5 July 2010 : Column 1

House of Lords

Monday, 5 July 2010.

2.15 pm

Prayers-read by the Lord Bishop of Gloucester.

Introduction: Baroness Sherlock

2.22 pm

Maeve Christina Mary Sherlock OBE, having been created Baroness Sherlock, of Durham in the County of Durham, was introduced and took the oath, supported by Baroness Hollis of Heigham and Baroness Prosser, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Bannside

2.27 pm

Ian Richard Kyle Paisley, having been created Baron Bannside, of North Antrim in the County of Antrim, was introduced and took the oath, supported by Baroness Boothroyd and Lord Morrow, and signed an undertaking to abide by the Code of Conduct.

Introduction: Baroness Drake

2.34 pm

Jean Lesley Patricia Drake CBE, having been created Baroness Drake, of Shene in the County of Surrey, was introduced and made the solemn affirmation, supported by Baroness Warwick of Undercliffe and Lord Young of Norwood Green, and signed an undertaking to abide by the Code of Conduct.

Lord McCluskey took the oath.

Energy: Renewables


2.39 pm

Tabled by Lord James of Blackheath

Lord James of Blackheath: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I note my former interest as chairman of North Sea Assets plc and British Underwater Engineering plc.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland): My Lords, I believe that the noble Lord is referring to the European Union's obligation under the renewable energy directive to source 20 per cent of its energy from renewable sources by 2020, of which the UK share is to achieve 15 per cent renewable energy consumption by 2020. We are committed to meeting the UK's target for renewable energy by 2020, but we want to go further and have asked the Committee on Climate Change to provide independent advice on the level of ambition for renewables across the UK.

As part of the package of challenging energy and climate change measures, the UK has also signed up to the target of a reduction in new EU greenhouse emissions of at least 20 per cent below 1990 levels by 2020. Actual costs will depend on how the market responds to incentives, on barriers to deployment and on how technology costs evolve between now and 2020. We will continue to monitor and review the uptake of financial incentives and costs.

Lord James of Blackheath: I thank the Minister for that reply. Can he confirm whether his department is able to agree with the former estimates last provided to

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your Lordships by the previous Government to the effect that they would achieve the target for 2020 with a programme of extensive wind farm developments on Crown properties within a budget to be provided by the Prime Minister of the time-not from his own pocket, I think-of £75 billion? Does that hold good as an achievable forecast today, given that not a scrap of equipment can be contracted for wind farm development until 2020?

Lord Marland: I thank my noble friend for his question.

Noble Lords: Next Question.

Lord Marland: Noble Lords may want brevity of answer over here, but it will not suit Members on those Benches too well if I give that, quite frankly.

A noble Lord: Why?

Lord Marland: Because of lack of performance, I am afraid. However, I am avoiding any confrontation on this issue, so if I were the noble Lord, I would as well.

The most recent statistics for 2009 show that the level of renewable energy consumed in the UK has reached 3 per cent. This puts us on a trajectory to meet our first interim target under the renewable energy directive, which is 4 per cent by 2012.

Lord Pearson of Rannoch: My Lords, are the Government wise to have committed £18 billion per annum for the next 40 years to combat climate change when the science underpinning it has collapsed? How many British people will suffer fuel poverty as a result of this discredited initiative?

Lord Marland: I am not sure I thank the noble Lord for his question, but his party's views are well known and, I am afraid, do not coincide with ours. We think that climate change is one of the biggest issues to confront the nation. We are putting green awareness on the front of our agenda. We are going to be the greenest Government who have existed and we intend to deliver policies to show so.

Lord Tomlinson: Does the noble Lord regard nuclear-generated electricity as being renewable?

Lord Marland: Nuclear-generated electricity is a fundamental part of our party's coalition policy but I am not sure that it is relevant to the Question in hand.

Lord Teverson: My Lords, is not one of the ways in which we will meet this target much greater use of biogas? How will the UK catch up with other European countries, such as Germany, in terms of anaerobic digestion?

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Lord Marland: I thank my noble coalition colleague for that question. For some people who may not have the noble Lord's knowledge, anaerobic digestion needs to be encouraged. It is a recycling of waste-sewerage, animal waste and food waste-that creates biogas. It is a very important development. My honourable friend in the other place, Mr Greg Barker, has organised a stakeholder event in the Recess to discuss the development of this kind of renewable energy.

Lord Howarth of Newport: My Lords-

Lord Lawson of Blaby: My Lords-

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): There must be room for both noble Lords to speak. Why do we not have first my noble friend Lord Lawson and then the noble Lord, Lord Howarth?

Lord Lawson of Blaby: I am grateful to the Leader of the House. Is my noble friend aware that only a couple of days ago, Mr Bob Wigley, the chairman of the previous Government's Green Investment Bank Commission, stated that meeting the requirements of the absurd Climate Change Act will cost the United Kingdom £50 billion a year, every year, for the next 40 years. How-above all in this age of austerity-can this possibly be justified?

Lord Marland: I am very grateful to noble Lords for fighting over a question for me; it is quite rare in this job. However, I must correct my noble friend; the Green Investment Bank was an initiative set up by our own party and one must not rule out the phenomenal business opportunities that it offers for this country. We must have 2 million heat pumps by 2020. We must have bioenergy, which will create 100,000 jobs at a value of £116 million. Wind alone should create 130,000 jobs at a value of £36 billion. At a time when the country needs investment, these are heartening numbers.

Baroness Ford: At a time when the country needs this investment so badly, how does the Minister propose to meet those renewables targets without the benefit of an independent Infrastructure Planning Commission, which this Government are committed to abolishing?

Lord Marland: I am very grateful to the noble Baroness for her question. She is quite right; the planning process is fundamental to renewable energies and we have to put great emphasis on it, and I am afraid that we have to accelerate it because it had become stuck in a mire. I am not sure that the IPC is the right method for doing that. We shall put energy into reforming that area. I am grateful to the climate change committee for recommending it.

Lord Howarth of Newport: My Lords, in seeking to pursue their laudable aim of increasing the proportion of energy consumption supplied by renewables, how will the Government ensure that the landscape of this country is not disfigured by a rash of ill-planned wind turbines?

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Lord Marland: I am grateful for that question. Under the previous Government, 14 gigawatts of onshore turbines were approved, 70 per cent of which is under way. It is our determination that there should be no dramatic increase in this and that the emphasis should be offshore, where the supply of wind is much more reliable. There are of course constraints in the environment, to which the noble Lord referred, and fishing and shipping communities need to be listened to, but offshore is the future for this country.



2.48 pm

Asked By Lord Sheldon

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, there are different methods of calculating wealth. HMRC personal wealth statistics estimate that, in 2005, the latest year for which data are available, the top 10 per cent of individuals owned 54 per cent of total wealth. The wealth and asset survey, a new survey measuring wealth across Great Britain, estimates that, between 2006 and 2008, the top 10 per cent of households owned 44 per cent of wealth. However, the wealth and assets survey uses a different methodology from the HMRC statistics.

Lord Sheldon: That does not take into account the period from 2000, which was my original question, and how the population varied during the period of the Labour Government. The richest 10 per cent must have been rather wealthier than the Minister said. What action has been taken to reduce the level of wealth?

Lord Sassoon: I am grateful to the noble Lord for asking what action was taken during the period of the Labour Government to reduce wealth inequality, because I can give him the statistics. The HMRC survey showed that the top 10 per cent of households in 1997 owned 54 per cent of the wealth; in 2005, they still owned 54 per cent of the wealth. The Gini coefficient, which your Lordships will be aware measures the dispersal of wealth, had risen marginally from 69 per cent in 1997 to 70 per cent in 2005. That probably shows that whatever action was taken had no appreciable effect.

Lord Bilimoria: My Lords, does the Minister agree that the question should be not how much wealth does the richest 10 per cent hold, but how much wealth does the richest 10 per cent generate for this economy? What are the Government doing about the worry of driving away some of the most talented people through the 50 per cent rate of tax, the non-dom levy and increased CGT? Surely we should be attracting more wealth creation. On the other hand, with regard to the question before about the previous Government

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and reducing child poverty, is it not shocking that we should have child poverty in one of the wealthiest nations in the world?

Lord Sassoon: My Lords, I am grateful to the noble Lord, Lord Bilimoria, because he enables me to say yet again how important it is that wealth generation is created and that the balance of the economy is switched from overdependence on the public sector and debt to dependence on the private sector and equity. That is why he did not mention-but I will-the reduction in corporation tax, the fact that CGT did not go up anything like as much as people had feared and a number of other measures in the Budget. He is right to draw attention to child poverty because the previous Government failed to meet their target of halving it by 2010.

Lord Roberts of Conwy: My Lords, is it not true that the gap between the richest 10 per cent and the poorest 10 per cent is actually at its greatest for 40 years? The party opposite were in Government for the best part-no, not quite the best part, but for 18 years, or almost half-of that 40 years. If we were in the blame game should they not take responsibility?

Lord Sassoon: My Lords, I completely agree with my noble friend. The policy of this Government is to increase wealth across the wealth distribution for everybody.

Lord Eatwell: My Lords, does the Minister agree that one of the most important political ideas of the past 50 years is that of a property-owning democracy? Conservative thinkers must get due credit for the development of that idea. Why, then, have the Government abolished child trust funds, the first measure in the history of this country to give every child a stake in the wealth of the nation?

Lord Sassoon: My Lords, there are simply some measures that, in the present fiscal position, are unaffordable. The child trust fund, regrettably, falls into that category. However, to ensure that children at greatest risk are protected, we have introduced above-indexation rises in child tax credit. If noble Lords look at the new tables set out in the Budget document on pages 64 to 70, they will see that the effect is progressive across all income bands.

Lord Newby: My Lords, does the Minister accept that one way to stop disparities in wealth growing disproportionately is for the wealthy to pay their taxes? The Government have at long last announced a review looking at the possibility of introducing a general anti-avoidance rule. Will the Minister assure the House that this review will be finished in time for legislation on this matter to be introduced in the next finance Bill?

Lord Sassoon: My Lords, the coalition agreement indeed commits the Government to make every effort to tackle tax avoidance. There was a Budget press notice on eight initiatives that we are taking. One is to

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examine whether the option of a general anti-avoidance rule should form one element of strengthened defences against avoidance. I assure my noble friend that there will be informal consultations on this possible anti-avoidance rule over the summer.

Lord Foulkes of Cumnock: My Lords, may I ask the Minister a very simple question? What proportion of wealth is held by members of the Cabinet?

Lord Sassoon: I suspect that it would not register significantly on the data.

Lord Pearson of Rannoch: My Lords, whatever the views of the Benches beside me and opposite me, does the Minister not agree that in socialist societies the differential is very much sharper than in democratic and capitalist societies? Does he, for instance, recall that in the Soviet Union some 95 per cent of the wealth and influence was controlled by less than 2 per cent of the population?

Lord Sassoon: My Lords, I have been looking for international comparison data, which are very hard to come by. I certainly do not know of any reliable statistics for the former Soviet Union. In the latest data of which I am aware, which is an Economic Policy Research Institute survey in 2000, the USA has the top 10 per cent of households earning 69.8 per cent of wealth, France is on 61 per cent, the UK on 56 per cent, Germany on 44 per cent and Japan on 39.3 per cent.

Disabled People: UN Convention


2.55 pm

Asked By Baroness Greengross

Baroness Greengross: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest as a member of the Equality and Human Rights Commission.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, this Government are committed to the Convention on the Rights of Persons with Disabilities and to using it as a driver to achieve equality for disabled people. The Office for Disability Issues is co-ordinating implementation, monitoring and reporting across government and the devolved Administrations to ensure that they are aware of the need to take the convention into account in developing policies, and that they involve disabled people and their organisations in doing so.

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Baroness Greengross: In thanking the Minister for his reply, I recognise the huge resource challenge we all face and I welcome the Government's commitment to ensure that fairness is at the heart of any financial decisions that will be made. In light of the recent announcements around welfare reform, including incapacity benefit and disability living allowance, and the possibility of a delay in implementing the Equality Act, can the Minister assure the House that every step is being taken to make sure that spending cuts do not impede the implementation of the UN convention and that full equality impact assessments are carried out so that the impact on disabled people is actively and appropriately considered?

Lord Freud: My Lords, I am grateful to the noble Baroness for her informed questions, which I know come from her interest in and passion for equality issues. I can assure her that we will treat this convention with great seriousness and will push ahead to make sure that it does not slow down. Next July, we are due to report on progress in this area. We will be pushing to make sure that we do so to time. I can also assure her that in our welfare reforms we will look precisely at making sure that those who need support the most continue to receive it.

Baroness Campbell of Surbiton: My Lords, one-third of disabled people live below the official poverty line, which does not measure the additional costs of disability. Under the UN disability convention, the Government must promote the right of disabled people to an adequate standard of living and social protection. Will the Government's review of the disability living allowance and, more importantly the recent closure of the independent living fund to new recipients, breach that obligation?

Lord Freud: My Lords, when we look at our obligations under the convention, we are clearly looking at a journey towards complete equality for disabled people. It would be naive to claim that within one bound we shall produce total equality. This has been a long journey, which started many years ago. We are committed to press on and make sure that as we move ahead we produce greater equality and improve the lot of disabled people steadily as the years progress.

Lord Ashley of Stoke: The Minister's assurances are welcome, but how do the Government explain the reservations that they have made? It is not so much the question of individual reservations, but the cumulative effect of all four of them. It gives the impression that the British Government are not interested and certainly are only lukewarm towards the issues covered by the four reservations to the convention. How does the Minister square that?

Lord Freud: My Lords, we have four reservations on this convention, and there are two ways of looking at that. A large number of countries have signed-145 of them, and 87 have ratified. We have taken this convention with great seriousness and looked through the implications of applying it, rather than looking at it as a purely

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aspirational matter. Of those four reservations, we are working extremely hard to ensure that we can remove two.

Lord Addington: My Lords, when we are dealing with disability matters we tend to pass a lot of legislation, then have to go back and pass legislation again on the same subject. Have the Government decided whether we have the legislative framework to enact the United Nations convention? If we do not, when will it be in place? May we know as soon as possible?

Lord Freud: The United Nations convention is not a matter of law in this country or in Europe. It is a convention that holds us to account on our performance, and on which we report back to the UN. We will do that in July.

Lord Knight of Weymouth: My Lords, Article 28 of the convention promotes the right to an adequate standard of living. Elsewhere, the convention requires that all activities must include the participation of persons with disabilities. How have persons with disabilities been involved in the decisions in the Budget that show, in table 2.1 of the Red Book, that £360 million in 2013 and then over £1 billion in 2014 will be cut from the disability living allowance?

Lord Freud: My Lords, this is the first time that I have had a chance to welcome the noble Lord to these Benches. As he points out, part of the convention says "nothing about us without us", and we take that seriously. We will go through the normal Budget processes in terms of ensuring that equality and human rights issues are dealt with.

Lord Low of Dalston: My Lords, the Minister will be aware that the European Parliament is currently considering a draft regulation on the rights of passengers on bus and coach transport. Will he assure me that the British Government will support the inclusion in this regulation of stronger rights for disabled people in line with Article 9 of the UN convention, particularly with regard to the provision of assistance and accessible information?

Lord Freud: As I said, my Lords, we are determined to implement this convention. We have four reservations, but transport is not one of them. We will be implementing it in as proportionate a way as we can.

House of Lords: Reform


3.02 pm

Asked By Lord Campbell of Alloway

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The Minister of State, Ministry of Justice (Lord McNally):My Lords, instructions to parliamentary counsel will be drafted by officials in the usual manner, based on decisions made by the committee.

Lord Campbell of Alloway: My Lords, I thank my noble friend for that response. The take note debate raised a question of due process relating to this Question, which, in effect, has not been answered. I am afraid that I cannot answer it; I did not set up the committee. I suspect that the only person in your Lordships' House who can really answer it is my noble friend the Justice Minister. In the mean time, though, there is a problem about this process. There are two aspects.

Noble Lords: Too long!

Lord Campbell of Alloway: I am sorry. I will sit down.

Lord McNally: My Lords, because, as the noble Lord said, the debate raised the issue of due process, I was very careful to make inquiries about whether it could be suggested that anything that was taking place was not being done with due process. I am advised that parliamentary counsel will draft the Bill, which the Government plan to publish before the end of the year, based on clear instructions provided by the departmental lawyers, and that this is normal practice.

Lord Dubs: Does the Minister agree that every Minister should be accountable to one House or the other in Parliament and that it is therefore an anomaly that the Minister without Portfolio in the Cabinet Office is apparently not answerable to anybody in either House? Will the Minister ensure, in feeding in to this process, that all Ministers are accountable?

Lord McNally: I cannot believe that that is not the case. Perhaps the noble Lord will write to me on it; otherwise, I will report what he suggests to the Cabinet Office. I think that I have seen most Ministers up for Questions. If the Minister is in another place, it is open to Members of another place-

Lord Dubs: It is this House.

Lord McNally: Ah, I know where we are now. Why does the noble Lord not try putting down a Question to her?

Lord Maclennan of Rogart: Can my noble friend give a little further advice on the status of the committee, which, although appointed by the Government, includes a representative of the Opposition? None the less, the Leader of the Opposition in this House, the noble Baroness, Lady Royall, described it as a Cabinet committee. Does it have that authority and collective responsibility? Secondly, what steps will be taken to enable representations to be made to the committee that are germane to the work of the committee in the form of advice, given that the noble Baroness said to the House that the committee's proceedings could not

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be made clear or transparent? Are we not all interested in helping constructively? If we are to help constructively, can we be given some greater indication of how we can do so?

Lord McNally: I am very much aware of just how constructive most of this House wants to be to the committee and I am grateful for that. It is not a Cabinet committee; it is a working group that is drawing up a draft Bill. The reason why the Opposition accepted the invitation to join the group is that, prior to the election, a great deal of the work had been done by a similar committee under the chairmanship of Mr Jack Straw. That committee left a good body of work for this group to get ahead in its work in drawing up a draft Bill.

Lord Christopher: My Lords, I understand that the Cabinet rules on legislation require an impact assessment and a cost-benefit analysis. Indeed, the Government were criticised only recently for not producing them. In the case of this government draft legislation, it seems ludicrous that the House should discuss something without knowing what the consequences will be.

Lord McNally: Those matters can be fully scrutinised by the pre-legislative scrutiny committee when it sees the draft Bill. I emphasise that this committee is working on a draft Bill, which will be subject to pre-legislative scrutiny, when there will be a lot of opportunities to look at both the impact and the cost.

Lord Grocott: My Lords, as I previously understood it-the Minister has made it much clearer to me now-the agenda and the minutes of the committee could not be made public because the committee was a Cabinet committee. The noble Lord has now told us that it is definitely not a Cabinet committee. Given that this Government have trumpeted their commitment to transparency and openness, on which the Deputy Prime Minister has been in the lead, why on earth cannot the agenda and the minutes be published? If the noble Lord tells me that they cannot be, what offence would be committed if, for example, I were to ask my noble friend the shadow Leader of the House to let me have a copy of them?

Lord McNally: I am sure that the Leader of the Opposition would honour what has been set out by the committee. This is a drafting committee and we are working with due speed to produce a draft, which will then give the opportunity for the real work that Lords reform requires. I think that the House is getting overexcited about this. We are receiving advice and written submissions and we are working hard to be able to give the House what I have described before as a bone for it to chew on. I think that that is the best way forward for Lords reform.

Lord Jones of Birmingham: My Lords-

Noble Lords: Time.

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Arrangement of Business


3.10 pm

Baroness Anelay of St Johns: My Lords, at a convenient point after 4 pm, my noble friend Lord McNally will repeat a Statement on political and constitutional reform, followed immediately by my noble friend Lord Hill of Oareford repeating a Statement on education funding.


Motion to Take Note

3.11 pm

Moved By Earl Attlee

Earl Attlee: My Lords, I am very grateful to the usual channels for giving us the opportunity to have a full debate on transport matters, and in prime time. The provisions of the Companion apply but we have no overall limit on time, and that is a pleasant change from our normal ration. We have an excellent list of speakers who have much experience and knowledge in the field. The noble Lord, Lord Davies of Oldham, has spoken on transport from the Front Bench for many years, and I am delighted that he will continue to do so. I am sure that he will give me not only a run for my money but the benefit of his wise counsel.

Transport is, and always has been, an integral part of a strong economy and a free society in the UK. It was 250 years ago this month, 180 miles to our north on the Duke of Bridgewater's estate, that excavation work began on the central section of a groundbreaking canal linking the coal mines at Worsley Mill to factories in the heart of Manchester. The Bridgewater Canal revolutionised transport in this country, and the boom in canal building that followed its construction unleashed a wave of industrialisation that transformed Britain into the richest nation on earth.

This country's history has long borne witness to the importance of transport in supporting its economic and social development. As a proud maritime power, for centuries our ships have carried goods to and from the furthest-flung corners of the globe. In the decades following George Stephenson's pioneering trial of his Rocket locomotive in 1829, we became the first country to develop a comprehensive railway network, carrying our citizens and commerce between towns and cities the length and breadth of our island. In the 20th century, the motor car brought unprecedented personal freedom to millions, while air travel shrunk space and time and, in doing so, opened markets, spread trade, connected countries and brought people and communities closer together than ever before. We now live in a globalised world. We are interconnected and interdependent-socially and culturally, economically and environmentally. What binds, links and supports us is transport. So, as we stand here in 2010, our duty is to build on the

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successes of the past and continue with the task of delivering a transport system that is safe and accessible; that supports communities and spreads opportunity; and that sustains the economy and safeguards the environment.

Noble Lords will note that safety was deliberately the first issue I listed. I did so because safety will always be paramount in this country's transport systems. We have a duty to ensure that our citizens are conveyed on the safest aircraft, the safest ships, the safest trains and the safest road vehicles. We are fortunate that the UK is already a world leader on safety. The latest figures show that the number of people killed in road accidents fell by 12 per cent, from 2,538 in 2008 to 2,222 in 2009, but this still leaves us facing a toll of more than six deaths per day-a cost in life and suffering that, of course, remains far too high. We need to switch to more effective ways of making our roads safer while ensuring that we do not curtail Britain's tradition of freedom and fairness through an obsession with new fixed cameras and "spy in the sky" technology. Fatal drink-drive accidents and fatalities are now at their lowest-ever level after falling by three-quarters since breath testing was launched 40 years ago. We need to continue to tackle drink and drug driving in the most effective way possible to protect law-abiding motorists, and we are committed to introducing a drug-testing kit for drivers as soon as possible. We hope to have it in police stations as soon as next year.

Driving is an important life skill and calls for continued and lifelong learning, and I say this as an out-of-date qualified Army driving instructor. The Government are therefore considering what improvements could be delivered to the traditional driving test as well as steps beyond to ensure that we are helping people to become, and stay, safe and responsible drivers. We will be looking closely at the availability and delivery of products that help qualified drivers to maintain and develop their driving skills, including Pass Plus, additional training with the possibility of an assessment aimed at newly qualified drivers, advanced training and remedial training offered to drivers responsible for collisions or infringements of motoring law.

It is not just essential that we take the right steps to protect those who use transport; it is vital that we take the right steps to protect the planet from our transport system's damaging side-effects as well. Climate change imperils our planet-that is scientific fact. We cannot side-step this challenge and we cannot ignore it in the hope that it will go away. We have to face it head on and transport has to be front and centre of our efforts. Transport accounted for more than a fifth of UK greenhouse gas emissions in 2009, so we must be prepared to deploy a wide range of levers to cut carbon emissions and decarbonise the economy. While this is a challenge, it is also an opportunity, and transport has a central role to play in the creation of new green jobs and technologies. A cleaner tomorrow demands a cleaner transport sector-a transport sector that is more sustainable, with tougher emissions standards and support for new transport technologies. We are determined to protect our environment as well as strengthen our economy. That is why we regard a low-carbon future as the only viable future for Britain.

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The vast majority of transport's contributions to greenhouse gas emissions come from road transport. That is precisely why it is so crucial that sustainable alternatives to the internal combustion engine are developed and given the appropriate support. Currently, half of all car journeys are between one and five miles in length while close to half of all car journeys for education purposes are less than two miles. If we could replace as many of these car trips as possible with the cleaner and greener travel alternatives of walking, cycling and public transport, we could see significant reductions in greenhouse gas emissions-and that is in addition to the improvements in health, air quality and traffic congestion that would result. These benefits to our shared environment, our individual well-being and our collective quality of life mean that this Government are committed to sustainable travel initiatives as well as to the encouragement of joint working between bus operators and local authorities.

It is also vital that a new generation of low-emission vehicles emerges to take the place of the UK's current fleet. I can tell your Lordships that the Government are committed to fostering the development of electric and plug-in hybrid vehicles with plans to mandate a national vehicle charging infrastructure on top of a smart grid and smart metering for electricity. As well as the obvious environmental benefits, the shift to ultra-low-carbon technologies is an opportunity to reinvigorate the UK automotive industry. The sector already employs 180,000 people in manufacturing and adds £11 billion to the economy each year, and this Government are continuing to work with industry to realise the business opportunities from the global transition to low-carbon technologies.

Beyond any question, rail will have a central role to play in building a greener future for our country. The Government support a truly national high-speed network connecting key cities across the country. We also support Crossrail and the further electrification of the rail network. Taken together, these railway projects have the very real potential not only to generate economic growth but to encourage a modal shift of people and freight from long road journeys and short-haul flights.

The fact that we are pro-environment does not mean that we are anti-aviation. Yes, we recognise the environmental impact of aviation and believe that we must seek to reduce that impact, but we are also a Government who understand fully and appreciate absolutely the positive social and economic contribution that aviation makes. To strike that balance between aviation's environmental impact and its socio-economic benefits, the Government are working for a better, rather than a bigger, Heathrow by shelving plans for a third runway there. We will also explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty, which would encourage a switch to fuller and cleaner planes.

Lord Clinton-Davis: If there is to be no expansion of Heathrow, will other airports be available? If so, where? It is incumbent on the present Government to identify this important issue of regulation.

Earl Attlee: My Lords, one of the reasons why I have looked forward to this debate is the opportunity it will provide to listen to the noble Lord's full

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contribution-which I know he is looking forward to making. When I wind up the debate, I will be in a position to give him a full answer.

More broadly, we are also committed to reforming the way that decisions are made on which transport projects to prioritise, so that the benefits of low-carbon proposals, including light rail schemes, are fully recognised.

Transport matters. It matters because it fosters economic growth, and it matters because it connects companies to markets and customers. Transport matters because it increases competition, spreads innovation and produces economies of scale. It matters because it improves labour market flexibility at home and opens up business opportunities abroad. Above all, transport matters because, when it is safe and sustainable and when it works at its best as the great connector, it can improve beyond measure our economy, our society, our communities and our environment. An investment now in transport is an investment in recovery, renewed growth and our children's prosperity.

I am convinced that, just as canals shaped our national life in the late 18th century, our transport networks can transform Britain for the better in the 21st century. Modern transport in a modern Britain means a country equipped to compete in a globalised world-a country with an economy that is strong and stable, an environment that is clean and green, and a society that is free and fair. That is what safe and sustainable transport can achieve. That is its potential for progress-a potential that this country's ports, airports, railways, motorways, bus lanes, cycle lanes and paths all have a part in delivering. Few in this House would underestimate the role that safe and sustainable transport has in building a better Britain, and I look forward to all your Lordships' contributions in the debate to come. I beg to move.

3.25 pm

Lord Snape: My Lords, first I apologise to the noble Earl for missing the first three minutes of his speech. I am afraid that I was running late, as was the Virgin train that I came down to London on this morning. However, it is about time that those of us who participate regularly in these debates in your Lordships' House paid tribute to those in the transport industries generally, and certainly in the railway industry, for the high level of passenger satisfaction that has been demonstrated in recent months. The PPM for our railways is running at about 94 per cent, which reflects enormous credit on those who work in the railway industry. We ought to give credit where credit is due and pay tribute to railway men and women at all grades for the efforts that they are making and for the high levels of passenger satisfaction that have been demonstrated throughout the country.

Having apologised to the Minister, I now thank him. He sent me a handwritten note last week thanking me for participating in this debate. Whether he will send me another one when I sit down remains to be seen. However, it is the first time that I have received such a note from a Minister, and I am grateful for it.

A very short time is available to all of us who are participating in this debate. The Minister is right that good and efficient transport is essential for a civilised

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society. I start with a warning to the noble Earl, Lord Attlee, and to the Government, about the so-called draconian cuts that are planned-if the media are to be believed-across our transport industries. The new Secretary of State did not make a particularly good start when he talked about the new Government's policies ending the war on motorists. It is a pretty phoney war, because the cost of motoring has fallen in real terms since 1997 compared with the cost of travelling by both rail and bus, which has increased in real terms. I hope that his future pronouncements on government policy, and his actions, will be based on reality rather than prejudice.

The Government are seeking to make many savings in the transport budget. I will presume to make some suggestions to the Minister, which I hope he will accept in the spirit in which they are offered. Certainly, there is a problem with Network Rail. I probably carry both sides of the House with me when I say that various obvious savings can be made in the Network Rail budget. There are three things wrong with Network Rail: its governance, its performance and its prices. There is a lot wrong with its governance. I have had the privilege of serving on a couple of boards in my career. Any board that has more than 100 members is a recipe for chaos. I am not sure why Network Rail's governance is as chaotic as it is, or why it has so many people on what is not a board of directors but merely an advisory group. Perhaps the best size of a board is five or six; it is certainly a lot less than 100.

We all know why Network Rail was created in the way that it was; it was an attempt by the previous Government to keep their expenditure off the PSBR. Laudable though that may be, it is no way to run a business to have an advisory board of the size that Network Rail has. I hope that the Government will look again at this. At the moment, Network Rail appears to be neither fowl nor good red herring. If it is to be run properly, the Government have to look again at its overall governance.

The Government should also look at Network Rail's performance. All too often, these debates become a series of "All Our Yesterdays" stories, but from my time in the railway industry I seem to remember the much maligned British Rail being far more efficient than Network Rail is at present. As an 18 year-old newly qualified signalman in 1960-that rather gives my age away-the old BR managed to resignal Manchester London Road, as it then was, in a weekend. The semaphore signals dating from 1908 were swept away and scores of colour light signals were put into what became Manchester Piccadilly. Actually, it did not work out quite as well as BR had hoped, as I think it was about Wednesday before we were able to run a comprehensive service. However, for all that to be done in four days, although the target was two, far surpasses anything that Network Rail can do at the moment. I live very close to Yardley Wood station in Birmingham. Only last year, Network Rail decided to resignal the Stratford line, which passes my home. It was necessary to close the line on successive weekends and then for the line to be completely closed for 10 or 12 days in order to install a dozen signals and a new junction at Tyseley. BR could do things far better than

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that. Network Rail has to toughen up its performance if it is going to match what BR managed to do quite easily in the past.

The other aspect of Network Rail's performance is price. I was at a recent meeting of the All-Party Group on Rail at which officers of the Office of Rail Regulation were present. They talked about benchmarking Network Rail. How do you benchmark a monopoly? Perhaps the Minister can tell us how that can be done. Is it necessary to have a monopoly such as Network Rail? After all, rail companies such as ScotRail run an organisation that is largely separate from the rest of Network Rail. Why not allow ScotRail to maintain its own track and infrastructure? There could then be a proper comparison between the costs there and those of the rest of the railway network. Why not let Merseyrail, for example-again, an organisation that is virtually completely separate from the rest of the network-operate and maintain its own track on Merseyside? Surely that would be the best way to benchmark Network Rail, where the simplest job appears to cost hundreds of thousands of pounds. If the Government genuinely want to save money-I understand their reasons for wanting to do so-why not have proper cost comparators such as that? As long as Network Rail is allowed to maintain its own monopoly, we will never really know the true cost of major railway works, and we have to accept the costings before, during and after as laid down by Network Rail.

There are other areas that I hope Her Majesty's Government will look at. In the West Midlands, for example, close to my former constituency of West Bromwich is a company called Parry People Movers, which operates about 700 or 800 yards of line between Stourbridge Junction and Stourbridge. It has achieved a 99 per cent reliability rate on that stretch of line. Why-this is not a political point; it happens under all Governments-do we find it so difficult to innovate within the railway industry? Why are we so hidebound and traditional as to insist on rolling stock being made to the highest possible standard and with the tracks being maintained as though Pendolino trains will run at 125 miles per hour throughout the network? Why cannot we have a cheap and cheerful branch line perhaps run by Parry People Movers? I hasten to add that I have no direct connection with the business. Some years ago, John Parry, the chairman, asked whether I would be interested in joining his board. At that time, I was working for a rather bigger organisation called National Express, so, probably to his relief, I had to turn him down.

This is an area in which genuine savings could be made. We could operate a cheap, or cheaper, railway system on some of our threatened branch lines. Indeed, we should consider reopening some of them, but that cannot happen at present because of the costs of operating the current railway system.

I hope that the Government will look not at slashing front-line services or cutting railway infrastructure but on making the present system work more cheaply and efficiently. I hope in the 10 minutes or so available to me that I have been able to give the Minister some food for thought and that the Government will see that we depend on the railway industry economically as we do on other forms of transport.

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I wish that I had time to talk about buses and aviation, but I know that other noble Lords want to participate in the debate and I do not want to take up too much time. The transport industry can do a lot to boost the economy of the United Kingdom, so please let us not slash infrastructure or front-line services.

Going back to my BR days, all too often when cuts had to be made it was the night-turn shunter who lost his premium payments on Saturday and Sunday nights. The problem with the present railway industry is that it is overmanaged and undersupervised. All too often when things go wrong, managers are far away and not in a position to put things right and no one on the spot has the ability, knowledge or authority to do what is necessary to combat either delays or dislocations. The Government could genuinely save money in those areas while preserving the best of our railway industry.

I wish the Minister all the best in his new post and hope that he can convince the Secretary of State that clichés such as "Ending the war on motorists" are not the right way forward. I also hope that he can find some time to write me another letter saying that not only are the Government taking some of my strictures on board but that they are prepared to act on them.

3.37 pm

Baroness Scott of Needham Market: I take this opportunity to congratulate the noble Earl on his appointment. In the short time with his brief he has already shown himself to be an assiduous Minister and I look forward to working with him on transport issues in the coming months and years.

In his opening remarks he talked about the fundamental role that transport plays in the economic, social and environmental well-being of the community. My interest in transport developed in a much less dramatic way as a councillor in Suffolk when I realised fairly quickly that probably nine out of 10 pieces of casework related to transport in some way or another, whether it was home-to-school transport, a dangerous crossing, an inability to access some sort of public service, or the state of the roads. I have always been interested in the enabling role that transport plays, and the fact that many good policy interventions made by government and local authorities failed to work because nobody properly thought through the transport dimension.

I have never made a pretence of having any great technical expertise on transport but I have a great admiration for those who do. The UK transport industry is a major employer throughout the country. In the past 20 years huge structural changes in the industry mean that transport is much less the preserve of the public service than it used to be and there is huge variation in the size of the organisations concerned, from large multinationals to small specialist companies-indeed, Parry People Movers.

The Brunel report published in November 2008 reported a supply of 87,400 people working in engineering, the technical field and planning across the transport industry. That compared to a demand of 96,900. While I acknowledge that the cancellation or postponement of some projects may have reduced the skills gap, it still exists. The challenge on how to mix economic

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growth with a low-carbon economy is set to increase the skills shortage in coming years. If we do not meet that challenge our future prosperity will be jeopardised.

Currently, the average age of a chartered engineer is 57. That may be young compared to the membership of this House, but the reality is that over the next decade a huge part of the current knowledge and experience in the transport engineering industry will be retiring. While there are many young people graduating into engineering, many of them then do not go on to work in engineering-they go off and do other things, which are usually better paid.

Young people are required to make a choice about their subject options about 12 years before they would expect to become a chartered engineer or transport planner, so a choice made about topics and subjects this year will affect a young person qualifying in 2022, or thereabouts. Operating on these timescales does not sit comfortably with short-term planning and stop/go investment. Advanced apprenticeships, support for 14 to 19 diplomas and supporting STEM subjects all need funding, and what is more they need employers who have the security of knowing that they will have predictable income streams to pay for the training. Statutory regulations on apprenticeships should be looked at to ensure that they are cost-effective, accessible and manageable, especially for small businesses.

Furthermore, it does not stop with young people. At all levels, changing skill requirements, new and safer working practices, green technologies and other developments mean that the need for training and development is continuous. The costs of that always fall to the industry, which is another reason why industry needs stable investment flows.

The need for skilled, specialised personnel in the transport sector is crucial and will remain so. The supply cannot be turned on and off at will. It takes a considerable time to develop such people, and the timescale goes way beyond our current financial challenges.

At this time, we have to consider a simple economic case: stop/go work flows will make it difficult for even the most enlightened employers to go on investing in good training and development. A lack of short-term prospects could drive skilled people to other sectors or abroad. The result of those two things could exacerbate the skills shortage, driving up costs, when the upturn comes. If the skills base is too far eroded, there will be a real lack of capacity to provide the transport infrastructure needed to sustain growth. The transport industry needs a long-term vision and strategy so that it can resource the skills needed for a low-carbon economy in the future.

I want to say a few words about transport spending in the current environment. In roads, focusing on maintaining the existing asset and using it more effectively should be a priority. It is usually easier to commission and has more immediately visible results. Reactive maintenance-in other words, response to damage-is an inefficient way of dealing with the highway. Planned preventive maintenance offers better value for money and is more efficient.

Road safety is not just a matter of quality of life -often literally-although that is clearly uppermost in our minds. It is also a question of value for money

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-savings for the NHS in dealing with the injuries caused by road traffic accidents, but also the long-term care required by people with the most severe injuries. Yet there are very few training requirements for people in road safety specialisms, and what little there is is provided by local authorities on a discretionary basis. Of course, when money is tight, discretionary services, especially training, tend to be high on the cuts list.

It is possible to build incentives for training into our procurement processes. For example, the East Midlands Highways Alliance is a collaboration of a number of companies and local authorities whose aim is to improve highways services in the region, and includes the development of a skills academy. The savings to its partners have been huge over recent years.

I have always used trains and, since becoming president of my party, have spent an inordinate amount of time on the railways. I have seen them at their best, and I have seen them at their worst. My overwhelming feeling is that the current franchising scheme, and the highly complex regulatory regime within which the rail industry has to operate, has completely lost sight of the needs of the passengers. I hope that the very welcome review of the franchising system will at last begin to put the passenger first. The fares system is in chaos and there is a widespread lack of understanding of how it works, even among the staff who operate the system. Queues for tickets are at unacceptable levels and should be dealt with as a priority. There are far too many bus substitutions and too few visible staff to help when things go wrong. When passengers complain to train operators, they are often told that their freedom to respond to passengers is hampered by franchises which are overregulated and micromanaged by the Department for Transport. Surely departmental oversight should be focused on the things that really matter: punctuality, reliability, cost and, above all, passenger satisfaction.

It is surely no coincidence that the three train operating companies with the highest performance and passenger satisfaction are those with the longest franchises. Can the Minister tell us the Government's thinking on longer franchises? Does he agree that the decision to award a franchise should not be on cost alone; it should be on improving service quality and how much the operator is prepared to put in? With refranchising of the west coast main line due in 2012 and of the east coast main line next year, and with the whole question of my local, rather benighted, rail franchise, National Express East Anglia, can he tell us whether they will come under the new regime which is currently under consultation, and what will be the timetable? Furthermore, will he say something about rolling stock? There is clearly a need for new rolling stock, but at the moment there seems to be a huge amount of unnecessary government intervention between train operators and the roscos.

I am very pleased that this House has had the opportunity to debate transport matters at this early stage in the life of the new Government. I look forward to contributions from other noble Lords. The importance of transport in all areas of our lives is not always recognised, and it is good that it has been today.

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3.46 pm

Lord Liddle: My Lords, I thank the noble Earl for moving the Motion and enabling this debate. I have a long-standing interest in transport questions. My dad was a railway clerk for most of his life and a member of my noble friend Lord Rosser's trade union. My first job in national politics was working for the noble Lord, Lord Rodgers of Quarry Bank, as a special adviser in the Callaghan Government when he was Secretary of State for Transport.

Today, I shall talk about transport issues from a regional perspective, and specifically from a Cumbrian perspective. I declare an interest here as chairman of Cumbria Vision, which is the sub-regional economic development body for the county of Cumbria.

The question of transport connectivity is crucial to the future of the north of England at this time. Like many parts of the north, Cumbria is heavily dependent on the public sector. The county council undertook an analysis which shows that of all types of different public expenditure, we in Cumbria get £2 for every £1 we contribute in tax, so we are very vulnerable to the cuts in public expenditure now in prospect.

That also means that the economic priority for the north of England has to be to grow the private sector. The private sector can grow-we can attract new businesses to the north-only if some key facilitators of growth are in place. Some of those are skills and some of them are adequate industrial sites. Digital connectivity is important, but crucial is transport. Investment in safe and sustainable transport is vital. I hope that the Government recognise at this time of public spending restraint and cuts that if they want private sector growth and inward investment in places such as the north of England, they must continue to provide favourable public investment, especially in transport, to support it.

We have seen in recent years a great improvement in rail services. When I was a boy, if you wanted to go from Carlisle to London, there was a train that left Carlisle at 8.40 and it got in at four o'clock in the afternoon. Most people who wanted to go to London from Carlisle went overnight, and the station was busiest as people were getting on overnight trains. Nowadays, with the west coast main line modernisation, the journey takes about three hours and 20 minutes, so there has been a great improvement. I agree with what my noble friend Lord Snape said about the need to make sure that Network Rail stays up to the mark in delivering this high-quality service. I was involved in the Grayrigg train crash, in which a Pendolino came off the track on the way to Carlisle, and I think that any detriment to the safety of the system is a great concern.

Despite the investment, the situation is still not satisfactory. If noble Lords will bear with me, I shall make some particular points of general relevance. First, you can get to Carlisle very fast, but if you want to go to the heart of Britain's nuclear industry at Sellafield, you face another 40 or 50 miles on a very slow train that rarely connects efficiently with the mainline service at Carlisle. Connections are vital for our area if we are to attract the potentially huge investment from American and French firms that could

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come to Cumbria if we get the conditions right for a revival of our nuclear power industry. There is a huge opportunity here, but we need to have investment in transport to make it possible. Some of the questions I have for the Minister are, "Do we have the regulatory system right?", and, "Is the franchise system right to encourage the different train operators to work together effectively so that we have a seamless network rather than lots of different services?".

Secondly, I do not believe that at present transport is serving the needs of sustainable tourism in the future. The Lake District is one of our greatest tourist assets and one of our greatest areas of natural beauty. However, more than 95 per cent of people who come to the Lake District come by car. If we are going to get more sustainability in our tourism, we have to see a modal shift away from the car to public transport. I believe that there is enormous potential for expanding the role of the private sector in providing sustainable transport, but we have to put in place the right regulatory and economic framework. I know that in my county this is not a popular view, but I think we have to question whether free and unrestricted access for private cars to national parks is consistent with a sustainable long-term future. We have to look at different methods of road pricing and congestion charging and at banning cars from particularly sensitive parts of our national parks. There is potential for the kind of electric carbon-neutral buses that the noble Baroness, Lady Scott, spoke about, but we need to have the right economic framework in place for that to happen. Further, if the framework is in place, we can explore the potential for opening up some of our closed railway links like the line into the heart of the Lake District that ran from Penrith to Keswick.

One of the things I applaud about the present Government's transport policy is their commitment to high-speed rail and investment in a modern, European-style fast rail system. I hope that this is not going to be a victim of the Government's cuts, but I know that the Treasury, which is always suspicious of any sort of rail investment, will try to sharpen its knives. I hope that Ministers in the Government are strong enough to make sure that the high-speed rail links go ahead-and if they do, let me make one special plea. Great Britain does not stop at Birmingham and it certainly does not stop at Manchester; it goes much further north. If we are to have fast trains on the European model in Britain, they have to go to Scotland, and I say that they also have to stop at Carlisle. There is a bit of special pleading for you, but I hope in a good cause. I believe that if we get the economic framework right, we can see a growth in sustainable transport in this country and we can secure a sustainable future for one of the most special parts of England.

3.56 pm

Lord Teverson: My Lords, the reason I am taking part in this debate is not because I have been in the transport industry, although I was involved in road freight, but because one of the great things about life in the 20th and 21st century is real freedom of movement. As individuals it allows us to travel more or less where we want, and the freedom of movement of goods means that we can purchase or acquire more or less

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whatever we want from any part of the world. That is a fantastic privilege. After I left university in 1973, I travelled to eastern Europe, which was not often done in those days. I had an old Morris 1100 and with colleagues we drove around East Germany, Czechoslovakia and Hungary. We came across other students and young people who at the time were not allowed to move out of the communist bloc. They did not have freedom of movement, so it is a great privilege that we can enjoy today.

The big difference between the 20th and the 21st centuries is, of course, that we have to feel guilty about that freedom of movement because of our carbon footprint and all that is caused by carbon emissions produced through the movement of ourselves or our goods. Something like a quarter of all carbon emissions within the United Kingdom are the result of transport, while beyond that to the global environment, aircraft emissions account for 2 per cent rising to 3 per cent of total emissions. Again, that is something we are concerned about and will have to solve if we are going to have sustainable economies.

What I really want to do in this debate is agree with the premise of the Motion, which is that through transport we can be sustainable while enjoying those freedoms and creating jobs that will renew our economy, and I want to encourage the Government in that process. I have one or two questions which have not been raised. The Committee on Climate Change looked at a number of things to do with sustainability in transport and came up with a series of questions. It pointed out that over the past few years we have had quite high profile negotiations at the EU level with car manufacturers about bringing down the emissions of the cars we drive. That has been relatively successful. But we have not had a similar hard negotiation with the manufacturers of trucks and vans, so those emissions have not come down on average. Are we going to press the Commission to take on the industry at truck and van level, as we have done with cars, to ensure that emissions come down?

When I first came into the House four years ago, one of the areas of salvation for sustainability of transport and travel was biofuels, which were going to be the future. We all then had visions of the rainforests in Indonesia and South America being cut down-that we were feeding cars rather than people and that food prices were going to go up-and, all of sudden, it became a dodgy subject to talk about rather than a good one. I think it is time the pendulum started to swing back the other way, partly because it is possible to develop sustainable biofuels, such as biodiesel and ethanol, and I would like to know what progress there has been on the guarantee and certification of sustainability. With biogas we have a fantastic opportunity to ensure that biofuels work properly, and in a big way, for sustainable transport through anaerobic digestion and other techniques that do not necessarily substitute road energy for food. What are the Government's plans in that area?

The Committee on Climate Change drew attention to the staggering statistic that, by 2020-which is only a decade away, obviously-we can expect to have 2 million electric cars on the roads of Britain. When

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are we going to start the process of setting up the infrastructure to ensure that charging points are delivered across the nation and we can really start to move into that technology? I do not understand how that is going to happen practically.

For me, one of the great moments in the coalition Government so far was the announcement in the other place from the Ministry of Justice that we are going to reform prison policy; it is fantastic that we are going to look at prisons in a different way. However, in road transport we have an equal kind of hostage to fortune-road pricing. We all know that the only way we will effectively and economically control cars and their usage is through road pricing. Is it likely that there might be a revolution in this area as well over the next five years?

I congratulate the Government on moving forward with the good work that the previous Government have done in this area, particularly in relation to the high-speed rail network. I encourage them to reach the goal of substituting rail transport for all internal air transport as quickly as possible. However, I have a difficult tale to tell about my experience over the last weekend when I went to Amsterdam to see my daughter, who is working there. I decided to go by high-speed train to Brussels and then, beyond that, to Amsterdam. It was a great travel experience but it was not a great experience for my wallet; it cost me something like double the amount it would have cost me to fly. Affordability, therefore, provides a real challenge and, while I commend the Government on their job creation through sustainable transport and for maintaining our individual freedoms through sustainable travel-Amsterdam was a fantastic example because people there move about the city by bicycle, trams and walking-I urge them to keep to their targets for sustainable transport through high-speed rail, electrification and a sustainable road network.

I congratulate the coalition Government. I look forward to the Minister's answers and to progress in the industry and in this area of operations.

Political and Constitutional Reform


4.04 pm

The Minister of State, Ministry of Justice (Lord McNally): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Deputy Prime Minister. The Statement is as follows.

"Mr Speaker, every Member of this House was elected knowing that this Parliament must be unlike any other, that we have a unique duty to restore the trust in our political system that has been tested to its limits in recent times. If anything was clear at the general election, it was that more and more people have realised that our political system is broken and needs to be fixed. They want us to clean up politics; they want to be able to hold us properly to account. So the Government have set out an ambitious programme for political renewal, transferring power away from the Executive to empower Parliament and away from Parliament to empower people.

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That programme includes: introducing a power of recall for MPs who are guilty of serious wrongdoing; tackling the influence of big money as we look again at party funding; taking forward long overdue reform of the other place; implementing the Wright Committee recommendations; taking steps to give people more power to shape parliamentary business; speeding up the implementation of individual voter registration; and increasing transparency in lobbying, including through a statutory register.

Today I am announcing the details of a number of major elements of the Government's proposals for political reform. First, we are introducing legislation to fix parliamentary terms. The date of the next general election will be 7 May 2015. This is a hugely significant constitutional innovation. It is simply not right that a general election can be called according to a Prime Minister's whims. This Prime Minister will be the first Prime Minister to give up that right.

I know that when the coalition agreement was published, there was some concern at these proposals. We have listened carefully to those concerns, and I can announce today that we will proceed in a Bill that will be introduced before the Summer Recess. First, traditional powers of no confidence will be put into law, and a vote of no confidence will still require only a simple majority. Secondly, if after that vote of no confidence a Government cannot be formed within 14 days, Parliament will be dissolved and a general election will be held. Let me be clear: these steps will strengthen Parliament's power over the Executive. Thirdly, there will be an additional power for Parliament to vote for an early and immediate dissolution. We have decided that a majority of two-thirds will be needed to carry the vote, as opposed to the 55 per cent first suggested, as is the case in the Scottish Parliament. These changes will make it impossible for any Government to force a dissolution for their own purposes. These proposals should make it absolutely clear to the House that votes of no confidence and votes for early dissolution are entirely separate, and that we are putting in place safeguards against a lame-duck Government being left in limbo if the House passes a vote of no confidence but does not vote for early dissolution.

I am also announcing today the details of the Government's proposals for a referendum on the alternative vote system and for a review of constituency boundaries to create fewer and more equally sized constituencies, cutting the cost of politics and reducing the number of MPs from the 650 that we have today to a House of 600 MPs.

Together, these proposals help correct the deep unfairness in the way that we hold elections in this country. Under the current set-up, votes count more in some parts of the country than in others, and millions of people feel that their votes do not count at all. Elections are won and lost in a small minority of seats. We have a fractured democracy where some people's votes count and others' do not, where some people are listened to and others are ignored.

By equalising the size of constituencies, we ensure that people's votes carry the same weight no matter where they live. Only months ago, the electorate of Islington North stood at 66,472, while 10 miles away, in East Ham, the figure was 87,809. In effect, that

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means that a person voting in East Ham has a vote that is worth much less than a vote in Islington North. That cannot be right. These imbalances are found right across the United Kingdom.

Reducing the number of MPs allows us to bring our oversized House of Commons into line with legislatures across the world. The House of Commons is the largest directly elected Chamber in the European Union, and is half as big again as the US House of Representatives. It was never intended that the overall size of the House should keep rising, yet that is precisely the effect of the current legislation-the Parliamentary Constituencies Act 1986. Capping the number of MPs corrects that, and saves money too. Fifty fewer MPs would save £12 million a year on pay, pensions and allowances.

On the referendum, by giving people a choice over their electoral system, we give that system a new legitimacy. Surely when dissatisfaction with politics is so great, one of our first acts must be to give people their own say over something as fundamental as how they elect their MPs. The question will be simple-asking people whether they want to adopt the alternative vote, yes or no. The precise wording will be tested by the Electoral Commission.

As for the date of the referendum, in making that decision we have been driven by three key considerations: that all parties fought the general election on an absolute pledge to move fast to fix our political system so we must get on and do that without delay; that it is important to avoid asking people to keep traipsing to the ballot box; and, finally, that in these straitened times we must keep costs as low as possible.

That is why the Prime Minister and I have decided that the referendum will be held on 5 May 2011, the same day as the elections to the devolved legislatures in Scotland, Wales and Northern Ireland and local elections in England. That will save an estimated £17 million. I know that some honourable Members have concerns over that date, but I believe that people will be able to distinguish between the different issues on which they will be asked to vote on the same day.

Our Bill will make explicit provision for the boundary commissions to report on more equally sized constituencies for the process to be completed by the end of 2013, allowing enough time for candidates to be selected ahead of the 2015 election, and we will ensure that the boundary commissions have what they need to do that. That means that, in the event of a vote in favour of AV, the 2015 election will be held on the new system, andaccording to new boundaries. Let me be clear: these are complementary changes-the outcome of the referendum is put in place as the new boundaries are put in place.

The Bill will require the boundary commissions to set new constituencies within 5 per cent of a target quota of registered electors, with just two exceptions: Orkney and Shetland, and the Western Isles, uniquely placed given their locations. We have listened, also, to those who have very large constituencies-so the Bill will provide that no constituency will be larger than the size of the largest one now. We intend that, in the future, boundary reviews will be more frequent to ensure that constituencies continue to meet the requirements we will set out in our Bill.

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I understand that this announcement will raise questions on all sides of this House, for these are profound changes. But let me just say this: yes, there are technical issues that will need to be scrutinised and approached with care as these Bills pass through Parliament. But ensuring that elections are as fair and democratic as possible is a matter of principle above all else. These are big, fundamental reforms we are proposing, but we are all duty bound to respond to public demand for political reform. That is how we restore people's faith in their politics once again. I commend this Statement to the House".

My Lords, that concludes the Statement.

4.13 pm

Baroness Royall of Blaisdon: My Lords, I thank the noble Lord the Deputy Leader for repeating the Statement of the Deputy Prime Minister, and I am grateful to the Government for early sight of the Statement.

There are some who take the view that this House has no role in these matters, that these are matters for the House of Commons and the House of Commons alone; but I believe that this House is a key part of the politics and the constitution of our country and a vital element of the constitutional checks and balances which are a central feature of the governance of our nation. There are clearly issues in the Statement repeated by the Deputy Leader for this House to consider.

First, will the Deputy Leader acknowledge that the Government's proposals announced today for an early Dissolution of Parliament following a vote of no confidence represent the first major U-turn of this Government-and in less than two months? Can he explain to the House why the Government did not think before about the impossibility of a Government hanging on after they had lost a vote of no confidence by a simple majority? To have done so would have saved the Government a lot of embarrassment. But why, having recognised that a vote of no confidence leads inexorably to a Dissolution, do the Government continue to assert the nonsense that no confidence and Dissolution are separate? They are not-the one is a consequence of the other. As to the Government's now subsidiary proposal for a two-thirds majority of any other Dissolution, what is its purpose? Is it not completely superfluous? Either the Government are in favour of a fixed-term Parliament, as long as the Government of the day enjoy the confidence of the House, or they are not.

On boundary changes, is the Deputy Leader aware that what we in the Opposition will not allow is for support for AV to be used as some sort of cover for outrageously partisan proposals in the same Bill to gerrymander the boundaries of the House of Commons by arbitrary changes in the rules for setting boundaries and by an equally arbitrary cut in the number of MPs? There is the huge problem, which the Electoral Commission highlighted in March, of 3.5 million citizens who are eligible to vote but who are not on the register. If the Government's aim is to make the system fairer, why has the Deputy Leader said absolutely nothing about how the Government will ensure that those 3.5 million citizens are included in the Boundary

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Commission's calculations about the size of the constituencies and how to get them on to the register in time for the review of the boundaries?

Since the Government claim that they want to empower people, is it the Deputy Leader's intention that local communities should continue to have a right to an independent local Boundary Commission inquiry? If it is, then when he says,

to complete this huge task by the end of 2013, what additional resources and staff will it be given?

As for the referendum on the alternative vote, this House will be well aware that just such a proposal was put forward by this party on these Benches. But does the Deputy Leader recall that during the general election the Deputy Prime Minister told the Independent newspaper that the alternative vote system was a "miserable little compromise" and that he was "not going to settle" for that?

A noble Lord: It's not a U-turn, is it?

Baroness Royall of Blaisdon: Can the Deputy Leader tell the House what changed the Deputy Prime Minister's mind?

The material points on this for your Lordships' House are principally twofold. First, a matter such as a referendum on voting reform is bound to be a central component of the national debate. Whether the public are as interested in it as the politicians remains to be seen. However, it will be part of the national debate, and this House unquestionably has a part to play in that debate.

Secondly, a move to a referendum will require primary legislation. Even if you do subscribe to the view that it must be for the elected House to have its way on electoral matters at national level, the fact that legislation will come before your Lordships' House again unquestionably requires this House to play its part in the carriage of that legislation. So, Members of this House will be able to hold the Government to account as they bring forward the legislation which this referendum will require.

I can tell the Deputy Leader that one of the points on which we will be pressing the Government strenuously will be the clear need to improve the register of voters before any election under a changed system of voting. We know the gaps in the register. We know that people across this country are disenfranchised. We know that those who are particularly disenfranchised are those who are already among the most disadvantaged. So, as part of the preparation for the next general election-and particularly so if it is to be carried out on the basis of a changed method of voting-can the Deputy Leader confirm that the Government will mount with local authorities a major exercise to improve registration?

Can the Minister also confirm that just as the coalition Government are preparing to press ahead with a referendum on a major constitutional issue such as a change to the electoral system to be used for national general elections, the coalition Government will also commit themselves to a referendum on further major reform of your Lordships' House?

5 July 2010 : Column 29

Much has been made of how far the decision of the coalition Government to proceed to a referendum on AV is a risk to the Prime Minister, the Deputy Prime Minister, the two parties which form the coalition and the coalition Government as a whole. All that, of course, must be a matter for them. However, we on this side of the House are concerned about making sure that the Government's decision to move to a referendum is not a risk to the constitution, to the legislative process and to the country. That is the proper job of opposition. That is a job which, in relation to what the Deputy Prime Minister has announced today, we on this side of this House will do.

4.19 pm

Lord McNally: My Lords, on that last point, I would expect no other. Yes, it is the job of the Official Opposition, and indeed of both Houses of Parliament, to scrutinise carefully any constitutional change, and there is nothing in what the noble Baroness said that I could disagree with. Nor would I disagree with the fact that, given the experience and collective wisdom of this House, when the legislation comes forward it should again have proper scrutiny in this House, as it will, as a constitutional Bill, on the Floor of the other place.

It is always good fun to find U-turns. If you do not U-turn then you are arrogant, you do not listen and you are pushing ahead, but if you consult, listen to advice and make changes then you have done a U-turn. What I look at is the end result, and here the end result is far more sensible and should be far more acceptable to the House than the original proposition. Two-thirds is belt and braces against the Government breaking the fixed Parliament, and as such it should be welcomed. The endorsement of the straight majority being the requisite for a vote of no confidence should, again, be welcome.

On the question of "outrageously arbitrary", "gerrymandering" and so on, one expects the Opposition to get a little excited and start using colourful and florid language. As most colleagues know, what was wrong with our system was that it was becoming increasingly distorted: in 1951, 98 per cent voted either Labour or Conservative, so the system reflected the view of the country to a general degree, but in 2005, 36 per cent of the vote delivered a majority of 66 per cent in the House of Commons. Giving absolute power on a grotesque minority of the vote is arbitrary and unacceptable, so it is right that we should look at equal constituency sizes. As my right honourable friend pointed out to Mr Straw in the other place, equal constituency size was in fact one of the initial demands of the Chartists in the 1840s, and if it was good enough for the Chartists, it is good enough for me.

Noble Lords: Annual Parliaments!

Lord McNally: The noble Lord, Lord Tomlinson, is showing off his history again.

These missing 3.5 million citizens are a concern, and it is a concern that many of them can be identified as young people, people from ethnic minorities and

5 July 2010 : Column 30

the very poor. The reason why they are not registered is a matter that we all have to address, and I fully agree that there has to be more of an effort to get them on to the register. On the other hand, if you have between 92 percent and 93 per cent of your electorate registered, with all the churn that goes on, that is not a bad record for a functioning democracy.

What is more unacceptable is the idea of holding elections on Boundary Commission boundaries that, by the time the election is held, are over 10 years old. That is how you get your elections out of kilter. However, I take the noble Baroness's point. We will certainly make every effort to get people registered and involved in our political system. One of the good things about this exercise is that nobody has suggested that our Boundary Commission has been anything other than absolutely above reproach in the way in which it has carried out its work, except that it has been extraordinarily slow in doing that work. We will talk with the Electoral Commission and the Boundary Commission to see what resources they need to do a better job quickly.

Whether or not AV is a "miserable little compromise" is a matter of judgment, but it is interesting that the party opposite opted for AV for the very good reason that it retains the link with the single constituency. I see the noble Lord, Lord Grocott, nodding in agreement. I find one of the refreshing and enlivening things about coalition is that, after you have fought an election with firm vigour, you sit down with your coalition partners and you manage to convince them about a referendum on voting reform, while they manage to convince you that AV would be the best solution to put to the country. That is the kind of healthy give and take-

Lord Davies of Coity: My Lords-

Lord McNally: No, sit down. We have 20 minutes. So eager are the Opposition to start asking me further questions that I will just say that I think that I have covered most of the points that the noble Baroness raised and I look forward to questions from the Back Benches.

4.26 pm

Lord Waddington: I wonder whether the noble Lord will allow me to pursue a matter that was raised by the noble Baroness, Lady Royall. I am very much in favour of a reduction in the number of parliamentary seats, but how will the Government ensure that the Boundary Commission can report and bring those changes into effect in time for the next general election? It is not enough just to require the Boundary Commission to report by a certain date; somehow or other, it will have to avoid getting bogged down in interminable local inquiries, which are what have taken up time in the past. What will the Government do to try to curtail those inquiries and to make it possible for the Boundary Commission to report? I am not much in favour of curtailing the rights of citizens to give evidence at inquiries, but what is the alternative? How can the Minister assure me that these changes will come into effect in time for the next general election?

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Lord McNally: My noble friend makes a very interesting point, which I suspect that the draft Bill will cover. We have to find the right balance between the Boundary Commission doing a proper and thorough job and not getting bogged down in the way that my noble friend describes.

Baroness Taylor of Bolton: Given the Government's new-found enthusiasm for a two-thirds threshold for a Dissolution of Parliament, will there be a threshold in the referendum? Will two-thirds of the country have to vote yes in the referendum? Will there be a threshold in the turnout of the electorate before the referendum has any validity?

Lord McNally: No. If the noble Baroness wants me to show her the scars, I will tell her about the first Scottish referendum.

Noble Lords: My Lords-

Lord Howe of Aberavon: My Lords, what is most notable about my noble friend's presentation is that in the last paragraph he emphasises that these are profound changes-"big, fundamental reforms" which will require immense and careful scrutiny. Does it begin to make sense for the whole range of solutions to these wide-ranging problems to be presented in this way at this time? Is he aware that the first book I reviewed, for the South Wales Evening Post, was written by Christopher Hollis and had as its title the question Can Parliament Survive?That was 60 years ago. The book was full of anxieties and propositions. Parliament has, on the whole, until the last decade survived pretty well. In the earlier 50 years it would not have dreamt of approaching problems as large as this with solutions as great as this. It would surely have committed them to a Speaker's Conference, a royal commission or both, and done it step by step. To address this situation of total disillusion, as my noble friend describes it, with a torrent of ill considered change of almost everything is surely the last thing people want at this time.

Lord McNally: That speech has been made in this House and the other place many times over the last 200 years, though not by me. I have always taken the view that constitutional reforms are carried through by Governments that believe in them and put them with vigour to both Houses. My noble and learned friend gives the recipe for inaction that we have always had-Speaker's Conferences, royal commissions and inaction. This is a radical programme to deal with a problem that we are all aware of. I was a member of the Maclennan committee before the 1997 election. I remember our high hopes that the incoming Labour Government would move forward. Unfortunately, after three or four years they completely ran out of stem on steam on constitutional reform.

Lord Dholakia: My Lords-

Lord Elystan-Morgan: My Lords-

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, we have another 15 minutes. I am sure everybody will get in. Shall we hear from the Cross Benches first and then somebody from the Labour Party?

5 July 2010 : Column 32

Lord Elystan-Morgan: My Lords, does the Minister recollect that, about a fortnight ago, in reply to my intervention in a Question on the reduction of the number of seats in the House of Commons, he said that the justification for that was devolution in relation to Scotland and Wales? Today's Statement makes no reference to devolution-only to the saving of £12 million per annum. Which is it? Will it be the case, as far as the reduction is concerned, that it will be pro rata over the whole of the United Kingdom, with no specific culling on the basis of devolution for Wales or Scotland?

Lord McNally: There is no specific culling on the basis of Welsh or Scottish devolution. There is an aim, as far as possible, to get the same size of constituency. Saving money and moving forward with devolution are not mutually exclusive. We have already pledged that we will move forward with the referendum on more powers for the Welsh Assembly-something that the Government are committed to and which is part of this broader pattern of political reform.

Lord Dholakia: My Lords-

Lord Campbell-Savours: My Lords-

Lord Strathclyde: My Lords, I said that a Labour Back-Bencher should speak next. Then we will hear from my noble friend Lord Dholakia.

Lord Campbell-Savours: I ask a question that will be on the minds of elected Members of the House of Commons. The noble Lord referred to 5 per cent of the target quota of registered electors. What is that number per constituency on the basis of calculations which have already been done in the Minister's department?

Lord McNally: I think the figure is about 80,000. I am not sure whether I am going beyond my brief in telling the noble Lord that, but it does not take a great deal of high mathematics to work out that 600 into the electorate is about 80,000.

Lord Dholakia: My Lords, from this side of the coalition I thank the noble Lord, Lord McNally, for repeating the Statement on political and constitutional reform. Coming so soon after the reform of the criminal justice system announced last week, this is most welcome and the Government ought to be congratulated on it. Does the Minister accept that the previous election, fought on the first past the post system, did not deliver a strong, stable or decisive Government-so much for that system? Some in government have indicated that they do not wish to play an active role in the referendum campaign. What is being done to encourage them to participate? The referendum and the involvement of political parties will have resource implications. What discussions are being held with the Electoral Commission and others to ensure that funds are available for that campaign? Will the Minister encourage the media to take an active role similar to that adopted in the leadership debates so that the electorate are better informed about the new system being proposed?

5 July 2010 : Column 33

Lord McNally: I thank my noble friend for those comments. It is clear that a referendum will involve a yes and a no campaign with a cap on the expenditure on either side but with some public funding available to help both sides. That will become clear following the discussions we are having with the Electoral Commission to ensure that the referendum can be conducted properly and with the involvement that my noble friend talked about.

Lord Brooke of Alverthorpe: When precisely will the Government speed up registration? What action will they take between now and the referendum, or can we expect 3.5 million people not to vote in the referendum because they are not registered? Will the Minister consider the suggestion made recently to him by his Back-Bench noble friend Lord Goodlad as regards adopting the good and well tried practice in many countries, particularly Australia, where there is compulsory registration of individuals? Are the Government considering that; if not, why not?

Lord McNally: We are not considering compulsory voting. The note of indignation about the missing 3.5 million comes a bit rum from a Government who tolerated it all through their period in office. However, I do not blame them. Suddenly the Labour Party has become indignant about the missing 3.5 million. I believe that in a voluntary system it is almost impossible to get 100 per cent registration. Then there is the problem to which I referred of a low turnout among the very poor, ethnic minorities and the very young. Those problems face all political parties when seeking to engage those groups in our political process.

Lord Pearson of Rannoch: My Lords-

Noble Lords: Cross Benches!

Lord Higgins:We have heard various cost estimates, but not one for the redistribution of the boundaries under the Boundary Commission. What is that cost estimate? I do not share the noble Lord's view on the Boundary Commission. In a public inquiry in my former constituency of Worthing all the political parties and everyone were agreed on what the right answer was. After the matter had been concluded, the Boundary Commission, without warning, came up with a totally different solution. Should there not be an appeals procedure, at least in extreme cases where the answer seems to be wrong?

Lord McNally: We will have to see what the proposals are in the Bill to meet the objective of streamlining the work of the Boundary Commission. I think that any reasonable person would say that is needed if its work is to be relevant to elections. I repeat that a gap of 10 years between the commission doing its work and the holding of an election renders that work absurd. It is very difficult to respond on individual constituency issues and to give at the moment a precise response on costing. All those will come forward in due course and in proper time.

Lord Pearson of Rannoch: My Lords-

5 July 2010 : Column 34

Lord Pannick: My Lords-

Lord Strathclyde: My Lords, the noble Lord, Lord Pearson, has been trying to get in from the very start. He is the leader of a party in this House. Perhaps we can then hear from the noble Lord, Lord Pannick.

Lord Pearson of Rannoch: My Lords, I am most grateful. I should like to put a question on behalf of the 2.5 million people who voted for minority parties, the largest of which I have the honour to lead. The Government state:

"Surely when dissatisfaction with politics is so great, one of our first acts must be to give people their own say over something as fundamental as how they elect their MPs".

However, the Statement goes on to "take it or leave it". It is the AV system or nothing. What is wrong with AV plus, which is, after all, a system that is good enough for Scotland, Wales and the London Assembly? Why is that system not good enough for the country?

Lord Foulkes of Cumnock: Because it's useless.

Lord McNally: I have just heard a major flaw in AV plus; the noble Lord, Lord Foulkes, was elected to the Scottish Parliament on it. The Government of the day have a duty to put forward a proposal for Parliament to consider a referendum on AV plus-

Noble Lords: Oh!

Lord McNally: I am sorry, I meant AV. It is for Parliament to scrutinise and Parliament will decide.

Lord Pannick: Can the Deputy Leader clarify what is the purpose of legislating to allow for a dissolution of Parliament on a two-thirds vote of the Members of the other place? Her Majesty's Opposition will of course seek to persuade that House, on a 50 per cent vote, to pass a vote of no confidence. This matter was raised by the noble Baroness, Lady Royall, but the noble Lord gave no answer.

Lord McNally: The point is that once we have got to a system of fixed-term Parliaments, to prevent the Government of the day engineering an early dissolution for their own short-term political advantage, they would therefore need a two-thirds majority-something that no Government in the UK have had since the war. As I said in my opening response to the noble Baroness, it is belt and braces against what we are trying to get away from. We are trying to move to the stability of a fixed-term Parliament and away from Governments of the day using early elections for short-term advantage.

Lord Lawson of Blaby: My Lords, given the profundity of the constitutional changes that will be incorporated in this Bill, can my noble friend give an undertaking that in no circumstances would the Parliament Act be invoked in order to secure its passage?

Lord McNally: I do not think that we go into things like that at this stage.

5 July 2010 : Column 35

Noble Lords: Oh! Shame!

Lord McNally: We put forward proposals for the very good reason that we think they are very sensible, and we assume that both Houses of Parliament will endorse them.

Lord Davies of Coity: My Lords, with regard to the referendum on the alternative vote, can the Minister answer this simple question? We understand that both parties that make up the coalition Government will campaign in opposite directions. If that is the case, what impact will that have on the electorate?

Lord McNally: I have no idea. However, I am sure that, as with previous referenda, we will have people of good will taking honest opinions about voting yes or no and campaigning on them-and may the best side win.

Lord Rennard: My Lords, is the Minister aware that the estimates that have been made of the party-political consequences of this reducing and equalising measure suggest that it may make a difference of only seven or eight, or 12 or 13, seats; and therefore that much heat has been generated needlessly about this proposal?

Lord McNally: I am quite sure that the psephologists and slide-rule merchants in all parties and on television will be making calculations. We are putting this forward because it makes our system of elections fairer, and that is what people want.

Baroness Symons of Vernham Dean: My Lords, I do not want to be unkind to the Deputy Leader of the House, but his answers seem to have been a combination of, "You would say that, wouldn't you?" to the Opposition, and, "I have heard that argument before" to members of his coalition; and it seems that he cannot say whether the Parliament Act would be used. I will ask a straightforward question: what will happen to the coalition if the referendum on an AV system is lost?

Lord McNally: Usually, people who say that they do not want to be unkind mean that they want to be unkind. I assure the noble Baroness that if the referendum is lost, the coalition will move on with its programme of government towards the election in May 2015. What has not got across to the other side is that we are into a new system of politics that provides better governance.

Lord Goodlad: My Lords, will my noble friend arrange for an early debate on the Select Committee on the Constitution's recent report on referendums, in the light of the difference of views that have been expressed around the House and of the topicality of the subject?

Lord McNally: That is a matter for the usual channels.

Lord Myners: The Minister explained the reduction in the size of the other place by reference to the size of

5 July 2010 : Column 36

Chambers elsewhere in the world, and to cost. Will he explain why the Government are increasing the membership of this House?

Lord McNally: It is a period of transition-I nearly said "ambition". Once the radical reforms for this place are through, this House, too, will come down in size.

Lord Strathclyde: My Lords, I know that this subject interests all parts of the House, but we have now spent 20 minutes on it. Normally, we would go on to the next Statement, which is on education. However, since it has not yet started in another place, we will continue with the debate. The noble Lord, Lord Greenway, is the next person on the list of speakers. It has been drawn to my attention that he has now arrived, which is very good news for the whole House and no doubt for the nation, which will be waiting to hear what he has to say.


Motion to Take Note (Continued)

4.49 pm

Lord Greenway: My Lords, I am grateful to the Leader of the House and apologise for being caught completely unawares. I am rather breathless but I am here.

We now return to the general transport debate, so ably introduced by the noble Earl, Lord Attlee, whose competence in many transport matters we have got used to over the years. I join other noble Lords in welcoming him to his new post.

So far we have talked about rail and roads, and no doubt we will talk more about those subjects, but I am now going to take your Lordships away for a breath of sea air and talk for a bit about the maritime side of the transport business.

We are an island nation and have always relied on trade for our well-being. Indeed, it was on the back of trade that our present greatness was built, and for many many years we were without equal in both shipping and shipbuilding. We are still an island and trade is still vital to our economy, with over 90 per cent of it involving a sea journey.

The introduction of the tonnage tax by the then Deputy Prime Minister in 1998 reversed a serious decline of the UK fleet, since when it has made a considerable recovery, increasing some sixfold. A number of big foreign companies have set up large UK operations and have placed quite a large number of ships on the UK register.

The recent recession hit shipping hard. The volumes coming out of Asia are starting to improve and rates are holding up, giving some cause for optimism, although I am sure that there could, and probably will, be further fluctuations before we return to the boom conditions that existed before the credit crunch.

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However, this sense of optimism is under severe threat so far as the UK flag is concerned, as a very nasty squall is approaching over the horizon. Some of your Lordships may have seen a letter in the Daily Telegraph last Friday and an article by Libby Purves in the Times today. The letter in the Daily Telegraph was signed by 11 senior shipping executives in this country. The reason for their concern is an obscure regulation tucked away in the Equality Act, which was rushed through just before the election. I believe that it is coming up for implementation in October and, if brought in, it could compel quite a large number of UK flagship operators to leave the UK register, as it would compel them to pay UK wage levels to seafarers who are normally resident abroad.

For many years, those people have been paid lower wages than their UK counterparts but ones that nevertheless place them on a par with highly skilled professionals in their own countries. The arrangement goes back to the Race Relations Act 1976, from which shipping was granted an exemption. It was reviewed in 2003 when the amount of damage that it would do to the industry was realised. This new threat is indeed very severe, and quite a large number of owners-possibly up to 20-have indicated that, if the regulation is brought in, they will almost definitely remove their ships to another flag. As many as 172 ships-almost 50 per cent of the current UK fleet-could be affected. If the new rates apply only to ships within the European economic area, a smaller number of ships will be affected but it will still have a massive impact on UK Ltd's shipping. Extra costs would arise out of it and could well impact on the jobs of 4,000 seafarers.

I hope that the Government will look at this matter extremely seriously. It would affect not only shipping but all the ancillary businesses in the City that rely on shipping and are still recognised as world leaders. I am talking of insurance, arbitration and shipping law. Many foreigners still prefer to use shipping law, so London must not lose its attraction. Many other places in the world, including Singapore and Dubai, are trying to increase their shipping centres, and anything that happens to damage our shipping will only benefit these new centres.

Yet another squall is coming over the horizon involving taxing non-domiciles, which I believe the Government are taking a further look at. Let me give an example of what can happen. Some years ago New York was a maritime centre to rival London, with many non-domiciled Greeks living and working there. The Americans decided to tax the worldwide interests of the non-doms, which resulted in all the Greeks upping sticks and leaving New York. They have never returned. We cannot allow that to happen here. A lot of Greek non-domiciled shipping people have been resident here for many years but a number have already gone back to Athens. If any further detrimental change is made to the tax regime for non-doms, UK shipping would suffer a very great loss. It does not just affect immediate owners. Greek shipping businesses are very complex; there are a lot of family trusts, so not only the up-front people are affected but many of the families as well.

The Government must take strong note of two factors. We must preserve a decent UK-flagged fleet because on that hangs all our expertise in the City of

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London. That was why the International Maritime Organisation was based in London in the first place.

I shall say a few words about safety, which is part of today's debate. One of the worrying things about shipping is manning levels. Shipping companies have been far too ready to cut their staff, which must have a detrimental effect. There are numerous instances of fatigue causing accidents. I believe that some measures are being taken to try to rectify that, but when so much capital is tied up in a ship and its cargo one must ensure that that ship is properly navigated and looked after. That issue needs to be looked at again. It is all very well relying on modern electronics but one cannot beat an extra pair of eyes on the bridge of a ship.

There is also concern about the dissemination of information within the industry. There was an incident this year when a container stack on a feeder ship collapsed. The investigation discovered that an almost identical accident had happened on a similar ship four years ago. The Marine Accident Investigation Branch had reported thoroughly on that accident but it appears that that knowledge had simply not reached the operators of the ship that was affected this year. That cannot be right and we must try to improve the dissemination of important safety information.

Another worrying issue regarding the international transportation of containers is the fact that there is no proper way of checking the weight of a container before it is loaded on board a ship. The shipowner has to take what the transporter of the goods says, and again in recent incidents when container stacks have collapsed, their weight bore no relation to the figures provided to the shipping company.

The enormous expansion in the number of wind farms, as mentioned in the first Question today, is also a safety concern for the shipping industry. In the earlier rounds of granting licences to developers of offshore wind farms, no one seemed to take shipping into consideration. It was intended to place some of them right across well used shipping lanes, which was obviously crazy. Things have since improved and developers now consult widely with the general lighthouse authorities. Inevitably, however, with the enormous increase in wind turbines offshore, we will increase the risk of an accident. If a gas carrier or large tanker is involved, one can only guess at the horrors that might arise.

I want to comment briefly on ports, which are the important interfaces between the shipping industry, shipping transport and inland transport. I am delighted that the Government have acted quickly to reverse the back-dated rates, which were affecting a large number of ports and people who operate within them. The system was quite iniquitous and I am delighted that they have taken that action. However, a few companies have gone bust as a result. What will happen about them? I fear that nothing will.

A number of new port developments have been given the go-ahead. Work is actually starting on the London Gateway, on the site of the old oil refinery just this side of Southend. It is an extremely large and important development, and with improvements in shipping and overall trade we will need such facilities when shipping gets back into its stride.

5 July 2010 : Column 39

I could go on to talk about all sorts of different subjects, but I will not. I shall merely return to the fact that shipping is so important to this country that the Government must take note of the two issues I mentioned earlier. If we lose our UK flag, the whole of the back-up of maritime businesses could topple like a pack of cards. That is something that we cannot allow.

Education: Funding


5.02 pm

The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford): My Lords, first, I apologise for interrupting the debate again. With permission, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Education. The Statement is as follows:

"Mr Speaker, with your permission, I would like to make a Statement on education funding. This coalition Government are determined to make opportunity more equal and to reverse the decline in the performance of our education system relative to our international competitors.

Over the last 10 years, we have declined from fourth in the world for the quality of science education to 14th; from seventh in the world for literacy to 17th; and from eighth in the world for mathematics to 24th. At the same time, the gulf between rich and poor has got wider, with the attainment gap between students in fee-paying schools and those in state schools doubling. But the action necessary to improve our schools is made more difficult by the truly appalling state of the public finances left by the last Government.

This coalition has inherited a national debt approaching £1 trillion; a budget deficit of £150 billion; and debt interest costs every year which are more than the entire schools budget. It is no surprise then that the last Labour Chancellor of the Exchequer felt he had to pledge a 50 per cent cut in all capital spending, the last Labour Education Secretary could not make any firm promises to protect schools' capital spending and the last Labour Chief Secretary to the Treasury left a letter saying simply that there is no money left.

Faced with the desperate mess left by the last Administration, this Government have had to prioritise, and our first priority is raising the attainment of the poorest by investing in great teaching. We know that the world's best education systems have the most highly qualified teachers. We are fortunate that the current generation of teachers is the best ever, but we must do better if we are to keep pace with the best.

No organisation has done more to attract brilliant new recruits into the classroom than the charity Teach First. Since its launch, Teach First has placed hundreds of highly accomplished graduates in our most challenging schools and has helped drive up attainment in those schools for the very poorest.

We believe that every child should have access to excellence, especially the poorest, which is why we will more than double the size of the programme from

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560 new teachers a year to 1,140. We will help to recruit hundreds more teachers into areas of poverty, so there will be Teach First teachers in one-third of all challenging schools. Breaking new ground, we will fund the permanent expansion of Teach First into primary schools, so that more than 300 superb new teachers will be working in some of the country's most challenging primaries.

Therefore, to clear up the economic mess that we have been left, we have to bear down on the waste and bureaucracy which have characterised Labour's years in office and reined back projects which have not been properly funded. Even before we formed this coalition Government and had the opportunity to look properly at the scandalous mess that we inherited, we knew that Labour Ministers had no proper respect for the public's money.

The whole process by which the Government procured new school buildings was a case in point. The Building Schools for the Future scheme has been responsible for about one-third of all the department's capital spending, but throughout its life, it has been characterised by massive overspends, tragic delays, botched construction projects and needless bureaucracy.

The BSF process has had nine meta-stages: preparation for BSF, project initiation, strategic planning, business case development, procurement planning, procurement, contractual close, construction and then operation. Each of those meta-stages has a series of sub-stages. Meta-stage 3, strategic planning, for example, has had another nine sub-stages: step 1, local authorities produce a strategic overview of the education strategy; step 2, local authorities produce a school and FE estate summary; step 3, local authorities submit their plans to both the non-departmental public body, Partnership for Schools, and the Department for Education for approval; step 4, once Ministers have approved steps 2 and 3, part 1 of the Strategy for Change is considered complete; step 5, local authorities produce another strategic overview, this time with "detail and delivery"; step 6, local authorities use the school and FE estate summary to develop an estates strategy; step 7, local authorities then seek executive approval on steps 5 and 6; step 8, once they get executive approval, local authorities submit the same documents to the Department for Education; step 9, once the Department for Education approves, part 2 of the Strategy for Change is complete.

I have here just the first three of the more than 60 official documents which anyone negotiating the BSF process needed to navigate. The whole process has been presided over by the Department for Education, the quango, Partnership for Schools, and at various times has involved another body, 4ps, and Partnership UK.

Local authorities involved in this process have employed a Partnership for Schools director, a Department for Education project adviser, a 4ps adviser and an enabler from CABE, the Council for Architecture and the Built Environment-another non-departmental public body. Local authorities have also had to set up a project governance and delivery structure, normally including a project board of 10 people, a separate project team of another 10 people and a further, separate, stakeholder board of 20 people. They formed

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the core group supervising the project. Beyond them, local authorities were expected to engage a design champion, a client design adviser and the 4ps gateway review team-a group of people who produce six separate gateway reviews over the course of the whole project.

It is perhaps no surprise that it can take almost three years to negotiate the bureaucratic process of BSF before a single builder is engaged or brick is laid. Some councils which entered the process six years ago have only just started building new schools. Another project starting this year is three years behind schedule.

By contrast, Hong Kong International Airport, which was built on a barren rock in the South China Sea and can process 50 million passenger movements every year took just six years to build-from start to finish.

Given the massively flawed way in which it was designed and led, BSF failed to meet any of its targets. BSF schools cost three times what it costs to procure buildings in the commercial world, and twice what it costs to build a school in Ireland. The previous Government were supposed to have built 200 wholly new schools by the end of 2008. They had rebuilt only 35 and refurbished 13. The cost to each school for just participating in the early stages of the programme was equivalent to the cost of a whole newly qualified teacher. The cost of setting up the procurement bureaucracy before building could commence-the so-called local education partnership or LEP-has been up to £10 million for each local area.

This expenditure did not guarantee quality. One BSF school was built with corridors so narrow that the whole building had to be reconstructed; another had to be closed because the doors could not cope with high winds; and one was so badly ventilated that additional mobile air conditioners had to be brought in during the summer and pupils were sent home.

After 13 years in power, only 96 new schools out of a total secondary school estate of 3,500 schools have ever been built under BSF. The dilapidated school estate we have today is, alongside our broken public finances, Labour's real legacy. Far from using the boom years to build a new Jerusalem, the previous Government managed to fix only just under 3 per cent of roofs while the sun was shining.

The whole way we build schools needs radical reform to ensure more money is not wasted on pointless bureaucracy, to ensure buildings are built on budget and on time, and to ensure that a higher proportion of the capital investment we have gets rapidly to the front line: to individual local authorities and schools which need it most. That is why I can announce today that a capital review team, led by John Hood, the former vice-chancellor of the University of Oxford, Sir John Egan, the former chief executive of BAA and Jaguar, Sebastian James, the group operations director of Dixons Store Group, Kevin Grace, Tesco's director of property services, and Barry Quirk, chief executive of Lewisham Council, will look at every area of departmental capital spending to ensure we can drive down costs, get buildings more quickly and have a higher proportion of money going direct to the front line.

In order to ensure we do not waste any more money on a dysfunctional process, I am today taking action to get the best possible value for the taxpayer.

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I will take account of the contractual commitments already entered into, but I cannot allow more money to be spent until we have ensured a more efficient use of resources. Where financial close has been reached in a local education partnership, the projects agreed under that LEP will go ahead. I will continue to look at the scope for savings in all these projects. Where financial close has not been reached, future projects procured under BSF will not go ahead. This decision will not affect the other capital funding in those areas. Schools will still receive their devolved capital allowance for necessary repairs, and the efficiencies we make now will ensure better targeting of future commitments on areas of greatest need.

However, there are some areas where, although financial close has not been reached, very significant work has been undertaken to the point of appointing a preferred bidder at close of dialogue. There are 14 such cases. In these cases, two, or occasionally, three projects have been prioritised locally as sample projects to be the first taken forward in the area. I will be looking in more detail over coming weeks at these sample projects to see whether any should be allowed to proceed.

Because we believe in supporting those in greatest need, my department will be talking to the sponsors of the 100 or so academy projects in the pipeline with funding agreements or which are due to open in the coming academic year which are designed to serve students in challenging schools in our most deprived areas. Where academies are meeting a demand for significant new places and building work is essential to meet that demand, where there is a merger and use of existing buildings would cause educational problems and where there is other pressing need, I will look sympathetically on the need for building work to go ahead, but where projects are some way from opening or academy sponsors can use existing buildings to continue their work of educational transformation any future capital commitments will have to wait until the conclusion of our review. That review is made all the more necessary because as pupil numbers rise in years to come we have to ensure our first duty is guaranteeing an expansion in capacity to meet that demographic growth.

Fortunately, in this coalition Government, we have a proper relationship between the Department for Education and the Treasury, which is why we have deliberately reduced our forecast reliance on underspends elsewhere and brought our spending into line. In the process, we have kept capital spending within the envelope outlined by the last Government so there are no reductions beyond those which the Treasury had budgeted for. By bearing down on costs now, we can ensure that money will be available in the future to help secure additional places, to help the most disadvantaged pupils, and to refurbish those schools in greatest need.

We have safeguarded front-line schools spending, front-line spending on Sure Start, and front-line spending on school and college places for 16 to 19 year-olds this year. We have cut spending on wasteful quangos, we have cut the unnecessary bureaucracy that has swallowed up so much money, and we have reduced the amount

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spent on regional government, on field forces, and on unnecessary government inspection regimes. But we have prioritised funding for better teachers, we have invested more in the education of the poorest, and we are giving schools greater control of the money which had previously been spent on their behalf. For everyone who believes in reforming education, that has to be the right choice, and I commend this Statement to the House".

My Lords, that concludes the Statement.

5.16 pm

Baroness Morgan of Drefelin: My Lords, I thank the Minister for repeating the Statement in this House. I do not want to trade on legacies, but I have to make it clear for the record that even the right honourable Michael Gove, Secretary of State for Education, has recognised and admitted, albeit rather grudgingly, that in 1997 we inherited a legacy of tremendous underinvestment in the school estate and that it was absolutely right to prioritise investment in school facilities. Labour's investment in school building initially targeted the backlog of repairs that had built up under the last Conservative Government as well as helping to provide for smaller classes in the primary sector. Since 1997, around 4,000 schools have been built new, rebuilt or significantly refurbished, with 1,000 completed in the last two years. Labour was on track to see a further 1,000 new school buildings in the next two years. Overall, every school has benefited from investment projects, big or small, and devolved programmes did put investment directly into the hands of every single school in every single part of the country.

Building Schools for the Future refocused schools investment on the strategic renewal of the school estate. It was intended to be a programme to renew the entire secondary estate and to plan and provide for changes in demand. The National Audit Office looked at Building Schools for the Future and found that, yes, it was delivering rebuild and redevelopment in a very successful way. So I have to say that this Statement is disastrous news for hundreds of thousands of teachers, parents and pupils who had been expecting this much-needed investment in decent, 21st century facilities for children to learn in. Even though we warned during the election campaign that hundreds of school rebuilding projects would face the Tory axe, I believe that this news will still be a bitter blow for communities right across the country, from Devon all the way to Denbighshire.

This is an extremely short-sighted decision by the coalition Government. Billions of pounds' worth of contracts that support thousands of jobs and local businesses will now be lost. Further, many schools and councils have spent a great deal of time as well as investing money and resources into working up their rebuilding plans, only to find the rug pulled from under their feet. As I said, Building Schools for the Future was also designed to plan for future changes in school numbers. The right honourable Michael Gove has said that his priority for the spending review is a hugely expensive free market schools policy that will see new schools built with no regard for the need for

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places in an area. Instead, it will create a free-for-all which has been shown elsewhere to be much more expensive.

I have a number of questions for the Minister. The Statement began by talking about standards. Can he confirm that, in 1997, half of all schools missed the basic performance level of 30 per cent good GCSEs that we set and which has been cut to just one in 12 schools? Can he confirm that improvement in standards since 1997? Further, can he confirm that in the international TIMSS study, England has risen from 25th in the world in 1995 to seventh place, and that England's 10 and 14 year-olds are the highest achieving pupils overall in maths and science among European countries? Can he dispel the notion that it is the Government's policy to run down the achievements of teachers and children around this country at every opportunity? I would like to hear him say how proud he is of the achievements and our children around the country.

On the question of Teach First, does the Minister agree that we have the best generation of teachers we have ever had in this country? Is he proud of the contribution that teachers make? Can he confirm that the previous Government had already invested in expanding Teach First, including pilots for primary schools? Can he make the House aware that it was the leadership of the Teach First programme who warned the previous Government that to accelerate its expansion any faster would put at risk the future quality of the programme? So it was the previous Government who were thinking carefully about the quality of the programme.

Can the Minister be clear about what independent assessment has been made about the Building Schools for the Futureprogramme that has led to this huge cut to valuable developments around the country? Have the Government made any assessment of the numbers of construction and private sector jobs that will be lost as a result of the decision? What will be the impact of the decision on jobs? Do the Government believe that excellent facilities are key to an excellent learning environment? What is the Government's policy on that? Will the schools that have been planning for building still have a building programme under this new value for money scheme, or does it simply represent an overall cut in the development of our school infrastructure?

Where will the capital come from for the free school programme? I really want an answer to that because I have asked the question a few times already. Will the projects be capitally funded from money saved from the cut in the Building Schools for the Future programme? Exactly how much will be saved by this announcement today? What will be lost through the cost of break clauses and reorganising expenditure? What methods will the Government use to fund and support councils to plan for future changes in demand for schools, or will they simply expect them to provide more portacabins as the rolls increase? Will schools and councils be left to pick up the tab for the work they have done already to prepare for the new investment?

Finally, have the Government made an independent assessment of the value for money of the free schools policy? As the Minister is aware, I am interested to

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know about that impact assessment because evidence from Sweden has shown some disappointing results.

I am aware that I have asked a number of questions and I am grateful for the Minister's attention. If there are any points of detail on which he would wish to write to me, I should be happy to receive such a letter. I am grateful to the noble Lord for repeating the Statement.

5.24 pm

Lord Hill of Oareford: My Lords, if there are points of detail I shall write. However, let me respond in broad terms, first, to the points made by the noble Baroness, Lady Morgan.

Going back to 1997 generally, I hope I have always made it clear to the noble Baroness and other noble Lords on the Benches opposite that there are many things that the previous Labour Government did well in the field of education that we want to build on. As she rightly pointed out, one of those was Teach First, and I am happy to put on the record again my praise for the previous Government in setting up that scheme. I agree with her that this is the best generation of teachers that we have had. I recognise that that does not happen by accident and the efforts of the previous Government contributed to it I certainly want to dispel the notion that, in talking about Building Schools for the Future, one in any way wants to run down or disparage the achievement of teachers or pupils. That is not our purpose. If the noble Baroness were to be fair to me, she would recognise that, since I have started doing this job, I have sought frequently to praise teachers where praise is due.

Neither this Government nor any Government would want willingly to cause the difficulty and disappointment for schools that the noble Baroness rightly said would be caused by this step. It is being done because it has to be done. The NAO report pointed out that the costs of delivering the project appear to have increased by between 16 per cent and 23 per cent from when it was set up. Quite a lot of the evidence has been heard about the bureaucratic nature of the process from people who have involved in it. If one thinks that this is a very expensive way of spending capital and improving schools, one is under an obligation to try to find a cheaper way of doing it. To spend capital willy-nilly when one knows that there is a cheaper way of doing it, when we have all the other financial pressures that we face and when we are asking people to bear a heavier tax burden seems not a sensible or fair way to proceed. Therefore, I do not make this announcement with a light heart, and I recognise the noble Baroness's point about the difficulty that it will cause, but we have taken the decision in order to try to get better value for every pound that we spend on capital and to make sure that, if capital is spent more effectively, we are able to help schools better.

The noble Baroness has asked me on a previous occasion about funding for the new free schools. The money for that is not coming from any savings from Building Schools for the Future because the previous announcement predated this one. The money for that, which I believe is in the order of £50 million for the first year, is coming from savings from an existing technology fund.

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The noble Baroness asked how much will be saved. By stopping the expenditure now, we think that we can save £5 billion over the lifetime of the spending review period. That £5 billion would have been spent if we had just carried on.

I hope that I have responded to the noble Baroness's general points; I shall follow up on any specific points. The purpose of setting up the independent review is to learn lessons from Building Schools for the Future and come up with a better, quicker and cheaper system of capital allocation which I am sure everyone would welcome. That money would then go to the schools that needed it most.

5.29 pm

Baroness Walmsley: I thank my noble friend for repeating the Statement. I should like to ask him first about Teach First. He will be aware that, under Labour, many schools in deprived areas did not have properly qualified teachers in the STEM subjects, which include science, technology and engineering. Can he say anything about the distribution of the new teachers in Teach First, some of whom will by their nature have qualifications in those subjects? Will he prioritise those schools in deprived areas that have suffered from the lack of properly qualified teachers in those subjects? Can he say something about the resources available for training these new recruits to the teaching profession, who will know all about their own subject but will not know too much about teaching in the first instance? I am aware that they have a foreshortened programme of teacher training, but there will be a lot more of them and we need to be reassured that appropriate funding is available to do that training.

On Building Schools for the Future, the Minister has made it clear how much it has cost schools and local authorities already to become involved in this overbureaucratic process. When the coalition Government have brought this country's economic situation under control, will those schools that have already spent a lot of money and time, but have suffered from the freeze that he has just announced, be at the front of the queue when we are able to get back to normal business?

Finally, when talking about quangos, will Partnerships for Schools be closed down?

Lord Hill of Oareford: The role of Partnership for Schools will be considered as part of the review that we have announced. We plan to roll out Teach First to areas of the country that it has previously not reached and go to primary schools, which I am sure my noble friend will particularly welcome given her interest in the teaching of young children. I take her point about the importance of training for STEM subjects, for which there is a particular problem in finding teachers. I know that the previous Government worked hard on that. It is a problem faced by all Governments and I hope that Teach First will help.

As for whether the disappointed schools that were a long way down in the process would be first in the queue, the answer to all those questions is inevitably dependent on the comprehensive spending review in the autumn and how much capital the department ends up with. It would be wrong of me to presume on

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the outcome of that, but those are factors that the department will take into account when making future capital allocations.

Baroness Farrington of Ribbleton: My Lords, in repeating the Statement, the Minister said:

"Where academies are meeting a demand for significant new places and building work is essential to meet that demand, where there is a merger and use of existing buildings would cause educational problems and where there is other pressing need",

the department will look sympathetically on the need for that work to go ahead. Will he give a categorical assurance that all other schools in the voluntary and maintained sectors will be treated in exactly the same way? Can we have an assurance that after the review, the £5 billion to which the Minister referred, that everyone agrees needs to be spent on our schools, will be returned? There will not be £5 billion of savings after the review unless the money is gone.

Lord Hill of Oareford: On the noble Baroness's first point, the Secretary of State said what he did about academies because the kind of schools that are in the academies programme from the previous Government, which we want to try to continue to support, are by definition focused in the areas of greatest need and deprivation. In looking at those, he will not give any blanket position but will review them on a case-by-case basis to consider as fairly as he can those individual circumstances.

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