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Lord Gibson: My Lords, the point is that the committee chaired by Sir Richard Eyre will report to the Minister and not to the Arts Council, which would have been the case in my day.

Lord McIntosh of Haringey: My Lords, the national institutions are not funded by the Arts Council--

A noble Lord: They are!

Lord McIntosh of Haringey: Well, my Lords; as always, I yield to the greater knowledge of noble Lords. I shall have to think about whether there is any point to

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be made about the involvement of the Arts Council. The noble Lord is right to say that the Eyre Committee will report to the Minister. I should also say to the noble Lord, Lord Jacobs, that it is true that we have not yet sorted out the South Bank. Indeed, that will involve us in very intensive discussion within the next few days and weeks.

I now turn to regional museums. That leads me to the changes which were announced in the Budget yesterday. Speculation at the weekend on the amounts of money that would be made available--particularly that mentioned in the Independent on Sunday--was wide of the mark. That is regrettable. A £9 million package was announced to promote access and education at museums across the country, and up to £5 million for the new audiences programme for the arts to help arts organisations broaden their audiences; to bring new people to the arts; and to encourage young people to participate. Initiatives supported under the new audiences programme will include a scheme to offer reduced price tickets for school leavers, additional touring funds, support for orchestras to build closer links with young audiences and regional challenge schemes including those to assist educational and social regeneration. Only in the next two weeks will we be able to make further announcements about the kind of schemes that will be supported.

Many noble Lords asked me about regional museums. The disparity in funding between regional museums, local museums, Ministry of Defence museums and national museums is a great problem. I do not pretend that we have found the answers to that. However, our departmental spending review will consider that issue, among others, and we shall report on it before the summer Recess. I must respond directly to the noble Lord, Lord Eden of Winton. I was not aware of the problems that he described with the Royal Armouries Museum but I shall write to him and place a copy of my letter in the Library for the benefit of other noble Lords. Although I am unable to propose a solution for regional museums, I acknowledge the importance that is attached to them which has been evident in this debate. I am conscious of the difficulties that they have experienced over many years as a result of reductions in funding.

Noble Lords will be aware that before the election we committed ourselves to the spending plans of the previous Chancellor for this year and next year. Therefore the prospect of large windfalls, other than those announced by the Chancellor of the Exchequer in his Budget, is not great. However, we shall certainly bear in mind the points that noble Lords have made.

I have exceeded my time, although I believe that we are within the time that is allocated for the debate. I conclude by thanking all noble Lords who have taken part in the debate. It has been enormously helpful for the Government to hear the wide range of expertise and passion that has been expressed this afternoon. I hope that my response has not been too discouraging for those noble Lords who have taken part in the debate. I repeat my thanks to my noble friend Lord Puttnam for making the debate possible.

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7.52 p.m.

Lord Puttnam: My Lords, I shall not detain the House long. On behalf of the House I thank the Minister for what has been a frank and sympathetic summing up, probably as befits the subject. It is left to me to thank noble Lords for providing and sustaining what I found to be a fascinating, informative, wide-ranging and good-natured debate. I am very much in your Lordships' debt for making it so.

I identified wholly with just about everything that has been said this afternoon, most particularly with the views of the noble Lords, Lord Gibson and Lord Hastings, regarding the role of the arts in education. There is no more important issue. I believe that there is absolute unanimity in the House on that. I say "just about" because I detected some level of misunderstanding, but that of course is in the very nature of art. Petty squabbles in the world of the arts, as in politics, quickly become splashy news stories for a voracious press. I did not for a moment suggest that Mr. John Tusa created schism, but I felt that in some respects his article sustained it. By not making common cause within the arts we become extraordinarily easy meat for those negative instincts that always seem to be lurking within the Treasury. That does our case no good whatsoever.

Perhaps I may finish with a rapid canter around four heroes, or five if you include my love of Donizetti, or six if you include my affection for my right honourable friend the Secretary of State for Culture, in whom I have enormous faith and confidence. He is a good man doing a difficult job. My first hero is Diaghilev. Had he lived during my era, Diaghilev would probably have made the greatest of all film producers. In some respects I am glad that he was not a competitor! He wrote a letter in June 1921 to the London press, having received ghastly reviews from the Sunday Times and the Daily Express for the opening of his opera, "Chout". The letter makes the case far better than I could as to why I would always urge generosity towards the new. Diaghilev wrote,

    "When I was sixteen, I heard someone say that not a single melody was to be found in all of Wagner; at twenty, I was told that Rimsky-Korsakov's music was mere mathematics; at twenty-five, that Cezanne and Gauguin were frauds. As for Debussy! Strauss! Le Douanier Rousseau! Matisse! For fifteen years people hooted at them, without even suspecting they were making fools of themselves".

Art, I am happy to say, has no fixed point in time. It evolves, mutates and changes. I see that very much as a strength and not a weakness.

Another hero of mine and of the noble Lord, Lord Inglewood, is William Morris. I have already quoted him but I must quote once more. He said that he looked forward to the time when,

    "all men would be artists, and the audience for art would be nothing short of the whole people".

That is why I am passionately in favour of inclusivity not exclusivity. Another very important hero who is no longer much discussed is Sir Robert Meyer, to whom I owe an enormous debt. Robert Meyer's "Music for Children" resulted in my going at the age of 11 to the then newly built Royal Festival Hall to hear a Saturday morning concert. It was for me an utterly transforming

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experience. I am not sure that I ever got over it. I had never heard an orchestra before. My son--my fourth hero--yesterday conducted an orchestra in two schools in North London, one in the morning and one in the afternoon. He is an enthusiastic young conductor. He told me that before starting either concert he asked the audience how many of them had ever heard an orchestra before. He told me that in both cases a tiny smattering of hands went up. That worries me more than I can say because it seems to me that many children today are being denied that very transforming experience which altered my life and, I have to say, is possibly the reason I am in this House today. My Lords, I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

Multilateral Agreement on Investment

7.56 p.m.

Lord Razzall rose to ask Her Majesty's Government what steps they are taking to ensure that the impact of the proposed multilateral agreement on investment is more widely appreciated.

The noble Lord said: My Lords, I am most grateful to the House for the opportunity to review the proposed multilateral agreement on investment. If, for the purposes of my speech, I refer to it from now on as the MAI, I do not refer of course to the company of which the noble Lord, Lord Hollick, is chairman. I thank in advance the noble Lords who will participate in this discussion. I look forward with eagerness to the Minister's response.

I hope noble Lords will think that the timing of this debate is opportune. Although talks on the MAI are currently deadlocked, discussions will recommence in April. Therefore now is a good opportunity for this House to hear from the Government their view as to the likely progress of the negotiations and for the House to reflect concerns which have emerged in recent months as to the implications of signing the treaty in its current form.

For the benefit of noble Lords not familiar with the background to my Question I should explain that the MAI has emerged following the recent and successful GATT round. It is the acceptance by government that consequent upon multilateral agreements on trade in goods (GATT) and multilateral agreements in services (GATS) the time has come for similar rules on investment in the form of a multilateral agreement on investment.

I suppose the motivating factor for this must be that foreign direct investment is now a significant creator of growth and jobs. Indeed, in the period from 1973 to 1996 foreign direct investment flows multiplied 14 times from 25 billion US dollars per annum to the 1996 figure of 350 billion dollars per annum. It is estimated now that perhaps two-thirds of the investment in what is known as the third world comes from foreign direct investment. Therefore the multilateral agreement on investment is of vital potential importance to mirror the GATT and the GATS treaties.

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As noble Lords will realise, the OECD has attempted to negotiate with its 29 member countries, and five countries I think with observer status, a proposed MAI. The first of the three core principles of MAI is non-discrimination. Participants agree to treat foreign investors and investment no less favourably than they treat their own investors; and they agree not to discriminate among investors of different countries which sign up to the MAI. Secondly, national and local government will agree to accept that they cannot restrict foreign investment in any form, such as restriction on buying privatised companies, or in any sector except for defence. The third core concept is that national or local government cannot impose "performance requirements", for example, to ensure local employment, control currency speculation, or require a minimum period for investment.

Noble Lords might ask what the particular concern is about this apparently laudable objective. The first and overreaching problem, I submit, is how little consultation and public debate has so far taken place. When Renato Ruggiero, the Director-General of the World Trade Organisation can boast in February 1998 that,

    "We are writing the constitution of a single global economy",

one would have expected some widespread discussions in the press and media as to the issues involved. After all, the latest GATT round took 10 years to reach satisfactory resolution. The fear shared by many is that we are backing into a treaty by stealth which will have a far reaching and permanent impact upon the global economy.

I am grateful to many of the NGOs and other organisations which have expressed their concerns about the proposed treaty. In the time available there will not be time to list all their anxieties. The fact that an anxiety has not been expressed does not mean that I give it any less importance. However, perhaps I may list some of those concerns. I shall be grateful for the Minister's response to them.

The first anxiety relates to the secrecy with which the negotiations have been conducted throughout the world. Although the Government have denied it, a recent report by the European Parliament's Committee on External Economic Relations highlighted its regret that until now the negotiations have been conducted "in the utmost secrecy" with national parliaments being excluded. In fact most negotiators concerned with the MAI now admit that the process of consultation has been inadequate and has contributed to many of the problems that I raise today.

There are a number of serious concerns about the environmental impact of the proposed treaty. First, in my submission, the Government have failed to provide adequate assurances that the MAI will not conflict with existing international environmental treaties. On 18th June 1997, Angela Eagle responded to a Written Question in another place:

    "We shall also want to ensure that obligations under multilateral environmental agreements are fully safeguarded".--[Official Report, Commons, 18/6/97; col. 166.]

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Despite that desire, we have yet to see detailed analysis of the potential conflict of the MAI with international treaties.

During the Adjournment Debate in another place on 23rd February of this year, Barbara Roche gave an assurance that trading pollution quotas "would not be prohibited" under the MAI. I wonder how the Minister can give such categoric assurances when the OECD's analysis of the relationship between the MAI and multilateral environmental agreements is still being revised. In fact even the US Government, who have performed the most wide-ranging environmental analysis of the MAI, have reserved their position on the relationship between the MAI and the Kyoto Protocol.

Secondly, there is concern about the effects on existing environmental legislation. Ministerial statements so far about the MAI's impact do not address the chief concerns expressed by a number of NGOs. As I understand it, the Government's position is that so long as environmental legislation is non-discriminatory it should be safe from legal challenge. The problem is that that ignores the fact that in certain cases discriminatory environmental legislation is legitimately needed to fulfil environmental goals and is clearly allowed under international agreements. For example, the UN Convention on the Law of the Sea mandates the use of discriminatory measures to ensure countries gain fair compensation from foreign fishing fleets with access to their fishing resources. The UK has asked for an exemption from the MAI for its fishing regulations. Yet any developing country signing the MAI will undermine its ability to control the fishing fleets of richer countries, weakening its bargaining position when negotiating access to its fishing grounds.

Worse still, under the current MAI text, multinational companies could claim compensation on the basis that environmental regulation has effectively expropriated their assets or profits. That has already happened under the NAFTA investment chapter which uses identical language to that contained within the MAI. For example, in Canada the US Ethyl Corporation is suing the Canadian Government for 250 million US dollars for banning its production of a petrol additive that was found to be poisonous. The OECD has acknowledged that this is a controversial area and has promised to reconsider the language on expropriation. However, it is unclear when action will be taken.

The flagship environmental protection measure in the MAI is the proposed binding clause which would prevent countries lowering environmental and labour standards to attract investment. However, as the proposal has evolved, it has departed from its original intent which was to prevent the scrapping of environmental laws leading to a legal "race-to-the-bottom", and to block the establishment of high pollution industrial zones, as currently exist in countries such as Mexico and Brazil. Instead the clause has been restricted to preventing one country gaining a competitive advantage over another by lobbying the government for a derogation from regulation for a specific investment.

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The Government make much of the association of the voluntary OECD guidelines on multinational enterprises with the MAI as a way of providing greater environmental and social safeguards. However, that emphasis on the guidelines is arguably disingenuous because the text of the MAI firmly reiterates their non-binding character and does not allow them to be used in any way as an interpretive guide to the treaty.

Many other concerns have been raised. Time does not permit me to raise them tonight. But the fundamental argument and tenet is that inadequate consultation has taken place on the fundamental issues raised by the treaty. I welcome the Government's response on this. It may well be that we now have the opportunity to deal with that. It appears that the United States currently may not wish to sign the treaty. There are two hot transatlantic issues which still require to be resolved. The first is the issue of expropriation of foreign investment and investment in dubious foreign regimes, and the problem as regards that of the Helms-Burton Act against Cuba and the D'Amato law against Iran and Libya. Secondly, there is the perennial problem that bedevilled the GATT round of negotiations. It is best summarised by the demand of France and Canada in particular to be able to permit a continual cultural subsidy of their film industry in order to prevent, in their view, the domination of the Hollywood blockbusters.

If the United States is going to delay signature of this extremely important treaty, I hope that the Government will take the advantage of addressing in the negotiations a number of the concerns that NGOs and other bodies have raised with them. I hope that by asking this Question today I have cast a little light on what is clearly a difficult but important subject.

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