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Viscount Waverley: My Lords, what are the Government doing to assist the International Maritime Organisation in its activities? What success has the Metropolitan Police had in previous missions to target countries?

Baroness Symons of Vernham Dean: My Lords, we helped to finance the ongoing series of missions and seminars of the International Maritime Organisation for the affected regions. These focused on the need for some states to put in place effective plans to investigate the attacks which occur and to prosecute those involved. In addition, we have funded the participation of two international crime experts from Scotland Yard who have been able to give practical advice and who are helping to develop piracy response plans in parts of the world most severely affected by these difficulties.

Hotels and Guest-houses: Grading Scheme

2.59 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

Lord McIntosh of Haringey: My Lords, raising the quality of all serviced accommodation in England is a high priority, as Tomorrow's Tourism made clear. Inspections by the English Tourist Board, the AA and the RAC under the new harmonised accommodation rating schemes began in January 1998. When the schemes are launched to consumers in September of this year we think that they will welcome the greater emphasis on quality and find the combined rating of facilities and quality much easier to understand.

Lord Dormand of Easington: My Lords, in thanking my noble friend for that helpful reply, I declare an interest as vice-president of the Northumbria Tourist Board and vice-chairman of the All-Party Tourism Group. Can my noble friend tell the House what is being done to define the standards to which he referred? For example, what consultations are being held on the proposed standards? Will the scheme be a statutory one? Further, does my noble friend agree that such a scheme is long overdue and that all other tourist countries have had such a scheme in operation for a long time?

Lord McIntosh of Haringey: My Lords, the standards themselves are enormously complicated. Although I shall not read them out, there are 51 pages of standards for hotels and a further 26 pages of quality standards for guest-houses. These have been agreed after detailed consultation and are being used by the

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inspectors of the English Tourist Board, the AA and the RAC. There is no present intention to make it a statutory scheme but we would not rule that out if it became necessary. However, the reception of the inspection process that has been going on for more than a year has been very good indeed. I agree with my noble friend's last point that this is long overdue.

Lord Inglewood: My Lords, does the Minister agree that it is unfortunate that there is not a single harmonised scheme operated by all the tourist boards across the United Kingdom? Does he agree that that would be very advantageous to the industry as a whole, bearing in mind that the divisions between the home countries are not easily recognised by those beyond our shores?

Lord McIntosh of Haringey: My Lords, I agree entirely with the noble Lord. We would have wished to reach agreement with the tourist boards of all three countries. However, the harmonised scheme that is available in England through the AA, RAC and the English Tourist Board is available in Scotland, Wales, the Channel Islands, the Isle of Man and Northern Ireland under the auspices of the AA and the RAC. Therefore, although it may not be as simple as it should be tourists can have access to the same standards everywhere.

Lord Strabolgi: My Lords, is my noble friend aware that a very successful grading scheme has been operated in France for many years and it is probably easier to understand than all of the various descriptions promised by the Government?

Lord McIntosh of Haringey: My Lords, I entirely agree with my noble friend. I am a great devotee of the nomenclature nationale. It is a little regimental and requires registration by the prefect of the particular department, and classification is integrated with registration. It is a bit conformist, if I may put it in that way.

Lord Naseby: My Lords, is the Minister aware that Tomorrow's Tourism contains a number of other recommendations, not least the one about lay-bys for tourists going to and from these registered hotels and guest-houses? Can that also be given some priority?

Lord McIntosh of Haringey: My Lords, I believe that the noble Lord tempts me into a lay-by that is quite a way from the original Question, which is concerned with the classification of tourist accommodation. Clearly, all of the proposals in Tomorrow's Tourism are being pursued very actively not just by the Government but by the tourist trade itself.

Baroness David: My Lords, does my noble friend agree that in his effort to harmonise these matters everything will be exactly the same? When one wanders round the capitals of Europe, or further afield, it is depressing to find that many hotels are exactly the same and have no character of their own.

Lord McIntosh of Haringey: My Lords, I shall gladly lend my noble friend the details of the standard

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classifications. I do not believe that in all cases they require identical provision but comparable provision, and that is what tourists want.

Baroness Anelay of St. Johns: My Lords, on more than one occasion today the noble Lord has made reference to the English Tourist Board, which will be monitoring the new system. The noble Lord gives me some encouragement. Does the noble Lord mean by his statements on the English Tourist Board that the Government have gone back on their decision in Tomorrow's Tourism to rename our national tourist board? Can he reassure the House that "England" or "English" will remain in the title?

Lord McIntosh of Haringey: My Lords, I was referring to the English Tourist Board as having been responsible historically for the harmonised scheme. The report on the implementation of the scheme to establish a new national body for tourism in England has been produced after very considerable consultation. That is now with Ministers. We hope to make their conclusions public very shortly. I confirm that the recommended name for the new body includes "England".

Lord Dormand of Easington: My Lords, does my noble friend agree that education and training are crucially important if standards in the tourism industry are to be raised? What encouragement are the Government giving to education and training in the industry?

Lord McIntosh of Haringey: My Lords, we are giving huge encouragement. A major section of Tomorrow's Tourism is concerned with education and training. It is our view that the tourism industry in this country can be helped only if we treat it as a serious and responsible profession. To that extent both the skills training proposals and the introduction of the minimum wage are essential.

Pollution Prevention and Control Bill [H.L.]

3.6 p.m.

Lord Carter: My Lords, on behalf of my noble friend Lord Whitty, I beg to move the Motion standing in his name on the Order Paper.

Moved, That it be an instruction to the Committee of the Whole House to whom the Bill has been re-committed that they consider the Bill in the following order:

Clause 1, Schedule 1, Clauses 2 and 3, Schedules 2 and 3, Clause 4.--(Lord Carter.)

On Question, Motion agreed to.

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Taxation and Public Expenditure

3.7 p.m.

Lord Skidelsky rose to call attention to current levels of taxation and public expenditure and their consequences; and to move for Papers.

The noble Lord said: My Lords, these debates on Wednesday afternoon are a bit of a luxury, especially for busy people. They are not directly connected with legislation, but they give the House the opportunity to consider broad questions of policy in a relatively non-contentious way. I very much hope that this Wednesday slot will survive the reforms of our House, whatever shape they take. The debate this afternoon is really our substitute for a Budget debate. Therefore, I should like to thank in advance those noble Lords who have agreed to take part.

Economic writers have always known that excessive government spending can undermine an economy. Government revenues are derived from taxes and borrowing. If rising taxation destroys the incentives and finances of producers, the economy declines. We have also always known that there comes a point, difficult though it is to define, when tax evasion, tax avoidance, smuggling and other economic crimes become endemic and cause government revenues to collapse. In other words, the truths underlying the famous (or infamous) Laffer curve have been known for centuries. I give the following quotation:

    "Attacks on people's property remove the incentive to acquire and gain property... When the incentive to acquire and obtain property is gone, people no longer make efforts to acquire any. When attacks on property are extensive and general... business inactivity, too, becomes general... People scatter everywhere... to places outside the jurisdiction of their present government... The population of a region becomes light. The settlements there become empty. The cities lie in ruins". Those words were written by the Arab scholar Ibn Khaldun in 1377 and have been repeated by most economists over the ensuing centuries. They are particularly apposite to the subject of the proposition before us today.

Taxation is driven by public spending. This century public spending has risen dramatically as a share of national income in all developed countries. To take just our own country, in 1900 the British Government spent 10 per cent. of national income, roughly the level it had been since the Napoleonic Wars, out of which they also repaid a large part of the national debt incurred during those wars. By 1976, the share had risen from 10 per cent. to 50 per cent.

I should like to draw your Lordships' attention to two features of that record which seem of particular interest. First, our most successful period of post-war growth from the late 1940s to the early 1960s coincided with a downward trend of public spending in national income, from 35 per cent. in 1948 to 28 per cent. in 1960. Secondly, we reversed the upward ratchet which started in the early 1960s, earlier than most European countries. Our public spending share peaked at 50 per cent. in 1976 and has fallen fairly steadily ever since--despite the blip in the early 1990s-- down to under 40 per cent. today. The European Union share, by contrast, went on

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rising through the 1980s and has only recently stabilised at a much higher level than our own--at about 50 per cent. of national income.

For much of this second period, the UK growth rate has been higher than that of our European partners. They have stagnated; we have discovered a fresh dynamism. Of course there have been other factors in that turnaround, including the supply side reforms of the 1980s. But the main conclusion I draw is that, within fairly wide limits, it is not so much the level of taxation which influences economic performance as the expectation people have of what the tax burden will be--in other words, the expected trend of taxes. If they expect the burden to go up, their efforts will slacken; if they expect it to go down their efforts will quicken.

That is very relevant to the present situation. Between 1981 and 1997 the tax burden fell from 39 per cent. to 36 per cent. of GDP. Since 1997 it has started to creep up again as a result of what we call stealth taxes--excise duties, tobacco tax escalators, windfall taxes, reductions of allowances, and so on. It is projected to go up to 37 per cent. by the year 2001--a very small amount, I concede, but one which could have large effects if that is expected to set a trend of rising taxation.

That is the first point to which I wish to draw attention. It is not just the level of taxes which determines economic performance, but the expectation of whether taxes will go up or down.

My second point is the close connection between the level of taxation and fiscal rules. The reason is that a budget which is balanced to any large extent by borrowing leads to debt accumulation which has to be financed by higher taxes. If one has no budget rules but simply allows borrowing to plug any shortfall of normal taxes, one gets into an unsustainable debt situation which means one then has to raise taxes. So there is a quite close connection between the level and trend of taxation and budget rules. A balanced budget in the normal sense was achieved only once in our country between 1945 and 1988--from 1968-70 when the noble Lord, Lord Jenkins of Hillhead, was Chancellor. I am glad to pay tribute to him for that achievement.

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