbons, it was British science instruments based in the Antarctic which discovered that. The science and technology response to it means that the ozone layer is now recovering. Climate change is a problem of pollution, just as the depletion of the ozone layer was. We can solve it but it requires science and technology.
That is the message which I would like the Minister to take back to the noble Lord, Lord Astor, and alert him to the fact, if he is not already aware of it, that I am trying to get a debate on the Armed Forces. Frankly, I feel slightly ashamed at the nature of the Answer I got compared with what is being done in Australia, the United States, Holland, France, Italy and elsewhere. We are not doing very well, yet we have been at the forefront of the science and technology.
The Earl of Selborne (Con)
Like the noble Lord, Lord Soley, I would like to focus my remarks on the environment. The purpose of the Bill promised in the gracious Speech which will impose a charge of 5p for a single-use non-biodegradable plastic bag is presumably to do more than reduce the pollution caused by those ubiquitous bags. The Bill is a not very subtle nudge to make us change our behaviour and become more aware of how we can reduce adverse impacts on the environment, which will in turn damage our economy. I would welcome the Bill with more enthusiasm if I could be sure that the Government themselves were pursuing a coherent, overarching strategy to achieve what they said they would in the 2011 environment White Paper. As your Lordships will remember, that set out an agenda for this Parliament with the brave aim of being the first generation to improve our natural environment.
There are in fact a number of areas where in recent decades we have indeed improved our environment. Pollution control, which is the primary purpose of the charge on plastic bags, is in many ways something of a success story. We no longer have pea-soupers or a stinking Thames and, as my noble friend Lord Patten reminded us today, the otter has made a comeback in many of our rivers. However, as we increase our consumption, so we increase the danger of harmful impacts on ecosystems and ecosystem services. In the United Kingdom we have converted or modified most of our semi-natural vegetation to arable and grassland use. Major increases in fertiliser use, particularly nitrogen and phosphorous, adversely affect aquatic ecosystems through run-off. As my noble friend Lord Plumb reminded us, United Kingdom agriculture has also delivered a largely successful programme, initiated after the Second World War, to improve our food security, but the price has been increased leakages into soil, air and water.
Other sectors including energy, industry, housing and transport, some of which could also be described as success stories, have also had major impacts on ecosystems and the delivery of ecosystem services. Examples of such impacts are the deposition of atmospheric nitrogen and sulphur, the loss of habitats through construction and disruption of flood regimes in river basins and coastal wetlands. We take ecosystem services too often for granted yet we depend on them to produce our food, to regulate water supplies and climate, to break down waste products and much else. Nutrient cycling, the purification of air, soils and water, groundwater recharge and flood control are all critical to our economy and our well-being, yet these services are consistently undervalued in economic terms. If we want reminding of just how damaging extreme events can be, think of the impact of what happened in Thailand in 2011, when in one year flooding reduced its GDP by 11%.
The Natural Capital Committee was set up to advise the Government on how to deliver the aspirations of the 2011 environment White Paper. We had signed up at the Earth Summit in 1992, and subsequently elsewhere, to heroic targets—for example, on protecting our biodiversity—but had, frankly, no prospect of achieving those targets and no coherent policy either. The committee has now produced two helpful reports, the second in March this year, and its message to the Government is that we must plan long-term, by which it means at least 25 years. The second report states that integrating the environment into the economy is hampered by the almost complete absence of proper accounting for natural assets—what is not measured is usually ignored. The committee is leading in developing metrics and risk registers, identifying the necessary capital maintenance and ensuring that project and investment appraisals in both the public and private sectors properly take natural capital into account.
I wish the committee every success, but it has to change the way that investment decisions have been made for generations. Take, for example, the proposed Thames Water tideway scheme, which has been contemplated since the 1990s and which is to resolve the problem of contamination of the Thames tideway from sewerage overflows by a new tunnel that will cost £4.2 billion at 2011 prices. The driver for this is the urban waste water directive from the European Union and the threat of some highly expensive infraction proceedings. Yet this project, so long in gestation, does nothing to promote water recycling, flood alleviation, green infrastructure or sustainable urban drainage systems. It is, frankly, the Victorian solution of Bazalgette repeated, and it puts the problem firmly into the hands of one organisation, Thames Tideway Tunnel Ltd, and the cost on those in the Thames Water catchment, whether near the tideway or miles away in Gloucestershire, Berkshire or wherever. It is probably too late to stop this scheme but I am sure that it would never be started now, when we are learning at last how to value our natural capital.
By the end of this Parliament in March next year, we should be able to judge whether the committee’s advice to the Government on the need for long-term planning has been accepted. If we are to make biodiversity offsetting work, one of the more innovative proposals that have been considered by Defra and put out to consultation, it can be done only with the help of a detailed national long-term plan. By definition you will never be able to offset ancient woodland, for example, but you might be able to offset other habitats—meadows, perhaps, or wetlands.
When Sir John Lawton produced his 2010 report Making Space for Nature, he attributed the continuing decline of many species to the size of protected sites, which tend to be too small to prevent random fluctuations driving local populations to extinction. His solution was to create more, bigger, better managed and joined-up sites in a landscape-level approach to wildlife conservation. Such an approach would be possible only by involving partnerships working together on well designed schemes, funded appropriately by agri-environmental and woodland grant schemes.
Such schemes must be underpinned by sound ecological research and supported by good-quality data, with their effectiveness measured by a suitable monitoring system. Realistically, funding on this scale can come only from a reformed common agricultural policy that allows national Governments to allocate maximum resources to environmental programmes. That brings us back to the need to achieve greater subsidiarity and for the Prime Minister to be supported in this essential endeavour.
Viscount Hanworth (Lab)
My Lords, this year the Speech from the Throne has been a very dull affair; it is distinguished more by its omissions than by its inclusions. It has failed to address the urgent problems that have arisen from the previous enactments of the Government. The programme of privatisation and deregulation, which has been accompanied by the disengagement of the state from all manner of social services and provisions, has surely run its course.
The programme has led to the neglect of some severe social problems, one of the most prominent examples of which is in connection with the provision of social housing. Several speakers in a previous debate mentioned the role of Harold Macmillan at the Ministry of Local Government and Planning in Churchill’s Government of 1951 in providing affordable social housing Macmillan was given the task of overseeing the building of 300,000 houses per year. This was an objective that had been mandated by the Conservative Party conference of 1950, and it was amply fulfilled. The policy of housebuilding depended on close co-operation between central and local government. Local government was empowered to finance homebuilding by issuing bonds and was given substantial subventions from the Treasury. The percentage of people renting from local authorities rose to over one-quarter of the population, from 10% in 1938 to 26% in 1961.
In the era of Margaret Thatcher there was a complete reversal of the housing policies of the Conservatives. The Housing Act 1980 gave a right to buy to council tenants, and within 10 years 1 million council houses were sold. Thereafter the building of houses by local authorities virtually ceased, and none has been built since the early 1990s.
The present Government have taken further steps to prevent local authorities from embarking on housebuilding programmes. The Localism Act 2011 transferred roughly £21 billion of housing debt to the 171 local authorities that currently own houses, in return for fuller control over their housing stock. At the same time the Government introduced a debt cap on each local authority, which restricts the amount of money that they will be able to borrow in connection with their housing stock.
In effect, the Government have divested themselves of any responsibility for publicly owned housing and have allowed local authorities only enough money to cover the cost of its maintenance. This is an encouragement to the authorities also to divest themselves of any ownership of housing, and many have already done so.
Nowadays, the Conservatives appear to believe, in line with a free-market philosophy, that the provision of housing should be wholly a matter for the private sector. However, in recent years housebuilding by the private sector has all but collapsed. Against all evidence, the belief has been fostered that the failure of the private sector is due to its having become mired in red tape and planning restrictions. Accordingly, the Growth and Infrastructure Bill of the previous Session established a new national planning framework which replaced 44 planning documents by a slim document of 50 pages. In the process, a set of documents that had been providing careful planning guidance in many specific circumstances, and which had been developed and refined over the previous 25 years, has been tossed into the rubbish bin. This act of vandalism represents a remarkable triumph of ideology over analysis.
At the same time as we have seen a collapse of housebuilding, we have seen a boom in house prices and a remarkable escalation in the rents charged by private sector landlords. The unaffordability of house ownership and the exorbitant costs of rented property are immiserating a generation of young people. A symptom of their distress is the escalating size of the housing benefit paid to those who cannot otherwise afford any accommodation. The cost of housing benefit in the financial year 2013-14 was £23.8 billion, which was almost 30% of the entire welfare bill. This dwarfs the £1.5 billion that has been spent on capital investment in social housing.
At the same time as they have been subsidising the incomes of private landlords via the housing benefit, the Government have been stoking the rise in house prices by their Help to Buy scheme. This has offered assistance to those who are already rich enough to think of purchasing a house. One can think of few policies that could be more socially divisive.
The house price inflation has led to a massive transfer of wealth in favour of the richer members of an older generation, who are well established in their properties. An obvious recourse would be to tax some of their wealth in residential property. Then, the proceeds could be used for building social housing to be provided at affordable rents. If the houses were built in sufficient numbers, then some of them might be for sale. It has been said, in opposition to such a wealth tax, that it would be unfair to those who are rich in assets but poor in income. The objections seem to deny the close correlation between income and wealth. However, the escalation of house prices could be very effectively staunched by a tax imposed on the sellers of properties. This could be assessed on the basis of their capital gains derived from the increased value of their houses. There would be no disadvantage to asset-rich and elderly people who choose to linger in spacious and valuable properties. The proceeds of such a tax would be used predominantly for the purpose of financing the building of social housing in the areas from which they have been derived. To the extent that rising house prices are a reflection of the scarcity of housing, the revenue would be reinvested where the need is greatest.
The costs of investment in social capital, whether they are met through taxation or by the issue of bonds, should not be reckoned as part of the central government’s current account. Such costs should be deemed to have no bearing on the Government’s financial deficit. Nevertheless, the present Government profess that, in a time of financial stringency, they cannot afford to meet the costs of major investments in social capital. This is surely a spurious excuse with which they are hoping to conceal their wilful neglect.
Lord Smith of Clifton (LD)
My Lords, it is a pleasure to follow my erstwhile academic colleague the noble Viscount. I want to concentrate on consumer affairs, which were an aspect of the speech by the noble Baroness, Lady Hayter.
Some 30 years ago, the late Lord Grimond of Firth gave a lecture at City University on changes then taking place in commerce with the introduction of computerisation into retailing. He was passing a branch of an insurance company in which he had a small life policy he was thinking of cashing in. He entered and inquired of the assistant whether he could be sent an updated valuation if it was paid up. She asked him to wait a minute while she did the calculation on the computer. This upset him. He wanted the details to arrive in the post some days later. Having the valuation there and then was not part of the consideration he was making. He hoped to turn it over in his mind before coming to a decision and was disoriented by being stampeded with the immediacy of the information provided. It short-circuited the process and usurped the opportunity to ponder his course of action.
Those of a certain advanced age will sympathise with Jo Grimond’s discomfort at having to amend his previous biorhythms. Computerisation has brought benefits, as my noble friend Lord Clement-Jones said, but it has also brought disadvantages to the consumer, and these are what I want to bring to your Lordships’ attention.
IT can be and is being used to the public’s disadvantage, as I know from two recent experiences of my own. The first case concerns HMRC. The Daily Mail, Sunday Times, Observer, Financial Times and other newspapers have drawn attention to Her Majesty’s Treasury’s intention to give HMRC powers to have direct access to private current accounts of those deemed to be defaulting on their tax liabilities. I believe very firmly that tax dodgers should be pursued and made to pay up. However, from my own recent experience, I do not believe HMRC is functioning adequately to be allowed direct access to personal bank accounts at this stage.
Although, as a pensioner, my tax position is fairly simple, I nevertheless always get a firm of chartered accountants to prepare and file my tax returns to ensure their accuracy. They, in turn, advise me of any shortfall, which I then pay to HMRC. For the year 2012-13 they told me that I should pay £992.62, which I promptly did, well before the deadline set.
I was surprised, therefore, to receive a demand for the same amount from HMRC. I checked my documents—my cheque stub and my bank statement—which clearly showed money had left my account. I telephoned HMRC’s Leeds office. After waiting 40 minutes my call was answered. I had all my documentation to hand so I could provide the necessary information. After much trouble at the other end, it was discovered that my cheque had in fact been paid into the Cardiff HMRC collection office, which is where I had usually sent it. I asked why HMRC did not have a computer system that linked up its various branches automatically as a matter of course. I received no answer. I asked for a written confirmation that the money had been paid, and was told that it was not HMRC practice to issue receipts as it would not be necessary now that the situation had been cleared up—ha ha.
The next week I received another demand for the same amount, plus a £49 penalty for late payment, with threats that debt collectors would call if I did not pay. I received similar demands for the next four weeks. HMRC has no control over its computer system, which dementedly and endlessly sends out demands for weeks on end. This was to someone classified in the official jargon as a “frail, old” pensioner who had always been assiduous in paying his tax well before the deadline. I was innocent, receiving neither an apology nor a receipt which I could have shown the bailiffs while being harassed by this out-of-control computer juggernaut.
I wrote to the chief executive of HMRC on 8 March last, complaining of the treatment I was receiving. I wrote again on 20 March, complaining I had received yet another tax demand. My original letter of 8 March was acknowledged on 14 March, promising I would receive a reply by 3 April. Hardly surprisingly, HMRC failed to meet its own self-imposed deadline. I emailed the HQ reminding it, and received a reply dated 10 April which sought to explain what had happened and apologised, but it accepted that its telephone contact system did not meet industry standards.
As a member of your Lordships’ Economic Affairs Select Committee, I saw the HMRC’s inadequacy in chasing up large corporations who pursue aggressive tax avoidance schemes. The committee reported that HMRC had a lack of resources to do this. Yet HMRC seems to have enough spare capacity to aggressively harass innocent OAPs like me. The proposed new powers, apparently, would enable HMRC computers to hack into my current account, transferring £992.62 for weeks on end. Until and unless HMRC can guarantee this could not happen these new powers should not be approved.
My second example concerns British Telecom. My home landline was out of service for 10 days from 23 November last. I received my usual quarterly payment request, but no deduction had been made for this contractual failure by BT. I phoned to ask why, only to be told that no refunds were made unless requested by the subscriber. BT has the records on computer and deductions should be made automatically, in my view. To add insult to injury, I was told I was entitled to a rebate of a paltry £3.17. When I queried this, I was referred to an account manager, who restated BT policy without any attempt to explain let alone justify that policy, which is tantamount to attempted theft. He wrote a template reiteration:
“I am sorry you are unhappy with this condition of service, however this is the case ... This means we have reached deadlock”.
He suggested that I take my complaint to the communications ombudsman, which I did on 20 May. I received no acknowledgement, despite two requests from me, until Sunday 1 June—at least they work out of hours. The reply requested nine items of information, almost all of which were contained in my original letter, and the rest could have been obtained from the computerised records of BT. In addition, it was suggested that I should take my complaint to Ofcom.
I responded immediately, saying that it was the ombudsman's job to utilise the information conveyed in my letter—why should I have to repeat it? I also asked why BT had suggested in the first place that I make contact with the ombudsman, which, for its part, thought I should go to Ofcom with my complaint. None of this adds up. I have yet to receive a reply from the ombudsman. Like almost all regulators it leaves very much to be desired in the service it provides.
I am being pushed from pillar to post by these agencies. Clearly, there is a conspiracy of attrition which hopes that procrastination will dissuade complainants: is it worth it for £3.17? Yes, it is. How many thousands of £3.17s are there? Unclaimed amounts get transferred across to profits at the end of the year, swelling the remuneration packages of BT senior management. It is tantamount, as I said, to theft.
It is quite clear from these two examples that the failure to utilise computers to facilitate customer-friendly services should be exposed for what it is: an attempt to obfuscate, prevaricate and procrastinate in the hope that complainants will give up through sheer exhaustion. This must stop forthwith, and Her Majesty’s Government should address this issue.
Lord Swinfen (Con)
My Lords, I hope that the Minister will send a copy of today’s Hansard to HM Revenue and Customs and point out my noble friend’s speech, which HMRC should read, mark, learn and inwardly digest.
I live in an arable farming area in the south-east of England, and my remarks will be based on that. I recall, back in 1962, being given by my mother a copy of Rachel Carson’s Silent Spring, a book on the evil effects of pesticides. I also recall, some years later, the problems when DDT was used in subtropical parts of the world to deal with the Anopheles mosquito in an attempt to prevent the spread of malaria. They did not succeed in doing that but instead polluted the land, because DDT is a pollutant. I suspect that in some of those areas the land is still polluted, because they probably did not have the wherewithal to clear it up. I understand that DDT has since been banned.
I am surrounded by arable land. A few years ago, a large field with a young crop of rape was liberally spread with slug pellets. I do not know how many pellets there were to the square yard, as I did not count them, but if you had put down an outstretched hand, there would have been a lot of them underneath. Hedgehogs died, because they eat slugs. We have not had any hedgehogs since. I know that there has also been a disease, but their deaths may have been caused by the pesticide that was intended to deal with the slugs.
We used to have swallows at home, in large numbers, some of which nested in an outbuilding. I cannot blame my neighbour who owns the land because for many years an agricultural contractor has done the work on it—under contract, I believe—and I suspect that it does not matter to the contractor what state the land is in when his contract comes to an end. The swallows died. We had one swallow last year. I found it lying on its back on the ground. We have had no more since. That is a terrible waste, and it will take years for swallows to return because they normally nest in the same area each year. It will also mean that the farming practices around us will have to change so that they have the flies to feed on.
There are no larks, no starlings, apart from one or two, as opposed to the large flocks that we used to have. In the agricultural fields around us there are no sparrows; there are hardly any birds at all. There is not the food for them. There are no butterflies. Walking the dogs I did come across some bees. They were on the track and they were dying because of the insecticides used on the crops.
What I am saying about the area in which I live is probably happening in other parts of arable farming in this country. I know that we need to produce as much food as we can as cheaply as we can, but is it worth losing our wild flowers and our normal insects? In the summer I used to be bothered by flies; there are not any flies to bother me any more. There are not any bees and not many wasps.
Last year there was some rain while the harvest was taking place near me. They had to keep the men employed and the machinery operating, so they trimmed the hedges. They trimmed off all the berries that the birds, if there were any, would have eaten during the winter. There was no food for the birds over the winter.
While I have been there, which is over 40 years, the land has had only chemicals and no dung put on it. The land is no longer ploughed but is cultivated, and not to the old eight inches deep as with ploughing. In days long gone past, dung would have been ploughed into the soil, which helped with the drainage of rain from the soil while at the same time retaining a supply of moisture in the soil for the plants to grow.
Of late, even the straw which used to be chopped up and ploughed in—or rather cultivated in, because it is only the top two or three inches that is cultivated nowadays—is being carted away, I suspect down to the West Country where it is being used for animal bedding, or possibly animal feed, and not put into the soil. No humus is going back into the soil at all. I wonder what is happening to the condition of the soil. Vegetable soil takes 1,000 years to form; it can be destroyed in the matter of a few years.
I do not blame the owners of the land. Their farming is all done under contract, with the contractor—I do not know who it is; I do not want to know who it is—quite obviously wanting to make as much money as they can out of the land as quickly as possible, and then abandon the land and go on elsewhere.
The noble Earl, Lord Selborne, mentioned nitrogen on the soil. It is one of the few things that are put on. The run-off produces the most terrific weed growth in the local watercourses, blocking the watercourses, and then has to be removed at considerable expense. I wonder to what extent that caused the flooding on the Somerset levels. I do not know; I am not an expert. It is only a question in my mind.
I have another question. I am not a farmer and know nothing about the common agricultural policy, but I wonder if part of this is a result of the common agricultural policy, and whether we ought to have a very good look at what we are doing to the soil in the agricultural areas of our country to make certain that it is useful and in good condition for years and generations to come.
Baroness Turner of Camden (Lab)
My Lords, it is surprising that there is so little in the gracious Speech about employment law. During the lifetime of this Government, the employment protections which many of us have fought for for years have almost disappeared. It has now become almost impossible for a dismissed worker to sue for unfair dismissal at a tribunal. The proceedings are not only very complicated but very expensive; it can cost an employee about £1,000 to get a hearing. Accidents at work continue to happen far too frequently, particularly in the construction industry, but again suing has been made more difficult for the employee or his family. The Government have made it clear what they think about employment rights with their absurd scheme whereby employees abandon all employment rights in exchange for shares in the employing company. A number of us in your Lordships’ House opposed these measures when they were proposed here, but, unfortunately, without success.
We are told that the employment situation has improved, particularly in London and the south-east, but not I think for younger people. The same goes for older people, too. I have received letters from time to time from people over 50 years of age who have been made redundant. They desperately want to work again, but receive no replies to their job applications. This is particularly true for older women, as has already been pointed out. In other parts of the country, the situation is much worse. In the Midlands and the north there are areas where once the manufacturing industry provided work for whole communities, but the factories no longer exist to do so.
Clearly, there should be area renewal plans for such areas. Perhaps the Government will tell us what they have in mind, if anything, for these areas. But even where jobs exist, as in the London area, problems exist for poorer families. I am glad that the Government have agreed that the minimum wage must be increased and enforced. There is also more pressure for the living wage, which my party supports. Living costs in London have become impossibly expensive. There is a desperate shortage of affordable housing, as we have heard from other noble Lords, and in the mean time, despite the right to buy which has assisted some people, many poorer people are confined to rented accommodation in the private sector. There is a case for some intervention here. There is a need for more social housing to be built, as a number of noble Lords have said. This has been proposed by the London mayor, but it takes time, even if what he proposes is enough. This is a crisis, and there is therefore a reason to impose restrictions on the amount that may be charged for private rentals. I know of course that the Government are anxious to reduce the amount spent on welfare, but this becomes impossible if wages are too low and rents too high. This is currently the situation in London.
I have briefly set out the situation as I see it in London and the south-east, but there is another aspect which receives far less attention than perhaps it should. There is a lot of talk nowadays about the growing inequalities in our society. Many of us deplore this and wish that we could do something about it. Encouragement is given to community and voluntary organisations, and it is right that that should be done, but the largest voluntary organisations in this country are those built by the workers themselves. I refer, of course, to the trades unions. A recent survey indicated that one reason for the growth in inequality was a decline in union power. If that is so, I deplore it. But the Government certainly either ignore unions entirely or introduce legislation to make their functioning more difficult. This is a mistake. Unions have as their main function representing their members’ best interests, but they provide a range of other benefits to individual members as well, such as legal services to individuals in a situation in which legislation through LASPO has reduced access to legal aid for a whole range of issues, including employment and welfare.
Training and education are also areas where unions have been able to help members who have missed out in this respect earlier in their careers. The TUC’s Unionlearn has been widely praised for the training it provides. Many parliamentarians owe their education to union scholarships undertaken at Ruskin College, Oxford. I benefited from that provision through my union. Unions are increasingly becoming involved in community work and simply do not deserve the demonisation that occurs too often in the media, and the Government should simply ignore it.
The noble Lord, Lord Bamford, in a very good maiden speech, referred to the successful economy and high productivity in Germany. One of the reasons for that is the involvement of the unions in consultation, an issue with which we should be concerned in this country.
As has already been indicated, the proposals on pensions are extremely complicated. I was very interested to hear what my noble friend Lord Monks had to say about this, with which I agree. Retired people want a regular, reliable income that they can count on, perhaps linked to increases in wages. I am not certain that the proposals in the Bill will provide this.
As regards welfare, there appear to be difficulties in implementing the universal credit measures. The changes are already causing concern, particularly among disabled people. Again, this is something to which we must return when the House is ready to discuss the welfare problems that we all know exist. They would certainly benefit from further discussion by your Lordships.
Lord Bourne of Aberystwyth (Con)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Turner of Camden, who speaks with such knowledge and authority. This has been a very interesting debate in which we have benefited from two outstandingly cogent and engaging maiden speeches from my noble friend Lord Bamford and the right reverend Prelate the Bishop of Durham.
A point made by many noble Lords on the Benches opposite relates to the content of the Queen’s Speech and the suggestion that it is light. I do not think that is the case. I have done some research through the internet on previous Queen’s Speeches. It is interesting that search engines reveal that in relation to previous gracious Speeches the person most mentioned after Her Majesty is Dennis Skinner. That throws up the interesting possibility of him being an important part of the constitution. Perhaps we have missed a trick in the gracious Speech in not seeking to privatise him.
In the last two years of the previous Labour Government 26 Bills were proposed, whereas in the last two years of this Government there have been 28. We should not just measure the number of Bills but also examine their content. However, the suggestion that this is the fag end of the coalition Government is not borne out by the important content of the Bills in the latest Queen’s Speech. I refer, for example, to the measures on pensions, which were referred to most recently by the noble Baroness, Lady Turner of Camden. Under the new proposals people will not be obliged to take a lump sum and the annuity option will still be available. We should rejoice in the fact that pensions will be freed up so that people will be able to take a lump sum if they want to do so. I agree that it is important that there should be access to impartial, independent advice. However, given the provision of such advice, this is a radical, bold move which will help pensioners across the board. If they have that independent advice, they can make up their minds about what is most appropriate for them.
Also, the pooling of funds as is done in Denmark and the Netherlands is again welcome. The noble Baroness, Lady Sherlock, referred to the fact that she welcomed that. If we look at this and study it, it will again help pensioners in years to come. It is important and to be welcomed. It is a meaty part of the gracious Speech.
I turn next to another important part, relating to small businesses. In many contributions from all round the House, noble Lords talked about business as if somehow all businesses are the same. Indeed, there have been suggestions that people disapprove of business. That may be true in terms of polling but I suspect that where that is the case they looked much more at large FTSE companies than at small businesses—the small print shop at the corner of the street, or the small two or one-person business that has become incorporated, the sole trader. These are vital for the running of our economy.
I welcome some of the measures heralded in the gracious Speech. On providing fair access to public procurement contracts, as the Minister said, £230 billion is spent on those contracts. To ensure that small businesses have a share of that is right and important not just for those small businesses but for the entire country, which will benefit from the prosperity that that will generate.
I also welcome the provision looking at red tape. I know that routinely Governments always do this. I hope the Government are serious about this because it is important. Look at the way we treat businesses, for example in the Companies Act 2006. This is not a political point: the Act was passed under the last Government but largely with all-party approval. It is the largest measure ever passed by the Westminster Parliament, with 1,300 Sections and 16 Schedules. It applies, by and large if not entirely, as much to the small incorporated business with perhaps one shareholder as it does to FTSE companies. That is nonsense. Admittedly there are exceptions, but we need much more to drill down and ensure that we do not tie up in red tape our small businesses—which should be in the business of business: earning income and providing employment for people. It is more appropriate for larger companies, perhaps, but even there we need to be careful. That Companies Act is also without reference to the insolvency legislation, European directives, the Enterprise Act, financial services legislation and so on. I am not suggesting that we throw out health and safety legislation. That is vital. Good work has been done on that by successive Governments. However, we need to see how we treat small businesses with a lighter touch on some of the regulatory provisions relating to meetings, accounts and so on. That is imperative. In so far as the Queen’s Speech heralds that, I very much welcome it.
Other provisions in the Queen’s Speech I will mention just briefly. The assistance for public house tenants is to be welcomed as malpractices happen. I welcome the fact that we are to have a statutory code and an adjudicator. That is important.
I welcome, too, the provision on carrier bags. In Wales, I voted in favour of this—I am sure my noble friend Lord German did, too—in Cardiff when it went through. Wales was the first part of the United Kingdom to have this legislation and it went through with all-party approval. Again, it makes sense environmentally and from an economic point of view. It is much to be welcomed and is not just applicable within the United Kingdom and parts of Europe. It has been tried and tested and is working in parts of Africa such as Botswana and parts of Asia such as Hong Kong—in slightly different ways, admittedly. There is much we could learn from that, too.
I also mention briefly the carryover Bill—the Wales Bill. I declare my interest as a member of the Silk commission that did a lot of the work now contained in that Bill. This is an important piece of legislation that will contribute to the economy. It provides for a measure of taxation for the National Assembly for Wales in terms of landfill, stamp duty land tax, income tax subject to a referendum, and a measure of borrowing. No doubt we will have to revisit some of that after the Scottish referendum in terms of the way it works across the United Kingdom, but that is an important piece of legislation, too.
In short, there is much in this gracious Speech to welcome. I am sure we all have our pet schemes and would like the Government to have done some other things. For example, I am interested in the promotion of STEM education—something we need to be doing—and the protection of older people. There are many things, but I have sat through most of the debate and I have noticed that there is not much that people have disagreed with. The speech has been criticised for not containing things, rather than for what it contains. With that, I welcome the gracious Speech.
Lord Young of Norwood Green (Lab)
My Lords, at this time of day, following a long, wide-ranging and absorbing debate, most of the points have been extensively and superbly addressed. I offer my apologies for the inevitable reiteration.
There have been two great maiden speeches. The noble Lord, Lord Bamford, as another ex-engineering apprentice, ensures that JCB puts its money where its corporate mouth is: into training, apprenticeships and vocational education, investing in today’s and tomorrow’s engineers. Earlier this year, I had the good fortune to visit the JCB Academy, which is now a university technical college. It is a superb college, with a balanced approach to vocational education that enthuses and inspires young people. I also echo the praise of other Peers for the speech of the right reverend Prelate the Bishop of Durham, especially his concern for young people and their expectations of a career or job. He highlighted the need to meet those expectations. As a country, we cannot afford another lost generation of young people who despair of finding a worthwhile job.
I want to focus on two areas: justice for workers in employment and, unsurprisingly, apprenticeships. Before I do, I want to make a plea. In any future debates on pensions, I ask that we stop advertising Lamborghinis when we have a whole range of high-quality British cars, such as Jaguar Land Rover and Aston Martin. I do not know who got the contract to advertise Lamborghinis, but they are doing well.
I was dismayed when I heard the Minister talk about ensuring further reductions in the number of employment tribunals as reducing the burden on business. As my noble friend Lady Drake informed the House, in the past year we have experienced a 79% reduction in employment tribunals since fees were introduced. For many ordinary workers, unless they belonged to a trade union—as my noble friend Lady Turner reminded us—the upfront costs of seeking redress from an employer who had treated them unfairly meant that justice was denied. I do not want to see unnecessary tribunals and I hope that mediation will be successful, but employment tribunals are not just red tape or a burden. They are a necessary means of defending hard-won workers’ rights and ensuring that employers meet legal requirements, whether they are the minimum wage or zero-hours contracts. We know that far too many employers are willing to deny their employees basic rights. My noble friend Lady Donaghy highlighted the problems of casual employment, which is especially evident in the construction industry, where still too many workers are often falsely described as self-employed. Of course I welcome the proposals to enforce a minimum wage—that is long overdue—but I am far from convinced that the Government will take meaningful action on those employers who exploit zero-hours contracts.
I turn now to apprenticeships. In other debates I have been accused of being churlish towards the Government’s proposals for the expansion of apprenticeships, but at least I recognise their commitment and some achievement. That is more than I can say of the noble Baroness, Lady Kramer, in her description of the previous Labour Government. I can accept, in the cut and thrust of debate, a bit of rhetorical hyperbole, but there are limits. I quote from her speech last Thursday. She said that,
“as I go up and down the country and talk to young people who are now just getting into employment, they came through education during the Labour years when they did not get the skills they needed, when there were no apprenticeships” .—[Official Report, 5/6/14; col. 112.]
No apprenticeships? Let me just remind noble Lords, as my noble friend Lord Macdonald of Tradeston did, that when we inherited an almost moribund apprenticeship scheme, we had only 65,000 apprenticeships left and an abysmal completion rate of about 37%. When we left we had 280,000 apprenticeships with a 71% completion rate. It was not good enough and there was much more work to be done, but I hardly think it deserves to be characterised as “no apprenticeships”. We left a firm foundation, which is usually acknowledged by this Government.
A number of Peers have warned of the Government’s desire to quote the large figure of 2 million apprentices. My noble friend Lord Bhattacharyya warned that most of these were adults over the age of 25 and already in employment, and the Richard review recommended that they should not be described as apprentices. Their work may involve essential reskilling and retraining but, in my view, those are not the areas on which we should focus. We need to focus on quality and on two groups—16 to 18 year-olds, where we have seen a decline, and 19 to 24 year-olds. Both are vital age ranges. The Government’s latest proposals on funding apprenticeships are causing concern among employers. The noble Lord, Lord Aberdare, warned us that they may cause some small employers to regard apprenticeships as a financial risk. If we are serious about expanding apprenticeships, we must ensure that the dismal figure of only 8% of all employers and only a third of FTSE 100 companies taking on apprentices is massively expanded.
As I have said on many occasions, the Government should lead by example. I look to the Minister to tell us in his reply why they do not make it a mandatory requirement for public procurement contracts to require apprenticeships. We did it with both the Olympics and Crossrail. We also need to expand group training associations and apprenticeship training associations. All local authorities and local enterprise partnerships should be developing apprenticeships as part of an industrial strategy. Let us not argue about where we need apprenticeships. That is obvious—in engineering, IT, construction, healthcare and the creative arts. In most cases, demand exceeds supply. It is perhaps appropriate that the noble Lord, Lord Livingston, is here because I always quote BT, where something like 25,000 applications go chasing 400 apprenticeships. It is tougher to get into BT than it is to get into Oxford or Cambridge, and I reflect on that as a former GPO apprentice.
As the noble Lord, Lord Aberdare, reminded us, schools have a vital role to play in giving comprehensive career advice. However, in many cases they fail to do so, focusing on directing all their students towards A-levels. I go into many schools and when I ask the 16 to 18 year-olds whether they have heard of apprenticeships, they look at me in amazement as though it is something they are totally unaware of. What should we do about that? The noble Lord, Lord Aberdare, suggested that, in its inspections, Ofsted should look at the quality of careers advice. I would welcome the Minister’s comments on that.
Under current legislation, schools have a legal duty to give a comprehensive range of careers advice, but most of them are still failing to do so. We need to continue to upgrade the status of apprenticeships. We need to emulate the companies which ensure that there is a proper graduation ceremony when apprentices finish an apprenticeship scheme. We need to ensure that apprentices go back into schools and tell young people—especially young women—what good career opportunities present themselves in apprenticeships.
In my view, combating the scourge of youth unemployment is our biggest challenge. If we are serious about creating a fairer society—and I think that that is an aim that all of us in this Chamber share—then it is a challenge that we cannot fail to meet.
Viscount Ridley (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Young of Norwood Green, and what he says on apprenticeships is much appreciated. I should like to focus my remarks chiefly on the small business, enterprise and employment Bill, but I shall also touch on agriculture and the environment. In doing so, I declare my relevant interests as listed in the register, particularly on the subject of agriculture.
I begin by congratulating my noble friend Lord Livingston not only on his remarks about business in opening this debate but on what he said in Liverpool yesterday. If the press is to be believed, he said that this is,
“a creative country, a modern country, an innovative country, a country led by design”.
I welcome those remarks. He was of course talking about the revival of the economy of the north-west of England, but I hope that he will not mind if I also draw his attention to the remarkable transformation that we are beginning to see in the economy of the north-east of England. That is something that the right reverend Prelate the Bishop of Durham touched on in his excellent maiden speech, on which I congratulate him. There are more people at work in the north-east LEP area than ever before. We have seen the equivalent of six new Nissan plants in the north-east in the past 12 months. These are good jobs in software and offshore in engineering and technology. Overall, productivity in the north-east is up by 14% between 2009 and 2012, which is three times as great an increase in productivity as in the country as a whole. While mentioning productivity, I also want to congratulate the noble Lord, Lord Bamford, on his excellent maiden speech.
Turning to the UK as a whole, I probably do not need to tell my noble friend the Minister about the vital importance of innovation. That is the theme I particularly want to talk about. Two-thirds of UK growth between 1997 and 2007 was due to innovation according to NESTA—the National Endowment for Science, Technology and the Arts. There is no way that we can grow out of the debt burden that still hangs over our economy without huge amounts of innovation. We are on the brink of several innovative revolutions in technology: in personalised medicine, on which we stand a good chance of being in the forefront; in 3D printing; in self-driven vehicles; in self limiting crypto-currencies, I read in some newspapers; and in collaborative consumption, where we can each use our spare rooms to become hoteliers and our used cars to become car rental companies. The other exciting thing that is happening all over the world is peer-to-peer networks—which we are very good at in this place, obviously, but I think it means something else. I looked up some numbers and discovered that, if you bought a pair of jeans in 1982 and were on the average wage, it took an hour and 50 minutes of work to earn the price of those jeans. Today it costs 41 minutes for an equivalent pair of jeans. That is what innovation delivers. It delivers a shrinkage in the amount of time that people have to work to fulfil their needs. That, of course, enables them to fulfil more needs and provide more people with jobs.
On the subject of innovation, it is worth pointing out just how crucial the “D” rather than the “R” is in R&D. We are very good at research in this country. We have the second most Nobel Prizes in the world, but we are not so good at development. We are not so good at turning those discoveries into innovation. The perspiration that goes into starting a business and commercialising an innovation is as important, if not more so, than the inspiration that goes into the discovery. I welcome the Government’s initiatives over the past few years, such as the patent box, in particular.
However, I also want to make a specific suggestion that I hope my noble friend will be able to look at, which is to look at various options for improving incentives for entrepreneurs. We are at the moment very generous to venture capital investors in start-up businesses through the EIS and the VCT scheme. By the way, we have to be generous to investors—otherwise in this country we would spend all our money on housing—but we are not quite so generous to entrepreneurs. If someone wants entrepreneur’s relief, he has to apply for it after he has sold his business and there is not a great deal of certainty about that. On the whole, the person sitting across the table from the venture capital investor is not getting such a good deal, or certainly such a certain deal, as the investor himself. In passing, let me say that it is important to resist the temptation to put the threshold for entrepreneur’s relief up to about 25%, as has been suggested, because it is the entrepreneur who lets himself be diluted as he tries to expand his business and ends up well below that figure. He is the one who is taking the greatest risk.
It is also worth noting that the one purchase that we all make that has not become smaller in the time it takes to earn is government. Government costs the average person more than food, fuel, clothing and housing put together, according to the Taxpayers’ Alliance. I am sure that I am not alone in noticing that there has been a lack of urgency in the public sector over many years to try to reduce the amount of time that it takes for people to fulfil their needs when being dealt with by government. There is a tendency to say that it does not matter how long it takes to get planning permission, to get the right regime for a new development, to answer queries about tax planning or to build a nuclear power station. But time is surely of the essence for many businesses. We need a relentless pursuit of productivity in the public sector. Therefore, I especially welcome, as the noble Lord, Lord Bourne of Aberystwyth, said, the provisions in the small business, enterprise and employment Bill to help small businesses to access public procurement.
Finally, I turn to one of the greatest obstacles to innovation—the pessimism enshrined in law at the European level in the form of the precautionary principle. This means that potential risks are weighed in advance but potential benefits are not. The precautionary principle, essentially, asks us to measure the risk of innovating but not the risk of not innovating. George Freeman MP has produced an especially hard-hitting report making the argument that the European Union’s precautionary approach to biotechnology, both in agriculture and in medicine, is greatly harming innovation and condemning Europe to a back seat in the biotechnology revolution. In his report he says:
“Just as the genomic revolution is beginning to offer untold opportunities across medicine and agriculture to help us generate huge economic, social and political dividends for mankind by helping to liberate billions from the scourge of insufficient food, medicine and energy, the EU is developing an increasingly hostile regulatory framework which risks undermining Europe as a hub of biotechnology”.
That is an especially acute problem in agriculture. We now can see very clearly that the ban on genetically modified food over the past 15 to 20 years was a mistake in terms of both environmental and economic problems because it has greatly increased Europe’s reliance on pesticides.
I hope that innovation and dismantling the barriers to innovation will run through everything the Government do, and will continue to do so.
Lord Smith of Leigh (Lab)
My Lords, I, too, want to comment on the bits missing from the gracious Speech. I shall speak to the welfare aspects of this debate from my perspective as the recently re-elected leader of Wigan Council and as chair of the Greater Manchester Combined Authority. The four aspects I wish to talk about are the bedroom tax, universal credit, the new Work Programme and the Social Fund.
The bedroom tax is acknowledged to be a failure by everyone except the Government. It has not delivered the objectives they claimed it would. It has not saved housing benefit to the extent that they claimed it would, partly because they overestimated the numbers of people who would be affected. Also, as I have told the House before, in places such as Wigan moving from a three-bedroom council house to a private one-bedroom house involves higher rents, and the housing benefits are therefore higher, too. So it has failed to meet that target and the target of persuading people to move. In my authority, only 102 people have moved as a result of the bedroom tax—not because many of them may not want to move but because smaller properties are simply not available in the public sector. People are stuck where they are and they are stuck with the bedroom tax. Nationally, only about 4.6% of people have moved as a result of the bedroom tax.
However, the bedroom tax has had major consequences. One consequence is that the number of tenants now in arrears has shot up considerably—it has increased to 55% nationally, I understand, according to the Joseph Rowntree Foundation. In Wigan, arrears have gone up and we are trying to manage that, but it is difficult. Despite the application of discretionary housing payments, there is simply not enough money to meet the need in my authority and therefore people get into difficulties. Of course, there have been some beneficiaries of the bedroom tax in Wigan: there are far more payday lenders in the town now than there ever were before.
I believe in reform of the welfare programme. I was surprised when the Minister, in introducing the debate, referred to the success of universal credit. As far as I know, it has not yet been rolled out in a programme. I always had doubts. The Government’s ambition led them to do it far too quickly without making sure that they could cope with any difficulties that arose. To understand this better, my authority, as the noble Lord, Lord Freud, knows, became a pilot and a pathfinder authority. We wanted to learn the lessons that could be learnt from introducing universal credit. We did a small experiment for newly unemployed single persons who get on to universal credit—just over 1,000 people so far—and soon discovered the major flaws in the actual process. They are pretty obvious.
First, people do not have the skills in personal budgeting, so we have had to try to remedy some of that. Secondly, they lack access to financial institutions into which they can have the benefits paid. Banks do not, frankly, want people on that kind of income as their clients, as they are far too costly and too difficult, so we have had to set up more credit unions to try to cope with the problem. The third problem is the lack of access to and understanding of IT. I think the national figures, which our experience bears out, are that about 40% of this group do not have access to IT and find it difficult. We have been able to set up schemes within the local authority to try to do this. We can do it for a small group of clients, but if we had had to roll out the full scheme, as was originally threatened, for 1 April, it would have been beyond us to cope with the scale of the problems. I hope the Government understand that we want to help. We understand the need to reform welfare but we need to be very cautious about what we do.
The press seems to indicate that the Government, apart from not being able to get their computer system up and running, are having somewhat of a rethink. I want to ask them to consider rethinking the idea of making direct payments of housing benefits. This is one of the most difficult things for people to manage. All that would happen in many cases is that people would get into severe debt, leading probably to homelessness and so on. If the Government work with local authorities, I think we can reach an understanding; otherwise, again, we will simply provide more help for payday lenders.
I was also surprised when the Minister said in his introduction that 500,000 people had got jobs through the Work Programme. If they have, then maybe somebody ought to tell the providers, because they have only been paid for 48,000 places provided in respect of long-term unemployment. Maybe there is a deficit there that needs to be fixed. Those 48,000 would represent about 3.2% of the 1.5 million people who have been through the Work Programme. I do not think that is particularly successful.
However, I am genuinely pleased to note that the Government are actually beginning to understand more that this is not simply a numbers game but about understanding the people we are dealing with and their needs. I accept that, for many people, getting and keeping a job would be a real transformation in their lives. However, for many people, we have to transform their lives before they can get and keep a job. The Greater Manchester Combined Authority is running quite an ambitious “Work Programme plus” with the Government, which, fortunately, the DWP has agreed to. That will give people not only a key worker to help them with their problems but access to a range of supporting services from local authorities, health authorities and mental health authorities to help them.
There is a gap in understanding in this House about the nature of poverty and how poor people work. However poor people are, and whether that is due to unemployment, low pay or zero-hours contracts—whatever the cause—people can have a crisis in their lives. Children needing shoes, an unexpectedly high energy bill or whatever it might be can cause a real problem for them. The Social Fund was set up to try to deal with crises of this nature but, just as the recession was beginning to bite, the Government passed the Social Fund on to local authorities and halved the available money. I do not think that was the right thing to do, but we coped with it. We decided that we would try not just to cope with the crisis situation but to be more thematic. Rather than say to someone, “You need a new fridge, here’s the money”, we try to find providers who will give them fridges—we will call down a contract for fridges. That saves us money and is more effective. However, from April 2015, even the paltry sum we have is going to disappear. What do the Government expect to happen from April 2015? Do they expect hard-pressed local authorities to provide the funding? In many cases, that will not be possible.
If the Government really cared about fairness in our society, they would reverse that mean-minded policy and work with local authorities to change the lives of people with complex dependencies. That would be an investment, not a cost. The Government would save money, local authorities would save money and we would manage to help people turn their lives around, not just for this generation but for generations to come.
Lord German (LD)
My Lords, before I turn to the centrepiece of the gracious Speech’s measures, I would like to say a few words about the plastic bag tax. I had the privilege of chairing the committee of inquiry in the National Assembly for Wales which looked at this issue prior to the legislation being introduced in 2011. My message to noble Lords is: do not panic. It will all work out. It will all be very successful and it will have two very valuable outcomes.
First, the plastic bag tax will change people’s behaviour. It will make people behave differently. You are just as likely now in Wales to see someone with a Tesco bag for life shopping in Waitrose with it and a person with an Asda bag for life shopping in Sainsbury’s. The fact of the matter is that people now carry their bags with them and very few people resort to buying a plastic bag.
The policy will also produce a hardened attitude towards protecting the environment so that it becomes important to people. It is a bit of a culture shock for me to come to London, where people continuously want to thrust plastic bags at me. I usually try to refuse but on occasions I am in a queue and I get a plastic bag, but I refuse to throw them away, because that is what we do not do now in Wales—you do not have them to throw away. So I now have a boxful of plastic bags that I do not quite know what to do with, so if anybody needs a bag for life I have some that I can give them for nothing. I will bring one of my biodegradable plastic bags for the noble Baroness, Lady Sherlock, next week, which of course are a prerequisite if you are going to dispose of food waste, which is primarily what they are used for.
I was looking for an analogy from the natural world, the environment, which fits the changes that this Government are making and have made in the area of pensions. The segue between the two is a bit tricky. After all, we have just had the announcement of two Bills this Session, following on from the new single-tier state pension and auto-enrolment the year before. It is a pretty seismic shift in the crucial and previously much underplayed sector of pensions.
My analogy from the natural world is about the experience I had with forestry in Wales. Some 12 years ago, I was the member of the Welsh Government with responsibility for forests. I introduced a major change in tree planting. I discovered that previously taxpayers in Wales had been heavily subsidising the growth of cash-crop conifers, reflecting a bygone age when pit props were needed in great numbers. But in effect the Government and taxpayers were subsidising timber for garden sheds, fencing, DIY products and the like. The change made was a presumption in favour of planting broad-leaf trees and providing natural growth so that our forests would become varied and contrasting places for recreation and leisure. Now, some 12 years later, the true value of cash-crop timber is slowly becoming apparent and conversely more forests are being opened up for public enjoyment, tourism and leisure. That was a change which had profound and significant outcomes for generations to come. That is my segue: it is the same with the pensions revolution that we are seeing.
Actions taken by this Government in their five-year term will lead to profound and significant changes that will benefit many generations to come, fulfilling an ambition for what people want from their pension: a reasonable idea of the level of pension they will eventually get; a pension that gives them best value for the contributions they have made over the years; and a pension which is as straightforward and understandable as possible. I took to heart the speech of the noble Lord, Lord Holmes of Richmond. It hurts your head, he said, and it can hurt your head. Anything that we can do to make it straightforward and understandable and get people engaged with it is very important.
I pay tribute to my honourable friend Steve Webb for delivering those changes, which, taken as a whole, see more people saving for their retirement and a better provision of choice and control for the pension saver. I know that my honourable friend did not know the price of a Lamborghini before he made that statement, but he certainly did afterwards. Many people have commented on that matter today. I will certainly transmit the message to him that there are very fine motor vehicles produced within the United Kingdom which compare very favourably indeed.
In that list is a better state pension—last year’s measure—locked against the vagaries of inflation, price rises and government action, the extension of the range of pension products available and more certainty of a pension outcome. That is the benefit in just a few years. We now have more than 3 million new pension savers in this country, but there are many millions yet to join the pension-saving population. Getting the changes right is critical for all those saving for a pension. The two Bills outlined in the gracious Speech indicated by the Government as the centrepiece of the programme are part of the building blocks for the pension ambition, the ambition of which I spoke about earlier. They will need close scrutiny to ensure that, in their detail, they play a full part in meeting this ambition.
In respect of the private pensions Bill for a defined ambition pension, I welcome the Pensions Minister’s statement that the Government will not be taking an off-the-shelf product which replicates the system in the Netherlands, Denmark or even Canada, but that we will have a product which suits the United Kingdom market and the needs of United Kingdom pension savers. However, there are already some emerging and important questions to be asked. Perhaps I can tempt my noble friend to address some of them in his winding-up speech.
For example, on the Treasury’s pension tax Bill, giving people choice on the use of their pension pot raises a critical issue for the success of that new freedom: the guidance that pension holders will receive. As many noble Lords have said today, the Government’s consultation does not end until tomorrow, but there is huge time pressure to get it right. The big question is: what will be the nature of the Government’s guarantee of free, impartial and face-to-face guidance to DC pension holders, as announced by the Chancellor? What will be the degree of independence in the provision of guidance? I am sure that this House will want clarity on how the Government’s guarantee will work, how it will be funded, how it will be triggered and how savers will be dealt with both before and after the guidance has been received. The new pension products that we are talking about in the second Bill—the target pension—will help share the risk, provide stability and, crucially, more certainty, for pension savers but, once again, there are questions to be asked.
The pensions landscape will have changed with profound and significant effects for future generations after all those measures have been passed in this Parliament. I pay tribute to the Government for putting this centre stage, but we need more engagement with pension savers. Then we should get greater understanding, which is crucial. A good start would be—I believe that this is possible—a new political consensus in this Parliament to provide long-term continuity towards that goal and ambition which I believe we all share. As I said, the pursuit of greater understanding is critical. After all, the money is the savers’ money and managing their savings plays an enormous part in people’s well-being in later life.
My plea for political consensus means that we have to have all the key information and analysis available for our consideration. My noble friend has a track record of providing information in abundance, so I very much hope that he will be consistent and live up to his magnificent record of delivering papers to us in such numbers that we will have no complaints from any part of this House about not understanding the Government’s intentions or their analysis of the problems which we face.
I believe that what we see before us is a seismic shift in our pension system, which will have a profound effect for many generations to come.
Lord Stevenson of Balmacara (Lab)
My Lords, I start by congratulating the two excellent maiden speakers. The noble Lord, Lord Bamford, made some direct and very sensible suggestions about the UK earning its way through engineering and utilising our manufacturing capacity, but also by investing in training. The endorsement from my noble friend Lord Young, who had visited the noble Lord’s training centre, brought that directly into our discussions. I also thank the right reverend Prelate the Bishop of Durham for his fascinating story about his personal journey to his current see, his tour d’horizon of Durham and the north-east and his commitment to represent the north-east in this House. By a curious quirk of fate, I think that I was responsible for responding to the maiden speech of his immediate predecessor, so without having to do much research I happen to know that he was the 73rd in the line and that the third was another Wilfred. We do not get many Wilfreds, as I said at that time, so I am always pleased to be able to reflect on that and make sure that they get the credit they deserve for having such a ridiculous name.
Looking at how the contributions panned out in this discussion, it is interesting that the majority have been on the business, employment and pensions side of the debate. Of course, we also have it in our title to deal with other issues. Despite a late run from those interested in agriculture and the environment, I am afraid that the preponderance of the debate was in the former areas. I will not pre-empt the Minister, who I am sure will want to go through in some detail the individual contributions made by many Members right around the House across the range of issues. However, I hope that when he comes to respond or when he reflects later, he will wish to write to us about some of the points—particularly the interesting points made by the noble Lord, Lord Tugendhat, about the changing foreign policy context and his concern about the lack of an ability to stop takeovers which might be damaging to viable and successful British-based companies. I would be interested to hear the Minister’s comment on those points.
It is difficult to believe that the irrepressible noble Lord, Lord Holmes of Richmond, ever has a sore head but he did go on about his pensions experience, so I hope that we will get some interest on that. I also hope that the Minister, when he responds, will pick up the important points made on taxation by my noble friend Lady Hollis. We heard quite a lot about the dark side of the flexible contracts which are represented mainly by zero-hour contracts, although there are other variations. That was raised by my noble friends Lady Hollis, Lord Monks, Lady Donaghy, Lady Turner and Lord Young. I also thought that some important points were made, particularly by the noble Lord, Lord Aberdare and my noble friend Lord Macdonald, about the new rules for apprenticeship schemes, which need addressing.
The noble Lord, Lord Mitchell, took us into a digital world and I would be interested to know whether the Minister felt that there was anything in his suggestion for a digital Magna Carta. I am sure that is not just a scheme for a rather elaborate and high-tech exhibition during the anniversary year but reflects a deeper concern about the way that the internet can sometimes get out of control and cause problems, and that some code of conduct—some Magna Carta, as my noble friend put it—would be a good way to go.
The noble Lord, Lord Clement-Jones, made a very important point about visa problems in higher education and in particular on the question of post-doc students. Our universities are suffering badly from this and I would be grateful if the Minister could pick up on that. Also, how can we not have a full and well documented response for that innocent pensioner, the noble Lord, Lord Smith of Clifton? His story of wandering in the deeper recesses of BT and the Inland Revenue must have made the Minister sad, so he must respond. We want to know the real story—even if it is £3.17, as the noble Lord said, there could be a lot of them.
The noble Lord, Lord Bourne, said that we should not discount this year’s Queen’s Speech just because it had a small number of Bills. We do not discount it on those grounds but because when we consider it, the key question is: does it help revive the economy, generate good and well remunerated jobs, ensure that good quality and affordable education and training is available and that good affordable housing is accessible? Does it reassure us that nobody will be left behind? The answer to those questions is that it does not. The Bills do not address the severe cost of living crisis in Britain, where food bank use is soaring, even among many working people, where personal debt levels are dangerously high, where wages have fallen in real terms as essentials such as food and energy prices rise, where too many people are trapped in part-time jobs or with low hours or exploitative zero-hours contracts, and where millions cannot afford to buy their home and are trapped into renting low-quality properties at ever rising rents.
Several noble Lords touched on the question of personal debt, which again seems to be financing our recovery. I share the disappointment that there is little in the legislative programme about the problem debts that are facing millions of our fellow citizens. I declare my interest as chair of StepChange Debt Charity, which is the UK’s largest provider of free-to-client debt management plans; we deal with more than 500,000 clients every year who have problems with personal debts. I think that the Minister is aware of our work in this field, and we are looking forward to talking to him about our recent report, Life on the Edge, which shows how a lengthy period of low or no wage growth and rising living costs has left millions of households stretched to their absolute financial limit.
Individuals and families are paying a high price for the high levels of personal debt. The economy suffers too. Debt is a brake on people’s capacity to work or return to work, and on their aspirations and potential. It leads to mental health problems and family and relationship breakdowns, and has an adverse impact on the wider community. Equally, all society benefits if we tackle this problem. Otherwise, such people all too often turn to high-cost credit, and the recent work announced by the Financial Conduct Authority has shown that we still have much to do to drive bad practice from this sector.
I believe that the time has come to have a mature conversation across all parties about a national strategy for personal debt. In particular, I suggest that we need to look north to Scotland to see how its statute-based system operates. We need to build personal financial resilience so that the poorer members of our society are not paying the highest prices for essential goods and services, there are better safety nets and there is a more formal role for creditors in helping those in financial difficulty.
Another source of personal debt is of course the contingent tax liabilities that students are incurring in higher education. As my noble friend Lady Warwick said, there is now a growing consensus that the higher education reforms introduced by the coalition since 2010 are a complete disaster, yet we look in vain to find a higher education Bill. In a country where living standards are under acute pressure and where the deficit still looms so large, I agree with the noble Viscount, Lord Ridley, that innovation is the one sure way out of austerity. That is why our universities are so important. They are the powerhouses of the knowledge economy. They need to be bigger, stronger and more central to our economy in the years to come. Britain needs to put science and innovation at the heart of a strategy for long-term economic growth. Unless we grow smarter, we will grow poorer. What has been created over the past four years is not sustainable in cash terms. It does nothing to boost the science base, to diversify student choice, to bring universities and business together or to deliver effective progress toward better social mobility. This is something that we will definitely need to return to.
The small business, enterprise and employment Bill, which will be reaching the House towards the end of this year, has been covered by a number of people and I do not want to go into it in too much detail. It really is a very weak Bill, and the common theme across this motley collection of measures seems to be that the majority of its proposals were in fact first raised by the Labour Party, often in debates here in your Lordships’ House, although of course they were summarily rejected by Ministers.
The issue of pub companies was raised at the end of our debate. Labour has consistently called for a statutory code to give pubs the protection they need and ensure that landlords get a fair deal. Ministers have dragged their feet on this issue for more than three years, during which time hundreds of publicans have lost their livelihood. We are pleased that the Government have now accepted many of the arguments that they repeatedly vetoed in the House of Commons, but we fear that the watered-down reforms will not address the large increase in pub closures that we have seen. The changes that Ministers have announced do not include a free-of-tie option or the genuinely independent rent reviews that Labour and campaigners have been calling for. Instead, the proposed code includes parallel rent assessments, which will give tenants greater information but not the right to exit the beer tie.
We welcome the measures on late payment. Ministers have repeatedly promised to tackle this scandal, which severely affects the cash flow of small firms. The previous Labour Government legislated so that late payments at least incurred interest; alongside that, they established the prompt payment code. However, we want to see greater transparency to help to prevent late payment, including through reporting requirements on payment performance in companies’ accounts.
On business lending, any scheme that helps small businesses to access finance is welcome, but the record of the Government in getting the banks to lend to small businesses has been one of complete failure. Every scheme, from Project Merlin to Funding for Lending, has completely failed to deliver. Figures published this week show that in the first quarter of this year net lending to SMEs by Funding for Lending participants actually fell by £700 million, and in the past year net lending to SMEs has fallen by £3.2 billion. The press notice says that the main purpose of this Bill is to,
“build a stronger economy by supporting small business as they compete”,
but it is hard to see where the real needs of the majority of small businesses are being addressed.
The world is changing faster than we can comprehend with global economic forces moving south and east. This is creating huge opportunities in a world where the global middle class is expected to treble to 5 billion people in the next two decades. So surely what we needed in this Queen’s Speech was a Bill that would transform our economy and back our businesses to make the most of the new opportunities there so that we can innovate and grow our way to higher standards of living for all our people.
I absolutely accept, and I am sure it is common ground between the parties, that the 2008 crash exposed long-standing structural problems in our economy. The economy was unbalanced by sector and region, short-termism in our corporate culture led to low levels of business investment and low productivity, and a dysfunctional finance system and a stubborn and increasing trade deficit all did their work.
Although some growth has finally arrived, as my noble friend Lord Liddle said, it is not the balanced and sustainable growth we need, so prices are still rising faster than wages and the continuing cost of living crisis for many means that individuals are, on average, £1,600 a year worse off compared to 2010, so business as usual is not good enough. To set the foundations for future success, we need to take a different approach.
The noble Lord, Lord Higgins, challenged us and said that we did not have a strategy for the economy, but Labour has a long-term plan to earn and grow our way to higher living standards. Our goal is a high-productivity, high-skilled, innovation-led economy. To get there, we absolutely accept that we need more British-based businesses creating good jobs, investing, innovating and exporting.
If elected in May 2015, we have already announced that we will take action on immediate pressures that businesses face. We will help 1.5 million businesses by cutting business rates in 2015 and freezing them in 2016. We will reform the energy market to put transparency and competition back into the industry, as well as freezing energy bills until 2017, saving the average business £5,000. We will boost real competition in the banking sector. To lay the foundations for long-term success, Labour’s plans include radically reforming vocational education and apprenticeships putting employers in the driving seat, creating a higher skilled workforce, driving up productivity and underpinning higher wages. We will support lending to businesses by creating a proper, independent British investment bank and a network of regional banks with a responsibility to boost lending in their direct area.
We will support green growth by backing the 2030 decarbonisation target, giving the Green Investment Bank borrowing powers and prioritising investment in science and our innovation system. We will establish a small business administration to champion small business at the heart of government. We will devolve powers to cities and regions to boost growth and rebalance the economy, allowing local knowledge to solve local problems and we will encourage longer-term decision-making in business and government through rules and incentives for business that reward a longer-term focus, and an ambitious industrial strategy to support long-term growth.
It is clear from the recent election results that too many people do not feel a sense of personal or community well-being. They feel insecure and ill equipped to deal with change and harbour a deep sense of unfairness. Like my noble friend Lady Sherlock, I feel that the gracious Speech failed to respond to the needs of the people for security, fairness and stability. What we need is a legislative programme that will tackle the challenges ahead to restore real growth, tackle debt and build an economy that works for all our people, not just for those at the top. With this Queen’s Speech, the Government had an opportunity to respond to some of these challenges, but I fear that that they have failed to do so.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, I thank our two maiden speakers today, my noble friend Lord Bamford and the right reverend Prelate the Bishop of Durham, for two excellent speeches giving us the promise of some really formidable contributions in the years to come. They are on notice that more are required. I also need to thank my noble friend Lord Smith of Clifton for his account of his encounters with HMRC and BT. Clearly he has a future as a novelist along the lines of Kafka; I commend him.
I will start off with the two private pensions Bills that we have coming. We have the pensions tax Bill, which gives people far more discretion over what to do with their retirement funds when they come up to retirement; and much greater innovation within the private pensions market in the other Bill. One of the issues raised by a number of noble Lords—the noble Baronesses, Lady Sherlock and Lady Drake, and my noble friends Lord Holmes and Lord German—is about guidance. We agree that guidance needs to be impartial and to meet the needs of those who need to access it. The consultation closes tomorrow, so clearly I cannot tonight pre-empt its outcomes. However, I assure noble Lords that the response to that consultation will be out before Recess.
A question was raised by the noble Baroness, Lady Sherlock, and my noble friend Lord German about the impact of these various changes. We made an announcement at the Budget on the Exchequer impact of those reforms. We are currently consulting, as I said, on the guidance guarantee. The information gathered there will help to form the estimate of the reforms’ impact. I can confirm that we will publish a full impact assessment on the defined ambition reforms alongside that Bill.
There was a little bit of political teasing, I think I would call it, on compatibility of the two Bills from the noble Baronesses, Lady Greengross, Lady Hollis and Lady Drake, and the noble Lord, Lord Monks, the issue being the obtaining of savings at retirement age and the collective nature that some schemes may adopt under the defined ambition Bill. It is consistent, because members will be able to cash out their collective benefits if they are in that kind of scheme, in the defined ambition context, if they so choose.
The noble Lord, Lord Monks, raised a question about why we are looking at collective schemes when the Dutch are moving away. I am reliably informed that the Dutch are not moving away from collective arrangements. We are, however, looking very closely at what they are doing and learning lessons from their experience. The issue is that there needs to be a clear allocation of pension rights to individuals, as well as requiring schemes to disclose in detail what members are entitled to.
Moving to the issues of welfare and employment, on which there have been and continue to be a range of changes, I go directly to the points of the noble Lord, Lord Smith of Leigh, on his experiences in Wigan. I went up to Wigan and joined him when we started the pilots there. One of the things that we are doing is developing a quite intense relationship with the local authorities in various areas as we roll out universal credit. What he was describing—the responses that the local authority is becoming involved with—is exactly what we are talking about doing. For the first time we are getting real support, on a fairly holistic basis, for individuals who have never had that kind of support before. We are learning an enormous amount, including from Wigan. I therefore turn round the way in which he made those points to say that we are trying to get those local authority responses so we can get the kind of support to people that they have never had and which they need. As we roll it out in volume we have learnt and are learning the lessons of how to do that so that we do it successfully when we roll out the local support service framework, as we are doing.
On the other point the noble Lord made on the removal of the spare room subsidy—although he did not express it quite like that—I point out that the Homes and Communities Agency published figures yesterday which suggest that arrears are increasing, not decreasing in the social housing sector, despite various changes.
On the point raised by the noble Lord, Lord Morris, that work is not a sufficient route out of poverty, clearly that is one of the most interesting trends over the past decade. The previous Government tried to deliver their child poverty targets and managed to pay it out through raising benefits, but that did not have the impact on people who were in work. Universal credit is designed to do exactly that: to make sure that people who work full-time, even on low wages, are brought out of poverty by the way that universal credit works. We expect that it will take 300,000 children out of poverty through that sort of effect.
The noble Baroness, Lady Turner, made points on homes. In 2014 we are expecting to deliver over 60,000 more affordable homes in England, which is the largest number for almost 20 years. My noble friend Lord Addington made a point on the disabled students allowance; we are currently engaging with a wide range of stakeholders on the development of our guidance, which we plan to publish in the autumn. However, I will pass on his helpful comments to the Minister.
The small business, enterprise and employment Bill is designed, as my noble friend said in the introduction, to help ensure that the UK is the best place for businesses to start, to innovate and to grow.
A wide spread of noble Lords—the noble Baronesses, Lady Sherlock, Lady Hollis, Lady Drake and Lady Donaghy, and the noble Lords, Lord Monks, Lord Morris and Lord Young—focused on the zero-hours contracts issue, basically making the point that the Government are not doing enough here. The Government have made clear that zero-hours contracts play a part in a dynamic and flexible labour market, and recent figures published by the Chartered Institute of Personnel and Development support that. Those on zero-hours contracts said that they are equally satisfied with their jobs, happier with their work-life balance and less likely to think that they are treated unfairly by their organisation when compared to the average employee. However, zero-hours contracts can be abused, and shortly we will announce how we intend to tackle that through the Bill.
We have moved from consultation to action on this in less than 12 months, which is fast and in contrast to the Opposition, who initially consulted on the abuses of zero-hours contracts back in 1998. I was interested to muse over their paper, as I am sure they have done. It was called Fairness at Work. It was clear in stating:
“Many employers ensure the contracts are used sensibly, but they have the potential to be abused”.
The White Paper went further by welcoming:
“Views on whether further action should be taken to address the potential abuse of zero hours contracts”.
But nothing happened in the next 12 years. So it is 16 years later and I am very pleased to hear the Opposition belatedly making some suggestions.
The noble Baroness, Lady Hollis, also focused on zero hours. We will not mandate the universal credit claimants to zero-hours contracts that do not allow the claimant to work for another employer. She expressed concern about the difficulty of vulnerable people in claiming credit. The current figures, a pilot having gone for a year in a place that is expanding, are that over 90% of claims to universal credit are made online. Clearly the local support service framework is designed to get that support and service to as many people as we possibly can.
Many noble Lords talked about apprenticeships and what the Government are doing, including my noble friends Lord Bamford and Lady Sharp, and the noble Lords, Lord Liddle, Lord Bhattacharyya, Lord Aberdare, Lord Desai, Lord Macdonald and Lord Young. It is not a numbers game, but we are on track to deliver 2 million apprenticeships. There were over 868,000 people undertaking an apprenticeship in the 2012-13 academic year, which is the highest in modern history. We are making efforts now, following the Richard review, to ensure that apprenticeships are more rigorous and more responsive to the needs of employers.
On the question of how we break down the barriers between academic and vocational training, we want it to become the norm for young people to go into an apprenticeship or go to university, or do both in the case of some higher apprenticeships.
On the question of careers advice, schools now have a legal duty to secure access to independent career advice to pupils in years 8 to 14 and this must include information on apprenticeship.
Industrial policy was raised by my noble friend Lady Sharp, and the noble Lords, Lord Liddle, Lord Haskel and Lord Desai. We have five main themes in our industrial strategy: technology; access to finance; skills; procurement; and sectors. We have invested in emerging technologies—the £200 million for the seven Catapults to speed up technologies’ commercialisation, which is getting products to the market faster.
There is also £600 million to develop and commercialise the “eight great technologies” that we have isolated. Space was the one that my noble friend Lady Wilcox focused on. She mentioned the others: big data, robotics, regenerative medicine, synthetic biology, agri-tech, advanced materials and nanotechnology, and energy storage.
We were reminded of the metric system by my noble and learned friend Lord Howe. The Government support a single system of units of measurement in principle but recognise that many people in the UK prefer or are more familiar with imperial units. Therefore the Government are committed to retaining the existing usages of imperial units for as long as consumers and business find it useful, which, I suspect, is not the answer that he wanted to hear from me.
On the issues of agriculture and environment, the noble Baroness, Lady Sherlock, and my noble friend Lady Parminter asked why biodegradable plastic bags were exempted. It is fundamentally a challenge to UK industry to produce a genuinely biodegradable bag that meets defined criteria. We have awarded four contracts for feasibility studies looking into developing biodegradable bags and economically viable methods for separating bags from the waste stream.
The noble Lord, Lord Soley, asked about our response to the Natural Capital Committee’s second report. It needs to be considered fully, and the work of that committee has given us some interesting insights into how to value natural capital in government policy.
The noble Lord, Lord Northbourne, made the point about preparing children for adulthood. The Secretary of State for Education has spoken publicly on a number of occasions about the importance of developing character skills in young people. The DfE is supporting schools in different ways to develop and build the characters of their pupils and is making it easier for them to choose how to do this.
The noble Lord, Lord Stevenson, raised an issue about public houses and why we were not pursuing a mandatory free-of-tie option. While there were many calls for the introduction of free-of-tie, there were also widespread concerns that such a move would create uncertainty for pub-owning companies and have an unpredictable impact on the wider pub sector. This is because, if significant numbers of tenants decided to go free-of-tie, the whole tied model might no longer be viable because pub companies would lose their purchasing power and with it the ability to service a smaller and potentially more disparate tied estate. Our reforms will rebalance the relationship between the pub-owning companies and their tenants without threatening the balance of the wider industry.
I hope that I have covered most of the points. I do not think that I have covered absolutely everything, but that was, of course, impossible. I will write on anything significant that I have missed out.