14 Mar 2011 : Column 1

House of Lords

Monday, 14 March 2011.

2.30 pm

Prayers-read by the Lord Bishop of Newcastle.

Health: Visitor Service


2.37 pm

Asked By Lord Northbourne

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, the health visitor implementation plan, published last month, confirms our intention to recruit an extra 4,200 health visitors and sets out the enhanced offer to families that the increased workforce will bring. The new model ensures a universal service for all, a rapid response from the health visitor team when parents need specific expert help and ongoing support to deal with more complex needs over time, including services from Sure Start children's centres, other community services and, where appropriate, the Family Nurse Partnership.

Lord Northbourne: I am most grateful to the Minister for that encouraging Answer; it sounds very good indeed. Is he aware, though, that some of the families in the greatest need are very hard to contact, sometimes simply because they are embarrassed by their inability to parent and sometimes because they are afraid that the local authorities, if they hear about it, will take their children away? Is he also aware that there is a strange geographical distribution of the supply of health visitors, which as it stands has nothing to do with need? Will he assure the House that these issues will be addressed in the new plan?

Earl Howe: My Lords, the noble Lord is undoubtedly right that in many areas the current health visitor workforce is very stretched. They are there as a universal service but, at the same time, they try to target their efforts to families in the greatest need. Some struggle to do so, which is why we have set this ambitious programme of recruitment over three to four years. It is a very tough target-I do not disguise that from the noble Lord-but we think that it is necessary if we are to focus on the needs of the most disadvantaged families.

Baroness Gardner of Parkes: Is the Minister aware that many people apparently now view health visitors with suspicion as agents of the state? They are frightened, as the noble Lord has said, of the child being taken away. Does the Minister therefore think that one great answer is the system of adoption whereby children can be fostered by someone who could adopt them if, for example, the drug addict mother does not overcome her addiction, but which also leaves open the possibility of the child returning to the mother? That gives the mother an opportunity to recover. It is a very good scheme and it is in operation in some parts of the country. Would it not be a help in addiction cases?

Earl Howe: My noble friend makes a good point. The kind of intensive interventions that she is referring to are very much the domain of the family nurse partnerships, which are there to assist and support those families with the greatest needs, particularly single mothers, families where there is addiction and so on, and try to keep the family together. With regard to the health visitors, however, I take her point that there is suspicion out there. It comes down to creating a relationship of trust with a named health visitor, and we have seen the success of that over the past few years. The results of the assessments have been very positive.

Lord Hughes of Woodside: My Lords, when health visitors were attached to local authority services, co-operation between the different arms of local authorities was much easier. In many cases, health

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visitors are now attached to general practice services. Can the noble Earl assure me that there will be the widest possible consultation to make sure that health visitors can reach out to the community at large, which would be very valuable in terms of public health?

Earl Howe: My Lords, the noble Lord makes an extremely good point. The health visitor initiative is very much part of our public health drive. Local authorities will have an important part to play in commissioning services in the future. However, at the start of this big programme of recruitment, it is very important to have a concerted national drive. That is why we have said that it will be the responsibility initially of the National Health Service Commissioning Board to push this agenda forward. Thereafter, we will see much more local commissioning as the programme moves on.

The Lord Bishop of Wakefield: My Lords, given that the Department of Health accepts that the family nurse partnerships-to which the Minister has referred-have been shown through an international report to have a great effect in minimising the maltreatment of children, are there plans to introduce them across the board alongside the implementation plan for health visitors?

Earl Howe: The right reverend Prelate draws attention to a very important area. Family Nurse Partnership is essentially a preventive programme for vulnerable young first-time mothers. It complements and supports the work of health visitors, providing intensive care. We are committed to expanding the Family Nurse Partnership Programme for those families and doubling the number of places on the programme by 2015.

Baroness Jolly: My Lords, this is a really large programme. Will the noble Earl clarify whether, if these posts are filled from within the NHS, those posts will in turn be backfilled?

Earl Howe: My Lords, we hope to recruit nurses and midwives for upskilling from a variety of sources. Some will come out of retirement, we hope, while others will, we trust, come from the acute sector. As my noble friend knows, the trend for a long time has been to try to get care increasingly out of acute settings and into the community. I think that we will see that transfer of skills taking place from a variety of sources.

The Earl of Listowel: My Lords, given the important and welcome drive to recruit health visitors, will the Minister consider hosting a meeting for health visitors and Members of the House of Lords so that we can understand this issue better and support this work as far as we can?

Earl Howe: My Lords, I draw the noble Earl's attention to the document which my department published last month, Health Visitor Implementation Plan 2011-15: A Call to Action, which sets out how we are going to work with partners to deliver our ambition, including,

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very significantly, the Sure Start children's centres which play an important role in our agenda. However, I will take the noble Earl's idea back with me and be in touch with him about it.

Baroness Ritchie of Brompton: My Lords, what work is being done to improve the training of health visitors to enable them to identify the mental health needs of new mothers, which can impact very negatively on the emotional attachment between mother and child?

Earl Howe: My noble friend identifies an extremely important area of the health visitors' remit-to put their finger on where there are problems and therefore to alert members of the multidisciplinary team to address those problems where necessary. The issues to which she refers are very much a part of health visitors' training.

Botswana: Bushmen of the Central Kalahari Game Reserve


2.45 pm

Asked By Lord Pearson of Rannoch

Lord Wallace of Saltaire: My Lords, the UK follows closely the situation of the San communities in the Central Kalahari Game Reserve. We will continue to encourage dialogue between the San communities and the Government of Botswana, and we raise the issue at appropriate levels. We welcome the Government of Botswana's announcement that they will respect and facilitate the implementation of the recent decision of the court of appeal granting San community members the right to access and sink boreholes within the reserve.

Lord Pearson of Rannoch: My Lords, that is, of course, good news. However, as the Government of Botswana have overridden court judgments in the past, do Her Majesty's Government accept that we have perhaps a special responsibility in this matter, because we did, after all, give Botswana its constitution in 1966, and it has been consistently abused? Will the Government, as the noble Lord has indicated, pay particular attention to making sure that the Bushmen have free access to their reserve, to their water supply and, indeed, to new boreholes?

Lord Wallace of Saltaire: My Lords, I am not sure that the Government accept that the constitution has been consistently abused, but I welcome the noble

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Lord's support for this ethnic minority and its culture, for his vigorous support for the international human rights regime and his insistence that human rights obligations limit state sovereignty. I also congratulate him on his support for the rule of law as a limiting factor on majoritarian democracy, and I am sure that he will hold true to all these principles in his approach to the EU Bill next week. I particularly welcome his reference to the ruling of the Botswana appeal court, which the Botswana Government have clearly accepted. As he will know, the court is, unusually, composed of foreign judges. The judgment is signed by two South African judges and one each from Ghana, Lesotho and Zimbabwe, the last of whom is called McNally. I am glad that the noble Lord recognises that foreign judges can reinforce domestic standards of human rights.

Lord Avebury: My Lords, can my noble friend confirm that the Government of Botswana have already sent a team into the CKGR in pursuance of their undertaking to facilitate the return of the Bushmen? Can he also say whether there is any prospect of employment for the Bushmen in enterprises being set up in the reserve, such as the $3.5 billion diamond mine at which, given suitable training, they might be employed?

Lord Wallace of Saltaire: My Lords, my noble friend will recognise how difficult it is to combine maintaining the traditional hunter-gatherer way of life with economic development. The report of the UN special rapporteur on human rights for minorities talks about,

The problem here is that once you start talking about education, medical assistance et cetera, you are moving away from traditional culture.

Lord Harries of Pentregarth: Does the Minister feel able to make an evaluation of the role of the mining interests in this area? Does he think that their role is helpful or frustrating in terms of achieving the desires of the indigenous people there?

Lord Wallace of Saltaire: My Lords, as we all know, these are extremely difficult issues. Botswana has done extremely well economically, and its wealth lies above all in diamonds. That wealth has been put to use for the benefit of economic development in that country; and last year Transparency International ranked Botswana as number 1 in sub-Saharan Africa in terms of the transparency and non-corruption of its Government. I am assured that high commission officials from Britain regularly visit the Central Kalahari Game Reserve and that the current proposals from Gem Diamonds will not destroy the reserve.

Baroness Kinnock of Holyhead: Will the Minister comment on the fact that the real difficulty in enforcing the UN Declaration on the Rights of Indigenous Peoples is that it is not legally binding, and that this creates enormous difficulties? Can he therefore also confirm that the United Kingdom is supporting the

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recent call by the UN special rapporteur on the rights of indigenous peoples for urgent action to ensure that the rights and principles enshrined in the declaration are implemented?

Lord Wallace of Saltaire: My Lords, I read with great interest the very useful report on Botswana which the UN special rapporteur presented last year. The noble Baroness will know, and I now understand, how immensely difficult it is to maintain traditional cultures in the face of all the pressures of economic development. In a number of other countries there is a clear role for these minorities in protecting the rainforest. In Botswana, some of the issues are a little more difficult.

Lord Pearson of Rannoch: My Lords, are the Government aware that a number of Bushmen have actually been educated according to our western culture and still wish to return to their way of life? Secondly, does the Minister agree that a diamond mine occupies a very small area in the vast expanse of the Central Kalahari Game Reserve and there really should be plenty of room for both?

Lord Wallace of Saltaire: I thank the noble Lord for reinforcing my previous point. As he will be aware, however, there is no surface water in the game reserve; the Bushmen traditionally obtained their water from fruit. Once one talks about providing boreholes around the reserve, one is already beginning to change the traditional way of life. That is one of the tensions we are stuck with as we deal with these problems.

House of Lords: Membership


2.52 pm

Asked By Lord Lamont of Lerwick

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, an important part of the plans for the reform of this House is the continued primacy of the House of Commons. The presence of the Prime Minister in the House of Commons therefore underlines that primacy.

Lord Lamont of Lerwick: Does my noble friend accept that in a number of bicameral systems in the world it is possible for a Prime Minister to be in either House? While it might not be acceptable to public opinion at the moment for a Prime Minister to sit in this House as it is presently constituted, if in, say, 10 years' time this House is wholly elected, is deemed more legitimate and is demanding more powers, would it not be appropriate and necessary for there to be more senior Ministers in this House? Would it not be wrong for the Government's legislation to exclude the possibility of a Prime Minister being in this House, as used to be the case right up to the early years of the 20th century?

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Lord Strathclyde: My Lords, I am deeply impressed by my noble friend's ambition-10 years to wait does not seem too long at all. The fact is that the Prime Minister is First Lord of the Treasury. It would a very strange thing, given the reduced powers of this House since 1911, for the Prime Minister to be a Member of this House. Therefore, we have no plan or proposal to make it so.

Lord Kakkar: My Lords, if the programme of parliamentary reform led by the Deputy Prime Minister were to result in the other place continuing to be elected by first past the post, and the future Chamber here being elected through proportional representation as envisaged in the coalition agreement, who would have greater democratic legitimacy-MPs or elected Peers?

Lord Strathclyde: My Lords, it is of course an immensely good question, and it is one that we will return to many times over the next few months when the Deputy Prime Minister has published his White Paper and draft Bill. But I go back to the central point-which is that, under the terms of the 1911 Act, another place has primacy. We believe that that is where it should remain.

Lord Grocott: My Lords-

Lord Soley: My Lords-

Lord Maclennan of Rogart: My Lords-

Lord Howarth of Newport: My Lords-

Lord Cormack: My Lords-

Noble Lords: Grocott!

Lord Grocott: Can the Leader of the House reaffirm his frequently stated opinion to this House that, in the event of there being an elected second Chamber, which I understand he has not been that keen on in the past, he would be strongly opposed to it being elected on the basis of proportional representation and would stick to first past the post? Secondly, is it correct, as reported in the FT last Thursday, that he expects there to be Senators in this House by 2015? If that is not correct, perhaps he could say so. If it is correct, can he please observe the normal proprieties of making crucial statements about the future of this House or of government policy to this House and not to the Financial Times?

Lord Strathclyde: My Lords, the noble Lord, Lord Grocott, certainly has the power to embarrass me because it is certainly on the record that I am not one who favours proportional representation. However, it was in the coalition agreement that, in the event of there being an elected second Chamber, it would be under the system of proportional representation. So far as concerns the Financial Times, I am not sure that that is what I said. Of course, that will depend on the draft Bill being published soon and on the Joint Committee sitting in time for legislation to be passed so that an election can take place in 2015, and that will depend entirely on the will of Parliament.

Lord Maclennan of Rogart: My Lords-

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Lord Boston of Faversham: My Lords-

Baroness Anelay of St Johns: My Lords, there is time. We have had a question from the Cross Benches. Perhaps we might hear from the Liberal Democrats first and then the Cross Benches.

Lord Maclennan of Rogart: Does my noble friend agree that it would not necessarily interfere with the primacy of the House of Commons if all Ministers were answerable to the second Chamber on matters for which they had ministerial responsibility and, in particular, for the legislation that came from their departments?

Lord Strathclyde: My Lords, that is an interesting proposition and it will no doubt be dealt with in the forthcoming White Paper.

Lord Boston of Faversham: My Lords, does the noble Lord the Leader of the House agree that it would not be possible for the right honourable gentleman the Prime Minister to sit in this House because he is already a Member of another place? Does he therefore accept that the noble Lord, Lord Lamont, should be allowed to amend his Question slightly proposing that a Prime Minister-I emphasise "a"-should be allowed to sit in this House? I say that even though I do not agree with the idea of an elected House of Lords.

Lord Strathclyde: My Lords, all things are possible but that is not part of the Government's proposals.

Baroness Royall of Blaisdon: My Lords, can the Leader tell the House whether the Government will continue to pursue the coalition agreement until 2015, which is the date when it is reported that he believes the changes will be in place? The agreement states:

"Lords appointments will be made with the objective of creating a second chamber that is reflective of the share of the vote secured by the political parties in the last general election"-

that is, 86 more Conservative Peers and 99 more Liberal Democrat Peers.

Lord Strathclyde: My Lords, over time, we shall certainly wish to produce what is in the coalition agreement.

Baroness Knight of Collingtree: My Lords, is it not the case that this House always gives way in the end to the other place, because its Members are elected and we are not? If we were elected, would we not deny such possibilities occurring? Surely we would be bound to hold to our rights as well.

Lord Strathclyde: My Lords, I accept that possibility, but there are well known processes for dealing with disagreements between both Houses. It is not without precedent. Over the past 40 years, the House of Lords and the House of Commons have come to disagreements that could only be resolved by turning to the Parliament Act.

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Health: Sickle-Cell Disease


3 pm

Asked By Baroness Benjamin

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, addressing the training needs of health professionals working with patients with sickle-cell disease is the responsibility of the appropriate regulatory body. They set standards for the preregistration training, approve the education institutions that provide training and determine the curricula. Where a health profession is not regulated, it is the duty of the employer to make sure that the individual has the appropriate level of training to perform the duties required of them.

Baroness Benjamin: I thank my noble friend for that Answer. I am sure he is aware that sickle-cell disease is now the fastest growing genetic blood disorder in England. Some 300 babies are born with the condition every year and yet there are many misunderstandings about diagnosing a sickle-cell crisis. Is my noble friend aware of the recent tragic death of a young girl who died of a sickle-cell crisis? Apparently, during the crisis, she had soiled herself and, allegedly, the emergency crew who came to her home refused to treat her and to take her to hospital because of the messy state in which they found her. Does my noble friend agree with me that this underlines the urgent need for training, not just for paramedics but for all emergency crews, so that that never happens again? Will he assure the House that best practice standards and guidelines with regard to sickle-cell disease are enforced right across the NHS? I declare an interest as a patron of the Sickle Cell Society.

Earl Howe: My Lords, I am aware of the tragic case to which my noble friend refers, which is of course the subject of an investigation at the moment. The facts, as I am aware of them, suggest that the failings that occurred in that case were more to do with poor practice than a lack of training, although we will see what emerges from the inquiry. However, I can tell her that there is national guidance on the symptoms and emergency treatment of people with sickle-cell disease, published by the Joint Royal Colleges Ambulance Liaison Committee. All ambulance crew staff receive training in the assessment and management of patients with sickle-cell conditions in line with those guidelines and further national guidance was issued to staff in 2009. It is regularly updated and it is taken very seriously.

Lord Foulkes of Cumnock: Do both of the Minister's replies apply also to Scotland?

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Earl Howe: I am in danger of giving the noble Lord the wrong answer and, if I do, I shall regret it. I had better write to him.

Lord Colwyn: My Lords, I declare an interest as chairman of the All-Party Parliamentary Group on Emergency Ambulance and Paramedic Services. The College of Paramedics is very aware of the skills levels of ambulance staff. Will the Minister consider the use of badges to identify staff according to their registration status, so that all concerned parties are enabled to make reasonable assumptions about their abilities as regards treatment and overall incident management?

Earl Howe: My Lords, I am aware of the suggestion to which my noble friend refers. The wearing of badges is very much a matter for local determination. Clearly, it is desirable that there should be consistency across the country. I understand that there is a regular meeting of the chief executives of ambulance trusts under the chairmanship of Peter Bradley, the London Ambulance Service chief executive. I suggest to my noble friend that the proposal is put to Mr Bradley as one that the joint chief executives could look at.

Lord Hughes of Woodside: My Lords, does the Minister accept that it is not simply the health service that needs education about sickle cell but also vulnerable communities themselves that need a great deal of education and knowledge to help them?

Earl Howe: The noble Lord is quite right. One of the successes in recent years has been the universal screening programme for sickle cell that has certainly raised awareness among all communities about this devastating condition. The screening programme alerts healthcare professionals to the needs of children with the disease and also enables them to provide the necessary support for families.

Baroness Gardner of Parkes:Do people who have sickle-cell disease carry any form of card or identification as people with various other conditions do? As a dentist, I know that the definitive test is a blood test. Patients told you they had it, but no one expected you to pick it out in some person coming in the door. I wonder whether there might be a case for having some kind of identification.

Earl Howe: I am sure my noble friend's suggestion is a very good one. I do not think that the practice of carrying identification is by any means universal, but is it perhaps one that could be commended to the relevant patient groups.

Lord Touhig: One in 10 children diagnosed with sickle-cell disease will suffer a stroke. Unfortunately, a number will die. Those who do not will go on to have further strokes leading to disabilities and cognitive loss. The Minister talked about a screening programme. Do the Government have in mind any plans to get greater public awareness of sickle-cell disease by a public education programme right across the board among all groups in society?

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Earl Howe: There are several initiatives in train that should raise public awareness. We have asked NICE to produce a short clinical guideline. The National Haemoglobinopathy Registry is being launched. It was a key recommendation of the NCEPOD report a couple of years ago. We are funding many more training posts for registrars, nurse consultants and clinical scientists, and we are developing a special competence framework for nurses. As for raising awareness generally among the public, patient groups have an important part to play there in conjunction with specialist clinicians.

National Insurance Contributions Bill


3.07 pm

Clause 3 : Increased product of additional rates to be paid into National Insurance Fund

Amendment 1

Moved by Lord McKenzie of Luton

1: Clause 3, page 2, line 5, leave out ""50"" and insert ""50, or such greater percentage as is necessary to ensure that the National Health Service allocation will grow in real terms year on year""

Lord McKenzie of Luton: My Lords, we return to the issue of the NHS allocation from the National Insurance Fund. The specifics of the amendment require the percentage of the product of the additional primary percentage rate to be either 50 per cent or such greater percentage as would ensure that the allocation increases in real terms. In essence, the purpose of the amendment is to stop the NHS being short-changed. It is a variation on the theme of the amendments in the other place that required the NAO to report on what sums would be required for this to be achieved. When this was debated in the other place, the Minister offered two arguments against this approach. The first was that the spending on health is set by the spending review and is not affected by the NHS allocation. The second was that the Government would anyway normally expect contributions to the fund to rise broadly in line with earnings. The Minister, Mr Gauke, said:

"In any case, the amount allocated to the health service from national insurance contributions would, other factors being equal, be expected to grow in line with earnings and therefore grow in real terms every year under the terms of the Bill".-[Official Report, Commons, 13/1/11; col. 475.]

If that is what the Minister's colleagues believe, perhaps he will say what part that judgment played in the spending review allocation.

However, it would seem that the Minister's colleague is mistaken. In Committee, the noble Lord, Lord Sassoon, helpfully pointed out Appendix 6 to the GAD report on the 2011 benefits uprating order, which shows the NHS allocation reducing in 2011-12 in comparison to the current year. This outcome is based on assumptions that the number of jobs in the economy would remain the same over the two years and that earnings are expected to increase by 2.1 per cent. This would suggest that, as regards Mr Gauke's premise, the NHS allocation should rise by some

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£400 million and not fall. Overall, therefore, it seems that the NHS allocation for 2011-12 has been short-changed by £600 million. Why?

As was pointed out in Committee, in keeping the NHS allocation of the additional national insurance to just 1 per cent, the Government appear to have overlooked the changes to the various thresholds, which were policy changes designed to mitigate, in part, the effect of the national insurance increases. We have debated some of these during our consideration of this Bill. Will the Minister confirm that the effect of the reduction in the UEL from April 2011 and a significant increase in the primary threshold means that, for primary contributions, the band of earnings for 2011-12 on which the 2.05 per cent NHS allocation could be made is cut by something like £2,800 a year, although the 2 per cent rate, just 1 per cent of which is allocated, starts £1,350 earlier? Subject to further adjustments to the thresholds, that will mean a recurring diminution in the amount of the NHS allocation and an equal and opposite benefit to the fund.

Perhaps in dealing with the point, the Minister will say what the coalition Government's policy objective is in respect of this allocation. Is it to maintain the allocation in real terms or to let it drift? How, if at all, is the projected allocation taken into account in determining the overall resources for the NHS?

We persist in these matters not just as a narrow question of arithmetic but because of our concern for the NHS and what is happening to it. We are concerned that the BMA reports a gap between government rhetoric about protecting front-line staff and the reality on the ground and that the recent comprehensive survey of healthcare cuts found that more than 50,000 doctors, nurses, midwives and other NHS staff are due to lose their jobs. I do not propose to cite at length the improvement brought about to the NHS under the previous Labour Government, but we note the coalition agreement's pledge:

"We will guarantee that health spending increases in real terms in each year of the Parliament".

However, in a devastating analysis in Committee in another place, my right honourable friend John Healey MP blew apart the Government's claims that their plans represented a real-terms increase, particularly because of updated inflation forecasts and the allocation of funding from the NHS budget to cover social care budget shortfalls of local authorities. Of course, there are other pressures from the VAT increase, which the King's Fund has estimated will cost the NHS some £300 million a year.

We know that the Government have not rebutted this analysis and that they are on course to break the coalition pledge of a real-terms increase in funding. Instead, they are heading for a real-terms cut. Despite the fact that the Prime Minister promised to protect NHS capital investment, that, too, is being cut by 17.4 per cent over four years. In the circumstances, it is surprising to say the least that the NHS allocation from the National Insurance Fund is not being maintained, at least in real terms. This is what the amendment seeks and I beg to move.

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3.15 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, Amendment 1 returns to the allocation of national insurance contributions receipts between the National Insurance Fund and funding of the NHS, which was covered both at Second Reading and in Committee. This amendment, as the noble Lord, Lord McKenzie of Luton, has explained, is aimed at ensuring that the NHS allocation of the additional rate is subject to an adjustment to ensure that the funding of the NHS from national insurance contributions will grow in real terms year on year. The amendment would require comparisons to be made from one year to the next of the NHS allocation and adjustments to ensure that the allocation grows in real terms each year.

As I explained in Committee, the amount that is to be spent on the NHS, whatever the noble Lord says, was confirmed in the spending review in October last year and is unaffected by whether the funds come from national insurance contributions or elsewhere. The noble Lord says that he wants to ensure, through the amendment, that the health service is not short-changed. I can absolutely assure noble Lords that nothing in this Bill goes anywhere near short-changing the National Health Service. The amendment would ensure that the national insurance allocation to the NHS increases year on year, which is a bookkeeping matter, but nothing more.

It may help noble Lords if I put this matter into a bit of context, because I was beginning to lose some of the train of the noble Lord's argument and I fear that others may have done so as well. Perhaps it would be helpful to the House to go back and explain the numbers very broadly.

I shall take the last full year for which the numbers are certain. In 2009-10, the total sum raised by national insurance contributions was £94 billion. Of that, just over £20 billion was allocated to the NHS and the balance, around £74 billion, was allocated to the National Insurance Fund. Total NHS expenditure in 2009-10 in England alone was exactly £100 billion, so it is important to understand that, whatever allocation of funds out of NICs proceeds to the National Health Service, it makes up only around 20 per cent of NHS expenditure.

I have also been looking at the numbers over the past few years. If we go back to 2004-05, for example, in that year the contribution made by NICs to NHS expenditure on the basis that I have described was 24.3 per cent, but by 2009-10 that contribution had fallen to 20.3 per cent. So I find it quite hard to accept noble Lords opposite casting all sorts of aspersions at the present Government about how they will safeguard expenditure on the NHS when their own record shows that over the last few years they contributed a significantly falling percentage of NICs to NHS expenditure. Nobody challenged them with the thought that they would renege on their commitment to NHS expenditure, so I do not expect noble Lords seriously to challenge the fact that this Government will stick to their commitment to increase National Health Service expenditure in real terms. The point is that NICs will only ever make a small but significant-20 per cent or thereabouts at

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the moment-contribution to NHS expenditure. The balance-the greater sum out of NICs-will go where it has to go, which is into the National Insurance Fund.

I do not want to belabour the point but, in big-picture terms, the amendment would make absolutely no difference. It would not affect the money that goes into the National Health Service. The negative effect of the amendment would be to create a degree of uncertainty in establishing the NHS allocation, as we would know the receipts from national insurance for sure only after the end of the tax year, because they are dependent on wage levels, economic conditions and the thresholds as they apply in a particular year. We would then have to compare those with the previous year's allocation and make an adjustment if necessary to ensure a real-terms increase. That would add administrative complexity and create accounting and funding uncertainty, not least for the Government Actuary, who is required to report on the state of the National Insurance Fund each year. It would have, as I have explained at some length, no impact on the overall spending on the NHS, which is a rightful concern of noble Lords.

Government policy is to maintain the level of national insurance contributions allocated to the NHS and to allocate additional revenues from rate rises to the National Insurance Fund. That is what the Bill will achieve. That helps to ensure that plans for payment of pensions and other contributory benefits are sustainable in the long term. In that way, we can protect pensioners with the new triple lock, which guarantees each and every year a rise in the basic state pension in line with earnings, prices or a 2.5 per cent increase, whichever is the greatest.

I repeat that this amendment will not affect overall spending on the NHS because that figure has been set in the October spending review. Given that the figure has been fixed, the amendment would serve only to create a degree of additional bureaucracy and complexity. I have gone to some length to reassure, I hope, the noble Lord, Lord McKenzie of Luton, that the health service will in no way be short-changed because of the Bill. Therefore, I ask the noble Lord to withdraw the amendment.

Lord McKenzie of Luton: My Lords, I thank the Minister for his response. He said that he did not believe that we could reasonably challenge the assertion that the coalition Government would increase funding for the NHS in real terms, but that is precisely what we are doing. If the noble Lord looks at the Red Book and the projections, the aggregate figure is a 0.4 per cent increase, but when you back out the fact that included in that is £1 billion reallocated for social care, because local authority budgets have been squeezed, you will see the opposite effect-a real-terms cut. That was part of the backdrop to the amendment.

The noble Lord said that the Government's proposition was to "maintain" the allocation, but that is precisely what they are not doing this year. I raise what Mr Gauke said in the other place. He said on the record that, because earnings were increasing and were projected to increase next year, on the basis of the Government Actuary's report, he would expect the NHS allocation to increase.

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At the end of the day, the Government are clearly under pressure on spending, as any Government would be at the current time. If they are looking for resources outside of the National Insurance Fund to make good any shortfall in meeting their commitments, that will be more difficult if they cannot get a reasonable allocation from the National Insurance Fund-a reasonable allocation being an increase in real terms when earnings are increasing as well. That was exactly the premise of Mr Gauke in another place.

The Minister made much of what this would mean in terms of administration, but I reject that rather bureaucratic proposition of how you could deal with this, because I think that it could be dealt with quite easily on the basis of estimates, with adjustments at the end of the year. There is no great mystery about that. Having said that, our real concern is the fundamental issue of whether proper funding is going to the NHS and whether in real terms the Government are meeting their commitment. We do not believe that they are. This is just one facet of that. However, I think that we have probably got as far as we can on this. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 4 : Holiday for new businesses

Amendment 2

Moved by Lord McKenzie of Luton

2: Clause 4, page 2, line 8, at end insert-

"( ) This section applies to all regions and countries of the United Kingdom."

Lord McKenzie of Luton: My Lords, in moving Amendment 2, I shall speak to the other amendments in the group, which seek to remove the excluded regions from the Bill so that the national insurance contributions holiday will apply without geographical restriction. It will bring London, the eastern region and the south-east within the benefits of the provisions.

There are two fundamental reasons why we continue to advance this proposition. The first is fairness and the second is to do with simplicity. To deal with the latter first, it was clear from probing that having excluded regions is a complicating factor in the construction of the legislation and the operation of the scheme, and would discourage a clear understanding and therefore take-up of the scheme. We identified complexities for some types of businesses as to where the new business was principally carried on and, I think, established that some of the 10 employees by whom the national insurance holiday could be enjoyed could anyway be working in the excluded regions. I think that we left unresolved the issue of how, if at all, the holiday would work whereby new business might contribute to the shared services of a group.

I am sure that the Minister accepts that having the excluded regions as part of the scheme creates additional bureaucracy and administrative cost, but the real issue is fairness. Excluding three regions from the holiday scheme means that significant parts of the UK that are every bit as deprived as other parts and have equal if not higher unemployment and a heavy reliance on

14 Mar 2011 : Column 16

public sector employment are denied this incentive. If the national insurance contribution holiday is a meaningful incentive, while we do not think that it is perhaps the most effective means of stimulating growth, we can see that it will help and believe that it should be fairly available. Help, of course, is needed especially at the current time, with the unemployment figures looking continually grim. The unemployment rate for the three months to December 2010 was up to 7.9 per cent, and the total number of unemployed people increased by 44,000. For 16 to 24 year-olds, unemployment increased by 66,000 to reach 965,000-the highest figure since comparable records began in 1992.

The Minister has to date been a little coy about providing up-to-date figures for the take-up of the scheme, which has now been running with effect from June last year. Figures given in another place suggest take-up by January this year of some 1,500 businesses, which is obviously disappointingly short of what might have been expected, as the overall projection is that 400,000 businesses will participate over the three years and two months that the scheme will operate. If the Government are not to fall woefully short of their target and to miss an opportunity to deploy to the full the resources allocated to stimulate the growth of jobs, the scheme requires better take-up or an expanded application. We offer by way of a later amendment the requirement for an annual report to take more formal stock of progress. That could lead to changes in the scheme if the report showed that including the currently excluded regions was leading to overspending. Modifications could then be made.

3.30 pm

It is worth putting this in the context of the most recent labour market statistics, which showed in the quarter to September last year a net increase of 9,000 jobs, including 63,000 additional jobs. Clearly, those additional jobs will not all come from start-ups and some will come from the currently excluded regions, but that illustrates the headway in the current budgetary provision. The holiday was projected to cost the Exchequer £50 million this year. At £2,000 per business, which I think is the estimate, that should mean 25,000 businesses at least having taken up the scheme by 31 March. Can the Minister give us any assurance on this point? It is difficult for him to argue that removing the exclusion of regions would cause the budget allocation to be exceeded if he cannot assure us that the scheme is currently on track.

The Government have targeted the holiday by reference to the reliance on public sector employment, the idea being that the holiday will promote the formation of new businesses in the areas most reliant on public sector employment. Estimates of job cuts arising from government spending cuts vary, but 500,000 could be in the pipeline, together with consequential effects on the private sector job market. The VAT rise simply adds pain to that. By targeting areas of existing public sector employment, the national insurance holiday seems to be focusing on what is to come, not on what exists, although there may be a correlation between the two.

Whether the focus is on the reliance on public sector employment, existing unemployment levels or deprivation, significant anomalies occur by taking a

14 Mar 2011 : Column 17

broad regional analysis. Nearly half of constituencies that are the lowest 15 for claimant count unemployment are in regions that can benefit from the national insurance contribution holiday, and 20 per cent of constituencies in the highest 30 for claimant count unemployment are in regions that are denied the benefit of the holiday. We know that of the top 12 most deprived local authorities on the economic deprivation index, seven will miss out on the contribution holiday.

The House of Commons Library produced a report that sought to analyse public sector employment by constituency. While caveating the complete accuracy, it set out figures for the relative importance of public sector employment. Again, we find that 25 constituencies in the top 100 for reliance on public sector employment are in regions that cannot benefit from the holiday, and that 43 constituencies in the bottom 100 for such reliance are in regions that can benefit. The ONSpublic sector employment statistics bulletin for quarter 1 2010 not only shows a generally relatively narrow spread across the English regions but shows London to have a higher public sector employment rate than the West Midlands and the east Midlands. London, of course, is excluded.

Even assuming that the Government are correct in targeting just by reference to the reliance on the public sector-in the current climate of savage job cuts in the public sector, that is not unreasonable-their regional approach is missing too much of the target. Each region and country of the UK has pockets of deprivation, high unemployment and a high reliance on public sector employment, as well as areas of prosperity and high employment. To limit the holiday on a regional basis is too crude. The Government need either considerably to fine tune the approach, with the bureaucracy that that would entail, or to lift the excluded region prohibitions. This is what fairness demands. I beg to move.

Lord Newby: My Lords, I have made clear in the past my criticism of the Government's cuts to regional expenditure. Therefore, I welcome the fact that this measure potentially puts back the best part of £1 billion into regional development. It is not the traditional way in which it has been done. Arguably, if it works, it will be more effective because it follows the market absolutely rather than the views of regional development agencies. Therefore, it could be an effective way of getting money back where it is needed.

I found the first of the arguments of the noble Lord, Lord McKenzie, about fairness quite perplexing. To argue that the measure is unfair because it excludes the more affluent parts of the country is to argue that regional policy is unfair because it excluded or did not give much preference to the wealthier parts of the country. It is true that there are wards and constituencies in London that are extremely poor and that have high levels of unemployment-that has been the case for a very long time and throughout the history of regional development-but it has not been seen in the past as a reason for not giving additional support to the north, where the problems are even greater. The difference between the problems of Newham and those of Sunderland, Liverpool and Barrow is that Newham is in a buoyant labour market within a travel-to-work

14 Mar 2011 : Column 18

area that is doing very well compared with the rest of the country. Many communities in the north are in labour markets and travel-to-work areas where there is simply no way to get a job very easily. That is the essential difference between the excluded regions in the south and those in the north.

The noble Lord spoke about simplicity. While he might have been right to castigate the Minister for using administrative arguments in dealing with the first amendment, he is doing exactly the same here. He cannot argue that a man or a company cannot be given a benefit in Newcastle just because, two and a half years down the line, they employ someone in London. That argument does not stand up.

New businesses have been set up in the past predominantly in excluded areas. Therefore, if his approach were adopted, one would expect a large number of new businesses to be established in London and the other excluded regions. What assessment have he and the Labour Party made of the cost of such an extension of the area? I know that he-and, indeed, I-are not absolutely convinced that £940 million is the cost of this programme, but no doubt he has a view as to what it is likely to be. I suspect that the cost of extending the provision will be double what is in the estimates already, which means a potential cost of another £940 million. Even if it is £500 million, has the noble Lord contemplated that? How does that extra expenditure fit into the Labour Party's commitment, under the Fiscal Responsibility Act, to halve the deficit over the next four years?

Lord Sassoon: I am very grateful to my noble friend Lord Newby; he has done my job admirably on these amendments. However, I start by returning to fairness. The reason for the Government introducing the holiday is their belief that it is fair that people and regions that have become overdependent on public sector jobs are given additional help as the economy has to rebalance. I therefore agree completely with my noble friend. It is clear that the noble Lord, Lord McKenzie, means to misconstrue the purpose of the Bill.

We in the Government are doing other things to lift the burden of national insurance contributions on businesses right across the country, notably by raising the threshold by £21 per week above indexation from 6 April 2011 and by reducing corporation tax rates. Those very considerable measures are benefiting businesses right across the country, reversing the damaging effect of the Labour Government's jobs tax. This particular measure is not about fairness across the country in that sense but about fairness to those regions that, under the previous Government, became overdependent on government employment. This is a way of targeting resources to enable new businesses to grow in those regions.

My noble friend Lord Newby went on to ask the noble Lord, Lord McKenzie, about the additional cost of the scheme. The Government estimate that if the scheme were to go national it would increase the projected costs of the scheme by about 70 per cent, so my noble friend is completely right that this could be a significant additional expenditure. He has made the point that I was not going to make, although he is quite right; it is yet another example of Labour's unfunded spending promises.

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As for other issues on the excluded regions, the reason why Greater London, the eastern and the south-eastern regions are excluded is principally because the proportion of the population in public sector employment in those regions is lower than in any other parts of the UK. Also, in addition to my noble friend's point, noble Lords might wish to be reminded that during the public evidence session on the Bill, representatives from the Federation of Small Businesses and the British Chambers of Commerce made it clear that the south-east is more resilient than the rest of the UK and that the formation of now businesses would not be harmed significantly if the holiday was not available in these regions. The Government agree with that assessment.

There is then the question of having pockets of deprivation with high claimant count in particular parts of the excluded region. The Government of course acknowledge that areas smaller than regions have particular concentrations of needs. That is reflected in our looking for more efficient mechanisms than this one for addressing those more local needs. For example, my right honourable friend the Chancellor of the Exchequer announced earlier this month that the Budget will introduce new enterprise zones across parts of Britain. Those zones have great potential but need that extra push from the Government and local communities working together. Such enterprise zones would be expected to be far, far smaller than regions. There are other, fairer and more appropriate ways of dealing with the issues which the noble Lord, Lord McKenzie, raises perfectly reasonably. They just do not happen to have anything to do with this holiday, which is about dealing with an unbalanced economy as far as dependence on public sector jobs is concerned.

In conclusion, the holiday is targeted specifically at regions and countries with the highest proportion of public sector dependence. It is there to encourage new businesses to start up and to take on employees in those areas. I will not be drawn into updating now on the take-up-there will be other occasions for that-but one would expect it to increase over time. We will no doubt discuss a little later today the form of reporting that is appropriate. Expanding the holiday to the whole country would undermine the very purpose and rationale of the policy. I ask the noble Lord to withdraw his amendment.

Lord McKenzie of Luton: My Lords, I thank the Minister for his reply and the noble Lord, Lord Newby, for his contribution. We do not misconstrue the purposes of the Bill; we support projects that help to rebalance the economy, and we see that focusing in part on where there is high public sector employment in an area is one way of doing it. It is not the only way, but we have acknowledged that the Bill can make a contribution in that respect.

The noble Lord speaks as though there is almost a huge divide between the excluded regions and those that are included. From the ONS public sector employment statistics bulletin for quarter 1 of 2010, let me run through the list of percentage by region of identifiable public sector employment. The point that I reiterate is that the spread between the regions is

14 Mar 2011 : Column 20

relatively narrow, and that London misses out on this basis. The north-east is said to have 25.1 per cent, the north-west 22.3 per cent, Yorkshire and Humber 22.6 per cent, the east Midlands 18.5 per cent, the West Midlands 21 per cent, the east 16.6 per cent, London 21.1 per cent, the south-east 16.8 per cent and the south-west 21.3 per cent. To chop off three of those areas, as though they are a completely distinct part of the economy with in no way the same reliance on public sector employment, seems incredibly flawed as an argument. It is not just a question of looking at little pockets within regions, as the overall regional statistics show a close match across the regions.

The noble Lord, Lord Newby, said that we were talking about £1 billion for regional development-fine; no one is looking to take £1 billion away from the project. However, he again referred to "more affluent" regions. I am sure that parts of all regions are affluent, and parts of all regions are deprived and with high unemployment. One accepts that there are special challenges in some of the northern regions, and one would not want to detract the support available to those. Luton is in the east of England. It still has high levels of deprivation, but the spread across the region shows that parts to the east are distinct, with much lower wage economies, higher employment infrastructure deficits and real challenges. They are every bit as deserving of the benefit of schemes such as this as anyone else.

The noble Lord rightly challenged me on the costs. I refer to figures given by the Minister, but the purpose of the probing earlier-I note that the Minister remains coy on the point-was to question whether the allocation made will in any way be spent. I think that the proposition that underwrites the estimate is that this will support something like 800,000 jobs, and those jobs will have to be created outside the excluded regions by start-up businesses over a period that has about two and a half years to run. That is a tall order. If it can be achieved, great, but there is headway in the allocation to extend the scope of the scheme, and we support that.

I have tried to deal with the points raised. We think that the provision is unfair. All regions should have the opportunity to benefit from this. We shall get to an amendment tabled by one of my noble friends shortly, following which there would be scope, through monitoring, to dampen down the scheme if it proved to be overheating. However, there is no sign of that. It is a pity that the Minister was not even able to give us an update; we are almost at the end of the year. Some £50 million is meant to have been spent, which would mean that at the very least 25,000 businesses would have signed up. I suspect that we are nowhere near that on the basis of the figures of 1,500 that were discussed a couple of months ago in the other place. Having said all that, we have had a brief but, I hope, full encounter on the subject, and I wish to test the opinion of the House.

3.49 pm

Division on Amendment 2

Contents 139; Not-Contents 200.

Amendment 2 disagreed.

14 Mar 2011 : Column 21

Division No. 1


Ahmed, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Armstrong of Hill Top, B.
Bach, L.
Barnett, L.
Bassam of Brighton, L. [Teller]
Beecham, L.
Berkeley, L.
Bhattacharyya, L.
Bilston, L.
Blood, B.
Borrie, L.
Bragg, L.
Broers, L.
Brooke of Alverthorpe, L.
Brookman, L.
Cameron of Dillington, L.
Campbell-Savours, L.
Carter of Coles, L.
Christopher, L.
Clancarty, E.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Corbett of Castle Vale, L.
Davies of Abersoch, L.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Donaghy, B.
Drake, B.
Dubs, L.
Elder, L.
Elystan-Morgan, L.
Erroll, E.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Gilbert, L.
Glasman, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Grantchester, L.
Grocott, L.
Harris of Haringey, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Hoyle, L.
Hughes of Stretford, B.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Jay of Paddington, B.
Jones of Whitchurch, B.
Jordan, L.
Kennedy of Southwark, L.
Kennedy of The Shaws, B.
King of West Bromwich, L.
Kinnock, L.
Kinnock of Holyhead, B.
Knight of Weymouth, L.
Lea of Crondall, L.
Levy, L.
Liddle, L.
Lipsey, L.
Lister of Burtersett, B.
McAvoy, L.
Macdonald of Tradeston, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mallalieu, B.
Maxton, L.
Meacher, B.
Montgomery of Alamein, V.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Morris of Yardley, B.
Newcastle, Bp.
Nye, B.
Palmer, L.
Patel of Blackburn, L.
Patel of Bradford, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prescott, L.
Prosser, B.
Puttnam, L.
Ramsay of Cartvale, B.
Rea, L.
Richard, L.
Rosser, L.
Royall of Blaisdon, B.
Sewel, L.
Simon, V.
Smith of Basildon, B.
Smith of Finsbury, L.
Soley, L.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Symons of Vernham Dean, B.
Taylor of Bolton, B.
Thornton, B.
Tomlinson, L.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turner of Camden, B.
Valentine, B.
Wall of New Barnet, B.
Warner, L.
Wheeler, B.
Whitaker, B.
Wilkins, B.
Williams of Elvel, L.
Wills, L.
Wood of Anfield, L.
Woolmer of Leeds, L.
Young of Hornsey, B.
Young of Norwood Green, L.

14 Mar 2011 : Column 22


Aberdare, L.
Addington, L.
Ahmad of Wimbledon, L.
Allan of Hallam, L.
Alton of Liverpool, L.
Anelay of St Johns, B. [Teller]
Astor of Hever, L.
Attlee, E.
Avebury, L.
Baker of Dorking, L.
Bates, L.
Benjamin, B.
Berridge, B.
Best, L.
Black of Brentwood, L.
Blackwell, L.
Blencathra, L.
Boswell of Aynho, L.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brinton, B.
Brittan of Spennithorne, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Byford, B.
Campbell of Alloway, L.
Carswell, L.
Cathcart, E.
Cavendish of Furness, L.
Chadlington, L.
Chorley, L.
Clement-Jones, L.
Cobbold, L.
Colwyn, L.
Condon, L.
Cormack, L.
Courtown, E.
Coussins, B.
Cox, B.
Craigavon, V.
Crickhowell, L.
Cumberlege, B.
De Mauley, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Doocey, B.
D'Souza, B.
Dundee, E.
Dykes, L.
Falkland, V.
Faulks, L.
Fearn, L.
Fellowes, L.
Fookes, B.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
Freeman, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
German, L.
Goodhart, L.
Greenway, L.
Hamilton of Epsom, L.
Hanham, B.
Hannay of Chiswick, L.
Harries of Pentregarth, L.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Howard of Lympne, L.
Howarth of Breckland, B.
Howe, E.
Howe of Idlicote, B.
Howell of Guildford, L.
Hurd of Westwell, L.
Hussain, L.
Hussein-Ece, B.
James of Blackheath, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jones of Cheltenham, L.
Kakkar, L.
Kerr of Kinlochard, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Kramer, B.
Laming, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lindsay, E.
Lingfield, L.
Liverpool, E.
Loomba, L.
Lothian, M.
Lucas, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
Mackay of Clashfern, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Magan of Castletown, L.
Maples, L.
Mar, C.
Marland, L.
Marlesford, L.
Mawhinney, L.
Miller of Chilthorne Domer, B.
Montrose, D.
Morris of Bolton, B.
Murphy, B.
Neuberger, B.
Newby, L.
Newton of Braintree, L.
Noakes, B.
Northover, B.
O'Cathain, B.
Pannick, L.
Patel, L.
Perry of Southwark, B.
Plumb, L.
Ramsbotham, L.
Randerson, B.
Rawlings, B.
Reay, L.
Redesdale, L.
Rennard, L.
Ribeiro, L.
Risby, L.
Ritchie of Brompton, B.
Rix, L.
Roberts of Conwy, L.

14 Mar 2011 : Column 23

Roberts of Llandudno, L.
Rowe-Beddoe, L.
St John of Bletso, L.
Saltoun of Abernethy, Ly.
Sassoon, L.
Seccombe, B.
Selsdon, L.
Shackleton of Belgravia, B.
Sharkey, L.
Shaw of Northstead, L.
Sheldon, L.
Shipley, L.
Shutt of Greetland, L. [Teller]
Skelmersdale, L.
Slim, V.
Smith of Clifton, L.
Soulsby of Swaffham Prior, L.
Spicer, L.
Stedman-Scott, B.
Stirrup, L.
Stoneham of Droxford, L.
Stowell of Beeston, B.
Strathclyde, L.
Sutherland of Houndwood, L.
Tanlaw, L.
Taverne, L.
Taylor of Holbeach, L.
Tenby, V.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Thomas of Walliswood, B.
Thomas of Winchester, B.
Tope, L.
Tordoff, L.
True, L.
Trumpington, B.
Tugendhat, L.
Tyler, L.
Verma, B.
Waddington, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Walpole, L.
Warnock, B.
Warsi, B.
Wei, L.
Wheatcroft, B.
Wilcox, B.
Willis of Knaresborough, L.
Wilson of Tillyorn, L.
Younger of Leckie, V.
4.03 pm

Amendments 3 and 4 not moved.

Clause 5 : Starting a new business

Amendment 5

Moved by Lord Davies of Oldham

5: Clause 5, page 3, line 35, at end insert ", or

( ) a non-trading charity

Lord Davies of Oldham: My Lords, we debated this issue in Committee and it was the subject of debate in the other place as well. However, we found the Government's response to this amendment and the concept behind it somewhat unconvincing. Their view seems to be that this measure, in this Bill, revolves around what they define as the wealth-creating sector. That seems, by definition, to exclude charities from consideration. Why should the Bill be subject to this narrow definition, which seems to suggest that charities do not contribute to wealth in our society? That view is buttressed by the Government's arguments that reflect the very narrow definition of what they regard as the nation's wealth. In other words, it is to do with jobs but not public welfare-it is about people being employed but not what they are employed to do. In other words, it has nothing to do with quality of life.

I know that the Minister will regard my presentation of these arguments as indulging in a flight of fancy that is a little different from the day-to-day preoccupations of the Treasury. However, I ask noble Lords to consider the obvious point that in these difficult times we should give hope to our people, as this measure seeks to do. We should give help and support to those thousands of our fellow citizens who will lose their jobs in the public sector as the Government say that they cannot afford to employ them all. They rarely deploy the argument which they use regularly at party conferences and elsewhere, when rhetoric plays its part, that they wish to reduce the size of the state as

14 Mar 2011 : Column 24

they consider that that would benefit the nation. In reducing the size of the state they are, by definition, reducing the number of people in public employment not because they cannot be afforded but because, in the Government's opinion, society is better when the Government play a smaller part. The House will not be surprised to hear that we take a somewhat different view about wealth and the virtues of public employment.

The previous amendment was directed at those parts of the country which the Minister indicated were more dependent on public sector employment which is to be subjected to such a serious assault from the government cutbacks. Why can we not help these areas by creating jobs in bodies such as non-trading charities? Of course, I appreciate that it will be a modest contribution and I subscribe to the view that the noble Lord will no doubt put forward in his reply that the Bill overwhelmingly concentrates on businesses which create wealth. I am not in any way, shape or form against that endeavour. In fact, my party has made clear that it supports the development of small businesses. However, I am against exclusion for no obvious good reason. I do not see why non-trading charities should not be included.

The Minister's argument in Committee partly revolved round the fact that the matter is said to be outside the main purposes of this legislation and that we should not bring in something that is somewhat extraneous. However, the number of Bills which the Treasury can introduce over the year is fairly limited. The noble Lord will be all too well aware of the fact that apart from the Finance Bill, in which this feature is scarcely likely to be addressed, Treasury Bills, other than those which have a very specific operation, are few and far between as the Treasury competes with other departments for legislative time in both Houses. We therefore propose an amendment of a most modest but beneficial kind that-even if the Minister thinks it is not entirely appropriate to the main purposes of this modest measure-is not far distant from the objective of creating jobs on a very small scale in areas where public employment is being reduced. I maintain that non-trading charities can play a modest part in creating those jobs.

Given the government arguments thus far-and that is why we are continuing this debate beyond Committee-I see no reason why the amendment should not commend itself to the Government, and that is why I commend it to the House. I beg to move.

Lord Sassoon: My Lords, the noble Lords who put their name to the amendment have again raised the issue of making non-trading charities eligible for the employers national insurance contribution holiday. This matter was debated at some length in Committee and I again suspect that what I am going to say will not come as a huge surprise to the noble Lords concerned. Nevertheless, I will do my best to persuade them to withdraw the amendment.

I thought that the noble Lord, Lord Davies of Oldham, was going to go off on some flight of fancy. I do not think that he went off on any flight of fancy, and he kept entirely to areas that the Treasury takes extremely seriously. I was therefore disappointed, because I expected the noble Lord to go down some exotic new avenue-but he did not.

14 Mar 2011 : Column 25

However, in the first half of his remarks, he did not recognise that an important group of charities will get the benefit of this holiday. It is important for me to confirm that new charities in qualifying areas are eligible for the holiday if they are carrying on a business. I appreciate that the noble Lord later on in his remarks started to distinguish between trading and non-trading charities, but this is an important point. For example, were employees to be taken on for a charitable trade, such as providing education or healthcare services, the charity is potentially eligible for this generous relief. Amendment 5 would specifically extend eligibility to new non-trading charities in qualifying areas. As, to be fair, the noble Lord recognises, this would not support the Government's objective of encouraging new entrepreneurs to set up businesses in areas with a high proportion of public sector employment. The noble Lord suggested that his amendment would be a nice-to-have add-on, if I may crudely paraphrase him. However, he recognised that it does not chime in with the core purpose of the Bill.

Just as we have other ways of supporting regions that are not covered by the holiday, the Government of course have other important ways in which they support the critical work of charities, not least in their contribution to the big society. We provide substantial support to charities and charitable giving with tax reliefs worth more than £3 billion each year. Gift aid and relief from non-domestic rates are each worth around £1 billion a year. I remind noble Lords that, across the UK, charities that are employers will also benefit from the increase in the employers national insurance contribution threshold by £21 a week, plus indexation, that comes into effect on 6 April.

4.15 pm

Because I think it is important to deal with the technical details of amendments and give them their due, I also respectfully point out to the noble Lord that the amendment on its own is somewhat defective as it does not deal with the many difficult issues that would arise if the holiday were extended to non-trading charities. For example, it would be necessary to consider carefully the commencement date of such a change. The scheme has been live since September 2010 and the relevant period commenced in June 2010. We do not think that any such amendment could be made with retrospective effect as the amendment implies. The legislation would need to provide a start date for charities. Is this to be the date of establishment or some other date-for example, the date it is registered by a regulator such as the Charity Commission or the Office of the Scottish Charity Regulator? What about the existing holiday rules covering businesses that are taken over or transferred or where there is a change in activities? Would these rules need to be applied so that only genuinely new charities qualified or would they need to be modified to cater for cases where charitable status might be obtained at some point after the activity had commenced? Therefore, there are considerable technical problems with the amendment.

In any case, as the noble Lord, Lord Davies of Oldham, recognises, any benefit ensuing from such complicated changes is likely to be limited, as we estimate that relatively few non-trading charities employing

14 Mar 2011 : Column 26

staff are likely to be set up over the holiday period. By including non-trading charities, we would undermine the policy rationale for the holiday, which is to encourage new businesses to be set up and to take on employees. For example, if charities were included, employers of nannies and carers could claim that they should also be included in the holiday. We have drawn a line at trading because that is what supports the overarching policy.

In conclusion, the scheme specifically targets new businesses that create new employment in areas that require it most. If a new charity were carrying on a business, of course it would qualify, but extending the holiday to non-trading charities would greatly complicate the scheme. Rather than channel resources through this scheme and impose administrative burdens on new charities, the Government consider that it is more efficient to provide support through existing mechanisms to all charities, as well as significant benefits, in the ways that I have outlined. Therefore, I ask the noble Lord to withdraw the amendment.

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for his precise exposition of the Government's case against the amendment in principle. I do not think that we need the overkill of the technical limitations of the amendment. It is rare for the Opposition to table amendments that do not have certain technical imperfections, but when a Government have the will, they certainly have the way to get past those imperfections. Of course, the Minister is really piling Pelion upon Ossa. He is saying that he is not having this amendment at any price on a fairly straightforward and clear principle; nevertheless, so far as the Opposition are concerned, the argument is made on unconvincing grounds. However, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Clause 7 : The appropriate amount

Amendment 6 not moved.

Amendment 7

Moved by Lord Davies of Oldham

7: After Clause 10, insert the following new Clause-

"Annual report by the Treasury

( ) The Treasury shall, following the day on which this Act is passed, review the operation of the regional holiday scheme under Part 2 of this Act, and provide an annual report to Parliament.

( ) Each annual report shall set out, by region-

(a) the number of businesses availing themselves of the secondary contributions holiday;

(b) the number of employees designated as qualifying employees under the scheme;

(c) the total expenditure saved by businesses under the scheme; and

(d) an assessment of the demand to apply the regional holiday to different areas of the country."

Lord Davies of Oldham: My Lords, this amendment again relates to an issue that we addressed in Committee. On that occasion, the Minister gave us the benefit of his perspective on this matter and indicated the ways

14 Mar 2011 : Column 27

in which the Government would be held properly accountable for their work in this area, as in all aspects of Treasury matters, and indeed wider than that.

The amendment relates to the specific nature of the holiday. We are seeking an annual report in the terms adumbrated by the amendment because this is a most interesting scheme. If not experimental, the scheme certainly has a significant dimension, which is, as we discussed when we debated the earlier amendments on the regional aspects of the scheme, the control factor attached to it. The scheme will operate in the majority of the country, although it will exclude the south-east, London and the eastern region. Therefore, after a year, we shall be able to see how much progress has been made on job creation for those who have lost their position and where there are fewer jobs in the public service and we shall have a control position as regards those regions that are not in the scheme. We may be able to see the benefit of this initiative by the Government.

To my noble friends on the Front Bench, that seems to be a good reason why we should have a precise annual report on this scheme and on how it has worked. Although I quite understand that the Minister's defence is likely to be that the Treasury is always open and accountable and that it has measures whereby it makes matters explicit to the nation, I would not be the first noble Lord to have to confess, even with the experience of being on the Treasury Bench, that from time to time there has been a degree of obscurity that makes it extremely difficult to analyse just what has transpired in schemes and their effectiveness. This amendment would give the Treasury a golden opportunity, after one year, to make quite clear the success or otherwise of the scheme, which we wish success. I beg to move.

Lord Sassoon: My Lords, Amendment 7 would insert a new clause into the Bill with the aim of requiring the Treasury, following the day on which the Act is passed, to review the operation of the regional employer NICs holiday under Part 2 of the Bill and to provide an annual report to Parliament. The amendment would require the annual report to contain information by region. At the risk of being accused of piling Pelion on Ossa, it is important to get the comparison between what is proposed by this amendment and what I shall go on to say the Government propose to do. It is important to get it straight. I hope that I am not going into any unnecessary detail but I will clarify what is going on in the proposed amendment and what the Government seek to do.

The amendment requires that the annual report should contain, by region,

"(a) the number of businesses availing themselves of the secondary contributions holiday;

(b) the number of employees designated as qualifying employees under the scheme;(c) the total expenditure saved by businesses under the scheme; and(d) an assessment of the demand to apply the regional holiday to different areas of the country".

As I said in Committee when we discussed amendments of a similar nature, I think that this amendment is motivated by a wish to encourage transparency-the

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noble Lord, Lord Davies, has confirmed that-and to ensure that proper consideration is given to how the holiday operates in practice. I shall attempt to explain to noble Lords why the amendment is unnecessary.

First, as I said in Committee, my honourable friend the Exchequer Secretary explained in the Public Bill Committee in another place that there is no budget as such for the scheme. Anybody contemplating starting up a new business can be confident that there is no budgetary constraint on the scheme. The holiday will continue as proposed regardless of how many successful applications are made. If a large number of additional new businesses are formed as a result of the policy, this would help to increase Exchequer revenues. The expected costs of the scheme were set out in the policy costing document at Budget 2010.

Secondly, on the point on which the noble Lord, Lord Davies, focused his remarks, the Government are committed to increasing the transparency of tax policy-making and of the tax system more generally. To that end, I am happy to repeat the undertaking, which I have mentioned before at different stages of this Bill, made by my honourable friend the Exchequer Secretary in another place to provide to Parliament and the public updates before the end of the calendar year on the operation of the scheme, including information at regional level. As I said in Committee, we envisage a factual report regionally and nationally covering the number of new businesses applying, the number of applications rejected, the number of qualifying employees for whom a holiday has been claimed and the amount claimed.

The only significant difference between the commitment that the Government have made and the amendment that we are debating is that the latter would require,

I am not completely clear about the meaning of these words and how what is suggested would operate. The noble Lord, Lord Davies, did not address the detail. The substantive point is that the Government do not see the need to report annually on the demand to apply the holiday to different areas of the country. We can assess that now and I do not expect the assessment to change. There is, of course, strong demand from excluded regions to enjoy the benefit of a holiday that they would like to have, but we have debated that already and the House has this afternoon formed a view on excluded regions. The position remains as we have debated it, so I am not sure how that part of the amendment would achieve anything.

The Government's objective remains to target resources at those regions most in need. The Government do not expect the objective to change. By tabling this amendment again, the noble Lord has given me the opportunity to restate for the avoidance of doubt that we will come forward with a transparent and comprehensive report on an annual basis. With those reassurances, I hope that the noble Lord will withdraw the amendment.

Lord Davies of Oldham: My Lords, I am once again grateful to the Minister for his identification of the way in which the Government are seeking to meet the clear objectives of transparency and effectiveness with regard to the scheme. Of course, I understand that

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because the scheme has no particular budget there is an aspect of parliamentary control that is clearly not possible in the measurement of the budget. My noble friends support this amendment because we see the value of transparency with regard to the scheme, particularly a scheme that is partial in its impact. Of course I understand that the Government have sustained their position about the limited geographical range of the scheme, but there is bound to be greater demand for transparency in a scheme that does not apply to areas where there are none the less pockets of deprivation, as we sought to identify in the past. Clearly, they would have benefited from the scheme had that been the case.

I accept what the noble Lord has said about the process by which the Government will be transparent on the operation of the scheme. I want to make it clear to him and the Government that we will continue to take a close interest in this scheme. It may be a modest measure, but it is highly significant and, in certain aspects, groundbreaking in the way in which it has been framed. That is why we will hold the Government to account on the extent to which they reflect accurately the operation of the scheme. With that, I beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Clause 11 : Interpretation of Part 2

Amendments 8 and 9 not moved.

Japan and the Middle East


4.31 pm

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, this may be a convenient moment to repeat a Statement made by the Prime Minister in another place a few moments ago. The Statement is as follows:

"Mr Speaker, before turning to discussions at last week's European Council, I am sure the whole House will want to join me in sending our deepest condolences to the Japanese people following the earthquake and tsunami that struck their country over the past few days. We are all deeply shocked and saddened by the devastation that we have seen and by the loss of life, the full scale of which will take many days to comprehend. As yet there are no confirmed British fatalities but we have severe concerns about a number of British nationals. I spoke to our ambassador in Japan who was one of the first to get to the affected region and his team are working around the clock to help British nationals.

Over the weekend, we have had three rapid deployment teams of 20 staff operating in the worst affected areas. They will be augmented by a further team of 17 arriving in Tokyo this afternoon and advancing to the affected area tomorrow. They are working together to help British nationals caught up in the tragedy and to help find out information for the families who are so worried about them. We have set up a helpline for these families. It has taken several thousand calls and we are following up each lead.

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We have, of course, offered humanitarian assistance to the Japanese Government and we stand ready to assist in any way that we can. At their request, a 63-strong UK search and rescue team, which includes medical personnel and two dogs, has already been deployed and arrived in Japan yesterday morning.

The whole House will have been concerned at the worrying situation at the nuclear power station at Fukushima. The Japanese Government have said that the emergency cooling system at three reactors at the plant has failed because of the tsunami. There have been explosions due to the release of hydrogen gas at both the Fukushima 1 and Fukushima 3 reactors. This is clearly a fast moving and rapidly changing picture, and the Japanese Government are doing everything that they can to manage the situation they are facing. We are in close touch with the Japanese authorities and have offered our nuclear expertise to help manage this very serious incident.

The Energy Secretary has asked the chief nuclear inspector, Dr. Mike Weightman, for a thorough report on the implications of the situation in Japan. The UK does not have reactors of the design of those in Fukushima and neither does it plan any; nor are we in a seismically sensitive zone. But if there are lessons to learn, we will learn them.

COBRA has met several times over the weekend and again this morning, and we will keep our response to this tragedy and our support for Japan and the wider Pacific region under close and continuous review. The devastation we are witnessing in Japan is of truly colossal proportions. It has been heart-breaking to listen to people who have had all their relatives, friends and livelihoods simply washed away. Those who have survived will not recognise the place where their homes once stood. We do not yet know the full and dreadful toll, nor can anyone truly understand the impact these events will have. Japan and the Japanese people are a resilient and resourceful nation. We have no doubt that they will recover. We will do all we can to aid and assist those affected and our thoughts are with the Japanese people.

Let me turn to the substance of Friday's special European Council. The reason for having this Council was twofold: first, to make sure that Europe seizes this moment of opportunity to support the Arab people in North Africa and across the Middle East in realising their aspirations for a more open and democratic form of government; and secondly, to address the difficult situation in Libya. The Council addressed both of these issues and I will be frank with the House about where progress has been made and what more needs to be done.

The first is supporting the building blocks of democracy in the Arab world. The aim should be a big, bold and comprehensive offer to those countries in our southern neighbourhood that want to move towards becoming more open societies. There was some real success. The Council declaration talks of a "new partnership" founded on,

and with an approach that gears support to those countries where progress is being made in meeting their citizens' aspirations. This could be so much better

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than the failed approach of the past. But now Europe needs to follow through on its declaration with a real and credible offer to these countries based on the prospects of deeper economic and trade economic integration with the EU, and the free movement of goods, services and investment.

Turning to Libya, it was right for the EU to meet and discuss how we can work together to deal with this crisis. There has been considerable international co-operation on evacuation. We have now got over 600 British nationals out and have assisted over 30 other nationalities. Around 220 British nationals remain in Libya, the overwhelming majority of whom are long-term residents, and many are, of course, dual nationals or the spouses of Libyan nationals. Many of this group have told us they wish to remain in Libya, but a number of other British nationals are now contacting us for the first time. We will stay in contact with these people and continue to assist those who wish to leave.

We have also been at the forefront of the response to the humanitarian situation in Libya and on its borders, but we remain deeply concerned by the humanitarian situation for people inside Libya caught up in the fierce fighting, and the Development Secretary has repeatedly called for the protection of civilians and for unfettered humanitarian access to those in need.

On further isolating the Gaddafi regime, the Council made good progress. Two weeks ago, we put in place a tough UN Security Council resolution and agreed in record time asset freezes, travel bans and an arms embargo, as well as referral to the International Criminal Court. At this Council, all European leaders were united, categorical and crystal clear that Gaddafi must "relinquish power immediately". We widened the restrictive measures against individuals close to Gaddafi and strengthened the financial sanctions on the regime, adding the Libyan central bank and the Libyan Investment Authority to the EU asset-freezing list. In doing so, the UK has increased the total of frozen Libyan assets in this country from £2 billion to £12 billion.

We now need to make clear the next measures in terms of putting further pressure on the regime and planning for what other steps may be necessary. Two weeks ago, I told this House that I believed contingency planning should be done, including plans for a no-fly zone. NATO is now carrying out that work. As we have said before, a no-fly zone would need international support based on three clear conditions: demonstrable need, regional support and a clear legal basis.

In recent days, first the Gulf Co-operation Council and now the Arab League have called for a no-fly zone. In terms of the European Council, of course, the EU is not a military alliance and there is always a hesitation in discussing military options, but the Council expressed its,

and agreed that member states will "examine all necessary options" for protecting the civilian population, provided there is a demonstrable need, a clear legal basis and support from the region. There was some progress, especially compared with where Europe was in advance

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of Friday's Council, but we need to continue to win the argument for a strong response in the international community, Europe included.

Along with others in the United Nations Security Council, the UK is following up urgently the lead given by the Arab League by drafting a resolution, which sets out the next measures that need to be taken, including the option of a no-fly zone. Included in the resolution in our view should be much tougher measures against mercenaries and the states from which they come, as well as others who are attempting to breach the sanctions and assist Gaddafi.

Every day Gaddafi is brutalising his own people. Time is of the essence. There should be no let-up in the pressure we put on this regime. I am clear where British national interest lies. It is in our interests to see the growth of open societies and the building blocks of democracy in north Africa and the Middle East, and when it comes to Libya we should be clear about what is happening. We have seen the uprising of a people against a brutal dictator and it will send a dreadful signal if their legitimate aspirations are crushed, not least to others striving for democracy across the region.

To those who say it is nothing to do with us, I simply respond: do we want a situation where a failed pariah state festers on Europe's southern border, potentially threatening our security, pushing people across the Mediterranean and creating a more dangerous and uncertain world for Britain and for all our allies as well as for the people of Libya? My answer is clear: that is not in Britain's interests. That is why Britain will remain at the forefront of Europe in leading the response to this crisis. I commend this Statement to the House".

4.41 pm

Baroness Royall of Blaisdon: My Lords, I thank the Leader of the House for repeating the Statement by the Prime Minister in the other place. I start by associating myself and these Benches with the remarks in the Statement about the Japanese earthquake and tsunami. The tragedy that has hit Japan and the Japanese people is of an almost unimaginable horror and scale. All of us will have been shocked by the scenes of devastation that we have seen on our screens over the weekend. We fully support our Government in their efforts to help the Government and people of Japan in their hour of need.

This is clearly an anxious time for friends and family of UK nationals and I know that consular staff will be working around the clock to provide all help and assistance. Our thanks must go to the staff of the Foreign and Commonwealth Office who are doing a fine job at this very difficult and demanding time, when they must be focused on Japan, Libya, northern Africa and the wider Middle East. Can the Leader of the House assure us that, while clearly stretched, they have adequate resources?

The Statement mentioned the helpline for families for people who must be desperately worried and we welcome the extraordinary help that that line gives. Does the Leader of the House agree that it would be useful if members of the public whose loved ones are

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found could inform our officials? I well understand that finding someone who was lost must be overwhelming and making a phone call may be far from mind. However, it would ensure that resources could be targeted on finding those who are still lost. That was a lesson that we on these Benches learnt after 9/11. The circumstances are clearly different, but we are talking about lost people who we hope to God are found. I also associate myself with the remarks in the Statement about the work of British search and rescue teams.

On the understandable concern about the nuclear power issues following the earthquake and tsunami, we should clearly see whether there are lessons to be learnt but avoid a rush to judgment. The scale of what has happened in Japan is such that there is a long way to go on many if not all of these issues. I am pleased that the chief nuclear inspector, Dr Mike Weightman, has been asked for a report on the implications of the situation in Japan. Will the Minister confirm that the report will be published when the Government receive it in due course?

On last Friday's meeting of the European Council, I will focus on three issues: the military options available to the international community regarding Libya, the wider response and the need to re-energise the Middle East peace process. First, we welcome the clear and unequivocal statement in the Council declaration that the Libyan regime should relinquish power immediately. As the Statement repeated by the Leader made clear, the situation in Libya is grave and pressing. We said when the Prime Minister first publicly floated the idea two weeks ago that we welcomed the consideration of a no-fly zone. Can the Leader of the House give us a clearer picture of what the Government believe a no-fly zone would involve and whether it is contingent on the US Government participating, given that some parts of the Administration have expressed reservations?

I note the unanimous decision over the weekend of the Arab League in support of a no-fly zone, which was mentioned in the Statement. In view of the decision, does the Leader think that any no-fly zone would best be supported by the active engagement both in planning and in actions by countries that are members of the Arab League? It would be helpful if the Minister could arrange for the communiqué from the meeting of the Arab League to be placed in the Library of the House.

On timing, I note that the Statement repeats the statement made by the Prime Minister last week that the United Kingdom is now working on a new Security Council resolution. Given the urgency of the situation, what is the Government's best judgment about when such a resolution will be tabled? Above all, we on these Benches emphasise to him the importance of matching what is said in public with the diplomatic spade-work needed to win international support for a practical and legal plan. Given the position this morning of the former Foreign Secretary, the right honourable Member for Kensington and Chelsea in the other place, on arming the rebels, what is the Government's position on the legality and wisdom of this?

Secondly, can I ask about the other actions that we can take? I welcome what the Statement said about asset freezes and sanctions. To maximise pressure on

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the regime, have the Government made any formal communication to the International Criminal Court to impress on Libyan leaders and commanders individual accountability for commissioning and carrying out crimes against humanity? If the Government have not done so, I suggest to the Leader that they do. On the humanitarian crisis, is DfID planning to provide additional support to the other multilateral organisations, such as the World Food Programme and UNHCR? On these Benches, we have evidence that young men are being taken away from their homes and that Benghazi men living in Tripoli are specifically being targeted. I am sure that the Leader will also have such information, but if it would be helpful for us to share that information we will certainly do so.

Thirdly, we welcome the reference to the Middle East peace process. Can we reiterate to the Government the central importance of not losing sight of this issue? Last week, both the Prime Minister and the Leader of my party held separate talks with President Abbas during his visit to London. What discussions took place at the European Council on how the EU can help to get the peace process back on track? In particular, what representations have been made to the United States following its recent veto of the UN resolution on settlements?

I hope and think that we are united in a view that this must be a moment when the European Union and the international community show that they are more than a sum of their parts, whether on Libya specifically, north Africa more widely or the Middle East process more generally. We hope that the Prime Minister of our country and other leaders will do all that they can over the coming days and weeks to make that happen.

4.48 pm

Lord Strathclyde: My Lords, I thank the Leader of the Opposition for her warm words. I very much welcome those words of support for the people of Japan, but they come as no surprise to me because one thing that this country is good at-and this Parliament in particular-is showing solidarity when in another part of the world an immense tragedy has befallen people.

I also thank the noble Baroness for her tribute to the FCO. She is right in pointing out that it has a lot on its plate at the moment. The FCO is using its resources effectively and has established crisis centres; it has learnt a lot over many years on how to deal with these emergencies and is able to focus its response not just on Japan but on Libya, preparing for potential crises as they come about. We are living in the most uncertain of uncertain times, and I believe that the FCO continues to do sterling work. In particular, the ambassador in Japan, David Warren, and his team are doing a remarkable job in providing support.

The noble Baroness's suggestion of targeting resources on helping to reunite people who are lost is extremely wise and sensible. I am sure that officials have thought of that; I had not, and I thought that it was extremely useful. Likewise, I welcome the noble Baroness's comments about the UK search and rescue teams. They are an important group of people with immense experience, knowledge and ability in finding people under the

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most difficult circumstances. They have moved quickly; they are on-site and working hard.

The noble Baroness asked me about the publication of the report of Her Majesty's Nuclear Installations Inspectorate. We do not yet know what form the report will take, but when a report is made, clearly, a decision will be taken on whether to publish it. I cannot imagine the circumstances under which it would not be published.

Turning to the situation in the Middle East and Libya in particular, the noble Baroness said that it was a grave and depressing situation; she is completely right in that. We have been very keen to see co-operation across alliances and countries for the no-fly zone concept. We have been much supported in that view by the Arab League. I shall look into why the Arab League's communiqué has not been published; if it is publishable, I shall ensure that she gets a copy and that a copy is placed in the Library of the House.

In the UN, we are working closely with our allies-in particular, France-to draft a resolution that will maximise support among all those whom we need to influence. I cannot give any update as to when the new resolution will be tabled, but I hope that it will be soon. The International Criminal Court is of course an independent body. It is not for the UK Government to make that referral; that has already been done by the United Nations. The United Nations has communicated with the ICC and has asked it to look into that. I am not sure what would be gained by the UK doing that separately, but I will certainly pass that question to officials. The noble Baroness produced some useful intelligence as to what is happening on the ground in Benghazi and Tobruk.

Finally, the noble Baroness rightly asked about progress on the Middle East peace process. As has been said many times at this Dispatch Box-under this Government and the previous one-there is an opportunity to start this work again, to seek to complete it. This weekend, the Council communiqué states at paragraph 17:

"The European Union is conscious of the wider political and economic impact of these events on the wider region and calls for reactivating the Middle East Peace Process".

That was included specifically at the request of the United Kingdom Government. It is very important that we should start that up. There is an opportunity that should not be missed; if it is missed, it will be a failure on all our parts not to have done everything to ensure that it continues.

4.55 pm

Lord Hannay of Chiswick: Perhaps I may press the noble Lord a little on the UN aspect. I know that drafting UN resolutions is quite complicated, but it does not take two weeks, which is what we have been saying is going on in New York. Has the time not now come to put down a resolution on the table? It is only when a resolution is on the table that people are forced to take a position on it. With the Arab League now supporting a no-fly zone, the tactical situation should have changed quite a lot.

Will the Leader confirm that, so far as legitimacy or a legal basis is concerned, this country flew sorties to

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enforce a no-fly zone in Iraq for 12 years without a specific authorisation from the UN? During that time, no one challenged the legality of that, although it was based on a Chapter 6 resolution that had no mandatory force. There is now a Chapter 7 resolution on Libya, which requires Colonel Gaddafi to stop repressing his people. The legitimacy or legality-whichever you like to call it-of acting even without a UN authorisation is therefore rather clear, as was the case also in Kosovo.

Lord Strathclyde: My Lords, the noble Lord, Lord Hannay, with his former experience, brings to the House a knowledge that is shared by few. I am sure that he is right that the sooner a resolution is tabled the better, but it will not be tabled until we, the French and our other allies feel that we have adequate support. I have no further news to give on that situation. I note what the noble Lord said about the legal basis or legitimacy. He made a useful comparison with Iraq and Kosovo. These issues are being actively discussed at the moment.

Lord Anderson of Swansea: My Lords, does the UN arms embargo apply to both sides? The Arab League and the Gulf Cooperation Council have said very welcome words about a no-fly zone. Does that extend to an offer to supply military assets in support of a no-fly zone? The Statement referred to increased political co-operation with the countries of the Maghreb and the southern flank of the Mediterranean. Earlier efforts-for example, the Barcelona process of 1995 and the Union for the Mediterranean of President Sarkozy-have failed for clear political reasons, including the position of Israel, Morocco and Algeria over the Polisario. What indications are there that this effort will be any more successful than the past failed efforts?

Lord Strathclyde: My Lords, we are obviously operating under very different conditions. It is impossible to say at this stage whether what everybody is seeking will be successfully achieved. It is a fast-moving picture in Libya, as it is in the rest of the Middle East. My understanding is that the Arab League, while supporting the no-fly zone, has not made any offer of physical assets.

Lord Hurd of Westwell: The Statement mentioned the freeze on Libyan assets, whose strengthening I welcome, but are the Government happy about the state of affairs as regards Libyan oil revenues? Can my noble friend give us any assurance that oil revenues will not trickle into the pockets of Colonel Gaddafi?

Lord Strathclyde: My Lords, not only have we taken a very firm line from the beginning of this process on freezing the assets of Colonel Gaddafi and his close associates and family, but that has been extended this weekend in the European Council. As a result of this cumulative effort, £12 billion of assets has now been frozen in the United Kingdom. On top of that, as my noble friend will know, we have removed Gaddafi's head-of-state exemptions from UK controls and we have prohibited the export of uncirculated Libyan banknotes from the UK. There are of course other countries that will wish to undermine these sanctions, but we, with our allies-and there is a very

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united view about this-will do everything that we can to make sure that Gaddafi feels the pain of sanctions as quickly as possible.

Lord Morris of Aberavon: My Lords, I welcome the support that Her Majesty's Government are giving to the drafting of a Security Council resolution on the option of a no-fly zone. May I emphasise that in the search for legality a Security Council resolution is the only real, universally accepted basis, difficult as it may sometimes be to get? Any other basis is where there is an agreed international understanding that there is an overwhelming human disaster, such as with the Kurds, the Marsh Arabs or in Kosovo, where I was involved. Will the noble Lord give an indication that such a situation has not yet arrived, brutal as the regime in Libya is? Will he indicate the Government's thinking on that? At the same time, will he perhaps encourage the Americans to join the International Criminal Court, which our Government set up?

Lord Strathclyde: My Lords, I will not be drawn on that final question, but the noble and learned Lord again raises some valuable and useful material about the legal basis, in particular the resolution at the United Nations. We want to get the widest possible support for action-in the EU, within NATO and among our wider allies, as well as in the United Nations. It is difficult to forecast at this stage exactly what kind of support that will be, but it is useful that we should try as hard as possible to get that unified view.

Lord Dholakia: My Lords, serious concern has been expressed about the cooling system in the three nuclear reactors in Japan. When the nuclear inspector, Dr Mike Weightman, produces his report, will it be made available to the public and will full account be taken of it before we in the United Kingdom proceed with our nuclear power stations here? Also, the noble Baroness, Lady Royall, rightly asked about the position of the Obama Government on a no-fly zone. What discussions have taken place and where do the Government stand on this issue?

Lord Strathclyde: As the Statement pointed out, the types of nuclear installation affected in Japan are not ones that we have in Britain, nor are any of them planned. However, it was entirely right to invite the nuclear inspector to give us a report to see what lessons can be learnt. I told the noble Baroness that I did not know what form that report would take. I cannot imagine the circumstances under which it would not be published, but I cannot confirm that at this stage. Apart from anything else, if lessons are to be learnt, the more widely those views are propagated the better. Concerning discussions with the United Nations, those are obviously ongoing within NATO and President Obama has given his full support to NATO looking at the planning of such an operation.

Lord Elystan-Morgan: My Lords, is it not the case that-

Lord Hughes of Woodside: My Lords-

14 Mar 2011 : Column 38

Lord Wallace of Saltaire: There are a lot of people trying to intervene. There is room provided that everyone is brief.

Lord Hughes of Woodside: My Lords, while I welcome the statement from the Arab League and do not in any sense diminish its importance, does the Leader of the House think that there is any real prospect of countries which are part of the Arab League and which have the military capacity taking part in the no-fly zone operation? Does he think that seeking such support would be a help or a hindrance to getting a resolution through the Security Council?

Lord Strathclyde: My Lords, there are members of the Arab League that would have the capability to involve themselves in policing a no-fly zone, but I sense that we are a long way from that at this stage. There is still a diplomatic process to be completed of resolutions in the United Nations, but there is certainly no bar to making the co-operation across nations and alliances as wide and as deep as possible.

Lord Elystan-Morgan: My Lords, is not the technical legal situation fairly straightforward and simple? Under Article 39 of the United Nations charter, where there has been a threat to peace or an act of aggression the Security Council is entitled to take that into account; it appears to have made a ruling on that basis. That triggers Article 42 of the charter, which allows-it is permissive, not mandatory-the Security Council to use any measure, including the use of force in the air, on land and at sea. However, prudence and practicality might well suggest that, for a no-fly zone to succeed, it would be necessary for there to be an elimination of the 20 or more surface-to-air missile sites that lace the coastal belt in Libya. Very great caution should be exercised before coming to such a decision.

Lord Strathclyde: My Lords, I agree that there should be caution. I am less with the noble Lord that these legal matters are clear and simple; so far as I can see they are immensely complicated. That is why we want the widest international support from Europe, the Arab League and beyond, and it is why we are working in the United Nations to draft a resolution with France. Things need to be taken step by step-we are not going to overreach ourselves-and we are working with our partners at the United Nations, in NATO and in the US to look at all the options. It is clear that a no-fly zone needs international support, a clear trigger and a legal basis; no country will go for it alone. The question of the surface-to-air missiles that the noble Lord raises, and of Libya's whole defence resources, will no doubt be taken into account.

Lord Eden of Winton: My Lords, I revert to the horrendous events that have so tragically overtaken Japan. Although it is clearly much too early to form any picture as to what happened at Fukushima's nuclear power plants, is it not remarkable that those buildings, which were so close to the centre of the earthquake, seem to have withstood so successfully the onslaught to which they must have been subjected?

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The second point that I want to make concerns the peace process in the Middle East. Given what has been happening throughout northern Africa and elsewhere, is there not evidence that the youth of those countries are desperate for greater freedom and a more secure economic basis for their existence? Would this not therefore be a wise and helpful time for Israel to show some indication that it understands what is going on inside Gaza and to take some humanitarian steps to assist the people suffering there?

Lord Strathclyde: My Lords, on my noble friend's first point about the nuclear installations, I agree that lessons need to be learnt-I am sure that they will be-in terms of siting and design of nuclear plants and in terms of what went wrong in the earthquake that led to the problems, which I am sure were unforeseen when the plants were originally built. That will come in not only our internal review, but those of the Japanese Government and any other international organisations. On the second point raised by my noble friend, I agree that there is an opportunity for Israel to, in his words, show that it understands what is happening right across the Middle East and to show a determination to seek a long-term peaceful solution.

Lord Campbell-Savours: My Lords, are we learning lessons from the past in the use of no-fly zones? Have Ministers considered the comments of Mr John Nichol, an air navigator in Bosnia and Iraq, who described delays in securing legal authorisation for interception and delays in securing clarity over rules of engagement, with the result that there was a high incidence of failure by opposition aircraft-indeed, thousands of failures by opposition aircraft-to observe no-fly zones? Before we go down this route, can we get absolute clarity for pilots as to what the rules of engagement are and when they can act? Without it, the policy will fail.

Lord Strathclyde: Yes, my Lords, I agree with what the noble Lord just said, including his correct warning about the dangers of delay. I agree with him about the importance for pilots of clarity about the rules of engagement and that the legal basis should be as wide as possible, to cover all those who are flying within the area. That is, of course, a lesson that we have learnt from the past, which I hope is being put into effect, but the first step is to get international agreement so that we can move forward with unity.

Lord Hylton: My Lords-

Lord Kilclooney: My Lords-

Lord Wallace of Saltaire: I think that the noble Lord, Lord Hylton, was trying to get in earlier.

Lord Hylton: My Lords, I welcome the changes that are now under way in the EU neighbourhood plans and in the conditions attaching to them. Does the Leader of the House agree that it is probably unlikely that there will be sufficient agreement for mounting an

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effective military intervention, even for the limited task of protecting the people of Cyrenaica who have established their own freedom? If so, will warning be given in good time to the leaders of the uprising that they will, in effect, not be defended or protected? Will sufficient transport be available for those involved in the insurgency who wish to leave the country? Are plans being made for where these people might wish to go?

Lord Strathclyde: My Lords, that is a very wide question and it is difficult to answer. The noble Lord is right that we are seeking, through support for a no-fly zone, to protect the people of Libya who have been involved in the uprising. There are, of course, other options, such as the idea of a humanitarian corridor to allow people who wish to leave to do so. Nothing that I have seen leads me to believe that we are planning to put troops on the ground in any way. We believe that the best way of protecting these individuals is by supporting a no-fly zone.

Lord Gilbert: My Lords, will the Minister inform the House as to the attitude of Libya's two neighbour states, Tunisia and Egypt, to the intervention of other countries to assist the freedom fighters and protesters inside Libya? In particular, for example, in connection with the no-fly zone, have there been any discussions with the authorities in those two countries as to the availability of airfields, which would not involve our putting infantry on the ground but would be an enormous contribution to the operation of a no-fly zone?

Lord Strathclyde: My Lords, our discussions and negotiations about the possibility of a no-fly zone will include Libya's neighbours but, given the support from the Arab League at the weekend, I am much more optimistic about having the co-operation of those neighbours in playing a greatly supportive role, including the possibility, at least, of providing airfields.

Lord Ahmad of Wimbledon: My Lords, I thank my noble friend the Leader of the House for the Statement that he has made. We have talked previously about the domino effect gripping the Middle East and I wondered whether he would like to make some statement on the situation that we see emerging in Yemen and on the news stories that are reaching us about the Saudi intervention in Bahrain. Have the Government made any representations in that regard?

Lord Strathclyde: My Lords, just as I left my room to come to the Chamber, I saw reported on the television that the Saudi military had been invited by the Bahraini Government to go into Bahrain in order to restore law and order and to protect government buildings. I have no other information to give and certainly no official response from the British Government. However, my noble friend is right to raise what he called the "domino effect". Right across the Middle East we have seen enormous changes taking place, and these will continue. The role of the British Government is to be supportive of groups of people who wish to change their lives and to meet their aspirations and we have called on Governments across that region to allow those people to achieve those aspirations.

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Postal Services Bill

Committee (2nd Day)

5.15 pm

Clause 2 : Report on decision to dispose of shares in a Royal Mail company etc

Amendment 8

Moved by Lord Young of Norwood Green

8: Clause 2, page 2, line 2, leave out paragraphs (a) and (b) and insert-

"( ) the principal objectives intended to be achieved by any disposal,

( ) the extent to which the Secretary of State considers that the disposal will achieve those objectives, and

( ) the expected time-scale for undertaking the disposal."

Lord Young of Norwood Green: My Lords, I shall also speak to Amendment 11. These amendments concern the report that the Secretary of State will be required to lay before Parliament after deciding to dispose of Royal Mail, whether through a trade sale or an IPO share sale. We have already put on record the Opposition's disagreement with the principle of privatising 100 per cent of Royal Mail and that we believe that it should be kept in overall public control. However, in this Committee we are seeking to improve the Bill by casting a critical eye over the detail before us. The Bill might enable Ministers to conduct a sale of Royal Mail, but how they set about that task is important; it can be done well or badly.

We have pointed out some of the dangers that lie before Royal Mail and the country if the Government set about this disposal in the wrong way. So much can go wrong. It could be sold to an owner with short-term horizons who cherry-picks the most valuable parts and breaks up the company, perhaps, heaven forbid, on the road to administration-hence the need for Part 4 of the Bill. The Bill could create a Royal Mail that, against the wishes of Ministers and the current management of the company, decided to break the historic link with the post offices of this country. Either case would be catastrophic for our post office network, and there is nothing in the Bill to prevent them from happening. The company could be sold off cheaply, with a few individuals getting rich at the expense of the country's taxpayers at a time of public austerity, with taxes going up, public services being curbed, wages being frozen, the retirement age receding and jobs being lost. I hope that Ministers are aware of the public anger that would be unleashed if that happened due to a lack of care and attention by Ministers and civil servants.

We know that in the past many privatisations have resulted in the sale price on the day of sale being dwarfed by the trading price on the first day of trading. The track record of trade sales is not much better. I well recall the Select Committee investigations that

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ensued when the Royal Ordnance factories in this country were sold, apparently over cocktails between the Minister and a businessman, for the princely sum of £1. The site of the old Enfield rifles establishment and the associated site on either side of the M25 must have been worth a pretty sum on their own. This sort of sale did not instil confidence that the long-term future of the company and its staff would be foremost in the mind of the new owner.

We want to avoid these disasters, as I am sure do the Ministers, and that is why we are bringing forward amendments that might help to make the process safer and more successful. These amendments therefore seek two simple improvements in the report to Parliament: first, to set out clear objectives for the disposal of Royal Mail, not just the process itself but the sort of Royal Mail that we want to emerge at the end of the sale and a clear timetable for action; and, secondly, clear criteria in deciding whether to undertake the disposal. Ministers have made it clear that they would sell to almost anyone. Well, I hope that they will not and that they will show some discretion. They say that they would not sell at any price but give the impression that they would not even obtain an independent valuation, so they will have no benchmark against which to judge whether any offer is too low to accept.

The wording of the amendments might have a familiar ring, but I hope that they will not send the noble Lord, Lord Hunt, racing off to his doctor complaining of another Groundhog Day moment. He need not worry; these are the self-same provisions which the noble Lords, Lord Hunt and Lord Razzall, sought to insert into the 2009 Bill-this is certainly déjà vu-and that were agreed on Third Reading. They were therefore incorporated into that Bill. Imagine our surprise to see them omitted from this Bill, no doubt through some oversight. We simply thought that we would ask why these measures have been omitted and, given their provenance, I am sure that the noble Baroness will have no trouble in accepting the amendment.

The Government have allocated £1.34 billion of funding for the post office network over the next four years of the comprehensive spending review. Fifty per cent is above the social network payments. That is welcome, but what happens in 2015? What happens if a privatised Royal Mail wants to reduce its use of the post office network? After all, we have already witnessed the awarding of one significant contract-the green giro contract-going not to the Post Office but to Citigroup. What happens if there is compulsory competitive tendering for a substantive contract which the Post Office fails to win?

Once again, there are so many unanswered questions. If the Government do not know what the assets of Royal Mail and the Post Office are before moving on to sell Royal Mail or to hand over the Post Office to mutual ownership, they might well sell the people of this country short. That will increase the risk of asset-stripping and of selling at too low a price. That could change the nature of who owns the company and how they run it. Amendment 12A, in the name of my noble friend Lord Whitty, at least seeks to establish a proper record of Royal Mail's assets in the division between

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Royal Mail and the Post Office. It also draws attention to the vital inter-business agreement, a subject to which we will return later in the Committee's deliberations.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): My Lords, I thank the noble Lord, Lord Young, for his most helpful opening words. Telling me that his intention is to enable those on these Benches to make a better Bill is welcome.

The amendments seek to insert additional reporting requirements into the Bill on the Government's objectives for a disposal and the principal criteria used for deciding to make a disposal. I believe that the Government have already been very clear about why we wish to dispose of shares and the objectives for such a sale. Like the previous Government, we believe that Royal Mail needs an injection of private capital and disciplines. In addition, we also wish to give the employees the opportunity to own shares in the company. We believe that this, along with the other measures in the Bill, is the best way to ensure that the universal postal service is maintained in the United Kingdom.

When making a disposal, we have already stated clear objectives. These are to secure the future of Royal Mail and to ensure that we achieve value for money for the taxpayer. Clause 2 requires the Secretary of State's report to state the type of disposal that would be made. Quite broadly, this is likely to be either through a sale by auction or through a flotation. It also requires that the timescale for undertaking a disposal be included in the report.

The Secretary of State would not, especially for the first sale of shares, lay a report before Parliament that had two lines stating, for example, that there will be a trade sale and that it will take place in 2012. We know that Parliament would expect more than this. Indeed, we believe that on the occasion of the first significant sale of shares an Oral Statement is likely to be appropriate. As arrangements have to be made for an employee share scheme before any shares can be sold, the report would also include information on how and when the employee share scheme would be set up.

On the suggestion that criteria for deciding whether to sell Royal Mail should be included in the report, at one level we have already set out those criteria-that Royal Mail is poorly served by the Government as its sole shareholder and needs urgent access to private capital and disciplines to secure the future of the universal services. I have doubts, however, about the inclusion of detailed criteria for a sale in a report before a sale is made. The previous Government's Postal Services Bill 2009 required information to be provided to Parliament on the criteria for a sale of Royal Mail. However, the report in the 2009 Bill would have been presented to Parliament after an agreement had been entered into to sell shares to a third party. Clause 2 of this Bill requires a report to Parliament before a sale. I hope that noble Lords on all sides of this House will welcome this earlier provision of information to Parliament.

As I have said in response to other amendments that we have debated, it would not make commercial sense for the Government to lay all their cards on the

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table when entering a commercial negotiation. We will have criteria for a sale, but I see no logic in revealing this before a transaction has taken place. Therefore, I ask the noble Lord to withdraw the amendment.

Lord Young of Norwood Green: I cannot say that we are completely satisfied with the noble Baroness's response. Nevertheless, we shall reflect on it between now and Report. In those circumstances, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Amendment 9

Moved by Lord Kennedy of Southwark

9: Clause 2, page 2, line 3, at end insert-

"( ) the means by which the name Royal Mail is to be protected and used by the universal postal service provider."

Lord Kennedy of Southwark: My Lords, I hope that I will get a favourable response from the Minister as my amendment should cause the Government no problems whatever. It has no effect on the thrust of the Bill and its objectives should be welcomed by noble Lords on all sides of the Committee. In the Bill, the Secretary of State is required to lay before Parliament a report on the proposed disposal. Clause 2(3) sets out, on page 2 of the Bill, what the report must state. My amendment would add that the Secretary of State should detail in the report how the name "Royal Mail" is to be protected. Noble Lords might ask why we should do that. The Royal Mail is an institution that can trace its roots back to 1516. Parliament and government should be concerned to protect its name and not to leave that to chance. Royal Mail for me conjures up images of hardworking postmen and postwomen working in all weathers to deliver post to our homes. It is a great brand name.

I raised this issue at Second Reading. I hope that the Minister will not tell me not to worry about this as any new owner would be daft to change the name. However, organisations do daft things all the time. Just because something is right, proper, obvious, reasonable and sensible has never stopped people doing daft things. My amendment would give the Government the power to stop anything daft happening to the name "Royal Mail" and stop it being confined to the dustbin at some point in the future. It would stop another Consignia fiasco happening. No one had any idea what Consignia was. Some people thought that it was a relaunch of a 1980s deodorant called Insignia, not the universal service provider.

The Government have a real opportunity today to stand up for the brand name Royal Mail and protect it for the future. I hope that they will do so.

5.30 pm

Baroness Wilcox: My Lords, I fully appreciate the sentiment behind the amendment. The name "Royal Mail" has been synonymous with the delivery of the postal service in the United Kingdom for hundreds of years. In fact, the noble Lord, Lord Kennedy, has told us the date on which it was established, and I can

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understand why he seeks reassurance that the name will be preserved. However, I have to say that the choice of the name of the company delivering the universal service provider should be a commercial decision for the company and its shareholders. I do not believe, however, that future owners of the company will rush to change its name, because this would not make commercial sense.

I say that because "Royal Mail" is, as the noble Lord said, one of the most recognised brands in the UK, perhaps in the world. There is no doubt that the name is a commercial asset to the company-an asset that potential investors will value; and so will we. It is the Government's firm belief that any future owners of Royal Mail would recognise the power of the brand, and it would be folly on their part to seek to dismantle such a brand in any way.

Your Lordships will remember the previous attempt to change the name. Once again I repeat the noble Lord's point; "Consignia" was not a success. It is not a name that you hear mentioned at Royal Mail headquarters these days. As my noble friend Lady Wheatcroft said at Second Reading, the BBC summed up the name change as,

It would take a brave, or perhaps foolish, owner to seek to change the name again.

Noble Lords will also wish to note that while there might be support for ensuring that Royal Mail continues to be associated with the universal postal service, there are those in the other place who are opposed to a privatised company using the name or the other royal associations currently used by the company. We do not agree and we believe that Royal Mail, as the universal service provider, should continue to be able to use the name and the royal association, provided that suitable safeguards are put in place to ensure that the associations are used respectfully and appropriately at all times. Discussions about these safeguards are ongoing.

I am therefore afraid that, although I greatly sympathise with the noble Lord's request, I ask him to withdraw the amendment.

Lord Borrie: I would have spoken immediately after my noble friend Lord Kennedy, except that I imagined-wrongly-that there was no answer to his point and that the noble Baroness would give way. It is unsatisfactory that when a sale is to be made, there is no firm or unfirm indication in the Bill that the name will be kept. I suppose that the name "Royal Mail" is protected in one sense, because it is a trademark that no one else can use. Perhaps I was wrong to think that the noble Baroness would adhere to that and say, given the radical change in terms of privatisation, that the name should be protected in more than one sense, not only as a trademark but as a name that cannot readily be altered. We all remember the absurdity of "Consignia", of which my noble friend Lord Kennedy reminded us. Goodness knows what name someone might think up in the future. People, even heads of business, do silly things in relation to their names. Some of us remember other names that have been changed and had to be changed back again because they turned out to be a complete failure. I ask the Minister to change her mind and at least agree to think further before Report.

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Lord Swinfen: Does the noble Lord, Lord Borrie, think it would be appropriate for the name "Royal Mail" to be owned by a foreign company that had bought the postal services-indeed, a foreign company from a republic?

Baroness Wilcox: My Lords, I say to the noble Lord, Lord Borrie, that we intend to put safeguards in place to ensure that the royal associations are used by Royal Mail respectfully and appropriately at all times. We have not yet finalised how these will be structured, but they could, for example, be set out in a legally binding agreement between the company and the Secretary of State. When drawing up such an agreement, we would seek to ensure that the use of the name "Royal Mail" was linked to the provision by the company of the universal postal service, and this would prevent it being used in other circumstances.

I wondered whether someone was going to ask whether there is not the potential for a foreign owner to misuse the royal associations. That was almost the thrust of the question. We appreciate that there might be concerns about the potential for misuse of these associations, and we propose to put safeguards in place to ensure that they are used respectfully at all times. However, this is a commercial transaction and we wish to stop at this point. I am sure that the noble Lord, Lord Borrie, who knows what brand names are all about from his time as director-general at the Office of Fair Trading, will know all the protections that are encompassed around that.

Lord Kennedy of Southwark: I thank the Minister for her response, which I am a little disappointed by but hope she will reflect on. I reserve the right to bring this matter back on Report. I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendment 10

Moved by Lord Clarke of Hampstead

10: Clause 2, page 2, line 3, at end insert-

"( ) how the Secretary of State will ensure that the provision of universal postal services will be maintained following the disposal;

( ) how much of the Royal Mail company's modernisation budget-

( ) has been spent, and

( ) remains unspent,

at the proposed time of transfer; and

( ) what progress has been made towards existing modernisation goals by the proposed time of transfer."

Lord Clarke of Hampstead: My Lords, I first declare the interest that I declared many times when my party was trying to push through the disposal of Royal Mail. I am a former postman, a former trade union official, a former trustee of the Post Office pension fund, and I have had a few jobs in the Post Office. I am sure that that declaration will suffice as we consider the Bill.

My amendment seeks to add new paragraphs to the part of the Bill that deals with the situation after the Secretary of State has made a decision on the disposal

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of shares in Royal Mail, and then makes a report to Parliament. My purpose is to require that any report that the Secretary of State may make on the disposal of shares includes the requirements listed in the amendment. It simply asks that in his report the Secretary of State recognises the need for clarity before Parliament is asked to agree to any of his proposals.

The first new paragraph calls for what should be a vital element in any proposal-that there should be a clear understanding of how the Secretary of State proposes to enshrine universal service provision in respect of the new legislation. We have just heard a little about that. The second new paragraph outlines that the necessary information be provided regarding the expenditure of Royal Mail's modernisation budget and how much of the budget remains unspent at the time of the disposal of shares. Noble Lords who were here a couple of years ago will recall the repeated requests that I and others made for information on what was meant by "modernisation", what the programme was, and what machines were being talked about. Unfortunately, the Secretary of State at that time did not answer any of those questions. The third new paragraph instructs the Secretary of State to report on how much progress has been made towards the existing goals at the time of the transfer.

Many people would agree that Royal Mail is part of our national infrastructure and cannot be looked at as just another company to be sold off on the Stock Exchange or otherwise. Such a view is shared by me. As the Bill progresses, I shall try very hard not to become too emotional. It hurts me deeply that we are contemplating the destruction of Royal Mail, and it saddens me to the point where I feel that I am witnessing an act of legislative vandalism. When the Minister spoke last week on the first day of the Committee she said:

"I have of course listened to what has been said, and it will of course go on the record. I know that there are Members of your Lordships' House who would rather that Royal Mail was not sold at all, and I understand people who have been associated with Royal Mail for many years finding all discussions of this sort very difficult, especially having gone through all this a year ago with the previous Government-a Government of their own. Yet that Government, too, could not successfully find a way out".-[Official Report, 8/3/11; col. 1549.]

I do not know whether the Minister had me in mind when she said that but she can certainly count me in as one of those who are very saddened at what is going on. I would rather Royal Mail was never sold off, and the alternatives should have been examined before rushing into what is happening today.

Before noble Lords opposite remind the House of the role played by the previous Government, perhaps I may say that I and a very few other noble Lords tried to point out the error of their ways at the time. I suppose that a redeeming feature of this Bill is that it is not a direct contradiction of a government manifesto commitment, as was the previous Bill under the Labour Government. It was like a dagger in my heart that the party for which I had worked for so many years proposed to sell off this valuable asset. I am sorry that that Bill ever saw the light of day, especially when my party had promised the British

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public that they would not make such a sale. I shall say no more on that at this stage.

I believe that this Bill is scant on information regarding the sale of Royal Mail. As the Secretary of State has only to report on his decision, Parliament would merely be noting the sale and would not be able to ensure that it was value for money or that it was in the appropriate format. Later amendments will deal with the need for a proper and thorough valuation of Royal Mail. There is a good argument for ensuring a stronger form of accountability to Parliament by the Secretary of State regarding the terms of the sale. This could be through a variety of methods, including further legislation, the super-affirmative resolution procedure, the affirmative resolution procedure and so on.

The Bill states that the Secretary of State needs only to lay before Parliament a report on the proposed disposal, but unfortunately the requirement to report comes into force only after a decision is made. This seems to close off the opportunity for Parliament to influence how the sale takes place. I hope that, when the Minister replies to this debate, the House will be told exactly what form the report will take. We should consider what the Minister for Postal Services said on the form of that report when he was challenged in the Public Bill Committee in another place. He said that,

The clause states only that a report will be laid and not how it will be laid. At that time, the Minister was asked whether he intended just to pop it in the Vote Office. He would not be drawn but he did state that,

A Command Paper, as this House well knows, can cover a multitude of sins. It is a document issued by the British Government and presented to Parliament. It encompasses a wide range of forms, including White Papers, Green Papers, treaties and reports from royal commissions and various government bodies. Therefore, the House is no further forward in understanding the Government's intention to allow parliamentarians to arrive at an informed decision on the future of Royal Mail.

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