Queen’s Speech

Lord King of Bridgwater Excerpts

Wednesday 25th May 2016 Lords Chamber

Moved on Wednesday 18 May by

[Lord King of Bridgwater]

, as amended on Monday 23 May

That an humble Address be presented to Her Majesty as follows:

“Most Gracious Sovereign—We, Your Majesty’s most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament, but regret that the gracious Speech did not include a bill to protect the National Health Service from the Transatlantic Trade and Investment Partnership”.

[The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con)]

My Lords, it is a privilege to open this debate following Her Majesty’s gracious Speech last week. I thank in advance my noble friend Lord Ahmad of Wimbledon, who will be wrapping up the debate later today.

It has been a year since I had the honour of joining Her Majesty’s Government. In fact, it was the occasion of Her Majesty’s Speech that allowed me to deliver my maiden speech before noble Lords last year. That day, I spoke of my determination to put an end to the underperformance and wasted talents of our towns and cities beyond the capital, especially in the north. I said that I wanted to help the UK make the most of our relationships with the most important emerging economies across the globe. I also said that I would be continuing the work I started before I joined the Government to establish how the world ought to respond to the stark threat posed by antimicrobial resistance.

The rise of superbugs resistant to our current drugs is a huge problem, and one that is getting worse. If we do nothing, the human and economic costs will be dreadful indeed. In fact, as we have shown in our review, by 2050 superbugs could kill 10 million people a year—the equivalent of someone dying every three seconds. I am delighted to inform noble Lords that we published the recommendations of this review last week, setting out not only the areas where we need to take action but how we can pay for it. So on all these fronts, without doubt it has been a busy year for me.

The views of your Lordships—including at times robust ones—have been of considerable assistance to me throughout, because the issues that we have debated and discussed in this House are ones of genuine complexity. As noble Lords will be aware, there are no silver-bullet responses to such critical questions as how best we can strengthen our economy and plan ahead for the future. So I look forward to the discussions we will have over the course of today, and indeed this year.

I now turn to the measures set out by Her Majesty the Queen last week to reflect the determination of this Government to follow an economic plan that will lay the groundwork for the long-term good of the country. For me, there are three main parts to that plan. First, we need to strengthen our economy to guard against future shocks. To do this we must not only bring public finances under control but address some of the more persistent and enduring challenges we have faced in the UK, such as low productivity growth and our current account deficit, which I touched on earlier.

Secondly, we need to make the right investment choices now to keep our economy growing over the coming years and decades. Thirdly, we must continue to do more to give everyone in this country the opportunity to do well at all stages of their lives and in all parts of the UK.

Today we have the chance to take a broad look at the Government’s plans to achieve these three aims, particularly during the next legislative session, as we look at some of the measures being taken forward by the Treasury, the Department for Transport, the Department of Energy and Climate Change, the Department for Environment, Food and Rural Affairs, and the Department for Communities and Local Government.

I will start with the very foundation of our strategy for the future: the Government’s work to fix the public finances. There has been clear progress to date. The deficit as a share of GDP was at its post-war peak in 2009-10. The independent OBR currently forecasts that the deficit will be eliminated by 2019-20, so the UK can go into the 2020s with a surplus. However, despite the considerable deficit reduction achieved, our debt to GDP ratio still stands at a very high level—indeed, its highest level since the late 1960s—at 83.7% of GDP. Reducing this figure is important, and therefore aiming for a surplus remains the most sensible fiscal policy to prepare for the inevitable future economic shocks that will come our way.

This Government have repeatedly stated their commitment to making sure that we live within our means. That is why spending has been reduced to 40% of our GDP in 2015-16, compared to 45% in 2010-11. Welfare savings of £12 billion are being delivered, and a further £3.5 billion of efficiency savings will be made by 2019-2020 to make sure that the public get the highest possible value from every pound that is spent.

But while it is important to keep spending under control, that is only one part of a sensible economic plan for any country, ours included. On its own it is no guarantee of long-term security and prosperity. It is equally critical that we invest where investment is needed, and put the policies in place now that will unlock growth in the future. Indeed, we are accelerating capital expenditure of £1.5 billion to make sure that the public start to see the benefits of our investment somewhat earlier. We are also legislating to put the independent National Infrastructure Commission on a statutory basis. This will play a crucial role in setting out a clear vision of the future infrastructure needed to ensure that our economy is fit for 2050.

Beyond that, it is also worth summarising the main ways in which the Government are investing in the future. First, we are rebalancing the economy. Your Lordships will know by now, I hope, how strongly I believe in the importance of rebalancing our economy, so it will come as no surprise when I turn first to our plans to develop the northern powerhouse and the Midlands engine for growth, because I am clear that accelerating regional growth is one of the best policies to deliver game-changing benefits to the entire UK. That is why we are so focused on the north and Midlands.

We are making record levels of investment in the transport networks of these regions: over £18 billion in this Parliament. Let me add—I touched on this earlier in Oral Questions—that there are increasing signs of overseas private investment in infrastructure in those regions of the UK. We are also setting aside well over £0.5 billion to help small and medium-sized businesses. We are creating more enterprise zones, which have already attracted thousands of jobs and more than £1 billion in private sector investment. We are funding new flood defence schemes and improvements in educational attainment.

Secondly, I will touch on devolution, which is closely associated with this.

Queen’s Speech

Lord King of Bridgwater Excerpts

Wednesday 11th June 2014 Lords Chamber

[Lord King of Bridgwater (Con)]

My Lords, I am pleased to follow the noble Lord, Lord West, in dealing with the references in the gracious Speech to foreign affairs and defence. The gracious Speech states that,

“the United Kingdom will work for peace and security on Europe’s borders”.

My comment on that is “borders wherever they may be”.

In her opening speech the Minister referred to seeking to meet the aspirations of the Ukrainian people. One needs to give consideration to the respects in which we may seek to meet those. If that involves Ukrainian membership of the European Union or of NATO, that needs to be looked at very carefully indeed because we need to show greater sensitivity to Russia in respect of some of the changes taking place in Europe, which may have been entered into with perhaps a lack of sufficient consideration of their implications. Russia may see European Union membership as in some ways a stalking horse in relation to subsequent NATO membership. Indeed, we saw the problems that arose over Crimea.

The gracious Speech refers also to the need for,

“stable relationships between Russia and Ukraine”.

I certainly urge that. In a Statement made in the other place that has not yet been repeated in this House, the Prime Minister referred to the need for better relations. It is welcome that Mr Putin met President Poroshenko in Normandy and that Moscow and Kiev are again engaging with each other. I think everyone in this House will recognise that the way through this situation has to be through dialogue. If it develops into conflict, the damage and distress caused to both countries could be very substantial indeed.

The gracious Speech further states:

“My government will host the NATO summit in Wales”.

The noble Lord referred to that. That will be a very important meeting indeed. There is no question in some minds, perhaps including my own, that a few years ago there was a sense of a job having been done with regard to NATO. Peace and security had been achieved in Europe and NATO meetings seemed to have a slightly old-fashioned look about them. Some of the NATO practices then became very valuable in Afghanistan and, most recently, in Libya. However, as the noble Lord said, there are now some serious issues because we have had to stand to with pretty limited forces. There was a certain nervousness in Europe and in some of the ex-Soviet countries, particularly the Baltic countries, about the events in Ukraine and what looked like a pretty thin and inadequate NATO capability at that time. That will need to be looked at again.

I move on to the greatest crisis that we face at this time. I had already written a note about what I might say, which was that it was impossible to overstate the scale of the crisis in the Middle East. I wrote that before Mosul and the announcement today of what could be a total civil war emerging in Iraq. I see suggestions today that those who have now taken Mosul may advance on Tikrit and may even advance on Baghdad as well, which would cause a crisis. A very distinguished person in that region said to me and a few others who were at a meeting not long ago that his fear was that the Sunni/Shia split that is now developing threatened a conflagration that could spread from Beirut to Mumbai. Actually, he was wrong. It is Mali to Mumbai. There is Boko Haram. There is the situation in Libya, Egypt, Syria, Iraq, Jordan and Lebanon—goodness knows how those countries are surviving some of the pressures on them—and Turkey as well. We know that Somalia is pretty ungoverned space. We know the situation in Yemen. Some may have heard David Miliband talking today about the situation in South Sudan. It is impossible to overstate its gravity. We also have on the agenda our withdrawal from Afghanistan and the undoubted risk that a civil war may develop in that country unless there are some very wise heads involved in trying to resolve the situation.

Against this, we face a massive humanitarian crisis. What does it mean for us? In the first instance, we face a major threat of mass migration out of a number of countries. We can see the horrific stories of what is happening in the Mediterranean and of the number of people who are trying out of sheer desperation to get out of where they are to another country. In the Spanish territories adjacent to Morocco people have stormed the barriers. There are supposed to be 300,000 people waiting in Libya to try to find a way out and into Europe. This is going to be our first challenge.

On top of that, the next challenge we face in this country is terrorism. We have recently discussed the Prevent strategy and the role it can play. The question that arises out of this Queen’s Speech is what it means for defence. I simply make this point and will be extremely brief. I agree with the noble Lord, Lord West. I think there is no question that we face a more dangerous situation. I am not a huge enthusiast for aircraft carriers that need substantial escorts out of the very limited number of escorts that we have, and I would like to see more platforms available for their work. I see that it is said today that the National Audit Office is holding up the publication of a report on the reserves. I am very worried indeed about whether the reserve programme and the numbers for the Army are going to come through. In this dangerous and uncertain world, we now need to look very hard at the situation over our defence expenditure.

Welfare Benefits Up-rating Bill

Lord King of Bridgwater Excerpts

Monday 25th March 2013 Lords Chamber

[Lord Kirkwood of Kirkhope]

No. I have two remaining points to make before I sit down. First, we have learnt over the past few days that Mr Alan Milburn, the chairman of the Social Mobility and Child Poverty Commission, has made it clear that he thinks that income is important for low-income families when trying to deal with child poverty. Finally, we need to invite the Social Security Advisory Committee to look at all this between now and July.

A lot of work needs to be done, and an annual report would help to inform that work. It is not safe to allow this Bill to continue into its later stages until we are sure that we have some way in which to track its progress and can ensure that those at the bottom of the low-income scales do not get hurt as a result of its provisions. I beg to move.

[Lord King of Bridgwater]

I shall intervene very briefly, supporting the point made by the noble Countess, Lady Mar. My noble friend Lord Kirkwood and I had an exchange last time on this matter, and he has made it clear once again that he does not like this Bill. I do not like it either. I do not think that any Member of this House would like to have this Bill at all, were things more normal and better than we actually find.

Since we have debated the Bill we have had a Budget and we have had Cyprus. If anyone wants to think that the situation is improving, the most significant thing in the Budget was the absolutely frank admission by the Chancellor of the very serious debt situation that we face. We now realise that it will be extremely tough to turn the ship round. Since then, we have had the comments from the rating agencies, and my noble friend may recall an intervention that he allowed me to make in his previous speech that we had better watch out for the rating agencies.

We have already heard that we are on negative watch by the other rating agencies, and that is even in our present situation. If we ally to that some recognition that this Government are not going to be able to stick even to the programme that they have proposed, if we faced a further downgrade from the rating agencies we might start to move into territory where the Government have to borrow to meet our debt at interest rates that are significantly higher. It will not then be a question of benefits being uprated by only 1%; there could be, as in other countries, significant cuts. If we get higher interest rates as well, with the impact on a huge raft of people who depend on their mortgages and who are finding it an extremely tough battle to maintain them, and with the risk of a significant increase in repossessions around the country, we will be in a very tough situation indeed.

To summarise, the purpose of my noble friend’s amendment is simply that at the end of the year we should discover how much we have saved and what the impact has been. If the Treasury is not going to do that anyway, I do not think that we need to spend a lot more time on this amendment, writing complicated additional amendments into a Bill on a matter that will surely be part of the normal purpose of government.

Welfare Benefits Up-rating Bill

Lord King of Bridgwater Excerpts

Tuesday 19th March 2013 Lords Chamber

[Lord Forsyth of Drumlean]

The noble Lord seems to think that the reason why the economy is not growing is that the state is not large enough. How big does he want to the state to be? It is already taking nearly 50% of everything created by the Government and spending it, and that is not enough because they have to borrow on top of that.

If levels of taxation are high, which they are, and levels of regulation are high, we will not get the growth that is required. We need to constrain public expenditure to make room for the private sector to create wealth. Once we have a bigger cake, everyone can have a bigger slice, but if we try to proceed in this way we will end up with a smaller cake and those dependent on welfare benefits will be cruelly cheated. They will find their living standards destroyed by inflation, higher costs and the inability of the Government to finance the kind of programmes that Members opposite are prepared to say now that they would support, although they are not prepared to say so at a general election.

[Lord King of Bridgwater]

My Lords, I agree with a particular point that my noble friend has made and would like to add that the Bill has come forward on an especially interesting day. I refer to Cyprus. The warning is on the packet. There has been a certain amount of calm around, as though we had come through all our problems and were moving steadily forward into calm waters, and as though the eurozone was secure. The financial markets, with the euro increasing in value, may have had that illusion. However, it has all been blown away. I have not heard any recent news; I do not know whether there has been a decision yet about what Cyprus will do. We should remember that, at the moment, there is a very real risk. Clearly, people have been caught in Cyprus. If Portugal, Spain and Italy decide that this will be the European practice, people there may find that their savings and funds in their banks are not as secure as they had been assured they were. After all, everyone thought that there was a clear undertaking that below a certain level, around €100,000, their own bank accounts were at no risk. If that changes, we face a very serious situation.

There is complacency around, as I picked up from an article today by the chief economist of HSBC, as though with just a bit of going forward and a bit more luck we will be back on the old growth train and in the business that we were in before. What has been exposed is that over many years we have been living on borrowed money, on a construction boom in the financial services area and on public expenditure. Now that those have to be constrained, suddenly people are turning around and saying, “How, as a country, are we going to earn our living in future?”. We are finding that we have slipped in the leagues. In one of our most successful areas of overseas earnings, defence expenditure, we have now slipped a place and China has overtaken us. China is now taking away a number of the markets that our manufacturers used to serve extremely well. It is said that we hope to sell Typhoon to Oman, the UAE and one or two other countries, but the point has been made that its successor will be made in America, and that will be the end of one of our most successful overseas earnings. When you see where we earn our living in the world, we are not in a happy place.

That is why I very much agree with my noble friend Lord Forsyth. All of us in this House would like to say, “Let’s increase benefits. Let’s deal with all the hard cases and see how we can give people more money”. Look at the situation in Ireland, where benefits have been cut by, I think, 10%. There has been talk of cuts today but in fact we are taking about how big an increase the Government should impose, not an absolute cut in the amount. Other countries in Europe are cutting by 6%, 10% or 12% the actual amount that people are getting—what hardship that must represent.

This is not a pleasant speech to make. It is much more popular to say, “Let’s have some more benefit”. I say this against a background of a new situation that has suddenly come upon us: if this House—the unelected House of Lords—decides today to cut right through one of the decisions made as part of the prudent financial planning to find our way out of the problems that we are in, and if that triggers a loss of credibility in our national approach and the Government’s approach to tackling those serious problems, it will really be a problem for people on benefits if there is a run and we then find that the low interest rates that the Government have enjoyed for their substantial borrowing no longer apply.

I agree with my noble friend on this point. There is an illusion that somehow we are reducing our debt. We are not; we are reducing the rate at which the debt is increasing. One of the blessings that we have had is that at least we have been able to borrow at an extremely low rate because we had some credibility. If the House of Lords today kicks away one of the planks that help to shore up the credibility of a Government who have a plan to try to deal with our problems, and if those international interest rates are then demanded of the Government and the country when we try to borrow money, the problems that we will incur for all our people could be vastly greater. Look at the tragedies that exist now, such as the unemployment rates in Spain, which is 50% in certain age groups.

We have held things together so that we have a lower unemployment rate than the eurozone countries. There is so much that we have to hang on to. This is a dangerous time. I say seriously to your Lordships: do not tamper at this stage with this very difficult situation, at a time when we are least able to face it and when it could quite seriously endanger our whole economic structure. I do not think that people understand what a mess the world is in at present. There is a huge amount of complacency around. We are not by any means out of the woods yet, and it is our duty to ensure that we hold firm.

I intend to support my right honourable friend Iain Duncan Smith, whose commitment to this area I think we all admire enormously. He is doing the best that he can. He is agreeing to an increase in benefits for the most deserving people in this country, but not as large an increase as they might have hoped to see. That is the only realistic approach that can be taken at this time.

[The Lord Bishop of Leicester]

My Lords, I have lent my name in support of this amendment, and I am happy to speak in support of it.

This debate is about who should bear the greatest weight of the burden imposed by the Government’s need to reduce debt. I hope that the noble Lords, Lord King and Lord Forsyth, might consider accepting an invitation from me to come to the city of Leicester to explain to our local Child Poverty Commission why it is in the interests of children in poverty that they should become poorer at the moment because that will serve the national interest regarding debt, and that this House is working in their interests by reducing the uprating of their income to 1%, however much inflation rises. They might accept an invitation to explain that also to the unemployed and to voluntary associations in Leicester, which anticipate a tsunami of difficulties such as homelessness and dependence on food banks. They can come to listen to the response to this Bill from those who are dependent on benefits through no choice of their own, who can explain what that is like and how much harder it will get in the years ahead.

If the purpose of this Bill is to control welfare costs, this is not the right way to go about it. The key to reducing the benefit bill is to change the circumstances that lead many people to need benefits, such as the absence of job opportunities, too much short-term, low-paid work, the shortage of affordable housing, and expensive, patchy childcare. We should be focusing on those issues, not cutting benefits in real terms, which simply creates hardship without addressing the underlying issues.

This Bill is both unnecessary and ill conceived. It will harm the most vulnerable in our society and do nothing to promote work incentives. I have heard nothing at Second Reading, in Committee or today to make me change my view that this Bill ideologically shrinks the welfare state regardless of desperate need. Nor does it change my view that we are heading for a US-style welfare system that is dependent on food banks and hostels. We know that we can do better than this, we must do better than this, and we should amend the Bill.

--- Later in debate ---

[Lord McKenzie of Luton]

Housing benefit is one such benefit. Council tax benefit has been dumped on local authorities with a 10% restriction on funding, which means that people’s support will be cut in cash terms. That is absolutely happening.

I say to the noble Lords, Lord King and Lord Forsyth, that it seemed that the mention of Cyprus was meant to lead us to a conclusion that bears no relation to reality. We are not dealing with a situation here that would take us anywhere close to the situation in Cyprus. We are talking about restrictions on uprating which, on the Government’s own figures, would amount to something like £1.9 billion.

[Lord King of Bridgwater]

The Government’s ability even to pay this level of benefit will partly depend on our ability to borrow enough money at low enough rates to continue the policy. Is the noble Lord not aware that there is a big shiver going through the eurozone about the financial situation? It has suddenly come back into the headlines. If it was thought at this moment that the Government were going to deviate from their previously planned approach—if it was voted down by your Lordships’ House—it would have a serious effect. Then the problems faced by some young people and people in poverty at the present time, as spoken to by the right reverend Prelate, could be seriously aggravated. Our job is to try to make the best we can of a very difficult situation.

[Lord McKenzie of Luton]

My Lords, of course we are aware of what is going on in Europe, and I shall come on to issues of borrowing in a moment. We are talking here about an amount that is less than 0.1% of total government expenditure. The noble Lord cannot seriously be arguing that taking our position rather than that of the Government would bring the whole edifice crashing down. That simply does not reflect reality.

The problem that the Government have is that because they have failed to deliver growth in the economy there is a real risk—this is what is happening—that their austerity programme is making debt worse. This was again a point made in a very powerful article last week in the FT.

We have heard a great deal about the Labour Government’s record. When the Labour Government left office the economy was growing again and it was the austerity measures which choked off that growth. As to the Labour Government’s record on debt, before the international crisis hit, our debt levels were the second lowest in the G7, lower than when we came into office in 1997, I believe.

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[Lord McKenzie of Luton]

My Lords, we have added our names to this amendment moved so comprehensively by the noble Lord, Lord Low. It requires that all the components of ESA—the personal allowance and the additional component for those in the work-related activity group, as well as those in the support group—are taken outside the 1% cap on uprating. As we have heard, the amendment rightly includes provision for children to be made under universal credit, although it remains to be seen how much progress the faltering universal credit will have made by the time the Bill is spent.

As we have argued on previous amendments, it is the vulnerable who are most affected by the Bill. This is particularly so for those on ESA for two specific reasons. They are much less able to increase their income through work and their living costs are generally higher. This is particularly so for those in the support group, who are furthest from the labour market, but also for those in the WRAG. It is worth remembering that there is a rigorous testing process for people who are unable to work due to ill health or disability. We know that the gateway to this benefit is tough. Although the process involving Atos has been improved, there are still many who end up on ESA only after a successful appeal.

Although individuals in the WRAG are closer to the labour market through their conditionality or otherwise, the route to paid work is not easy, as the noble Lord, Lord Low, said. We know that the Work Programme has not covered itself in glory in this regard. As things currently stand, individuals in the WRAG will lose something like £191 a year by 2015 as a result of this Bill. Those in the support group will fare little better in terms of income, being some £138 a year worse off by that date.

Macmillan has specifically drawn our attention to how these measures will affect people with cancer. Its estimate is that in excess of 40,000 cancer patients will be claiming ESA by 2015 with the presumption that they will be placed in the support group. Macmillan particularly stresses the impact of rising energy bills on this group. Like the noble Lord, Lord Low, I remind the Secretary of State that he should fulfil his commitment to make sure that people on ESA are being fully protected.

The noble Lord, Lord Brooke, challenged me to say where we think the money should come from. I thought I made it clear in the first debate that we think the Government should not proceed with the tax cut that is proposed for those earning £150,000 a year. The proposed tax cut from 50% to 45% would be a source of revenue. The Government say that this will not produce very much, but that assumes that people can get away with planning their income to defeat the thrust of that change. If the Government are alert to that, they could garner that revenue and we believe they should.

There is a wider argument about the extent of debt that can be sustained. The point I come back to is that the greater the failure of the Government in their economic policy—the greater the paucity or lack of growth in the economy—the more it will be necessary for the Government to borrow. If the Government can get growth back into the economy, that begins to ease the debt burden. There is another source there.

I also remind the noble Lord that these amendments take ESA out of the fixed uprating—the collar that this Bill puts around them—so a judgment would have to be made for each uprating period. Traditionally and rightly that has been an increase by the rate of inflation of one sort of another. That is what these amendments are doing. They are not technically, of themselves, proposing a different rate, although I made it clear that we support uprating by inflation for the year that we are about to enter.

It is clear from that combination of reasons that this proposal can and should be supported. It is not constrained by the economic position of the Government. It is the Government that have got themselves into a bind because they have failed to generate growth in the economy.

[Lord King of Bridgwater]

As the noble Lord understands some of the complexities of this matter which many others may find more difficult, what does he assess the cost of this amendment would be over the next few years?

[Lord McKenzie of Luton]

The total cost is certainly less than that proposed for the totality of the arrangements in the Bill. It would be a portion of that. The number of people in the support group is something like 200,000 and there are around 300,000 in the WRAG. If you assumed you were looking at a difference between uprating by inflation and uprating by 1%, that would be the calculation. I stress that this amendment is saying that you simply take ESA out of the 1% collar, and it leaves open the question of whether uprating next year and the year after should be by whatever inflation is then. However, this amendment does not put a figure on it.

[Lord King of Bridgwater]

The noble Lord is a signatory to this amendment. He is speaking for the Official Opposition and it obviously represents a cost. I wonder what that cost is. I do not see how the House can vote if it is not clear what extra costs are envisaged. If he is suggesting that there is no extra cost at all, I do not imagine the Government will find great difficulty with the amendment. Presumably there is a cost; I wonder if he knows the figure.

[Lord McKenzie of Luton]

It depends on what the alternative proposition would be. I have tried to stress that this amendment takes ESA outside this 1% fixed uprating—outside that collar—so we would have to judge the impact at each uprating period thereafter. A judgment would have to be made in the light of inflation and general economic circumstances at that point in time. That seems a very clear proposition, is it not? It is certainly a basis on which we are very happy to support this amendment.

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[Baroness Morgan of Drefelin]

My Lords, I am not an economist. I declare an interest as chief executive of a cancer research charity. My concerns are similar to those voiced by the noble Lord, Lord Kirkwood. The Bill locks in the 1% and does not contain a very important review provision. I am sure that my amendment is so anodyne that the Minister will say either that it is unnecessary or that he will accept it.

For that reason, I will be brief. It is important once more to challenge the myth that disabled people will be protected from the measures in the Bill when that is so clearly not the case. Let us remember that, by 2015, in excess of 40,000 cancer patients will be claiming ESA. It is the main benefit claimed by cancer patients, as we have already heard. For those cancer patients in the support group, only a proportion, the support component, of what they receive, will be protected, while their core payment will rise by only 1%, as my noble friend Lord Low mentioned.

Overall, cancer patients in the support group will see their ESA payments rise by only 1.4%, rather than by inflation, and Macmillan Cancer Support has estimated that, by 2015, cancer patients will be £138 worse off each year than if they had received the 2.2% rise which could have been expected with the CPI level as was in September 2012. I cite the £138 figure, but I am conscious that we do not yet know the true effect of the Bill. That figure shows how far ESA will fall behind inflation if the consumer prices index were to remain at the September 2012 level of 2.2%. However, it has now risen to 2.7%. If, as we have heard, inflation were to rise to 3% over the next three years, the loss to cancer patients and others in the ESA support group would be even greater. The actual impact on cancer patients and others supported by those payments is just as uncertain as the level of inflation itself.

In its current form, the Bill leaves no flexibility to protect vulnerable groups such as cancer patients if there is a significant rise in inflation over the next three years. For that reason, I support the amendment moved by the noble Lord, Lord Kirkwood. I fully expect the Minister to say that he will accept my amendment or that it is unnecessary because it is a matter of course that there will be a review by the Social Security Advisory Committee if we have such a rise in inflation. I very much look forward to hearing the Minister’s remarks about how the Government aim to continue to protect cancer patients as much as possible.

[Lord King of Bridgwater]

I should have asked my noble Lord friend Lord Kirkwood, this; he is an expert on uprating. The noble Baroness said that this is an anodyne amendment. I am not an expert on how uprating works, but does her amendment provide that if inflation is above 3%, the Bill does not apply and it will then be up to the Secretary of State to decide what increase he tries to get through both Houses of Parliament, which could in fact be 1%, if the economic situation is as it is? So it does not automatically provide that the current rate of inflation has to be included. Have I got that right?

[Baroness Morgan of Drefelin]

That is correct. As normal, the House would receive an annual uprating SI, there would be a debate in the normal way and, if the Government of the day wanted to propose a particular uprating, there would be the normal impact assessment. The noble Lord, Lord Kirkwood, may want to clarify his amendment, but my amendment states that if we have a significant increase in inflation, we need the experts to conduct a review to say what will be the impact on benefit recipients.

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[Lord Kirkwood of Kirkhope]

I think it is me, in fact, but let that pass. I am grateful to my noble friend. He and I had a good private discussion about this. I understand the Government’s position and he understands my position as well. I plead not guilty to his charge of being clever. All I am trying to do here is to get an insurance policy to protect people who are on benefits who may well need it. I hope I am wrong. He knows more about inflation than I do, but there is a real risk that in the demeanour of the coalition Government’s policy, which I would support, to try to attract higher levels of growth, it may be a price worth paying—not to let inflation rip, as my noble friend said, but to allow it to rise reasonably in expectation that growth would follow as a result of that. The shift in the policy changes that.

When the Bill was drafted we were in a different position. We are now—we will see tomorrow whether that is correct or not—in a position of the proposals of the noble Lord, Lord Heseltine, for growth, much of which I support. I must say to the noble Lord, Lord Forsyth, that I pay attention to what he says as Britain is a poorer place. These are huge sums of money and we need to work out collectively how we make provision for social protection in future. However, I say to my noble friend—I am looking him straight in the eye—that I cannot accept that this is a safe position to leave the House in. I want the protection—

[Lord King of Bridgwater]

Is not the key point here that the Government have to be able to convey credibility to those around the world who may lend us money? The noble Lord, Lord McKenzie, has made the point very well. We have to borrow a lot of money or there will be nothing like the present level of benefits if we find, as the Minister has made clear, that we are out on the market trying to borrow from countries and lenders who say, “I thought they had a clear plan. Now they’re qualifying it, they may not follow through”. I make this simple point. The noble Lord quite rightly talks about the risk of inflation rising. The risk that he is prepared to accept is that we lose our rating and then we will be in a very much worse state.

[Lord Kirkwood of Kirkhope]

I thought that we had lost our rating. I have now lost my drift.

This is very simple. This is a one-way bet for the Chancellor. If the Government end up with a windfall of £1 billion or £2 billion over and above the saving that I am supporting here, that is completely unconscionable. I am moving this amendment only to try to get an element of inflation protection for benefit claimants. I am grateful to everybody who has taken part in the debate, even the noble Lord, Lord Forsyth. I am sorry to do this to my noble friend, but I want to test the opinion of the House.

Public Service Pensions Bill

Lord King of Bridgwater Excerpts

Tuesday 12th February 2013 Lords Chamber

[Lord Kennedy of Southwark]

My Lords, Clause 10 imposes a normal pension age of 60 on firefighters as well as on police and members of the Armed Forces. My amendment would build some flexibility into that but does not rule out 60 in respect of firefighters.

The Government, under the previous Fire Minister in the other place, set up a review, chaired by Dr Tony Williams. It published its report in January, just a couple of weeks ago. I think it is at best odd, and perhaps even outrageous, that the Government are pressing ahead here and are not taking the review properly into account. The report does not recommend a normal pension age of 60; nor does it make the case for firefighters working to 60. The review was set up to assess the appropriate normal pension age. Nowhere in the review does it say that 60 is appropriate. At most, the review’s recommendations establish a set of conditions —such as national firefighter fitness standards, fitness entry standards at recruitment, fitness training throughout careers, and an accepted testing regime—that would have to be met before working to 60 was possible.

The report provides medical evidence that working beyond 55 is not attainable by most current firefighters. Between half and two-thirds of current firefighters would not be fit enough to work beyond 55. Other figures in the report suggest that more like four out of five firefighters would not be fit enough to work beyond 55. The Government seem intent on imposing a national pension age of 60 despite the medical evidence against that. I hope that in his response today the Minister will explain fully why that is the case.

A national pension age of 60 will hugely disrupt the fire and rescue services. There is also a danger that it will not only discriminate against women but will drive out most women firefighters, undermining decades of equality work. A national pension age of 60 will not just remove the link to the occupational nature of the pension scheme; it will also risk making it unsustainable. With higher contributions, it will take a drop-out rate of only 7% to do so.

The Williams report recommended that firefighters over the age of 55 who can no longer meet the fitness requirement should be allowed to leave early on an actuarially reduced pension, calculated so there is no overall financial advantage or disadvantage to the firefighter. This means that most firefighters will get a reduced pension because the national pension age is wrong.

I want to move on to make some remarks about fitness. Aerobic fitness, one of the core components of fitness—along with anaerobic/high-intensity fitness and strength—is often measured using the rates of oxygen uptake, or VO2. The Williams report suggests that at least 42 VO2 is necessary for firefighting. This is the level recommended by experts in the field and is the level that the majority of fire services are using today. The report admits that at 50 to 54 years of age, 51% of firefighters are below the figure of 42 VO2. At the age of 55 to 60, that rises to 66%: two-thirds of firefighters are below that standard. The report suggests that if 42 is the standard, then by 60 years of age up to 92% of present firefighters could be below the minimum standard for operational duty. To push ahead with this is risky and dangerous.

The report suggests that, even in a best case scenario, where firefighters maintain their physical activity status, their body mass index and their smoking status as they age, at 55 years of age approximately 15% of firefighters would be below the minimum standard required for operational duty. By 60 years of age, this percentage would rise to 23%. However, this best case scenario model uses a higher entry standard than the one currently in force. It assumes that firefighters are recruited at 47 VO2, whereas actually the recruitment standard is much lower at 42. This means that the best case scenario is flawed as it assumes a much higher fitness level on recruitment than is in fact the case.

Will the noble Lord spell out clearly what kind of fitness regime and lifestyle changes will be necessary to meet this best case scenario? Most firefighters are likely to do fitness training at work of at least 30 minutes per shift; some do up to four hours a week. Does the noble Lord accept that what may be possible in the future, with new recruits and different standards, is fundamentally different from expecting people now in service to reach these service levels at ages between 55 and 60? It is risky and dangerous. If the noble Lord is not prepared to accept the amendment, can he tell the House why? The amendment commits the Government to do nothing other than accept that the national pension age must be set in scheme regulations and must be no more than 60. It allows for further discussions to take place, and if the Government are not persuaded, they can set the level at 60.

I had a meeting with the noble Lord. He very kindly met me and representatives of the Fire Brigades Union and I thank him very much for that. It was a very useful meeting and people put their case across very well. I appreciate that he did that. I hope that the Government will come back today with something positive.

[Lord King of Bridgwater]

I think that probably all noble Lords have had a most interesting letter from the general secretary of the Fire Brigades Union setting out the union’s case on this matter. I do not know whether I read it wrong, but I got the impression from the letter that there are safeguards to protect those who are approaching retirement age at the present time and that the issue arises much more for firefighters who are now 40 to 45. In those cases, when it is recognised that people are going to live longer and when the pension age may rise to 67 or higher, it seems that we are going to be looking for a different standard of fitness. It is quite difficult to argue in your Lordships’ House that nobody is fit any longer at 55.

[Lord Kennedy of Southwark]

I think the noble Lord is absolutely right that there is a difference in fitness. That is the problem. A regime could be put in place for people when they first come as recruits. By accepting my amendment, the Government could set the age in scheme regulations, whereas at the moment the age would normally be 60. I beg to move.

Queen’s Speech

Lord King of Bridgwater Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Razzall]

My Lords, I am sure that the students of politics in your Lordships’ House, of which there are many, will entirely understand why the noble Baroness thinks that this is all the fault of the Government and blames the whole thing on government policy. However, we ought first to put into perspective what has happened to government expenditure during the period of the coalition. In real terms, expenditure has hardly been reduced at all.

If we take the official Treasury numbers, stripping out inflation and showing real spending indicates a reduction last year of just £8 billion. In real terms, that is a cut of a pretty modest 1.1%. The figure is also flattered by comparison with Labour’s spending in the election year, when it increased by £31 billion, making the high-water mark unusually high. Therefore, the real level of government spending today, against that in 2008-09, represents an increase of £23 billion, which is a 3.4% rise. I hardly think that the policy of economic cuts that the noble Baroness indicated is responsible for austerity. However, we know that austerity is particularly unpopular. We have to look only at what happened in elections in Greece, France and North Rhine-Westphalia to realise why the noble Baroness is on that particular bandwagon.

The Liberal Democrats on these Benches are of course part of the coalition but we retain our independence—

[Lord King of Bridgwater]

Don’t go too far.

[Lord Razzall]

The noble Lord, Lord King, does not want me to go too far so I will rein that back. As noble Lords will be aware, we have not necessarily been uncritical of a number of government policies and plans. However, on these Benches we stand four-square behind the coalition on the necessity of bringing the deficit down. Now is not the time to spook financial markets. We have to look only at what is happening in the eurozone, particularly Greece, Spain and Portugal, to realise the incalculable cost to our economy if we were to lose market confidence. Look at our current borrowing rates. I think we are now selling our gilt-edged securities at a lower level than we have in modern economic history. That is a huge benefit to our public expenditure and we need to retain the confidence of the markets.

Taking the noble Baroness’s point about there being nothing in the gracious Speech about growth—

--- Later in debate ---

[Lord Bilimoria]

My Lords, six months ago I read out this quote:

“The era of procrastination, of half measures, of soothing and baffling expedients, of delays, is coming to its close. In its place, we are entering a period of consequences”.—[Official Report, Commons, 12/11/36; col. 1117.]

Those were the words of Winston Churchill in 1936, and we all know what happened three years later.

We have finally had a Queen’s Speech, after what I believe was an unacceptably long gap of two years. Could the Government assure us that this will not happen again, and that we will have year-long sessions in future, as is customary?

One message that the Government have very clearly got across in their two years is talking tough about austerity, and the two big benefits of this have been that Britain has retained its AAA credit rating and continued to enjoy phenomenally low bond yields, as the noble Lord, Lord Razzall, said. But how long can tough talk last? I am glad that the Government have stopped blaming all the problems on the previous Government—although they have just done so. Now they are blaming Europe, and we have the eurozone crisis building up and about to explode, as many of us predicted. France and Germany, formerly the best of friends, are now at loggerheads, and there is growing certainty that Greece will have to leave the euro—it is almost definite—with all the possible contagion that this will bring. We have entered a double-dip recession. The Nobel laureate, Paul Krugman, wrote recently:

“Britain … has achieved the remarkable feat of doing worse this time around than it did in the 1930s”.

And what is in the gracious Speech? We hear that:

“A bill will be brought forward to reform the composition of the House of Lords”.

Is that the most important thing in the public’s mind? We know that it is not. It is the lowest priority to this country, and if we go down that route we will be accused by our people of being like Nero, fiddling while Rome burns.

On top of this, we have had a Budget with some great measures in it, such as cutting the 50p rate of tax. I believe that it should go down to 40p. It also reduced corporation tax, which was fantastic. On the other hand, it was a PR disaster, upsetting so many people: charities, pensioners, heritage lovers, the Church of England and even pasty consumers. Now, as we have heard from the noble Baroness, Lady Royall, the Institute of Chartered Accountants in England and Wales has said that the child benefit plans announced in the Budget are seriously flawed.

On top of that, we have business leaders criticising the Queen’s Speech for not having enough of a plan for growth for business. As we have heard, the response from the Government is that these leaders of business should stop whinging and work harder. I know from running my business how tough it is to grow a business in this economic environment—and the Government are saying to me that I am not working hard enough? How dare they?

We have had blunder after blunder. The NHS reform has been badly handled to the extent that we face the dreadful thought of doctors going on strike. The defence review was rushed through, and now we face the blunder of having no carriers and no Harriers for almost a decade, with the Government executing a U-turn on the carrier aircraft which will cost us billions from the defence budget. Will the Government accept that they have made a blunder with regard to the loss of capability and of money on that score?

The Government have cut higher education funding, one of the jewels in Britain’s crown. Just last week a report was released that found that in government expenditure as a percentage of GDP for higher education, we in Britain came 41st out of 48 countries in the world. I have been saying for many years that we need to increase spending on higher education funding. One reason the United States is always ahead of the game is because it invests far more, in absolute terms and as a proportion of GDP, in both public and private expenditure on higher education. That is why its productivity and its innovation are always streets ahead. Why do not we learn from that? Could the Government explain?

Then we have had the big society—big talk and big platitudes, with the best of intentions. People could genuinely question whether the Government are in tune and in touch with people. Only one city out of 10 wanted an elected mayor. Now we have elected police commissioners, and we know that the public are not that keen on that. The turnout in elections is bad, with that for the London mayor elections at only 38%. In India, in the state of Uttar Pradesh, turnout was at 60% in the recent legislative elections. Do not the Government understand that people do not want more elections, politicians and partisan bickering? People’s worries are about their jobs, job security and economic prosperity; that is the priority.

On top of this we have had the immigration cap, which wrong-headedly encompasses foreign students. Would the Government admit that, by including foreign students in the overall immigration numbers, they are forgoing an enormous opportunity, which brings up to £8 billion into this economy? Nick Pearce, a fellow member of the UK-India Round Table and director of the IPPR, recently asked:

“Will the next generation of world leaders, like Manmohan Singh, Benazir Bhutto or Bill Clinton, be educated in the UK if the UK Government restrict the flow of students to the UK’s world-class universities?”.

As someone who came to study in this country from India, I know how much foreign students bring to this country and the bridges that we build for generations to come.

On the other hand, where schools are concerned, I pay tribute to my old sparring partner, Michael Gove. For two years running he led the Oxford Union while I led the Cambridge Union—although we will not ask what the result was. Last week we both spoke at the Brighton College education conference. I believe that he is doing absolutely the right thing in freeing schools from the shackles of local councils, encouraging free schools and academies, and appreciating the independent schools in this country, which are the best in the world.

The gracious Speech states:

“My Government will build strategic partnerships with the emerging powers”.

As president of the UK India Business Council, which is backed by UKTI, I see the phenomenal opportunities offered by companies such as Tata, which owns Jaguar Land Rover, creates jobs over here and now exports Jaguar Land Rover cars back to India. That makes me feel very proud. However, as a proud manufacturer, I note that there was nothing in the gracious Speech about encouraging manufacturing or providing tax incentives for manufacturing. Will the Minister tell us why the Government cannot do this?

We have a bloated public sector that the Government are rightly trying to cut. Public spending should be 40% of GDP. We have taxes that are too high in terms of VAT, fuel duty and income tax, and we have a welfare state and a benefits trap that need to be addressed. I am glad to see that the Government addressed welfare spending in the gracious Speech although I understand that this is a sensitive issue.

[Lord King of Bridgwater]

The noble Lord says that no encouragement is being given to manufacturing. However, is he aware of the very encouraging recent news about major new investment in this country on the part of two major car companies? That is significant news for manufacturing and builds on today’s very welcome announcement that this year, for the first time since 1976, we have exported more cars than we have imported.

[Lord Bilimoria]

I could not agree more with the noble Lord. All I am saying is that, if we had more incentives for manufacturing, we would have even more such success stories. In fact, Britain has so much going for it. We have the finest universities, the best in design and creative industries, tourism, sport, advanced engineering, the City and our financial markets, the accounting profession, the law profession, and we have our wonderful monarchy and Her Majesty celebrating the Diamond Jubilee this year. We need to harness these amazing assets and use them to generate growth. We need infrastructure spending to create the environment for business to succeed. However, businesses are not getting the money. Will the Minister tell us what is happening with the £20 billion credit-easing scheme? I do not think that it is flowing through.

I conclude: more than anything else, the Government need to show real leadership, not to create fear through austerity or accuse business leaders of whinging and not working hard enough. They need to create hope and optimism—hope, not hopelessness. We have so many strengths in this country; they just need to be unleashed. We need to unleash the great British spirit—the spirit of Great Britain—and unleash hope, optimism, opportunity and aspiration.

Economy: Government Policies

Lord King of Bridgwater Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord King of Bridgwater]

My Lords, it is a particular privilege for me to be the first to have the opportunity to congratulate the noble Lord, Lord Hussain, on his immaculate maiden speech. It combined exactly what the House likes to hear: a very interesting explanation of his background and experience, and then some very interesting thoughts on the situations that he has faced in the many varied activities in which he has been involved. I could not help thinking that he was almost a founder member of the big society, given the part that he has played both in Rochdale and in Luton, which makes it even easier for me to call him my noble friend. As he has been unsuccessful standing for election twice but has now been welcomed to these Benches, I hope that he will not have to stand for election again.

I was also pleased with the noble Lord’s commercial experience of having run things. He has passed the Sugar test as someone who has actually run something. I plead guilty myself: I speak in this debate as somebody who has spent all my life, apart from my time in government, trying to run things in business. I endorse strongly what the noble Lord, Lord Sugar, said. Given my noble friend’s particular background, the situation we face, the attempts to traduce the Muslim tradition in the world at present, and the need for people with the courage to speak out against some dangerous and evil people who are trying to mislead many of their community, he has a valuable part to play. I know that the House will listen with great interest to his further contributions, which we will certainly welcome.

I thank my noble friend Lord Lawson for the way in which he introduced the debate. I shall just repeat my previous remarks about elections: under a different form of House, I do not think that the House would have had the privilege—the day after the Budget—of having a debate led with the authority and experience that we had from my noble friend. However, I am afraid that I have just one comment, which is that I do not think that he is quite as good a Tory and exponent of Conservative economic policy as the noble Lord, Lord Sugar, but in other respects he was extremely good.

The debate is about the Government’s policies to promote enterprise, growth and the fundamental rebalancing of the economy. In my judgment, that is most certainly needed. My concern is that it is tougher than many people think. An old adage is often quoted that the future is not what it used to be. A lot of people are going on as though we have had a bit of hiccup—a bit of a knock—but that we will be back on the old track. So why do we not have normal growth coming back? The situation is infinitely more difficult. We face a record budget deficit. I noticed that the Chancellor mentioned the risk of a continuing sovereign debt crisis. We go home last night and hear that the Prime Minister of Portugal has resigned and that there is a crisis meeting this evening in Brussels, which I understand our Prime Minister will attend. Under the arrangement introduced by Mr Alistair Darling at the end of the last Government, if there has to be a substantial drawing down of assistance for Portugal, the implication is that it could cost this country a further £3 billion. I do not think that was known at the time.

An interesting passage in the Chancellor’s speech yesterday referred to the relative interest rates in various countries. He made the point that, although we have a deficit bigger than any of these countries, our interest rate is relatively comparable to that of Germany. As he said yesterday, it is half the rate payable in Portugal, a third of the rate of interest that Ireland has to pay, and a quarter of the rate that Greece has to pay. Of course, the figure for half the rate of Portugal is already out of date because I do not know what Portugal’s rate will be now. If it has no Government there will have to be an election, so there will not be any Government for another two months and it cannot agree on any of the public expenditure cuts and improvements needed to stabilise its position.

We have to earn our living in this world. As Will Hutton said in an interesting article, the present faltering recovery could easily be blown off course by any major crisis. When we look at earning our living in the world and ask where our markets are going to be, we must look at the situation in the eurozone. Ireland is a much bigger customer of this country than many people realise. How good is Ireland’s purchasing going to be? How good are our sales going to be to Ireland in the next year or two? Then there are Spain, Portugal, France and Italy. I am sorry if the catalogue goes on—I thought of marking my comments earlier by saying that anyone of a sensitive disposition ought to leave before I got too far into the difficulties that I see facing us. But of course we then have Japan. As we stand here today, we do not have any idea what will happen, with people running in and out of Tokyo. Is there or is there not a risk to the drinking water in Tokyo? How bad is that crisis going to be? Every day we see a different estimate of what the cost to Japan may be of the quite appalling disaster that has overcome that country.

Then there is the instability in north Africa and the Gulf—a part of the world of which I have had some experience. Those who would wish to see a change of Government and wish to see democracy introduced into many of these countries must also recognise what an appallingly difficult situation those new Governments will face. They will come in with a 50 per cent increase in food prices, and not only an increase but in many cases an acute shortage of food. They have increases in fuel prices as well and some very serious youth unemployment. That is the background against which there will be new, inexperienced Governments, and I do not give them a lot of chance to be enduring Governments who will be able to quickly establish the calm and stability that the market needs. It is against that background that I see the challenges that we face.

I used to sit in a school chapel under a poem by Sir Arthur Hugh Clough, which said:

“If hopes were dupes, fears may be liars”.

I remember the final line, quoted without a stutter by King George VI in one of his Christmas messages when America came into the war. He said:

“In front the sun climbs slow, how slowly,

But westward, look, the land is bright.”

I think that that needs changing now, because in economic terms I am not sure that the westward does look so bright. Eastward, yes, I hope—with the opportunities that we have not seized as we should in India and in China—and southward as well. South America and Africa are areas and markets that are much more interesting now. There is an interesting times conference going on at the moment, with African leaders asking why Europe and Britain does not take more interest.

There are great challenges ahead and undoubtedly it will be very difficult. But Iain Macleod’s first law of Budgets is that first impressions are usually wrong, and I have some hopes that, having seen this described as the most pro-growth Budget seen for a generation, we may at last slowly and in a most difficult situation start to climb out of the problems that we have inherited.