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House of Lords

Thursday, 5 June 2014.

11 am

Prayers—read by the Lord Bishop of Lichfield.

Serious Crime Bill [HL]

First Reading

11.06 am

A Bill to amend the Proceeds of Crime Act 2002, the Computer Misuse Act 1990, Part 4 of the Policing and Crime Act 2009, Section 1 of the Children and Young Persons Act 1933, the Female Genital Mutilation Act 2003, the Prohibition of Female Genital Mutilation (Scotland) Act 2005 and the Terrorism Act 2006; to make provision about involvement in organised crime groups and about serious crime prevention orders; to make provision for the seizure and forfeiture of drug-cutting agents; to make it an offence to possess an item that contains advice or guidance about committing sexual offences against children; to make provision approving for the purposes of Section 8 of the European Union Act 2011 certain draft decisions under Article 352 of the Treaty on the Functioning of the European Union relating to serious crime; and for connected purposes.

The Bill was introduced by Lord Taylor of Holbeach, read a first time and ordered to be printed.

Infrastructure Bill [HL]

First Reading

11.08 am

A Bill to make provision for strategic highways companies and the funding of transport services by land; to make provision for the control of invasive non-native species; to make provision about nationally significant infrastructure projects; to make provision about town and country planning; to make provision about the Homes and Communities Agency and mayoral development corporations; to make provision about the Greater London Authority so far as it exercises functions for the purposes of housing and regeneration; to make provision about Her Majesty’s Land Registry and local land charges; to make provision for giving members of communities the right to buy stakes in local renewable electricity generation facilities; and for connected purposes.

The Bill was introduced by Baroness Kramer, read a first time and ordered to be printed.

Armed Forces (Service Complaints and Financial Assistance) Bill [HL]

First Reading

11.09 am

A Bill to make provision about service complaints; about financial assistance for the Armed Forces community; and for connected purposes.

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The Bill was introduced by Baroness Anelay of St Johns (on behalf of Lord Astor of Hever), read a first time and ordered to be printed.

Medical Innovation Bill [HL]

First Reading

11.09 am

A Bill to make provision about innovation in medical treatment.

The Bill was introduced by Lord Saatchi, read a first time and ordered to be printed.

Mutuals’ Redeemable and Deferred Shares Bill [HL]

First Reading

11.10 am

A Bill to enable the law relating to societies registered under the Industrial and Providence Societies Act 1965 or the Friendly Societies Act 1992 and certain mutual insurers to be amended to permit and facilitate the use of new and additional classes of redeemable share capital and deferred share capital; to provide consequential rights to members of such societies or insurers; and to restrict the voting rights of certain members who hold such shares.

The Bill was introduced by Lord Naseby, read a first time and ordered to be printed.

Assisted Dying Bill [HL]

First Reading

11.10 am

A Bill to enable competent adults who are terminally ill to be provided at their request with specified assistance to end their own life; and for connected purposes.

The Bill was introduced by Lord Falconer of Thoroton, read a first time and ordered to be printed.

House of Lords (Expulsion and Suspension) Bill [HL]

First Reading

11.11 am

A Bill to introduce a Bill to make provision empowering the House of Lords to expel or suspend Members.

The Bill was introduced by Baroness Hayman, read a first time and ordered to be printed.

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Committee of Selection

Membership Motion

11.12 am

Moved by The Chairman of Committees

That in accordance with Standing Order 63 a Committee of Selection be appointed to select and propose to the House the names of the members to form each select committee of the House (except the Committee of Selection itself and any committee otherwise provided for by statute or by order of the House) or any other body not being a select committee referred to it by the Chairman of Committees, and the panel of Deputy Chairmen of Committees; and that the following members together with the Chairman of Committees be appointed to the Committee:

B Anelay of St Johns, L Bassam of Brighton, L Faulkner of Worcester, L Hill of Oareford, L Laming, L Moser, L Newby, B Royall of Blaisdon, L Wakeham, L Wallace of Tankerness.

Motion agreed.

Queen’s Speech

Debate (2nd Day)

11.12 am

Moved on Wednesday 4 June byLord Fowler

That an humble Address be presented to Her Majesty as follows:

“Most Gracious Sovereign—We, Your Majesty’s most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament”.

The Commercial Secretary to the Treasury (Lord Deighton) (Con): My Lords, it is a privilege to open this debate following Her Majesty’s gracious Speech. The measures set out yesterday demonstrate this Government’s commitment to securing the UK’s economic success by creating a stronger, more competitive economy for the longer term. Through the British people’s hard work and the effective policies of this Government, we find ourselves in a far superior economic position than this time last year, when some were expressing concern regarding the prospects for recovery.

No major advanced economy grew faster than the UK over the past year or in the first quarter of this year. Employment is at record levels. Last month’s inflation of 1.8% was below target. We are seeing competition in the supermarkets, which is pushing food prices down. Wages are rising at a similar pace to prices and real take-home pay is increasing. We are completing major infrastructure projects: for example, a dramatically improved King’s Cross station, smart motorways to relieve congestion across the country and, yesterday, a new Queen’s Terminal at Heathrow airport to enhance our international connectivity.

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The fiscal challenge facing this Government in 2010 required urgent action. This meant not just committing to reducing the deficit, which is on course to halve this year from that 2010 level, but doing it in a way that gave markets confidence and helped keep interest rates low. The Government’s decision to deliver the majority of consolidation through reduced spending was the only credible option for our country. As a result, the independent Office for Budget Responsibility now predicts that in 2018-19 the UK will have a surplus for the first time in 18 years.

By almost all measures, the performance of the UK employment market is excellent and improving. One way, however, of getting more people into work is by addressing the high cost of childcare. This issue particularly affects women. Even though female participation in the workforce is at an all time high, if we could equalise their labour force participation to that of men the UK could increase growth by 0.5% per year. We are therefore introducing legislation that will further support working families with the cost of childcare. This is beyond the existing £5 billion invested every year in early education and childcare. The Childcare Payments Bill will implement a new tax-free childcare scheme providing up to 1.9 million families with 20% support towards their childcare costs of up to £10,000 per year per child—£2,000 credit per child. This will be available from autumn 2015. This Bill replaces employer-supported childcare with a new, fairer scheme that will be easy to access online, open to working parents irrespective of who they work for, and available, for the first time, to the self-employed.

The quality of a nation’s infrastructure is a key driver of its economic growth. That is why this Government have put investment in transport, energy, telecommunications, flood defences, water, waste and intellectual capital at the heart of our economic strategy. We are making significant progress. Over 2,000 infrastructure projects and improvements have been completed over the past four years. In this financial year alone, over 200 new projects are due to start and another 200 are due to complete, which will directly support over 150,000 jobs in the construction industry. These are part of the £36 billion of investment planned for 2014-15.

These projects form part of our national infrastructure plan, which it is my pleasure to oversee at the Treasury. That plan not only sets out the Government’s decisions about what infrastructure our country needs over the next decade and beyond, it also sets out our strategy for how it will be delivered. It lays out the action that we will take on financing, which builds on both the innovative long-term public funding settlements that we have already announced—£100 billion of capital investment in projects over the next Parliament—and the steps that we have already taken to support private-sector investment, for example through the UK infrastructure guarantee scheme. A significant portion of the UK’s infrastructure investment takes place through corporate financing by our utility companies in the capital markets. This is an extremely efficient way of getting things done because of the confidence that investors, both domestic and international, have in the integrity and independence of our regulation of these sectors. We should hold on to that independence dearly.

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The national infrastructure plan also lays out the action that we will take on strengthening planning, where a number of improvements have helped to take planning approvals to a 13-year high. The new specialist planning court for infrastructure, which opened in April, and the additional measures published in the Infrastructure Bill that we have introduced will further streamline the regime for major infrastructure and speed up the discharge of planning conditions. These reforms to planning will further support our efforts to generate a faster, much needed, increase in the housing supply.

In last year’s spending round, the Government committed to the largest programme of roads investment since the 1970s. Between 2010 and 2021, the Government will invest more than £24 billion in our roads. By committing this significant amount of long-term capital and by reforming the Highways Agency so that this capital is deployed efficiently, we intend to address the stop-start cycle of investment previously seen in roads and to ensure that our road network can continue to support the economy and its growth.

On rail, legislation for the first phase of a new north-south high-speed railway is progressing through this Parliament. It is 120 years since we built a mainline railway north of London and it is absolutely imperative that we seize the opportunities that this presents. The new railway complements this Government’s transformational investment in our existing railways. Between 2014 and 2019, Network Rail will spend over £35 billion, continuing a substantial programme of expansion and renewal. We are building the Northern Hub, a programme of rail upgrades across the north of England that will allow up to 700 more trains to run each day and provide space for about 40 million extra passengers a year, and we are delivering an unprecedented programme of electrification across the country.

Passengers on the great western and the east coast main lines will benefit from £6 billion of investment in fast new electric trains, and of course we are transforming rail capacity in the south-east by completing—on time and on budget—Crossrail and Thameslink. That includes rebuilding London Bridge Station, which is being done quite dramatically by keeping it operating at the same time for the benefit of customers. HS2 will connect eight of Britain’s 10 largest cities and more than double capacity on some of our busiest routes. It will directly employ nearly 25,000 people in construction, and the regeneration around stations will support up to 100,000 further jobs. I chaired a task force that examined how to maximise the benefits from this project, and I was persuaded that it can be truly transformational, particularly for our cities in the Midlands and the north, if we approach it strategically and collaboratively so that we capture its full economic potential. I am now working across government to make sure that we do just that.

I was delighted by the overwhelming cross-party support shown for the HS2 phase one Bill during the recent Second Reading debate in the other place, but there remains a long way to go until this legislation receives Royal Assent. I urge Members of both Houses to make this happen quickly, because I believe it is

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crucial that the scheme’s huge benefits are felt by people and by businesses up and down the country as soon as possible.

Finally on infrastructure, through the reform of the electricity market we have established a framework that will drive investment in energy infrastructure, deliver renewable energy and make sure that we have secure supplies for the future. We have already seen more than £45 billion of investment in electricity infrastructure since 2010. We have agreed the terms for a new nuclear power station at Hinkley Point, the first in a generation. We have set aside more than £1 billion to drive innovation in carbon capture and storage, and that is one of the best offers to develop this technology in the world. We have also increased the share of our electricity that comes from renewables to almost 15% in 2013, up from under 6% at the start of 2010.

It is also important that we get the most from our existing oil and gas reserves in the North Sea. Three months ago the Government accepted Sir Ian Wood’s recommendations on this subject, and we are introducing measures in the Infrastructure Bill to put the principle of maximising economic recovery of petroleum in the UK into statute. Shale gas has significant potential for boosting economic growth and competitiveness, and the Government are creating the most competitive tax regime in Europe to encourage its development, but more still needs to be done. The Government want to put in place the right regulatory framework to support a shale gas industry while ensuring that we protect the environment.

Moving on to local government, we believe that the local enterprise partnerships are best placed to identify local priorities for growth and drive forward local economic development. The Government are currently implementing the recommendations set out by my noble friend Lord Heseltine in his review of UK growth entitled No Stone Unturned in Pursuit of Growth. So far, we have agreed 24 city deals across the country, which have successfully devolved resources to local areas. We are going further. The Government are currently negotiating a growth deal with each of the 39 LEPs that will see them receive a share of the Local Growth Fund, which will total £2 billion in 2015-16 and will be at least £2 billion in each year of the next Parliament. These growth deals demonstrate the Government’s commitment to empowering local areas to take control of the growth agenda in their local economy.

I would like to close my remarks by reviewing how we are making sure that our policies impact people in the fairest way possible. Tax avoidance not only deprives the UK of the money it needs to fund public services, it also undermines public and business confidence in the fairness of our tax system. The National Insurance Contributions Bill includes measures to strengthen the robust stance that this Government are taking in tackling all forms of avoidance. Our approach here is simple: in return for offering a competitive tax system that promotes economic growth, we expect everyone to pay their taxes, and the anti-avoidance measures included in the Bill will reinforce this principle. In addition to tackling those who do not pay their fair share, the Bill will also simplify the collection of national

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insurance from 5 million self-employed individuals by implementing the self-assessment scheme recommended by the Office of Tax Simplification.

The other main thrust of our fairness policies is quite simply to reduce the tax burden on the millions of working people in the country. In this respect, noble Lords should note that the personal allowance will increase again to £10,500 from April next year, and fuel duty has been frozen until the end of this Parliament. We have helped local authorities to freeze council tax in every year of this Parliament. We are reducing the impact of government policies on energy bills by £50 for average households—a way in which we can sensibly control energy bills. We have also made it easier to save and easier for people to access their pensions. But the best way of getting money into people’s pockets, and the best way of helping them to raise their living standards, is from the jobs and opportunities that are created and sustained by a dynamic, growing economy. I believe that the measures set out by Her Majesty yesterday will achieve this.

11.25 am

Lord Adonis (Lab): My Lords, it is a great pleasure to follow the noble Lord, Lord Deighton, and to pay tribute to him for his sterling work over the past year in promoting HS2. Six weeks ago, the House of Commons carried the Second Reading of the HS2 Bill by the colossal margin of 452 votes to 41. HS2 is vital to transforming transport capacity and connectivity between London and the major cities of the Midlands and the north. The Bill will proceed in this Session with our support.

However, if HS2 is the “Flying Scotsman” of the new Session, the rest of the Queen’s Speech barely merits “Thomas the Tank Engine”. Starting with the economy, the gracious Speech tells us:

“An updated Charter for Budget Responsibility will … ensure that … governments spend taxpayers’ money responsibly”.

I assume that this means that the Chancellor will be updating his fiscal rules of 2010 and proclaiming them as a charter. However, since the Chancellor is not on target to meet either of his 2010 rules by 2015 as intended, because of the weakness of the economy for most of the four years since he became Chancellor, it is hard to see why the public should have more confidence in any new set of rules just because they are dressed up as a charter.

As for the proposed legislation to cut bureaucracy and promote access to finance for small businesses, we welcome any measures to deal with late payments in particular—although the public sector is itself often the culprit. However, the Government have spent the past four years announcing one initiative after another on access to finance, mostly to little effect: remember Project Merlin? The House will not be holding its breath. The plain fact is that, as the Bank of England’s latest Trends in Lending report said in April, lending to all businesses is still falling, with small and medium-sized enterprises hit worst.

The Queen’s Speech also promises yet another Bill to reform the planning regime and to promote infrastructure, even as the ink is barely dry on the

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previous Growth and Infrastructure Act—intended, yes, to reform the planning regime and to promote infrastructure. “Déjà vu all over again”, as someone once said.

The House will therefore want to focus not so much on the measures in the Queen’s Speech as on the economic fundamentals. Thankfully, the economy is at last reviving. We all welcome the recent improvements in employment and output, and the fact that inflationary pressure remains low. However, before we hear too much about an economic plan that is working, the best gloss that can be put on Britain’s relative economic performance is that, at last, we are in catch-up mode. Unlike the US, Germany, France, Canada and Japan, the UK’s GDP is still below its 2008 peak—out of the G7, only Italy has a worse record. As the Office for National Statistics says in its latest analysis,

“UK real GDP fell by 7.2% … and the subsequent economic recovery has been one of the slowest in the G7 … and in UK economic history”.

Nor has economic growth been accompanied by any pick-up in productivity, the key determinant of long-term prosperity. Productivity growth in the UK since 2007 has been lower than in all other member countries of the G7, including Italy. This underlying productivity weakness partly explains why average real incomes have been languishing for so long and why wage growth has been so weak.

Exports remain especially weak. The current account deficit stands at 5.5% of GDP, the highest level since records began in 1955. Over the past two years, the UK’s exports have been flat, and the Government are not remotely on track to meet their target of doubling exports to £1 trillion by 2020.

As for employment—made much of by the noble Lord—the top-line employment figures tell only part of the story. For instance, 1.4 million people are working part-time because they are unable to find full-time employment. As the Bank of England notes, this very high number of people reporting that they would like to work longer hours points to considerable underemployment. The rise in claimed self-employment, which accounts for more than half the increase in total employment reported since last summer, also suggests that millions simply cannot find permanent jobs and are looking for other ways to make ends meet.

Youth unemployment remains especially high. At 19%, the UK’s youth unemployment rate is higher than that of Italy, Denmark, France, the Netherlands, Austria and Germany. We are failing the next generation —a lost generation of young people with poor skills and no work, and little hope for the future.

The truth is that Britain is growing but the foundations are weak, the young are especially disadvantaged and a good deal of today’s growth is being driven by consumer debt and a surge in house prices. This partly also explains why growth is so regionally imbalanced, concentrated on London and the south, while the Midlands and the north do less well. Tellingly, 21 of the 25 worst performing retail centres in the country are in the north, the Midlands and Wales, while 22 of the 25 best performing are south of the Watford Gap.

Household consumption and private housing investment, fuelled by the housing price surge in London and the south-east, represented fully 60% of GDP

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growth last year, while net trade and business investment, essential for driving innovation and high-value jobs, remain worryingly low. A critical issue is the failure to build new homes on anything like the scale that the country needs. The rate of housebuilding is lower than at any time since the 1920s. Barely half of the 200,000 new homes a year that are required are being built nationally, and less than a third of the 60,000 a year needed in London.

Where are the policies to deal with these fundamental weaknesses, to improve youth skills, to transform vocational education, to accelerate investment and to dramatically improve the rate of housebuilding? To tackle youth unemployment, we need more apprenticeships and more work opportunities for young people, yet the number of apprenticeships for under-19s is still below its 2010 level—a figure disguised by the Government lumping all apprenticeship numbers into one total, when most of the growth under this headline number is for those already in employment in their mid or late 20s. Even in the public sector, apprenticeship numbers are pitiful and too little is changing too slowly. The Civil Service used to have no Whitehall-wide apprenticeship scheme whatever. Now it has just started but for a mere 100 apprentices when there should be thousands.

The Government’s Youth Contract, billed by the Deputy Prime Minister as the big answer to youth unemployment when it was launched two and a half years ago, has massively underachieved. The policy was for 160,000 wage incentives for employers taking on long-term unemployed young people. There were also to be 250,000 unpaid work experience places. Two and a half years later, a mere 4,000 young people have been placed with an employer for six months with full government support; that is just 2.5% of the way to 160,000. Furthermore, a recent employers’ survey revealed that 81% of the jobs advertised under the Youth Contract would have been offered anyway. As for the 250,000 work experience placements, fewer than half have in fact been created.

It is a similarly worrying story on housebuilding. Why is the rate of housebuilding so low? It is because of a serious construction skills shortage, private sector land-banking and the unwillingness or sheer inability of the public sector in its various guises, from local government to the MoD and the NHS, to get building on its own land. There have also been some nimby councils but others want to do more but do not have the powers. The Government have done far too little to tackle these problems. For example, three years ago the Prime Minister told us that he wanted to see new garden cities. So far only one has been announced, in Ebbsfleet, which already had planning permission for 10,000 homes.

To drive improvements in skills, housing and infrastructure, the Government should be following the advice of the noble Lord, Lord Heseltine, and empowering England’s cities and localities by radically devolving budgets and powers to local authorities and to local enterprise partnerships, overcoming what Vince Cable called the Maoist abolition of the regional development agencies in 2010. Instead, only a fraction of the Heseltine devolution has taken place, mostly

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dependent on complex and protracted individual city deal negotiations, which is far from the rocket boost required.

It is a similar story of half measures or no measures in respect of energy and infrastructure. The average dual gas and electricity bill is now at a record £1,353, up from £819 in 2009. Over the four years to October 2013, gas prices increased by 21% and electricity prices by 25%. The Office for National Statistics estimates that the share of household income going on essentials has risen by 10% since 2003, which is a huge burden on family budgets. The lack of an effective energy market is part of the explanation. That is not just our contention: since Ed Miliband put this issue up in lights, it has become the Government’s and the regulator’s contention too.

In February, Ed Davey asked the big six energy companies to review their pricing. He also asked Ofgem to think radically and even consider breaking up the big six if they had been overcharging. In March, Ofgem reported back that it found evidence of both collusion and overcharging, evidence of “possible tacit coordination” between energy companies that includes a,

“strong alignment of pricing announcements, in both timing and extent”,

and evidence that the big six have seen increasing profits that do not appear to reflect increasing efficiency, a possible sign of lack of competition. A Competition and Markets Authority investigation is now under way, but nothing is being done in this Queen’s Speech to freeze or reduce energy prices while that happens and we will not get any action on competition until after the election. As for energy infrastructure and new supply, according to a recent survey by the CBI and KPMG, two-thirds of British companies fear that UK infrastructure will deteriorate over the next five years, and their concerns are most critical on energy.

Legislation on fracking is proposed in the Queen’s Speech which, the Government say, would put shale gas production in line with the coal industry, water and sewerage, all of which have access to underground land. We welcome that in principle, provided that communities are reassured about impacts on the environment, including contamination of the water table, but the critical issue is that a fifth of the UK’s power-generating capacity will close over the next decade, but plans for delivering new gas and nuclear power stations are well behind the curve. Ministers talk about a dozen new nuclear power plants, but only two are as yet proceeding. As for gas, because of a lack of clarity and confidence in the Government’s capacity mechanism for encouraging new supply, we face a situation where existing gas stations may be mothballed but there is little appetite for new plants. On renewables, there appear to be two separate Governments: Ed Davey’s DECC is in favour while Eric Pickles’s DCLG repeatedly turns down applications for extra capacity.

The story on housing and energy applies to transport, too. Although a few welcome projects, such as Crossrail, Thameslink and HS2, are proceeding—mostly, I should note, inherited from the previous Government—there are too many plans without delivery, the biggest plan of all being the constantly relaunched national

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infrastructure plan, which is a catalogue of everything on the infrastructure drawing board, only a fraction of which is actually being taken forward

In one vital area of economic importance, extra airport capacity in the south-east of England, there is not even a plan, just a commission, which is not due to report for another year, because for the entirety of this Parliament, the Government have not even been able to form a view, let alone to take a decision. It is the same with the new lower Thames crossing—vital infrastructure to relieve the M25 Dartford crossing, the most congested short stretch of road on the entire trunk network. The previous Government published three options for the new crossing five years ago. Since then, the coalition Government have merely reduced the three options to two so there still is no plan, let alone a decision. Yet a new crossing would be entirely paid for by the private sector through tolls.

The Government’s non-delivery is summed up by the extraordinary saga of the A14. The upgrade of the A14—a vital growth corridor from the east coast ports to the Midlands—was shovel-ready in 2010. One of the first acts of the coalition Government was to cancel it, along with a string of other major transport schemes. Two years later, in 2012, Ministers tried to resuscitate the A14 as a toll road with magic money. That scheme collapsed and last year, finally, the Government said that the A14 would go ahead on its original plan. So a vital major trunk scheme, which might have been finished by now, is not even remotely close to starting. A very large number of the schemes that the Minister mentioned in his remarks from the road plan of last year are simply the resuscitation of schemes that were cancelled in 2010.

As a country, we face huge challenges. At last there is growth but far more needs to be done to tackle youth unemployment and underemployment, and to construct the homes, infrastructure and energy and transport systems that Britain needs to thrive. Where the legislation in the Queen’s Speech addresses these problems, we will give it our support but the imperative is for a bold and ambitious Government—and for that, the general election cannot come soon enough.

11.41 am

Lord Razzall (LD): My Lords, I think it is common ground on all sides of your Lordships’ House that this was a gracious Speech that was very short, with only 11 Bills promised to add to the three or four being carried over from the previous Session. I listened with interest to the noble Lord, Lord Adonis, but did not quite follow his analogy of this being a Thomas the Tank Engine speech. I was sorry that he did not use the attack used by a number of his friends from another place, which I much preferred. They referred to it as being a zombie speech from a zombie Government. Of course, the people who have put that into the mouths of their spokesmen do not really understand what zombies are: although zombies may well be the living dead, they are also immortal.

I am surprised that the Labour Party has chosen to attack this speech for being very short because the only shorter Queen’s Speech in living memory was in the run-up to the 2010 election. There were even fewer

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Bills promised by Labour at that stage but of course they also had their problems with the coalition between the Blairites and the Brownites. I welcome a short gracious Speech because, to me, good government is not just about legislation. We can all remember the 21 or so law and order Bills that the Labour Party brought in during the 13 years when it was in power but do we think that any one of those had any effect on the crime statistics? Indeed, I have long come to the conclusion that the purpose of a detailed legislative programme is to keep idle hands busy in the House of Commons.

For my part, rather like the noble Lord, Lord Adonis, I propose not to concentrate on the Bills set out in the gracious Speech but to take a look at the current state of the British economy and perhaps to describe what I see as some of the pitfalls ahead. Notwithstanding the noble Lord’s reservations, there can be no doubt that the UK economy is on the mend. Output is growing at its fastest rate since before the financial crash, unemployment is falling as new jobs are created and inflation is back below the Bank of England target. However, for politicians, like most people in your Lordships’ House, the issues are both political and economic.

First, on the political, for the two coalition parties the challenge is very clear. As a result of the Fixed-term Parliaments Act, we now know the date of the next general election, which will be on the first Thursday of May 2015. To do well in that election, both our parties need to demonstrate that the economic policies of the coalition are working and that a return to a Labour Government would put the economic recovery at risk. The coalition has of course been successful in persuading the electorate that the financial crisis in 2008 was the result of the Labour Government’s profligacy. This is obviously slightly unfair as it ignores the effect of the sub-prime mortgage collapse in the United States, notwithstanding the reservations of the noble Lord, Lord Forsyth. However, the success of the arguments made by the coalition is demonstrated by polling figures that have consistently shown that the Government are better trusted to manage the economy than Labour. Of course, Labour has not been helped by the refusal of the shadow Chancellor, Ed Balls, to show any remorse for Labour’s period of economic stewardship.

The second recent political argument has been over spending plans for the five years after 2015. The legacy inherited by the coalition in 2010 was a double whammy of an unsustainable deficit of government spending over income and a crippling government debt burden. George Osborne and Danny Alexander, the two key Treasury Ministers, have committed their respective parties to further steps to eliminate the deficit and reduce debt after 2015, although naturally there are disagreements to come between the two parties as to how in practice this would be achieved. In the mix of tax increases and spending cuts, the Tories will be more likely to avoid the former whereas the Liberal Democrats will not wish to rely solely on the latter. However, the two parties are united in opposition to Ed Balls’s recent proposals, which appear to concentrate solely on deficit reduction, ignoring the debt burden.

Inevitably, the political positions of the coalition will not succeed unless the economic recovery continues for the next 12 months, and this is where the economic

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arguments are relevant. Will the coalition parties be able to claim that the economy has recovered on their watch? As the noble Lord, Lord Deighton, and I have indicated, the portents are good. The polls are indicating a surge in the economic confidence of both business and the consumer. Surveys by the employer organisations indicate a significant increase in proposals to invest, and clearly the Government claim some credit for the increase in growth. The noble Lord, Lord Deighton, has rightly described the plans for which he has responsibility in infrastructure spending. I have said before that I have often thought that government policy in this area is rather,

“analogous to a swan, sailing serenely on while declaring that there was no alternative to the austerity programme but underneath the water the legs are paddling furiously to create initiatives to promote economic activity: infrastructure spending, with Crossrail the largest infrastructure scheme in Europe; the regional growth fund; the Green Investment Bank and the business bank; the development of an industrial strategy by the Department for Business, Innovation and Skills, with concentration on key areas of industry; and the stimulation of the housing market by the Help to Buy scheme”. [

Official Report

, 27/3/14; col. 608.]

The overwhelming factor at the moment, though, has been the return of what Keynes described as “animal spirits”. No one—no economist, and certainly no politician—quite knows why, over the centuries, consumers have suddenly lost confidence in the economy in which they live, thereby triggering a downturn in economic activity. However, there can be no doubt that the process has been now been reversed in the United Kingdom. As the Bank of England has pointed out recently, the tell-tale sign is the fall in the amount of cash held in ISA accounts—I prefer my pronunciation —which was £2.8 billion in April, the largest monthly fall since ISAs were first introduced in 1999. This cash is currently finding its way into property, equities and the high street.

So what are the risks to our economic recovery? First, as a recent CBI survey indicates, there has been a significant change in business attitude. Business now believes that the biggest threat is political risk. As John Cridland, the director-general of the CBI, has said:

“The UK now has more stable economic foundations, and political risks must not jeopardise this”.

The political risks are obvious. First, whatever one’s view about Scottish independence, there can be no doubt that were the vote to be yes, this would have a disruptive effect on the British economy even if it were only in the short term. Secondly, there is a political risk in what seems to be increased competition in anti-business rhetoric coming from all sides of the political argument as we approach the election, of which I suppose the best example has been Labour’s proposal for an energy freeze which, rightly or wrongly, is clearly having an impact on ongoing investment in the energy field.

Then we come to the political risks of Europe. A number of my colleagues and I have for some time been arguing that there is a significant risk to the growth of our economy if multinational companies form the view that we are going to come out of Europe in 2017. The motor car industry is obviously a classic example, and last year for the first time we exported more cars than we imported. Do we really think that

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investment in the motor car industry will be continued if people really feel that we are going to come out of the European Union?

Whatever views may be on our role in the European Union, there is no doubt that a recession in the eurozone would seriously damage our economic prospects. There seems to be a serious possibility of Europe spinning down the sort of inflationary spiral which affected Japan for 20 or 25 years. I hope the whole House will agree that in this context the intervention this week by the European Commission with a prescription for UK economic policy—the Times called it,

“a breathtakingly obtuse invitation to tax more and spend more … from the architects of the eurozone’s slump to the leaders of Europe’s fastest growing-economy”—

was totally inappropriate. Indeed, one might assume that the officials who wrote that were in the pay of UKIP, in the same way that I always assumed Arthur Scargill was in the pay of Central Office in Millbank.

Let me return the compliment to the European Commission, certainly to the ECB. I very much hope that today Mr Draghi—who may well already have done so but had not by the time this debate started—will cut the key ECB benchmark interest rate and will stop draining cash out of the banking system by sterilising bond purchases through weekly market operations. This would ultimately create €165 billion of extra money in Europe. This would be better than straightforward quantitative easing, which could be challenged in the German Constitutional Court and would in practice drive down German and French borrowing costs the most, which is not where the drive down needs to take place. I hope Mr Draghi takes this advice, if has not already done so.

11.52 am

The Lord Bishop of Leicester: My Lords, I want to take the opportunity of this debate to raise some questions about the balance of power between London and the regions in our country today. The gracious Speech emphasised the new financial powers to be implemented for the Scottish Parliament and the National Assembly for Wales. While this is welcome, it highlights even more acutely the need for urgent action to address the very different environment for local government in England, in spite of what the Minister briefly said to us about resourcing local economic partnerships.

It is surely now vital that more power should be devolved from the overly centralist and siloed Whitehall closer to communities that have a stake in the success of places and to where a real link between politicians and positive action can be formed, as the report of the noble Lord, Lord Heseltine, recommended. My conversations in the east Midlands point to a clear consensus that the balance of power between local and central government is not right. Councils are now placed in the impossible position of taking responsibility for abolishing front-line services that are both wanted and needed by local communities. One of the clear messages of the recent elections is surely that a large part of the population has begun to lose confidence in our political processes and that trust has dangerously eroded between the electorate and its representatives.

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This suggests that we have reached a moment requiring both leadership and courage: first, in recognising that localism has become an empty word, especially to practitioners, who regard local discretion as little more than a myth. This is demonstrated by the national Planning Inspectorate’s habit of taking big decisions in the teeth of local opposition and the capping of council tax levels. Secondly, leadership is required locally to achieve an effective appraisal of local democratic systems which are so multilayered and overlapping that people increasingly struggle to relate to them. We need now to make progress in rationalising the mishmash of unitary and two-tier structures and, frankly, to reduce the number of locally elected representatives. Would it not be worth considering whether a form of proportional representation might be appropriate for local authority elections in view of the one-party states that now appear in several cities and London boroughs?

These reforms are not best left to some future Parliament but require attention now before the attenuation of local government reaches crisis levels, with even more unbalanced growth across the United Kingdom and even more damage to public service outcomes. The challenges we face are too complex and particular to be left simply to broad national solutions. Rather, we need to draw much more effectively on the creativity and civic energy of local communities. We must think differently about what it means to be a citizen, seeing ourselves not simply as consumers of services but as genuine partners in providing them. This means facing and challenging the unwillingness of many in national government to lose control over public services and decision-making, because they still harbour a fear that local institutions lack the required capacity or capability.

Yet without some risk, innovation and courage in this area, local government will continue to be starved not only of cash but of the civic talent it desperately needs in order to make the scale of transformative changes required of it in the years ahead. At the top of these changes and concerns is of course the funding of adult social care, which clearly is an issue that now troubles most of the population in one way or another. While we have all read headlines about gaps in local authority funding, it is salutary to think that to date none of them has really picked up on the additional costs which the 150 top-tier councils will face if the Government do not meet the cost of capping adult social care, whether on the Dilnot formula or not.

Surely we are now at the point at which it is urgent for the Government to recognise that these costs cannot be laid upon local authorities without bringing the whole structure of local government crashing down. Allied to this is the equally urgent need to face and work through the complex issues surrounding integration of the NHS and social care services. If this is left simply to vested interests—whether political, clinical or bureaucratic—a once-in-a-generation opportunity will be lost, and the scare stories about black holes in the NHS budget, quite apart from those in local authority budgets, will continue to haunt us.

Noble Lords will perhaps forgive me for reminding them that Leicester, at the heart of my diocese, is indeed to become, after protracted legal proceedings,

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the final resting place of Richard III. This has focused the attention of all of us, especially our city and county councils, along with Leicester University, on the need for closer partnership working at many levels if all the necessary plans and preparations for reinterment with dignity and honour are to be put in place. Such partnership working—on many other matters, of course, as well as this—must be the pattern for the future and will require new attitudes and work patterns with more flexible, outwardly focused and engaged local authority personnel learning how to work with and trust other public and private sector institutions more creatively.

The Richard III experience has also reminded us of the significance of place for all our citizens. People are interested in their story, their heritage, their narrative and character, as well as their prosperity and prospects. On these Benches, we might call this the soul of a place. Here, too, we find a particular role for the churches in partnership with local authorities as significant leaders in creating a sense of identity, and stimulating opportunity, quality of life and cultural richness.

In the City of Leicester and the County of Leicestershire, our city and county councils have taken an effective lead in presenting the story of the Battle of Bosworth and the death and discovery of Richard III, and in creating a major new civic space around our cathedral. All of this speaks to the importance in our national story of this controversial king.

Successive Governments have acknowledged the need to reduce pressure on local government and provide greater local flexibility, but this need is now critical. None of us wants to face a future without an affordable plan for adult social care or to accept a culture that accommodates an increasingly atomised and fragmented public service provision, leaving frail and vulnerable people, in particular, increasingly exposed and anxious. As devolution to the nations of the United Kingdom progresses in this Parliament, so the challenge of resourcing and empowering local authorities in England must be faced and responded to. The gracious Speech’s pledge of Her Majesty’s Government to continue to work to build a fairer society surely requires the revitalisation of local government as an essential part of that pledge.

12.01 pm

Lord MacGregor of Pulham Market (Con): In the time available to each of us it is necessary to confine ourselves to a limited number of points and even then to deal with them only in staccato fashion. I warmly welcome the Queen’s Speech and wish to make four points.

However, first I wish to congratulate my noble friend on the Front Bench on his speech. I thought he made an outstanding case for the work on infrastructure that the Government are doing at the present time. I do not intend to repeat the many points he made, but I wish to say how fortunate we are to have him taking the ministerial lead on infrastructure. I believe that we are greatly benefiting from his skills, experience and track record.

I turn to my first point. I wish to follow the noble Lord, Lord Razzall, and dismiss the suggestion by some Labour Front-Benchers that this is a lightweight

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package from a Government who have run out of steam. I well remember, as Leader of the House of Commons and therefore chairman of the committee making recommendations to Cabinet, the discussions for the programme leading up to the 1992 general election. There are always many candidates for legislation. Every department has a shopping list, and there are always many more candidates than can be entertained in any one year, but that is particularly the case in an election year. The legislative programme has to be shorter than usual in that year. There is no scope for spill-over legislation. Even in those days, when we did not know when the election would be called, provision had to be made for that. Today, with a fixed-term Parliament, we know that the Session will be short. There will certainly be many other things to occupy Parliament: the implications of the Scottish referendum, whichever way the vote turns out, and much debate on EU matters and an EU referendum in advance of the general election, to name just two. I believe that the Government have judged the weight of the Queen’s Speech absolutely correctly.

Secondly, I warmly welcome the economic measures—the charter for budget responsibility, to deal with spending taxpayers’ money responsibly, something which throughout my parliamentary career I have always felt to be of the utmost importance. In this context, I recommend that all with an enthusiasm for this should read the book Conundrum co-written by my successor as Member of Parliament for South Norfolk, Richard Bacon, which is based on years of work by the PAC and demonstrates how much more still needs to be done on this front of spending taxpayers’ money responsibly. I welcome the emphasis on start-ups and small businesses. My first ministerial job was as Minister for Small Businesses. In fact, I was only the second such Minister in the DTI. Much progress has been made since those days. The contribution of these businesses is much more widely acknowledged, but clearly more can be done, and I warmly welcome that. Above all, I welcome the emphasis on the long-term plan to build a stronger economy and reduce the deficit. I believe that the Chancellor’s determined pursuit of his strategy has been masterly and he has seen off his critics. It ill behoves the shadow Chancellor to criticise, given the very important part that he played in the previous Government’s huge overspending and the increase in government debt, which left us so vulnerable when the international crisis came.

I have great respect for the noble Lord, Lord Adonis, but I was astonished by his speech today. There was no word of acknowledgement from him about the disastrous legacy that we inherited. He seems to ignore the fact that the Labour Government were responsible for nearly 10 of the past 13 years. It would be interesting to cost the programme that he has laid out today and see what that would do to bring down the deficit. In that context, the Chancellor has seen off his IMF critics, who now acknowledge that, when they made criticisms of him in the past year, he was right. Like the noble Lord, Lord Razzall, I was deeply concerned by the European Commission’s recent intervention calling for the Government to rein in the Help to Buy scheme and increase council taxes. That is none of the Commission’s business. I am a firm believer in subsidiarity,

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and this is a classic breach of that principle, unhelpful in the current context of the debate on the role of the Commission. It is entirely the Chancellor’s responsibility to deal with these matters.

That leads me on briefly to my third point—housing—which it is appropriate to mention in a debate on the economy, given the recent comment from the Governor of the Bank of England that the housing market posed the “biggest risk” to the UK’s economic recovery. There is recent evidence that the Help to Buy scheme is helping the housing market outside London, particularly for first-time buyers, and that the increase in house prices there may be easing. I believe that the way to tackle such excessive risk as there may be in the mortgage market is not by raising interest rates but rather by tackling it through a tighter approach to loans-to-incomes ratios, as the Financial Conduct Authority is now considering and Lloyds and RBS are now doing. It is a throwback to the regimes that we all knew when taking out our first mortgage. Prudence was imposed on us by relating the size of our mortgages to the incomes that we earned. But London is a special case. Here the continued rise in house prices is creating serious problems for many young people seeking to own their own homes. Partly, that is a reflection of the increasing numbers seeking to live and work in the capital and partly it is because the housing supply is failing to keep pace. I applaud the measures in the Queen’s Speech to deal with that.

An increasing contribution to the problem is the way in which the housing market in so much of central London is now dominated by soaring prices paid by foreign buyers. Of course, we must expect and welcome many foreign residents with high incomes living here in London if London is to remain a dominant international financial and business centre. But I am concerned that so many of the new developments in the centre of London and spreading out seem to be marketed first to very wealthy foreign purchasers seeking a safe haven for their investments and not regularly living here. That is having a considerable ripple effect, way beyond central London. All of us who live in London but not in the centre are experiencing that. I welcome the introduction in the Finance Bill of the measure that non-residents disposing of UK property should pay capital gains tax, but nevertheless my concern remains. I believe that the Government should continue to monitor that very carefully.

Finally and fourthly, I particularly welcome the proposal in the Queen’s Speech to,

“introduce a Bill to bolster investment in infrastructure and reform planning law to improve economic competitiveness”.

In particular, the Bill will,

“enhance the United Kingdom’s energy independence and security by opening up access to shale and geothermal sites and maximising North Sea resources”.

This measure was one of the proposals that the Economic Affairs Committee of this House recommended in its recent report, The Economic Impact on UK Energy Policy of Shale Gas and Oil. I believe that this is one of the most important reports the Economic Affairs Committee has published during my chairmanship of it. I ask the Minister to urge his colleagues to produce

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the government response in good time and well before the Summer Recess so that we can have a full debate on this issue as today I can outline only briefly some of the issues.

The committee was immensely impressed by the US experience over recent years in relation to shale gas and oil, which has transformed the American economy, lowered energy prices, produced substantial employment, caused a lot of the energy-intensive industries to consider going back to the United States and led it to export a great deal of coal to Europe, which is not the most environmentally beneficial form of energy. That American experience, which will not be repeated in full here, has been dramatic. Shale gas and oil could provide a huge opportunity for the UK, with lower energy prices, although not on the scale experienced in the United States, and greater energy security, which is particularly important in the context of what is happening in Ukraine. The development of shale gas and oil could retain energy-intensive industries in the UK and help to mitigate climate change as it is an effective carbon dioxide reduction measure. However, the problem is that progress is painfully slow. We are only just beginning to see applications to do exploratory drilling and we simply have no idea how much shale gas and oil can be produced in this country until we go ahead with exploratory drilling. We have not really started on the process. As the noble Lord, Lord Adonis, correctly pointed out, there are real risks of energy shortages and rising energy prices occurring in this country towards the end of this decade because of the reduction in coal-fired plants and the slowness of getting nuclear proposals through. Therefore, we urgently need to take full advantage now of the potential offered by shale gas and oil.

We identified the planning process as one of the main obstacles. We did not recommend that the regulatory environment should be weakened but we believe that the delays which arise in dealing with a multiplicity of agencies greatly inhibit companies that wish to exploit shale gas and oil. Therefore, streamlining is essential in that area. We examined a huge amount of scientific evidence, looked with great care at all the environmental and other objections, and concluded that all could be met, given our rigorous regulatory regimes. In short, shale gas and oil exploration is potentially a major opportunity for this country but we need to get on with it. This is a good first step in getting on with it but I ask my noble friend to ensure that we have a full debate on this subject before the Summer Recess, given its serious implications and great potential.

In conclusion, much of what is in the Queen’s Speech is very good and I warmly commend it.

12.13 pm

Baroness Andrews (Lab): My Lords, in this debate, I want to focus on one of the most understated aspects of the gracious Speech, which has already been referred to in passing by my noble friend Lord Adonis and the noble Lord, Lord MacGregor. It is, of course, housing. We were told that one of the themes of this year’s Queen’s Speech was to be aspiration. There is one thing to which we all surely aspire and that is decent

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homes for ourselves and our children. That aspiration has never been so far out of the reach of so many people, and the Queen’s Speech, I am afraid, does very little to make it a reality.

We were also told that this was to be a bold Queen’s Speech. There are very welcome references to garden cities, and isolated initiatives such as selling high-value government land and more Help to Buy, but they require close scrutiny and certainly do not add up in terms of scale, investment or coherence to what is so obviously needed. If this were to have been a bold strategy, it would have had to set out a full and proper vision and strategy for housing the nation—a clear prospectus for meeting the needs and ambitions of all communities, all tenures and all ages. To match the national mood of anxiety about housing, it should have been at the core of the text of the Queen’s Speech—not a series of marginalia—recognising the frustration in so many families as they watch prices and rents spiral out of control.

I had hoped today that we could debate housing within the wider context of the economy. It was disappointing that the Minister made such passing reference to housing, not even mentioning it in his list of infrastructures that drive the economy and should be prioritised. The noble Lord, Lord MacGregor, has wisely drawn attention to the real fears that by stoking the housing bubble in London there is a threat to a very fragile economic recovery. The London housing crisis exemplifies with brutal clarity the extent to which we have a not only dysfunctional but dangerous housing market, fuelled by policies focused largely on demand that have not impacted sufficiently on supply. Without being at all partisan, surely we can all agree that there is something seriously wrong with a housing policy whereby £23 billion is spent on housing benefit to subsidise housing costs and only £1.5 billion is spent on capital investment in social housing for those in greatest need.

“Crisis” is an overworked word but is justified in the context of London. Every day, as the noble Lord, Lord MacGregor, said, we see absentee millionaires’ flats rising on every available space in central London. I hope the Government will not only listen hard to the call for monitoring that process but think about the actions required to reduce it. Less visible are the families being driven out of London by the bedroom tax, or the young and professional families who are stuck in insecure and overpriced rented accommodation, with no hope of buying into the market or moving out of London. Young people are paying a fortune for the most appalling, shared rented accommodation. We in the last Government thought we had come close to solving the problems of homelessness and evictions by investing in homeless hostels and improving conditions. It turned out not to be the case. The national association of ALMOs reflected only yesterday that the percentage of rent arrears in households affected by the bedroom tax had increased from 37% to 69% by the end of June 2013, and is now about 27% above the base position.

To date the Government have tackled the housing crisis primarily through welfare restrictions and advantageous mortgage take-up. A fair and effective housing policy needs to plan to restore the balance of

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the housing market to meet the totality of housing needs. The fact is that while Help to Buy can help the few, help to build is the only way in which to help the many. What might a policy focused on help to build consist of? We need clarity and certainty around the number—an accelerated number—of new homes that we need to build, and how they would be financed and distributed across tenures. There is no mystery to the figures. By 2021 we will need to house an additional 221,000 households each year. We also know the price of failure. Almost 10 years ago to the day, Kate Barker spelled out the problem in her review of housing supply:

“I do not believe that continuing at the current rate of housebuilding is a realistic option, unless we are prepared to accept increasing problems of homelessness, affordability and social division … hampering our economic success”.

How very right she was, and she recommended an annual target of 230,000 new homes. In 2007, the last Government were building 170,000 a year, the highest rate for 19 years.

I would therefore be grateful if the Minister could clarify the agreed government target for housebuilding. Is it 200,000, as I understand the Housing Minister to have said, or is it 300,000, as some of her Liberal colleagues are saying? Does she agree that even the lower figure would demand a significant input from public and social providers? What proportion of that housebuilding target will be social housing? Does she agree that there is an indisputable economic case for social housing? This was reinforced recently by no less than PricewaterhouseCoopers, working with the London and Quadrant housing association, in a report called The Numbers Game. It clearly shows that, for those on lowest incomes and in the greatest need, housing at social rents offers the best deal, not just for tenants but for taxpayers and providers. That sort of evidence lends further volume to the chorus that is calling for the Government to remove the cap on the housing revenue account, which stops local authorities from building. That chorus is not just the usual suspects: it includes the Home Builders Federation and the CLG Select Committee. It is not a minority argument. In fact, the Government have already conceded the case: borrowing limits have already been raised by £150 million. That is a welcome recognition that the system is not fit for purpose. The logic is to abolish it altogether. Very handily, the Deregulation Bill is coming down the track into this House shortly. It is an obvious vehicle for doing this, which would kick-start more social housing.

The right reverend Prelate has called for more co-operation and partnership working at local level. How right he is. We need to see the LEPs working across boundaries. We need to see the sub-regional partnerships planning systematically for housing. We are making up so much ground that was already in place when we had regional spatial planning. It is a tragedy that we have to reinvent some of that.

Let me suggest a few more things the Government can do quickly, in the next year, to make help to build a reality. My heart sank when I heard of another reform of the planning system. We have only just had the guidance on the National Planning Policy Framework. More than anything else, planners need certainty in the system. They need to know what they will be able

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to invest in. Why do the Government not look, for example, at legislation to identify and free up land banks, which are deliberately being held back for long periods, to create the range of new delivery vehicles needed if the Government are serious about garden cities—not just garden cities, but good, high-quality, well designed urban extensions? Why do the Government not acknowledge that the new homes bonus has not led to an increase in building? They should go back and have a look at the housing and planning delivery grant, which was really effective.

Help to build also means taking the long view on the demography of this country and planning for a society that is growing older and occupying a lot of housing stock. There are not sufficient decent, high-quality homes for older people to move into. If we made that a priority, recognised that we are dealing with the whole community’s housing needs and integrated housing as the front line for decent health and care for elderly people, we would have a much more intelligent approach to housing and health and care.

The most urgent action is to help what Ed Miliband has called Generation Rent. My noble friend Lord Adonis referred to it as a lost generation, living in insecurity and with soaring costs in the private sector. These are young, vulnerable and exploited people, often in very low-paid jobs or unemployed. Despite being a supposed free market, private renting is a major cost to the taxpayer. It benefits from a patchwork of subsidies, guarantees and tax reliefs. It is the main driver behind the huge escalation in housing benefit. The next Labour Government have committed to build a modern rented sector, with sensible reforms around the core rights of consumers. We can look to other successful countries that are doing that, such as Germany. We can look to New York, where Mayor Bill de Blasio plans to build no fewer than 200,000 affordable units to rent. He has the support of the Real Estate Board of New York behind him, because it knows that a regulated market, properly done, has the self-interested support of the whole market. Why can we not do that in London, instead of letting the market rip?

Finally, there is time to do two things that can make a big difference. Legislation can still be brought forward this year to regulate letting agents and to extend the powers available to deal with rogue landlords. Those two immediate changes would help the most vulnerable. We have a year before the election. It is not too late to do any of that. Somehow I suspect we will have to wait for another Government to do it. I hope that will be a Labour Government, who will put different values and priorities into place.

12.24 pm

Lord McNally (LD): My Lords, the guidance invites us today to discuss the economy, infrastructure, transport, energy and local government. As it happens, I want to discuss all those topics but as they apply to one particular place.

My full title is Lord McNally of Blackpool. I chose it in recognition of my pride and affection for that town and its immediate locality, the Fylde, where I grew up in the 1940s, 1950s and early 1960s. In those days, Blackpool was one of the most successful holiday

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venues in Europe—an international centre for entertainment, with a hinterland supporting a diverse service and manufacturing base. It was an exciting place in which to grow up and one for which I retain an enduring affection. However, I am well aware that, although I retain many friends and family on the Fylde coast and although, as my son once shrewdly observed at the age of eight, “Daddy is always happier on a Saturday night when Blackpool have won”, I speak now as an exile of nearly 50 years.

My reason for using the opportunity of the gracious Speech to speak about Blackpool is that I worry that, without concerted effort by both local and national government, the town could reach a tipping point which would make regeneration impossible. I sometimes think that if Blackpool had had a manufacturing rather than a tourist-based economy, its need for help would have been more easily appreciated. If a mill, a pit, a steelworks or a shipyard closes down, the impact is more immediate and so is the response. Blackpool’s business is tourism, which, as the noble Lord, Lord Pendry, and my noble friend Lord Lee of Trafford have constantly argued with successive Governments, has never been given the priority it merits by dint of its capacity to create jobs and stimulate economic activity.

Over the past 30 years, Blackpool has had to deal with a variety of factors beyond its control, which together add up to the perfect storm. The decline of Britain’s old industrial base—the shipyards, the textile mills, the coal mines and the steelworks, to which I referred a minute ago—robbed Blackpool of its traditional holidaymaker market just at the time when those in the new and surviving industries were discovering package holidays and cheap flights to the sun. Blackpool is still Britain’s largest seaside resort, with iconic attractions such as the Tower, the Winter Gardens and the Pleasure Beach, which attract millions of visitors a year. However, unlike in my youth, most of those visitors are there for the day or the short term. This reduction in the length of visits has resulted in an oversupply of holiday accommodation. That, in turn, has resulted in many properties being converted into flats and houses for multiple occupation, which in turn become occupied by those on housing and other benefits. The result is high levels of social deprivation and poor housing conditions in parts of the town’s inner areas and an increasingly transient population, reinforcing social challenges.

The blunt fact is that Blackpool has had to spend a disproportionate amount of resources, manpower and energy responding to social care, health, housing and educational needs which are not of its making. This, in turn, diverts resources and energy from the task of revitalising the visitor economy and improving the housing stock and local environment so that the town becomes once again an attractive place to visit and in which to live. Blackpool urgently needs a coherent and co-ordinated programme of measures which will reverse the decline and create a benign circle of confidence and growth. I know that the Government are in the process of considering a strategic economic plan drawn up by the Lancashire Enterprise Partnership. I urge the Government, when they respond next month, to do so with a sense of urgency and imagination.

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I have to say that I believe a great opportunity was missed when Blackpool was rejected as the location for a super-casino. It is ironic that Blackpool was refused a super-casino, which is probably the most thoroughly regulated of all gambling outlets, while Parliament waved through new opportunities to gamble from the ease of one’s own sofa or when strolling down the local high street. I still believe that the casino option should be revisited to revitalise the economy and to use Blackpool’s unique brand name to create a multi-activity resort, as has happened with many successful regenerations around the world.

Even after the disappointment of the casino decision, Blackpool has pressed ahead with a wide range of initiatives which I believe require a positive response from the Government. There is the proposal for a museum to celebrate Blackpool’s unique contribution to entertainment, and proposals for an energy academy. Work is already under way on refurbishments to Blackpool Tower and the Winter Gardens. The promenade has been upgraded and redesigned, new trams run on re-laid track, and the Pleasure Beach continues to provoke terror and delight with rides of space-age technology. I pay tribute to the town’s two MPs, Gordon Marsden MP and Paul Maynard MP, for their assiduous fight on the town’s behalf.

The Lancashire Enterprise Partnership measure to which I referred is before the Government as we speak, and the outcome is expected in July. If approved it will result in much-needed improvements to Blackpool’s economy and the creation of new jobs, with transport proposals to improve access to Blackpool’s tourist attractions and the arrival points to the town, a new major visitor attraction and the establishment of a new energy skills headquarters, as well as plans to address the quality and choice of housing on offer.

This is all good news but it must be the beginning and not the end of a process. The Government need, at long last, to give tourism the priority that it deserves. There is also a need for a holistic approach to the development of this coastal region. I wonder whether there is not a case for revisiting the concept of a City of the Fylde from the Wyre to the Ribble to tackle some of these issues. I mentioned earlier the very strong industrial history of the Fylde. I heard what the Minister said about the shale gas industry and the comments and observations from my noble friend Lord MacGregor. What I say now is only a personal observation, but I believe that if there is a region where fracking could be done safely and successfully it is west Lancashire, with its long association with the chemical industry, with British Nuclear Fuels and with offshore gas and wind. There is an industrial tradition on the west coast which could very quickly be revived. I was delighted to learn that the site of the old ICI works at Burn Naze, where my father worked for 47 years, is again a growth point for the manufacture of polymers and chemicals.

Higher education also has a part to play, and I am pleased that Fylde College and Lancaster University continue to co-operate to ensure that the sub-region has the required skills to match the needs of a regenerating economy. I have already referred to the idea of an energy centre of excellence, which would further strengthen the educational base.

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I know that the Cities Minister, my right honourable friend Greg Clark, has visited the town and taken a personal interest in Blackpool and its future. I would like him now to do a “Heseltine” and make a personal commitment to Blackpool’s future or, even better, dispatch the noble Lord, Lord Heseltine, to Blackpool with an “action this day” brief to get things moving. When Alderman Bickerstaff visited the Paris Great Exhibition in 1890 and saw the Eiffel Tower for the first time, he said “We’ll have one of them”, and we did. When the opportunity came to levy a cultural rate in the 1920s, Blackpool used the money to fund the illuminations, which are still going strong and delighting millions every year. That spirit is still there. Not for nothing is the town’s motto “Progress”.

Because I have retained my Blackpool accent I am often asked where I come from. When I say Blackpool, there is inevitably an outpouring of fond memories of days of fresh air and fun, particularly the fun. That positive name recognition and good will is still there but Blackpool needs a little help from its friends. The building blocks of recovery are all there. A good deal of groundwork has been done. There now is a need for a positive approach from government which will turn opportunities into realities. I look forward to my noble friend’s response.

12.34 pm

Lord Birt (CB): My Lords, it is a pleasure to follow the noble Lord, Lord McNally, and his hymn of love to his native city. As a Liverpudlian, I fondly recall visiting Blackpool routinely as a child and less fondly watching Stanley Matthews give us a display of how to play football in the second football match I saw as a child.

In 2008, the UK economy suffered a body blow. At long last, we are beginning to recover, but our bounce back has been slower than other leading economies. Moreover, it will be 2018 before we are again, as a nation, in fiscal balance. Our debt levels are now, and will remain for some time, among the highest in the world. It will be a generation before they return to prior levels, always assuming that we will have responsible Governments in the future willing to work to that goal. All parties standing at the next election will, I hope, set out their plans for returning our national debt to historical and defensible levels.

Our lengthy recession has had manifold adverse consequences, as we are all aware. Many individuals and businesses have moved backwards in their fortunes. Responsible savers are paid minuscule rates of interest, well below the rate of inflation, yet still pay tax on the proceeds—punished twice over for their prudence. Even the best-run economies were affected by the global recession, but the UK’s difficulties were intensified: first, by a large financial sector, parts of which, as we all know, were infected by an ingrained culture of risk-taking and greed, making casino bets with their clients’ money; and, secondly, by a failure of government correctly to forecast tax revenues and tailor the level of public spending accordingly. On the one hand, regulation of the finance sector failed us; and on the other, the institutions of government proved inadequate to the task of managing our public finances. Changing the culture and behaviour of a

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whole industry is not a trivial task, but let us cross our fingers that the new financial regulation reforms will work.

The OBR is a welcome new institutional fixture of manifest independence and integrity. Alongside an independent Bank of England—another welcome reform of recent times—the OBR, if it is retained and respected by future Governments, should prevent political hopefulness and opportunism once again tipping over into recklessness. Yet one fatal imbalance in our economy has not been addressed: for 40 or 50 years, like a badly run business, the UK has consumed too much and invested too little.

Public investment in the UK as a share of GDP is consistently below that of other countries. Unsurprisingly, there is a clear correlation between countries with excellent infrastructure and national competitiveness. The UK lags behind the rest of the world, as once we led it, in creating modern infrastructure and—surprise, surprise—our national productivity trails our competitors too. We know that we allowed our Victorian water and sewerage infrastructure to decay, that we were slow off the blocks with broadband, that we have procrastinated over power generation for the past two decades, and that we have by far the most congested roads and underinvested road and rail infrastructure of any major country. The cold statistics speak for themselves, but each of us can make brutal comparisons whenever we travel to competitor countries. It is shameful but characteristic that we did not long ago resolve how to deal with chronic undercapacity at Heathrow, one of the UK’s most prized strategic assets.

Last year’s Treasury document, Investing in Britain’s Future, was a list of directionally sound projects, but it was neither a vision nor a plan for modernising our creaking, crumbling, unfit-for-purpose national infrastructure within the span of a generation. I greatly respect the record of the noble Lord, Lord Deighton, and I do not for a moment doubt his good intentions, so I will look keenly at the plan he outlined earlier to see how far it goes towards meeting those long-term goals. As a nation, we need to resolve to set aside 3.5% of GDP annually for investment, which is the long-term OECD average. We have been so far below 3.5% for so long—we are currently at something like 1% to 2%—that we probably need to spend 4% to 5% of GDP on our infrastructure for at least 20 years simply to catch up with other nations.

We also need some formal mechanism to embed a long-term commitment on investment into our budgeting, and perhaps in her concluding remarks the Minister will tell us what share of GDP the newly announced infrastructure plan implies over the next five to 10 years. For decades, Governments of all kinds have promised investment but have then short-sightedly cut it at the first sign of economic reverse, most recently vouchsafing in late 2008 that capital spend would be protected—I quote the Treasury of the time—“to support the long-term productivity and competitiveness of the UK economy”, only to see the capital budget savaged, cut by almost half, in the period from 2009 to 2011.

We should continue the process of remedying the long-standing weaknesses in the governance of our economy and, alongside the OBR and an independent central bank, create a new institution of some kind

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that will depoliticise long-term infrastructure investment. Projects, as we know, can take decades to gestate, plan and deliver. We need an organisation that will bring together the main political parties in order to forge and stand behind a consensus about our national infrastructure. HS2 and the skilful cross-party work of the noble Lord, Lord Adonis, offer us some hope that this might be achieved. Let us complete an institutional framework that will stabilise our economy, improve our productivity and end the catastrophic dislocations that have plagued us on and off for half a century, and which have substantially reduced our economic performance as a nation and prevented this creative and enterprising country from achieving its full potential.

12.42 pm

Baroness Noakes (Con): My Lords, four years ago, the Government inherited an economy on its knees. We had emerged from the most severe recession in post-war history. We had a big structural deficit. Government debt was more than 60% of GDP and rising. The previous Government had no plans to deal with this. They left an uncompetitive economy and tax system with a corporation tax rate of 28% and a top personal rate of 50%. It has been a long haul over the past four years to restore the economy to something that resembles health. The job is far from over, but there is a lot to rejoice about. The economy really is growing again—and at the fastest rate in the developed world. Unemployment is falling rapidly and real disposable incomes are starting to rise again. I am sure that the Benches opposite will join me in rejoicing that manufacturing industry, which suffered so much under the previous Government, is now firmly on an upward trajectory. My right honourable friend the Chancellor was wise to reduce the deficit largely through expenditure reductions rather than taxation, and he was wise to ignore the Keynesian sirens calling for more spending and more borrowing.

On the downside, the deficit remains stubbornly high and it is not a cause of celebration that the debt to GDP ratio will peak at nearly 80%. There is still an absolute necessity to continue to bear down on government spending. The Government have played a difficult hand very well, but there are of course some things that they could have done better. Our energy policy is still a mess. We have the self-inflicted wounds of environmental policies that load costs onto British businesses and on to vulnerable consumers. We need some common sense on how much this country is prepared to pay for green luxuries. I endorse everything that my noble friend Lord MacGregor of Pulham Market said about the potential for shale to transform our economy, but dealing with underground access to shale resources in the Infrastructure Bill is but a small part of what the Government need to do to get this moving. Like my noble friend, I look forward to the government response to the report of the House of Lords Economic Affairs Committee on this.

There is also much work still to do on reducing regulatory burdens. There is only so much that we can do in the UK, so we will have to take the fight to Europe—and the sooner we get into serious negotiations over our membership of the EU and its terms the better.

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However, my main topic today is taxation. It was wonderful to hear in the gracious Speech that the Government would continue to cut taxes. My right honourable friend the Chancellor has done much good work already. I will single out two things in particular: the path to the lowest rate of corporation tax in the developed world and the reduction in the top rate of income tax. However, the Government get few points for tax simplification. The Office of Tax Simplification was a great idea and has done excellent work, but its recommendations have not all been heeded, and more than 2,000 pages of complex tax legislation will have been added to our tax code by the end of this Parliament.

The Chancellor has shown his capacity for radical thinking with his excellent pension reforms, announced in this year’s Budget. I look forward to the pensions tax Bill delivering those reforms. What the country now needs is a similar reforming mindset applied to the tax system. I draw noble Lords’ attention to a substantial report on a single income tax, produced two years ago by the 2020 Tax Commission, which was sponsored by the TaxPayers’ Alliance and the Institute of Directors. It echoes the conclusions of work done by my noble friend Lord Forsyth of Drumlean’s Tax Reform Commission over eight years ago. The report recommended that most taxes should be abolished and replaced with a new single tax on income. This major simplification would replace the existing income tax, national insurance, corporation tax and various capital taxes including inheritance tax. For good measure, it would get rid of the detested air passenger duty.

The commission recommended a single 30% tax rate on income plus a total restraint on taxes as a percentage of national income of around one-third. The essential argument for a low-tax regime is that high taxes act as a drag on the potential of the economy. The 2020 Tax Commission estimates that its proposals would add over 9% to GDP over 15 years. Importantly, the annual growth rate would permanently be increased by around 0.4%. These potential prizes are too great to ignore.

The Tax Commission’s analysis included dynamic modelling carried out for it by the Centre for Economics and Business Research. This is the key. Many of us were delighted that the Chancellor used dynamic modelling to underpin the reductions in corporation tax last year and the recent cut in fuel duty—so far, so good. What we really need the Treasury to do is move towards using dynamic modelling as a way of life. It is good to use dynamic modelling for specific taxes but the Treasury should be using it to understand how to drive the tax system to support the whole economy. Traditional modelling methods will inevitably produce incremental rather than radical approaches to policy. If the analysis of the 2020 Tax Commission of a single low rate of tax is even half-true, the Treasury simply has to embrace it.

Of course, analysing the impact of a radical tax change is one thing and implementing it is another. It is not easy in an advanced economy such as ours to re-engineer the tax system in a short period of time. There have to be transitions to avoid destabilising the economy and harming individuals. There is the underlying

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paradox that if you take a long time over transition and overprotect the status quo, you will not see the benefits of higher growth, which is the aim. So there is a case for boldness.

I can see why the Government might shy away from wholesale restructuring, as proposed by the 2020 Tax Commission. It does seem pretty scary. But I do not understand why the Government are not pressing ahead with one key element of the tax commission changes: namely, merging national insurance with income tax. This has a growing body of support. The Office of Tax Simplification proposed it in its review of small business taxation; the Institute for Fiscal Studies supports it; and surveys of businesses show strong support.

Informed commentators know that national insurance is a tax in all but name, but the one thing that has managed to keep it alive is that it is the ultimate stealth tax. Gordon Brown knew that when he raised the extra 1%, allegedly for the NHS—and it seems that Mr Miliband is thinking about trying the same wheeze if he gets a shot at running the country. I find it extraordinary that the Exchequer Secretary has used the Beveridge notion of the contributing principle as the rationale for keeping them separate. Expecting citizens to contribute in return for qualifying for benefits is fine, but you do not need the fiction of a separate national insurance fund to achieve that. The time has come to be honest about national insurance. No one pretends that merging the two systems is a walk in the park. There are many legal and administrative hurdles to overcome. But the prize is great if we want a simpler tax system.

Lord Forsyth of Drumlean (Con): What would my noble friend do about the problem of pension income, which is not subject to national insurance?

Baroness Noakes: I was about to say that the TaxPayers’ Alliance produced a very thoughtful report, which showed how a transition could be made within five years and could also protect the expectations of pensioners at the same time. There is a way of doing it. All I would say to my noble friend and to noble Lords generally is that it can be done—it just needs a Government with the will to do it.

12.53 pm

Lord McKenzie of Luton (Lab): My Lords, it is a particular pleasure to follow the noble Baroness, Lady Noakes. Tempted as I am to engage in the tax debate, I think I ought to stick to my prepared script and talk about local authorities.

In last month’s local elections, more than 4,000 individuals were elected in England to serve on some 160 local authorities of one description or another. Many would have been re-elected and some elected to serve for the first time. The democratic process delivered joy for some and despair for others, but for my party it delivered more than 300 more councillors and control of 82 councils. As the largest grouping on the LGA, it now falls to us to provide its chair, Councillor David Sparks, the first Labour councillor to become chair since my noble friend Lord Beecham. I propose to take this opportunity to reflect briefly on the challenges for those councillors—those continuing and those just

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elected—as they make their declaration of office and see what, if anything, planned for the new Session is designed to help them.

The scene has been very much set by the outgoing chair of the LGA, the Conservative Sir Merrick Cockell, who described councils as being at a tipping point, warning that council services are at breaking point. He has been reported as declaring that the current funding arrangements will not see us through for very much longer and expressed concern about the running down or wholesale closure of services such as libraries, road maintenance, school support schemes and youth clubs. We know that local authority spending on adult social care has already been cut by £1.8 billion since 2009-10, and there are 300,000 care workers on zero-hours contracts. That is before we have to face the big issues referred to by the right reverend Prelate the Bishop of Leicester.

As we have debated before, funding for local government overall has been cut by 40% during this Parliament—bigger and earlier cuts than those to any other part of the public sector—but it is the distribution of those cuts that shows the true nature of this Government. Poorer communities have been disproportionately hit, as evidenced by the fact that the 10 most deprived local authority areas lose 10 times the amount of spending power per household compared to the 10 least deprived local authorities. Liverpool gets a 27% reduction in spending power per household, while Surrey and Wokingham get an increase—so much for creating a fairer society.

At a time when we hear the Lib Dem wing of the coalition boasting about how many people they have taken out of income tax by raising the personal allowance, and Eric Pickles asserting that councils have a moral duty not to increase council tax bills, we know that hundreds of thousands of poor people are having big increases in their council tax bills because of the localisation of council tax support—delegating responsibilities but cynically not providing adequate funding. That is just one of the dilemmas confronting elected members: should they charge the poor to help pay for the very poor or should they cut services further? In the mean time, more households are being summonsed for non-payment and more are experiencing the heavy hand of the bailiffs.

If we believe that the impact on the poor is an unfortunate oversight, the plans to withdraw specific funding for local welfare provision—the successor to the discretionary Social Fund—tells us otherwise. Of course, the iniquitous bedroom tax, which we will repeal, is yet further evidence of a Government who neither understand nor care about the misery their measures are inflicting on vulnerable families.

Councillors are on the front line of having to deal with the consequences of one of the coalition's biggest policy failures, touched on by my noble friend Lady Andrews: housing. Despite a plethora of announcements and initiatives, housebuilding has been at its lowest in peacetime since the 1920s, with the number of affordable homes built last year dropping by 26%. The NAO concluded that there was little evidence, for example, that the new homes bonus has yet to make significant changes to local authorities’ behaviour in increasing housing supply.

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We know that under the coalition Government, homelessness is up, rough sleeping is up and the number of families with children living in bed-and-breakfast accommodation has reached a 10-year high. Housing deprivation has ramifications across other council services. Switching government funding from investing in new homes to subsidising housing costs with housing benefit means that central government now spends more than 20 times as much on housing benefit as on building grants to support the provision of new affordable homes—as things stand, a trend that will continue.

We have seen some revival of council house building, generally led by Labour authorities, but overall, as we have heard, we are building fewer than half the new homes needed to fulfil demand, let alone to deal with the backlog. To be fair, it is not a new phenomenon and successive Governments have failed to build at the rate we once did. As a result of all that, more and more people are being locked out of home ownership and are living in the private rented sector. Across England, a quarter of adults under the age of 35 are living in their childhood bedroom. There are now 4 million households in the private rented sector, of which 1.3 million are families with children, and nearly 5 million people on local authority waiting lists. The average cost of rents has gone up by 13% since 2010 and renting is now the most expensive tenure, with renters spending on average 41% of their income on rents. Many face unpredictable rent hikes, while high and unpredictable costs are made worse by the uncertainty and insecurity of short-term tenancies of six to 12 months.

All this is helping to fuel the cost of living crisis and directly impacting on business competitiveness, especially in London. That is why we need to change legislation to make three-year tenancies the default in the market, as the Government’s voluntary approach is inadequate. We would also provide for an upper ceiling on rent increases during the tenancy, but with negotiated market rents as the starting point. There is more. We will stop tenants being hit by rip-off fees from letting agents and regulate residential lettings and managing agents to protect tenants and landlords. We will also introduce a national register of landlords and make it easier for local authorities to introduce licensing in their area, to drive standards up and rogue landlords out.

Nothing in the Government’s programme announced yesterday touches on these issues or acknowledges the problem, and nothing addresses the fundamental problems in the housing market or matches our commitment to build 200,000 homes a year by the end of the next Parliament. There is the commitment to legislate for development of a new garden city at Ebbsfleet and, as far as it goes, that is to be welcomed. However, there is a failure to ensure the provision of affordable housing or other garden city principles in that development, and the number of homes announced is some 5,000 fewer than were originally announced in 2012. The proposed reforms to planning to support small builders are ones that we could support but we will have to examine the detail. However, there is nothing to address the more deep-seated problems with the current planning system. No effective action is proposed to stop developers hoarding land with planning permission and nothing

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addresses the weakness in the planning system of the duty to co-operate, which is denying some local authorities the right to grow.

An incoming Government in 2015 will not be able to turn back the clock on funding but they could address the fairness in distributing the resources available. Labour councils and others are already meeting the challenges of austerity in many ways and more can be done if we build on the model of city deals throughout local government. It is crucial that we support councils to deliver economic growth in all areas of the country. This means devolving real power from Whitehall to towns and cities so that working together with local businesses—as in the city deals, where it is good that 24 have been agreed to date—they can take responsibility for transport, housing, jobs and skills and economic development. We need to be radical in breaking down the barriers to integrated working, including ending Whitehall’s silo mentality.

The Local Government Innovation Taskforce set up by Ed Miliband is looking at how Labour in local government is already innovating and responding to the challenges that our communities face. In some of the councils where we made gains last month, it is possible to see what is on the agenda. Priorities are being set locally: in Crawley, Labour will require 40% of new housing to be affordable, for example, while the priority for Croydon is to make it a living wage borough. Getting money out of the centre, from Whitehall to the town hall, is essential if we are to rebuild confidence in the power of people working together to create a future that is right for them and their communities. So, from the safety of this unelected House, I say to all those elected councillors: when the euphoria of election fades and the scale of the challenge emerges, keep the faith. Local councillors have a vital role to play for their towns and cities, their communities and, indeed, their country.

1.04 pm

Lord Palumbo of Southwark (LD): My Lords, I am delighted to contribute to this debate on the Government’s programme for the coming year. The country’s financial position is, of course, central to this programme. Current UK Government debt is approaching 100% of GDP. Household debt is roughly the same. Financial sector debt is more than double this amount, due to the historically large size of our banking industry. Then there are off-balance-sheet issues such as private finance initiatives and unfunded pensions. I appreciate that it is a matter of opinion as to whether these should be included as liabilities of the state but if the country were to account like a business, they would be. These add perhaps another 200% of GDP to our debt. Economists differ as to our total debt amount but on any basis we must be approaching 500% of GDP, which makes Britain one of the most indebted countries in the world.

Over the past four years, the Government have made heroic efforts to combat the legacy of the 2008 financial crisis. While opinions might differ as to the wisdom and effect of quantitative easing and other stimulus programmes, the Government have steadied the financial ship. The problem is that despite the austerity narrative, public spending continues to rise

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and our debts continue to grow. Then there are a number of other issues thrown into the political mix such as Scottish independence, immigration and Europe, which perhaps distract from the key fiscal debate. Beyond this, it is a very difficult debate to have because it involves cutbacks to the way we live and, as your Lordships know, human beings are hard-wired to avoid pain. Who will vote for that and which politician will put pain centre stage in their manifesto?

There are many opinions on how to deal with our economic problems. I know that I am inexperienced in politics and your Lordships need no lessons in “a better way of doing things” from me. Alas, as a businessman, I have no other frame of reference. John Micklethwait and Adrian Wooldridge from the Economist recently published a book, The Fourth Revolution. In it they drew lessons from the Asian economic model, in particular from Singapore. These lessons provide some interesting ideas, including: a system for educating public administrators from an early age and paying them generously—in business terms, hiring the best; a more robust system for social welfare with higher contributions from individuals and businesses; more emphasis on self-reliance and, most of all, long-term business planning. I appreciate that Singapore operates under a different political system and that some of its methods would be difficult to apply in western democracies. However, the country’s success rather speaks for itself. We have also seen western countries such as Sweden adopt Singaporean-type methods, such as the tight fiscal rules which reduced Sweden’s debt from 70% to 37% of GDP in fewer than 20 years.

I understand that there is tremendous nuance in this area of debate. It is all too easy to sound off and there are no easy answers. However, we must plan for some bumps in the road ahead, such as when rates normalise or we have further political uncertainty. I sincerely hope and expect our recovery to gather pace but if it should falter, we may need to consider more stringent business methods with which to run our lives.

1.08 pm

The Lord Bishop of Rochester (Maiden Speech): My Lords, I thought that your Lordships might welcome a maiden speech as a kind of interlude in the midst of today’s business. I am most grateful for the welcome that I have received in your Lordships’ House since my introduction on, of all auspicious days, April Fools’ Day. I am particularly grateful for the courtesy, kindness and helpfulness shown by the Lord Speaker, Black Rod, the Clerk of the Parliaments and their staff.

I enter your Lordships’ House as Bishop of Rochester and thus, in a sense, I represent parts of Kent and south-east London which were for a time predominantly Saxon, if tradition is to be believed, in contrast to the Jutes who inhabited east Kent. For most people, such historic divisions have disappeared along with the history of early medieval times, but of course we in the Church of England hold strongly to our historic divisions, even sometimes holding them with affection, and to this day a great gulf therefore continues to be fixed down the middle of Kent in ecclesiastical terms between the diocese of Rochester and the diocese of Canterbury—it outdates us by a mere seven years.

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More seriously, I come to your Lordships also as bishop to prisons, a role that I have recently inherited from the former Bishop of Liverpool who I know brought care, commitment and intelligence to that role both within your Lordships’ House and more widely in the nation. It is a role that I have accepted with enthusiasm and some modest knowledge, not least because I am married to someone who has spent a great deal of the past few years in prison—in her professional capacity, I hasten to add. The title of “bishop to prisons” notwithstanding, the brief covers most of the criminal justice and penal affairs world. In that regard, I look forward to engaging, within the life of your Lordships’ House, with matters such as the proposals for secure colleges, which merit some serious thought and attention, and others that no doubt will be touched on in this House next week.

As an aside, I was aware in some of the reporting of the gracious Speech, or rather its televising, of the continued observations that I am part of an all-male Bench. One of the tasks that I carry at the moment is to take before the General Synod in July this year the draft Measure that would bring that position to an end, and I suppose that I crave your Lordships’ encouragement in those matters later this year.

Noble Lords: Hear, hear!

The Lord Bishop of Rochester: Having been what one might call a jobbing vicar for 23 years, I come to your Lordships’ House with that background. My journey has taken me from living and working in inner-city Birmingham for a number of years and then in more suburban parts of that city to rural north and west Norfolk and, now, within the very mixed socioeconomic geography of north and west Kent and south-east London. In each of those rather varied settings I have found myself drawn to, among other things, a particular interest in and engagement with issues around housing and homelessness. Having served for some 20 years on the boards of housing associations, first in the city of Birmingham and then in East Anglia, and now chairing the trustees of Housing Justice, which is the national ecumenical voice of the churches on these matters, I expect also to take a particular interest in these issues within the work of the House.

A number of speakers in this debate—the noble Baroness, Lady Andrews, and the noble Lords, Lord MacGregor and Lord McKenzie—have touched at some length on issues to do with housing. I hope that it is not thought too controversial for what is meant to be an uncontroversial maiden speech if I touch on some of those matters again. It is hard at present to go even 24 hours without being aware of some comment, research report, announcement or other public contribution on housing-related matters; reference has already been made today to the recent intervention of the Bank of England, and there have been many others. At some point, housing-related questions impinge at almost every level on discussions around the economy, family life, community well-being, societal cohesion, welfare policy and much more besides.

Living and working in rural Norfolk for six years, I became aware of the pressing need for small-scale affordable housing developments in villages. They are

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essential to sustain the diversity and vitality of such places—their community infrastructure, as it were—not least by enabling local younger people to remain in their communities and to be economically active in those places. In the south-east, where I am now, an area dominated by the London housing market, as we have heard, there is a similar need for housing to be available to those working in the lower-waged sectors of the economy—sectors that are vital for that economy. We have heard of the huge pressure on housing, both for purchase and for rent, in the south-east. In our socially disadvantaged communities across the nation, there is a simple need for decent places to live at prices that can be afforded in communities where support networks and opportunities for training and employment are also close at hand.

Why do these things concern me as a bishop, or indeed simply as a human being? Because at a very deep level our human well-being is bound up with our sense of belonging and identity—and, our sense of the global notwithstanding, belonging and identity are in turn bound up with our sense of locatedness and, more specifically, of what we might call home. For those like me who draw inspiration from the Judaeo-Christian tradition, we find in the Hebrew prophets a vision of a person sitting in security beneath their vine and their fig tree, with no one to make them afraid, and at another point there is the encouragement, even when finding oneself in a strange place, to build homes, settle down and plant productive vineyards. These are visions of settledness, locatedness and security. “Home” in that sense is of course about much more than bricks, mortar and roof tiles, but certainly in our culture, and perhaps more specifically in our weather, to think of home without adequate and affordable bricks, mortar and roof tiles is very hard indeed.

As we have heard, the Government’s programme for this Parliament, as outlined yesterday, touches on housing matters at a number of points. There is the expression of a continuing aspiration to increase housing supply by means of reforms of various kinds, including to the planning system, about which we have also heard; initiatives such as the garden cities, the first one of which, at Ebbsfleet, will be in my diocese; and support for small housebuilding firms. Alongside this, there is the intention to see new homes built to a zero-carbon standard although, while I welcome that, the big issue is of course the retrofitting of existing homes to those sorts of standards, which is far more difficult.

I await the outcomes of all this with interest because, as I think we all know and acknowledge, there is an awfully long way to go regarding housing supply, markets for housing both for purchase and for rent, and many other issues connected with housing in one way or another. I am well aware that the issues are complex, having worked in the field in one way or another for 25 years, and that there are no easy answers, but I cannot rest content for as long as there are those without somewhere to call home and, more sharply, without security in relation to the shelter over their head. I trust that Her Majesty’s Government will continue to give these matters focused attention for they are foundational, yes, for the economy, but also for our individual, familial and societal well-being.

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Lest it be thought that people like me talk about these things and then simply sit back and expect others to make things happen, I would point out that the churches are not inactive in this field. Our work at the sharper end of homelessness, often of course in partnership with others of good will, is well known: winter shelters, advice centres, day care and the like. But it goes further than that: there is, for example, under the umbrella of Housing Justice, the organisation that I chair, a project that we call Faith in Affordable Housing. Developed over recent years, this helps to make church-owned land and property available for development for affordable housing purposes. The resulting developments are small scale but are beginning to emerge in both England and Wales, in urban and rural settings. We need more such initiatives. As well as legislation and policy, we need imagination, creativity, a properly entrepreneurial spirit and a restless passion for what is right and good for the future of our society in this regard. This is for the well-being of us all—and, more particularly, for that of our children and our children’s children.

1.18 pm

Lord Jenkin of Roding (Con): My Lords, it is a particular pleasure for me to congratulate the right reverend Prelate the Bishop of Rochester on, if I may say so, a very attractive and persuasive maiden speech. Housing is certainly a very important issue, as a number of speakers on all sides of the debate have made clear today. The right reverend Prelate, as he explained, brings very special knowledge and experience in that regard to our debates, and we will very much welcome that.

He has also talked about his work in prisons. That is an enormously important area for the work of the churches, in order to help the prisoners when they come to be released back into the community and hope for their redemption. He did not mention one of his interests, which is urban regeneration. I spent some years at the Department of the Environment dealing with those problems, and I have no doubt that the right reverend Prelate will bring much wisdom to our debates.

I have to tell the House that the right reverend Prelate is very keen on choral singing. As a founder member of the Parliament Choir, I hope he may be persuaded—although I think it somewhat unlikely—to attend the weekly rehearsals and sing in one of the choir’s performances. Perhaps that is asking too much.

It is a particular pleasure to me to be able to welcome the right reverend Prelate’s maiden speech as I have a brother and a son who are in the church and I draw considerable benefit from their advice, as the right reverend Prelate the Bishop of Leicester well knows from what has been said in recent years. I say to the right reverend Prelate the Bishop of Rochester that we all very much look forward to the contributions he will make to our debates in the future.

A number of speakers have already touched on the Infrastructure Bill, and I join my noble friend Lord MacGregor in congratulating my noble friend Lord Deighton on his speech and on what he had to say about that subject. We all await the development of the very exciting proposals which he outlined to the House.

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On the subject of energy, there will be not only the infrastructure proposals directly. As the gracious Speech noted, we are going to see measures to implement the electricity reforms which were legislated in the previous Session under the Energy Act 2013. Rather unusually, the gracious Speech referred to what in practice will amount to delegated legislation which is involving much activity by DECC. I had a Question down two days before Prorogation and miraculously it was answered by the Minister before we prorogued. I was very pleased about that. My noble friend Lady Verma outlined the programme for the EMR secondary legislation:

“It is the Government’s intention that these regulations will be laid before the House at the beginning of June 2014 and published concurrently”.—[Official Report, 14/5/14; col. WA508.]

Well, time has slipped, as I learnt yesterday that it is now going to be towards the end of June. I hope that is not a harbinger of other delays in future. There will also be a number of responses to consultations that have been issued over recent months, and it is quite clear that the department has a great deal to do. It means that this House will also have a lot to do in dealing with that delegated legislation.

Among the issues which we will be considering is another matter that is left over and about which the Minister has not had a reply. It is the application to the European Commission for state aid approval for the various measures in the electricity market reforms. The first being considered in detail at the moment is the application for the nuclear power station at Hinkley Point in Somerset. Those of us who took part in the debates on the Energy Bill were encouraged to write to the Commission and express our support for the application in the hope that the Commission would approve it. I duly wrote and stressed that the Government’s electricity market reforms are vital to allow essential investment in new low-carbon generation of all types to come forward. One does not often get acknowledgements from government departments, but I had a very handsome formal acknowledgement from the Commission and I have no doubt that others who wrote in did as well. I made it clear, and it is certainly true, that EDF and its partner firms need clear and timely approval from the Commission that the arrangements that have been agreed with the Government and are now the subject of legislation are compatible with the state aid rules. The Competition Directorate has completed its consultation, and we have been assured by Commissioner Almunia that he intends to decide the case during his term of office, which ends later this year. There must be no delays to this progress. Our margins are getting very slender, and although the nuclear power station will not be operative until the early 2020s, other investment will need to go forward and we need the approvals to enable that to happen.

In particular, I want to mention the capacity market. The measure in the Act is the framework intended to ensure that we have investment in electricity generating capacity, particularly to help to keep the lights on when the wind does not blow. Regulations, which are awaited with keen interest, have been the subject of fierce negotiation between the industry and DECC. It is now looking as if what comes forward will meet most of the representations that have been made by

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potential investors. Last month, I had a very helpful letter from the Minister for Energy, my right honourable friend Michael Fallon, in which he spelled out the measures that are likely to be in these regulations. This House will want to look at them very carefully when they are issued to make sure that they achieve what is required.

The capacity market also has to be approved by the EU Commission and is the subject of a separate application under the state aid rules. It has been difficult to find out where the application has got to, but yesterday I had an answer from my noble friend. In advance of her letter, her office very kindly answered my question about the process and timing of that state aid approval and stated:

“We have engaged with the Commission since the start of the policy development process and continue to do so. Discussions with the Commission are at an advanced stage and the Commission is fully aware of our deadlines. At present, we do not foresee any delay and our plans for the first auction in December remain on track ... A delay is not currently anticipated”.

We shall want to watch this very carefully. There have been huge delays in the investment programmes so far, and we cannot afford any more. We are facing very narrow margins over the next two or three years, and this urgent gas-fired investment will be essential to keep the lights on.

The gracious Speech foreshadowed the Infrastructure Bill, which had its First Reading this morning. As my noble friend Lord MacGregor made clear, it includes measures to ease the path for the development of shale gas and oil and geothermal energy. It is interesting that the consultation paper that has been issued covers both almost in parallel because they raise exactly the same issue of deep drilling. Shale gas involves horizontal drilling, which is part of the technology. A lot is known about this because of the consultation paper that has been issued. There has been quite a lot of consultation with stakeholders in recent months. I agree with my noble friend Lord MacGregor that this implements the recommendation that came from his Economic Affairs Committee. Like him, I hope we shall have a response to that very soon so that we can debate in the House that hugely important report. Suffice it to say that the report sets out in detail the very great economic benefit that will accrue to this country from the successful exploitation of this energy source. Of course it must be safe, and of course the environment must be protected, but the evidence that was given to that committee shows that, in fact, that is all entirely possible.

Why do we need this new provision? When I was reading law at university more years ago than I care to remember, I was taught that the common law of England provided that the ownership of land—I shall eschew the Latin, because I know it is out of order—roughly translated, carries ownership of the space up to the heavens and down to Hades. Of course, the minerals below that have long since been nationalised and therefore do not belong to the landowner, unlike in America where they still do. The right to use the space is still that of the owners. Below 300 metres—the figure in the consultation paper—it really can be of absolutely no practical use to the landowner at all. Yet some of the opponents of fracking have threatened to

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buy strips of land all around so that they can stop the exploitation of shale gas simply by saying, “Sorry, you cannot go through our land”. The Government have made it clear that this is of huge importance to the economy of this country and in helping Europe as a whole to become less dependent on imported sources of gas. I will warmly support the proposal in this Bill.

However, there seems to be a question of timing. The consultation was launched last month and is not due to end until August, in the long recess. Are we really going to debate this Bill and the clauses in it without knowing whether it will in fact be approved by the Government and without having seen the Government’s response to the report? I find this quite difficult. It would be helpful if something could be said about that when the Minister winds up.

It was suggested at one point that this Parliament would have very little to do in its last Session. However, as my noble friend Lord Razzall and others have said, that simply is not true. We are going to be extremely busy, and I warmly welcome the gracious Speech.

1.33 pm

Lord Giddens (Lab): My Lords, I also congratulate the right reverend Prelate the Bishop of Rochester on his excellent maiden speech, which was both forceful and charming—two qualities which are hard to merge. I hope that the right reverend Prelate enjoyed the reference to “up to the heavens and down to Hades”, because that is the way we speak in the House of Lords.

I have recently, after many years, been rereading Marx. After all, capitalism is in the middle of probably the biggest crisis that it has experienced in its existence, because it is now a global system. Here are one or two choice quotes which I dug out from Marx:

“just as any revolution eats its children, unchecked market fundamentalism can devour the … long-term dynamism of capitalism itself”.

Here is another juicy little quote:

“Capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith”.

The net result, Marx concluded, is revolution.

I do not know whether I have fooled anyone—probably not the Minister—but these phrases do not come from Marx at all but from an altogether different source: Mr Mark Carney, the Governor of the Bank of England. They were made not a century ago but as recently as last week. Moreover, Mr Carney’s objective was not to overthrow capitalism but to rescue it. The speech was, however, remarkable, especially given the source from which it came. I ask the Minister for his opinions on some of the themes which it contains. They are pretty powerful. The speech was full of implications for policy-makers and is relevant to the themes of the gracious Speech.

Mr Carney identifies some of the economic stresses and strains that have caused disillusionment among citizens, have alienated many of them from orthodox politics and have helped to fuel the rise of populist anti-establishment parties. He identifies three sets of factors in his speech. All, I suppose, are pretty well known but they are fundamentally important. First,

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he mentioned the emergence of staggering levels of inequality, especially at the very top, with the bankers in the lead. He says:

“Bankers made enormous sums in the run-up to the crisis and were often well compensated after it hit. In turn, taxpayers picked up the tab for their failures”.

Huge resentment has followed from the fact that ordinary people have had to pay for the excesses of the rich. At the same conference at which Mr Carney spoke, Christine Lagarde, the head of the IMF, made similar points in an equally forceful fashion, not about inequality in general, but about extreme inequality at the very top. I am pleased to see that the gracious Speech contains not one but two references to creating a fairer society. I would like, later on, a bit of expansion on how this is going to be achieved.

Mr Carney’s second point, made by many noble Lords here this morning, is that the recovery leaves large swathes of young people especially isolated from prosperity or jobs. The famous “lost generation” is a phrase used by everybody but is no less powerful for that because it is a serious risk. Even in my sector, as a university person, a substantial proportion of college graduates are unemployed—much larger than was the case a few years ago.

The governor’s third point is about the enduring effects of the crisis upon the poor, of which we have again heard mention today, especially in decaying working-class areas. These people bear,

“the real costs of financial instability—unemployment and the seizure of credit”.

Does the Minister accept this analysis, which seems to me to be very accurate? I particularly ask the Minister whether the Government accept the key theme of the speech—which is why it is such an important speech to be given by the Governor of the Bank of England—that market fundamentalism has proved divisive and dangerous. That is a big thing for the Governor of the Bank of England to say, and its implications are important.

Mr Carney indentifies three basic strategies which the Government should actively pursue to try to pick up the threads of these difficulties. Again, I will list them as a threefold set of remarks. The first policy should be to reintroduce competitive markets where market principles have become undermined. As Mr Carney puts it,

“Many supposedly rugged markets were revealed to be cosseted”.

Would the Minister agree that this includes situations of oligopoly? In circumstances of oligopoly, you have neither public control of the companies concerned, nor do you have a market. That situation applies in fairly large chunks of British industry today. It would be interesting to know if the Government have any policy of attacking that issue.

Secondly, Mr Carney says we should affirm the centrality of social justice, concentrating especially on the redistribution of wealth and income. He said,

“inequality… is a critical determinant of well-being”.

What policies do the Government have in place to reduce inequalities at the very top? The stress on tax avoidance has been important and consequential, but it is clear that much more needs to be done and we are dealing to some extent with a global and not just a

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national issue. What progress has been made, in the Government’s eyes, in either closing down or limiting the impact of tax havens?

The third point made in the speech is that we have to rebuild a sense of vocation in business and especially in banking. Mr Carney said:

“In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients”.

What should the role of Government be in promoting a culture of ethical business? How can relationship banking be introduced on a substantial scale?

I do not ask these questions in a particularly partisan spirit because we all have an interest in saving capitalism from itself.

1.41 pm

Lord Wrigglesworth (LD): My Lords, I am very grateful that I am following the good and noble Lord, Lord Giddens. The last time that he and I spoke in a debate he made some very kind remarks following my maiden speech. If I had spoken before him today he might have felt the need to rectify the remarks that he made on that occasion, although I hope not. I shall not follow him in his analysis of the governor’s speech, but I join him in complimenting the right reverend Prelate on his maiden speech today. The right reverend Prelate’s comments on the housing market—I shall say something about it as well—will bring comfort to many. It is very reassuring to know that he and his colleagues do so much good work not only in the housing sphere but in so many other spheres in this country. I am sure that it will be rectified and that we will benefit in future debates from the experience he has had.

I was in the other place for nearly 14 years and have spent 25 years in various businesses primarily in the north of England but in the north-east in particular. I have frequently thought that so many of those involved in politics—particularly in the other place, if I may be forgiven for saying so—considerably underestimate the importance of confidence in the business world and in business decisions. Therefore this very delicate flower needs to be nurtured and sustained. It is a very delicate flower and a very sensitive issue.

Those of us with long memories can think of other occasions when confidence was shattered and damage done as a result of events spiralling out of control. I think of the Millom Co-op in Cumbria going bust in 1969, which led to a run on co-operative societies throughout the country. I was very involved in the co-operative movement at the time. The situation led to something happening which people do not recognise today, when the Co-operative Building Society changed its name to the Nationwide Building Society. It had a profound impact on businesses. I have often thought of that occasion during the recent discussions about the Co-operative Group and the difficulties that the Co-operative Bank has been facing.

We also had the secondary banking crisis in 1974. I was working in the City at the time. It was a major banking crisis. The Bank of England launched a lifeboat to save many banks but it allowed some of them to go to the wall. That crisis had the potential to cause a run on the system of the sort that we have seen in more

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recent years. Then, of course, we saw Northern Rock all of a sudden undermining confidence and the start of a run. Before that situation could be controlled it almost spiralled out of control.

It was of fundamental importance for this Government to inspire confidence in what they were doing and to gain the market’s confidence. I would maintain from these Benches that my colleagues in government, not least the Chief Secretary to the Treasury, who has been primarily responsible for some of these matters, and the Deputy Prime Minister have made a major impact in maintaining the confidence of the markets. The Chancellor and the Government have made a difficult judgment which has had to be carried through and sustained over time, but it has led to that confidence. Apart from any other benefit, it has saved billions of pounds in interest on the debt which the Government have to sell on the markets. It has been crucial to get that judgment right. When one is in the sort of situation that the Government were in it is better to err on the side of caution rather than risk losing the confidence of the markets.

The Office of Budget Responsibility’s March outlook report stated that the Government remained on course to meet the fiscal mandate a year early in 2017-18. The underlying deficit in public sector net borrowing peaked at 11% of GDP in 2009-10, but the underlying deficit has fallen in cash terms and as a percentage of GDP for every year of this Parliament. The OBR reported that the deficit had fallen by more than a third by the end of last year. The deficit is forecast to have halved in the coming year from its post-crisis peak to reach 5.5% of GDP—£95.5 billion—which will be the first time in six years that annual public sector net borrowing will be below £100 billion.

According to the International Monetary Fund, between 2010 and 2013 the UK has reduced its structural deficit more than any other G7 country. If there is any question in anybody’s mind as to why the markets have confidence, one need only look at what the Government have achieved. This party on these Benches has paid a heavy political price for that austerity programme, but it was absolutely in the national interest that it should be carried through and sustained. I am proud to have been associated with what the Government have done on that front, which has led to the start of growth in the economy that we are seeing now.

The objective of long-term sustainable balanced recovery is still there. It is being sustained also by direct action by many departments, in particular Vince Cable’s department, with Vince Cable himself carrying through an industrial strategy that has underpinned the monetary policy and fiscal policy that the Government have pursued.

There has been support for public sector investment with green investment, the green bank, the business bank and the industrial strategy itself in many respects, with the training, innovation and technology strategy and the catapults. I could go through the whole range of things that that department and others have carried through, not least of which has been the work of the regional growth fund.

I was deputy chairman of the regional growth fund with the noble Lord, Lord Heseltine. That has had an enormous impact in regions such as the north-east in

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sustaining, in particular, smaller enterprises and getting investment in manufacturing going in a way that everyone in the country would like to see. The regional growth fund has been criticised for not getting money into the pockets of the businesses that have been awarded the money. It should be understood that this is not like other grant-giving bodies. If firms bid for grants, nothing is given until all the due diligence has been done and the contracts agreed. However the regional growth fund is a challenge fund where a conditional offer is made. The matter then has to go to due diligence and negotiation of the contract before the grants are given, which can take a very long time. Sometimes during the course of that negotiation and the due diligence being carried out it will be decided not to give the grant. That is the nature of a challenge fund of the regional growth fund-type. It is doing a magnificent job in the regions of this country and makes a very considerable impact, which has led to some of the jobs that have been created.

However, over the next five years this Government and the new one will have to make further judgments on public spending as the time to do so arises. We need to avoid getting involved, certainly on these Benches, in any “cold shower” economics—as in “Cold showers are good for you”. I refer to the masochists, who think that cutting is a virtue in itself. There is a balanced judgment to be made in sustaining the confidence of the markets, to which I referred, while at the same time ensuring that public services are protected and the weak and vulnerable are taken care of. That is a judgment that successive Governments will have to take—and there are going to be some very difficult judgments. If the party opposite ends up in office after the next general election, it will have to make some very difficult decisions on what to do about ring-fencing education and health—as will we, if we are in the same position as we are in at the moment. Anyone who looks at the public expenditure forecasts will see that, if they continue to be ring-fenced, they will be a massive proportion of public expenditure, which I believe is unsustainable. If that is the case, there are going to be some very big and difficult political decisions to be taken on what to do about education and health. I flag that up as something that a Government will have to do something about in the fairly near future.

Secondly, there is no national housing market, and some very misleading debate takes place on that issue. It is grossly misleading to talk about the average house price without taking into account all the regional differences in the country. According to Economic Research Council figures, across England and Wales house prices have increased by 6.7% over the past year, but remain about £10,000 below their peak price in late 2007. However—and I quote from my own experience—in the north-east, prices have increased by only 2.9% over the past year and actually fell in April, compared to March. Compared to their peak price, homes in the north-east are still £30,000 cheaper than they were in 2007. However, differences between the north-east and the national average are small when compared with the London market, where there has been an annual increase of 17% and prices are now £90,000 higher than at the previous peak of 2007.

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I plead with those who want to start taking national policy decisions that will affect the markets outside London not to think that taking steps on the Help to Buy scheme is going to affect anything in central London. Frankly, I am not sure that there is much that the Government can do, unless it is a very radical policy, to affect the central London housing market anyway. How do you control overseas investors and the cash that is going in? You can control the mortgages and sustain the banking system, but you would find it very difficult to stop the money coming into the London housing market from the places from which it is coming in at the moment. That is one plea that I make. In future, these decisions will be extremely difficult if we are to sustain the confidence to which I referred.

I am delighted with how the gracious Speech has carried forward the economic policy measures of the past four years. I very much like the programme of legislation that is outlined in it, and very much commend it to the House.

1.54 pm

The Lord Bishop of St Albans: My Lords, I, too, congratulate my colleague the right reverend Prelate the Bishop of Rochester on his maiden speech. From these Benches, I can say that we are delighted that he will bring a great deal of insight and experience, not least into housing and prisons, into our debates.

There were a considerable number of areas in the gracious Speech which we, too, would welcome. Before I get on to specifics, I will make one or two general points. After the gracious Speech yesterday, I took my guest through to the other place, where the debate had already started. The Leader of the Opposition spoke of the very considerable disconnect between the electorate and Parliament. He pointed out:

“About 10% of those entitled to vote at the recent elections voted for UKIP, but as significant is the fact that over 60% did not vote at all. Whatever side we sit on in this House, we will all have heard it on the doorstep … ‘It doesn’t matter who I vote for.’ Of course that is not new, but there is a depth and scale of disenchantment that we ignore at our peril—disenchantment that goes beyond one party and one Government. There is no bigger issue for our country and our democracy, so the test for this legislative programme, the last before the general election, is to show that it responds to the scale of discontent and the need for answers”.—[Official Report, Commons, 4/6/14; col. 15.]

I recognise the problem, especially among the younger generation, but surely that is due at least in part to the loss of the concept of the common good. I fail to see how any particular piece of legislation is going to deal with that deeper discontent. There has been such emphasis on the mantra that rights and entitlements trump duties and obligations that we have lost the widely held narrative about how communities and families thrive and flourish and have lost sight of the fact that we find our individuality within families and communities, in mutual relationships. In short, we have created, or allowed to be created, unrealistic expectations about what life can offer and what politics can deliver.

Part of our task, as well as the legislation laid out in the gracious Speech, is to create a debate about how we live together that will involve our rights, of course, but also a much greater emphasis on what each of us

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needs to contribute. That tension is illustrated in yesterday’s legislative programme laid out before us, such as in the reforms to planning law. As part of the proposed infrastructure Bill, Her Majesty’s Government pledge to,

“Speed up the pace of delivery in key areas of infrastructure developments”—

wait for it—

“whilst still safeguarding the need for communities to be involved”.

Therein lies the tension that we are all trying to grapple with.

I welcome the Government’s commitment to responsible stewardship of public resources through seeking to simplify planning and infrastructure decision-making procedures. Yet the importance of giving proper consideration to those whose lives will be affected by these changes must not be overlooked. Subsidiarity must be a key principle in any reforms—working towards a more participatory democracy, in which all people feel that they have a stake in a shared society and want to engage in the democratic process. It is not an easy task. We have to insist that people do not retreat into an unthinking, uncaring nimbyism that refuses to address the real problems facing us. That is precisely the point that my colleague the right reverend Prelate the Bishop of Leicester made in his speech.

We find that same tension in the area of housing. I, too, welcome the announcement that there will be an increase in housing supply. There is no doubt that, certainly in some parts of the country, there is a huge shortage. But I know that in many areas, not least in some rural areas with which I have had close connection, the building of large quantities of housing is precisely the reason why some people feel that politicians do not listen to them. That is the dilemma that we are grappling with. Those people feel powerless; they think that their vote cannot, and does not, make a difference. How can we find ways to engage with local communities, again insisting that they do not put their heads in the sand but engage with the problems in their localities? Surely this is one of the areas where we need to work out a way to devolve powers from Westminster and enable more local solutions for housing.

One of my particular interests is the rural economy and rural sustainability. I note Her Majesty’s Government’s commitment to opening up shale gas sites,

“by clarifying and streamlining the underground access regime”.

I recognise the importance of energy security, which will certainly be threatened in the coming years. However, the discussion about changing the law to allow companies to exploit gas reserves under privately owned land in return for only minimal compensation to landowners, even if the latter object, may not be the best way to achieve this end, especially if it is clear that profits are being taken out of that area and going somewhere else. Is this not another area where we need to think about introducing local agendas whereby communities can see that they will get tangible benefits from opening up the land and from the gas that is taken from it?

I am fully aware of the vital importance of energy security but have reservations about the wisdom of Her Majesty’s Government’s continuing overreliance on fossil fuels. We cannot afford to wait until we run out of fossil fuels before turning to alternative sources

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of energy. Indeed, we have more than enough fossil fuels remaining to do almost irreparable damage to our world. Rather, we must continue with serious sustained investment in research into and development of renewable energies to go along with the legislation on shale gas.

If the United Kingdom is to meet its commitment set out in the Climate Change Act of an 80% reduction in emissions from 1990 levels by 2050, growth in the renewable energy sector will be needed way beyond the current 15% share of the national electricity supply. I applaud the Government’s push for an EU energy and climate change package that would mean at least a 40% reduction in greenhouse gas emissions by 2030. To this end, the Government’s investment in renewable energy sources must match the growth in private sector investment, which has created more than 37,000 green jobs across the UK in the past five years.

I note that there is time in the coming year for draft legislation to be published providing for direct elections to national park authorities in England. However, I should point out that many of us were not only hoping that legislation would be brought forward to respond to the forestry report, which was published in July 2012, but had tabled Written and Oral Questions on the matter. I am sure that some noble Lords are thinking that that topic is not for debate today as it concerns rural affairs, which will be discussed some time next week. However, one of the key points about the forestry report is that it is not just about the environment or leisure but has profound economic opportunities and implications for rural areas. I will not refer to them all but point out where it seems that we need to do some joined-up thinking.

We have been promised that the forestry report will be taken forward but some time has elapsed since its publication. This is one of the report’s recommendations:

“Government, woodland owners and businesses to seize the opportunity provided by woodlands to grow our green economy by strengthening the supply chain, and promoting the use of wood more widely across our society and economy”.

Another recommendation states:

“Local Enterprise Partnerships should work together to bid for funding … to develop woodland enterprise zones in areas where there are opportunities for a revitalised woodland economy to help create jobs in rural areas”.

I will quote one further recommendation:

“Local Authorities should use their Local Plans to introduce a ‘Wood First’ policy for construction projects to increase use of wood in buildings”.

Incidentally, this fits in closely with the Government’s desire, as spelt out in the gracious Speech, which states:

“Legislation will also ensure that new homes are built to a zero carbon standard from 2016, which will reduce carbon emissions and reduce household energy bills”.

The recommendation goes on:

“They should also create a positive planning environment for sustainable wood and forestry businesses, as well as those based on woodland leisure and tourism, that should always enhance natural capital”.

I hope that as we take the legislation forward some of these aspirations and recommendations will be brought before us.

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A number of noble Lords have pushed Her Majesty’s Government to take all these recommendations forward, not least for economic reasons. I hope that a way will be found to do that in the coming year.

2.05 pm

Lord Marlesford (Con): My Lords, I suggest to the Opposition Front Bench that the continuing message from the opinion polls, as confirmed by the results of the European Parliament elections a couple of weeks ago, is that criticism from Mr Miliband or Mr Balls of how the Government have handled the economy is very unconvincing.

The Chancellor has taken us out of the recession. That is what matters. Britain is growing at 3.3%, the same as Germany and much more than the USA. Socialist France, under the disastrous M Hollande, who is, in some ways, as weird as Mr Miliband, is growing at a derisory 0.1%. Italy is still in recession. Even with Germany to help it, the eurozone is making only 0.8% growth, while the rate in Britain is 3.3%. Unemployment, on the ILO basis, in the last quarter of 2013 was 7.1% in Britain while the rate in the eurozone was 12%, with France at 10.8%, Italy at 12.7% and Spain at a horrific 25%. The US rate is 7% and in Germany it is an enviable 5.1%. Net borrowing has been greatly reduced from 11% of GDP during Labour’s last year in office to 6.6% in 2013-14. However, not surprisingly, net debt—that is, the total government borrowing—is still far too high at 76% of GDP, well above the comparable Maastricht 60% target. We had been well below the Maastricht limit for more than 30 years until Gordon Brown so unwisely took the brakes off the economy. Inflation, the monster we must never forget, is not on the horizon but is never off the map. In 2010, using the old RPI, which I believe to be a much better indicator than the CPI, it was 4.8% and is currently 2.5%.

All this, of course, involved a period of austerity, with most of us seeing our take-home earnings falling in real terms over the past four years. Mr Miliband says that all this could have been achieved without the pain of austerity. Indeed, he implies that he would take the brakes off again. That reminds me of the story of Columbus and the egg. When Columbus came back from discovering America, the King of Spain gave him a great banquet and everyone praised him. Some of the courtiers were rather jealous. They said, “We could have done that, too. Why all this praise for Columbus?”. Columbus—after dinner, admittedly—took an egg and asked, “Can anybody balance this egg on its end?”. They all tried and of course could not do so. He tapped the bottom of the egg until it was nice and flat, and made it stand on its end. They all said, “We could have done that”. “Yes”, he said, “when I had shown you how”.

Having given priority to the views of Mr Miliband, let me come on to the advice we are getting from the EU on how we should run our economy. When I read it, I was reminded of the remark of the great Clement Attlee to Harold Laski when he was at his most loquacious:

“A period of silence on your part would be welcome”.

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I would make one point on the EU and tax. Following the European Parliament elections, the Commission really must face up to the impracticality of the financial transaction tax unless it is operated on a global basis. Sub-Committee A of the EU Committee, which I am about to leave after four stimulating years under the excellent chairmanship of the noble Lord, Lord Harrison, spent many months pointing out that the FTT was potentially deeply damaging to Britain’s position as Europe’s financial centre. London is one of the three great financial centres of the world, along with New York and Hong Kong. Now that there is diminishing support for the FTT, it should be abandoned and there should be a focus on introducing a workable stamp duty.

I want to mention one particular worry over the economy—the amount of toxic debt that still lurks. I want to take one item only as an example: the level of credit card debt that has overrun. It is not the debt that you and I pay off each month, but what is not being paid off and is therefore subject to very high rates of interest—anything between 16% and 26%. On the whole, few people can afford to borrow at such rates. Certainly, the sort of people who use credit cards to do so cannot afford it. It is basically unsecured debt and is therefore highly toxic. The last time the banks sold off this debt to the debt collectors they received between 8p and 12p in the pound for it. The level of that debt is currently more than £57 billion—more than £1,000 for every adult in the UK. It is also more than 20% of the market cap of all five big banks put together. In terms of stress tests on banks, we are talking serious money. Let us be clear that this consumer debt is completely different from mortgage debt, which is, to a large extent, secured by the houses on which it is made. The percentage growth in overrun credit card debt is interesting. It had been in single figures until the middle 1990s. It increased to 13% by the start of 1995, it increased hugely to 25% a year later and it has only recently started to come down again. Actually, it is beginning to creep up again. There is, for me, an unsolved mystery in the difference between the monthly figures published by the British Bankers’ Association and those published by the Bank of England. I am trying to discover the reasons.

Finally, I turn to the issue of how to deal with the taxation of residential property. One way not to do it is through the mansion tax proposals, so unwisely postulated by Dr Cable before he had begun to work out how to do it, and foolishly picked up by Mr Miliband. If Mr Miliband were to read the memoirs of the noble Lord, Lord Healey, he would see a warning on how not to introduce a wealth tax until you have worked out the details. Noble Lords will remember that Mr Healey tried to introduce a wealth tax in the 1970s. A lot of obstacles appeared and the proposal was referred to a Commons Select Committee, which said that the scheme could not work—and Mr Healey wisely abandoned it.

However, we all accept that although council tax was an excellent replacement for the disastrous poll tax, it has been hugely overtaken by the housing boom. To have eight bands, A to H, based on April 1991 house values, with top band H representing houses worth more than £320,000, is wholly inadequate when so many properties are making millions. There is

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an understandable and justifiable demand for those with much more expensive houses to pay a higher rate of tax of some form or other. I propose a completely new set of bands that could be called I to P, with the lower band, I, representing houses below a value of £500,000. The bands would then increase: from £500,000 to £1 million, from £1 million to £2 million, from £2 million to £5 million, from £5 million to £10 million, from £10 million to £15 million, from £15 million to £20 million, and over £20 million. One could have much higher rates of council tax on that basis. The key would be not to impose the new rates on all houses now because there would be, first, the gigantic problem of revaluation and, secondly, all the anachronisms of people who have lived for a long time in a house that is much more valuable than they would now be able to afford. There would be an element of retrospection in that. I suggest that the new bands, from the moment they were approved by Parliament, would apply to all subsequent domestic property acquisitions. They would be based on actual market prices, not arguable notional prices based on what district valuers think properties are worth. They find it difficult enough even to work out inheritance tax, let alone value every house. One would use the figures reported to the registrar, and people would know what they were in for when they bought a house. The system would not be retrospective; it would be workable and the sooner we introduce it, the better.

2.17 pm

Lord Sawyer (Lab): My Lords, I have spoken in almost every housing debate since I became a Member and was slightly concerned that today, given all the other economic issues, housing might slip off the agenda. I am pleased that that has not been the case and that many noble Lords—not least the right reverend Prelate the Bishop of Rochester, whom I congratulate on his maiden speech—have addressed it.

Housing is probably the number one economic issue that British people outside this House care about. The previous full debate in this Chamber on housing was back in January, when my noble friend Lady Ford raised the issue. Since that time, it is fair to say that it has gained considerable traction in the public mind. Indeed, in its editorial of 9 May, the Times said:

“Housing is the biggest problem in British politics. If it gets less attention than the biggest problem in British politics … this is because it is a problem that nobody knows how easily to solve”.

That is true; none of us really knows the solution to the British housing problem. The reasons for this unsolvability have been well aired in this House today and many times before, and I do not intend to go through the list of the problems there are in trying to house our people properly. It is true that there is a market frenzy in housing, which I hope will abate, but it gives way to a market frenzy of policy solutions—of daily advice from commentators, new reports from think tanks and opinions from politicians. It is hard for people to understand where we might be going at any given time. I find some of the advice quite depressing. I do not know why the Mayor of London has to be seen to stand up for foreign absentee landlords against the housing needs of millions of people in London. I also do not understand why we get so excited about opinions from the European Commission. Lots of

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domestic politicians and commentators in this country have talked about housing tax reforms, so why do we get excited because the European Commission says, “Why don’t you look at that?”? Well, why do we not look at it? It seems a sensible thing to do. The housing debate needs to get less excited and more serious so we can be seen to represent people’s deep concerns, and not just see it—as I think some people do—as some kind of political football.