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Lord McIntosh of Haringey: My Lords, what is good enough for Sir Ernest Gowers is good enough for the Sovereign.

Lord Fraser of Carmyllie: My Lords, the noble Lord may say that, but it is the first time that a split infinitive has appeared and I am happy, if nothing else, to record that change in our modernised Britain.

The more dismaying and perplexing paradox is what is said in the gracious Speech about regulation. The Government indicate their drive against inappropriate and overly complex regulation. However, if the Government really go at that with a will, they will not encounter much opposition either in this House or beyond it. But if it is genuinely the desire of the Government to see a reduction in regulation, would not the obvious starting point be to be economic when granting regulation-making powers to Secretaries of State? If they are given such powers, you must anticipate that they will use them. Indeed, one might go further and say that if they are given such powers, you must expect them to use those powers. I noted with interest the words of the noble Lord, Lord Sainsbury, when he said that at least in one provision we can anticipate that there will be a sunset clause in relation to regulation-making powers. That is welcome, but I doubt whether it will be the complete answer to the problems that such additional powers always bring.

Furthermore, I am curious to know this: in aggregate, how many new regulation-making powers are contained in the 28 or so Bills that will be introduced during this Session? When I examine the character of the Bills, I can only predict that there is going to be a massive raft of new regulation-making powers and nowhere will that be more obvious than in the Deputy Prime Minister's beloved transport Bill. As we have already seen, he has decided to funk on taking responsibility for alienating the motorist. If any charges are to be levied on motorists, that will be left to local authorities. If they need to do that, it is possible to bring it about only by the use of regulation-making powers.

It has been reported that Mo Mowlam has said that there is to be a "Star Chamber" for regulation. I do not know what that comment conveys to others, but it strikes me as a rather unfortunate way of declaring one's intention to attack regulation.

However, what has troubled me even more than that infelicity is the indication that the noble Lord, Lord Haskins, is to be "on a ministerial panel at the heart of

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government". Not only that, but as he sits in the Cabinet Office presiding over meetings in Conference Room A, which is where all Cabinet committees meet, I understand that he also has something of the order of 50 staff who are answerable to him. So far as I am aware, the noble Lord, Lord Haskins, is not a Minister in the Government; but he looks like a Minister, he sounds like a Minister and he appears to have the powers of a Minister. If that is the situation, in those circumstances I believe that we should have an opportunity to explore exactly what is the noble Lord's role and exactly what he does. I suspect that in large measure much of what he wants to do are steps of which I would approve, but it is becoming a troublesome matter when an individual holds so much power--I quote again, "at the heart of government"--without being answerable to this House or to another place.

It also particularly troubles me that the majority in another place appears to have abandoned scrutiny in favour of sycophancy. With that abdication of responsibility, it is both our right and duty to take up the task of scrutiny of all regulation.

I do not know exactly what is intended by the statement in the gracious Speech that steps will be taken,

    "to increase the effectiveness of the power to remove regulatory burdens".

I wonder whether what is being suggested is that, in the future, it may be possible to repeal primary legislation by means of secondary legislation. If that is what is intended, I shall be interested to know about it. The idea has certainly been floated in the past, but I am sure that those sitting on the Government Benches would anticipate that any such measure, if proposed, would no doubt incur a significant degree of hostility from your Lordships' House. I shall be grateful if the noble Lord who is to respond to the debate at the end of the evening can give me a categorical undertaking that no such proposal is lurking anywhere within the government machine.

I shall turn briefly to the Financial Services and Markets Bill. I agree with my noble friend Lord Bagri that the Opposition are to be complimented on agreeing--uniquely--that this Bill should be carried over from the previous Session. I very much appreciated serving with the noble Lord, Lord Burns, on the Joint Committee. He chaired that committee so successfully that it serves him right that he has now been given the responsibility of looking into the economic impact of banning fox hunting. I believe that in future he will appreciate the danger of success in chairing a committee of both Houses.

As I understand it, the Government were minded to accept a very significant number, if not all, of our recommendations. As that Bill trudges through its Committee stage in another place, it is difficult to grasp whether all or only part of what we recommended has been acknowledged. In common with many others, I hope that before the Bill reaches your Lordships' House it will be in the best possible shape. I do not want to waste unnecessary time. As my

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noble friend Lord Saatchi said, there is broad agreement that the Financial Services and Markets Bill should work effectively. Although I do not want to waste time, I hope that given the vital importance of the legislation not only to the City of London but to the wider financial community on this side of the Border and north of it--your Lordships will not be surprised to hear me to say that--it will not be suggested that a Moses Room procedure is appropriate for proper consideration of that measure.

I am extremely keen to see the Bill on the statute book in good shape in the near future. From my involvement which is set out in the Register of Interests, I have become aware that from Canary Wharf has emanated a wide range of requests for information which essentially seem to be of a commercial character. It appears to be unnecessary beyond any proper regulatory requirement. That troubles me, not least because it appears that a number of those who might otherwise have been favourably disposed towards such legislation are becoming concerned by what they see as an unnecessary increase in the burdens placed upon them.

I do not believe that those within the Financial Services Authority are to be blamed for this. For too long they have sought to establish a single regulatory regime essentially on shifting sand. As they try to fix best practice, all they can do is give it a best guess. I believe that at the earliest possible time it is necessary to give Mr Howard Davies and his senior team at the Financial Services Authority an opportunity to examine exactly what Parliament requires of them so that they can go forward with a self-assured, confident gait and ensure that, while sound regulation is good for business as was pointed out earlier, there is not imposed on financial services in the United Kingdom a degree of unnecessary burdensome regulation which, far from helping the reputation of the City and those services, simply has the effect of driving them away to other financial centres in Europe and elsewhere.

It is with all those considerations that I particularly look forward to the Financial Services and Markets Bill coming before your Lordships' House. I believe that given the expertise in this House, we shall be able to send it away in an improved form.

5.53 p.m.

Lord Harrison: My Lords, it is an enormous privilege to pass through the Norman Porch of the House of Lords and join noble Lords from my previous chamber--the European Parliament. It is also a pleasure, for several reasons. First, I can speak and be understood in my native tongue, which is English. Secondly, I can dispense with headphones which were my habitual headgear in Brussels and Strasbourg through which I listened to instant interpretation, which sometimes had comic consequences. I recall that on one occasion in the middle of the Gulf War crisis the Leader of the House, a Frenchman from Normandy--whose people are renowned for their prudence and sagacity--rose to address the European Parliament with Gallic gravitas.

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    "Nous avons besoin de la sagesse normande pour trouver une solution a cette crise",

said the interlocutor. At that moment, much to his astonishment, the British MEPs, Tory and Labour, burst out laughing, for over their headphones they had received the translation:

    "In order to solve the Gulf War crisis we need Norman Wisdom".

My third reason for warming to your Lordships' Chamber is the recognition that, surprisingly, the Lords and the European Parliament have much in common, despite the enormous difference in ages. Each is a second chamber concerned with revising and improving legislation and each is characterised by a consensual and co-operative way of working. I have been enormously heartened by the friendliness and fraternity meted out in all quarters of this House. Further, each is the senior House charged with scrutinising legislation from the European Commission. Perhaps we should build on this consanguinity. The House of Lords and the European Parliament should be blood brothers in enhancing citizens' interests.

For the past 20 years I have had the pleasure of representing the unique city of Chester in the beautiful county of Cheshire in both the European Parliament and previously on Cheshire County Council. Five industries predominate in our area: tourism associated with Roman Deva, retailing and, more latterly, financial services in modern Chester. The automobile industry boasts Vauxhall Motors at Ellesmere Port and Rolls-Royce Motor Cars at Crewe--all within my former Euro constituency of Cheshire West and Wirral. Finally, farming in the form of beef and dairy cattle sweeps the plains of Cheshire. It is the best of British. But all of these industries are dependent on the single European market, which is something that we know feelingly in the case of British beef. Likewise, that most quintessential of British-made products, the Rolls-Royce car, is now reliant on German owners for its future development. Far from being despondent, I welcome such European collaboration.

The burden of my speech today is that we in Britain must come to terms with Europe. Most urgently, we must realise, in both senses of the word, the enormous potential of the world's biggest single market of 370 million people, soon to become 500 million strong as the market migrates to absorb the applicant countries of the beckoning east. It is a market which, imperfect though it is, has generated 900,000 new jobs, according to Commissioner Mario Monti's single market report for 1997. I was greatly encouraged when the same year, and during the British presidency of the European Union, the Government made as their priority the completion of the single market. I fervently believe that the fastest way to divest ourselves of unemployment and poverty is to embrace the full Monty of a vibrant and dynamic market in Europe.

My optimism is further galvanised by the emphasis in the gracious Speech on,

    "promoting economic reform in Europe ... more open markets, greater economic growth and new job creation".

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In particular, the Bill that promotes e-commerce will provide the elasticity to elongate and elevate this market. This Bill can stretch trade, commerce and business across the whole of the Continent to the distinct advantage of British entrepreneurs. But it is imperative that in fostering e-commerce we ensure that British and European Union legislation is complementary. In future we must view all single market legislation application and enforcement as something that happens in Britain's backyard, not as something that is over-taxed, over-regulated and over there.

I conclude with a practical example of where Britain is ahead of the field in clearing the undergrowth which ensnares business. Recently, the Government, with your Lordships' help, enacted legislation to combat late payment of commercial debt by introducing a statutory right of interest for small firms--and quite right, too. The Cheshire-based Forum of Private Business has computed that, at any one time, £20,000 million is owed to British firms in the form of late debt. That is a real burden on business, and a disincentive to invest and grow.

But what about businesses trading in the single market? Do they enjoy the same protection? No, not yet. A small businesswoman told me in Chester one day, "As an entrepreneur in the single market, I suffer the double whammy of having to pay my Swedish supplier early, while receiving payment late from the big firm down the road".

I am pleased to say, as former rapporteur on this vexed issue in the European Parliament, that legislation is being formulated to right that wrong. This practical piece of legislation tackling late payment is an essential jigsaw piece in the wider picture of the single market. Our task now and in the future will be to prepare for that changing and developing market, so that British firms can be like the buccaneers of old, plying new and charted seas.

It is time for us, as a nation, to absorb the consequences of the Norman Conquest long ago: to appreciate that Britain was always an integral part of Europe; and, as the gracious Speech does, to lay a belated down-payment on Britain's future in the expanding Europe of the 21st century. We are not alone, and we never have been.

6.1 p.m.

The Earl of Selborne: My Lords, it is an enormous pleasure to follow the maiden speech of the noble Lord, Lord Harrison. He brings to this House his great experience of serving on the county council in Cheshire and then representing the county in the European Parliament. He is clearly well informed on a wide range of European issues. The noble Lord is absolutely right to remind us of the job creation potential in Europe, and that there are 900,000 new jobs in what we must now look upon as our home market. I assure the noble Lord that he will never need any interpretation in this House. He is a model of clarity.

We have noted from the previous speech the need for job creation at an ever-increasing speed. It has been the nature of industry since the Industrial Revolution, or

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before, that we have to work hard at job creation if we are simply to stay where we are. Of course, we cannot afford to stay where we are given the degree of under-employment or unemployment and the industries where early retirement is the norm. Taking the coal-mining industry as an example, the figures are massaged--I use the word clearly--to give the best possible interpretation, and always have been. That is simply because, as mining communities lose jobs, a great many people will be placed on the long-term sickness register. When jobs reappear in the sector, rather surprisingly one might think, the number of people on the register will go down, because jobs will be available to those who would rather work than be registered sick or unemployed.

Mining is an example of an industry that has moved into completely new fields, leaving people who are highly trained in one sector ill equipped for some of the new industries. It might be seen as a model for what is required from our science and technology base. It is obvious that if we are to create new jobs--from markets in Europe or production in this country, or both--they can be underpinned only by the relevant science and technology. In this country we have been very good at creating jobs ahead of our competitors by applying science and technology from our own science base at a rapid pace.

I am alarmed, therefore, to see that the British public is, at a certain level, ambivalent about the opportunities that science and technology can offer--sometimes for reasons that are clear. It is obvious that if there is a disaster such as Chernobyl, there will be grave concern about the nuclear industry sector. Likewise, as a result of the BSE crisis, we see grave concern about many aspects of the food industry and agricultural production. Understandably and perhaps rightly, that is manifested in concern about genetically modified products.

However, the biotechnology industry, particularly in the field of medicine, is one of the industries where we must look for job creation, and indeed improvements in the quality of life. Whether we think that genetically modified food will be relevant to our own markets is open to doubt. However, it is clear that in the pharmaceutical sector, in vaccines and the like, genetically modified products will certainly be of great importance.

Therefore, it is astonishing that there is widespread applause for those who, having demanded extensive trials of genetically modified crops, then go out of their way to disrupt those very trials. Just a moment's thought suggests that it is a denial of all logical demonstration and research--the very background to the job creation for which we must look in the future. So I strongly hope that we understand that job creation and improvements in the quality of life in this country can be achieved only by means of objective and well-tested research and the experimentation that goes with it. It is then for the policy-maker to determine whether the new technology is appropriate.

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The businesses referred to--the 900,000 new jobs in Europe and others--will frequently be generated by those who will be starting again for the second or even third time in their working career. Lifelong learning is very much the norm now, with many people--possibly many noble Lords in this Chamber--returning to university or college more than once in their career. I was pleased, therefore, to see mention in the gracious Speech of an e-commerce Bill. It is from precisely such sectors as these that we all have so much to learn, be it as employers, universities or colleges, about implementing the new opportunities for job creation.

One of the best White Papers produced during the past 10 years was Realising our potential. It set out the base for the future organisation of science. It was uncontentious, and was supported by both sides of the House. It gave us the Foresight exercise, which led to the collaboration of industry, scientists, policy-makers and consumers. That precedent is running well. It is perhaps a truism to say that in this country we are poor at implementing research although very good at doing it. Much has changed over the past 10 years. Many initiatives have been followed through from universities and science parks to small businesses, creating half a dozen jobs which can lead rapidly to many more. Those are the jobs for which we shall be looking in the future. I earnestly hope that any tendency in this country to be disparaging about our science base and to dismiss the objectivity of our publicly funded science can be well and truly quashed.

6.8 p.m.

Lord Elder: My Lords, it is with what I am sure is the traditional degree of trepidation that I rise to address the House for the first time. However, I suspect that like many before me, I find my task made a good deal less daunting by the helpful and friendly welcome that I have received from your Lordships and from members of staff since arriving here. Whatever other reforms are in store, I very much hope that one thing that will not be reformed is the welcoming civility with which Members of this House accept newcomers.

I arrive here after almost 20 years' involvement in politics. I worked for two Members of this House when they were in another place: the noble Lords, Lord Healey and Lord Merlyn-Rees. I worked for the Labour Party in Scotland, latterly as General Secretary and was then John Smith's chief of staff when he was Labour leader.

However, I have always been very grateful for the eight years I spent in what I shall risk describing as the "real world"--that well-known nationalised institution, the Bank of England. I went there immediately after leaving university, where I had studied some, but not much, economics. I believe that I was at the Bank long enough to realise that what economics I had learnt at university had probably been wrong, without being there long enough to learn anything very certain in its stead. That is perhaps as well as recent certainties in economics have not always proved long lasting. Certainly, I was never made aware, from the experience of the 1960s and 1970s or

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indeed from most of the 1980s and 1990s, that the present combination of low inflation, sound finance, growth and falling unemployment were even possible.

Those years away from politics, along with a brief spell more recently in a consultancy where I was able to continue my interest in financial services and in the energy sector, have been most useful in providing some kind of a sense of perspective which is not always easy to retain in the concentrated environment of the political world.

I have come to Westminster just as the Scottish Parliament has been set up, after many years of debate, in the latter stages of which I played a small part. To those who regard it as curious that I should do so and who would like to portray Westminster as irrelevant to Scotland's future, I simply restate my belief that we are, and should remain, part of the United Kingdom. Like many others, I believe in devolution, with Scotland having a proper level of its own government, but very much within the UK and the European Union. That was certainly the belief of John Smith, for whom I had the privilege to work both early in the 1980s and later when he was Labour leader. He had a great commitment to devolution and an even greater commitment to, and belief in, social justice.

He believed that social justice and economic efficiency, far from being incompatible, in fact worked together: that one could not achieve the efficient working of the economy if one had vast unused resources. Social justice was not just about giving financial support to the unproductive, but also about getting all back into productive work. It was the pursuit of those ideas that lay behind the setting up of the Smith Institute, with the activities of which in Scotland I remain somewhat involved, and which is doing much good work in looking to set that agenda. I wholly support that view. Prosperity, the steady increase in the standard of living in an efficient and productive economy, is not only consistent with a socially just and caring society, but in a truly civilised society, prosperity and social justice reinforce each other.

I therefore especially welcome the Government's commitment as set out in the gracious Speech, which shows that the social justice agenda is very much at the core of the Government's actions. While John might have spoken of "economic efficiency" and "social justice", the gracious Speech talks of "fairness" and "enterprise", but the essential truth is that the two are inseparable.

These ideas are now at the very heart of government. It is interesting to note that when they were set out in the United States by Kuttner in The Economic Illusion in the early 1980s, they were seen to be running very much against the tide of Thatcherite Reaganomics of the time.

Measures such as the introduction of the second pension and the continued development of the New Deal are just some elements of the gracious Speech which sit very well with the record of a government who, through the New Deal, the national minimum

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wage, the increase in child benefit and the investment in education are working to transform the chances of all.

But there is much more than that to welcome in the gracious Speech. As a special adviser in the Scottish Office in the first two years of this Government, I had the pleasure of serving on the working party in Scotland on land reform. It is good to note that progress is to be made on the right to roam in England and Wales.

As regards transport, as a person who does not now drive, and therefore has more than just a theoretical interest in the quality of the public transport network, I especially welcome the commitment to the development of that network which is to be so much a feature of the work before us in the year ahead.

It is my intention to support my Government in the Divisions ahead. I say that fully aware that this has been, and rather often in the past few weeks, the sort of introductory remark which was usually followed by an explanation as to why it would not be possible to do so in that particular case.

However, I have been asked to come here by the elected Government, not just to help to provide a contribution to the scrutiny that this House gives to legislation, but also to ensure that the Government's declared programme should be accepted by Westminster. I regard that as a mandate more than equal to any other in this House.

I look forward to supporting the Government's programme for social justice in the United Kingdom, based on fairness and enterprise, and to participating in your Lordships' deliberations on these and other matters in the months ahead.

6.14 p.m.

Lord Cooke of Islandreagh: My Lords, it is my pleasure and privilege to congratulate the noble Lord, Lord Elder, on his maiden speech. He spoke with clarity and good sense. The noble Lord obviously has a sound background. Being a close associate of John Smith and secretary of the Scottish Labour Party was a good start. I understand that the noble Lord is also a hill climber and continues to be so despite a heart transplant. I am sure that he will continue to climb. I know that your Lordships will welcome contributions from the noble Lord in future.

The noble Lord, Lord Sainsbury of Turville, gave us a wide review of the economic situation. I noted with pleasure that he emphasised the importance of competition in the provision of energy with fair prices. I wish to speak on energy and electricity prices because we have a particular problem in Northern Ireland. I suggest to your Lordships that it is even more important that the economy prospers and expands there in the next few years so that jobs will be available for all, which will reduce the temptation for some to engage in anti-social activities.

The development of the economy is handicapped at the moment by remarkably high electricity prices. Northern Ireland currently has the highest priced electricity in Europe. Large industrial users pay more

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than 40 per cent in excess of equivalent plants in Great Britain. Obviously, that handicaps business development and obstructs inward investment for activities which require electrical power. The handicap of the high cost of electricity in Northern Ireland has recently been highlighted by the CBI, the Institute of Directors and in particular by the report of the energy working group led by Sir George Quigley. Each made recommendations to Strategy 2000. A draft document was prepared by the Department of Economic Development. It is now out for consultation.

Most of the price disadvantage to Northern Ireland electricity users is caused by the manner in which the electricity generating stations were privatised in 1992. They were not sold in a straightforward manner as happened in Great Britain. The long-term contracts which were offered extending to the year 2010, and some to 2020, required plant to be made available for supplying power. It is against availability that payment is made.

These availability payments, which increase with the percentage of plant made available, are sufficient to cover all costs except those for fuel and include profit. When power is delivered the fuel required is paid for under an agreed formula. The companies which accepted these contracts to operate the generating stations paid cash for a guaranteed cash stream against availability until 2020. The size of the availability payments require Northern Ireland electricity users to pay £40 million a year above the costs of generation. The money paid to the Treasury in 1992 for these contracts amounted to twice the sum per kilowatt installed compared with the amount paid in Great Britain. That accounts for the high availability payments which the Northern Ireland Electricity Power Procurement Business must pay to the generators.

Almost as serious is the fact that the long-term contracts tie in elderly and relatively inefficient generating plants to the end of the contracts. In Great Britain, many aged coal and oil fired stations have been replaced by very efficient combined cycle gas turbine generators which have brought about steadily reducing power costs. Similar modern generators in Northern Ireland could save electricity consumers another £40 million per annum. But the path to modern efficient generators is effectively blocked because if independent power generation reduced the load on the contracted generators the availability payments would remain unchanged and the price per unit from the contracted stations would increase.

Under the European Union energy liberalisation directive, an increasing percentage of power must be thrown open to competition. During the second half of this year, we have had a form of competition available to 26 per cent of the large users, and due to ingenious work by the director-general of OFREG savings of about 10 per cent have been enjoyed by the large users. Unfortunately, the regulator has no power to question the high availability payments made to the contracted

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generators as these are established by government contracts, a fact which makes genuine competition in Northern Ireland impossible.

Sir George Quigley's working party and the other interested parties have made clear that there is only one solution. Those contracts with the generators must be bought out by government without delay; first, to permit true competition, and, secondly, to encourage building of new efficient generating stations to start now.

A gas pipeline from Scotland to Northern Ireland has recently come into use. Ballylumford power station is now fired with gas and available to the city of Belfast. There is a proposal to extend gas to Londonderry and the north-west, but private investment will cover only part of the cost. Government, I believe, should get involved as that pipeline has strategic implications. Lower cost energy in the north-west would encourage industrial development and employment in that region.

The energy scene in Northern Ireland could really open up next year. Cross-border competition in both electricity and gas could be a reality. There is exciting news of a new and very large gas field off the west coast of Ireland which could bring a large gas main from the west to Great Britain through Northern Ireland. This should and could be very exciting, but the road block caused by the contracts with the generators must first be removed. Why should Northern Ireland be so handicapped compared with Great Britain and the Republic of Ireland as a direct result of government action in 1992 which was based on predictions which have proved very wrong.

I do not blame this Government for anything to do with those contracts. Nevertheless, I believe that it is their duty to look immediately into the matter and to remove this major obstacle to development of the economy in Northern Ireland. I do not ask the Minister who will respond to give a reply. The matter needs to be studied thoroughly by the Secretary of State for Northern Ireland.

6.23 p.m.

Lord Gavron: My Lords, I should like to start with an apology. Many noble Lords may think that I have already made my maiden speech. My name was indeed put down on my third day in this House by a noble Lord who is also a longstanding and dear friend. He did not consult me. He saw a suitable opportunity for me and felt confident that without any preparation I could "wing" it. I failed. I could not do so; I was not quite up to it. But such is the kindness and support given to new Members of this House that, to my surprise and delight, I was later congratulated on having made my maiden speech so early. The warmth and encouragement that I have received from everyone in this House--from noble Lords, and the expert and sympathetic members of staff--have been a revelation to me and must be remarked upon.

There were references in the gracious Speech to enterprise and job creation. Those were given further emphasis by the noble Lord, Lord Sainsbury of

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Turville, today. I should like to talk about a new development to protect business start-ups and to reduce their mortality rate in their early years.

Business incubation units are protected environments in each of which a dozen or so new businesses can spend their early years. They were first invented to raise chickens. Day-old chicks were put into incubators which kept them warm and dry and safe from predators until they could fend for themselves. Business start-ups have a great deal in common with day-old chicks. They are vulnerable, inexperienced, with a high mortality rate. They stand alone among the predators, who are not cats and foxes but bankers, accountants, lawyers, public relations people, consultants, office suppliers, and so on. All those people, who can be such wonderful allies when you know how to work with them, can be dangerous bedfellows when you are a day-old chick.

When I started my business there were no such things as incubator units. My life was dominated by loneliness. I scarcely met another entrepreneur engaged in a start-up, either in my business or any other business. I made a series of awe-inspiring mistakes which in retrospect were hideously elementary. They nearly put me out of business. In fact, my business was technically bankrupt for quite a long time. Luckily, I did not know enough to spot it. I knew something was wrong and I eventually took some figures I had cobbled together to show an older and more experienced friend. He studied them for a long time and then looked up. "I have only one solution for you", he said in sombre tones. I waited anxiously. "South America"!

I looked for a second opinion. Medical second opinions have done me well in the past. This second opinion saved my business. "What you need", said my second guru, "is a good accountant". He helped me to find one and I remained closely attached to the one he found for the next 30 years. He introduced me to concepts hitherto unknown to me, such as monthly profit and loss statements and, above all, the importance of cash flow. Healthy businesses need profits, it hardly needs to be said. But cash flow, I discovered, is like oxygen: we never talk about it but without it we are dead in three minutes.

The companionship of an incubator unit would have dealt with my loneliness, which was depressing. We could have discussed together the mistakes we had made, and possibly have avoided the mistakes we were about to make. Those of us who had no business people in our families would have had the equivalent of a business family in the same or adjacent building. The mere proximity of other day-old chicks generates warmth and moral support. The sharing of facilities creates great economies.

There are about 80 business incubators currently operating in the UK with about another 20 being planned. There are between 15 and 20 start-up businesses in each unit: 1,660 overall, employing a total of 6,800 people. The survival rate of start-ups in incubators is almost 80 per cent compared with around 35 per cent in the outside world. Businesses spend on

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average three years in an incubator unit. On the whole, high technology businesses and commercial businesses can pay for themselves in incubator units. The London Business School's incubation unit, which I helped to found, provides fully serviced units for £400 per person per month. All heating, lighting, cleaning and security is included and each tenant is provided with a desk, a telephone and a personal computer.

Another important function of incubators, apart from launching the Microsofts of the future, is to help start-up businesses in deprived areas. Those incubators, or the people in them, cannot quite pay for themselves and they have to be subsidised. But it is an economical way of developing businesses, and thereby employment, among the socially excluded, who are also mentioned in the gracious Speech. In the USA, with government support, 5 per cent of all incubators are focused on ethnic minorities, women entrepreneurs and disadvantaged workers. They are also used to help to redevelop areas in industrial decline.

The DTI has shown great interest in the incubation movement, but as yet given only modest, but valuable, funding. We must hope that this will develop into more substantial support for incubators in areas of special need. Business start-ups are hugely important in our economy. I applaud the encouragement given to entrepreneurs by our Chancellor. We need the entrepreneurial culture to be encouraged in our business schools and in our businesses, in our universities and in our secondary schools--and even in our communities and our families.

If any noble Lords have young people in their families or among their acquaintances who show signs of wanting to start businesses, I hope they will encourage them. If we can foster and nurture the entrepreneurial spirit in our country we will be able to look forward to a brighter economic future.

6.31 p.m.

Baroness O'Cathain: My Lords, it is truly a great pleasure to thank the noble Lord, Lord Gavron, for an excellent maiden speech, although in view of his comments about having received his congratulations previously on his non-maiden speech I am somewhat worried about doing so!

I am not at all surprised by the quality and content of his speech, opening the eyes of all of us to the idea of business incubators. I have been impressed, ever since I met the noble Lord long after he made what he so openly described as those hideous mistakes. His publishing and printing interests have significantly raised standards in those sectors to the benefit not only of consumers but the country as a whole. His quiet determination in the pursuit of excellence in his business interests, and his unselfish giving of time, talents and sponsorship money to the arts, have all made me a long-time admirer. I am sure that I can confidently say on behalf of the whole House, "Welcome, congratulations, thank you, and we sincerely look forward to your future contributions".

The gracious Speech reiterated the central economic objectives of the Government as being,

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    "high and stable levels of economic growth and employment".

Nobody could, or should, quarrel with that. However, inevitably there will be differing views as to how these objectives can be achieved. I am, however, concerned that the objectives are not sustainable in the long term. Above all, we must ensure that we take the longer-term view in all the issues over which we have, or think we have, influence.

Two particular measures which have been introduced by the Government strike me as making the attainment of these objectives very difficult indeed. The first is the apparent disregard of the impact of high real interest rates and the high exchange rate on industry, particularly manufacturing and other industry sectors operating outside the mega-successful pharmaceutical, software and telecommunications sectors.

The Minister, in his opening speech, reiterated the string of measures in the gracious Speech which would support the knowledge-driven industries, but studiously avoided mentioning the impact of high interest rates on the bedrock of British industry. I hope that the noble Lord will have time to read in the Official Report the speeches, particularly the maiden speeches, in this debate which he has missed in the past one and three-quarter hours.

The second measure introduced by the Government which makes me fear for the attainment of the objectives is the impact of the two year-old decision vis-a-vis ACT and pension funds. My noble friend Lord Boardman mentioned that. I make no apology for mentioning the ACT and pension funds issue yet again, but shall not dwell on it in my contribution today. I mention it only because I hope that some time can be made available for a full-scale debate on the issue in the not too distant future. An audit of the actual impact of the decision, some two and a half years on, should not be seen as a hostile suggestion. Any business worth its salt undertakes such audits on past investment or other strategic decision. Such a debate could put some minds to rest or even cause the Government to look again at the issue with the benefit of hindsight and two and a half years' data.

So back to my major concern about the situation of British industry--and commerce, too--and its ability to play its part in the achievement of the objectives of high and stable levels of economic growth and employment; namely, the high level of real interest rates. One can infer from the latest minutes of the Monetary Policy Committee (relating to its meeting on 3rd and 4th November) that the committee is concerned about the rise in house prices at a level which is higher than the rise in mortgage interest rates. This can be,

    "thought of as expected real capital gains more than offsetting the real cost of borrowing",

measured by the mortgage interest rates less expected consumer price inflation. Viewed from the relatively affluent south-east, where many of us are based--and where all of us work--such a situation could lull us into a false sense of security about the future

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performance of the economy and its ability to meet the two objectives. Because of the cushioning effect of capital appreciation on the major asset that most people possess--namely, a house--little attention is paid to the effect of high interest rates on other parts of the economy.

The cost of borrowing for investment (which is vital in order to maintain and increase our competitiveness as an industrial economy) is very high in real terms. Indeed, the nominal cost of borrowing for manufacturing companies is considerably higher than manufacturing output inflation. It is not only manufacturing companies which have such a problem. In the retail sector, there is significant deflation in practically all products, other than those effectively controlled by the Government; namely, tobacco and petrol. In the grocery distribution sector, there has been an increase in deflation month on month for about 12 months now and prices are some 2.5 per cent below the level pertaining 12 months ago. I hope that the noble Lord, Lord Jacobs, takes some comfort from that--and it is not due to the company he admires so much and has mentioned not only today but on previous occasions.

Of course, this is great news for consumers and for the economy as a whole in the short term, but how can future investment be financed and how can dividends be either maintained or increased to ensure that shareholders continue to hold their shares rather than rushing off to subscribe to a flotation of a company which has yet to produce anything?

Many of the companies at the heart of the British economy are probably looking at scenarios where the cost of borrowing in real terms could be in double-digit figures when the underlying rate of inflation hovers around the 2.5 per cent level. If one uses the EU inflation formula of the harmonised index of consumer prices, the real level of interest rates is much higher. The inflation level in September, based on the harmonised index of consumer prices, was 1.2 per cent, exactly the same level of inflation as in the euro area. As an aside, we seem to have achieved one of the desired effects of being members of EMU without membership, but another desired effect escapes us; namely, low interest rates. I hope that your Lordships will recognise how even-handed I am on this issue!

Although I am on record in my support of the Monetary Policy Committee and the decision to give limited independence to the Bank of England, I am very concerned that inflexibility regarding the target set by the Chancellor constrains the committee's ability to react to the sectoral and geographical imbalances in the economy. I fear that if this is not tackled, the objectives of high and stable levels of economic growth and employment will not be met.

In a further section of the gracious Speech, it was stated that,

    "The new system of monetary policy-making ensures that interest rate decisions are taken in the best long-term interests of the economy".

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I really am not so sure. I wish I were. I fear that the imbalances are getting worse and it is sadly true that the industry sectors worst affected by high interest rates and the high exchange rate are those which employ the greatest number of people.

We have seen recently that a major clothing retailer has decided to source its products increasingly from the Far East and has served notice on no fewer than three major UK suppliers which, in turn, have had to make many thousands of staff redundant. The high exchange rate, which of course benefits imports from such an area, was certainly a major factor in this. The people affected must have smiled a wry smile when they heard that the Government's objective included high and stable levels of employment.

Of course, there are other factors--factors over which no UK government can have any effect. Although the gracious Speech contained many expressions of confidence which can be explained only by the belief that they can achieve miracles, such as,

    "My Government will seek to modernise the United Nations",

the Government cannot effect a return to normality of price and other indicators in countries such as Thailand, which has a year-on-year deflation rate of 0.5 per cent and an industrial production level increase of 15.4 per cent, or Korea, which has an industrial production growth of 18.1 per cent.

Those are the harsh realities of extreme competition from the Far East facing our manufacturing and other industrial sectors in supplying our home market and the export markets where we compete. I am not a Cassandra, but I believe that the Government are not paying enough attention to the huge problems caused by high interest rates and the high exchange rate. Sadly, the objectives of high and stable levels of economic growth and employment are at risk.

Finally, I hope that the somewhat self-congratulatory attitude concerning the workings of the Monetary Policy Committee, which is easy to detect in the gracious Speech, will not become an unquestioning mantra of praise for the operations of the committee. I repeat what I stated earlier: I support both the concept and workings to date of the committee, but there is widespread concern about its selection and composition. That concern has been heightened by the spectacle of the internal squabbles being played out in public, which is also somewhat unedifying. I understand from the newspapers that the issue of adequate research facilities being provided for the independent members has been solved, but concern remains over the two matters that I have just mentioned: the selection and composition of the committee.

At the conclusion of the debate in your Lordships' House on 4th November, there was little or no acknowledgement of the seriousness of those concerns. The Government should respond to those concerns, and give an undertaking that they will not be ignored.

6.41 p.m.

Lord King of West Bromwich : My Lords, it is a privilege to be a Member of this House, a fact of which

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I am very conscious as I make my maiden speech. I am also the first Member of this noble House from the Sikh community. Incidentally, today happens to be the birthday of Guru Nanak, the founder of Sikhism. I wish to take this opportunity to congratulate the Sikh community world-wide on this special day.

I am extremely proud of the Sikh community and of all the communities of multicultural Sandwell whom I have the honour to serve as leader of their local authority. I wish also to thank all noble Lords and the staff of the House for making me feel so welcome and looking after me so kindly. I welcome the opportunity today to speak about industry, social and economic affairs. The relationship between those issues is fundamental to areas such as Sandwell.

Sandwell lies at the heart of the Black Country in the West Midlands and has one of the most heavy manufacturing- based local economies in Great Britain. During 1996-97, a total of 38.6 per cent of all jobs in the borough were in manufacturing. It is therefore obvious that manufacturing remains a major provider of jobs in Sandwell. We take pride in that and in our ability to come up with the goods that the country needs. We take pride, too, in Sandwell's skilled and dedicated workforce.

We cannot, however, hide from the fact that over recent decades manufacturing has suffered in successive recessions and that, inevitably, deprivation has been left behind in the wake of industry's downturns. Sandwell Council--which I have the honour to lead--is therefore committed to leading the regeneration of the area in order to tackle the scars of deprivation. There can be no doubt that a number of measures outlined in the Queen's Speech will give impetus to the initiatives that Sandwell is promoting to boost local industry and the Black Country economy. As a local businessman put it recently,

    "Sandwell has got to do what it already does, but better".

Our base of manufacturing must broaden over time to ensure sustainable regeneration of our community. However, our health inequalities are significant also. As one of the Government's health action zones, we are working in partnership to tackle those inequalities, but our task is substantial. Our health has a direct impact on our ability to work productively. All of those factors influence our economic success and our ability to respond to the challenges of life in the new millennium.

In his pre-Budget statement, the Chancellor set out his proposals for "Enterprise for All". In places such as Sandwell we welcome his commitment to breaking out of the closed circle which has restricted enterprise to a few. This Government have made clear their resolve to extend the opportunities of enterprise to people and places which the economy has too long forgotten.

Sandwell is a pathfinder for the New Deal for communities. All members of the civic partnership--the council itself, Sandwell Training and Enterprise Council, the health services, the police, the chamber of commerce, Sandwell College and the voluntary sector--have embraced the principles of the new

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commitment and are working in partnership to make the change a reality. The Government are calling on all sectors to work in partnership and our experience would support that. Joined-up thinking and planning are the first stage; we need to ensure joined-up impact. It is through that partnership approach that we have had considerable success locally in attracting business into the area, creating about 1,500 jobs in 1998--a figure almost double that of the next best achieving borough in the area.

We welcome, then, the announcement in the Queen's Speech that a Bill will be brought forward to allow firms to incorporate with limited liability while organising themselves as partnerships. We are addressing also local skill shortages in the construction industry where council spending is the highest. That project was recognised as best practice by both the Department of the Environment, Transport and the Regions and the Audit Commission.

As council leader I am acutely aware that the local chamber of commerce has strong views on the regulation of businesses. It is concerned that the high level of costs from spiralling bureaucracy are anti-competitive and can potentially damage the flexible labour market in promoting inward investment. At a recent meeting, the view of my local chamber of commerce was that urgent action was needed to address the current burden of regulation. Together we welcomed the Government's new approach announced recently by Ministers visiting the Black Country. The package of important changes designed to modernise and simplify government regulations and to make them easier for people to understand was good news indeed.

As a director of a local manufacturing company, I am all too aware of the burden of regulations. As council leader, I welcome the fact that a new team has been set up to look explicitly at the burden central government imposes on local authorities. I am determined also that the local council itself will play its part in lifting the burden through changes to our regulatory functions.

However, neither industry nor the public sector can achieve real joined-up impact alone. I welcome the idea of a single first point of contact for all regulatory information and advice proposed in the new small business service's business link with the franchise network. We have a small business service at Black Country level which is part of the national network. It is just one example of a growing sub-regional framework to help improve the advice and support infrastructure.

However, the Government could greatly assist economic regeneration in areas such as Sandwell and the Black Country by encouraging some government departments and national agencies to locate regionally. That would have the twin impact of assisting regeneration efforts in areas like my own and helping to stabilise overheating of the economy in other regions and its impact on the living costs of many people.

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Traditionally, business links have concentrated on high growth, team-managed businesses. This focus is now broadening with greater support and assistance for micro-businesses and community enterprise development. This is welcome news for those running small businesses, and even more welcome for those developing community based enterprises, including co-operatives, which will help us to build the social capital which is essential for tackling social exclusion.

The announcement in the Queen's Speech that the Government will bring forward legislation to assist the rescue of viable businesses in short-term difficulties is particularly positive. In Sandwell, the survival rate of VAT registered companies is comparatively low. In Sandwell again, the local authority will work at a local level to support this change and to consult local business on further improvements.

The package of measures assisting businesses to emerge from the burden of regulation, work in innovative and creative partnerships with the public sector to maximise the impact of all our resources, and measures to ensure a healthy and skilled workforce and reduce the risk of crime will be of significant importance to areas such as Sandwell.

The Chancellor has highlighted the need to escape from a volatile economic climate. His endeavours to ensure that we operate within a smoother economic cycle with more stable inflation will help businesses to develop steadily and reduce the number that fail to succeed.

None of these measures will alone deliver the environment for local people and local industry to thrive. The Sandwell experience shows us that the only way to deliver integrated and sustainable success is through partnership working. Then, and only then, can we hope to achieve joined-up impact.

6.52 p.m.

Lord Roberts of Conwy: My Lords, I am sure that the whole House would wish to join me in congratulating the noble Lord, Lord King of West Bromwich, on his maiden speech. It is the ninth that we have heard today. He is to be congratulated on his fortitude in surviving to make the speech. He has had a great deal of experience of local government, particularly in the West Midlands, and of business. Quite rightly, he drew upon that extensive experience for his speech.

It is as well to remind ourselves that the noble Lord is the leader of Sandwell Borough Council. However, his great claim to fame is to be the first member of the Sikh community to become a Peer. I am bound to say that his presence here certainly reminds me of the respect due to the Sikh religion. I am sure that his presence and utterances here will remind many of us of that in the days and years to come.

It is clear that many different minds were concerned in the preparation of the Queen's Speech. That probably accounts for the variability of its style, including some of the verbal infelicities which have been the subject of critical comment. The impression of incoherence, which is featured in the amendment

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tabled by my noble friend Lord Strathclyde, may spring from the same source, the "too many cooks" syndrome. However, I suspect that the incoherence and lack of vision rises from a greater depth; from some unresolved conflicts and contradictions, typical of the party opposite's state of mind in this post-socialist, new Labour era. I shall give some examples of the contradictions and paradoxes which concern me. Having listened to my noble friend Lord Fraser of Carmyllie, I know that he is equally concerned about these matters.

We are all now well aware of the damaging effects of excessive regulation on business. Regulations have grown substantially in number under this Government, in spite of the efforts, of which I read, by the noble Lord, Lord Haskins, who heads a better regulation task force in the Cabinet Office. Perhaps we can thank the noble Lord for the concern which exists within government and for the commitment on the first page of the Speech to introduce legislation to increase the effectiveness of the power to remove regulatory burdens as part of the Government's drive to address inappropriate and over-complex regulation.

All that sounds fine, but there are other commitments in the Speech which will provide enormous scope for yet more regulation. Even on the first page there is a commendable promise to modernise the utility regulation system. That was referred to by the Minister when opening this debate. I sincerely hope that when that promise is translated into practice we shall not have cause to regret our commendation and that modernisation of the regulatory system means less regulation, not more.

I utter these words of caution about regulations because I once had the experience of sitting on a government deregulation committee. I have to tell your Lordships that as quickly as we eliminated unnecessary, British-made regulations, a tidal wave of similar but grossly inferior regulations flowed in from Brussels. We could get rid of our own home-made regulations. However, there was little we could do about those garbled little monstrosities coming in from the Commission.

It is always a temptation to regulate. I am sure that the Government will find it so in the future as they have in the past. However, once the regulation is in place it is difficult to get rid of it. It has a life of its own. It builds up its own vested interest and clings tenaciously to its existence.

I turn to the subject of transport, which will clearly occupy a great deal of parliamentary time. The Bill sounds as if it will be the Old Testament of this Session. It does not seem to me that the Government have really grasped the essential truth that there is a direct connection between economic growth and growth in traffic. I refer to road traffic, in particular. Every percentage point growth in the economy is matched by a slightly higher percentage growth in traffic.

I hope that the Government will give close attention to the question of what happens to economic growth when traffic growth is artificially suppressed and

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stifled by tolls and other measures. I do not think that we are enjoying or likely to enjoy such a high rate of growth that we can afford to ignore this issue.

As my noble friend Lord Crickhowell knows--I am glad to see him in his place--I once had some responsibility for roads in Wales. We never found an adequate answer to costly congestion and well-justified genuine industrial and commercial needs that did not involve major road improvements or substantial new building. Most of our capital works were in response to pressing existing need or imminent anticipation of it. And of course it is undeniable that new roads bring prosperity in their train. I fear the worst if we do not build new roads to meet genuine needs.

I want to say a brief word on devolution. Would it be wrong to say that the Government have lost none of their enthusiasm for devolution outside Scotland and Wales? It would seem to be so. There is a clear commitment in the Queen's Speech to,

    "making devolution in Scotland and Wales work".

But there appeared to be an unwritten implication that there is some way to go before the measures of devolution already granted are seen and proven to be of such worth and value as to be beyond doubt and unquestionably right.

There are problems ahead for the Scottish Parliament and the National Assembly for Wales, not least in the financial field. The Welsh Assembly in particular is still not at all clear about how it will be able to take full advantage of the Objective One status that has been gained for a substantial part of the country. In addition, Wales is governed in the Assembly by a minority Labour government, which will come under increasing threat from Plaid Cymru et al as time passes and the Labour Party's pleas for an inclusive approach to politics and government wear ever thinner.

There appears to be an argument currently within the Labour Party in Wales about the nature of devolution itself. Is it static or dynamic, a settled position or a developing process? I am a pragmatist in these matters and my real concern is whether the people of Wales will be better or worse off under the devolutionary system. Will they be gainers or losers? That is the question. It is early days, of course, and no one can give a credible answer as yet. But the question will remain and be asked time and again. If there is no satisfactory answer, if the Welsh are not doing better under the devolution system than before, then the mad bark of separatism will be heard outside the gate.

Against that background, against the rightful apathy of so many English regions and the disarray of the current London metropolitan scene, one cannot but marvel at the Government's continuing faith in what the Speech describes as,

    "the process of decentralising Government in the interests of all the people".

Decentralisation in practice under this Government seems to mean more interference from the centre, but I am sure the Government will say that that is a passing phase. One cannot but wonder what the effect of the new arrangements will be on the new forms of local

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government proposed for the future. Will the mayoral-cabinet system really be more innovative and accountable to electors, or more amenable to central direction and control?

We have heard often that there are 28 measures in the Speech, and it is indeed a substantial programme for a Session, possibly rather more than Parliament can conveniently cope with. I have no consolation to offer the noble Lord the Captain of the Gentlemen at Arms except to remind him of a saying I heard from the mouth of the noble and learned Lord, Lord Hailsham of St Marylebone, that nothing discredits a government more than failure to get their legislation. I am sure the point will not be lost on the noble Lord the Chief Whip.

7.4 p.m.

Lord Rix: My Lords, autumn has brought a windfall of reports on services and opportunities for people with learning disabilities: Facing the Facts from the Department of Health; Building Expectations--Three years on from the Foundation for People with Learning Disabilities; and An Ordinary Home from the Local Government Association. And this morning I had the pleasure of chairing a conference on London's Learning Disability Strategy at the Barbican. A common theme, which runs also through the Health Secretary's announcement of a strategic review of learning disability services, is the need for joined up government at central and local level. In the all too joined up days of the old mental handicap hospitals, such slender rights as might be enjoyed by all came from the same source--or were generally denied, backed by that same source. Today, with a better life in the community, our fellow citizens with learning disabilities can benefit from a whole range of separate departmental policies affected by the gracious Speech.

I have had some difficulty selecting my day and my target, as select I must, though loss of voice and antibiotics until last night, and a fund-raising dinner for MENCAP tomorrow rather limited my choice. I trust your Lordships will forgive my occasional lapse into lateral thinking.

I begin by saying how delighted I am that Ministers are to look at learning disability support and opportunities across the breadth of Whitehall--education, healthcare, social care, transport, housing, employment, social security, civil rights, protection against crime, access to justice, and so on ad infinitum. I intend to speak on the broad issue of social inclusion, not focusing on the needs of people with learning disabilities but rather on the rights that should be conferred upon them as upon all citizens.

The primary right of any citizen must be to be valued and respected as an individual first and foremost. A necessary corollary is the right to protection from discrimination. We have seen much progress by the Government to bringing people with learning disabilities within their vision of a more cohesive society. We have seen sterling work in setting up the Disability Rights Commission aimed at eliminating the raw, direct discrimination faced, generally day by

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day, by people with learning disabilities, and the more latent but equally pernicious forms of discrimination experienced through lack of access to a range of goods and services. I wish the commission every success in its first year. I am confident that it will deliver results under the experienced chair of Bert Massie, formerly of RADAR.

I welcome also the commitment in the gracious Speech to continue to build upon the work of the commission and in particular to extend civil rights to disabled children in education. At present disabled children have the protection of the law against discrimination while shopping or visiting the cinema but not while in school where they should be spending most of the week. It is abundantly clear that that situation should be rectified at the earliest possible opportunity.

For those starting out in life, the right to an appropriate education is paramount. I fully support the right of parents of children to have a genuine choice in education and look forward to working with government to ensure that amendments to the statutory framework for inclusion proposed in the special education Bill strengthen the rights of children and their families.

The right to an appropriate education should not be confined to children alone. On many occasions this House has heard government talk of the primacy of life-long learning, making the most of life, throughout life, developing skills, engaging in work-based training and extending one's capabilities. I am proud to be Chancellor of the University of East London which boasts over 70 per cent of mature students studying particularly in the faculties of science, business and engineering. We have seen those life-long learning aims reflected in the gracious Speech through the announcement of legislation to reform post-16 education and training. I fully support any expansion that that may bring in vocational and non-vocational opportunities for adults with learning disabilities. Both are important for economic and social gains. Provision is currently patchy and quality varies enormously.

On a personal note, I look forward to the forthcoming debates because I feel rather well qualified in the field of lifelong learning from actor to actor/manager, to writer, to secretary-general, chairman and president of Mencap, and now a Member of your Lordships' House. Indeed, I look forward to many more incarnations to come, although "bent old age with silent foot" may be something of a determining factor.

It is also fundamental to address the education and welfare rights of those who are particularly deprived of opportunity. Young people leaving local authority care often face multiple barriers to accessing the kind of support they need for a successful start in life. Young people with learning disabilities are three times more likely than other youngsters to be living away from home. I therefore welcome the pledge in the gracious Speech for more help for care leavers who have lacked opportunities because of failures in joint

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working between local health, housing, social and educational services. It is vital for young disabled people that the transition to adult services is well planned and implemented and that it takes full account of another basic right--the right to express one's own views and have them taken into account.

The proposal to introduce a care standards Bill should help to advance two more important rights--the right to services that support an ordinary life and the right to be protected from harm. The Government have demonstrated a real commitment to improving services for people with learning disabilities and to making independent living a reality. As I noted earlier, the Department of Health has set in train plans to devise a national learning disability strategy to try to eliminate some of the variation and inequalities which exist in local service provision. This is something my colleagues at Mencap have been calling for over a number of years. We are delighted that a proper review now appears to be under way. However, the right to services that support an ordinary life will not be fully realised until charging structures for non-residential services are made more equitable right across the country.

In the care standards Bill I warmly welcome the introduction of a new registration and inspection framework which, while long overdue, should make a real difference to the safety and protection of people with learning disabilities who often live in situations where they are vulnerable to abuse. The scope of inspection will be broadened to include the well-being of individuals. I look forward to a future of improved service quality, filling in the gaps in what was previously an incomplete and a patchy regulatory framework.

However, I am disappointed that the Government have chosen to omit one of the key services from the new framework; namely, day services. Abuse is not confined to residential settings and the Government cannot ignore the right to protection which should be afforded to people who regularly use day services. The Barbican conference this morning was entitled, "From words into action". I trust that noble Lords are conscious that virtue is not a matter of honourable intentions but of sound achievements. We should remember the little boy who ordered jelly at a party but left it on a plate, saying to the hostess, "I do like jelly but not to eat."

I hope that my brief comments today reflect my support for the Government's attempts truly to join up rights and services for people with learning disabilities. As we look forward to the Human Rights Act coming into force in British law, rights cannot be viewed as an isolated concept but must be integral to delivering a difference and to empowering members of our society who have hitherto had fundamental rights compromised or denied.

7.13 p.m.

Lord Haskel: My Lords, noble Lords may remember that when my noble friend Lord Bragg was seconding the Motion for the humble Address, he invited us to:

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    "Go north and see the gutted fortresses of what once were great citadels of old success".--[Official Report, 17/11/99; col. 11.]

That was very nicely put. My noble friend was speaking of the way that industry has changed. He was speaking of the way that factories were built on the old certainties: the certainties of capital investment and tried equipment; on the well-tried ways of bringing products and services to market; and on the certainties of the old financial systems. But those factories became citadels to past success because our certainties became doubts. As the noble Lord, Lord Bagri, said in his excellent maiden speech, change entered our lives. Instead of investing in equipment, we had to invest in brain power. We thought we knew how to bring products to market. Then along came e-commerce to change all that. My noble friend Lady Lockwood described that very well.

We thought we knew how to cost and price our products and services. Then along came an era of low inflation and single currencies. We thought that there would be continuity in our basic financial markets, but along came NASDAQ with a 24-hour screen-based financial market; and who knows what the result of that will be. These are the tides that swamped our old industries, and as my noble friend Lord Bragg pointed out, they could just as easily swamp our new industries.

Such basic changes are unsettling. But what is particularly unsettling is the increasingly rapid rate at which they are taking place. The speed at which ideas and knowledge are translated into real business and wealth has increased enormously. As a result, the speed at which people earn money and the speed at which they lose money has also increased dramatically. I spent 30 years in the textile industry. In my time, it took years to bring a company to the stock market. Today it happens in months.

So what should a government do? How should a government react? I am sorry to see that the noble Lord, Lord Saatchi, is no longer in his place. Perhaps he would react with a further lecture on Karl Marx and Isaiah Berlin, such as he gave us earlier today. However, the rest of us live in the real world.

My noble friend Lord Bragg welcomed the Government's proposals to increase the nation's skills in order to adapt to these changes. I, too, welcome this approach. But a government's ambitions should go much further. I want us to be beneficiaries of these changes, not the victims. The only way to achieve this is to take competition and enterprise seriously, while at the same time creating a fairer society. There is no conflict in this vision of enterprise and fairness going hand in hand. It is not a new vision. Many of us have shared it for years. My noble friend Lord Elder reminded us that John Smith also shared it with us.

Therefore, when the noble Lord, Lord Strathclyde, in his amendment deplores the "lack of vision" in the measures proposed by the Government, I wonder why. To me, the vision is obvious. Perhaps noble Lords opposite have difficulty because they do not believe in the need to prepare and plan for the future. My noble friend Lady Lockwood told us how they certainly

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believe in this in Humberside and Yorkshire; and, indeed, what they are doing to prepare for it. We believe in preparing for the future.

I say to the noble Lord, Lord Saatchi, that there is so much mention of "modernisation" in the gracious Speech because of the need to prepare and plan for the future. That is why we are talking about "modernisation". If you are happy to leave it to the market to decide who will be the victims and who will be the beneficiaries of change, you do not need vision; but if you are ambitious for the many, not the few, to be beneficiaries of change, vision is required. So what do we need?

The answer is foresight--making the future work for you. Indeed, Foresight is the name of a well thought-out programme to help companies to arrive at a vision of their future. The noble Earl, Lord Selborne, referred to it. The Government and many sectors of business and industry have got together to produce Foresight. The November brief from the CBI about technology and innovation explained it rather well:

    "We live in a world of change. The need to anticipate and prepare for the future is crucial. This is Foresight".

To assist noble Lords opposite, I thought it might be helpful if I took them through a quick Foresight exercise. The first stage in the Foresight process is to look at existing plans for the future. My noble friend Lord Sainsbury told us that the economy will be modernised, with Bills on e-commerce and postal services competition. Welfare reform will make it more efficient and will give those on benefits greater security.

The public will be protected with changes to care for children and the elderly. Leasehold laws and the Race Relations Act will contribute to fairness, and so will an efficient transport system. My noble friend Lord Sainsbury told us that there are to be enterprise incentives for managers, together with research and development tax credits. Venture capital funds are to be set up in every region, particularly targeted at small businesses. There are to be scholarships for business people in poor areas to learn new management skills--perhaps potential tenants for the incubator units mentioned by the noble Lord, Lord Gavron.

The e-commerce Bill is admittedly a little late, but it will make Britain an easier place in which to trade electronically. Very importantly, people will be helped to cope with change by extending the New Deal to the over-25s. We shall have a fairer society by regulators for gas, electricity and water being required to promote yet more competition. The planning system and the Financial Services Authority will also have to look after consumers; yet more fairness.

My noble friend Lady Pitkeathley, when moving the humble Address, drew our attention to how some of the Bills mentioned in the gracious Speech which are of particular interest to her will help to create a fairer society. She mentioned welfare reform, race relations and freedom of information. She could also have mentioned how particular attention is to be given to encourage women to play a fuller role in the economy.

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Earlier this month I had the privilege of attending a Smith Institute seminar at No. 11 Downing Street about how women could play a bigger role in the economy. Here I must declare an interest as chairman of the trustees of the Smith Institute. We were told that many women would like to start their own businesses so that they can balance family and work. As an American delegate put it--rather well, I thought--they will not be frustrated by being between the sticky floor and the glass ceiling. Helping women to start businesses is another good example of combining a fair society with enterprise.

To return to our Foresight exercise, that is the data. The next steps take one through the challenges that we face: the needs, the opportunities and the threats that are out there. This will lead one to the knowledge and resources required for an effective response which, in turn, leads on to a vision of the future. There is excellent work being done by many national Foresight panels dealing with different sectors of business and themes in society. The panels bring together the worlds of business and academia, together with the public and voluntary sectors, to create a pool of knowledge on which we can all draw. They have a vision of the future: the vision is there. I invite noble Lords to share it. I also invite the noble Lord, Lord Strathclyde, to give some encouragement to the Foresight exercise and to withdraw his amendment.

7.23 p.m.

Baroness Carnegy of Lour: My Lords, my noble friend Lord Roberts of Conwy has reminded the House of what the Government had to say in the Queen's speech about devolution to Scotland and Wales. The Government are committed to it; and so say all of us. Everything--the social, political and economic future of the Union--depends upon that, the very future of the Union itself.

It is interesting that devolution is raising all kinds of new questions, some anticipated during the passage of the legislation through Parliament, and some not. So far as Scotland is concerned, it is interesting to read in today's press that the Labour Party's National Economic Council has produced an internal paper about the structural implications of devolution. It includes the suggestion--it will be a very interesting suggestion for Scotland--that in the next general election campaign it will be the Secretary of State for Scotland who takes the lead rather than the First Minister of the Scots Parliament.

I want to draw attention to one issue which has only recently begun to arise so far as concerns Scotland. It is an issue of considerable importance, I suggest, to this House because it presents the opportunity for noble Lords and Ministers in this House to play an important part in assisting the smooth operation of devolution to Scotland in particular. It is increasingly clear that when scrutinising Westminster legislation which relates to Scotland, Parliament must identify any proposals in that legislation which impinge on devolved matters and which alter the responsibilities of the Scots Parliament.

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Having identified those proposals, it seems to me that the Westminster Parliament must ensure that those proposals have been agreed by Ministers of the Scots Parliament, that they have at least been reported to Members of the Scots Parliament and that any implied additional expenditure will in due course be added to Scots Parliament funding. Nothing will threaten the smooth working of devolution to Scotland more than financial arrangements which are perceived, or suspected, to be unfair. It would be divisive indeed for Westminster to impose new responsibilities on the Scots Parliament without paying for them.

In ensuring that Westminster legislation is fair to the Scots Parliament, I believe that this Westminster Parliament, and particularly this House of Lords, with its line-by-line, unguillotined scrutiny, could do much to ensure that legislation here is fair and is seen to be fair. The noble Lord, Lord McIntosh of Haringey, is aware, I think, of the need for this kind of vigilance over Bills. He was on the Government Front Bench during the passage of the Immigration and Asylum Bill through this House. It was a Westminster Bill relating to Scotland, dealing with a matter reserved to Westminster, but of necessity it made changes to the operation of the Scottish courts, to the operation of Scottish local government social work departments; and indeed it amended the Scottish Education Act regarding school meals.

When I asked whether these measures had been agreed by the Scots Parliament, it was clear that the matter was not as yet uppermost in the minds of government Ministers in this House. That is not entirely surprising. Until recently we had a Scottish Minister on the Front Bench: we do not have that any more. The noble Lord, Lord McIntosh, gave me an extremely kind reply. It was in fact, I think, only half a reply but he did what he could, based on the information that he got from his advisers. The noble Lord, Lord Bassam, was also kind enough to promise to write a letter, which I look forward to receiving in due course.

However, it is to the coming Session that we must now look. We are told that 18 of the 28 Bills to be put forward will apply in some way, wholly or in part, to Scotland, as no doubt will a mass of secondary legislation and some Private Members' Bills. Members of another place, especially those from Scottish constituencies, will doubtless be on the lookout for implications for their colleagues in the Scots Parliament. However, I suggest that it will be in this House of Lords, with its line-by-line, unguillotined scrutiny, that the best opportunities will arise.

Those opportunities will enable noble Lords to identify such provisions in a Bill and seek clarification. Government Ministers will be able to come prepared to apprise this House as to which measures affect the responsibilities of the Scots Parliament, what consultations have taken place and what necessary adjustments to Scots Parliament funding are proposed.

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Vigilance by noble Lords on this matter is all the more important because of the way Westminster and Scottish Executive Ministers are proposing to settle the awkwardnesses of legislation which crosses devolutionary boundaries and the question of who pays for it. We see from Command Paper 4444, published last month by the noble and learned Lord the Lord Chancellor, that there is now a joint ministerial committee chaired by the Prime Minister or his representative, with sub-committees as required, that will have the remit of agreeing these matters and resolving disputes. This document is entitled A Memorandum of Understanding and Supplementary Agreements. It has no legal basis and it has had no public discussion. It is simply what the Ministers at Westminster and the two devolved Parliaments have decided. It tells us on page 10 that although there may be occasions when the joint ministerial committee will wish to make a public statement on the outcome of one of its meetings, its proceedings will usually be confidential.

At some point I hope that this House will debate the document and question Ministers upon it. It contains a number of rather surprising statements, one of which certainly will limit the ability of the Scots Parliament to be enterprising in the way the noble Lord who introduced the debate advocated. In the meantime we must simply note that any new Westminster legislation which impinges on devolved matters will have been discussed and agreed behind the scenes.

This House must, I suggest, see as one of its most important functions now the need to bring parts of Bills agreed behind closed doors into the open so that the Government can be held properly to account as to the way they intend to relate to the Scots Parliament on those particular matters. I believe that there is much noble Lords can do to assist the Government in their commitment to make devolution work. I believe that Ministers will have to do more than they have done up to now. It would be extremely helpful if in his reply to this debate the noble Lord, Lord McIntosh, could undertake to study what I have said--it is not a great speech, but I believe that I am saying something important--and perhaps draw the attention of his ministerial colleagues to it so that when we discuss the Bills it will be possible for this House to sort out the matters and so contribute to devolution.

7.33 p.m.

Lord Lofthouse of Pontefract: My Lords, I welcome the commitment within the gracious Speech that the Government will continue to work with others to promote economic reform in Europe and will work for more open markets and greater economic growth and job creation.

I am sure that I have no need to remind the House that in 1992 the Conservative government took a decision to diversify the country's fuel supply for energy generation and to close down the British coal-mining industry. As recently as Wednesday 10th November 1999, a debate was held in the other place in which Members of Parliament with coal-mining interests warned that the UK coal industry was now

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"at a crossroads" and added that the future existence of the English coalfields is threatened, and that critical mass may well be lost.

Although the UK coal industry is the most efficient in Europe and has reduced prices to consumers dramatically since privatisation, it is still faced with unfair competition from imported coals, many subsidised, alternative fuels and, of course, the influence of the strong pound.

The Government promised relief from the "dash for gas" by imposing a stricter consents policy on all gas-fired power station applications, at least until the promised review of electricity trading arrangements had been introduced and had had a chance to influence the situation.

During the debate to which I have referred, the Minister of State at the Department of Trade and Industry, Helen Liddell, advised MPs that the Government would not walk away from the mining communities and that the stricter consents policy already in place had resulted in the temporary postponement of new gas-fired plants with a coal equivalent of some 10 million tonnes. This, the Minister suggested, was "help indeed for the coal industry"! Although I recognise the Minister's support for the coal industry, what did not form part of that ministerial statement was the fact that some 2,000 MW of gas-fired generation had been sanctioned since the stricter consents policy was introduced. That is equivalent to 5 million tonnes of coal per annum, a figure that negates 50 per cent of the "savings" mentioned by the Minister.

During that debate mention was made of the French Interconnector; the cross-Channel submarine power transmission system that was originally constructed as a two-way installation to enable surplus power from the UK and France to be redirected as demand dictated. However, since this link was commissioned it has been used exclusively by the French and has operated in their favour to the tune of some 7 million tonnes of coal equivalent each year. This is comparable with the total output from four major UK collieries! Although I know that the Minister, Mrs Liddell, is keen to correct the position, it is a situation that should never have been allowed to develop, and one that must be regulated by government action now and, I suggest, without further delay. I am aware that the matter is covered by treaty, but that should not inhibit action.

Electricity transmission between member states of the European Union has now been liberalised and there should be no restrictions on exchange transactions. Recent examples of French intransigence may not warrant a trade war, but the situation that allows Electricite de France to enjoy a virtual monopoly over the interconnector should be tolerated no longer.

It may be helpful if I draw the attention of your Lordships to a situation that arose from the rundown, and the threatened further rundown, of the coal industry. The Association of British Mining

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Equipment Companies represents the interests of over 44 of the UK's major companies producing underground mining equipment. They employ 8,000 people and have an annual turnover of £550 million. As equipment manufacturers, they owe their success and international reputation for technical excellence to the continuous association and supply of equipment into the British coal-mining industry. Because of their long-standing relationship, the British mining equipment industry has designed, developed and manufactured products which are now exported to every coal-producing country in the world. It has contributed over £2 billion to the UK balance of trade in the past five years and continues to export a growing £300 million-worth of equipment each year.

As those companies develop further their export trade, there are compelling arguments in favour of manufacturing equipment overseas in the countries which they supply. They already manufacture in South Africa, Australia and the USA where there are mature, expanding coal industries. They do not manufacture in countries such as India and China, or in the Pacific Rim, eastern Europe and Russia. However, they are aware that the mining industries there are less sophisticated and therefore offer huge commercial opportunities. Although they are under constant pressure to produce an indigenous content, it makes better sense to stay in the UK. Control of design in the developing world is difficult and it is almost impossible to protect intellectual property.

In Britain, we enjoy the lowest manufacturing costs in western Europe. There may be advantageous variations between costs in the less developed parts of the world and the UK, but they are more than offset by the quality of manufacture, the available skill base and access to technical development and support programmes. If, on the other hand, the British coal industry is reduced yet again, and demand for equipment falls below current levels, your Lordships will appreciate that it would weaken considerably the case for maintaining a UK manufacture. Ultimately, it would leave them no option other than to move their manufacturing base overseas.

The Association of British Mining Equipment Companies has shown itself in recent years to be flexible and responsive. Member companies have reacted swiftly and positively to the radical changes within the industry. To meet the requirements of the restructured industry, there have been mergers, acquisitions, diversification and development of new products. Such moves have secured their individual positions and, at the same time, guaranteed continued technical support and supply to the UK coal industry in its current form.

If they are to operate effectively as world-class manufacturers of mining equipment, it is absolutely crucial that they maintain a substantial home-based industry. I say again: they need a clear and explicit strategy to meet the UK's future energy requirements, inclusive of coal, which, in essence, is mandatory. The ability to forecast rationally is as crucial to the future of this sector as to any other. That industry is at the crossroads yet again. Member companies are

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concerned that the Government have taken the narrow view and that they have failed to recognise the strategic value of the coal industry as a whole. At present, the equipment manufacturers feel that the UK coal industry has no certainty as to its future. I can well understand that.

That prevents those equipment manufacturers forming their own strategic plan. They cannot continue as global suppliers from a UK base without a determined future. If they are forced into moving manufacture overseas, the immediate outcome would be: a loss of thousands of manufacturing jobs in the UK equipment and engineering sections; a minimum loss to the balance of trade from equipment sales over the next five years of more than £2 billion; and a further drain of irreplaceable technical and engineering design skills.

In conclusion, I want to make the following observations concerning the fiscal aspects of UK coal. It was evident that MPs believe that the major player in the current debate, and possible beneficiary from alleged profits, is the only one on the field. This is not so. It must be clearly understood that the UK coal producers stand together as an integrated industry.

The Minister believes that it is unjust for pressure to be placed on the Government to pick up coal industry costs when the private sector pockets the profits. I can understand that. But does that mean that if it were in financial difficulties, subsidies would be appropriate? Without profit, how would a company like RJB be able to invest £350 million in new equipment and £1 billion in accessing and developing new coal reserves?

An integrated industry can have many parts, and the UK coal industry is no exception. It is true that it has a major player which provides, on average, 65 per cent of the total UK coal production, but the companies contributing the remaining 35 per cent are not insignificant, and without their support the current situation would be untenable.

In the past four years, RJB Mining has produced some 130 million tonnes of coal, and not one ounce of that has received outside support. During the same period, the remaining companies engaged in coal production have added a further 63 million tonnes--a not inconsiderable volume, your Lordships will agree--again, without subsidy of any kind. Your Lordships will appreciate that none of this production can be achieved and sustained unless a profit element is present; otherwise, the consequences are self-evident. In fact, some 10 medium and small producers have ceased trading since privatisation.

I am aware of the time and that other noble Lords want to speak, but I must emphasise that a way must be found to assist the coal industry to maintain even its present size. Although it was largely wiped out by the previous government, we still have a small coal industry which is essential to this country's needs. I emphasise that other private industries have been assisted to maintain their business and jobs. I hope that in replying to the debate my noble friend will be able to give me some assurance and confirm that the Government are sympathetic to the current needs of

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the coal-mining industry, and that they believe that it should receive protection in order to maintain it at its present size.

7.47 p.m.

Baroness Barker: My Lords, I am very pleased to be taking part in this debate, in which there have been so many outstanding maiden speeches. I should like particularly to congratulate the noble Baroness, Lady Wilkins, on her eloquent reminder of the rights of disabled people to exercise independence and choice in the same way as the rest of us. I should also like to congratulate warmly the noble Lord, Lord King, on his contribution. He touched on a favourite theme of mine--the need for proper partnership between government at all levels and the voluntary sector. I look forward to having many discussions with him about that in the future. I should also like to echo the sentiments of the noble Lord, Lord Rix, when he spoke particularly about the needs of people with learning difficulties.

This has been a somewhat strange debate. Earlier, we had some strange references to Karl Marx and to Isaiah Berlin; at times I feared that before the night was over we might have worked our way through to Irving Berlin.

Over the past few days, many Peers have found the gracious Speech a curate's egg. Contributions from a range of different speakers have all arrived at the conclusion that the legislative programme set before us is good in parts and awful in others. I share that view. In joining with the distinguished previous speakers, I want to concentrate on just one of the social aspects of the legislative programme in today's debate; namely, the care standards Bill.

It has long been recognised that there are good and bad residential homes, and that good and bad homes exist in each of the different sectors--private, public and voluntary. A Bill which aims to raise and implement standards across all sectors and to eradicate bad practice wherever it occurs will be welcomed by all those who share a concern for children, disabled people and older people who need care in a residential setting.

If it is ultimately the case when the details of the Bill become known, the approach which the Government are being urged to take of having standards based upon principles will also be welcome. The paper by the Centre for Policy on Ageing, Fit for the Future, advocates the setting of standards based on the principles of dignity, privacy, choice and respect. When the consultation period for that paper ends in December, I strongly urge the Government not to shy away from the relatively complex task of setting and monitoring qualitative standards based upon those principles. In the past, residential care, like healthcare, has often been assessed largely in terms of the physical state of buildings. That is a poor method of analysis because a home, wherever it is, is more than bricks and mortar. The real focus should be the quality of service and the treatment which individuals experience, regardless of the surroundings.

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While I welcome the care standards Bill, there are a number of reservations about the Bill to which I believe the Government's attention should be drawn. In doing so, I should point out that much of what I have to say is based upon my experience of working with local voluntary organisations and, in particular, organisations which have been involved in lay assessor schemes.

Clearly, the main aim of the Bill is to eradicate abuse within residential settings and to dispense with providers of bad care. Laudable as that is, there is also an opportunity before us to enable providers of services which are not bad, merely mediocre, to learn and to develop good practice. Definitions of what is good practice and best practice change over time. Therefore, when the Government determine what care standards are, I urge them not only to make them explicit but to make sure that they are regularly and frequently updated.

No one, least of all the majority of care home owners, could or would argue that independent inspection is anything other than desirable. However, if inspections are carried out infrequently by remote, regional inspectors, the work may turn out to be simply reactive. Experience of lay assessor schemes shows that much constructive and preventative work can be done when inspection is carried out within a context of trust, familiarity and respect. Furthermore, more frequent, but not, I stress, regular, inspection can be more revealing because residents feel more able to be open about what their life is like in the place where they live. Let us not forget that we are talking about people's homes. If any one of us had a problem in our home, I doubt that we would choose to discuss it in detail with a complete stranger. So why should they?

In addition, home owners and staff, even those who initially are reluctant to be involved in inspections, can come to view inspection not as a major threat but as a constructive means of addressing issues and problems. But they will do so only if they have the time and if they meet inspectors frequently enough to build a relationship of trust.

The Government's proposal to implement a training qualification for home owners is to be welcomed, as is the setting up of a general social care council and the expressed intention to raise standards of training and qualification throughout the field of care and social work. However, within the residential care economy there must be sufficient resources--by resources I mean both time and money--to allow ongoing training of all staff to become a basic feature of any care home. Training costs money; good training costs a lot. And I hope that in the implementation of this Bill the Government will take that into account and consider provision of a care standards training fund. We all want the end result of training to be significantly higher standards of care, not just faded diplomas hanging on the office walls of senior staff.

Implementation of new care standards will not require primary legislation. I would strongly urge the Government not to delay the implementation of this

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Bill. Vulnerable people in care homes do not have the time to wait for improved services and for protection. There is no reason why the implementation of this Bill should be delayed and I strongly urge the Government not to do so.

Finally, the passing of this proposed legislation will do much to reduce the anxiety of people who enter residential care and their relatives. The knowledge that one's new home will be safe and that one's dignity will be respected will be an enormous relief. However, as long as the Government give no response to the findings of the Royal Commission on Long-term Care, the biggest fear of many disabled and older people remains. Being confident that the quality of care is good is little consolation if one's ability to afford it is in doubt. The gracious Speech contains nothing on the future of long-term care and, therefore, I conclude that it is well and truly a curate's egg.

7.56 p.m.

The Earl of Longford: My Lords, the noble Baroness, Lady Barker, made a number of important points based on what was evidently deep personal experience. The noble Baroness will forgive me if I approach the matter from a different angle.

I want to put one fundamental question to the Government. It is one that cannot be put too often, but I do not expect a positive answer this evening. Is the Labour Party still committed to some redistribution of wealth between the rich and the poor? There is no one to whom I enjoy listening more on that subject than my noble friend who is to reply. He is a Treasury spokesman. In my time I was a Treasury spokesman for six years. We were not free agents; we could not say everything we wanted to say. My noble friend is restricted but I know that he will do the best he possibly can in the circumstances.

Is the Labour Party still committed to any substantial redistribution of wealth or, possibly a better word, income between the rich and the poor? Recently there was an important article in The Times which stated that the present Chancellor of the Exchequer is the best since Nigel Lawson. The noble Lord, Lord Lawson, was my last pupil at Oxford when I went back as a don. I do not suppose he recognises that fact. I do not want to take all the credit for his achievements, but I am very pleased that he was my pupil and that for a few moments he was in my hands. However, our present Chancellor has been compared to him in a very favourable sense. We Labour men must ask ourselves whether we are pleased that our Chancellor of the Exchequer is more or less identical in some eyes to the great Conservative Chancellor of the Exchequer. I put the original question: is there any fundamental difference today between Labour economic policy, however intelligently interpreted, and Conservative economic policy?

When I became a socialist over 63 years ago, having worked in the Conservative research department for a couple of years, I announced boldly, "I am a socialist because I am a Christian." That is what I felt at the time. I am still a Christian. I am not sure whether

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socialism is considered a relevant subject today, so I leave that aside for the moment. However, my approach is not quite the same today.

Recently I read a most interesting article in the Spectator by Charles Moore, the gifted young editor. He is a very Conservative type who says he is a Thatcherite. He argued that Christianity in itself--religious belief-- does not lead directly to any political conclusions. I am inclined to agree. It is possible to be a good man and a good Christian and to be a Conservative. I hope that I am not being patronising if I say that. As to the Liberals, the noble Earl, Lord Russell, can perhaps pronounce on the topic. After all, the greatest philosopher of our period was his father. I shall say no more. I could get into deep complications.

It is possible to be a Conservative, a good Christian and a good and sensible man. I did not think so at one time. In the 1930s we did not think so, but I am bound to say that I think so now. If you are a Christian, you presumably think a good deal about the poor. "Look after the poor, the maimed, the lame and the blind, and you shall be blessed". The Conservative view is that the poor benefit more when that party is in government. Years ago, when I worked in the Conservative research department, a famous leading article in The Times said, "Wealth is like heat. When it is unequally distributed, it performs what the physicists call work." That is one view which is still held. When people make large fortunes, inequality, as we saw in the Thatcherite period, goes up and up. Society becomes more and more unequal and, it can be argued, richer and richer. So that is one argument.

However, you cannot call yourself Labour and believe that sort of nonsense. You have to believe that Labour concentrates on social justice. That is surely bound to mean some increase of equality between the rich and the poor. For the past week or two I have been trying to discover how things have moved in that direction since we have been in office. I do not think anyone can say at the moment. At any rate, during the Thatcherite years things moved very much the other way. So I hope that we are setting out to reverse the trend.

There is a problem. I am old Labour in the sense that I admire Clem Attlee more than any British politician. Of course, De Valera remains my hero in Ireland, but that is a slightly different question. Clem Attlee is my idea of a great British statesman. But he was what is now called old Labour. What he would have been today, who can tell? In my eyes, and speaking as one of the members of that world, old Labour lacked one thing. It did not encourage business enough. The present Government, new Labour, deserve full credit--I give them full credit--for encouraging business and providing more of an incentive for business. We must welcome that. When all is said and done, do we still at the same time believe in any redistribution of wealth? The matter is as simple as that.

8.3 p.m.

The Viscount of Oxfuird: My Lords, following the noble Earl, Lord Longford, is a test. I feel that that was

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perhaps his third maiden speech. He has ever been erudite and comfortable in your Lordships' Chamber and there is no reason to change that. Perhaps modernisation is not something which he particularly enjoys, but we benefit, as always, from his presence.

I would like to make a very short intervention to the economic part of this important debate from the perspective of the engineering manufacturing community within which I have spent most of my working life, mainly as an exporter. The first point that I make is to acknowledge that, even after more than two years of Labour Government, our economy is still in pretty good shape. It would be churlish of us on this side of the House not to acknowledge that. I have to say that for those of my generation who lived through a number of post-war Labour administrations this has come as an immense relief. It may have something to do with inheritance.

The prime purpose of my intervention is to make a plea for that poor old fellow, the exporter, who has been so strongly affected by interest rates and the strength or otherwise of sterling. I personally do not agree with the City and others who have praised the decision of the Chancellor of the Exchequer to hand over responsibility for decisions on interest rates to the Bank of England. I actually see that as a fudge to avoid responsibility for the political fall-out that arises from any interest rate change, either up or down. Like my noble friend Lord Boardman, I believe that so many of the consequences of the decisions that result from interest rate changes affect the whole of our community that the Government should not duck the issue in this important area.

As we saw in the newspapers at the weekend, to my great delight, the manufacturing sector is not doing too badly at the moment. According to a new survey by KPMG Consulting, manufacturing productivity is rising sharply, easily outstripping the increase in the service sector and in competitor countries. That is excellent news and a real credit to the sector.

Another study, published jointly by the Engineering and Marine Training Authority and the Engineering Employers Federation, indicates that our leading engineering companies--large, medium and small--are making real investment in the future by investing in the training of their staff. The People Skills Scoreboard, published by them last month, shows that there is a significant correlation between commitment to the objectives of the Investors in People standard and business success. I suspect that part of the recent success of the manufacturing sector is associated with the higher than average commitment of the manufacturing sector to the Investors in People standard.

Let me conclude with a final plea for our British exporters. I particularly noted the words of the noble Lord, Lord Lofthouse, on the mining industry. I spent some time in India. I spent a long time in Calcutta and even in Ranchi, which is north of Calcutta. There we had great success supplying the Indian mining industry with hydraulic pit props. Our success was based on the

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fact that we could show them machinery operating in British mines and doing a really first-rate job. You cannot beat that for export promotion.

Given the current state of our economy, there is little doubt that interest rates are set to rise. The terms of reference given to the committee make that almost inevitable. So given that inescapable fact, may I plead with the Government to do everything else that is still within their control to help exporters? There are other parameters that they can still apply--perhaps a review of capital allowances; that would do a bit to help.

I thank your Lordships for your attention. Long may our manufacturing industry in the UK continue to flourish.

8.10 p.m.

Lord Shore of Stepney: My Lords, I shall listen with great interest to the Minister's response to the speech of my noble friend Lord Longford. However, that is not the subject of my remarks tonight. I shall direct my comments to the problem identified by the noble Viscount, Lord Oxfuird, who has just spoken. I am concerned about our exports and the state of our manufacturing industry. That was a point made by my noble friend Lord King of West Bromwich in his excellent maiden speech, and by my noble friend Lord Lofthouse.

The present state of the economy is a puzzle. Two entirely contradictory trends can be identified. We have a thriving and booming service economy of an extent, force and vigour that I have never seen before. Inevitably, that boom is focused on London and the south-east. While that is forging ahead, at the same time there is in fact a decline in the Midlands and the north of England. A recession has gripped those areas. Despite recent figures showing some increase in productivity, manufacturing industry in the north is suffering a major recession. That has coincided with expansion in the south. In terms of economic management, that is almost a unique problem.

The situation has serious implications for the Government's economic strategy which was elegantly and helpfully described by my noble friend on the Front Bench who opened the debate today. Even more helpfully, that strategy has been elaborated not only by the Chancellor's pre-Budget report on 9th November, but also in the Mais Lecture on 19th October. In the lecture and the pre-Budget report, the Chancellor set out the whole strategy of the Government, an unusual step for an administration in mid term. The strategy can be broken down into four themes: first, stability is the principal means to the end, and above all, price stability and virtually a balanced Budget; secondly, the need for an active labour market, encouraging more education and training, retraining and so forth; thirdly, measures to raise productivity; and fourthly, what I interpreted as the first signs of a recognition that a form of voluntary pay policy is necessary if we want to reach the Chancellor's twin goals. He restated those goals in the Mais Lecture and subsequently in other speeches: a

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return to full employment--not the present low level of unemployment but something more substantial--alongside a competitive economy.

I shall use my short time to offer an opinion on this strategy and to ask those questions that ought to be asked about how it is working. I have mentioned four points. The Chancellor's second point concerned an active labour market and his fourth point concerned new forms of genuine incomes restraint--not necessarily an old-fashioned incomes policy but the more interesting and innovative proposed share distribution scheme which may well be an alternative method of rewarding workers without increasing economic pressures to the point where they become inflationary. I believe that those two parts of the Chancellor's strategy are excellent.

However, what of the other two points? The word "stability" has become something of a mantra. Is that really consistent with raising productivity; namely, fulfilling both the Chancellor's first and third policy principles? On the whole, I believe that the evidence shows that it is not. In trying to achieve stability, we have given too much attention to controlling inflation. In my view, the Chancellor has wrongly abandoned his control over interest rate policy. He has handed it over to the Bank of England and, even worse, has given it and the Monetary Policy Committee very restrictive terms of reference. Their guiding purpose and aim must be to achieve price stability up to 2.5 per cent inflation a year.

Of course, the Monetary Policy Committee is properly and dutifully carrying out the Chancellor's mandate. But is it surprising that we have interest rates that are substantially higher than those in many other competing centres? We know very well that on the continent of Europe interest rates are significantly lower. I refer here to short-term interest rates. Long-term rates do not present a serious problem and are almost ad idem with those of our continental neighbours, but those of the short term are between 2.5 and 3 per cent higher than those available in Europe.

Over the past decade or so we have seen almost unbelievably massive movements of short-term capital, with people trying to secure a small margin here and there with overnight shifts of money. Billions of pounds flood in and out. And then what happens? Up goes the exchange rate, of course. Since the beginning of 1997, it has risen to an extent that is now really damaging--this is the gravamen of my argument. The exchange rate has risen by something of the order of 24 per cent against the deutschmark and now against the euro. That is an unbelievable figure. Although I agree that some 10 per cent of that rise took place before May 1997 when my honourable and right honourable friends took office, they have not since checked it in any way. Indeed, the decision to hand over interest rate policy matters to the Bank of England with restricted terms of reference has allowed a further acceleration of the exchange rate and a consequent loss of competitiveness.

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What is the point of talking about a platform of stability for industry? What about a platform of stability for our exporters? They have been undermined in the domestic market and in the export market by a 24 per cent rise in the exchange rate in two years. That is incredible and has never happened before. The Government must stop being complacent about it, or frankly they will bankrupt large sections of industry and devastate large areas of this country.

I shall turn now to the reasons why I am so worried about this situation. The evidence is overwhelming and is more than the huge rise in the exchange rate. Investment, which is the crux of making our industry more competitive and successful in the medium term, is falling in the manufacturing sector. It is not even static. The figures published yesterday showed that third-quarter investment in manufacturing industry is 16 per cent down in volume over the third quarter of last year, and rather over 20 per cent over the two-year period. That is terribly damaging.

I am sure that I can also say almost without contradiction that this year we shall have chalked up the largest trade deficit in manufactured goods and the general visible balance that we have had in the whole of our history. Fortunately we can get away with that situation because of the buoyancy of the service sector and other invisible earnings. However, we have beaten the all-time record for a trade deficit--£24 billion in manufactured goods is now a reasonable estimate for this year.

I say to my noble friend who will reply from the Front Bench that I hope that the Government will think much more deeply about the problems of this sector. I know that it is not easy to manage the economy. Heaven knows, we have all had goes at it and have not been all that successful. But do not ignore the manufacturing sector. Please try to ensure that the terms of reference of the Bank of England are changed so that they can take account of exchange rate competitiveness, or surely the Chancellor will have to think up a whole new package of measures to rescue our manufacturing industry from its present dilemma. I give way to my noble friend.

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