Baroness Cox: My Lords, I thank my noble friend for that reply, but it will give little comfort to the Armenians, who feel deeply hurt by what they perceive as Britain's discriminatory policy against them. Can my noble friend confirm that there are already centres in Azerbaijan and Georgia and that the British Council intends to open an office in Tashkent? Can she further say why, even with those developments in the region, Armenia is still being left out in the cold?
Baroness Chalker of Wallasey: My Lords, we are not discriminating against Armenia, but we have to decide from a limited budget where we can be most useful in opening British Council offices. There are now 229 offices in 109 countries. Those figures compare rather well with 108 offices in 79 countries some 15 years ago. As regards the countries about which my noble friend asked, the office in Azerbaijan was provided by commercial money. The offices in Georgia and Tashkent are very small indeed. My noble friend should compare the relative interests. That involves looking at where the money can be found and the priorities. Priorities are never easy, but they are important.
Lord Avebury: My Lords, the Foreign Office has a very limited sum of money to spend on British Council offices. Does the noble Baroness agree that throughout history there has been a very close affinity between the Armenian and British peoples; that Britain in particular took the lead in demonstrating the atrocities committed against Armenians in the First World War; and that at the time Britain was one of the foremost champions of Armenian liberty? Therefore, is it not incongruous that, when other countries in the region are privileged to have British Council offices, Armenia is still being ignored?
Lord Wright of Richmond: My Lords, perhaps I may declare an interest as a director of the company which helped to finance the British Council and diplomatic presence in Azerbaijan. Does the Minister agree that, while it is clearly important that the British Council maintains an adequate presence in the former Soviet Union, it is also very important to ensure that we maintain an adequate diplomatic presence in the former Soviet Union? Is the Minister aware that our diplomatic presence in the former Soviet Union, in the shape of home-based diplomatic staff, is now less than that of the French and under half the presence of the Germans?
Baroness Chalker of Wallasey: My Lords, the answer to all the questions asked by the noble Lord, Lord Wright of Richmond, is yes, I am so aware. I also believe that, although our presence in the former Soviet Union may need to be led by UK-based staff, it can be greatly helped by locally-engaged staff. In fact, we could not operate in those former Soviet republics but for the help of locally-engaged staff. So our presence there is enhanced by them, but led by British-based staff. We would like to do more, but it is a question of priorities.
Baroness Park of Monmouth: My Lords, my noble friend the Minister said that it was not going to happen in the near future. I take that to mean that not too far hence we shall open an office in Armenia. Can she tell me whether we have a new policy of not investing in those countries which might be most friendly to us? Armenia is a stable country and its economy is improving. Frankly--possibly against the views of some--I believe that investment in Azerbaijan may never come to anything because the Russians are going to be difficult and are still fighting a war in Chechnya. Therefore, does the Minister agree that it is worth giving value to the fact that Armenia is a Christian country; that we share a tradition; and also that it is stable and friendly?
Baroness Chalker of Wallasey: My Lords, there is a great deal in what my noble friend said, but she knows full well that we were able to open an embassy office in Armenia only a year ago. We are seeking to make sure that we do everything well. That is why I said in my initial answer that an office will not be opened "in the immediate future". My noble friend knows that I cannot make her promises. Certainly, it is very important that we have a British presence in Armenia. We now have that presence and we shall build on it.
Lord Molloy: My Lords, I acknowledge the reality of the Minister's extremely helpful Answer. Although Armenia has some difficulties, it speaks the English language and regards Great Britain with great esteem. Therefore, will the Minister to do all that she can, whenever she can--I am sure that she will--to help Armenia to progress in the way that has been suggested?
Lord Pearson of Rannoch: My Lords, further to the answer that my noble friend gave to the noble Lord, Lord Avebury, is my noble friend aware that Armenia has chosen to collaborate with the Midland Bank to set up its banking system and that it is at the moment collaborating with the Association of British Insurers to set up its insurance industry? In view of the simply huge potential which Armenia now has--a very much better potential future, one might think, than most of the other countries of the former Soviet Union--would we not be wise to do our very best to share and assist in that future? In short, can my noble friend change her Answer and say that, although we cannot help Armenia in the immediate future, we can perhaps do so in the very near future?
Baroness Chalker of Wallasey: My Lords, the very reason that we opened an embassy in Armenia was to assist those, such as the Midland Bank and the Association of British Insurers, to help Armenia to get going. We are very aware that its economy still needs improvement. That is why Armenia receives other help from us. However, it is probably a little early to make such a commitment with regard to a British Council office--that is, unless my noble friend is telling me that the Midland Bank and the Association of British Insurers will help us to fund it.
Baroness Blackstone: My Lords, will the Minister accept that the 10 per cent. cut in the British Council's funding, involving drastic economies in the UK and job losses abroad, means that no new council office can be opened without extra funding? Can the Minister tell the House that additional funding will be provided where a British Council presence is needed, as is the case in Armenia, according to our ambassador there?
Baroness Chalker of Wallasey: My Lords, I am well aware that our ambassador has been most active in the past week since he has been home on leave from Armenia. I am also well aware that the British Council receives nearly £100 million from the diplomatic wing and nearly £33 million from the ODA, and it uses that money well. However, the British Council has more offices overseas than even the Foreign Office. Therefore, we must have a sense of priorities, and we need to look at how British Council offices can become more self-financing and at how more efficiency savings can be achieved which will allow it to open more offices.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, we are providing a stable economic environment based on the best inflation performance for nearly 50 years, historically low interest rates, competition and free trade. Manufacturing output has risen by over 8 per cent. since the beginning of the recovery and is at a higher level than last year.
Lord Ezra: My Lords, I thank the Minister for that comprehensive Answer. Is he aware that the statistics for this year so far compared with last year show that although demand for manufactured goods has risen by 4 per cent., the increased production of manufactured goods has risen by only 0.8 per cent. and the import of such goods has risen by 12.7 per cent.? Therefore, is it not a fact that there are two economies in Britain today: the economy about which the Government like to talk--namely, the increase in consumer spending, the rise in house prices and other factors which are likely to lead to the feel-good factor--and the economy about which the Government speak much less; namely, the relative decline in manufacturing, the decline in exports and the increase in imports? Is it not about time that the Government paid more attention to the second economy?
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