Queen’s Speech
(7 years, 4 months ago)
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Baroness Chisholm of Owlpen (Con)
My Lords, just before we start the mammoth task again, can I remind noble Lords that the advisory Back-Bench speaking time is five minutes? If we stick to that, we will finish by 11.30 pm, which is already quite late.
Lord Razzall (LD)
My Lords, I join other noble Lords in welcoming the noble Lord, Lord Callanan, to the Front Bench and in looking forward to the contributions of the noble Lords, Lord Mountevans and Lord Colgrain.
I would like to concentrate my remarks on the problems facing British manufacturing industry. There are clearly industries that are hugely successful, such as aerospace, biotech and motor vehicles, to name but three. The drop in the value of sterling against the euro and the dollar has given a short-term boost to our export sales, but there can be no doubt that our manufacturing sector faces significant problems.
The first serious issue, which has been with us for many years, is productivity. We remain way down at the bottom of the productivity tables in comparison with all our major competitors, and all economic commentators agree that the reason for our low productivity is the low rate of capital investment over decades. I am disappointed that the gracious Speech did not emphasise more the Government’s proposals to solve the productivity gap between us and our competitors, particularly in the context of Brexit.
It is impossible to look at the issues facing manufacturing industry without also looking at the impact that Brexit will have. First, it must seem obvious to noble Lords that, as 52% of the United Kingdom’s exports currently go to the European Union, access to the European Union for goods must be maintained, even if some continued financial contribution is required. The alternative—of accepting World Trade Organization rules in the event of no deal after two years—would be unsatisfactory, as it would mean an average tariff of 5.3% on exports to the European Union, with tariffs ranging from 4.6% on chemicals to 10% on cars.
Secondly, it is not just potential tariff barriers that are a serious concern. Non-tariff barriers are equally important. These barriers deal with, for example, regulatory issues, technical barriers, standards and measurements. Harmonisation of standards has worked well in recent years, but there is significant nervousness in the manufacturing community that, following our exit, Europe will revert to the bad old days of Germany setting rules that suit its manufacturers.
It is also essential that lengthy customs checks are not introduced, as that would be damaging, particularly in industries that involve a significant flow of components to and from the European Union. The Government seem to believe that we will be able to build component industries to get round those difficulties. However, if we take the motor car industry, most manufacturers do not believe that a UK supply will be sufficient. We can look at the risks. Other motor vehicle manufacturers are aware of the history of Ford. Thirty years ago, it was the UK’s largest vehicle producer. It now produces 2 million engines per year in the UK, but 90% of those engines are exported to mainland Europe. Although Ford is the number one car seller here, not one of its cars is made in the UK.
The final major concern for all manufacturing companies is that British manufacturing industry requires significant skilled immigration from Europe. I appreciate that that is anathema to the Tory right, but there are countless examples of a likely skills shortage. A typical example is the need of some engineering companies for analogue design engineers. Our universities now really teach only digital electrical engineering, so the analogue design engineers that many engineering companies need can be found only from the Czech Republic, Slovakia, Romania and Bulgaria. Such people must be given the right to work in the UK; otherwise, a disaster will occur. In industry, there is considerable scepticism about whether the skills shortage will be made up by UK employees once we have left the European Union. I suspect that David Davis would acknowledge that, and did so in a little-recorded speech in Estonia some time back.
When I see the problems faced by manufacturing industry, which I have just outlined, I ask: is it any wonder that the Tory party, in its election campaign, got the lowest level of support from industry that I can remember in my many years in active politics?
Lord Mountevans (CB) (Maiden Speech)
My Lords, I am honoured to have the opportunity to make my maiden speech. I would have done so sooner, but some noble Lords may know that I have been occupied east of here for the past year or so.
Standing here, I have the privilege of following into this House my late father-in-law, Lord Moran, who gave distinguished service as a diplomat and later followed his father—Winston Churchill’s personal physician—into this place. I follow, too, my grandfather Edward Evans—or Teddy, as I knew him—who was raised to the peerage in 1945 following a career as a naval officer and Antarctic explorer. When Teddy was a lieutenant in the Royal Navy, he was second in command of Captain Scott’s ill-fated second expedition to the Antarctic, and he was one of the last three to see Scott and the final polar party alive, just 160 miles from the pole. Growing up, I grew acquainted with the spirit of exploration, innovation and enterprise that carried him literally to the end of the earth.
While I did not have the opportunity to follow in his footsteps and visit, in his words, the “desolate Antarctic”, during my year as Lord Mayor of London, I nevertheless visited 24 countries in five other continents. These visits, on which I was accompanied by business delegations, were conducted to promote London and the UK as the world centre for financial and business services, a position that I very much hope is maintained in the years to come. On these visits, I recognised in the best of British businesses the same animating spirit of enterprise, innovation and adventure that drove my grandfather and which we will need to harness to drive our own future prosperity.
This spirit is evident not least in a sector which my grandfather knew well and in which I made my own career, the maritime sector. More than 80% of world trade moves by sea. That is more than a ton and a half of cargo for every man, woman and child on the planet, and sea-borne trade is predicted to double by 2030. Given the importance of this sector, I am pleased to say that the UK, an island nation with a rich seafaring tradition, is a world-leading maritime centre and is perfectly positioned to capitalise on future growth.
Our skilled workforce, world-class infrastructure and competitive business environment make the UK a destination of choice. As a result, the sector, which encompasses not only shipping and ports, ship and boat building, manufacturing and engineering but the world-renowned lawyers, insurers and brokers of the City of London, makes a significant contribution to the UK economy—an estimated £22 billion, supporting 500,000 jobs. We have seen growth in recent years. Updated historical data and the latest figures will be presented in full at the Maritime UK reception here in Parliament during the third London International Shipping Week in September.
Innovation is critical and is widely evidenced across the maritime sector. Much attention is being given to the economic benefits of robotic and autonomous operations, and this House only recently received a report recommending a number of actions by government to ensure that the UK can take advantage of this evolving technology. Marine and agriculture were specifically mentioned as sectors from which early benefits could accrue. Singling out marine, the deployment of autonomous devices to increase the scope and speed of ocean surveys will be a capability of the new British Antarctic Survey ship, “Sir David Attenborough”, currently under construction at Cammell Laird in Birkenhead. That contract was won against international competition. This vessel will be a world leader in technology. Earlier, the noble Lord, Lord West of Spithead, wasted no time in bringing to the attention of this House the fact that the new carrier is sailing from Rosyth today. As an honorary captain in the Royal Naval Reserve, I say that the Royal Navy is not just guarding our sea lanes; it also plays a key role in the development of marine and maritime technology.
In 2014, I was honoured to be asked by the Government to chair the maritime growth study, which made a number of recommendations for keeping the UK maritime sector competitive. I am pleased to say that significant progress is being made in addressing those recommendations and that there will be much to report at London International Shipping Week. That has been a huge success and is an outstanding example of co-operation between government and business. I urge the Government and business to continue work on the relevant recommendations of the growth study to ensure that the maritime industries can harness the talent and enterprising spirit of the workforce to deliver for Britain in the coming years.
As a former Lord Mayor of the City of London, it would be remiss of me not to say something of another of the UK’s leading industries and great success stories: financial and related professional services. In my remaining time, I will not rehearse too many statistics. Suffice to say that the sector supports more than 2 million jobs nationally, with two-thirds of those outside of London, contributed £176 billion to the UK economy in 2015 and attracted £10.2 billion of foreign direct investment, which was around one-third of total inward FDI. It is the UK’s largest generator of tax revenues, covering, if you like, two-thirds of the cost of the National Health Service. It is also the source of the country’s largest trade surplus.
I would like to highlight just one initiative demonstrating the sector’s innovative and enterprising spirit: green finance. In my year as Lord Mayor, I was proud to launch the City of London’s Green Finance Initiative, a body committed to promoting and further developing one of the industry’s most vibrant and fastest growing sectors, which advocates the steps that must be taken if we are to facilitate truly 21st-century, high-tech jobs, growth and exports.
Green finance—the funding of investments that provide environmental benefit—will fund and facilitate the growth of a more efficient and productive and less polluting economy and can provide a bridge to markets both old and new, including China, the USA, Mexico, Brazil, Morocco and Argentina. This serves simply to show how, at its best, the sector embodies the same spirit of enterprise and innovation and of going out into the world of which I heard in my grandfather’s stories, and which I also see in the maritime industries today.
To close, it is my fervent belief that the best of British business, and the two sectors I have highlighted, will continue to embody that spirit and will make an important contribution to our nation’s future, helping to build the trading nation that the Government, and all of us, wish to see. For them to do so, however, it is vital that the Government deliver on their pledge to negotiate the best Brexit deal or suggested agreement, which must include mutual market access, early agreement of transitional arrangements and access to talent for the UK’s businesses. If the Government are able to provide the framework where opportunities can be taken, where innovation is encouraged and where businesses are not left out in the cold, I am certain they will deliver.
Lord Kakkar (CB)
My Lords, it is a very great privilege to follow the noble Lord, Lord Mountevans, and to be the first in your Lordships’ House to be able to congratulate him on his magnificent maiden speech, so clearly informed by the wisdom, experience and insight he has developed through his distinguished career in the City, which culminated, as we have heard, in serving as the 688th Lord Mayor of the City of London. I had the opportunity to speak to the Lord Chief Justice this morning, who indicated to me that the noble Lord was a most successful Lord Mayor of the City of London. He is highly regarded throughout the City and beyond, and your Lordships’ House will benefit from his future contributions to the important work that we have the responsibility of discharging on behalf of our nation.
I also congratulate the Minister on the thoughtful way in which he introduced this debate and declare my interests as professor of surgery at University College London, chairman of UCLPartners and UK business ambassador for healthcare and life sciences. I shall concentrate my contribution in this debate on the area of life sciences.
We heard from the noble Lord, Lord Mountevans, that financial services represent the most important part of our economy, but beyond financial services the life sciences are the second. They are an industry and a sector predicated on the development over many decades of a very finely balanced ecosystem. At the heart of that ecosystem is the National Health Service. Four of the 10 leading universities of the world, three of the 10 universities leading specifically in the field of life sciences, and two of the top 10 pharma companies in the world are based here in the United Kingdom, between them employing some 200,000 people in more than 180 countries around the world and providing a surplus in excess of £20 billion a year to the UK economy. There are some 1,300 companies in our country manufacturing in the medical area. There are 3,500 small and medium-sized enterprises, 500 of which are exporting actively, and the life sciences industries employ some 235,000 people, which is just under 1% of total private sector employment in our country. Those are important statistics, because the life sciences sector not only makes an important contribution to the economy and to generating wealth but has the vital purpose of ensuring that we can improve healthcare and the outcomes we can achieve for our patients through the application of innovation and technology that has transformed life prospects over recent decades.
A recent UK Trade & Investment report, Strength and Opportunity in 2014, which looked at the life sciences sector in 2014, established that it was a true world leader. Since 2011, the sector has attracted some £7.5 billion of inward investment into our country, which has resulted in the creation of some 18,000 jobs. The medtech sector grew at some 5.8% per annum in the period 2009 to 2014, and the biotech sector some 4% per annum. Those are very impressive figures when one looks at the general pace of economic activity during that period, and something that cannot be neglected.
The Conservative Party manifesto at the last election committed to ensuring that the United Kingdom was the most innovative country in the world. Clearly, the gracious Speech has identified certain areas of innovation—we heard in the Minister’s introductory comments a particular focus on driverless cars and travel into space—but I hope that the Minister can confirm a continued emphasis on the area of life sciences. This important area of activity, which is so bound up with the public sector, our universities and the delivery of healthcare, will not thrive unless there continues to be a determined focus on ensuring that it can compete globally. It is a sector, beyond many others. that is exquisitely dependent on collaboration—across universities, across industries and between Governments. Any loss of focus in that area will result in our country paying a heavy price.
In that regard, would the Minister be able to address two or three questions? First, is he content that there will be the opportunity for sufficient focus on the life sciences sector so that it can continue to deliver as required without any further legislation to deal with some anomalies with regard to the environment in which it has to operate? In particular, is he content that UK Research and Innovation will be able to drive the kind of collaborations and co-operation among scientists and innovators, not only in our own country but across the European Union, and potentially in other fundamentally innovative economies such as the United States and the emerging innovative economies in the east, such as China and India?
Is the Minister content that the vital role that the National Health Service has to play with regard to innovation in the life sciences sector can be delivered, particularly with the adoption of innovation at scale and pace—innovation established in our own country and applied for the benefit of the patients in our National Health Service but also using the fundamental opportunities of the NHS to demonstrate to the rest of the world the value of what we can bring to drive improvements in global healthcare?
Finally, is the Minister content that the life sciences sector can be properly supported in the negotiations attending our exit from the European Union?
Lord Davies of Stamford (Lab)
Before the noble Lord sits down, I have been listening to him—
Lord Inglewood (Con)
My Lords, I begin my remarks with congratulations to: my noble friend Lord Callanan, whom I served in the European Parliament, on his ministerial appointment; to the noble Lord, Lord Mountevans, with whom I was at university, on his maiden speech; and, if I may anticipate, to my noble friend Lord Colgrain, with whom I was also at university. I must also declare some interests that are in the register, some of which relate to me in a personal capacity and some to the activities that I am engaged in. I hope my noble friend Lord Callanan will not be too disappointed if I do not talk about space but keep my feet on the ground and talk about agriculture. If you are going to leave the CAP, it seems a good moment to review agriculture, agricultural policy and rural policy, because they all go hand in hand.
Clearly, as we all know, the CAP was not designed for this country, but, equally, it was not designed specifically for any other country either. It has a number of very foolish aspects to it, although of course you do not have to cross the channel to find idiotic aspects to government. It is also a mistake to parody it, as some newspapers have done, not least because in so doing they seem to parody responsible journalism. The CAP, like much else, has moved on. Especially since the MacSharry reforms, there are plenty of things we can take as good examples from the workings of the CAP. It is a pity that it played too big a part in the EU budget, but it may not have necessarily played too big a part in total levels of public expenditure. It is understandable, but a pity, that it also played such a big part in EU politics.
It is my contention that there is a serious market failure in agricultural, rural and environmental policy, which in turn is morphing from traditional agriculture much more towards traditional rural estate management. This market failure is part of the serious problem of rural and agricultural poverty. Last weekend, we were in Dorset. For a Cumbrian like me, it looks like the land of milk and honey, but underneath that thick veneer of prosperity there is rural poverty and deprivation, and it seems to be most closely associated with those who directly work on or close to the land—those who, on the continent, are called peasants. I have been called a peasant on the continent, and I am proud of it. That is a correlation that we need to think about.
What is agriculture doing in the contemporary world? First, it produces commodities, be they food or timber. Given the role that world prices have played in the CAP since the MacSharry reforms, I believe it is pretty much wishful thinking to suppose, as I have heard government Ministers suggest, that leaving the European Union will put the price of commodities up. It seems to be most improbable. Nor have I heard much consideration of the problems of the balance of payments, of the need for security of food in this country or of the costs of food, bearing in mind that it is a significant part of many families’ budgets.
Above and beyond this, tourism, leisure and general well-being are provided from what you might describe as the assets in the nation’s rural estate. In my home county of Cumbria, tourism is far more important locally than agriculture, yet tourism does not directly pay anything towards it. Then there are ecosystem services: carbon capture, flood mitigation, clean air and other things. Again, there are no direct cash transfers here specifically in respect of those. Then there is the environment more generally. It is my view that dereliction has probably caused more damage to the urban fabric of this country than the Luftwaffe did. If you do not look after things, as we have discovered in the Palace of Westminster, the end bill is a great deal bigger than it otherwise need have been.
Finally, the countryside should be a location for businesses. It is a great pity of the way the town and country planning system developed in the immediate post-war period that that has been stamped on to the extent it has. But the other side of the coin is that developing in the countryside in general is more expensive than doing it within the wider urban envelope. It seems to me that the tax system should recognise that. Then we have things such as the problems with broadband and other forms of infrastructure, which have been well rehearsed. On the basis that people should be paid for what they do, it looks to me as if a lot of urban Britain is freeloading on the back of the countryside, which is an example of the biblical maxim that to him that hath shall be given, and from him that hath not shall be taken away.
What, if anything, can be done about it? A particular suggestion that I would like to make is that the scheduler structure of income tax legislation should be looked at, because it discourages much sensible rural diversification and part-time farming. It is a gloomy state of affairs when the current framework around agriculture is conducted by the Rural Payments Agency and a lot of the planning authorities, which are not at all efficient or competent, taken as a whole. As a Cumbrian farmer said to me rather sadly, “Voting Brexit is, for farmers, the shortest suicide note in history”. I have no doubt that the Minister will not agree with that, but I would be grateful if he could explain in general but concrete terms their approach to these matters. I request that he please not repeat the meaningless mantra about generalised opportunities becoming available. To my own surprise and my friends’ amazement, I chaired a northern manufacturing company for several years, and the business was successful. The one thing that became clear to me was that entrepreneurs are successful through their own initiative and do not respond to government instruction.
Whether we like it or not, agriculture has always operated, and at least to some extent will continue to operate, within a state-regulated framework, and having an understanding of the Government’s aspirations and basic policy, so long as they are realistic, is a necessary condition of our country’s success.
Lord Eatwell (Non-Afl)
My Lords, there has been a lot of debate about the likely impact that leaving the European Union will have on the UK economy. To date, there have been two indisputable negative impacts. First, the fall in the pound as a consequence of the referendum vote has the direct effect of reducing real incomes. The second negative impact, indisputably, is the content of the gracious Speech. For the next two years at least, government energy and parliamentary time will be totally absorbed by the legislation needed to leave the EU. No time at all will be devoted to tackling the long-term trends in the UK economy, trends that herald very difficult times ahead for Britain, whatever may be the eventual deal reached in Brussels.
Consider the following. Investment in the UK as a proportion of GDP is lower than in both the United States and the EU. Corporate investment in fixed assets has fallen well below the rate of capital depreciation—in other words, the corporate capital stock is eroding. Research and development spending in the UK as a proportion of GDP is just a little over half the level that it is in the US or Germany. As a consequence of these, productivity in the UK, output per worker hour, is lower than in the US and all the major European economies, excepting Italy where it is about the same, and for the past decade productivity has not grown at all. It is hardly surprising that these trends have resulted in a seriously uncompetitive UK economy with a falling share of world trade and a persistent deterioration in the balance of payments. Britain is uncompetitive. The idea that we are in a fit state to conquer new global markets is an ignorant fantasy.
The competitiveness failure cannot be solved by the cheap-money policies of the Bank of England. It does not matter how cheap money might be; there is no incentive to invest unless there is prospect of a growing market and a positive return. No wonder companies today are accumulating and distributing cash, not spending on investment.
So what is there in this Brexit-dominated gracious Speech that might do something to reverse these miserable trends? Precious little. We are told that the Government will,
“work to attract investment in infrastructure to support economic growth”.
Note the careful wording—not a Government spending but a Government whistling in the wind in the hope of “attracting” investment. We are also told that the Government,
“will spread prosperity and opportunity across the country through a new, modern industrial strategy”.
But can we have any confidence in this strategy when over the next four years the Department for Transport’s infrastructure plans will see nearly £2,000 per person spent in London but just £280 per person in the north of England? There is not much spreading of prosperity there.
To become competitive again, Britain must become an investing economy. In policy terms we need nothing terribly original, just to learn from what has worked elsewhere. It is clear that low investment is related to the interaction of the UK’s financial markets and corporate behaviour. The Bank of England has shown that the UK’s capital markets are more short-termist than they used to be, and are more so than those of other countries. Investors give priority to short-term returns over long-term ones. In many ways the UK financial sector is a great success story; in terms of size, exports, employment and profits it is among the most successful in the world. But that international success has been bought at a price. The financial sector injects international instability and risk into the domestic economy. No wonder there is an emphasis on short-term liquidity, an unwillingness to commit to markets that are regularly punctuated by financial disorder.
Attempts to address these failings were made in the Financial Services (Banking Reform) Act 2013, which sought to erect a ring fence between, on the one hand, commercial banking for households and small and medium-sized firms and, on the other, banking for large companies, investment banking and more risky market activities. However, once the real structure of UK finance is taken into account, it is clear that the ring fence is in the wrong place; it should be between domestic finance and international finance. The stability of comprehensive financial services for UK firms should be rigorously enforced while our booming, if unstable, international financial centre should be encouraged to do what it does best: sell outstanding services to the rest of the world. A stable domestic financial system would provide the motivation for, and the possibility of, a reform of corporate governance, including the regulation of mergers and a revamped, publicly funded R&D strategy, and would incentivise the longer-term investment culture that Britain so desperately needs. Those changes, and the many others that are necessary to create a long-term competitiveness culture, will not work unless the prospect of stable and growing demand, at home and from abroad, provides a sustained incentive to invest. Internationally, the fall in the pound provides an opportunity to recover lost markets, just so long as the competitive boost is not squandered on increased consumption.
In sum, the state of the UK economy requires that all government policy should be directed towards the long-term recovery of British competitiveness. Instead, as is clear from the gracious Speech, all government policy is directed towards a complex divorce from the EU, a huge misdirection of time and effort that in itself will do lasting damage to the UK economy.
Baroness Parminter (LD)
About one-quarter of all EU legislation deals with environmental protection—environmental regulations that have given us safe food, clean rivers and beaches, homes for our wildlife and life support for our beleaguered bees. The Government have committed—through the great repeal Bill, as alluded to in the gracious Speech—only to incorporating EU regulations into UK law wherever practicable. Clearly, by itself that is not unreasonable; practicality is an important test and many EU regulations will not be able to be incorporated exactly as they are. While that may be necessary, though, it will not be sufficient. Will the Government commit that any adjustments to EU environmental laws needed to fit the realities of a post-Brexit UK will provide the same or a higher level of environmental protection as those in the original regulations?
I ask that as there are real concerns that a Government who have consistently seen “red tape” as a burdensome and unnecessary initiative will use this to lower environmental standards. We have to think only of the Government’s attempt to oppose air quality standards; how they had to be brought kicking and screaming to produce a plan to bring emissions within EU limits; the dropping of promised legislation to reform water abstraction licences despite the pressures on water supplies from erratic weather patterns and the massive housebuilding programme; or the evidence in the repeal Bill White Paper, which states that the requirement in the Offshore Petroleum Activities (Conservation of Habitats) Regulations to gain an opinion from the European Commission could be removed altogether. While clearly there may be a need to make changes, the removal of the need to seek an independent opinion is not merely a technical change to allow the conversion of EU law into domestic law, and the use of this by the Government as a case study signals a threat to vital protections.
This is a time of acute anxiety in the countryside. Leaving the EU puts farming and agricultural businesses in huge danger, from potential disastrous tariffs on exports to cuts to the support that underpin farmers’ livelihoods, and from an inability to find workers to harvest produce or care for livestock to new trade deals delivering cheaper products with lower standards for animal health and welfare. It is why Liberal Democrats believe that maintaining membership of the single market is fundamental to ensuring that British farming remains competitive. However, we also need early certainty about future support for farmers to replace the common agricultural policy, and I therefore welcome the commitment in the gracious Speech to legislate on both agricultural and fisheries policies.
We need to ally a new agricultural and land management policy to the provision of public goods: providing safe and healthy food, access to the countryside and building up natural resources such as water and healthy soils, delivering carbon storage and preventing flooding. There is no doubt that there will be pressure to divert the £3 billion that our farmers get annually away from agriculture. I noted that the Minister was careful in his opening remarks to say that the funding would be guaranteed only for the lifetime of this Parliament. Currently, the CAP gives to our farmers the equivalent of the sum of £48 a year for every citizen in Britain. We spent £215 for every citizen on administering central government management alone, so to me it would seem remarkably good value if a new policy could deliver clear public goods while maintaining the support critical to sustain farm businesses, particularly those in environmentally sensitive areas, such as the uplands.
Lord Colgrain (Con) (Maiden Speech)
In this, my maiden speech, I should like first to pay tribute to my predecessor Lord Lyell, a Peer much loved and respected in this House. It is a great privilege for me to have taken his place. I also thank all those noble Lords who so generously elected me as a hereditary Peer, and who have greeted me warmly and with much encouragement, including those whom I had not had the previous pleasure of meeting. In particular, I should like to thank my noble friend Lady Chisholm, who has been mentoring me, for her guidance and counsel, as well as the officers and staff of the House, who have been generous and patient with their time, not least when, in my early confusion in attempting to navigate the byways and corridors, I have found myself having to ask them the same question more than once.
As a hereditary, I owe a debt to a forebear, in my case my great-grandfather, who was president of the British Bankers’ Association and chairman of the committee of London clearing banks, positions he retained throughout the Second World War at the request of the coalition War Government. He was on the honours list of Churchill’s caretaker Ministry, and his nomination was endorsed by the incoming Labour Government.
I have frequently been asked the same two questions since I first swore the oath. The first, “Have you been here before?”, made me ask myself whether reincarnation was the subliminal message. I have understood subsequently that it was a reference to those hereditaries who had sat prior to 1999, and no, I am not of their number. But in one sense I have been here before: it was in 1972, with my grandfather, when I sat on the steps of the Throne. On that very day, the other place was debating Common Market membership, and it is a strange coincidence of timing that I shall now be privileged to bear witness to our withdrawal from the same.
The second question I have been asked is, “On what will you speak?”. Here I feel on dangerous ground. When asked the same when embarking on my year as High Sheriff of Kent, I replied with unwarranted confidence and, diverted by the number and variety of interests put before me during that year, I singularly failed to stay on script.
I know that in your Lordships’ House, there are a meaningful number of noble Lords who are experts on those subjects where I have a passing knowledge, but there are two areas where I hope to be able to make a contribution. I have spent the last 30 years recruiting in the financial services sector. Much of this has been in and for City of London-based institutions, and it has included a variety of firms located in other major global financial centres. I have been fortunate enough to bear witness to the great successes that were born from deregulation at the time of the big bang, as well as the self-destructive powers that were born from the same. As we move towards Brexit, passporting rights and other employment issues relating to the competitive position of the City, with its meaningful balance of payment contribution, will be an important part of the negotiation, and there will be much sparring with continental financial centres. I have negotiated with them happily over the years on employment matters, and I look forward to helping maintain the City’s pre-eminence in whatever way I can.
The second area where I have been engaged is the rural sector, which presents a Rubik’s cube of issues as we approach Brexit. I must here declare an interest, as president of Kent County Agricultural Society, the chairman of a working agricultural charity and a partner in a family farming enterprise. We have allowed an extraordinary situation to develop, which would not have been allowed in any other commercial sector, whereby many rural business models are viable only as a result of subsidy payments. The rationale has been that subsidies protect those disadvantaged geographical areas that we wish to continue to be populated and farmed, and in addition farmers can be paid to support conservation and environmental initiatives.
As we move towards Brexit, the quantity of and qualification for these payments will no doubt be questioned, but I suggest that the discussion should take place against another background. The New Zealand model is referred to as a demonstration of how its farming industry, and its dairy sector in particular, coped with the abrupt closure of the UK market to it. But the opportunity for us, and indeed our responsibility, is to ensure a smoother transition over the next two years than New Zealand experienced, which will minimise the stress and tribulations to which our farming communities will be exposed.
There is always a sense when engaged on the land that you are battling with the divine as well as mankind. I say this with feeling as, having been in the eye of the 1987 hurricane and as a hands-on farmer who has recently suffered losses to Schmallenberg disease, as well as seeing the immediate landscape changing as a result of ash Chalara, I have experienced it all too immediately. But we should be able to address some of the bigger questions over which we have control, such as: does it matter that as an island we are now only 60% self-sufficient in food, and can we ensure that our farmers do not suffer the double blow of export markets closing at the same time as our domestic market is subject to increased imports from competitor countries with lower welfare and hygiene standards?
Twenty percent of our population live in rural areas, very few of them are directly employed in the rural sector, and those who are are ageing fast and their numbers are falling annually. Automation is not a panacea—nor should it be—and those dependent on seasonal labour, and the current uncertainties associated with their temporary work permits, which is a very real current concern for the vegetable and fruit growers of Kent, will tell you that the development of suitable machinery is some years away anyway. We must not take for granted an industry that is now extremely vulnerable.
To summarise, I bring two parallel careers, in financial recruitment and farming. There have been times in each when I have been unsure which is the sublime and which the ridiculous, but I feel privileged to have participated in both at times of exciting change, just as I feel privileged now to be a Member of your Lordships’ House.
Lord Borwick (Con)
My Lords, when my noble friend Lord Colgrain asked me to follow his maiden speech, I had completely forgotten that he had not made one yet: quite a lot has been happening in Kensington recently.
Alastair Colgrain will make a fine Member of this House, as his maiden speech has proved, because he has that wide mixture of experience and skills that will enable him to thrive—not only experience as a financial services headhunter and farmer, but also early on as a policeman.
As a special constable, he told me that he was part of the line of coppers at the Trooping of the Colour, arm in arm holding back the crowds as they walked up the Mall to Buckingham Palace. I gather that two very young children, well trained by their parents that if they were lost they should find a policeman, toddled forward and grabbed Alastair by the knees. Holding tight to his trousers, they attempted to walk up the Mall, and were in danger of pulling down his police trousers, to the astonishment of the crowds and the amusement of his colleagues. His family motto is “Fac et Spera”—“Do and Hope”—an unusual motto for a banker, but perfect for this age of Brexit. We all welcome him.
In his Mansion House speech, the Chancellor said that,
“we must make anew the case for a market economy and for sound money”.
Unfortunately, he is right. Some young people have not yet got that point. Despite all the real-world evidence one could ever need, the results of the election and the recent campaigns on our streets show that there are still lots of people across the country who do not believe that free markets are a force for good. As well as making the case for free markets, it is also crucial that we do not react to the election result by simply turning on the taps, spending money we do not have. The budget deficit has come down from £152 billion in 2009 to £49 billion last year. That shows action was indeed taken by this Chancellor, and by his predecessor, to mend the broken public finances. However, it also shows that the job is not yet done. With more economic growth, we should be able to make further progress on this, and we should not be afraid to make the case for spending wisely. Public services need to be funded properly to ensure good quality, but we must also prioritise and save where we can.
Try as they might, no Government have taken more than 35% of GDP in tax in more than 50 years, according to the OBR. So if a Government want to massively increase taxes, we can conclude that people will take action. They can move elsewhere, or do less work. Calls for tax hikes to fund more spending are therefore misguided. We have probably hit the taxable capacity of this economy. We must remember that lower tax rates can actually bring in more revenue.
Corporation tax receipts are at record highs, tax rates having been continuously cut over the past few years. In fact, £56 billion came from corporation tax during the 2016-17 financial year. That was a 21% increase on the previous year. Let us not forget that in only 2008 the headline rate of corporation tax was 30% and it is now down to 19%. It is scheduled to be trimmed even more.
We know that much of the jobs growth has come from small firms and thriving entrepreneurs. It would be extremely damaging to hit those businesses with higher taxes. They would stop employing, stop striving and many may take their ideas and talents elsewhere. It is far easier to up sticks and relocate these days, and we should be encouraging entrepreneurship, not choking it.
Lord Naseby (Con)
My Lords, this is no ordinary Queen’s Speech, due to two dimensions. First, there is Brexit, to which understandably every government department has to give priority for certainly the best part of two years. The other dimension is that the Session will last two years, which gives us an opportunity to tackle those areas of our society that, for one reason or another, the Cameron Government chose not to deal with.
I start with challenge number one—it is always best to start with something you know about. I have been involved in the housing market ever since I entered politics and stood in Islington North—dare I mention it?—in 1966. I was leader of the council and chairman of the housing committee. I have been a non-executive director of a construction company. Housing, I suggest, is issue number one domestically in this country. We have failed miserably in recent years, in Cameron’s seven years churning out 123,565 homes per year on average. I was a junior housing Minister in opposition in Margaret’s time, and just after that when she took power, we succeeded in building 190,000 a year. Now we need 200,000 to 250,000.
That means that we have to revitalise each sector, including social housing with its two elements. Clearly, local authority council housing has to be revitalised. We need to look again at the housing associations, which means that they must be given some resources and borrowing powers to get on and revitalise what they do so well.
We need to have a look again at new towns. I had the privilege of serving Northampton for nearly 25 years—a highly successful new town. Next door is Milton Keynes, which is equally successful, and down the road even dear old Stevenage did a pretty good job. It works, so let us see some new towns and consider that area.
Above all, one area that I feel really strongly about is young people. When I bought my first house in Islington for £7,000, I was given some help in getting the mortgage and even more help with a cash grant to put in a decent WC and water et cetera. I bought another one later on and did exactly the same. Young people need some form similar to that, and I am certainly willing to be a volunteer to help in that area.
Secondly, there is the challenge of energy. I served on the Select Committee on Energy. Our problem today is not messing around with the margin of cost—I do not know why we ever had anything to do with price caps, not least because Ofgem suggested they would not work. Today’s challenge in energy is security of supply. We already have very limited gas storage facilities, and we now read that the biggest field, the Rough field, is closing. On top of that, we know that Qatar is in a sense a problem for gas storage supply. We have to address that issue.
Thirdly, there is the challenge in industry and commerce. I highlight the retail trade. I have raised six Questions on the Floor of your Lordships’ House about business rates, and only in the last manifesto did I read that the Government will possibly look at a proper reform of business rates. Did no one understand that if we put up business rates—by up to 500% for some shops—people will go out of business? We can see it in the high street. It is obvious that the rates are killing off the retail trade. There is a disparity between the charges for online retailers who use warehouses, who pay only one-eighth of what is paid on the high street. There is bound to be unfair competition. Added to that is the fact that there is supposed to be an appeals system, but that is not happening; it is not working.
Added to that, there is supposed to be a £300 million special fund to help, but here we are three months into the new system and the funds are there—they have been given to local government—but nobody has chased up local government to ensure that they have been distributed to the retailers affected. We were told in your Lordships’ House that, basically, the change would be cost neutral, and I have discovered that Her Majesty’s Government have received an extra £1 billion. That is not cost neutral, as far as I am concerned.
I end by saying that there is much work to be done on the ground. We need to look at competition policy and support for SMEs. If we are short of money—which we are—why not recognise that, if we actually got a grip on tobacco smuggling, it would save £2.8 billion. That is an awful lot of money, and maybe we should do a bit of digging and do something about that.
Baroness Royall of Blaisdon (Lab)
My Lords, I agree with the noble Lord, Lord Naseby, about the priority that we should give to housing.
Today’s debate is taking place in the shadow of Brexit, which will have a profound effect on all the issues that are being raised today. The Brexit Secretary, the Foreign Secretary and the Trade Secretary bear a huge responsibility for selling the people of this country an economic and moral pig in a poke smeared in snake oil. Many commentators from the right and the left agree that the country is in crisis, with deep geographical, age, education and income divisions, and the measures set out in the Queen’s Speech are too small to heal the divides and to make life fairer in this country.
I am ashamed that in 21st century Britain, which for the moment is still the fifth-largest economy in the world, inequality is rife. Inequality and a lack of hope are inextricably linked. That is why so many of our young people and their parents voted for change in this election. Labour’s manifesto spoke to people’s concerns about austerity, unfairness and the current economic model, which delivers for the few, not the many. It spoke to the burning injustices highlighted by Mrs May when she became Prime Minister but about which she has done little or nothing.
The high-level Business and Sustainable Development Commission produced a report, Better Business, Better World, which recognised that business should be at the very heart of a new, open, global economic model. This model should not only be low carbon and environmentally sustainable, but should turn poverty, inequality and lack of financial access into new market opportunities for smart, progressive, profit-oriented companies. I do not think the Government have read the report.
Such a model must also take proper account of the society and the communities in which businesses are working. The public and private sector at all levels must reflect multicultural Britain and make use of all the talent available, including those who still face conscious and unconscious bias. It cannot be right that, in the UK, citizen directors of colour represent only about 1.5% of the total director population; that 97% of senior leaders in central government are white; and that there are no non-white CEOs of London boroughs, despite the ethno-diversity of the London population increasing to over 40%. The Government, to their credit, have commissioned many good reports, but now is the time for action on diversity.
As noble Lords may recall, I am strongly in favour of a year of service. I strongly urge the Government, in the national contributions Bill, to use the Bill to amend class 3 national insurance credits so that they can be extended to those engaging in full-time social action. That would make a real difference.
Workers are absolutely key to a successful economy, but too many have terrible insecurity in their working lives, with part-time work, zero hours, the gig economy and low wages. Matthew Taylor’s review of employment practices, mentioned by the Minister, will be extremely important in that context. I ask for the Minister’s assurance that the Government will implement future recommendations that tackle the abuses of insecure work and end exploitation in the workplace. In some instances, exploitation has been exacerbated by immigration, but Mrs May’s immigration targets are certainly not the way to deal with this, and would do untold harm to our economy and our public services.
Agriculture is historically a sector in which there has been exploitation of workers, but the Gangmasters and Labour Abuse Authority, the GLAA, has done much to mitigate the problems. However, the wider remit that it now has, together with fewer resources, means that, post Brexit, the situation for agricultural workers could worsen. There is also widespread concern among farmers, especially summer fruit and salad growers, that there simply will not be enough workers available to sustain their seasonal business. Will the Government take the logical step to reinstate the seasonal workers scheme, as well as provide increased resources for the GLAA?
People working in agriculture sustain our rural communities but, with lack of affordable housing, exacerbated by the 2016 housing Act, and low wages, younger people especially are moving away from rural areas. Labour is committed to reinstating the Agricultural Wages Board to underpin employment standards and wages, and I urge the Minister to make a similar commitment. The lack of high-speed broadband in rural areas is still a massive problem, and stifles entrepreneurship. It seems that the Government have not rural-proofed their policies, including with regard to transport. The cost of buses in rural areas makes life difficult for many, not least students attending college. As the BMA pointed out this morning, local funding cuts have led to reduced bus services and patients unable to get to appointments.
I live in the Forest of Dean, and am immensely proud that, despite the Government’s best efforts, the community has mobilised and we have a fracking-free area. We need a sustainable energy policy, which includes a ban on fracking, a practice which is harmful both for meeting our climate change obligations and for the environment.
I finish where I began. This country is deeply divided, and there is a growing sense of anxiety and frustration. No matter what the Minister might say, the measures contained in the gracious Speech will not enable our businesses and economy to reach the potential desperately needed at this critical time, and will not lead to the much-needed improvement in the lives of our fellow citizens. This Government are failing the country and failing its people, who deserve a more confident future, with hope for themselves and hope for their children.
Baroness Featherstone (LD)
My Lords, first, I would like to say what a pleasure it was to listen to the maiden speeches of the noble Lords, Lord Mountevans and Lord Colgrain, and I congratulate them.
The Government were clearly in some trouble in bringing forward anything much from their manifesto into the gracious Speech, so in their hour of need I thought I would offer some ideas that might find a majority of support in this House and, who knows, maybe in the other. There were slim pickings for my own portfolio, energy and climate change, and what pickings there were will not deliver our commitments to the Paris Agreement, despite the welcome recommitment to it, or to the sustainable development goals. There is a preamble to everything that we discuss: that is, to ensure that with everything connected with energy and climate change in the Brexit negotiations, the aim is to achieve something better than that to which we ascribe as full members.
The automated and electric vehicles Bill is very welcome, and no doubt my noble friend Lady Randerson will pursue the Government on it later this evening. I would simply say that we should be more ambitious and move quicker: ban all sales of diesel cars and small vans by 2025, introduce a scrappage scheme to get rid of the worst vehicles more quickly, and for goodness’ sake use the conversion of lampposts into chargers. Yes, we would need to boost the grid, but renewable electricity is storming it right now. Make it super-convenient; that is the incentive for change that we need.
As I said, I was very glad to see the Paris Agreement in there, but where was the meat to deliver it? Not only are we not going to meet our targets, particularly on transport and heat, but there is no sense of a plan and certainly no sense of urgency. The UK’s ambitious target of slashing carbon emissions by more than half within 13 years is at risk because of a Government dithering on energy policy, as industry professionals have warned today. A survey by the Energy Institute, the professional body for the energy sector, found that four-fifths of their members believe that the UK is on track to miss the 2030 goal. We should be able to deliver 60% of UK electricity from renewables by 2030, and aim to be zero carbon by 2050, and I shall introduce a Bill to that effect in due course.
Our Act would set legally binding targets to reduce net greenhouse gas emissions by 100% by 2050, which is way more ambitious than the Climate Change Act 2008. If we do not get to 80% by 2040, we ain’t going to make it, and we will never be able to deliver on our targets if we do not develop carbon capture and storage. It is just not possible. What are the Government doing in that regard, and what are they proposing on investment to incentivise entrepreneurs to produce what we need: cutting-edge projects in energy storage, smart grids, hydrogen technologies and offshore wind and tidal power? And for goodness’ sake give the green light to the Swansea Bay tidal lagoon, please.
What of energy and energy prices? If we really want to help to lower bills, a cap will not do it. Improving home insulation and encouraging local renewable energy schemes will, combined with an ambition for 30% of the household market to have their needs met by entrant competitors by 2022. Take that, big six. When we build all the houses that the Government are promising, energy saving should be a top priority. The Government very stupidly removed the zero-carbon homes measure, but that is what would slash bills, cut emissions and boost jobs. Government reliance on fracking is so wrong-headed that I need a whole debate on that one. The change to the fundamentals on Hinkley since it was signed off have changed beyond recognition, making its viability extremely unlikely now. It is expensive and insupportable. Low-carbon services and low-carbon product markets are the economic miracle that we need. My goodness, we are going to need it with this knee-capped Administration, who are going to be too scared to say boo to a goose. It is worth trillions over the coming decades—creating jobs, not losing them. Please could this Government try not to undermine whole industries by moving goal posts, as they have done with solar, wind, and carbon capture and storage?
First and last, there is always the EU. Of course, Liberal Democrats want to ensure that the UK remains part of the single market and customs union post Brexit. I would rather that we did not leave, of course. But as we proceed, we want to hold the Government’s feet to the fire on their promises not to resile from our commitments. We led the EU Paris Agreement, with Amber Rudd clinging to Ed Davey’s coattails. We could lead the world on energy and climate change if we only had a Government who were brave, entrepreneurial, visionary and determined. Sadly, that is not the Government we have.
Baroness Hollins (CB)
My Lords, last week was Learning Disability Week, the focus of which was breaking down the barriers to employment and apprenticeships. Fewer than 6% of people with a learning disability are in fact in work. For people with a learning disability, as for most people, work is more than a pay packet; it is also about self-esteem, independence and inclusion within society. However, there are benefits for business too. Mencap points out that people with a learning disability stay in their jobs three and a half times longer than their non-disabled co-workers, leading to savings on recruitment and training. Businesses that employ people with a learning disability report better staff morale and better customer satisfaction.
In their manifesto, the Government committed to support 1 million more disabled people into work over the next 10 years. Since the election, however, there has been scant reference to this target. I hope that the Government will recommit to it. I hope too that the Government will push ahead with the recommendations in the Maynard review on improving accessibility of apprenticeships for people with learning disabilities. Addressing transition from school and college must be a priority if we are to improve their employment opportunities. However, to do this we also need to improve things within social care so that people get the right support to get a job and keep it.
In the lead-up to the general election, there was much talk about the pressures facing the funding of care for older people, despite the fact that one in three social care users are working-age disabled people, of whom nearly 150,000 have a learning disability. With no mention in the Queen’s Speech, or the accompanying documentation, of the pressures facing disabled people, there is concern that the forthcoming Green Paper in the autumn will focus entirely on older people and neglect working-age disabled people.
The Queen’s Speech announced a long-overdue review of mental health legislation and a continuing commitment to parity of esteem for mental health. Reviewing the Mental Health Act and getting widespread agreement to reform will not, however, be easy. I strongly urge the Government to reconsider the criteria for detention for persons with a learning disability and/or autism. The current criteria allow such persons to be detained simply because they have learning disability or autism, in the absence of any associated mental illness. The current Act thus perpetuates the stigma and discrimination faced by people with these conditions. It compromises their ability to make decisions for themselves about their life. It provides a get-out clause for local authorities in that rather than providing adequate resources to support individuals in the community, especially those with complex needs, they can medicalise the individual’s presentation and pass responsibility on to mental health services. Many people with learning disability and/or autism are detained in psychiatric hospitals, often far from home, for extensive periods, unable to challenge their detention successfully because they meet the criteria for detention by virtue only of their learning disability or autism, and will continue to do so. For people with learning disabilities or autism who have an associated mental illness, the criteria for detention could be applied in the same way as for those without those conditions.
I turn to transport. Currently, the cost of travel and the difficulties many people with learning disabilities have in using ticket machines in stations without ticket offices, and in purchasing the right or most economical fare, prevent many people getting around and doing the things that we all take for granted. The Government could extend free bus passes for people with a learning disability to other forms of public transport, and to peak times so that people can travel to work-experience placements. A free travel pass might also prompt staff awareness of a person’s need for reasonable adjustments, as required by the Equality Act. This could be extremely useful in busy terminals and transport hubs, and we could learn something from our American colleagues here.
I was pleased to see that there is now a Minister for Financial Inclusion, and I hope attention will be paid to the financial exclusion faced by many people with learning disabilities and to how banking might be made more accessible. In particular, I am thinking about the effect of local branch closures and the expectation, even by the Post Office, that everyone will be able to manage chip and pin, a significant problem for many people with learning disabilities, including the risk of financial exploitation and the possibility that they might not have the cash available to them to be able to use the ticket machines at stations.
There are cross-government opportunities to improve the lives and inclusion of the 1.4 million people in the United Kingdom with a learning disability. I look forward to working with Ministers and colleagues across the House on these important issues.
Baroness Fookes (Con)
My Lords, a number of noble Lords have been powerful advocates in this debate for various aspects of our national life. I will concentrate on another that so far has not received a single mention. I will give a few clues in the hope that at least a few Members of this House may recognise what I am about to speak about. This industry employs 300,000 people. It is worth about £10 billion to the economy annually, it has a very important role in bringing in tourists, including from within the UK, and it has a very important role to play in the health and well-being of people generally. I refer to horticulture. It comes under the aegis of Defra, but I fear that in the past it has always been a poor relation. I was therefore disappointed, but not in the least surprised, that it did not get so much as a mention in the gracious Speech. Nor has it been referred to so far in this debate, save when my noble friend Lady Neville-Rolfe mentioned homes and gardens and my spirits rose slightly, but that was all.
I want to insist that this is a very important aspect of our national life. Leaders in the horticultural industry have got together, and they have a number of organisations, one of which, a horticultural round table, has regular meetings with Ministers, and I hope these are still going on. I am making this point right now because it is very important that that continues to take place. They are not just whining and moaning; they are seeking to work with the Government on sensible policies that will be of benefit to both government and the industry. Sadly, it has not packed the punch of the big battalions because it is very disparate and that is one of its problems. There is gardening proper, nursery production, garden designers and landscape architects. On the scientific side there are botanists, those who look at pests and diseases and R&D. In many cases, the organisations are small: family firms, partnerships and so forth. It does not have that big punch, but I sincerely hope that the Government will take this on board now and in the future.
In the very short time that I have, I will touch on one or two of the myriad topics that I could mention if I had half an hour. First, there is a skills shortage. There are many organisations, including the National Trust, and many big contractors who have to turn down possible work because they do not have sufficient skilled people. We need to give far more attention to apprenticeships and right the way up to degree and post graduate work. I hope the Government will take that on board. My other beef is that very often the careers service and schools pay little attention to horticulture as a multifaceted career. To use rather vulgar parlance, the general attitude seems to be, “You only do gardening if you are so thick you cannot do anything else”. This absolutely enrages me, because it is so unfair.
My second point is the issue of import substitution. We import numbers of trees and other plants, and cut flowers, when we could be doing far more to produce our own in this country. But, of course, when it comes to trees, you have to get them going, and that might take up to five years. In those circumstances, the people who will buy the trees have to give the tree producers sufficient warning. I refer particularly to HS2, where an immense number of plants will need to be planted to help the environment around the railway line. I hope that will be considered very important. We also need to import less because of the fear of pests and diseases. However, that is an issue for another day, since I see that my time is up.
The Lord Bishop of St Albans
My Lords, I will confine myself to a few comments on agriculture and the environment. In doing so, I need to declare my interest as president of the Rural Coalition.
As regards agriculture and food, Brexit poses one of the greatest challenges to future food production. The UK produces some of the highest-standard food in the world and, indeed, some of the finest food. In our negotiations, it will be crucial that we do not sacrifice food quality, animal welfare or environmental protection as part of those multi-sector trade agreements which will form the foundation of future international economic partnerships.
The noble Baroness, Lady Royall, has already referred to agricultural workers. As reported only last week, soft-fruit and salad growers are already finding it hard to recruit the skilled workers they need to pick and pack the crops. A survey of the members of the British Leafy Salad Association and of British Summer Fruits revealed that almost a third of their respondents are already not sure whether they have enough seasonal workers for the start of the picking season this year. Researchers from Queen’s University, Belfast, in evidence to the Lords EU Committee suggested that 98% of the seasonal horticultural workforce are migrants from elsewhere in the EU. Many successful businesses will face a very uncertain future if the Government cannot produce some sort of seasonal agricultural worker scheme as part of the immigration plans. Defra and the Home Office will need to work in partnership to achieve a coherent approach and secure the economic future of rural businesses and the communities in which they are based. It is also critical that young people living in rural areas are given the skills, training and support they need to remain in, and contribute to, their local economy.
A new fishing Bill will be essential as the UK exits the EU, as we seek to regulate the access of foreign vessels to UK waters and determine our fishing quotas. However, I note with concern that there is no direct mention of the marine protected areas created by the EU birds and habitats directives in the documentation supporting the gracious Speech. These areas need to be maintained by UK law to ensure the long-term health of wildlife in the waters around Britain.
Finally, on climate change, the commitment in the gracious Speech to continued participation in the Paris Agreement is most welcome. This emphasises that the delivery of dramatic emissions reduction remains the core environmental policy adopted by the Government and will help provide stability and direction following the decision of the US to leave the agreement. Allied to issues of climate change are a number of other very pressing environmental issues, some of which have already been referred to, with around 40,000 deaths, for example, attributed to exposure to outdoor air pollution in the UK each year. I hope that the long-awaited clean air Bill will not remain absent from this extended parliamentary Session despite its exclusion from the gracious Speech.
Lord Plumb (Con)
My Lords, it is always a pleasure to follow the right reverend Prelate. I agree with everything he said. It is good that we have such interest in rural affairs and the countryside in its entirety. It is for that reason that I think we have all enjoyed the contributions made so far, certainly from colleagues who have just joined the House.
It is appropriate at this hour to concentrate for a few moments on the food and drink industry. As the Minister opened the batting, we were reminded that the economy is very much dependent on economic stability. That has to come first, and so it should. Industry is part of agriculture and agriculture is part of industry. The growth in agriculture in recent years has been phenomenal in the sense that the development has been due to technology and the ability of the younger people who are coming into the industry—and they are. Possibilities exist for yet more to be produced.
We already employ nearly 4 million people in the food and drink industry—14% of the population are involved in this sector—which generates over £100 billion-worth of product every year; all that in a volatile, uncertain, complex and ambiguous world. It is well known that farming knows how to be resilient, particularly against knocks of volatility.
I wish to raise an issue that I think is of great importance, as those who are dealing with Brexit start to come to grips with each other. Agricultural support post Brexit is not something in which the United Kingdom will have a free hand—far from it. It is essential to understand that whatever the UK does must fall within the framework of rules set by the World Trade Organization. The reason the CAP has changed so radically over the years is not because EU politicians saw the need for reform but much more because successive world trade agreements made reform inescapable. I know what I am talking about because I have been heavily involved in that over the last 30 years. Therefore, the United Kingdom will need to be a full member of the WTO and its related customs conventions to permit trade to move smoothly, and this will have to be agreed before Brexit. WTO rules will be the crucial framework for both the United Kingdom and the EU 27. I would very much welcome the Minister’s response on the possibility of involving the WTO in the talks that are taking place.
Of course, the UK will have decision-making on issues such as animal health, plant health, pesticides and genetically modified crops, but the rules will have to be acceptable to export markets if trade is not to be damaged. Consumer and environmental lobbyists are increasingly vocal about so many issues, such as animal welfare and pesticide use in countries that export to the United Kingdom.
The UK market is therefore itself vital for some regions more than others. We have just heard about the importance of making sure that we can grow, like others do, the horticultural products that are so important in this country. So we should and so we can. The UK market, which itself is of course so important, has to recognise that we are a trading nation, just as the others are, and we must take what advantage we can from it. This is therefore vital for many regions. One thinks, for example, of Welsh lamb going to France—we have had problems in the past. We frequently hear the comment that the EU will fall over itself to do a deal with the United Kingdom because the Germans want to sell their cars and the French want to sell their cheese. That is a pretty glib and unconvincing assumption. Nor it is obvious that all the countries which are supposed to be queueing up to do a trade deal with the UK as a whole are motivated entirely by philanthropic sentiments: for instance, the United States, Canada, Australia, New Zealand, Brazil and the like have their own interests. They will demand major concessions on products like beef, lamb, dairy products and pork. Such imports could drive down prices in the United Kingdom for the producer. It may be said afterwards, “It helps the consumer”, but WTO rules would make it difficult to provide compensation.
So where do we go? That of course depends on what we want from agriculture. If all we want is food, it is pretty difficult to defend the expensive support we have had. I say that clearly, as one who has been concerned with it for so long. What we want is of course a policy that will stand up and be there for ages. It has to encourage efficient production—that was in the 1947 Act. We therefore continue with those demands. In short, we should simplify the payments system without losing accountability, change the area payments mechanisms—for example, should payments continue to go to landowners even for unfarmed land?—and pursue a more scientific approach to plant and animal health, including GM.
The last point—which I must make—must be hammered home. The Government must produce a simple scheme to permit migrant labour to work in agriculture. The horticultural sector—although not exclusively—is dependent on such labour. At present it is a huge uncertainty, and the Government could dispel that very simply indeed.
Lord Morris of Handsworth (Lab)
My Lords, I too pay tribute to the gracious Speech. It was of course delivered at a testing time for us all, but especially for those involved in the terrorist attacks and the fire at Grenfell Tower. In years to come, how will we remember that tragic fire? Will the Government at last recognise that management of the economy based on the principles and the models of austerity comes with a price? This debate on the economy therefore provides an opportunity to look at the price of austerity, which we debated on the Statement earlier today.
We have all asked how this tragedy could happen in 2017, in the richest local authority in the United Kingdom, one of the richest countries in the world—a country strong in its democratic liberalism. But the local community is best placed to answer that question. Some 90% of the residents at Grenfell Tower signed a petition asking for an investigation into the organisation that runs the building, but they were treated as troublemakers. Residents tried to obtain legal advice over safety concerns but were prevented from doing so. Why? They were priced out of justice by the cuts to legal aid. Many lost their lives as a result.
We have yet to discover whether financial cuts to local authority budgets affected the quality of management, repairs and the upkeep of the properties owned by Kensington and Chelsea Council. Last week the Government ordered safety checks on 600 high-rise blocks in England. On Sunday we were told that the 34 tower blocks tested so far in 17 council areas had failed their safety tests. Although we do not yet know whether existing building regulations were broken, as building inspections are ongoing, we know that three consecutive Governments, as a cost-cutting exercise, failed to introduce changes to the housing regulations. According to a BBC report, although there are hundreds of high-rise buildings in London, no appliance is currently owned by the London fire service that can ascend beyond 32 metres. The fire service had to borrow a 42-metre aerial platform from the Surrey Fire and Rescue Service so that it could meet its needs, which were for a nearly 70-metre high tower. Why? I suspect that austerity and deregulation is the answer.
The newly elected MP for Kensington, Emma Dent Coad, who was for 11 years a councillor in Kensington, recently described the disdain with which many of her constituents were treated. Emma described the slow but determined programme of privatising public assets in the area such as schools, libraries and community public space. This is a shared experience across the country. Similarly, the Government’s economic policies, driven by austerity, mean that public sector workers are required to work longer hours in order to provide essential services while suffering severe pay restraint at less than cost-of-living increases. Is there anyone here who does not recognise that the economic cost of austerity falls on the poorest in our communities?
In 2016, the United Nations Committee on Economic, Social and Cultural Rights found reason to criticise the coalition Government as being in breach of their human rights obligations. The House will remember that it was the coalition Government who initiated the austerity programme in 2010. The UN committee said that it was “seriously concerned” about,
“the disproportionate adverse impact that austerity measures”,
were having on disadvantaged and marginalised individuals and groups. It also emphasised problems with welfare reform, saying that it was “deeply concerned” about,
“the various changes in the entitlements to, and cuts in, benefits”,
including the reduction of the household benefit cap, the four-year freeze on some benefits and the reduction in child tax credits. A year on from the report, the social outcomes of austerity today mean that the use of food banks, child poverty and homelessness are increasing. Yes, our economy has changed. We have changed from the casino economy to the gig economy, obviously with insecurity and the costs of poverty. We must and can do better.
The tragedy of Grenfell Tower and the years leading up to it have drawn attention yet again to the divisions in our country between those who exercise power and those who are marginalised by the abuse of that power. I, for one, hope and pray that the Government will come to their senses and recognise the damage being done to a large percentage of our fellow citizens by their one-sided austerity measures. Let us be clear: when we are told that cuts are essential, in reality that means tax cuts for the rich and benefit cuts for the poor. As we have seen, the socioeconomic tool of austerity has a price tag. Sadly, too often the price of austerity is the lives of our fellow citizens.
Lord Cavendish of Furness (Con)
My Lords, while it is always interesting to follow the eloquence of the noble Lord, Lord Morris, I wish that at some point somebody would explain to me how one can reconcile giving up austerity with keeping the national finances in good heart without endowing future generations with debt.
I should very much have liked to speak on many aspects of the gracious Speech but concluded that I would say one thing on one subject where I have the most personal experience and on which, incidentally, my noble friend the Minister was silent during his excellent opening speech. It concerns the SME sector of British business, which, I am told, contributes more than 80% of our output and growth. I have fears for its future, and these fears have been echoed by my noble friends Lord Inglewood and Lady Fookes.
First, I need to declare my interests. For most of the last 45 years, I chaired a family group of companies in Cumbria concerned with farming, forestry, leisure, mineral extraction, housebuilding and horseracing. Although I have relinquished the chairmanship to my daughter, I remain on the board of these businesses. At no point over those last four decades has it been more difficult than it is today to maintain the level of investment that these businesses require. Fearing that I may have had problems of my own creation, I consulted widely with some 20 businesses in my area. Without exception, all told the same story. Nor this time can the blame be laid at the door of the banks, even if they have let some people down.
In a sentence, the cause of the problem is a record high burden of taxation, much of it through stealth taxes, the disproportionate effects of regulation and, added to those, a mean-spirited and unhelpful culture that has developed over time among the numerous public sector agencies that impact on our working lives. Those three things combine to squeeze margins to the point where investment carries unjustifiable risk. I want to be clear: this is not about personal taxation. The Government are plainly right to work remorselessly to restore the public finances to health—and I accept that all of us who can have a part to play there—but what they should not do is to cripple the sector that contributes so enormously to creating jobs and prosperity.
I wish to say a word on those three ugly sisters—or brothers, if you prefer. Ministers may, with justification, pray in aid numerous schemes and devices to assist the SME sector, but that does not alter the fact that today’s tax take is at an all-time high—a point made by my noble friend Lord Borwick. Business has been vocal as to the impact that it carries in respect of business rates and national insurance contributions—that ill-named tax on jobs. Less well publicised are the regular hikes in the insurance premium tax, starting as it did at 5%, then rising to 9% and, more recently, to 12%. These are serious impositions and fall disproportionately on SMEs, which have less access than large companies to sophisticated financial advice.
Where regulation and employment law are concerned, it should be obvious that for myriad reasons they impact more heavily on SMEs than on larger concerns. To an alarming extent—I have personal experience of this—large companies lobby for increased regulation on the basis that they can afford complicated compliance, knowing that their smaller competitors cannot. An especially venal complicity on the part of the Brussels institutions has added to my conviction that Brexit is for the good. Brussels plays host to some 60,000 lobbyists, paid by large multinationals whose sole job, as far as I can see, is to obtain regulation that favours them and harms their smaller competitors. Perhaps my noble friend would add that to the list of unacceptable practices that he wishes to legislate against.
Finally, I must turn, with some sadness, to the present-day public sector culture, which I find damaging to smaller enterprises. It is worse among the supposedly independent agencies than among government departments, and it is conspicuously awful among the powerful monopoly utility companies. There has been a growing tendency over many years among powerful agencies to bully and harass those over whom they can exercise some control. The attitude might be summarised by the experience that members of the public have nowadays when they visit a hospital. The parking they used to enjoy close to the main building has now frequently been given to the staff, and as often as not we are now sent considerable distances and have to pay for it. All change these days, I find, is for somebody else’s convenience and never for mine. I even notice it in the Palace of Westminster.
Perceived hostility on the part of public sector organisations and the often slovenly service they give carries a huge cost. Planning is a powerful example. I could point to numerous examples of SME companies seeking to invest suffering endless delays for no good reason at the hands of planning authorities. What is so galling is that these people seem to have neither an interest nor an understanding of the harm they inflict on their own communities or of the good they could do by a simple change in attitude.
In my local community, I believe I have identified investment delayed or cancelled amounting to tens of millions of pounds. I also believe I have identified the reasons and given them to your Lordships. If those reasons can be addressed, I confidently predict that the sector will respond magnificently and produce still more jobs and tax revenues and enduring prosperity for all.
Baroness Randerson (LD)
My Lords, I am trying hard to be positive, so I start by welcoming the Bill on autonomous vehicles. However, I want to point out that across the world this is already a very crowded research field, with the US, for example, well ahead of us. What manufacturers want above all is easy access to sell their technology to EU countries, access to highly skilled employees in a flexible market and to co-operate across borders. It is called the single market. I hope this Bill is more ambitious than its predecessor, which was all about the insurance regime for automated vehicles. That is a necessary detail but unlikely to spark a revolution.
In the same Bill there are facilities for electric vehicles, which offer the Government a lifeline in the mess they are in on air quality. I agree with their proposals in the Bill, and I should declare an interest as the owner of an electric vehicle. However, the Bill does not go anywhere near far enough on this issue. As my noble friend Lady Featherstone pointed out, we need a much more comprehensive approach to air quality, and electric vehicles are just one piece of the jigsaw.
The space industry Bill is also welcome but the industry itself is jeopardised by Brexit. Restrictions on the movement of scientists and engineers, increased bureaucracy in the supply chain and the danger of being frozen out of EU space contracts are already taking their toll. I will give noble Lords an example: a new clause in the contracts for the last phase of the Galileo satellite navigation system specifies that the contract will become void if the supplier is no longer based in the EU. British companies are already talking of moving abroad.
I welcome, too, the commitment to phase 2A of HS2, but where oh where is Crossrail 2 in this Speech? I noticed that it was dropped from the Tory manifesto. I hoped it might have been overlooked in haste, but clearly this is definite government policy. This is a vital infrastructure project if London and the south-east are to be able to combat the Brexit attacks on our economy. From these Benches, we will continue to press for a government commitment on this.
Missing too from the gracious Speech were drones. I say to the Government, with all seriousness, that they seem frozen into total inactivity on this. They should have learned from the Grenfell Tower tragedy that it is worth while paying heed to warnings. Week after week there are potential incidents on this. At some point something bad will happen.
Another serious omission is a review of the franchise system of our railways. It is time the Government committed to a radical overhaul of the franchise system. Southern Rail is simply an extreme example of the problems with the current system. It is time to put passengers first. The Tory manifesto, like the Liberal Democrats’, committed to a rail ombudsman, but there is nothing in the gracious Speech on this. As we leave the EU we have to protect rail and air passengers’ rights. An ombudsman will be the first step. Above all, we need an ambitious programme of investment in our railways. The gracious Speech is totally silent on any commitment to big new infrastructure projects beyond HS2.
Intertwined with this are the Brexit challenges that the transport industry faces. That industry has a sizeable reliance on the EU. A big chunk of it—Eurotunnel, the ferries, many HGV operators—exists solely to service travel and trade with Europe. It is not a matter of adapting to leaving the EU. If trade ceases to continue at the same or a very significant level, those transport industries will wither or even cease to exist.
We were told that this was a pruned back Queen’s Speech, which, beyond Brexit, aimed to be uncontroversial. I argue that what was controversial was what was omitted. It was a Speech that lacked vision and ambition at a time when our country more than ever before needs a visionary and ambitious Government.
Lord Curry of Kirkharle (CB)
My Lords, I very much welcome the opportunity to contribute on the subject of agriculture as part of the debate. I declare my interests: I am a partner in a farming business in Northumberland and a trustee of Clinton Devon Estates, both of which are in receipt of the basic payment scheme and engaged in environmental stewardship. My other interests are listed in the register and include being chair of the National Land Based College.
There is no question that Brexit is the most important issue to face the agricultural sector since 1947. The agriculture Bill will be the most important since the 1947 Act. As has been said, it is an exciting time and an opportunity to shape our own destiny to create a set of policies that benefits agriculture and horticulture, our customers and our consumers; that contributes to our economy and our balance of payments; and that deliver environmental benefits, as mentioned by the noble Baroness, Lady Parminter. It will also help us to contribute to our climate change obligations. We also have an opportunity to recognise the important contribution that agriculture can make to the nation’s health. We must take the opportunity to design a holistic policy that embraces all these issues. I look forward to the debates on the content of the Bill.
I should like to emphasise three areas of concern. First, I want to stress again the importance of agriculture in the Brexit negotiations and endorse the comments of the noble Lord, Lord Plumb, on this subject. There continues to be a deep concern that agriculture is way down the ranking in the Government’s priorities. I should add that the fisheries sector shares the same concern. The common agriculture policy—the “expensive failure”, as described by the Minister in his opening comments—has had a dominating influence on agriculture ever since we joined the Common Market, so these negotiations are crucial.
In addition, we are part of Britain’s largest industry sector by a mile—it is even more important than the Minister described. The food industry is built on the foundation of the farming sector: agriculture provides the raw materials for our food processing and manufacturing sectors and much of the food service sector. Together they are far larger than the automobile, aerospace or exciting high-tech sectors that get much attention. Yet the agrifood industry is barely recognised in the Government’s hugely important industrial strategy. Why is that? In education and skills, farming and food science subjects are not even recognised as STEM subjects. Why is that? This industry is increasingly a high-tech, innovative and professional industry. There is a need for government to acknowledge the importance of this, both in the negotiations and in the design of domestic policy. This is true also of the trade negotiations.
The Minister suggested, as many do, that abolishing the CAP will lead to cheaper food. I remind the House that consumers in Britain enjoy cheaper food today, in relative terms, than at any time in recent history. Food being even cheaper could have a serious detrimental impact on farmers’ incomes. We do not want to be sacrificed in the trade negotiations to reach speedy and favourable agreements for other sectors of industry. I fully endorse the comments made by the noble Lord, Lord Plumb, and the noble Lord, Lord Colgrain, in his excellent maiden speech on this subject.
Secondly, I am deeply concerned about the relationship between the devolved Governments within the United Kingdom. I assume the Bill will address that issue. It is essential that we replace the structure currently provided by the CAP with our own UK structure that sets out a framework within which all four parts of the UK will function and, I hope, flourish. There will be a massive void when we leave the European Union. The House of Lords report from EU Sub-Committee D on Brexit and agriculture refers to this very real concern. Of course Brexit is, on the one hand, an opportunity to allow the devolved parts of the UK to design policies appropriate to their own priorities and circumstances. However, if this does not take place within an agreed UK framework, the result could be chaotic, cause massive tensions, and will potentially disrupt trade. I am aware that this will be a difficult issue, particularly with the Scottish nationalist Government, but it must be grasped and it is urgent.
There is much more I could say, but I shall finish on our competitiveness. The UK agricultural sector faces exactly the same challenge as our wider industry. Our competitiveness has declined relative to our main global competitors over the past couple of decades or so. This is a concern now but will be even more so in a post-Brexit world. We need to invest now—as a matter of urgency, in preparation for the challenge—in skills to project ourselves as an attractive and exciting sector with career prospects, and continue to invest in science, knowledge transfer and new tools and technology to raise our game. The sector is ready to respond, with new initiatives in place to help address this challenge, but so far has had little encouragement from the Government. We have a great science base in Britain, with world-recognised institutions. However, our recent record of transferring knowledge to give us a competitive edge has been poor. This cannot go on, because we are likely to face even greater global competition. We need government support for this. I hope the Minister will take note of these concerns and, as I said, I look forward to the emergence of the Bill.
The Earl of Arran (Con)
My Lords, in 2015 a former Conservative Party chairman said:
“Bureaucratic pen-pushers seem content to think it is OK to leave people in the countryside in the internet slow lane”.
The former Prime Minister, David Cameron, announced in November 2015 a proposal to introduce a universal service obligation to give people the legal right to a 10 megabits per second connection no matter where they lived. As noble Lords will know, that means the speed of delivery of broadband.
So what has happened? Not much. Why is this critical to the Government’s agenda in the forthcoming Session of Parliament? The experience of the south-west of England, which is where I live, is perhaps typical of many rural areas in the United Kingdom. The problems are a combination of a slow rollout programme, poor download speeds, poor mobile signals and poor adoption rates—that is, people not taking advantage of the services that they have. Despite funding programmes from Europe and other initiatives such as the get-up-to-speed programme by Connecting Devon and Somerset, the south-west, including Devon and Somerset, performs badly in relation to the rest of UK for digital connections.
In 2014, the Heart of the South West local enterprise partnership area, which covers Devon and Somerset, was ranked 36th out of the 39 LEPs in England for the proportion of internet users with access to broadband speeds of over 30 Mbps. Only two LEP areas had slower download speeds. Somerset ranked 161st out of the 189 local authorities, with 59% of postcodes having access to such superfast services. Devon ranked 163rd, with 57% of postcode coverage. I am sorry to quote all these statistics, but they help to make the case. These figures mask even greater deficits in the rural areas.
Why is this so important? First, productivity is part of the critical agenda that forms part of the Government’s industrial strategy. The south-west currently languishes 12% behind the average UK level of productivity. We know that, as a country, we are way behind other countries in the G7—20% behind France and Germany. However, there is a huge opportunity to improve output by tapping into the growing army of new small and micro businesses. In the south-west, over the last five years 60,000 jobs have been lost from the public sector, yet unemployment levels are at historically low rates. The majority of these people are not now private sector employees, but have become self-employed and many work from home. Most have made this decision because of the power of digital access to national and global markets. This country, in particular the south-west, needs these new businesses, which are nimble and motivated. They are better able to adapt to the challenges of Brexit than many larger companies, but cannot do so without the essential toolkit of superfast connections, reliable mobile and improved services, such as 4G and 5G technology.
Secondly, there is the demographic time bomb. The south-west, like many rural areas, experiences net in-migration from urban areas. Currently, the predictions are that the south-west’s population will grow by 400,000 by 2025. The sobering figure, however, is that only 65,000 of those people will be of working age. I need not spell out to noble Lords the pressure that this will impose on already stretched local authorities struggling to maintain health and social care services. Broadband is the unique opportunity to ensure that our ageing population can remain independent, self-supporting and even part of the drive for increased national productivity. Access to broadband could also mobilise another army of those who are no longer economically active—this time either as mentors able to use their life experiences to help the growth of our new businesses or even to establish themselves as entrepreneurs.
The prize is significant to UK plc. In a recent survey by Oxford Economics, it was estimated that digital capabilities within businesses are currently generating £123 billion in performance improvements across the economy, equivalent to 3.4% of total GDP. Companies project that over 1 million new jobs could be added as a direct result of enhancing their digital capabilities over the next two years.
The message is clear. We must finally ensure that this country, and particularly the rural economy, joins the digital age. It is not good enough just to provide the service: we need to ensure that we use it to harness its vast potential. The lack of progress so far is little short of a national scandal.
The Earl of Caithness (Con)
My Lords, I thoroughly enjoyed the speech of the noble Lord, Lord Mountevans. When I took my seat many years ago, a number of noble Lords said, “I knew your father”. I did not know the noble Lord’s father, but I knew his brother. He was also very interested in transport. I remember when I was Minister for Transport, we looked at the west mainline improvements together, as railways were his big thing in life rather than the noble Lord’s naval and shipping interests. I was glad that I was Minister responsible for shipping on two occasions and I hope that I helped a little towards keeping the City where it should be.
Whether we separate completely from the EU, as the voters wanted in the referendum just over a year ago, or whether we are an appendage on the edge of Europe paying a large sum of money to be part of a trading bloc but not having our feet under the table determining the policies, is irrelevant. What matters is the economy—James Carville coined the phrase when he was working for President Clinton, “It’s the economy, stupid”. So whether we are in or we are out, what really matters is the economy.
There has been a shift in the UK, as all parties now want more state intervention. The noble Baroness, Lady Jones, said “Spend spend” in her speech, completely forgetting of course that it was only seven years ago that the Chief Secretary from her party left government with a note in the drawer saying that there was no money left. The noble Lord, Lord Fox, talked about “Spend, spend” and even my noble friend Lord Callanan in introducing this debate talked about spending. But we need to be wary if Governments spend, spend, spend, because the national debt is still very large by recent historic standards and, relative to the size of the economy, it has grown.
Moreover, there are now more complicated issues to take into account for that. We have an ageing population, increased health spending, pensions and long-term care. We are incredibly lucky in this country, but at some point we have to sit down, like any good housewife running the household budget, and say, “Enough is enough. We have got to stop spending and set priorities”. Does healthcare always have to be free at the point of use? If that is what is agreed, something else will have to be cut; otherwise, this country will go completely bankrupt.
Who pays the taxes for the Government to spend? A quarter of the tax that the Government raise comes from income tax, but only 50% of us pay it. That is good in one sense but not so good in another. It is quite right that the low paid are taken out of tax, and this Government have done more than any other to accelerate that, but it puts an extra burden on those who are paying tax. During the campaign, Mr McDonnell said that he wanted to squeeze the rich because the poor were overtaxed. He has only to look at some of the statistics to realise that it is actually the rich who have seen their tax burden increase hugely over the past 20 years in comparison with the poor. Therein also lies a problem, because the rich are not necessarily on fixed salaries, and they move. If Mr McDonnell wants to squeeze the rich, as Mr Healey did, entrepreneurs and those who pay taxes will leave this country. That will do us no good whatsoever.
When we look at the UK workforce, it is important to realise that fewer than one in 10 people are working in manufacturing and even fewer in construction. The biggest growth in employment over the past 20 years has been in public administration, education and health. That all has to be paid for by other people earning money and contributing to the economy.
There is an unfairness in the tax system. We in this country pride ourselves on being fair, but there is a gross unfairness. If you take someone earning £40,000 as an employee, he will pay around £12,000 in tax. If he is self-employed, he will pay around £9,000 in tax. If he is an owner-manager, he will pay around £7,500 in tax. That is inequitable. Are the Government looking at this issue? I know that the Matthew Taylor report is yet to come. When is that to be published, because this area does need to be addressed? The Government are losing what is potentially quite a large sum of money. Will the Government also look at national insurance contributions again? What are they going to do about the loss of revenue that I have mentioned?
I conclude by turning to a subject that is closer to my heart, which is agriculture and fisheries. I am delighted with the Bills which have been proposed. At the moment, farmers are in an extremely difficult situation. They know the market within the common agricultural policy, but they have no idea what is going to happen in the future. When does my noble friend expect the Government to publish their 25-year plan for farming? A stock farmer is now putting cows into pregnancy to produce calves that will be fattened up for beef to be sold in a market that he has no idea of what it is going to be. We do not know whether we are going to be in or out of the EU or what rules will apply. Farmers are potentially at huge risk. There is a high chance of either an oversupply or a shortage of food. I hope that the two Bills which are to come before us on fisheries and agriculture will go some way to reassuring these people because they are absolutely key to maintaining the countryside as the nice environment we all want. We look forward to receiving them in this House soon.
Lord Kirkham (Con)
My Lords, reflecting on Her Majesty’s gracious Speech, I was struck by the extraordinary scale of the challenge being faced by our Government over the coming Parliament. However, I was greatly encouraged to see that, alongside the dominant theme of Brexit, the commitment to developing the skills of our future workforce has not been lost. Our industrial strategy will ensure not only the creation of high-skilled, high-wage jobs but will develop the skilled workforce we need to fill those jobs, be they in big business, small business, high-speed rail, low-speed rail, electric cars, outer space or to build the houses that my noble friend Lord Naseby and the noble Baroness, Lady Royall, want.
I realise that many of us in this fine place, with the exception of those who arrive through the old hereditary principle, know a bit about social mobility. As a consequence, like me they will welcome the proposal to reform technical education. These reforms will undoubtedly build on the commitment of successive Governments towards establishing parity of esteem for practical, technical skills through apprenticeships—skills beyond those that improve academic performance.
The creation of the new-style apprenticeships is shaping up to be nothing short of a revolution: a far-reaching change in the way in which we educate, motivate and upskill our young people and even inspire older workers to be more ambitious for their future careers. It is generally accepted—it is pretty much common knowledge—that the UK is experiencing a skills shortage, as my noble friend Lady Fookes mentioned earlier, with businesses across the board reporting difficulties in recruiting and developing young talent. Consequently, the creation of the Institute for Apprenticeships, made up of employer and industry experts from all sectors under the leadership of Antony Jenkins, provides a beacon of hope. It is an encouraging sign that we might bridge our nation’s skills gap and make social mobility a real prospect for young people struggling to get a start in life. I applaud the institute’s initiative to engage business leadership in a commitment to provide quality training to robust standards to millions of our young people.
Technical competence is, of course, critical for a high-skilled, high-wage workforce. High skills are vital if we are to compete effectively in the tough, global world of commerce and industry. However, we must take care to ensure that we match that technical competence with the rich personal life skills that are necessary to equip our young people to be active citizens, enthusiastic and able team players and fulfilled human beings, not automatons.
My experience of achieving the perfect storm of youth development wins has been through the work of the Duke of Edinburgh’s Award in supporting the apprenticeship schemes of many enlightened and successful companies, including household names such as British Gas and Royal Mail. At this point, I should declare my interest as chairman of the highly successful Duke of Edinburgh’s Award programme that last year, in 2016 its diamond anniversary year, had a record 420,000 young people actively working towards achieving an award.
Key corporate supporters of the Duke of Edinburgh’s Award have recognised that the classic D of E programme, when added to their own apprenticeship development programmes, produces not only an unrivalled result for their young recruits but measurable bottom-line benefits to their businesses, too. These companies discovered that apprentices who achieved the D of E gold award also displayed greater commitment to their employer and were more often fast-tracked and promoted than their peers. They also demonstrated self-confidence, self-motivation, commitment and that they cared—they cared about themselves, their communities and the businesses that employed them. Those businesses, incidentally, experienced higher retention rates, too.
My hope is that, as the shape of the new apprenticeship evolves and the impact of the significant additional financial resources business is contributing via the apprenticeship levy is felt, a place will be found for vital life-skills development alongside those critical technical skills. Employers are telling me that their hope is that they can apply a small element of their levy fund to enable them to introduce a proven programme, such as the Duke of Edinburgh’s Award, to fully round off and complete the apprenticeship experience.
This Government are a strong advocate of young people, and continuing government support and incentives are key in helping encourage business to provide the ladder of opportunity that develops ambition. If the UK really is open for business, then a first-class workforce and first-class management in those who direct them is fundamental for a first-class commercial trading nation. There is no more important priority for this or, indeed, any Government than promoting economic and social policies that allow every citizen of the United Kingdom to make the most of their abilities and talents because, for sure, jealously, division and anger flourish in an environment where people feel deprived and excluded from the possibilities of personal improvement.
I commend the Queen’s Speech for its focus on what matters in these challenging times—promoting actions that unite rather than divide us. I am delighted that the development of our young people’s work and life skills, so essential for prosperity and happiness, remains in sharp focus for our Government.
The Lord Bishop of Portsmouth
My Lords, the Prime Minister has spoken of the awful events of recent weeks as signs of a society not at ease with itself. Yet amidst the tragedy and the pain, we see hope and the victory of hope. We have seen a remarkable depth of love and shared resolve, especially between faiths. We have been deeply moved by how people have responded to evil with generosity, openness and humility. I was struck by the force and feeling with which the Prime Minister used that last word in the debate in the other place on the gracious Speech. Humility is not a term frequently associated with politicians by the public. True, circumstances have left the Government with little choice but to take the humbler part, but that is no reason for cynicism. A practical consequence is that we face the prospect of a two-year Session in which these discussions will take place. There are good reasons to deprecate departing from the annual cycle, but my hope is that it will also mean proper debate, detailed scrutiny and looking at issues from all sides and angles. If that is what humility looks like, in my view it is a price well worth paying.
Yet I have no sense that we will have a minute to spare. Brexit takes the lion’s share of the programme—an event one commentator described as the Heffalump of the programme. I fear they are mistaken. From my studies of The House at Pooh Corner, I am reminded that the Heffalump is an imaginary creature who inhabits the dreams of Pooh and Piglet. Brexit is all too real and, for some, a nightmare rather than a dream. The terrible irony is that most of the legislation we will consider is designed to enable us to do outside the EU what we do within it. We are transferring power and an existing body of law from one institution to another. We find ourselves a little like Alice, told by the Red Queen that,
“it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”.
Well, we might have to run even faster than twice as fast, especially if tonight we are to rise at the expected time.
The Prime Minister also commented on how the Brexit vote showed that,
“our country often does not work the way it should for millions of ordinary families. This Queen’s Speech begins to change that, by putting fairness at the heart of our agenda”.—[Official Report, Commons, 21/6/17; col. 57.]
On that admirable sentiment I must own to doubts—doubts that the measures we will consider answer such a clarion call; doubts not necessarily in terms of intent, but in the modesty of ambition, which matched the modesty of the trappings for this State Opening.
The programme certainly contains measures—worthy, admirable measures—which will do good, but how much will they transform or even just improve the lot of the people of a city such as Portsmouth or the challenged rural and coastal areas of the Isle of Wight, whom I serve? The measures on domestic violence, debt advice and insurance fraud are cases in point. They are good measures that will make a difference but they are discrete, aimed at a single issue. Similarly, on capping energy bills, it is good to see action being taken, and I welcome the focus on the most vulnerable customers, but what we have before us does not accord with the robust line taken until very recently.
Doubts are alarming things for the clergy, perhaps all the more so for a Lord spiritual. So it is my most earnest hope that the Minister tonight and the Government over the next two years will assuage my own doubts, and that we will indeed see this legislative programme, this Parliament and this country working with humility for millions of ordinary people up and down the land.
Baroness Noakes (Con)
My Lords, we are facing a two-year Parliament dominated by the legislation that will implement the historic decision taken by the British people last summer. This is an awesome task but I hope that this House will stick to its core competence of scrutinising and improving legislation and will not try to change that legislation’s intent.
The task of dealing with the legislation for our exit is so immense that there is not much time left for other legislation. That is a very good thing. Obviously, we have to have the Bills related to exiting the EU. The next priority must be to keep citizens safe from harm and I welcome in particular the proposed legislation on domestic violence and abuse, and on digital safety. However, we should be sceptical about the need for any more laws. It is not clear to me that all the remaining Bills are worth while. I will single out just one. In the previous Session, we had HS2 legislation, and I pay tribute to the noble Lords who did hard labour on the special Bill Committee. Now we are promised another HS2 Bill. I remain unconvinced about the project. It is not clear that its benefits outweigh its massive costs, which are on some estimates up to £200 billion. That is on top of the disruption and destruction that will be part of the project. It is not too late to change course on HS2; there are far more deserving homes for the taxpayers’ billions.
Today’s debate includes economic affairs, and that is the focus for my remaining remarks. If we had believed the forecasts that the Treasury produced as part of “project fear” last year, our economy should now be in recession. Wrong—our economy has continued to grow. Although that growth slowed in the first quarter of this year, the outlook is not gloomy. For example, the CBI reports that the UK’s manufacturing order books are at a 30-year high. The Treasury said that unemployment would jump by half a million. Wrong—unemployment has continued to fall and employment is at a record high. The Treasury said that foreign investment in the UK would fall, but there is no sign of that happening and a number of significant corporations have recommitted to investing in the UK.
Of course there are some issues, and rising inflation is a problem in particular for households that face lower income growth, but the long-term outlook for the UK is still positive, with signs that many non-EU countries are keen to enter into new trade deals that will take effect when we leave the EU. We have always been a great trading nation and I look forward to the Bills on trade and customs that will underpin our ability to forge our own trading destiny in the future.
As other noble Lords have reminded us, we must not forget that a large fiscal challenge faces us. Debt is expected to peak at just short of 90% of GDP, and the previous Budget paved the way for an even longer timeline for removing the deficit. We cannot wish away those facts of life. More than anything else, we need to stimulate economic growth, which is why building the foundations for international trade will be so important for us.
The gracious Speech had little to say on economic growth beyond legislation that relates to electric cars and commercial satellites. That is good; Governments cannot legislate for growth. The most important thing that they can do is create an environment where businesses can prosper. Tax is an important part of that environment. Corporation tax rates are on a path towards 17% and I applaud the Government for that commitment. We need companies to invest and grow, and success should not be penalised. However, we still have tax rates on individuals that are too high at both ends of the spectrum. The top rate of 45% is uncompetitive and is above the EU, OECD and global averages, and some marginal rates are even higher. At the bottom end, the Government rightly claim credit for the basic rate threshold of £11,500, but the ultimate stealth tax of national insurance still kicks in at about £8,000 per annum and at a rate of 12%.
Tax is not just a question of rates; it is also about complexity, and we have one of the most complex systems in the world. Low tax rates have been proven to raise yields, but one does not have to be a devotee of the Laffer curve to believe that pervasive low rates, together with a system that was stripped of complexity, would hugely boost our economic strength. I commend that to the Government as something to complement their huge efforts to promote our nation’s economic good health.
Lord Truscott (Ind Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Noakes. I agree with much of what she said, particularly on HS2. I also commend both noble Lords who made excellent maiden speeches today.
In speaking on energy today, I declare a non-pecuniary interest as vice-chair of the All-Party Group on Shale Gas Regulation and Planning and as a former UK Energy Minister.
Comparing the recent Tory manifesto to the gracious Speech, I am somewhat perplexed by Her Majesty’s Government’s invisible energy strategy. If this is what strong and stable government looks like, I can only be grateful that your Lordships’ House avoided a coalition of chaos. For example, media reports before the gracious Speech said that the Government had abandoned their commitment to UK shale gas development. I hope that the Minister—who is not in his place at the moment—can reassure or otherwise the House, at least until the next U-turn.
The Conservative manifesto stated that legislation would be introduced to permit non-fracking drilling as a permitted development; major shale planning decisions would be the responsibility of the national planning regime; there would be a new shale environmental regulator; and there would be changes to the proposed shale wealth fund. Now these are all apparently out of the window. Are Her Majesty’s Government still committed to shale in England, have they been won over by Labour’s argument that fracking should be banned, as it is in Wales, Scotland and Northern Ireland, or do they simply believe they cannot get the legislation through Parliament?
The Queen’s Speech mentions nuclear safeguards and proposals to secure critical national infrastructure. Can the Minister enlighten noble Lords about how this will be achieved post-Brexit? Again, the Government seem vague about attempts to protect the UK’s critical infrastructure. Just last September, the Secretary of State for Business, Energy and Industrial Strategy stated that the Government would reform the legal framework for future foreign investment in our critical infrastructure, including nuclear energy. The Tory manifesto said:
“We will ensure that foreign ownership of companies controlling important infrastructure does not undermine British security or essential services”.
The Minister briefly referred to this, but when will we receive the details? Concerns about Chinese involvement in Hinkley and Bradwell on security grounds have been widespread, but in the Queen’s Speech of this there was not a whisper.
Incidentally, as previously mentioned, a recent National Audit Office report said that the Government’s plans for a new £18 billion power plant at Hinkley Point were “risky and expensive”. As the UK’s ageing nuclear and coal plants need replacing or substitution by around 2030, the UK’s reliance on imports has returned to levels not seen since the mid to late 1970s, before production from the North Sea took off. My fear is that the Government do not really have an energy policy and certainly do not have a grip on the issues. A commitment in the gracious Speech to electric cars is welcome, but it is not a substitute for a low-carbon energy strategy. Perhaps it is time for a new energy White Paper. There has not been one for a while.
As mentioned by the noble Lord, Lord Naseby, Britain’s largest storage site for natural gas, owned by Centrica, is to close permanently, leaving the country more dependent on imports and price volatility. The situation is so precarious that a committee of your Lordships’ House advocated varying the pace of carbon emissions up to 2050 to keep the lights on.
While the gracious Speech commits the UK to tackling climate change and the Paris agreement, few independent experts believe the country can hit its emission targets. The noble Baroness, Lady Featherstone, commented on this point earlier. The Committee on Climate Change stated that current policies are likely to deliver at best around half the required UK emissions reduction from 2015 to 2030. A new emissions reduction plan has yet to be published. Can the Minister tell the House when its publication is likely?
I do not think the Government are treating cybersecurity with the seriousness it deserves. Where was the reference to this in the Queen’s Speech? We have already witnessed recent attacks on the NHS and Parliament in this country alone, with attacks also against the US, Ukraine and Iran, among others. The Stuxnet worm was used effectively against Iran’s nuclear power stations. Researchers are now warning the Industroyer virus could bring down power networks in their entirety or lead to our power grid being controlled by either criminals or a foreign nation state. The Cambridge Centre for Risk Studies estimates a cyberattack on the UK’s regional electricity distribution network would cost between £12 billion and £86 billion.
The powers and ability of the National Cyber Security Centre to deal with an attack of this nature are frankly insufficient. It does not have a statutory role and cannot enforce its recommendations. The National Cyber Security Strategy is muddled and unclear, particularly regarding the private sector, which owns most of the UK’s critical national infrastructure. The clock is ticking, but the Government appear paralysed.
The Duke of Wellington (Con)
My Lords, I wish to speak on only one of the several proposed Bills related to our leaving the European Union—namely, that on agriculture. I declare my interests in agriculture as detailed in the register of interests.
I welcome the proposed agriculture Bill. I congratulate the noble Lord, Lord Gardiner, who will presumably be responsible for taking it through this House, on his reappointment to the Department for Environment, Food and Rural Affairs. The farming industry will be one of the most affected by the decision to leave the European Union, and an agriculture Bill is necessary. But the terms of our departure will determine what level of support will be necessary in the future. As 75% of our agricultural exports go to the European Union, tariff-free access to the EU will be essential for all British farmers. Until we know whether this can be negotiated, farmers cannot plan their breeding and cropping programmes, and the Government and the devolved Administrations cannot formulate the required support systems.
Certain types of agriculture are heavily dependent on seasonal labour, as a number of noble Lords have mentioned. Most of this seasonal labour comes from the EU eastern European countries, and at the very least it will be necessary to go back to an equivalent of the seasonal agricultural workers scheme so that fruit and vegetable farms can pick their crops in a timely fashion. It would be helpful if Ministers could very soon make announcements about the future ability of British farmers to recruit seasonal workers from overseas. Of course, there are also large numbers of EU citizens already working on a full-time basis in agriculture. I welcome the publication today of the Government’s detailed proposals for EU citizens already working here.
Then there is the question of financial support. In the previous Parliament, the Government had guaranteed payments to farmers under the common agricultural policy up to 2020. During the recent general election, the Conservative Party stated:
“We want to provide stability to farmers as we leave the EU”.
That is indeed mentioned in the summary of the proposed agriculture Bill, but the manifesto also stated:
“So we will continue to commit the same cash total in funds for farm support until the end of the parliament”,
which I assume now means 2022. I therefore hope that Ministers will legislate this commitment in the forthcoming agriculture Bill.
It is sometimes suggested that farming does not need or deserve the amount of taxpayer support it receives. In this House, many noble Lords from all sides understand that many farming businesses, especially livestock farms, are not sustainable without financial support. That is particularly true in the less favoured areas of Scotland, Wales, Northern Ireland and the north of England. There is an enormous difference in profitability between a large arable farm in Lincolnshire and a livestock hill farm in, for example, Wales or Scotland. Most of these livestock farms are family farms that are important in many ways to their local communities.
My plea to Ministers is as follows. A new agriculture policy must be devised as quickly as possible. We need food security, remembering that only 60% of our food is home-grown. We need to care for our countryside and the environment. We need to provide safe and healthy food for consumers. We must improve the quality of broadband in rural areas. We must sustain our large food processing industry, which is heavily dependent on home-grown raw materials. However, my overwhelming concern is for the social fabric of country communities, and one of the best ways to preserve that fabric is to sustain the family farms of this country. I urge the Government to be mindful of that as they construct a new policy for this country’s agriculture.
Lord Cotter (LD)
My Lords, time is precious today, but I think others would agree that there is very little in the gracious Speech specifically about business, so I want to raise points especially affecting small business.
A major concern relates to the late payment of debts, something that I have campaigned on for many years but which remains a big problem. It has been reported that as much as £260 billion of SME turnover is locked up in late payments. An alternative figure is that one-third of payments to SMEs in the UK are late. This situation, which many small businesses face, has not been resolved. The Government have come up with many ideas over the years, but it is a continuing problem. Indeed, tens of thousands of businesses fail every year because of cash-flow problems. I ask the Minister to look again at the problem to see whether he can come up with appropriate ways of dealing with it, because it is not just businesses that are at fault; I want the Government to look at their payment practices, and local government also needs to be addressed in that respect.
Another point that needs to be addressed is the concern referred to earlier today about the availability in this country of necessary skills, which has become a continuing problem. Many colleagues have talked about the need to welcome people from other countries into this country to provide the skills that we need. It is important that we emphasise the importance of the skills that are needed as well as the quality of the technical education that is necessary to address this problem. That has been raised many times in connection with careers advice, another issue that I and other colleagues have raised and that, to be fair, the Government have tried to address. However, I assure colleagues here that careers advice and guidance throughout the country is not consistently as good as it should be. Young people need encouragement. They should be given opportunities to get skills—apprenticeships are an important area here—and encouraged to get them. When I left school I did national service, and I have been in business all my life. One company that I worked for was a “them and us” company, and the workforce was not encouraged to be encouraged, if you like. So I very much believe that careers advice and guidance is very important to give young people the encouragement that they need.
Other points have been raised. Briefly, the Government have talked about export and the need for trading overseas. That is often referred to and we all say, “Oh, yes”. The practicalities of it relate to Brexit, of course, but also—I have some experience of export with my small firm—to whether the quality of the diplomatic corps in its representation in different countries throughout the world is of the necessary calibre to help those business people who want to export to do so.
I hope that the Government will address those points and the many others that need addressing in relation to small business in particular. Many colleagues, including the noble Lord, Lord Naseby, have referred to problems with business rates and such like. I hope that we can address them.
Lord Framlingham (Con)
My Lords, I make no apology for returning to the vexed question of HS2, as this ridiculous scheme is getting under way. Demolition is starting, burial grounds dug up, trees felled and communities disrupted. The utmost pressure must be kept on in the hope that government common sense will prevail and an urgent review will be ordered.
I begin with the title of a comprehensive article written by the journalist Simon Jenkins, which traces the history of HS2, entitled, “HS2: the zombie train that refuses to die”. He wrote:
“It is the most extravagant infrastructure project in British history—but nobody can say why we need it. How did HS2 ever get so far?”—
a question we must ask ourselves and, depending on the answer, take the necessary action. Even at this late stage, it can be halted. The London garden bridge, another vanity project, has been reviewed and is unlikely to go ahead, despite the considerable sums already spent on it.
It is difficult to comprehend the enormity of the folly that is HS2. It is so monstrous that most people simply cannot believe it. On 31 January this year, I moved an amendment to the Third Reading of the HS2 Bill that would have put an end to it. Most of your Lordships voted against my amendment, while telling me privately that they agreed with it, but 26 Members of this House voted with me to stop HS2.
Were these 26 ill informed, or were they perhaps the best-informed Members of your Lordships’ House? Two of them were former Permanent Secretaries to the Treasury. Terry Burns, the noble Lord, Lord Burns, saw HS2 at first hand under Gordon Brown, and the noble Lord, Lord Macpherson, studied it under David Cameron and George Osborne. Both of them were so convinced of the case against continuing that they voted to stop it even at that stage.
Every dispassionate observer who is properly qualified and experienced in our railway system is opposed to it. A long list of railway experts who have no axe to grind have written to Ministers pleading for a meeting to put their case to help the Government to understand the dangers. They have been rebuffed.
Every supposed benefit of this project, including speed and capacity, has been comprehensively taken apart by those professionals, who really know what they are talking about. The noble Lord, Lord Darling, when he was Secretary of State for Transport, was so worried about the scheme that he commissioned a no-nonsense report from Sir Rod Eddington, the former boss of British Airways. Eddington’s report, which was published in 2006 was emphatic: this kind of scheme was wrong in principle and should not be undertaken. His report was enthusiastically welcomed by the Secretary of State and officials in Whitehall.
A critical report by Sir Jeremy Heywood in 2016 has not yet been made public. I wonder why. A consultant in this field, Michael Byng, was commissioned by the noble Lord, Lord Berkeley, to scrutinise the costings of HS2. His results showed that the scheme is likely to cost twice as much as the original estimate. We are talking about unbelievable amounts of money. The forecast cost was £56 billion, now thought to be nearer £70 billion, and some say eventually £100 billion.
I am reliably informed that for the price of HS2 we could rebuild and re-equip every hospital in England and Wales. Today we launched our new aircraft carrier HMS “Queen Elizabeth”, which cost £3 billion, described as an astronomic sum. In HS2 terms, it is peanuts. This scheme will last for years, a running sore constantly reminding whatever Government are in power of the massive mistake that was made through sheer obstinacy and an unwillingness to listen. It will be an ongoing financial and environmental nightmare.
Serious disruption will soon start in Camden despite the fact that there are still uncertainties surrounding how the scheme will work in the area. Homes are to be demolished, burial grounds dug up, businesses disrupted, and mature London plane trees felled. The Woodland Trust tells us that, further afield along its route, 63 ancient woodlands will be lost or damaged. This entire project is not worth the life of a single tree.
To defend the indefensible, HS2 is reported to be employing 17 PR firms to sell its case—gravy train upon gravy train. One firm is reported as being paid £280,000 to extol the virtues of HS2 to primary schools along the route. There is a constant stream of reports of hirings, firings and squabbling over contracts by those seeking a slice of the huge sums involved.
What we need, and what we must have before things go any further, is an urgent, open, Treasury-led review of the situation with proper professional independent advice taken and listened to. What harm can that do? What are people afraid of? Perhaps it is the truth. Surely, when such huge amounts of public money are being spent and such immense damage is being done, both to our urban environment and our countryside, it is vital to get at the truth.
Lord Haskel (Lab)
My Lords, the gracious Speech and many noble Lords have spoken of a new, modern, industrial strategy. I welcome this, because we need one. How can the Minister speak of strong fundamentals when after eight years of unprecedented fiscal stimulus from the Bank of England and eight years of austerity, we are still nowhere near balancing our books? Real incomes have fallen, our standard of living has fallen, and productivity has been virtually static. It is a fantasy that we can go on like this. In these circumstances, the industrial strategy should reflect our values of fairness as much as they reflect our ambitions to grow and prosper—a strategy that unites us. Even the Prime Minister has indicated a nudge in this direction.
So, how do we do it? The obvious place to start is the industrial strategy Green Paper issued in January. A lot of work has gone into responding to this and it really has the possibility of being a creative alternative to austerity. Consultation has been wide and it involved many parts of industry. Indeed, it involved a number of people from your Lordships’ House. Not least is the suggestion that the strategy should set tough targets for productivity and create a regulator to monitor and stimulate progress—a kind of productivity OBR. For instance, much is made of the matched funding available in the innovation fund. But that will be of value only to the incumbents who have the money to do the matching. Will the Government leave the funding to organisations such as Innovate UK to make judgments and not just reward those who can afford it?
In many fields, artificial intelligence is already superior to our own. Business will profit from recognising that fact, and encouraging this has to be part of our industrial strategy. Equally, part of the strategy must be to show how artificial intelligence can benefit us all, rather than just being a threat. As part of the strategy I would like to see a campaign similar to the public understanding of science campaign, which we carried out when science was perceived as a threat. Indeed, that campaign may have been initiated in your Lordships’ House. There have been many enthusiastic submissions, and none of them should be wasted.
The strategy must include a review of patient capital. Extensive research shows that our present systems of big bonuses make executives less willing to invest because they do not want to do anything that would cause a short-term hit to profits. We know that this perverse incentive is one reason why productivity is low. Will the industrial strategy take steps to limit this?
Business has been very good at evaluating the impact of politics on its businesses. Indeed, many of us have tried to help in this—but the message coming through loud and clear is that this works both ways. Businesses should carefully consider the effect of what they do on politics, such as directors paying each other enormous salaries, companies using great ingenuity to pay less tax, and staff being often more exploited than nurtured. Then there are the customers faced with complications to their disadvantage. What steps will the Government take in their industrial strategy to discourage that behaviour, because all that it does is lead to a loss of trust?
The Labour manifesto recognises the reality that growing demands put on the state need more tax revenue. So why not, as part of our industrial strategy, broaden the tax base with heavier taxes on activities which damage the environment or with VAT on financial services? There is a strong case for taxing expensive homes—why stop at band H? What about taxing the gains on people’s main homes when they are sold? If nothing else, it would help to stabilise the runaway housing market, which many have said needs to be dealt with.
We also need to make a better case for the role of the state as industrial stabilisers, and as regulators, especially after the Grenfell fire, and not just pursue deregulation for its own sake, as an end in itself. My point is that a new modern industrial strategy must decide to meet both economic and social objectives. We have been through a lot in recent months. A business and social industrial strategy will help to unite and support us after these difficulties by demonstrating our determination to put jobs and the economy on an equal footing with a fairer society.
Baroness Wheatcroft (Con)
The gracious Speech told us that Ministers will “strengthen the economy”—an admirable aim. However, while investing in autonomous driving vehicles and space travel might benefit the economy, some of us fear that the Government could make moves in a different direction, which would be a massive blow.
On 24 January, the Secretary of State for Exiting the European Union said:
“What we have come up with … is the idea of a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have, but also enable my right hon. Friend the Secretary of State for International Trade to go and form trade deals with the rest of the world, which is the real upside of leaving the European Union”.—[Official Report, Commons, 24/1/17; col. 169.]
That is a cunning plan that could be very beneficial to the economy, but the 27 countries gathered on the other side of the negotiating table do not seem to share the same vision of the UK being allowed to resign from the club while holding on to all the benefits. They seem to take the view that, if one eats the gateau, one no longer has it. Already, the Secretary of State for Exiting the European Union sounds less confident that the wizard idea he came up with can be delivered.
Without membership of the single market, it certainly will be crucial that companies become better at exporting to non-EU members. The UK’s share of the Chinese market, for instance, has fallen to around 1% over the last decade, lagging behind France, Italy and Germany, which do not seem to have been overly constrained by membership of the European Union.
The UK has some great exporting businesses but the challenge is to turn more of our smaller businesses into exporters. This is something which successive Governments have tried to tackle but with very limited success. In 2014, only 17% of medium-sized businesses—those with a turnover of between £25 million and £250 million —were exporters. The then Government launched a concerted effort to grow that, appointing trade experts to provide local support to medium-sized businesses. Ironically, they said at the time that English companies would become eligible to apply for up to £100 million in additional export support from the European structural and investment funds. I hope some did.
The gracious Speech referred to support for the export effort, and a more generous export credit regime would help. However, might we achieve more dramatic results if we could persuade big companies to each take a smaller one under their wing? It could be from an allied sector, rather than a potential competitor. The big companies have market knowledge, departments dedicated to export documentation and contacts. They know the ropes and they could, with little effort, help turn domestic businesses into global ones. Everybody would benefit from that. That would also boost productivity, which remains an issue for the UK. In his Autumn Statement, my right honourable friend the Chancellor of the Exchequer pointed out that it takes a British worker five days to make what a German produces in four. We lag behind the United States by 30%, France by 20% and Italy by 8%.
Investing heavily in innovation and infrastructure, as we are promised the Government will, should eventually lead to productivity gains. However, extensive research done by the productivity leadership group, led by Sir Charlie Mayfield, the chairman of the John Lewis Partnership, came to one overriding conclusion. Too many businesses simply were not focusing sufficiently on productivity. Put less politely, poor management may be the root of the problem. The much-talked-about skills shortage may extend to the boardroom. The productivity leadership group is aiming to change that by promoting best practice, but it will be effective only if owners of businesses, in both the private and quoted arenas, keep emphasising the importance of productivity. Sir Charlie Mayfield reckons that getting it right could add as much as £130 billion to the economy every year. Can the Minister confirm that the Government will continue to support the productivity leadership group with the very limited funding requirement that it has?
Baroness Maddock (LD)
My Lords, the gracious Speech commits the Government to bringing forward measures to help tackle unfair practices in the energy market and reduce energy bills. In my brief contribution this evening I will concentrate on fuel poverty. Can the Minister explain exactly what the Government are proposing on energy prices? How does this interact with the Fuel Poverty (England) Regulations 2014 and the fuel poverty strategy of 2015?
I should declare my non-pecuniary interests. I am president of the Sustainable Energy Association, president of the National Home Improvement Council, a vice-president of the Local Government Association and a vice-president of National Energy Action, a fuel poverty charity. I am grateful, as always, for their briefings on this issue.
The scale of fuel poverty is very worrying and has been for well over 20 years. What is more, the levels are increasing and have increased since the publication of the fuel poverty strategy in 2015. Since 2011, levels in England have been based on the low-income, high-cost definition whereby an individual is considered fuel-poor when their fuel costs are above the national median level and when spending that amount leaves them an income below the poverty line.
Monitoring in the other three UK nations uses a 10% definition, which simply means that you are spending more than 10% of your income on fuel. The latest figures for England show a small increase in the number in fuel poverty since the fuel poverty strategy was introduced. It was 2.35 million households and has risen to 2.38 million. That is nearly 11% of all households in England. United Kingdom-wide statistics are no longer produced by the UK Government but the last figures in 2015 highlighted a figure of 4 million households in fuel poverty. Whatever the definition of fuel poverty, the main drivers remain the same—the price of energy, the level of household income, the quality of energy efficiency of dwellings and the vulnerability of the occupants of those dwellings. From 2004 to 2014, we saw gas prices soar by 125% and electricity prices by 75%. In recent weeks, we have all heard announcements of new increases by the major suppliers.
Improvements in the levels of energy efficiency in our dwellings have reduced by 75%. Typically, the vulnerable are older people, children and those with long-term illnesses. We now have 1.8 million households in this category, up by 40,000 since 2013.
Wages and benefits have not kept up with prices. Those unable to work have seen their income stagnate or reduce, and half of all fuel-poor households are in work. We have heard the rosy picture and the not so rosy picture of our economy from noble Lords’ contributions but any rosiness in the economy has not affected the people in fuel poverty I am talking about.
This situation puts huge pressure on our National Health Service. The World Health Organization estimates that 30% of winter deaths are caused by cold housing. That means that in this country 9,600 people are dying needlessly through the winter months. It costs our National Health Service £5 billion to treat the effects of living in cold homes, at a time when we hear daily about the pressures on our health service. The Government have committed to various targets to achieve better energy efficiency but current resources are less than half what is required to meet them. There are no bespoke programmes so progress has been very limited. The 2015 fuel poverty strategy committed to prioritise the most severely fuel-poor through cost-effective measures and ensuring that vulnerability is reflected in policy decisions. However, the transition to supporting those who most need help has been very slow. The energy company obligation is the only delivery mechanism in England and spending reduced from £1.3 billion to £640 million over 18 months, rather than the original 12 months. Therefore, I ask the Minister: will the changes to this be part of the government proposals announced in the gracious Speech?
Another scheme for the vulnerable is the warm home discount scheme, which provides an automatic electricity bill rebate to low-income older-age households. Like ECO, this policy is paid for through a levy on energy consumers’ bills and is delivered across Great Britain. Some people do not always remember to apply for the £140 payment at the right time. If they do not do so, they end up paying for the people who are getting that help.
I have three questions and a suggestion. First, will action on energy prices go alongside co-ordinated support to drive up low household incomes? Secondly, the most sustainable solution to fuel poverty is to increase energy efficiency, so will the Government ensure that the National Infrastructure Commission includes energy efficiency as part of the upcoming infrastructure assessment, as was included, indeed, in the Liberal Democrat manifesto? Will the Government re-target current fuel poverty support and address the gaps in provision? Lastly, I urge the Government to build on local practice and replicate consistent outcomes in all our towns and cities. Much could be done in this way if the Government supported and resourced local authorities’ activities under the Home Energy Conservation Act, which I successfully steered through the other place a very long time ago. We are one of the richest countries in the world. When will we see the end to vulnerable people dying each winter in this country? It does not have to be like this.
Baroness Wilcox (Con)
My Lords, I know that at this stage there is no necessity for me to thank the two maiden speakers, but in this case I really would like to. I thought they were terribly good. I found the history of the mighty forebears of the noble Lord, Lord Mountevans, fascinating. I come from Plymouth, and everything he talked about seemed to me to be maritime—cargoes at sea and so on. I look forward to him being with us and bringing in a bit of fresh air. My noble friend Lord Colgrain spoke so graciously about Lord Lyell, which was lovely, about his great-grandfather and about sitting on the steps of the Throne. It became terribly close and nice, and I look forward very much to hearing from both of them. I have added up that between them they have experience of the City, rural and marine, so that will smarten things up a bit for a while.
I declare my interests—I have already put them on my list up there, but it is always with me—in fisheries and, of course, the National Lobster Hatchery. I am therefore delighted that there is to be a fisheries Bill. I was on the EU Select Committee, and when we put forward a report about fisheries we never dreamed for one moment that the Government would let us have a fisheries Bill. However, we have one now and I am thrilled. The Minister outlined how we would be in control of the UK’s EE zone. He talked about having a fairer share of the market, controlling quotas and not being bound by the EC fisheries policy. He talked about meeting other fleets fairly and about how coastal communities are to be renewed. I hope that will encourage modern apprenticeships, science and technology and bring our Government to a fisheries Bill that raises the morale of our island nation all over again.
Above all, I applaud the meaningful recognition of the need for enablement of the protection of our fish and our fishing fleet. We need now to put into place appropriate and effective protection. We need boats, and we need them built fast. I am sorry that the noble and gallant Lord, Lord Boyce, is not here to speak, for he is an admiral and the Lord Warden of the Cinque Ports, and is knowledgeable about the Fishery Protection Squadron, which thrives—I looked it up and read about it. I think we will do awfully well with this today. Can the Minister say whether the Government have already assessed the need for boats, and if so, when will they be ready to start with them? Have they ring-fenced the money to make sure that we can have them? We need to be ready to train the young people who will get their careers going in this area.
The Mediterranean has been fished out. Net sizes got smaller and smaller. The great fleets of France and the great Spanish armada have to come here, because the fish are available in our waters—our common-law system makes us very well behaved in not overdoing things. With the CFP removed, we will be able to make a policy of our own and police are own waters. We are blessed indeed with our inshore and deep water fish and shellfish, which provide demersal and pelagic fish, lobsters, crabs, oysters and shrimp—all those delicious things grow in our waters.
In the period from 2012 to 2014, EU fishing vessels, including ours, landed on average 1.1 million tonnes of fish and shellfish annually, caught within what will now constitute the UK EEZ. The report found that, on average, fishing vessels from EU countries other than from the United Kingdom landed 58% of that volume—equal to some £400 million, or 43%, of the value of all landings from the UK EEZ. Our country, out of the European Community, has a good, rich fishing future as long as we protect it.
Lord James of Blackheath (Con)
My Lords, before I start, I place on record that before speaking tonight I took counsel and guidance from the clerks—although from none of those who have been here tonight, so they can all relax—on whether there was any risk of me going sub judice on anything that I am about to say. They have assured me that there is not, for which I am grateful.
My subject is LIBOR and a sequence of four cases which have passed through the High Court in the last 18 months. There have been 15 prosecutions, five convictions, two cases where the juries have failed to agree and eight acquittals. We are now left with so many confusions and unresolved issues from this process and our parallel LIBOR market in Europe, called Euribor, is complaining so much that it may seek to shut us out and take the entire market, to our significant financial detriment. It is rather the reverse of the old Groucho Marx comment, “You wouldn’t join a club that would have you as a member”. We wish to remain in the club that does not want to have us as a member and this is a serious predicament.
The key issues are these. First, we are apparently at variance with the entire remainder of Europe, which has stated categorically that it will have no LIBOR prosecutions for any incident that occurred before 15 April 2013, as the new regulations came in on that date. All the prosecutions that we have seen go back as far as August 2006, so they would not have been relevant.
Secondly, the rest of Europe has been greatly upset by comments made by no less than the Lord Chief Justice in determining one of the appeal processes relating to these cases. He said that the bank’s positions in these LIBOR cases could have no link to the relevant indexes of the day when the deals were struck. That is not only fundamentally wrong; it is arrant nonsense, if I may be so bold. In any financial market, the bank’s position will always have a link to any index.
A range of possible rates could apply. That point was accepted by the FCA in the extraordinary disciplinary process that it mounted and completed just a few weeks before the start of the LIBOR cases, all of which involved the UBS bank and particularly its principal LIBOR trader—a man called Tom Hayes. The FCA, quite reasonably—expecting that this case would produce some prosecutions—set out to prepare the way for a lifetime ban on the other UBS staff who had been working on LIBOR. In doing so, it first convened its disciplinary committee, consisting of five people and 15 expert advisers. It sat intermittently over a three-month period and came up with three absolutely critical conclusions.
The first was that all LIBOR, in contravention of what the prosecution was saying in these cases, was based on daily fixings in something acknowledged as “the range”, which limited the minimum and maximum spot fixings that could be achieved. Secondly, the committee confirmed that the range had been correctly applied throughout all the cases that had gone through UBS and that there was no sign of any dishonesty whatever in that process. Thirdly, it then looked at the rest of the situation and said that the senior executive to whom Mr Hayes had had to report his fixings each day had behaved perfectly correctly. It said that there was no question of his disqualification and all accusations were binned.
Given those circumstances, that would have been a hugely valuable piece of information to have passed into the jury’s knowledge. Indeed, the FCA sent a copy of its report of the proceedings to the Serious Fraud Office, asking that it be placed in the hands of the defence counsel for the trial. Three weeks into the trial, it was found that the SFO had never released the report, and it was never seen again. The judge refused to allow it to be submitted as late evidence and the jury accordingly convicted. Mr Hayes was sent to prison for 13 and a half years and a confiscation order for £1.8 million was passed upon him—it realised only £800,000 but we cannot win on all things. He has almost 10 and a half years of his sentence still to serve, but I am sure it is a great consolation for him to know that the FCA thought his boss perfectly innocent of any accusation in the process that has now lumbered him with slopping-out every morning as he ticks another day off his sentence.
Having started off trying to circumvent the trial process by going for a common-law prosecution—they could not do it under the LIBOR rules due to the European restriction—they then gave themselves the task that although it was a common-law prosecution, they had to recreate a knowledge of LIBOR in the minds of the jury to understand the whole process. The SFO, ever helpful in these matters, provided an expert witness. He was a great success, and ran through every trial. However, in the fourth trial, he broke down and confessed that he did not know the first thing about LIBOR, had never worked a day in the LIBOR market and had been given coaching by the SFO as to what to say to convince the jury—that is splendid British justice for us.
The new Government need to address three separate and vital LIBOR issues. First, as a matter of common justice they need to decide how we are going to sort out the mess we are in with this one. Secondly, we have to work out how we are going to amend the statute book and codes of practice to ensure that we are clean for the future. Thirdly, we have to get ourselves back into LIBOR permanently and stay there. If we do not, we are all going to hell in a handcart and nothing in our financial services market is going to save us. This is a real issue and we need to address it very urgently. I commend it to the attention of the incoming Government.
Lord Hunt of Chesterton (Lab)
My Lords, despite its brevity, the Queen’s Speech emphasises that our Government and Parliament have a great responsibility for many critical issues affecting the future of the UK and the countries of the world. I agree with other noble Peers that dealing with global climate change for present and future generations has been accepted by most Governments as the most serious of these global issues. Most countries signed the Paris accord in 2015, although regrettably the US Government have withdrawn from it. I ask the Minister to assure the House that the UK will join with other major countries at the forthcoming G20 conference in Berlin in asserting again its commitment, as, of course, Mrs Merkel has already.
The UK can be proud not only of its diplomacy, which led to consensus in Parliament for the then Climate Change Bill, but of its participation in leading research that contributed to international consensus about the past processes of climate change and the future trends of rising temperatures in the atmosphere, ocean and land areas caused by rising emissions of carbon dioxide. There is now a practical consensus that over this century these emissions will be greatly reduced—the UK target for reduction is by 80%—but this is possible only if new sources of clean energy become available throughout the world.
There are great opportunities for the UK to develop renewable wind and solar energy. Even Saudi Arabia is moving away from petroleum and developing solar energy. The UK is also investing in advanced nuclear fission and fusion systems. I declare an interest. The environmental impact of these systems will also have to be managed in collaboration with other countries and international organisations, such as the International Atomic Energy Agency and Euratom. It is essential that the UK should positively expand its involvement in these national and international environmental and energy organisations. There will be a Bill, as the Minister said, on dealing with the consequences of leaving Euratom, and that will be a very important piece of legislation.
As I have said in the past, the House of Lords should receive more regular reports about these international bodies, which are so important to trade, the environment and communications. We have had almost no debates on this. I have organised two in the 17 years that I have been here and this goes by default. Select Committees could also be more involved in this aspect of UK governance.
Although local conservation of fisheries, which was brought up by the noble Baroness, Lady Wilcox, is an important issue, it is also important to realise that we have to think about fisheries on an oceanic scale. Again, I have been involved in ACOPS, which sits on some of these bodies. Following urgent environmental and infrastructure safety problems in the UK, which we have been seeing in the last few years and most urgently in the last couple of weeks, HMG need to consider the governance and openness of the responsible governmental and private organisations, and how the latest science and technology can be used.
I speak as a former chief executive of the Met or Meteorological Office—although some people think that it is another kind of Met—which I am pleased to see remains a world-class governmental agency despite several attempts by Governments of all parties to privatise it. Other well-known governmental laboratories have been privatised and universally spin off companies to provide valuable services. I declare an interest there. The question for the UK is how these privatised ex-governmental organisations should be involved in these critical governmental questions. That has been a hidden question during the last week. An alternative is to involve professional bodies such as the Hazards Forum, which brings together all the engineering institutions and quasi-governmental bodies such as the Health and Safety Executive. Again, I declare an interest.
Finally, as the noble Lord, Lord Kakkar, emphasised this afternoon, as the Government, Parliament and industry review the technical solutions to these challenges and the production and design of UK products, the need is to consider how UK schools, universities and training colleges can compete with leading institutions around the world, for example by making sure that our children do homework, which is rather rare in some schools. It is important that these institutions should educate more qualified engineers and scientists. If not, as industry is urging, the UK will need to expand the number of immigrants with advanced qualifications, assuming they have the confidence in how they are treated when they arrive. I was pleased to hear that identity cards are being considered again. That may be essential in future.
Lord Sheikh (Con)
My Lords, Her Majesty’s most gracious Speech made clear this Government’s priority to ensure security and stability as we leave the European Union. Safeguarding jobs in our economy must be at the forefront of this. We must protect our position as a global economic powerhouse, but also reach out for new opportunities. A fundamental part of our economic success strength stems from bilateral trade. This will be more important than ever before as we embark on a new era for our country. In particular, I believe that we must now seek greater economic and trade ties with our friends across the Commonwealth and forge new trading relationships.
I am a great admirer of the Commonwealth. It encompasses 52 countries and a third of the world population. It is culturally, economically and politically diverse, yet shares our values of democracy and the rule of law. The Commonwealth is essentially a ready-made trading market. Its economies are large and small, developed and developing. It includes two of the BRICS economies, India and South Africa, along with several members of the “7 per cent club”.
Earlier this year, Commonwealth Trade Ministers met in London and agreed to deepen economic ties. They were clear about the advantages that we all have through sharing a common law, language and institutions. In 2014, UK exports to the Commonwealth were worth more than £48 billion and imports were worth £42 billion. There has been a trade surplus since 2011. It is estimated that, on average, Commonwealth countries trade around 20% more with each other than with non-Commonwealth countries.
Next year, we will host the Commonwealth Heads of Government Meeting. This will be a golden opportunity to reflect on opportunities and develop new ideas. We must be ambitious and open-minded, and be more active in promoting business. The Government have made it clear that we will see new Bills on trade and customs. I look forward to such legislation and hope that we can support British businesses to export to new markets across the Commonwealth and, indeed, the entire world.
I would also like to emphasise the importance and potential of the Islamic finance industry to our economy. I declare an interest as the previous co-chair of the All-Party Parliamentary Group on Islamic Finance. It is my intention that the group will soon be reactivated following the general election. I am also a volunteer patron of the Islamic Finance Council.
The United Kingdom has the largest Islamic finance market outside the Muslim world. Its assets now exceed $20 billion. The market is also growing significantly worldwide, at an average annual rate of 15%, with a value of more than $2 trillion. We must take advantage of the strong hand we already have in this industry. We have hundreds of accountants, solicitors and consultants who are highly trained in Islamic finance. We must harness and grow this talent pool further.
We can also export these skills and help other countries to develop their Islamic financial structures. In 2013, the then Prime Minister, David Cameron, spoke at the World Islamic Economic Forum. He committed to issuing a £200 million sovereign sukuk, to providing sharia-compliant student loans and to providing sharia-compliant start-up loans for new businesses. The sukuk was issued and was 10 times oversubscribed. We must now look at the issuance of a second sovereign sukuk which can attract investment in infrastructure to support economic growth, something that was referred to in Her Majesty’s most gracious Speech.
Furthermore, we must also now move forward and deliver the other two commitments. Sharia-compliant student loans will enable greater numbers of Muslim students to attend university, while start-up loans will inspire Muslim entrepreneurs to establish their own businesses. These can only be good things for our skills base and for our economy. More widely, Islamic finance is also favoured beyond the Muslim community by those who wish for a more ethical form of financing.
We must be flexible and innovative as we explore new markets and build new relationships. This approach will deliver the best returns for our businesses, create more jobs for the future and secure a stable economy on a long-term basis.
Lord Palmer of Childs Hill (LD)
My Lords, there is yet another glaring omission in the gracious Speech and supporting documentation. It is the lack of understanding of small and medium-sized businesses and how they are a major component of the success or failure of the UK’s businesses and the UK economy. This Government have failed to understand how smaller businesses work and thrive. Smaller businesses need to concentrate on their core activities of providing services, production and sales, and the rest of their activities is incidental.
I have, in 2015 and 2016, spoken in your Lordships’ House on the Conservative policy of MTD, making tax digital. This was apparently seen, prior to the 2015 spring Budget, as a means of simplifying our tax system, being a step change in the ways records are kept and tax collected. This will mean that the self-employed, landlords and businesses will have to keep digital tax records. All right so far, but they will have to send four digital returns to HMRC, plus a year-end return, every year: five digital returns a year. For gurus in Whitehall or 10 Downing Street this might seem a simplification, but for most small businesses, in practice, it means employing a firm of external accountants—I declare an interest there—in order to comply; expensive, unless you are an accountant. Those in business who should be concentrating on production and turnover will be overwhelmed by the digital requirements. Please, Government, think again.
Another problem faced by small and medium-sized businesses, particularly in our high streets, is the obscene rise in business rates mentioned earlier by the noble Lord, Lord Naseby. Liberal Democrats want a systemic review of the business rates system, prioritising reforms that recognise the increased role of the digital economy. We want small businesses and high street shops to remain competitive. It cannot be right and fair that an out-of-town mail order house or a retail warehouse on an industrial site pays less rates than a small shop on my local high street. Have the Government any plans to address this major problem?
I would like to see a greater acknowledgement of the courage of individuals starting their own businesses. Liberal Democrats have proposed a £100 per week start-up allowance for six months to give support with basic living costs to entrepreneurs starting a new business. Further, we need to expand the British Business Bank, introduced in 2014 by Vince Cable when he was Secretary of State, to provide more equity capital for growing firms. I would welcome an assurance from the Minister on this.
Leaving the European Union will be, in the words of “Yes Minister”, “a courageous decision”, but whether we are in or out of the single market and customs union, I trust that central government procurement is used as a tool to drive local growth and community development. Can the Minister say whether government departments, local and national, will purchase from diverse sources and use local labour, goods and services where possible? Too often, government contracts go for apparent safety with a large firm, since if that firm goes belly-up, those who commissioned the work can say, “Don’t blame me, guv—I went to a large firm”. Small firms need to get a look-in on this business.
Inevitably, most speeches will come back to Brexit, that ill-advised leap in the dark. When trade negotiations start—assuming that by then we have experienced and able trade negotiators in the UK—I believe that those negotiations should focus on start-ups, the tech sector, data movement and tariffs, and the protection of intellectual property. A hard Brexit will lock Britain out of the world’s largest free-market area and will impose another huge administrative burden on SMEs seeking to export. If no free trade agreement is reached, the UK will be subject to WTO tariffs, which range from 4.1% on natural gas to 9.8% on cars and, horror of horrors, to 32% on wine. The Centre for European Reform estimates that this would cost the UK more than £40 billion.
Further, have the Government made any assessment of the additional costs to UK businesses of the overhaul of data protection rules? These EU-generated rules, which are going to be brought into UK legislation, will mean a change in how companies process information, such as customer lists and employee records, and will come into force, unless something happens, in May 2018. It is clear that many businesses will fail to comply. Will the Minister say how businesses are being made aware of these rules and whether next spring we will see a plethora of firms paying fines? Will the Minister confirm that fining will be a last resort?
Baroness Altmann (Con)
My Lords, I welcome my noble friend Lord Callanan to his role and wish him success. I am delighted to follow so many significant contributions, including the two excellent maiden speeches, in this important debate on the gracious Speech.
With today’s focus on economic issues, I congratulate the Government on achieving the highest UK employment rate since records began. Global firms have been investing here, taking advantage of our business-friendly environment and successful labour markets. We must protect this. A hard-left economic agenda would, in my view, do dreadful damage, as indeed would a hard-right or no-deal Brexit.
I welcome the Government’s proposals for the national living wage, increased housebuilding, protecting critical infrastructure and encouraging electric vehicle use to build on the UK’s leading position in this area. I am proud that the Government will continue supporting international action on climate change, which poses a real threat to younger generations. Another threat to the British economy is the worrying resurgence in consumer debt levels, which rose 10% last year. We know that excess borrowing and irresponsible lending preceded the 2008 crisis. I certainly support the financial guidance Bill to help consumers manage their finances and debts better, although more needs to be done to control consumer debt.
I also welcome the Bills to improve the treatment of mental ill-health and tackle injustice. However, there was a serious omission from proposed anti-discrimination measures. The Queen’s Speech rightly calls for an end to prejudice on the basis of gender, faith, race, disability or sexuality, but what about age? Can my noble friend the Minister explain why this was missing? Reducing immigration makes it increasingly important to tackle the ageism that still pervades Britain’s labour market. With an ageing population, the more we can encourage full-time or part-time later-life working, the better the economic outlook. This is not about favouring older generations over younger ones; it is about ensuring that everyone has opportunities to work and contribute to the economy and their own economic welfare. Too often employers overlook the talents, dedication and experience of older staff, whether in training or recruitment for new roles. In this context, I also welcome the new institutes of technology to improve young people’s technical skills, but we need an adult stream, too. Lifelong learning, mature apprenticeships and reskilling can help the British labour market stay world-class, improve productivity and enhance growth.
Another important issue for the economy and its resilience is corporate finance. In particular, I am concerned about the significant advantage for debt finance over equity. Stamp duty is paid on UK equities, while debt is subsidised by taxpayers and favoured by regulators. Having spent many years in investment management, I find this bias against equity capital concerning. Equity financing was invented in the UK and helps businesses drive innovation with the support of patient, long-term capital. Leaving the EU would make this even more important.
I had the privilege of opening the London Stock Exchange last Friday and it struck me that every trade in a British company attracted a tax charge, whereas each non-UK company trade did not. It is estimated that the tax comprises 70% of UK equity trading costs. Pension funds and insurers have dramatically reduced equity holdings in recent years, removing some of the underlying support for British business. As auto-enrolment brings millions more workers into long-term investing and quantitative easing continues to depress bond yields, the nation’s long-term economic interest could be boosted by levelling the playing field for equity versus debt finance, encouraging more activity in public equity markets, rather than private equity, as well as encouraging pension funds to invest in growth and job-creating British infrastructure.
Finally, the central theme of the forthcoming legislative programme revolves around arrangements for leaving the EU. From an economic perspective, I wholeheartedly support the wise words of my right honourable friend the Chancellor of the Exchequer, who urges prioritising jobs and prosperity during our journey of separation from the EU. The British people voted to be better off, not worse off. They did not vote to jeopardise our economy, manufacturing and services industries and all the jobs that depend on them— and what about immigration? From a demographic and economic point of view, immigration is essential for our economy. As our ageing population is moving into retirement with fewer younger people to support them, immigration has helped to power economic growth.
Leaving the EU single market, customs union and EEA by 2019 would be disastrous. Yes, Britain is great. We have strength, ingenuity, scientific brilliance and resilience but without a more conciliatory, co-operative approach to Brexit the economy is at risk. I believe that logical, rather than ideological, economic arguments are needed now. I hope my noble friend the Minister and many colleagues on these Benches can work with others in the national interest to help us better achieve success and future prosperity.
Lord Oxburgh (CB)
My Lords, I shall speak today about energy and the environment and, in the interests of brevity, I refer to my interests in low-carbon energy and energy efficiency in the official register.
Brexit and the tragic events of recent months will understandably take much of our attention but we must not forget the longer term. Our actions today are making the prospects of future generations very bleak, both for the people and for the plants and animals with which we share the planet and which make the planet habitable for us. Today, I wish to focus on the consequences of the deluge of greenhouse gases that is largely produced by the burning of fossil fuels and released into the atmosphere. It is steadily and remorselessly shifting our climate. Admittedly, the causal relationship is based on probabilities but it is one endorsed, I think, by every national scientific academy in the world. It gave rise to the Paris agreement of 2015, under which countries pledged to do what they could to reduce their greenhouse gas emissions. True, some of the pledges fell short of what the climate scientists calculated was needed to avert the most extreme consequences of climate change but something is better than nothing.
It was most welcome that in the Queen’s Speech, the Government renewed their commitment to meeting their Paris target. That said, it is far from clear how this is to be done. In the autumn Statement of 2015, the Treasury cancelled a £1 billion competition for industry to develop the carbon capture and storage technology—CCS—that is essential if the UK is to decarbonise at least cost. At a single stroke, this removed one of the three legs supporting the Government’s energy strategy: nuclear, renewables and fossil fuels, but with their emissions abated by carbon capture and storage. The then Environment Secretary, Amber Rudd, immediately set up an advisory group that I had the privilege to chair, comprising parliamentarians and external experts to advise on the way forward. The group scrutinised and then endorsed the Government’s previous view that CCS was needed to decarbonise heating and electricity generation. The group furthermore developed a business model by which this could be done at reasonable cost. The group’s report has been accepted by UK industry and has excited considerable international interest. Formal publication was last September, but the Government are yet to respond. They said they would do so in a decarbonisation plan, which would be out in the spring. It seems that spring is late this year because we have still not seen it.
The report emphasises that the technology is available but the timescales are long, whether for building power stations, laying pipelines or transmission lines or any other aspect of major infrastructure. This means that, for there to be any hope of meeting our Paris obligations, we have to decide urgently the outline of what needs to be done by both government and industry. It is essential that this outline has wide support across both Houses of Parliament because it must be robust to changes in Government. Chopping and changing in matters such as this is a certain recipe for wasting money and failing. There is no fundamental reason why this should be highly politicised, and this House, in particular, has a good record of achieving consensus on energy matters. If a broad outline can be agreed, details can be added later, as appropriate, and industry will be able to plan accordingly, but the Government will need to work hard because they must realise that after the cancellation of the CCS competition in 2016, their credibility is low.
I therefore ask the Government three questions: when will the decarbonisation plan be issued? Will the plan address the recommendations of the parliamentary advisory group on CCS set up by the previous Government? Will the Government seek ways of achieving all-party consensus on how decarbonisation is to be achieved?
The Earl of Selborne (Con)
My Lords, I propose to follow the example of the noble Lord, Lord Haskel, and others and confine my remarks to what the gracious Speech calls a new modern industrial strategy. When the Science and Technology Committee in the previous Parliament, which I had the privilege of chairing, took evidence on the Green Paper Building our Industrial Strategy, we were frequently reminded that industrial strategies have been formulated regularly, at least one a decade for 60 years, since the Attlee Administration. It is fair to say that most have not stood the test of time, so the first question to be addressed when formulating what the gracious Speech calls “a new modern industrial strategy” is: have we learned lessons from previous failures?
Whether we end up with a hard Brexit or a soft Brexit, our long-term prospects will depend on achieving economic growth in all parts of the United Kingdom. We have to improve productivity, capture a larger share of world trade and attract inward investment. We are not going to achieve lasting periods of economic growth unless we successfully promote innovation. Successful innovation raises productivity and living standards, expands the range of goods and services available to individuals and society and allows us to live longer, healthier lives. It will not solve all our problems. I accept that, as my noble friend reminded us, lack of productivity it is very much a consequence of poor management. It is not just business that must innovate; government and social organisations need to innovate, adapt, respond to and shape the evolution of society. We have a strong science base—I do not think that is disputed—but that does not ensure that we will be among the global leaders in developing new innovative technologies and processes.
The Green Paper recognised the potential benefits and, indeed, our national dependence on science and innovation, but it failed to impart a vision of how we are going to develop a coherent strategy. It amounted to a portfolio of tactics. The Science and Technology Committee suggested that a new modern industrial strategy should first set out pathways of practical steps to a more regionally dispersed economy building on our research excellence at every opportunity. The strategy should be clear on how many sector deals the Government aspire to. They are clearly already an important component. They should also explain how transformational technologies that do not necessarily fit comfortably into existing sectors will be matured. The noble Lord, Lord Mountevans, in his inspiring maiden speech, referred to the impact that robotics will have in the marine and other sectors. Many such sectors will be transformed by autonomous systems. This is an example of where innovation will lead in most unpredictable directions, but new industries they certainly will be.
We need to change the investment culture within our fund management industry to encourage, by a coherent approach to tax and regulation, the further supply of long-term capital for industry and science, particularly for emerging science-based firms with the potential to be significant global players. Brexit presents opportunities for businesses in the United Kingdom to gain competitive advantage from reforms to taxation and regulation that were previously not possible as part of the European Union framework. The new, modern industrial strategy promised in the gracious Speech must spell out clearly how such competitive advantage will be gained.
Lord Howarth of Newport (Lab)
My Lords, the Government should be dealing with much else besides Brexit, but I fear that the Brexit legislation and negotiations, and their struggle to survive, will consume all the Government’s energies. Complex and politically fraught as Brexit will be, here we should be optimistic. As the two sides move beyond simplistic rhetoric, sensible negotiators, recognising their shared interests in the maintenance of trade and other relations, will converge on practical arrangements. Meanwhile, we are experiencing the predictable consequences of the correction in the value of sterling that followed the referendum. Living standards are being squeezed, but inflation is not expected to remain high. Manufacturing orders are at their best for 30 years, which points towards a healthy rebalancing of our economy.
More difficult than Brexit, and more fundamental, is to achieve for Britain what the Prime Minister has called an economy that works for everyone. Our mountainous public and private debt, the excesses and abuses of deregulation, our debilitated productivity, stagnant wages, insecurity of employment, threadbare public services, and the chasm between rich and poor are the legacy of 40 years of neoliberalism. The hierarchs of the European Union remain unrepentant neoliberals. In Britain, we contemplate as a monument to neoliberalism the charred remains of Grenfell Tower and of the poor people who lived there.
The gracious Speech promises that the appropriate lessons of Grenfell Tower will be learned. Among the lessons are that effective regulation is necessary to secure humane values and that wealth does not trickle down but must be redistributed. A Manichaean contest between private and public may gratify ideologues, but it wrecks the lives of ordinary people. Capitalism needs government to save it from its own excesses. Shareholder value has been a pernicious mantra when it has meant ever-rising dividends at the expense of investment and good jobs. Finance, gorging on itself, all but destroyed our economy a decade ago, caused lasting misery for millions and now threatens us again through reckless lending. Conservative Governments, manipulated by party donors and lobbyists, have allowed big money to call the policy shots. The rentiers have been flattered and pampered while the poor have been insulted and punished. The overdue prosecution of the Barclays bankers is a parable for our times.
There is no sign that the Conservative Party has new thoughts about how to run the economy. The Speech promises vaguely to strengthen the economy so that it generates the tax revenues needed to invest in public services. It also promises to keep taxes low. The balanced budget continues to recede. The promised land of renewed public services is not in sight, nor is a credible path to it marked out. The public will tolerate austerity that repairs the public finances, but not austerity that gets us nowhere.
Meanwhile the Home Secretary admits that the police are too stretched; Shelter warns that, with the housing benefit freeze, 1 million households will be made homeless; academics are joining the precariat on zero-hours contracts; mental health services have collapsed; and the prisons are simmering. Whatever the pledges in the Speech, the debt overhang and the weakness of the tax base mean that there are not the resources to rescue public services. The social care debacle in the election campaign exposed how people—characteristically in our political culture—demand good public services but refuse to pay more taxes.
If the Chancellor has few cards to play, neither does the governor. Desperate to stave off disaster, central bankers have inflated their balance sheets as recklessly as commercial bankers inflated theirs. If capital is to be allocated other than into asset bubbles, interest rates will need to be normalised, but one shudders to think of the effect on overindebted households and fragile businesses. We need the productive growth that loose monetary policy has failed to stimulate. The Speech promises a major reform of technical education as part of a new industrial strategy, but our weakness in technical skills is the legacy of 200 years of cultural disdain. Wishful thinking will not transform a culture.
We need a new economic model. In the near term we need a boost to growth, but we know that economies predicated on the infinite growth that capitalism requires will be unsustainable in a world of finite physical resources already imperilled by climate change. Nor will the digital economy come to our rescue. Ungovernable, it creates global monopolies, traumatically disruptive change and extreme polarisation of wealth.
Our situation requires us to consider anew what kind of economy and society we want and what government is for. The Prime Minister refused to debate any of that at the general election, and the country refused to give her its confidence. We now have a Government in office but not in power and a Queen’s Speech made up of banalities and evasions.
Baroness Rock (Con)
My Lords, I add my congratulations to the noble Lords, Lord Colgrain and Lord Mountevans, on their excellent maiden speeches. I welcome the chance to lend my support to the Queen’s Speech and the measures therein to support business and the economy at this critical time for our nation.
Our businesses are not separate from our people, our communities or our sense of country, so it is a welcome change of tone in this Queen’s Speech that businesses are being brought back into the debate about what kind of country we want to be in these uncertain times. After all, at their best, businesses are not faceless and robotic; they are groups of people united in a common purpose.
If our economy is to flourish, we need business to flourish. If we want more jobs and new career paths, we need businesses to provide them. It is a relief, then, that we may yet see a new approach to consulting the business community, and that the Government will “test and validate” their approach to Brexit negotiations to give employers a chance to contribute and consult on how Brexit will affect them. I welcome the formation of a new business council but it must have a genuine role and input.
However, bringing business back into our national debate must be about more than Brexit. It is about our future place in the world and the level of prosperity that we can deliver for all people. So we must see government policy as something that can enable businesses to grow, create more jobs and make a bigger contribution to society. This Queen’s Speech should be judged on its ability to do this, and the Government should focus on matching skill supply with the demands of business. That is as critical now as it has ever been at this time of global competition and rapid technological change. I therefore welcome the reforms to technical education. Those reforms should be judged on their ability to increase the supply of engineering apprentices, programmers and coders and to give school leavers a legitimate choice in how they educate themselves, ready for their future careers.
Even as we invest in improving the skills of our school leavers and graduates, though, we must not allow Brexit to shut off the supply of the best that Europe, and indeed the world, has to offer. This means ensuring that business has a say on our approach to free movement of labour and its relationship to single market access. As the Chancellor said last year, we must keep in mind our first duty to spread prosperity and, as noble Lords have said, people did not vote to be poorer. It is the job of everyone in this place to explain the positive contribution that such skilled workers can bring, with the benefits felt by all.
Similarly, investing in technology, research and infrastructure gives businesses a platform to do more. Industrial policy, where it concentrates on improving our research base, our output in intellectual property and building a world-class ICT infrastructure, has a place in building a modern economy. I have spoken in this place before about positive changes to the way we allocate research funding, and I am pleased to see further investment pledged to commercial satellites and electric vehicles. Whatever our settlement with our EU partners, one thing we can be sure of is that investment in technology will stand us in good stead.
Lastly, I add my voice to those of other noble Lords who have reminded the Government of the greatest enabler that they can offer the business community: certainty. Certainty enables more investment. Businesses need to know what arrangements they will face in 2019: what tariffs they will have to pay, what customs arrangements they will have to navigate, and who they will be able to employ. Without more clarity, there is a risk that businesses will stop investing, and we need investment to foster productivity growth, which is the key to unlocking greater prosperity for all in the UK economy. In a Brexit context, it can be delivered with clear announcements on access to talent, access to capital and, most important of all, early clarity on a transition deal that avoids a cliff edge and allows businesses to plan for the future. Whatever the nuts and bolts of the final deal, avoidance of a cliff edge, with time built in for implementation, will be paramount.
We heard a lot from businesses during the EU referendum campaign—some say perhaps too much—but now I fear the pendulum has swung too far the other way and businesses have been largely excluded from the debate and have become mere recipients of government policy rather than legitimate actors in shaping it. We must hope, then, that a sense of equilibrium is restored, and businesses’ critical role as employers, community pillars and taxpayers is recognised once again.
The Earl of Lindsay (Con)
My Lords, I welcome the proposal in the Queen’s Speech to build a strong economy, and therefore cannot agree with the bleak analysis of the noble Lord, Lord Howarth of Newport. I am pleased to see the commitment to continue to develop a modern industrial strategy, because I believe that the industrial strategy Green Paper is a good starting point. However, I believe that two key components are missing from that strategy.
First, there is no reference in the document to the importance of maintaining and enhancing the United Kingdom’s well-deserved reputation for quality. This reputation has been achieved through the support of successive Governments for a national framework of standards, measurement and accreditation, which together are referred to as the United Kingdom Quality Infrastructure, or the UKQI. The UKQI is delivered by four key bodies: the British Standards Institution, the National Physical Laboratory, the National Measurement Regulation Office and the United Kingdom Accreditation Service. Here I should declare an interest as chairman of the United Kingdom Accreditation Service. I should briefly highlight the important role played by the UK quality infrastructure in respect to trade.
The assurance and confidence provided by UKAS accreditation and the other UKQI partners have been instrumental in facilitating international commerce by reducing cross-border technical barriers and increasing cross-border confidence in goods, services and their suppliers. This illustrates the increased relevance of the UKQI as we develop future trade agreements with our European partners and others across the globe. Indeed, the unrivalled international reputation and trust established by the UKQI partners have already enabled the development of many successful cross-border agreements—and will be crucially important ingredients in post-Brexit trading relationships.
It is worth bearing in mind that the German Government are energetic in promoting the German national quality infrastructure to support their export drive, and we know how successful that is. I think we should do the same in this country. The UKQI partners also have a crucial contribution to make in respect of the industrial strategy’s focus on policies and institutions that underpin productivity and prosperity in the UK. The UKQI’s integrated quality framework is capable of driving and reinforcing work across the strategy’s 10 pillars by helping businesses to innovate, to develop new processes, goods and services, and to break into new markets. The UKQI likewise has an important role to play in supporting the national productivity investment fund and the new industrial strategy challenge fund. In developing the industrial strategy, I therefore urge my noble friend and the Government to ensure that the key role of the UKQI is properly recognised and that the UKQI partners are supported in the work that they do to underpin trade within the economy.
My second point in respect of the industrial strategy relates to the continuing need to fine-tune regulation to ensure that it is intelligent, proportionate and fit for purpose. There is just one paragraph in the Green Paper on the subject yet, in my view, modernising the stock of existing regulations and applying intelligent scrutiny to all new regulatory proposals should be one of the key pillars of the strategy.
Our withdrawal from the EU provides a significant opportunity to take a fresh look at the regulatory and enforcement landscapes. It is an opportunity to see if it could be made more fit for purpose in terms of both reducing unnecessary, poorly focused or disproportionate burdens currently placed on businesses, organisations, public services and individuals, and at the same time enhancing the effectiveness with which regulations and their enforcement are able to deliver their intended protections and other purposes.
There are other opportunities that are also worth exploring further, some of them already well tried and tested and many involving the UKQI partners. UKAS accreditation, for instance, has been successfully used by regulators to support and complement existing regulatory regimes, enabling regulators to adopt a more risk-based and outcomes-focused approach. This in turn has enabled them to target their resources where they will have greater impact, focusing on where the risk of non-compliance is highest.
UKAS accreditation of voluntary standards has also been used effectively to underpin the credibility of self-regulation, so that it can deliver greater confidence to government, regulators, consumers and users. I note in passing that the Government will be considering placing a duty on regulators to consider the needs of vulnerable customers. This is welcome, as their needs are important. However, I encourage the Government to include in their consideration the option of using standards underpinned by robust certification and accreditation. For example, the Government could look at the BSI standard for inclusive service provision, which includes requirements for identifying and responding to consumer vulnerability.
Encouraging or requiring businesses that want to use this standard to be audited by a certification body that is UKAS accredited would provide assurance and public confidence. Such an approach would also chime with the Government’s ongoing Regulatory Futures Review with its focus on regulatory self-assurance and earned recognition. In summary, I urge the Government, as part of their commitment to a strong economy and a modern industrial strategy, to ensure that the role of the United Kingdom Quality Infrastructure and its partner organisations is properly recognised, given the contribution that they can make to trade, investment, innovation, business growth and productivity. Likewise, I urge the Government to see a regulatory and enforcement landscape that is intelligent and fit for purpose as a key objective and to recognise the contribution that the UKQI partners, particularly those involved in standards accreditation, can make towards this end.
The Viscount Thurso (LD)
My Lords, it is always a pleasure to follow the noble Earl, although it has been a little while since I last did so. I add my congratulations to the two maiden speakers, both of whom will add greatly to deliberations in your Lordships’ House and who mostly spoke of their experiences in the City. I feel that they will not entirely approve of what I have to say this evening—but I agree with the noble Lord, Lord Colgrain, on what he said about agriculture. A number of speakers tonight have made the point that the removal of the subsidy delivering cheap food is an equation that is a little hard to understand. The agricultural industry will need a great deal of support as we go through the Brexit process.
In his opening remarks, the Minister spoke about some of the fundamental strengths of the economy. I welcome him to his place on the Front Bench. I agree that there are a number of indicators of the economy that are good, and lack of unemployment is certainly one of them. But there are, equally, a number of the measures of the economy that do not give such grounds for optimism, such as the sheer size of the central bank balance sheet, the lowering of growth, low interest rates with growing inflation, a faltering property market and some of the difficulties coming into the labour market. Those are all areas of concern, but they are not fundamentals.
I should like to speak to two fundamentals that are at the core of a genuinely strong economy: the ability of the financial system, and banking in particular, to deliver capital, which is the fuel for industry and commerce, effectively into industry and commerce; and, secondly, the labour market, which remains dysfunctional, with those at the top still being rewarded excessively for a modest performance—and, indeed, at times failure—and those at the bottom receiving insufficient reward for their honest endeavour.
Before I make those points, I should say that I am utterly committed to free enterprise and to private capital. I believe that remains the best system for ensuring growth in our country. That is underpinned, however, by two principles that I believe in. First, capital and labour must be equally regarded and respected; they cannot be out of balance. Secondly, the purpose of wealth creation is, primarily, to enhance the nation and society, and the personal accumulation of wealth is a happy secondary benefit that comes from that. I feel that sometimes these days the opposite is the case.
On capital, I served on the Parliamentary Commission on Banking Standards in the 2010-15 Parliament. I reread its conclusions over the weekend and was startled to see how many of our diagnoses remain valid today and how many of the recommendations we made not only remain valid but have not been acted on. If anybody would like to, I suggest paragraphs 111, 116 and 119 are well worth a read. Corporate governance, ineffective markets and a concentration of banking power all remain a problem today—but the primary problem is that banks and the financial system should act as an effective mediation system between those who have capital and those who need it, and the current system does not deliver that, giving too much in commission to too many along the way.
On the labour market—interestingly, from the same report—it is clear that too many people are still being rewarded with too much for too little, while at the other end of the spectrum we have difficulty in ensuring that people at the lower end receive a genuinely living wage, on which they can live without being subsidised by credits. It has always seemed extraordinary to me that we are subsidising labour.
I could speak at length on both subjects but time does not allow. I will close with a memory of one of the first debates that I took part in in this House, on 21 February 1996, when the late Lord Dahrendorf introduced a report entitled Wealth Creation and Social Cohesion in a Free Society. We are not terribly good at wealth creation at the moment; we could be a great deal better. I have never known a time when social cohesion was so lacking and it threatens our civil society. I am worried and any responsible Government should be as well. I hope the Government will look to that as much as to anything else.
Lord Flight (Con)
My Lords, I, too, congratulate our two maiden speakers today. My case is that austerity is not the fundamental issue. With a current account deficit of over £40 billion per annum, a budget deficit of £50 billion per annum, and the OBR forecasting another £122 billion of additional borrowing over the next five years, this is not a picture of austerity; it is still one of Keynesian expansion. Although it is welcome news, the 32 million in employment—up 2.7%—is similarly a reflection of a positive situation, not a negative one. The issue is pay and living standards. Because productivity has been so poor, living standards and pay in both public and private sectors have scarcely increased for eight years. No wonder people are discontented. The two key factors that drive productivity are capital investment and making more efficient use of better skilled employees, both of which need to be worked upon. I would add a third factor that is relevant to increasing living standards: a much bigger free trade situation, where there is scope, post Brexit, for trade deals with some 165 countries that do not to date have deals with the EU.
Capital investment needs business confidence. The attack on business in the Conservative manifesto was misplaced and it is welcome that business is being brought back. The major cause of falling productivity has been tax credits. This has been conceded, to a large extent, by the noble Lord, Lord Darling. Tax credits were intended to increase living standards but ended up subsidising employment. This in turn led to labour hoarding and the use of labour as a cheaper alternative to capital investment. No wonder our productivity has been poor. Poor productivity has very much coincided with the period since the introduction of tax credits.
There is obviously masses of scope for capital investment in the public sector. In particular, I see the need for major improvement in the road network in the south-east, but I have some reservations about the Government having sole responsibility here. HS2 and Hinkley Point are not ideal examples of the most effective forms of public sector capital investment. However, the proposals in the spring Budget were extremely good and represented a clear statement on how to improve productivity. There is the £23 billion fund for productivity improvement over five years, the Sainsbury technical education initiative and the industrial strategy Green Paper, so there is huge scope. The UK has the other advantage of an extremely lively, young entrepreneurial generation coming straight out of higher education and willing to start new businesses. We have never seen anything as strong as that before, and it has also been crucial to the technology sector.
I could talk for a long time about Brexit, but on a three-year view I think it will be positive for economic growth, in particular for living-standards growth because of the much greater scope for free trade. To close, it is time to phase out budget deficits, to save and invest more, to reduce current account deficits and, above all, to improve productivity and advance free trade arrangements.
Baroness McIntosh of Pickering (Con)
My Lords, I add my congratulations to the two maiden speakers and congratulate my noble friend Lord Callanan on joining the Front Bench.
Most of my activities in the European Parliament, the House of Commons or this place have had a rural theme. I am delighted to be a member of the Rural Affairs Committee of the Church of England Synod. In the last Parliament, I co-chaired the all-party water group. For five years, I had the privilege of chairing the Efra committee in the House of Commons. Among those, I primarily advise the Water Industry Commission for Scotland and the Dispensing Doctors’ Association, and I am a vice-president of the Association of Drainage Authorities and of National Energy Action.
In the recent general election and in the gracious Speech there is very little about those who live in the countryside and rural businesses, yet about a third of the population live and work in rural or semi-rural areas such as market towns. In opening, the Minister seemed to indicate that support for farmers would carry on up to 2020 or 2022. But that begs the question: what happens after that time?
The wider farm-to-fork industry, including the food and drink manufacturers and retailers, is worth some £110 billion to the UK economy, employing more than 4 million people. Rural dwellers and businesses such as farmers, farm shops and others are held back by poor services. We have heard a lot during the debate about the poor broadband in rural areas, the lack of access and fast speed and, indeed, in many cases, poor mobile coverage, as well as the lack of affordable homes, lower funding for rural schools and lack of public transport. The poor access to such essential public services, especially the shortage of affordable homes in the countryside, is leading to many young people leaving the countryside. Demographic changes mean that the older people remaining put enormous pressure on health, social care and other services.
It is true that the resilience and resourcefulness of our farmers and growers help to feed the country, but we are only 60% self-sufficient at this time. If we are to improve standards, as the Government have promised to do in the words of the incoming Secretary of State for the Environment, Food and Rural Affairs, and we increase standards of animal welfare and other means of production that will only increase the price of food. That will price British farmers out of the market. British consumers primarily buy on price. Cheaper food should not mean substandard imports. As with other businesses, farmers and growers need certainty. Therefore, the question is: what happens post 2020-22?
Upland farmers in the hills up and down the United Kingdom rely for 50% of their income on CAP support through farm payments and stewardship schemes. Who better to act as custodians of the countryside than the farmers? They need access to a reliable supply of labour from the European Union. The Government need to say why they have not yet reintroduced the seasonal agricultural workers system. Rural businesses and farmers need certainty at a time of losing access to a guaranteed market of 505 million consumers and low-tariff access to EU markets, with the threat, as we heard earlier, of tariffs of up to 40% to 50% of their products under current World Trade Organization rules, and possibly 80% tariffs for higher-end products.
There remain alarming gaps in the Government’s policy as to what will happen before, during and after we exit the European Union, particularly during the anticipated extended transitional phase. Which body will adjudicate on any potential trade dispute between UK and EU companies if not the European Court of Justice? Who will be the ultimate arbiter on environmental matters in the UK relating for example to keeping our waters clean and our air of the highest quality, and avoiding and preventing pollution?
On fisheries, I am proud of the agreement that the current Fisheries Minister negotiated—an EU policy that determines conservation and quotas on the basis of science and decisions by the coastal states operating in the respective waters, such as the North Sea and the Irish Sea. Fish do not swim around in purely national waters, so the danger of setting purely national quotas could set back conservation policy in what are currently shared fisheries.
It is incumbent on the Government and indeed all parties to listen to the concerns and suggestions of those who live in rural areas, particularly rural businesses, and act upon them. I hope there will now be the opportunity for rural businesses, as my noble friend Lady Rock stated with regard to other businesses, to pave the way for Britain leaving the EU and to rectify this policy gap affecting rural communities. The rural voice must be heard.
Baroness Young of Old Scone (Lab)
My Lords, I declare an interest as chair of the Woodland Trust and president or vice-president of a range of environmental organisations. Your Lordships have heard a lot about global economics, social justice and business needs tonight, and at this time of night I want to talk to you about trees. This is probably one of the most important Queen’s Speeches for the environment—perhaps more important than any other. That is not immediately obvious from reading the Queen’s Speech, but practically every provision in it will have an environmental impact. However, before I touch on those environmental impacts, I will say that I wish that I was making the brilliant and humane speech that the noble Lord, Lord Low, made right at the beginning of this debate.
To focus on the environment and the gracious Speech, I will make three points. The first is about the repeal Bill. It is interesting that it is no longer called the great repeal Bill— I wonder why. Some 80% of the legislation that affects Defra’s responsibilities in the environmental sphere comes from the European Union, so there is a huge opportunity in transposing European law into UK law for the Government to make good on their manifesto commitment to be the first generation to leave the environment in a better state than when they inherited it. A third of these European legislation regulations that Defra enforces in this country cannot simply be dragged and dropped into the new legislation, so we need a commitment from government to ensure that these pieces of legislation are not watered down either by design or by error when they are transposed and tweaked to make them relevant in a post-EU world. I hope that we can get a guarantee from government that where substantive changes are proposed, that should be by primary rather than secondary legislation. In this House we have all had many long debates about how adequate the scrutiny of secondary legislation is.
We also seek assurances from Ministers that not only the laws and regulations will be transferred but some of the principles of the EU environmental legislation, including things like the precautionary principle and the principle that the polluter should pay. Also, what will take the place of EU enforcement processes and the whole infraction procedure? The big question is: do we now need an environmental court?
My second point is on agriculture. We all hated the common agricultural policy, and it is a bit like being a kid in a sweet shop to be—still with £3 billion in our hands, we hope—able to drive the train set ourselves, and indeed to design the tracks on which it runs. However, the proposals in the gracious Speech seem very much focused on farmers and food, with the environment coming a poor third. We need to look at an integrated process of land management which delivers a whole range of public benefits, and the public payment should be only for where farmers are rewarded for genuine public goods. These should include environmental services, such as delivering on biodiversity, reducing flood risk, helping with carbon sequestration, and dealing with water and soil protection. Scotland has a rather good integrated land management strategy. Perhaps we could just rub “Scotland” out at the top and put “England” there instead.
The issue in which I would be particularly interested is the integration of farming and forestry. At the moment their relationship is hugely dysfunctional, with the grant systems preventing farmers taking part in good forestry practice. We would also like to see the new agricultural Bill—whatever its terms might be—enabling a turnaround in the poor performance of this country’s planting rates in the future. At the moment, the Government’s target is 5,000 hectares per year but last year we planted less than 1,100.
The third issue that I want to touch on is a non-legislative one, and I have talked about it previously in this House. I greatly welcome the government commitment on better protection for ancient woodland. There is a proposal in the housing White Paper and we would very much like that to be taken forward. Unfortunately, the way in which it is currently framed would not be adequate. It is an urgent issue because the Woodland Trust is already aware of 700 cases where ancient woodland is threatened with damage. Indeed, HS2 managed to put a route through 63 of them in phase 1 and it will be putting the train tracks through 24 more in phase 2. Therefore, there is a real need to improve the protection of ancient woodland to the same level afforded to ancient buildings. I hope that the Minister can reassure me and encourage CLG Ministers to make sure that the tweaks to the proposals happen.
On balance, the European Union was good for the environment. In throwing out Europe, let us not compromise environmental protection. Can the Minister tell us how the gracious Speech will fulfil the very admirable government commitment to this being the first generation to leave the environment in a better state than it was found in?
Lord Leigh of Hurley (Con)
My Lords, it is always an honour to speak in such an auspicious debate and at a crucial juncture, having heard two excellent maiden speeches. I welcome my noble friend Lord Callanan to his new position.
Even though it did not fare as well with voters as we on this side of the House had hoped, there was much in the Conservative Party’s election manifesto to be commended, and we must hope that some of it, as appears to be the case from the Address, will be carried forward in legislation. I am reminded of President Truman, who said “Herbert Hoover once ran on the slogan, Two cars in every garage. The Republican this year is running on the slogan Two families in every garage.” It did not quite go as expected but we have some significant proposals in the manifesto, beginning of course with Brexit.
I have spoken before in this Chamber about the importance of international trade and the opportunity that Brexit will bring to set our own approach and pursue our own bilateral deals. It is worth reminding noble Lords again that being part of the EU bloc has meant that, to date, free trade deals struck with third countries have not necessarily been designed with Britain’s economy in mind. It is to be welcomed that the Address indicates that there will be a trade Bill, meaning that we will ultimately leave the customs union and strike out on our own, even if, as the Chancellor suggests—and even as a Brexiteer, I agree with him—there may need to be a transitional period inside the customs union.
Elsewhere, and closer to my own patch—I refer your Lordships to my interests listed in the register—I want to touch on corporate finance and the importance of ensuring that growing businesses have access to the capital they need. This should begin with announcing a new mandate for the British Business Bank to give it more capacity to invest in the UK through venture capital.
Similarly, I believe that it is not too early to consider how we might plan to make more of EIS and VCTs to help them finance larger companies. As your Lordships may be aware, the limit is currently £15 million, which of course is a restriction due to European state aid rules. I am not sure where the national productivity fund and promise to help SMEs win more government contracts, as in the Conservative manifesto, went in the Queen’s Speech. Perhaps my noble friend the Minister can assure us that they will be kept in the Government’s plans. Gone too are the corporate governance and executive pay restrictions and the inhibitions on FDI by changing the current takeover rules. This is welcome and, I believe, marks a turning point.
As my noble friend Lady Rock said, government is now listening to the voice of business, which frankly, as Luke Johnson recently wrote in the Sunday Times business section, needs to be less timid and more forthright. The business community has a responsibility to stand up and explain to all its stakeholders the devastation to the economy that a Labour Party Queen’s Speech would have wrought. It promised unaffordable borrowing, crude executive pay caps, trashing the flexible labour market, nationalisation of key industries at unspecified cost and increasing corporate tax, among many other measures, which, all the evidence suggests, by increasing the rate, would have reduced the tax take. Business has a right to be heard and an obligation to speak up. Neither has happened recently; thus, big business is currently considering making the easy move overseas if a change of Government were to arise. SMEs are also petrified of this eventuality and all businesses look to this Government for assurances that they are valued as a key contributor to our political economy.
There is some light ahead. I look forward to the findings from Sir Damon Buffini’s review into patient capital. I hope he finds creative ways to encourage pension funds to invest in venture capital. Elsewhere in the manifesto and the Address we continue to pursue regulation that ensures good and fair competition in markets, not least in energy. Ensuring that markets work for consumers is quintessentially Tory and something we on this side of the House should never lose sight of. We must keep up with corporate tax reductions as a clear signal to business that it continues to be welcome here.
In short, this is of course an Address that rightly focuses on Brexit, and the decision to extend Parliament to a two-year Session is wholly justified. I hope noble Lords will seek to work across party divides to ensure legislation is passed that enhances our current very competitive position, which is in part due to our low taxes and our flexible labour market. We need to strive to help existing and aspiring entrepreneurs to create wealth for all UK citizens. We have a Government who are, as my noble friend Lord Flight said, spending more not less, who are cutting the deficit, and who have seen the highest employment rates and fastest growth rates of any comparable country in the world. How is that? It is because they have a vibrant and entrepreneurial business community.
I look forward to that energy coming back into government to help our economy with legislation focused on ensuring business, and thus economic, success. We have shown we can do it; let us not stop now.
Lord Bichard (CB)
My Lords, I want to talk about business and skills. In doing so, I am conscious that this contribution could just as easily have been made in the education debate—indeed, given the hour, it almost was. However, I am equally conscious that the education debate will probably once again be dominated by finance, “Do schools have enough money?”, and even more by structure, “Do we have enough grammar schools, academies, free schools and technical schools?”. These are not insignificant issues, but my concern, and that of many business colleagues I meet, is that we spend nowhere near as much time talking about educational outcomes—in other words, the skills, competencies and attitudes that our education system needs to develop.
My particular concern is that we fail to prioritise the skills that business needs if it is to fuel a thriving economy in the face of the Brexit challenge. The time to address that is now, in this gracious Speech, and not after a Brexit deal has been done. Perhaps the skill which business needs most from our young people is enterprise, but enterprise is rarely something that our existing education system seriously addresses or prioritises.
I declare as a non-pecuniary interest that I chair the Bristol Business School at the University of the West of England. We hope to launch shortly a centre for enterprise. However, there are currently very few such initiatives. Sir Tom Hunter established a centre for entrepreneurship at Strathclyde, and Sir Anthony Seldon has set up an entrepreneurs centre at Buckingham, where he is vice-chancellor. But as I said, those initiatives are few and far between.
Equally, for young people leaving school, there is no formal vocational training route for those wishing to establish their own business, become entrepreneurs or even be self-employed, yet the small and medium-sized enterprise market accounts for 99% of all private sector business in the UK. For a young person to go straight from school to running their own business is a huge step, and most could not take the financial and emotional risk without proper training and support. Maybe the apprenticeship system could help fill that void.
Enterprise is also a subject area that could and should feature more strongly in schools. Again, there are few good examples of that. Sir Rod Aldridge has set up “Creates” centres in all his academies to enable students and others in those communities to start businesses in the schools, and these centres provide entrepreneurial training for all pupils. I know that Sir Rod is also interested in developing an entrepreneur apprenticeship scheme so that apprentices could achieve a level 4 standard while running their own business.
So my question is: why does enterprise get so little attention in our education system? In my time, now long ago, as Permanent Secretary at the then Department for Education and Employment, we began to see business having an increasing and healthy influence on the education system, but since then we seem to have regressed. Perhaps the business and the education departments need to be told to work closer together to ensure that enterprise features in our curricula at all levels. Perhaps business itself needs to be better organised, more confident and more articulate in explaining why this is so important and maybe the new business council is a vehicle for that.
To be clear, I am not encouraging yet further debates on the balance between vocational, technical and academic education. Those debates, I am sure, will go on. This is about ensuring that all students, whatever their subject, develop the desire and capability to be enterprising. It will not happen naturally, there is probably nothing we need more to be successful in a post-Brexit world.
The Earl of Lytton (CB)
My Lords, I apologise to noble Lords at this hour for appearing in the wrong place on the list, but their gain will be my loss because I will have an even shorter speech. The gracious Speech contains many valuable proposals. As a professional involved with property, much of what I would advocate in doing things better has been very tragically illustrated by the Grenfell Tower fire. I add my sympathies to all those affected. Here, the best of regulatory intentions in improving and updating an ageing housing stock have found us wanting.
Like other noble Lords, I suggest that there are many areas in which public administration and corporate social responsibility must improve. Regulators often appear ineffective, even toothless, and ethical tests seem to be missing from their toolbox. We would do well to consider impediments created by the inaccessibility of the judicial process to most normal folk and the economic implications of not having that check on actions by others.
In particular, we should address the “us and them”—perhaps the point made by the noble Viscount, Lord Thurso—and the sentiment that public administration is often not seen as being for the people or by their elected representatives. From my own standpoint, sometimes it is not clear whether one is dealing with the objective public administrator, a commercial competitor or some sort of political adversary. That should not happen.
The noble Lord, Lord Naseby, referred to business rates. Yes, indeed, not only is the valuation in some areas patently faulty, but the Valuation Office Agency itself is faced with substantial cuts. Then there is the new rating appeals system. A more dysfunctional, intrusive and frustrating process which seems to have been designed to prevent appeals happening at all is hard to imagine, but it is being paraded as a simpler and fairer system—I wish.
I welcome the attention being given to the question of spurious personal injury claims in motor accidents, but Highways England’s own contractors are apparently not averse to submitting inflated “green claims”, as they are known, for highway infrastructure damage caused during motor accidents. These increase insurance costs, too, and appear to be outwith the contractual arrangements with Highways England, and yet nothing seems to be done about them.
Planning departments across the country are underresourced. This matters because approval of reserved matters in planning consents is often mired in utterly unreasonable compliance demands and some are, frankly, nihilistic. All of them cost a fortune to resolve, but significantly most could be resolved by greater officer experience, the very experience which has in large measure been lost from that sector. All of these factors add cost, risk, delay and drag in delivery and fetter growth, to say nothing of developers then gaming the system for their own advantage. Housing and infrastructure are at stake here, and making ourselves best fitted for Brexit means that we can and must attend to these inefficiencies because much of the thrust of the other proposals in the gracious Speech will depend on it.
Baroness Kramer (LD)
My Lords, many powerful speeches have made across a range of issues and I confess before I start that I have absolutely no hope of doing this debate justice. The debate was opened by the noble Lord, Lord Callanan, and I join others in welcoming him to his role on the Front Bench. However, he described an economy that I think almost no one in this House recognised. He quoted a figure of 2% growth for the UK economy this year. Perhaps I may say to him gently that that figure was binned months ago. The British Chambers of Commerce has today given its forecast for this year of 1.5% growth, dropping to 1.3% next year, and the term now being used is “stagnant”. Part of that is the impact of Brexit—its uncertainty and the expectation of job disruption, export losses and the cost of the devaluation of sterling. It is certainly not the picture that the Minister addressed. A number of other speakers, including the noble Lords, Lord Eatwell, Lord Hain and Lord Howarth, and my noble friend Lord Thurso, questioned his analysis of the economy.
I want in particular to pick up on an issue that was raised by the noble Baroness, Lady Altmann. It is often overlooked but it is crucial. I refer to rising consumer debt. The Minister will know from IFS reports that repayment of consumer debt is now taking a bigger bite out of personal income than it did in the run-up to the 2008 crisis. That number is completely unsustainable. The buoyancy, or bubble, that we saw in economic growth shortly after the Brexit period was fuelled by consumer spending financed in turn by unsupportable and unsustainable consumer debt. This is an issue that ought to be addressed and I wish we had seen more about it in the Queen’s Speech and, frankly, in other proposals being put forward by the Government.
I also want to take this opportunity to welcome the two Members of your Lordships’ House who have made their maiden speeches today, the noble Lords, Lord Mountevans and Lord Colgrain. They were superb speeches, but it was interesting that both noble Lords talked about their experience in the City. That is highly relevant as we reach the point where we address the issue of Brexit, a subject that has probably been understated in today’s debate. There may be a certain exhaustion around it, but perhaps I may point out that the City of London and the financial services industry, described so eloquently by both our maiden speakers, are the major underpinning of the whole of the British economy. They are very much at risk as we enter the Brexit process.
This House will be aware than many organisations, having found that they got no sympathetic ear from the Government, have progressed with making their own plans. Most of the major American players have now identified a new European headquarters—it might be in Dublin or Luxembourg; some have identified two major European headquarters—to which they will begin to transfer business. Lloyd’s of London has opened, or is in the process of opening, its EU headquarters in Luxembourg. The small players—the fintechs—are part of the future and were mostly pan-European from the day they were conceived. One third of them were founded in, or have CFOs from, continental Europe. They have all started making their plans and have begun that process of shifting, not in great numbers, initially, but giving themselves the opportunity to gradually, salami slice by salami slice, decide where they can best put their business to serve their critical European clientele.
Strangely, no one referred to the decisions by the European Central Bank, soon to be ratified by the European Parliament, that will define where euro-denominated financial instruments can be cleared. The European Central Bank has set up a set of rules that are quite interesting because the UK has always argued, “We will never lose this business; Europe doesn’t have the capacity to take it”. The European Central Bank has now set up a system that will allow it to grow capacity and shift a piece of business, grow capacity and shift another piece of business, with the UK Government completely unable to intervene in this process in any way whatever. Frankly, some realism needs to be injected into this debate.
Speaking of that realism, I want to pick up the point that the noble Baroness, Lady Rock, and others made: business has been excluded from this discussion. I say to the noble Lord, Lord Leigh, that the issue for business in the whole discussion about business being listened to is essentially about Brexit, not taxation or regulation. Finally, there is some listening to business: we understand there is to be a council now that will enable various government departments at the highest level to engage with business. The problem is that in many instances, it is too little, too late. Moves have been decided and the beginning of that process is now well under way; leases have been negotiated, HR has gone through various iterations. We have to start being realistic about this, rather than talking as if nothing has happened over the past nine months: we may not have done much, but businesses and the European Union have done a great deal.
There was one fascinating area of the discussion that I had obviously not focused on to the extent I should have: concerns around agriculture. A number of Members of this House—the noble Lords, Lord Inglewood and Lord Colgrain, the noble Baroness, Lady McIntosh, the right reverend Prelate the Bishop of St Albans and the noble Duke, the Duke of Wellington—talked about the impact of Brexit on agriculture, reminding this House of the need for a workforce and access to European markets, because agriculture in this country is underpinned by its capacity to export to the European Union. The domestic agricultural system survives only because it also has that export opportunity. Those complications have been underdiscussed in this House and I hope they will be discussed more.
I particularly want to pick up on an issue that was raised by the noble Lord, Lord Colgrain, and addressed by the noble Lord, Lord Plumb: the idea that we could follow New Zealand’s system of restoring our agricultural strength after Brexit. The noble Lord, Lord Plumb, reminded us that this was achieved by much lower standards of animal welfare, health and safety and environmental standards than are acceptable in the UK today—or acceptable, I suspect, to UK consumers. I pick up on concerns about the environment expressed by my noble friend Lady Parminter, the noble Lord, Lord Oxburgh, and many others. There is a deep, underlying concern as we move into the future that we should not use this as an opportunity to water down and undermine environmental standards that our entire community now expects as a fundamental underpinning.
There are many other issues that could have been in this year’s Queen’s Speech, from productivity, raised by my noble friend, Lord Razzall, to housing issues, underlined by the noble Lord, Lord Naseby. There is a vast range of crucial issues, including those around artificial intelligence, the new economy, getting companies to invest and productivity. All are missing from this Queen’s Speech. I do not have the opportunity to continue to summarise this but I know that the Minister will look at Hansard and look at that range and depth. I hope we can bring this Government to find a way to address those absolutely key issues and not set them aside for two years, when many are vital to the future of both our economy and our young people.
Lord Davies of Oldham (Lab)
My Lords, this has been an excellent debate. First, I congratulate the noble Lord, Lord Callanan, on his appointment, and the clarity with which he presented the opening statement, although I have to say to him that I disagreed with about 90% of it, which is par for the course in these discussions in this Chamber.
We had some very important contributions on fisheries and agriculture. Both the maiden speakers made excellent speeches and we welcome their contributions to our subsequent debates. But the thing about fisheries and agriculture is that we have to start again. The withdrawal from the common fisheries policy and the London fisheries convention is bound to be problematic, as is the establishment of a new agricultural regime. Although I appreciated the fact that several noble Lords expressed considerable optimism about what could be done, we have to recognise that at present the Government have given us very little insight into these important developments. Of course, this is against a background where they did not plan for Brexit because the Government of David Cameron had not expected to lose the referendum. It is not surprising, therefore, that there is very little consultation or discussion on two areas of policy, which have been spoken about this evening and about which on the whole we remain at this stage very much in the dark—the Government involved in aspiration rather than inspiration on these points.
As for the environment, it is the pursuit of the wrong policies that we criticise on this side of the House. Do we remember that David Cameron’s Tory Government was to be the greenest ever? Do we remember the days of the huskies and various concepts such as that? Yet there has been limited investment in renewable energy. Of course, the Government sold off the green bank. We are on course to miss key climate change targets, and we have to add to this the ending of the Department of Energy and Climate Change by the Prime Minister, Theresa May. As my noble friend Lady Jones mentioned in her opening statement, the amazing fact we have to adjust to is the appointment of Michael Gove as Secretary of State in the department. It is not surprising that the Prime Minister wanted to show her keen appreciation of President Trump when she went to see him. She must have approved very much of his attitude towards climate change, at least.
Of course, we approve of the capping of energy prices by the Government, who managed in this last election to catch up with the Labour proposals in the 2015 election. There was some sign of realisation that one of the things presently facing a very large number of people in the United Kingdom, many of them on low incomes, is the real cost of energy.
On transport, notwithstanding the contribution of the noble Lord, Lord Framlingham, Labour supports HS2. It is essential to meet the rail demands of both passengers and freight between London and the north. We did wonder why the election promise of a rail transport ombudsman has been jettisoned. Presumably the Government think that Southern railway is doing reasonably well and that passengers are reasonably satisfied with the service. If they think that, they need to have a substantial recasting of their views on the state of our railways. From all I can see, the main transport proposals in the Queen’s Speech seem to have been on automated cars, space travel and insurance controls over whiplash claims. These are all desirable features—I like to see the Government look to the more distant future—but scarcely crucial to the infrastructure of our national economy and its present needs.
There were many contributions on business and the state of the economy. It looks pretty clear that we are to have a surfeit of finance Bills, which cannot bring us too much confidence in this House. We all recall the last finance Bill, when the Chancellor proposed one approach to national insurance contributions and shortly afterwards—four days, in fact—the Prime Minister annulled those proposals. We cannot therefore expect too much from the finance Bills to come.
However, we hope that the proposals on tax avoidance will be reinforced. We have pressed on this issue ever since the Government appeared to be a somewhat late convert—I am talking about a decade ago—to the realisation that tax avoidance was going on at a colossal scale, not by individual citizens or, to a degree, by the wealthiest among them but by multinational companies that were often paying less tax than individual employees were paying. This requires a well-staffed, well-trained and invigorated department of the Inland Revenue, yet the Government keep telling us how important it is to scale down the government machine. It is so important, they say, that we should reduce the role of the state in our society even to the point of reducing the role of those who collect the appropriate taxes from those who should be paying them.
This is a Queen’s Speech which pays little constructive attention to the deplorable state of our economy. I could scarcely credit the opening statement by the Minister. The first person to demonstrate how erroneous the Minister might have been was the noble Lord, Lord Low of Dalston, who spoke from the Cross Benches and produced a devastating indictment of how the Government have run the economy over recent years. We all remember that the deficit, which the Government now claim full credit for having reduced, was meant to have been eliminated by 2015. The appalling cuts in public expenditure and the sacrifice of our people during the period of austerity were meant to be over in five years, but instead, we had an extension first by Chancellor Osborne until 2018 and, under the new Chancellor, we are going deep into the 2020s. It is not surprising that the people are rising up against austerity when the Government are showing such obvious incompetence about hitting the target that they said that austerity was designed to achieve.
I am grateful to my noble friend Lord Howarth of Newport, who clearly identified the nature of just what government cuts in our society have created. We have reached a stage at which food banks are part of our economy. We have a situation in which the Government boast about an extension in employment but more than 1 million of the people who are employed are on zero-hours contracts. That form of employment might be considered acceptable to the Conservative side of the House, but it is not acceptable to all normal people who are trying to run their household budgets when they do not know with certainty whether their employer will use their work any day of the week. We have also seen enormous cuts in all the services which our people value. There have been cuts to education and a sharp reduction in funding of our schools and the decimation of our further education colleges and lifelong learning provision. No wonder the Government are waking up to the fact that if they are going to improve the skills of our nation, they have to reverse some of the policies they have been pursuing in recent years with such thoroughness.
There have also been cuts to the police and warnings that they may not be able to guarantee our safety because there are insufficient police officers as a result of such cuts. There have been cuts to local authorities, about which we have complained incessantly in this House, often to the rather obvious derision of Conservative Ministers who seem to think that local authorities can fulfil their obligations with the most marginal resources, until the cuts begin to bite where they produce enormous damage to our people: of course I am referring to the tragedy in the London Borough of Kensington and Chelsea. That borough saved a certain amount on cladding and has £300 million in its reserves. That is the difference between a rich borough that knows where its resources are and how little it is prepared to spend on the needs of its people. It is quite clear. What stands out from this is the reference made by several noble Lords to our gross lack of effective expenditure on housing, particularly social housing. The Government have to change their tune on that, otherwise there is no doubt that the people will speak with vengeance against the Government if they carry on with their present strategy.
The problem for the Government is that they cannot run the economy. They keep talking about the necessity to improve productivity, and our productivity has slumped under this Government. We are down with Italy at the bottom of the G7 in terms of the effectiveness of our workforce. How can the Government pretend that they are developing the economy successfully when that figure is clearly identified for us?
Another point, which the noble Baroness, Lady Kramer, just referred to, is that we are running personal debt at a higher level than before the 2008 crash. If that is not a warning hint to the Government about the problems of our economy, I do not know what is.
The noble Baroness, Lady Rock, said that if you are going to get investment in the economy, you need certainty. Certainty from this Government? Certainty when they lost a referendum which the Prime Minister called in order to win and who was then forced to resign? Certainty when the next Prime Minister decided the majority was not sufficient to run the country successfully and then found that she had translated a small majority into minority government? Is that where certainty is meant to come from for our businesses and for investors? It is quite clear that this Government are on the rocks. Even the much-vaunted lead Minister on Brexit, David Davis, is in the extraordinary position that he made it quite clear to the nation that he intended to go to Brussels to define the priorities in the discussions and then conceded to European arguments on that matter on the very first day.
I have some sympathy for the Minister who is to wind up on this. We all recognise that he is a principled man who enjoys a great deal of affection in this House. But this evening, he has to respond to the challenges that have been laid down from this side of the House, and from many parts of the House, on the state of the economy, which is crucial to the welfare of the nation but at present is being conducted by a Government who offer us no hope.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, we have had more than 60 speakers this evening, and many insights from much experience. We have ranged from lobsters, through the libel laws to horticulture, and I am afraid I cannot address all the issues that have been raised this evening. But I will just begin by congratulating my noble friend Lord Callanan on introducing the debate so well earlier this evening. He set out a very comprehensive legislative programme over the next two years, and I do not intend to repeat what he has said already. I also congratulate the noble Lords, Lord Mountevans and Lord Colgrain, on their two excellent maiden speeches. They bring to this House much experience from the world of financial services, the maritime industry and the rural sector.
I intend to spend most of my time this evening discussing the economy—as the noble Lord, Lord Davies, would like me to do—and Brexit a bit. Before I do that, two issues have been raised by a number of noble Lords this evening in addition to those. The first, of course, is agriculture. I refer to my declaration of interests: I am a partner in a small family farm. I was talking to a farmer at the weekend who was ranting on about the uncertainty caused by Brexit for the outlook for farm prices and about the difficulty he had in attracting labour to pick his fruit. I asked him how he had voted in the referendum, and he said he had voted for Brexit, so my sympathy for that particular farmer was somewhat limited in the circumstances.
As the noble Lords, Lord Plumb and Lord Curry, two very distinguished former presidents of the National Farmers’ Union, have said in the debate this evening, British agriculture is facing probably about as much uncertainty, or as big a decision, as it faced in 1946 after the war. We will be returning to this country the powers to make our own decisions about the trade-offs and priorities in British farming. We will have to decide whether we will retain area payments, whether we wish to treat big farmers differently from small farmers and what the trade-offs are between low prices and the need for better animal welfare. Then there are the ethical concerns about GM foods and animal and plant breeding. Those are the kind of decisions that we will have to make.
Personally, I have never been a great fan of the common agricultural policy. I felt it was a policy designed, by and large, for French farmers and the French structure of agriculture rather than the structure of British agriculture, which is very different. I have always been very pro-European myself, and I voted to remain in the European Union, but I think the repatriation of the common agricultural policy will be a good thing in the long run for British consumers and British agriculture.
The other issue that I ought to address was raised by the noble Baroness, Lady Featherstone, and the noble Lord, Lord Oxburgh, and other noble Lords: climate change and what we are doing on that. I would just point out to the noble Baroness, who was very critical of our policy on climate change, that between 1990 and 2016, carbon emissions in this country went down by 42%, at a time when GDP grew by 67%. I do not take all the credit for that. In fact, I personally take none of the credit for it. The coalition Government, of whom she and her colleagues were a part, can take some credit for that, but we have made huge progress in that area. We are trebling renewable electricity capacity for the period from 2010 to date. We have spent £730 million on renewable support over that time. We are leading the world in the offshore wind industry. We are committing £1 million to support ultra-low-emission vehicles. I do not feel remotely embarrassed about what this country has done when it comes to meeting our obligations to reduce carbon emissions and supporting all our initiatives on climate change.
I turn to Brexit. I do not want to spend the rest of my time talking about Brexit, because virtually everything that could be said about it has been said before. It is undeniable that there is a high degree of uncertainty in the business world at the moment, a point made by my noble friend Lady Rock, and it is going to be some time before we reach the sunny uplands of the economy that may result from Brexit. However, there is a dream that most of us can share, whether we are pro-European or have always wanted to leave the EU, and that is that we can come out of the machinery of government of the EU, we can leave that structure, and remain a very strong and committed trading partner with Europe. Surely now that we have had the vote on the referendum, that is something that we all need to support and get around. One of the few clear messages that came out of the last general election is that the electorate want us to work together to deliver a satisfactory outcome to the Brexit negotiations. I hope there is no room on either side for any triumphalism in these matters. We need now to get together and work out a solution.
I turn to the more substantive issue of this debate: the UK economy. We have reduced the deficit by 75%. Of course we would have liked to have cleared it further than we have. It is only because we were not actually tied as tightly to the policies of austerity that we have not succeeded in doing so. Still, the employment rate is now the highest it has ever been in this country, and over the last three years we have been the second-fastest growing economy in the EU.
That is one part of the picture. I accept that there is another part, and I thought the noble Lord, Lord Low, put it very strongly in his speech, while the Lord, Lord Hain, talked about seven years of prosperity. The noble Lord, Lord Low, referred to the personal misery of many young people who were without hope. The right reverend Prelate the Bishop of Durham referred to the precariousness and uncertainty of business in the north-east where he is in Durham. It is true that pay growth and earnings have been stagnant for many people. It is hard to disagree with the analysis that too many people have been left behind and that, as the economy has grown, too few people have enjoyed the benefit of it. However, this is not a recent phenomenon; it has been a growing issue for most of my working life. We have to ask ourselves why it has happened, and I think the answer is twofold.
The first answer is globalisation. The great beneficiaries of globalisation have been the billions of people living in China, south Asia, India and the like who have been raised out of poverty in extraordinary fashion over the last 20 or 30 years. The other beneficiaries have been a very small minority of people living in the West, many of them like those in this Chamber today, who have seen extraordinary rises in their income over the same period. That is true of every country in Europe and the USA. It is somewhat less in some of the Scandinavian countries, but by and large there has been a small sliver of people who have done extremely well over the last 20 or 30 years. There have been a small number of winners and a great many people who, if I may use the expression used by our Prime Minister, are “just about managing”. The Prime Minister absolutely recognised that as a huge issue.
The noble Viscount, Lord Thurso, talked about wealth creation and social cohesion. If we are honest with ourselves, we have not done so well on social cohesion, and not just over the last two or three years. You cannot just put this at our doorstep; it has been happening at a fundamental level for many years.
If we ask ourselves why so many people have had to put up with stagnant earnings for so long, the only true answer, as several noble Lords have said, is that we have had very poor levels of productivity. Paul Krugman said:
“Productivity isn’t everything, but in the long run it is almost everything”.
The fact is that, since the 1980s, we have been trailing in productivity by 20% or 30% behind the Germans, the French and the Americans. I have to accept, because it is true, that that gap has widened, not narrowed, since 2007. I do not think anyone fully knows the reasons for that, but it is actually worse than that, because in the south-east of this country and in London our productivity is very high. Arithmetically, it must be true, therefore, that in other parts of the country the productivity gap is even greater.
I have to say to the House that I think that this trend is getting worse, not better. There is a risk that it will get worse very quickly, because the advent of what is called “Industry 4.0”—in lay man’s terms, machine learning, artificial intelligence, robotics and automation—is, if anything, going to make it more difficult. One of the great lessons that we need to learn from the 1980s is that we have to look at the consequence of these changes. The consequences of globalisation destroyed the livelihoods of many people during the 1980s and 1990s. We must make very sure that those people who lose their jobs as a result of these new technologies are looked after much better than we have looked after people in the past. The noble Lord, Lord Fox, said in his introduction that he thought that this was an existential challenge outside Brexit. In many ways, the impact of these new technologies could be greater than that of Brexit.
Interestingly, the speeches of the chief economist at the Bank of England, Andy Haldane, predict that between now and 2030 16 million to 17 million existing jobs will disappear. That is supported by work done by the McKinsey institute. That is a huge change in a very short period that we will have to address. We are addressing it through our industrial strategy, and I shall describe just a few parts of that.
First, as the noble Lord, Lord Kakkar, said, we must build our universities. Our universities are an absolute source of competitive advantage for this country. We have four universities—Imperial, UCL, Oxford and Cambridge—in the top 10 in the world, and building on the universities to develop our life science industry, as described by the noble Lord, is a priority for us.
Skill is, clearly, always a huge issue. The noble Lord, Lord Howarth, said that we have a 200-year cultural legacy of problems in this area. We have always favoured academic over technical education. That is something that we must address in our industrial strategy. We must address digital and technical skills. The noble Lord, Lord Bichard, was absolutely right to draw attention to the need to develop enterprise and entrepreneurship skills at the same time. The noble Lord, Lord Kirkham, referred to the need for parity of esteem between technical and academic education.
We must address our physical infrastructure. We have talked about HS2. I will not get into a discussion with my noble friend Lord Framlingham about HS2 this evening, but a strong, good, efficient physical infrastructure is very important. So is high-speed broadband. It is a disgrace that we still have 2,000 schools this country without access to broadband. We have a commitment that, by 2018, 95% of the country will be covered by high-speed broadband—that point was made strongly by the noble Earl, Lord Arran.
The noble Earl, Lord Selborne, said that we must be sure that our industrial strategy is based around the country. It is no good basing our industrial strategy on London; it has to be in some of our great northern cities, in the northern powerhouse, Birmingham, Newcastle and the like. Two other interesting observations were made about the strategy. One was by my noble friend Lord Lindsay: that our quality standards under UKQI were an important part of the British offering abroad. My noble friend Lord Leigh and others referred to Sir Damon Buffini’s report on patient equity capital being available to our start-up firms, which is very important.
We are not starting at ground zero. I pay tribute to the noble Lord, Lord Mandelson, who is not here this evening, and to Vince Cable in the other place, both of whom, as the noble Lord, Lord Fox, mentioned in his speech, had a big contribution to make to our industrial strategy, which is something that we in this Government are building on. We are investing £23 billion through the national productivity investment fund up to 2021-22 into key productivity-enhancing areas such as infrastructure, R&D and housing. We are putting an extra £4.7 billion into science, research and innovation, and we have formed UKRI.
We are not standing still. I hope that large parts of our industrial strategy will gain the support of all parts of the House. If we do not address this productivity problem, we cannot address the social cohesion issue. I can assure noble Lords that our industrial strategy will have twin aims. It is in part wealth creation, but it is also, and very importantly, about social cohesion. If we do not get both those parts of this strategy right, we will not be successful.
It is late, so I shall bring my speech to a conclusion. For me, it has been, as it always is in this House, a very enlightening debate. It is right that we should hold up a mirror, and sometimes we see different things in that mirror. The noble Lord, Lord Davies, sees different things from me in the mirror. The truth is that we are probably both right to some extent. We probably ought to be given more credit than has been given to us. We acknowledge many of the problems in the economy that others not on my side of the House have identified and we will be using our industrial strategy to address them.