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Noble Lords: Keep going!

Lord Richard: My Lords, in the 19 years of Conservative Government between 1970 and 1994--that is, the four years of Mr. Heath's government and the 15 years between 1979 and 1994--there were in total 2,870 Divisions in the House of Lords of which the Government won 85 per cent. In the five years of Labour Government between 1974 and 1979, there were 427 Divisions in this House of which the then Government won 20 per cent. It may be coincidence, but it seems to me that those figures establish beyond doubt, first, the allegiance of the hereditary Peers on the Benches opposite; secondly, the way in which they can be used to vote in order to defeat a Labour Government; and thirdly--and, I suppose, understandably--the reason why we have heard nothing whatever about the issue in the 16 years since this Government came in in 1979.

I should point out to the House that all those figures exclude those Peers by succession who never appear. I do not quite know how many of them there are, so to speak, in the woodwork--if I may use that somewhat indelicate phrase--but the ones who are there and do not come to the House are not, I imagine, natural supporters of the Labour Party. They form a sort of static reserve which the party opposite could no doubt call upon if they so wished. I have to say to the House with all the seriousness that I can that it is not a situation which, when it comes into government, my party will be prepared to tolerate.

I am not introducing the first Queen's Speech of a future Labour government; of course, I am not. However, I believe that it would be helpful to the House to know that the abolition of the right of Peers by succession to sit and vote in this House is a measure to which an incoming Labour government is pledged. I am sorry if it offends Members opposite--although, actually, I am not too sorry--but I fear that history is about to catch up with your Lordships' House.

Had the gracious Speech had anything to say about parliamentary or constitutional reform, we would of course have listened to it with interest and participated in any discussion that there might have been. Had it had anything to say about the reform of your Lordships' House in the past 16 years, we would have listened to it and participated in any discussion that there might have been. But nothing has been said about it; there has been no discussion in the past 16 years because, very simply, the Government clearly do not want to alter a situation in which they have an enormous preferential position. The fact that that has not happened merely shows, yet again, that neither in terms of the real problems facing the British people nor in terms of making Parliament work better and being seen to work better have the Government lived up to their responsibilities. They are tired and have been there too long. It is time that they went.

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9.35 p.m.

The Lord Privy Seal (Viscount Cranborne): My Lords, in spite, if I may say so, of the tone of the speech of the noble Lord, Lord Richard, this has been a most useful and interesting debate, distinguished, as so often in this place--in spite of its obvious manifest failings, as stated by the noble Lord, Lord Richard--by strong opinions underpinned by deep knowledge and experience.

I was particularly grateful to the noble Lord, Lord Jenkins of Hillhead, for his what I might perhaps term characteristically valetudinarian remarks in which he paid a generous tribute both to the Government Front Bench in this House and to your Lordships' House in general. He was also particularly polite about me. It is not, I hasten to add, mere false modesty which makes me protest as strongly as I can that he flatters me merely in order the better to damn the Government as a whole.

Rather than playing on a sticky wicket in Northampton--I am not quite clear why the noble Lord chose to make derogatory remarks about what I understand to be an admirable town in the Midlands--I was playing on a batsman's pitch at Lords. However, if I attempted to answer every point made by every noble Lord who has spoken tonight, particularly the half dozen or so expert economists from both sides of the House to whom we have listened with great pleasure, I should detain your Lordships even deeper into the watches of the night than we are at the moment. Therefore, I think the House will forgive me if I try to answer only some of the points made and content myself with answering the others by letter.

I would say to my noble friend Lord Boyd-Carpenter and indeed to the noble Lord, Lord Desai, whose speeches, as always, I listen to with the greatest of attention, interest and, if I may say so, profit, that as regards the details of next week's Budget, the noble Lords will understand, better than anyone else, that I cannot at this stage possibly comment.

My noble and learned friend Lord Fraser set out extremely clearly in his opening remarks this afternoon the thrust of the Government's economic strategy since 1979. I know that the noble Lord, Lord Peston, was pretty complimentary about this country's performance between 1964 and 1979 in what I found a most interesting speech. I hope he will not think I am being patronising in saying so. However, let us not be mealy mouthed about it. By 1979 this country, with all its proud history, had become an economic and political basket case. Those of us who love our country and want to feel proud of it--that includes every Member of your Lordships' House--and who, like myself, have spent much of their lives abroad, felt ashamed at the sniggers mention of the United Kingdom occasioned among foreigners. Those sniggers, by 1979, were richly deserved.

By then, after nearly a century of relative economic decline under governments of all political stamps, we had become a sort of demoralised Ruritania. I do not need to bore your Lordships with an analysis of how that was brought about. However, I suspect weak

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government and over mighty subjects in a corporatist and socialist consensus would loom large in any such analysis.

As my noble and learned friend Lord Fraser said in opening this debate, one cannot reverse such a decline in an afternoon. However, as he also said, in 16 years we have made more than a start. My noble and learned friend reminded us by way of example that British industry was, hardly surprisingly, more productive than German industry in the 1940s, but that by 1979-- 30 years later--German industry was 50 per cent. more productive than British industry. After 16½ years of Conservative government that lead has fallen to only 10 per cent. We are not there yet but we have made substantial progress. I am particularly grateful to the noble Lord, Lord Peston, for acknowledging that achievement, particularly in view of what the noble Lord, Lord Desai, said on the importance of productivity growth.

Of course my noble and learned friend was also quite right to remind us of what has happened to our country's economy both since 1979 and during the steady recovery from the recession of the past three years. I shall, with your Lordships' permission, return briefly to this later. But, if only in one sense, this evening I am perhaps a Maoist. I dwell on the past merely to serve the present but, quite rightly, it is the future that concerns the electorate today.

So we must remind ourselves of the features that will characterise the successful economies of the 21st century, and the noble Baroness, Lady Seear, did so with her usual grace and eloquence. My noble friend Lady Rawlings and my noble friend Lord Wade acknowledged that those economies will increasingly be knowledge based. As they pointed out, communications and innovation will therefore run like a golden thread through everything that they produce, both tangible and intangible. Research by producers will become increasingly important as the time gap between concept and application narrows. Labour forces will become more flexible, as will working hours, and perhaps the dividing line between work and leisure will become fuzzier.

The noble Baroness, Lady Seear, talked about the need to grasp the opportunities worldwide in order to make sure that our domestic performance improves. That is already happening. I saw a particular instance of that only yesterday when, at a particularly enjoyable occasion at my local University of Hertfordshire, I was much struck at the degree-giving ceremony by the very large number of people from the Far East and southern Europe who came to St. Albans Abbey to take their degree. I suspect that that is the kind of thing that the noble Lady was talking about in her speech this evening.

I believe that the world will reflect the developments that I have tried, all too briefly, to describe. I believe that trade protectionism will not only become undesirable but impractical. Nationalised industries will go the way of the dinosaur, killed by their inherent contradiction, the contradiction that the state cannot serve the consumer as well as the private sector can. In

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parenthesis, it does so even less well in a rapidly changing market because of its own irredeemable leaden footedness in management of that kind.

Your Lordships will be well aware that assertions of that kind are nothing new. They have become almost a cliche of today's political and economic discourse. That does not mean that they are not accurate. Indeed, I believe that they are accurate. If they are accurate they dictate the kind of policies that will yield the best chance of economic success for our nation--policies based on free trade, a low level of government interference in industry and commerce, and on individual freedom and choice.

As the noble Lord, Lord Harris, my noble friend Lord Boyd-Carpenter, and my noble friend Lord Skidelsky, in a remarkable speech, emphasised, those matters are made possible by low taxation and low government spending. I shall plead lack of time as my excuse for not indulging in a fencing match with the noble Lord, Lord Desai, on his strictures about the relative unimportance of a low level of government expenditure as a proportion of GNP.

My noble friends Lord Astor and Lord Wade added the need for deregulation. I hope that their ambitions in that regard will to some extent be satisfied, as the pace at which deregulation orders are brought forward in your Lordships' House will accelerate from now on.

I believe that if those realities dictate our economic policies, they also dictate our policies in other fields. There is one field in particular which seems to me to matter more than a little to this country. It is often claimed by those who describe so graphically the nature of this rapidly changing world of ours that one of the effects of this technologically driven world will be the demise of the nation state. I believe such predictions to be inaccurate and such an eventuality to be profoundly undesirable. While it is true that a smaller world will make frontiers more porous and international co-operation imperative, it will also give power to international organisations. In practical terms I cannot see any entity capable of controlling those organisations except the nation states that created them. Quite apart from anything else, nation states already enjoy one inestimable advantage: they already exist, and as such they are the building blocks of our present attempts to build a coherent and peaceful system of international relations.

There is also another reason why the nation state's continued healthy existence matters in a changing world. That, again, is a point on which the noble Baroness, Lady Seear, touched, but perhaps in a different context. As the noble Baroness said, times of rapid change are very unsettling. Jobs become insecure. Social organisation changes fast. Man who is, after all, a conservative beast becomes bewildered and unsure. He no longer knows where he belongs. I believe that the nation state can provide that reassurance and continuity. For that reason it is of supreme importance today at least as much as it ever has been.

The nation state matters in this changing world so long as it is characterised by two essential but paradoxical features: evolution and continuity. Noble

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Lords might consider those as Tory principles. Since 1979 we have prepared the way for this country to compete in the 21st century. I have to say to the noble Lord, Lord Barnett, that I do not think that such preparation has much to do with magic. It is more to do with hard slog and determination. The framework has been the quest for permanently low inflation, as my noble friend Lord Caithness pointed out in what I thought a most remarkable speech, sound public finances, and addressing the question of debt.

Since we set a target for underlying inflation of 1 per cent. to 4 per cent., the underlying inflation rate has averaged 2.6 per cent. That is too high, as a number of noble Lords observed; nevertheless, it is better than the 1980s when it averaged 7.5 per cent., the 1970s when it averaged 13 per cent., and indeed the 1960s when it averaged, I am told, 3.5 per cent.

Regarding public finances, we shall achieve our objective--the objective, I understand, of the noble Lord, Lord Desai--of a broad balance in the medium term. Of course we shall achieve that. But to do so we have to do more than keep close control over public expenditure although that is axiomatic in our approach. We have to break out from the sterile view that public services can be provided only by public sector finances. It is for that reason that the private finance initiative and challenge funding are so important. I believe that they will play an increasingly important part not only because they are new sources of finance but because the pedestrian sterility which so often goes with public funding for services can by that means yield to a more imaginatively provided service, more swiftly responsive to changing circumstances and so giving better service to those who need it.

The noble Lord, Lord Bruce of Donington, in a perverse way, rather helpfully pointed out the consistency of the Government's approach over the past 16 years. That stable framework, together with our supply side reforms, is actually beginning to pay dividends. My noble friend Lord Prior went so far as to say that the economy is in pretty good shape. And he, as chairman of one of our leading industrial companies, is in a good position to know.

The noble Lord, Lord Richard, asks for facts. The noble Lord, Lord Bruce, and the noble Lord, Lord Peston, rather daringly as it turned out in view of the remarks of my noble friend Lord Skidelsky, interpreted Keynes in the context of investment. I agree with what they said about the connection between investment and productivity. If they will forgive me, it seems perhaps self evident. However, I have to point out that investment is rising and that the CBI--a body much reported on today--says that investment in pensions so far this year is at the highest level for six years. I hope that the noble Lord, Lord Cooke of Islandreagh, will have noted that only yesterday we heard that manufacturing investment had risen by over 12 per cent. on a year ago and that manufacturing investment in plant and machinery had risen by over 18 per cent. Therefore I say to the noble Lord, Lord Barnett--I suspect that he is a little sceptical about historical figures--that if he wants to look at the trend I

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refer him to the London Business School which expects double digit increases of that kind to continue for the next two years.

Exports too have risen by over 24 per cent. in volume terms since the beginning of the recovery. Indeed, they have risen 6.5 per cent. in the past 12 months. I was particularly grateful to my noble friend Lord Prior for the tribute he paid to the efforts of the Foreign and Commonwealth Office in that regard. I wholly subscribe to what he said. The improvement has been extraordinarily marked and I hope that his remarks will not go unnoticed in King Charles Street.

For the first time since the early 1960s, unemployment peaked at a lower level in the last recession than in the one that preceded it. The noble Lord, Lord McCarthy, accused the Government of not talking about unemployment. I hope that I shall be able to make up for the deficiency in a small way this evening. I have to say to him that the same is true of long-term unemployment as short-term unemployment. Our unemployment rate is now well below the European Union average. Indeed, in the last cycle over 2 million jobs were created, twice the rate of France and Italy. At present, for the first time for decades, the United Kingdom enjoys not only a higher percentage of its population in work than it has traditionally enjoyed, compared with our European neighbours, but also a lower rate of unemployment than Germany itself. Nevertheless, as the noble Baroness, Lady Seear, said, unemployment is still too high. We all agree with that. I merely contend that we are going about reducing it in the right way.

With all that--our increasingly well educated workforce and our by now magnificent industrial relations record--is it surprising that we attract more inward investment from the USA and Japan than France and Germany combined? Or that we have grown substantially faster than the G7 average over the past two years? The noble Lord, Lord Barnett, accused us of growing more slowly than countries with high spending governments. After all, as a former Chief Secretary he is better able than I am to diagnose figures. However, since 1981 we have grown faster than Italy, France and Germany.

We are doing many other things. We are running a balance of payments surplus with Asia as a whole, including a surplus with the much-vaunted newly industrialised Asian tigers. The noble Lord, Lord Richard, asked for facts; that is a cross-section. Since we are talking about the noble Lord, I must confess to some puzzlement when I contemplate his party's reaction to all this evidence. On the one hand they seem to say--or at least it is what they mean--as the noble Lord, Lord Harris of High Cross, pointed out, that Tory policies work. Mr. Gordon Brown and Mr. Blair--unlike the noble Lord, Lord Bruce of Donington, whom I exempt from this stricture--seem now to accept that low taxes are desirable, that 10 per cent. is a desirable goal. They--if not their supporters, and I suspect certainly not the noble Lord, Lord Bruce--seem not to want even to tax the rich very highly. They seem at last also to accept that the state should spend a lower proportion of the national output and they seem to

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recognise the importance of the private sector. Superficially they seem to accept that Toryism as a whole makes an economy work. They have even accepted the importance of using the welfare system to encourage the unemployed into work. Unlike a number of noble Lords, what they do not appear to have noticed is that the jobseeker's allowance, which they opposed, is designed to do just that.

The trouble is that they do not quite understand why Toryism works. They may approve of lower taxes in the private sector--or at least some seem to. But they still wish to introduce policies that will raise taxes and kill private enterprise. They do not understand that competition produces competitiveness.

There are a number of examples which I could give and I shall not weary the House at this late hour with examples of nationalisation. However, I wish to draw the Opposition's attention to two matters: the social chapter and the minimum wage. I could not help noticing that at the CBI conference the leader of the Labour Party in another place made the following rather remarkable statement:


    "The social chapter is not detailed legislation. It is a set of principles. The real fear is that by being part of it we may in future agree to the import of inefficient practices to Britain. A Labour Government will not pursue such a course. Each piece of legislation will be judged on its merits. I have no intention whatever of agreeing to anything and everything that emerges from the European Union".

I call that statement remarkable for that is what it is. It is remarkable for the apparent ignorance, which I am sure is not genuine, that it displays of the nature of the social chapter and Mr. Blair's contention that some of its provisions would, if adopted, "import inefficient practices into Britain".

I am sure Mr. Blair realises that he cannot, as he implied to the CBI, shop o la carte once he has signed up to the social chapter. Whether or not he is concerned about the works council directive, parental leave, part-time and temporary workers, he would have to subject himself to QMV. It is true of course that unanimity is required in certain areas, but they are very clearly specified, as the noble Lord, Lord Richard, with his greater European experience, will know.

What makes this even more extraordinary is that Mr. Blair, not content with explaining his wish to the CBI to veto those parts of the social chapter legislation of which he disapproves even though he may not be able to do so, said to this year's TUC Conference,


    "We will become part of the European chapter".

He certainly failed to qualify that undertaking to that audience.

What makes the case of Mr. Blair and the social chapter even more curious is that, at the same time, he calls for an extension of QMV--at least, he did so in Bonn on 30th May this year, when he called for its extension,


    "in the area of social, environmental, industrial and regional policy.".

Perhaps Ms Diane Abbott knew what she was talking about when she told the "Today" programme on Monday:

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    "Labour can say anything it likes so long as it gets elected".

What about the minimum wage? The Labour Party are apparently all in favour of it. They carefully do not say how much it will be. Perhaps that is because they know that it will cost jobs, particularly among those whom they, and we, want to encourage into work; namely, the young unemployed. Under pressure, Mr. Dewar admitted as much in another place on 10th July this year, as did both his Leader and deputy leader. Mr. Blair tried to hide it in what I can only call Ed Ball speak, when he told the Independent on 27th June 1991:


    "Econometric models indicate a potential job impact".

Mr. Prescott was perhaps typically rather more forthright to Mr. Brian Walden on 24th May 1992 when he said:


    "I knew the consequences were that there'd be some shake-out. Any silly fool knew that".

If any silly fool knew that a minimum wage would cost jobs, what should one call someone who, knowing that, still wished to introduce one?

The truth is that the social chapter has been tried in continental Europe, which does not enjoy the Tory negotiated opt-outs to which the noble Lord, Lord Cooke, referred. And what are the results? Our current rate of youth unemployment is less than half that of France and Spain, two countries which are signed up to both the social chapter and the minimum wage. The Labour Party may be long on rhetoric, but in the end it is perfectly clear that, when it comes to the detail, the Labour Party cannot be relied on to get it right.

Nowhere is that more apparent than in what the Labour Party propose for our nation state. I have already explained to the House why I feel that in the modern world nation states are important. The Labour Party pays lip-service to our country while advocating policies that will undermine its ability to protect its citizens and constitutional reform that will destroy the Union. By advocating a massive extension of QMV, they are undermining the Europe of nations which should be our goal and advocating a Europe that might have been attractive to the intellectual fashions of the 1960s. They are doing so at a time when, as the proceedings of the Majorca unofficial summit showed a few weeks ago, our European partners are beginning to see the force of our point of view and are moving away from some of their more corporatist stances. If noble Lords will perhaps forgive me for a brief reference to my own family history, this extraordinary procedure on the part of the Opposition reminds me of nothing so much as an ancestor of mine who became a Roman Catholic on the eve of the 1688 revolution.

In view of all this, I can therefore readily understand why the noble Lord, Lord Richard, preferred to talk about the reform of this House rather than the economy. In his place perhaps I might have taken refuge in the sort of rhetoric that he chose this evening.

The noble Lord was also understandably reticent about his own party's policies. He did not say very much about them at all. He and the noble Lord, Lord Jenkins of Hillhead, concentrated their fire on the Government and this Session's legislative programme.

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Both he and the noble Viscount Lord Chandos, called the programme "thin" and used a number of other words which carry the same meaning. I noted that the noble Lord, Lord Donoughue, in his extremely useful views on the Broadcasting Bill, hardly squared with that view. Indeed, I must say that I too, rather like the noble Lord, Lord Donoughue, and indeed my noble friend Lady Rawlings, find it hard to agree with the noble Lord, Lord Richard.

Suffice it to say that many of the Bills will prove controversial in your Lordships' House, even though the Government consider them to be necessary. If the programme is as thin as all that, let us see whether the noble Lord, Lord Richard, is as right in his diagnosis as he turned out to be in making a similar diagnosis at this same moment last year. The fact is that the programme announced in the gracious Speech continues the supply side reforms of the past 16 years. They were ignored by the noble Lord, Lord Barnett, during the course of his speech but they were well exemplified by my noble friend Lord Astor when he too pointed out the importance of the Broadcasting Bill. Those reforms have had an objective, which is to increase the prosperity of our country. Together with the rest of the programme, they will increase the cohesion and security of our society, about which all sides of the House are increasingly worried.

In short, I believe that the programme brings closer to achievement the twin objectives of this Government: prosperity for the 21st century and stability for the nation. I commend the programme to the House and look forward to debating it in the months to come.

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On Question, Motion agreed to nemine dissentiente: the said Address to be presented to Her Majesty by the Lords with White Staves.


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