Queen’s Speech

Viscount Hanworth Excerpts

Tuesday 17th May 2022 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, in the time that is available to me, I wish to make a wide-ranging and cursory review of our education system, comprising secondary education, further education and higher education. There is distress at all levels, which is quite apart from the effects of the pandemic.

In secondary education, there are ongoing disruptions caused by the policy initiatives of the Government and the Department for Education. These are occurring against a backdrop of a severe decline in the levels of remuneration of teachers and a crisis in teachers’ morale. A recent survey has shown that over the past decade, teachers in secondary schools have lost 9% of their real income. They are leaving the profession in large numbers to seek more gainful employment. More than 30,000 teachers are leaving the profession each year. The number of male teachers in secondary schools in England and Wales is the lowest on record. Whereas one might welcome the advancement of women in this profession, the changing sex ratio is symptomatic of greater male mobility, which allows men to leave the profession more readily. Older teachers who are leaving are being replaced by new recruits to the profession, who are often employed in the guise of supply teachers who struggle to achieve permanent placements. Young teachers have thereby become part of the gig economy. This is threatening the future of secondary education.

In further education, there are clear symptoms of distress. Colleges of further education have traditionally fostered the skills that are required by industry and commerce. However, the available funding has not allowed the colleges to adapt to the changing demands of industry and commerce, and the numbers of students completing their courses have fallen drastically in recent years. The decline of the further education sector has gone hand in hand with the expansion of universities. Since 2012, the universities have been allowed to recruit students without limits. Every recruit carries with them a fee income. This contrasts with the funding system of further education, where the numbers are effectively capped at the level of the previous year’s recruitment.

The implosion of the further education sector has also been a consequence of the reforms of the Further and Higher Education Act 1992. This removed polytechnics and colleges of technology from the control of local authorities and allowed many of them to become second-tier universities. Instead, they should have been recognised as equal but different. In the process, they have changed their mission. They have forsaken technical education in favour of degree courses. There is a hierarchy of qualifications in the UK, which is topped by bachelor’s degrees, master’s degrees and doctorates. The technical and industrial qualifications fall below these levels.

The rules in England for the financial support of students largely disbar persons who have achieved higher qualifications from seeking support thereafter to study technical subjects at lower levels. Thus, a university graduate is disbarred from adding a technical qualification to his or her university degree. Compared with other countries, our funding arrangements drive students and providers away from higher technical education. This is prejudicing the nation’s economic prospects.

Universities have barely profited from their freedom to compete for students. The desire to attract students has led to what has been described as an “amenities arms race”. Campuses have been refurbished to include additional and often lavish facilities for students. This has led many universities into financial difficulties. Funds have been diverted from salaries and, over the past decade, academic salaries have fallen by more than 10% in real terms. The universities pension scheme is in dire financial difficulties, and swingeing cuts to retirement benefits have been imposed. This has given rise to angry industrial action.

Since the 1950s, academics have been subject, at the behest of successive Governments, to an increasingly burdensome audit culture that requires them to demonstrate performance on a set of criteria that are manifestly in conflict with each other. They face a research assessment exercise under the guise of the research excellence framework; they are assessed under the teaching excellence framework and a National Student Survey; and now they face the demands of a knowledge exchange framework.

The academic workforce has been casualised. There is no longer any notion of academic tenure, whereby a lecturer could benefit from job security. Increasingly, they are employed on short-term contracts. It requires a considerable educational investment to become an academic, which entails a lengthy deferment of earnings. Given the job insecurity, the poor remuneration and the even worse retirement prospects, it is doubtful whether anyone should be encouraged to aspire to an academic career—unless they believe that prospects will soon be greatly improved.

The prospects for our university sector are not good. In consequence of Brexit, the sector has lost many of its European academics, who have returned home and will be difficult to replace. Universities have lost the research funding of the Horizon Europe programme, and the prospects of collaborative research with our European neighbours have been prejudiced. This is occurring at a time when the Prime Minister is proclaiming Britain as a scientific superpower that is set to become a high-income economy. This rhetoric flies in the face of reality. Unless we can repair our educational system, we will be destined for economic failure and poverty.

Climate Change: COP 26

Viscount Hanworth Excerpts

Thursday 18th November 2021 Lords Chamber

[Viscount Hanworth (Lab)]

I do not intend to make a detailed assessment of the outcomes of the COP 26 conference; I wish to say only that I share the disappointments and anxieties that others have expressed. Instead, I propose to examine the achievements of the first country in the world to declare net-zero targets for carbon emissions, which, of course, is the United Kingdom.

In agreement with the recent pronouncements of the UK Climate Change Committee, I wish to say that we are liable to miss these targets by a substantial amount. The Government’s overall strategy and detailed policies are not adequate to achieve the targets. The lack of meaningful plans for achieving a green industrial revolution threatens to consign this country to poverty and social dislocation.

The essential requirement is for a plentiful supply of electrical power, which should be available to replace the fossil fuels that power our transport and energise our industrial processes. Without this electricity, we would not be able to replace fossil fuels, and if we were to forgo these fuels without replacing them, we should suffer an economic collapse.

Other European nations that have hesitated to declare targets for staunching carbon emissions have been far more active than we have in pursuing industrial strategies that are appropriate to a decarbonised economy. It is undeniable that Britain has greatly reduced its carbon emissions in the course of the last 20 years. From 1990 to 2020, the UK’s emissions of carbon dioxide fell from 800 million to 420 million tonnes per annum, which is two-thirds of its former amount.

These reductions have come largely from one source in a way that cannot be expected to continue. It is in the generation of electrical power that the main reductions in emissions have occurred. The remainder of the reductions are illusory. They have arisen from the deindustrialisation of our economy and from the transfer of manufacturing to other countries where there have been little or no reductions in emissions.

The reduction in the UK of the emissions from generating electricity has arisen from the closure of coal-fired power stations and from their replacement by gas-fired power stations and wind farms. Power utilities in the private sector have managed the transition without any intervention from the Government. This has created an illusion that the private sector can be relied on to achieve the necessary investments in industrial infrastructure. However, it has become clear that, on its own, the private sector is incapable of accomplishing the next phase of the transition, which should see the elimination of natural gas as a source of power.

The successive failures of projects to build new nuclear power stations have shown that other means of financing large projects are called for. In the process of providing the necessary assistance, the Government will have to relinquish the free-market philosophy which proposes that capital markets should provide the necessary funds for investment.

The Government should be able to raise the necessary funds without paying the surcharges that normally accompany financial borrowing. They will be able to borrow the funds without paying a risk premium under the supposition that they do not default on their debts. If the funds are not readily forthcoming from the financial markets, the Government may resort to creating money to enable them to pre-empt the resources that will be demanded by the project, thereby avoiding the payment of a scarcity premium. Underlying the commercial rate of interest payable on borrowed funds is a discount factor, whereby future returns are valued at less than present returns.

A Government that propose to be custodians of our futures should not think of applying a discount to the future benefits of projects that are designed to avert or mitigate the damage caused by emissions of greenhouse gasses. By creating the money, the Government can avoid paying any surcharge that might be embodied in the commercial rate of interest on borrowed funds.

A more hopeful recent development has been the announcement by Rolls-Royce that it is prepared to go ahead with its project to build small modular nuclear reactors despite the paucity of government support. This is a technology in which we have a comparative advantage. Through the export of these devices, we should have a chance of contributing greatly to the reduction of carbon emissions throughout the world. It is agonizing to contemplate the loss of this opportunity.

REACH etc. (Amendment etc.) (EU Exit) Regulations 2020

Viscount Hanworth Excerpts

Tuesday 8th December 2020 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, I am bound to recapitulate on much of what has already been said, but I shall do so with added asperity.

Of all the aspects of a hard Brexit, the decision to leave the European regulation on the registration, evaluation, authorisation and restriction of chemicals—known as REACH, of course—is one of the most gratuitous and damaging. It seems to have come about because of an objection to the role of the European Court of Justice as the ultimate arbiter of any disputes arising. However, it has rarely been called on to perform that role.

The decision to leave REACH appears to have been hapless and inadvertent. This was revealed when the Secretary of State and his Permanent Secretary appeared before the House of Lords EU Energy and Environment Sub-Committee. The two seemed to be under the impression that it would be a simple matter to cut and paste the contents of the European Union REACH database into a UK version. They had to be disabused of this idea. It was pointed out to them that the database contains proprietary information, much of which is subject to commercial secrecy. Moreover, there is often joint ownership of this information. Acquiring the information can involve complicated and protracted negotiations that are liable to impose restrictive undertakings on those who wish to be granted access to it. I recall that the Secretary of State turned to his civil servant adviser with a look of surprise and irritation. This was answered by a look that also seemed to signify surprise and which bore an implication of “mea non culpa”. We might have expected the Government to change course and reverse their decision to leave REACH, but that has not happened.

Recently, in its response to an inquiry by the Secondary Legislation Scrutiny Committee, Defra asserted that much of the necessary information is in the public domain and is readily accessible. This is untrue. Either it reveals a persistent misunderstanding of the matter, or it represents an attempt to bamboozle parliamentarians and others. I am unsure which of these two possibilities is worse.

The truth of the matter is revealed by the fact that the statutory instrument allows, in some cases, a full six years plus 300 days from the end of the transition period in which to supply full information to a GB REACH database. This implies a lengthy hiatus, during which time the nation will remain inadequately protected against harmful chemicals, including pesticides and the wide variety of endocrine disruptors that are now coming under increasing scrutiny.

The inadequacy of the putative GB REACH organisation as regards its staffing and financing is revealed by some startling comparisons. REACH is managed by the European Chemicals Agency, which is located in Helsinki. This organisation has more than 500 staff from 27 European countries. It has four scientific committees with experts from all member states, which raise concerns and supply it with information. The annual budget is €109 million and its database comprises 23,000 chemical compounds.

The UK’s Health and Safety Executive, which has been given the task of supervising the replacement regime, has so far recruited 40 staff and intends to recruit 130 in all. As we have heard, its budget will be £13 million. This organisation will in no way be comparable to the European system. It will be wholly inadequate for the task that it will face.

The UK chemicals industry is likely to be devastated by the Government’s policy to leave the REACH system. The cost to the industry of replacing EU REACH with a national UK regulatory agency has been estimated variously at between £450 million and £1 billion. In any event, it will be very large.

To be registered in the European Union, a British chemicals exporter will have to seek an alliance with a so-called “only representative” within the European Union, who will have to vouch for all of the necessary information that must be provided to EU REACH. This information is to enable REACH to determine which chemicals are in manufactured items and which are abroad in the environment. The proposed UK regulatory agency will not be capable of doing this effectively.

The EU REACH system is increasingly defining the international standards to which chemical companies worldwide are seeking to adhere. To remove the UK chemicals industry from that system is a backward step that will do the industry untold harm. Far from being a case of taking back control, which has been the leitmotif of the proponents of Brexit, this will be a case of losing some of our former influence in international affairs. It is tragic to be reminded that the UK played a major role in creating the EU REACH system.

Zimbabwe

Viscount Hanworth Excerpts

Tuesday 27th October 2020 Lords Chamber

[Baroness Sugg (Con)]

My Lords, we note the signing of a recent $3.5 billion compensation deal between the Zimbabwean Government and farmers for improvements to land, but we remain concerned that the agreement is not underpinned by the finance necessary to deliver the agreement. Officials at the British embassy in Harare speak regularly with a full range of stakeholders, who are interested in reaching an agreement on compensation.

[Viscount Hanworth (Lab)]

My Lords, the Zimbabweans are a people of truly democratic spirit who are ruled by a venal and vicious mob of soldiers and policemen who have survived the demise of Robert Mugabe, to whom they owe their positions. Now they are systematically robbing and suppressing the nation. This country has profited greatly from an influx of Zimbabweans, who work as nurses, doctors, teachers and others. Will the Government acknowledge this debt and give sanctuary to those such as journalists, authors and churchmen who now find themselves in peril?

[Baroness Sugg (Con)]

My Lords, I join the noble Lord in paying tribute to the contribution that people from Zimbabwe have made in this country. As I said, we are still working to try to see the promised reforms. We have been clear that a lack of meaningful economic and political reform, as well as the ongoing human rights violations, means that the Government of Zimbabwe are far from achieving the level of reform that we need to see. We will work closely with like-minded partners to continue to raise concerns, press for respect of the constitution and see the sustained implementation of the reforms that have been committed to.

Trade and Investment

Viscount Hanworth Excerpts

Monday 15th June 2015 Lords Chamber

[Viscount Hanworth (Lab)]

Over the past quarter of a century there has been a continuing deterioration in Britain’s balance of payments. The current account, which represents the balance of trade in goods and services, has shown an ever widening deficit. The deficit on the current account in the three months to September 2014 reached a value that was equal to 6% of GDP. This is the biggest deficit that has been recorded since modern records began in 1955. Within the current account there has been an increasing deficit in the trade in goods, which has been only partly offset by an increased surplus in the trade in services.

Britain has, in effect, ceased to be a major manufacturing nation. In 1979, manufacturing in the United Kingdom contributed 25% to the gross domestic product and contributed largely to our export earnings. In 2010, manufacturing accounted for only 12% of the country’s national output. Its decline has been greater than in any comparable western country.

When a country runs a current account deficit, it is building up liabilities to the rest of the world that must be financed by flows in the capital account. The inward flows tend to be described, somewhat felicitously, as inward investment. However, in the case of the UK, they have been tied primarily to the sale of existing capital assets to overseas purchasers. A House of Commons Library note from March 2013 shows that the stock of inward investment that has accumulated in the UK over the period from 1970 to 2011 is equivalent to about a half of our gross domestic product. A report of the same year from the Department of Trade and Industry shows that the flows of investments into the UK greatly exceed those into any other country of the European Union.

It is both startling and instructive to explore the implications of this inward investment by taking stock of the current ownership of Britain’s capital assets. Of course, to construct a detailed inventory is next to impossible on account of the complexities of the financial arrangements, which entail joint and partial ownership. However, a good impression can be gathered by taking a few leading examples.

One might start with Britain’s ports, through which most of our trade in goods passes. This month a sale has been finalised that will see 30% of the ownership of Associated British Ports, which is the UK’s largest port operator, pass out of the hands of Goldman Sachs Infrastructure Partners and Infracapital, which is a Prudential subsidiary. The new joint owners will be the Canada Pension Plan Investment Board and the international financial conglomerate Hermes. These partners saw off competition from Malaysia’s sovereign wealth fund, from the Dutch pensions investor APG and from Korea’s national pension service. A third consortium, consisting of Abu Dhabi Investment Authority and 3i Infrastructure, was also vying to take control of the ports in an auction that began last year.

Within the last decade, Ferrovial of Spain has bought British Airports Authority, which is the operator of Heathrow and Stansted airports. The majority of Britain’s energy suppliers have fallen into foreign ownership, as has the supply of our water. The Australian bank Macquarie has recently taken control of our car parks by buying NPC. It would be tedious to continue in this way. Indeed, so complicated and opaque are the majority of such deals that most of us have ceased to pay much attention to them.

It is notable that those deals continue to provide the Government with funds that can be used to defray part of their budget deficit. However, there is an ever diminishing stock of assets for sale that remains in the public portfolio. As the Office for National Statistics informs us, the UK now has a large negative investment position. This means that foreigners own a greater value of British assets than British investors own of foreign assets—indeed, a much greater proportion. At the end of 2012, the balance was £544 billion in favour of foreign owners.

The foreign ownership of our capital assets implies an outward flow of profits, investment payments and dividends. In the past, Britain has been favoured by the fact that its overseas assets have generated a greater rate of return than have the foreign-owned assets in the UK. This favourable circumstance no longer prevails. Indeed, a deficit on the financial account has contributed to our record current account deficit. This deficit has necessitated even greater adjustments of the capital account, entailing a further sale of our capital assets. A vicious cycle is under way, which will end in our eventual impoverishment and in our inability to pay our way.

It is remarkable that, in the face of these circumstances, the Chancellor of the Exchequer, George Osborne, was capable of declaring in his pre-election Budget speech:

“Out of the red and into the black – Britain is back paying its way in the world”.

This ignorant optimism and insouciance contrasts markedly with the anxieties concerning our balance of payments that afflicted his predecessors, both Conservative and Labour, from the early post-war years until 1992 and, probably, beyond that date. In 1992, a Conservative Government were forced to withdraw from the European exchange rate mechanism after it had been unable to keep the pound above its agreed lower limit.

It is difficult to explain how this radical change in perception has come about, but undoubtedly it owes much to the fact that a regime of fixed or controlled exchange rates has been replaced by one that allows exchange rates to float freely. The change in the international arrangements for currency exchanges has been accompanied by a process of economic deregulation and globalisation that has given free rein to the currency markets and asset markets. These developments have been accompanied by a belief in the ability of the markets to achieve favourable economic outcomes in the absence of regulatory interventions.

Perhaps the Chancellor has been unduly influenced by the dogmas of the free-market economists. However, there is real cause for anxiety. On all previous occasions since the Second World War, when the current account deficit has been a high proportion of GDP, there has been a booming economy that has sucked in imports. At present, the economy is in recession, yet there is a very substantial deficit. Unless steps can be taken to stimulate the export of manufactured goods from the UK, we will be permanently constrained to maintain the economy in a state of recession, in order to staunch our demand for imports in an attempt to avoid a balance of payments crisis.

A balance of payments crisis will involve a flight of capital from the UK accompanied by a radical loss of the value of sterling vis-à-vis other currencies. Such a loss of value would raise the cost of imports, which, in addition to necessitating a reduction in demand, would give an impetus to domestic inflation. The reduction in the value of sterling might favour a degree of import substitution and it might encourage exports, but the conditions of recession and inflation would not be favourable to either of these tendencies.

The failure over many years of our industries to export their products has been a consequence, in part, of the overvaluation of the pound. It is startling to compare the upward trajectory of the pound to the downward trajectories of the currencies of the countries that have been providing us with cheap imports, namely the currencies of China and of the east Asian countries. In 2007 and 2008, there was a rapid reduction in the value of the pound in consequence of our financial crisis; but, since then, it has been gradually regaining its former heights. Our industries did not respond with alacrity to the enhanced opportunities to sell their goods abroad. For a significant response to have time to get under way, there would have to be a prolonged reduction in the value of sterling. It is clear that export markets can be lost far more easily than they can be regained.

One has to explain why the overvaluation of the pound has persisted for so long and how it might be overcome. The overvaluation owes much to the activities of our inflated financial sector. The sale of our capital assets to foreigners that has been mediated by the financial sector has stimulated a demand for the pound that has sustained its value. These sales have averted a balance of payments crisis, but they have also created the conditions that will exacerbate the eventual crisis. It will take time to amend these conditions. In the process, the financial sector will need to be diminished and its freedom to sell our assets overseas will have to be curtailed.

Our manufacturing industries, which will be required to grow in size and strength, will need to be fostered by a broad range of policies aimed at stimulating investment. The reduction of the value of the pound will need to proceed in a gradual and an orderly manner. This could be achieved with the help of the central bank, which should be instructed to purchase foreign currencies whenever the value of the pound shows signs of increasing. The central bank’s programme of quantitative easing has pumped a large quantity of money into our economy, which is threatening a further inflation of the values of financial assets and of commercial and residential properties. This is liable to stimulate the activities of foreign speculators, which may lead to an even further elevation in the value of the pound.

Quantitative easing has failed to stimulate investment in our native industries. This has to change; the banks have to be encouraged—if not instructed—to lend to businesses. The money that has been pumped into our domestic banks would have been more profitably employed in lowering the value of the pound by purchasing foreign currencies.

Queen’s Speech

Viscount Hanworth Excerpts

Tuesday 10th June 2014 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, this year the Speech from the Throne has been a very dull affair; it is distinguished more by its omissions than by its inclusions. It has failed to address the urgent problems that have arisen from the previous enactments of the Government. The programme of privatisation and deregulation, which has been accompanied by the disengagement of the state from all manner of social services and provisions, has surely run its course.

The programme has led to the neglect of some severe social problems, one of the most prominent examples of which is in connection with the provision of social housing. Several speakers in a previous debate mentioned the role of Harold Macmillan at the Ministry of Local Government and Planning in Churchill’s Government of 1951 in providing affordable social housing Macmillan was given the task of overseeing the building of 300,000 houses per year. This was an objective that had been mandated by the Conservative Party conference of 1950, and it was amply fulfilled. The policy of housebuilding depended on close co-operation between central and local government. Local government was empowered to finance homebuilding by issuing bonds and was given substantial subventions from the Treasury. The percentage of people renting from local authorities rose to over one-quarter of the population, from 10% in 1938 to 26% in 1961.

In the era of Margaret Thatcher there was a complete reversal of the housing policies of the Conservatives. The Housing Act 1980 gave a right to buy to council tenants, and within 10 years 1 million council houses were sold. Thereafter the building of houses by local authorities virtually ceased, and none has been built since the early 1990s.

The present Government have taken further steps to prevent local authorities from embarking on housebuilding programmes. The Localism Act 2011 transferred roughly £21 billion of housing debt to the 171 local authorities that currently own houses, in return for fuller control over their housing stock. At the same time the Government introduced a debt cap on each local authority, which restricts the amount of money that they will be able to borrow in connection with their housing stock.

In effect, the Government have divested themselves of any responsibility for publicly owned housing and have allowed local authorities only enough money to cover the cost of its maintenance. This is an encouragement to the authorities also to divest themselves of any ownership of housing, and many have already done so.

Nowadays, the Conservatives appear to believe, in line with a free-market philosophy, that the provision of housing should be wholly a matter for the private sector. However, in recent years housebuilding by the private sector has all but collapsed. Against all evidence, the belief has been fostered that the failure of the private sector is due to its having become mired in red tape and planning restrictions. Accordingly, the Growth and Infrastructure Bill of the previous Session established a new national planning framework which replaced 44 planning documents by a slim document of 50 pages. In the process, a set of documents that had been providing careful planning guidance in many specific circumstances, and which had been developed and refined over the previous 25 years, has been tossed into the rubbish bin. This act of vandalism represents a remarkable triumph of ideology over analysis.

At the same time as we have seen a collapse of housebuilding, we have seen a boom in house prices and a remarkable escalation in the rents charged by private sector landlords. The unaffordability of house ownership and the exorbitant costs of rented property are immiserating a generation of young people. A symptom of their distress is the escalating size of the housing benefit paid to those who cannot otherwise afford any accommodation. The cost of housing benefit in the financial year 2013-14 was £23.8 billion, which was almost 30% of the entire welfare bill. This dwarfs the £1.5 billion that has been spent on capital investment in social housing.

At the same time as they have been subsidising the incomes of private landlords via the housing benefit, the Government have been stoking the rise in house prices by their Help to Buy scheme. This has offered assistance to those who are already rich enough to think of purchasing a house. One can think of few policies that could be more socially divisive.

The house price inflation has led to a massive transfer of wealth in favour of the richer members of an older generation, who are well established in their properties. An obvious recourse would be to tax some of their wealth in residential property. Then, the proceeds could be used for building social housing to be provided at affordable rents. If the houses were built in sufficient numbers, then some of them might be for sale. It has been said, in opposition to such a wealth tax, that it would be unfair to those who are rich in assets but poor in income. The objections seem to deny the close correlation between income and wealth. However, the escalation of house prices could be very effectively staunched by a tax imposed on the sellers of properties. This could be assessed on the basis of their capital gains derived from the increased value of their houses. There would be no disadvantage to asset-rich and elderly people who choose to linger in spacious and valuable properties. The proceeds of such a tax would be used predominantly for the purpose of financing the building of social housing in the areas from which they have been derived. To the extent that rising house prices are a reflection of the scarcity of housing, the revenue would be reinvested where the need is greatest.

The costs of investment in social capital, whether they are met through taxation or by the issue of bonds, should not be reckoned as part of the central government’s current account. Such costs should be deemed to have no bearing on the Government’s financial deficit. Nevertheless, the present Government profess that, in a time of financial stringency, they cannot afford to meet the costs of major investments in social capital. This is surely a spurious excuse with which they are hoping to conceal their wilful neglect.