Lords Sitting of 18 November 2002

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby.

Electricity Supply
Lord Ezraasked Her Majesty's Government:
Whether the fall in wholesale electricity prices and the consequent problems being encountered by generating companies will lead to difficulties in the supply of electricity.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the Government do not expect the fall in wholesale prices to lead to difficulties in the supply of electricity but, as always, we are monitoring carefully the short-term balance of supply and demand. The energy review is considering all aspects of security of energy supply for the longer term, and we shall publish a White Paper in the new year.
Lord Ezra: My Lords, I thank the noble Lord for that Answer. But, as he is obviously aware, since 1998 wholesale prices have fallen by 40 per cent. Is he further aware that that has caused serious financial problems for a number of generating companies and has led to the mothballing or closure of a number of power stations? While this substantial market adjustment is taking place, is it not likely that serious interruptions of supply could occur from time to time and, therefore, does that not argue for a change in the new electricity trading arrangements?
Lord Sainsbury of Turville: My Lords, there has been a considerable and, I believe, highly desirable fall in wholesale prices from what were previously clearly artificial levels, and that has been of huge benefit to consumers. It has led to some mothballing of capacity which is not required at this stage. As I said, we have been monitoring carefully the position as regards capacity and demand. The latest National Grid company figures suggest that this winter 65 gigawatts of capacity are available for England and Wales against a forecast of peak demand of 55.3 gigawatts under average cold-spell conditions. That gives a margin of 17.5 per cent, which we regard as adequate in the circumstances.
Baroness Miller of Hendon: My Lords, following the detailed and somewhat comforting answer given by the Minister, can he be absolutely certain that that position is right? After all, that is what was thought in America but, as a result of very low prices, the generating industry got into trouble and a black-out occurred for many days. We certainly welcome low prices and consider them to be very good. But, in view
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of the American experience, can the Minister tell the House what representations are being made to the regulator to ensure the financial viability of the electricity generating industry?
Lord Sainsbury of Turville: My Lords, we keep that matter under review. Of course, it should be understood that, if a generator gets into financial difficulties, that does not necessarily mean that capacity will go out of use. As we saw in the case of TXU, it is likely that generating capacity will be taken over by another supplier, given that, in most cases, energy prices are still higher than the cost of supplying it. Therefore, I do not believe that that represents a danger. As I said, overall capacity is in reasonable condition and, in emergency circumstances, mothballed plant could also be brought back within a reasonable timescale.
Lord Mason of Barnsley: My Lords, first, can my noble friend say how much we are importing from abroad and, secondly, are we still importing electricity from France?
Lord Sainsbury of Turville: My Lords, so far as I know, we continue to obtain a large amount of our coal supplies from abroad and we also obtain energy from France.
Baroness Oppenheim-Barnes: My Lords, is the Minister aware that a number of practices by suppliers are greatly disadvantageous to consumers? Is he a ware that it took me six months to change supplier and that, since the change took place, I have been bombarded daily with letters from the old supplier asking whether I am sure that I have not made a big mistake?
Lord Sainsbury of Turville: My Lords, I do not believe that it is for me to defend the position of all suppliers. I am sure that the noble Baroness can do that very well for herself. However, that does not have anything to do with a fall in wholesale prices, which is another issue.
The Lord Bishop of Hereford: My Lords, can the Minister say what effect these very low prices have had on the viability, and therefore the availability, of electricity from renewable sources, which is not the cheapest form of power? Is it still possible for those who wish to buy electricity from renewable sources to do so in this particular commercial climate?
Lord Sainsbury of Turville: My Lords, I believe that there is no question that if lower prices have an impact on the generating industry, that will have an effect on the ability of suppliers of renewables to sell into the grid. However, the renewables obligation scheme, which applies to the electricity generation industry, makes the situation very advantageous for renewables.
Lord Stoddart of Swindon: My Lords, is the Minister aware that spare capacity of 17.5 per cent is the barest

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minimum that should be available if one is to have a safe and viable electricity supply system? Is he also aware that, if this winter is very hard, that amount of spare capacity will not be sufficient? Are we not becoming over-reliant on imported gas supplies since our own indigenous gas supplies are being run down at a very heavy rate?
Lord Sainsbury of Turville: My Lords, I do not accept that that is the bare minimum. I believe I said previously that there is thought to be a 50 per cent chance of the average cold-spell conditions being reached or exceeded in any one winter. That has happened only twice since 1990. The margin is quite significant. As I also said, the assumption is that 7.1 gigawatts of mothballed plant are available. That is probably an overstatement of what the situation will be and it is probably also a slight overstatement of demand. In reality, the figure is probably closer to 20 per cent, which is reckoned to be the base line that one should have.
Lord Dixon-Smith: My Lords, is the Minister satisfied that the regulator is sufficiently fleet of foot and of policy to avoid the electricity industry needing to make further calls on the Treasury?
Lord Sainsbury of Turville: My Lords, I believe that the noble Lord refers to the situation that has arisen with British Energy. Given the Government's overriding priorities as regards the safety of nuclear generation and the security of supply, we have taken action to maintain the situation with that supplier. I do not believe that that action should be taken across to other situations in the industry.
Lord Stoddart of Swindon: My Lords, will the Minister answer my question on gas supply?
Lord Sainsbury of Turville: My Lords, on the importation of gas, yes, we are dependent on a substantial amount of imported gas, which will grow considerably in the future as we become an importer rather than an exporter of gas. Account will have to be taken of that in the long-term review of energy security that will be covered in the White Paper when it is published.

Chechnya
2.44 p.m.
Lord Lamont of Lerwickasked Her Majesty's Government:
Whether they support the policy of the Russian Government towards Chechnya.
The Minister for Trade (Baroness Symons of Vernham Dean): My Lords, Her Majesty's Government recognise the territorial integrity of the Russian Federation and we share the Russian Government's outrage at the recent terrorist attack in
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Moscow. Our sympathy goes out to the families and friends of the victims of this appalling tragedy. We have unequivocally condemned the perpetrators of that attack and their links to international terrorism. Of course, we believe that the Russian response to that incident, and their military operations in Chechnya, must respect the rule of law and their human rights obligations.
Lord Lamont of Lerwick: My Lords, I thank the Minister for that balanced reply. I totally condemn, as she did, the recent action of Chechen rebels in the theatre in Moscow, but is it not the case that terrible things have been done in Chechnya by Russian troops and that ultimately the issue will have to be solved through politics and political negotiation? Is not one of the problems of the so-called global war against terrorism the fact that people with an internal dispute can justify whatever they do and whatever repressive measures they take by aligning themselves with the West and calling it part of the fight against terrorism?
Baroness Symons of Vernham Dean: My Lords, the attack on the theatre in Moscow was not the only attack to be perpetrated by some in Chechnya. They have perpetrated such attacks on civilian targets before; they have also used land mines indiscriminately; and they have maltreated Russian prisoners. Of course, allegations have also been made about the conduct of Russian forces. We believe that any such operations have to be proportionate and in accordance with the rule of law. We press the Russians to investigate thoroughly any allegations of human rights abuses. We would like to see more effective co-operation between the Russian authorities and humanitarian aid agencies and we do not believe that the problem can be solved by military means alone. It must also be solved through discussion.
Lord Rea: My Lords, does my noble friend agree that although in the past few years some fundamentalist Islamic groups have joined the Chechen resistance, we are seeing the continuation of a colonial war that has continued on and off for the past 150 years? Will my noble friend suggest to the Russians that the only way in which they can solve the problem is to talk to the elected president of the Chechens and his government in exile?
Baroness Symons of Vernham Dean: My Lords, that is a difficult question. We do not believe that there can be a purely military solution; there must also be a political process. We recognise that in light of the events in Moscow the Russian Government are having great difficulty in finding a credible interlocutor. My noble friend suggests that Mr Maskhadov may be such a credible interlocutor, but I remind him that in July this year Mr Maskhadov shared a public platform, the proceedings of which were broadcast by Al-Jazeera, with Mr Basayev, who was responsible for the outrage in the Dubrovka theatre. That will not enhance

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Mr Maskhadov's standing with those who want to advance him as an interlocutor. I believe that he did his cause great damage by doing that.
Lord Avebury: My Lords, is the Minister aware that at the same time the Russians are forcing internally displaced people in Ingushetia to return to Chechnya and denying admission to the UN rapporteur on violence against women and the Secretary-General's special envoy on internally displaced persons? Will the Government reinforce the demand made by the previous High Commissioner for human rights that a comprehensive independent inquiry should be conducted into the abuses? Will she and her partners in the European Union try to persuade the Russians that they should comply with the special procedures of the Human Rights Commissioner and the Secretary-General?
Baroness Symons of Vernham Dean: My Lords, as I am sure the noble Lord, Lord Avebury, knows, we asked the Russian Government to issue invitations to all the relevant UN special rapporteurs, including the special rapporteur on violence against women, during the talks held in September this year. The Russian Government responded that an invitation to the rapporteur on violence against women will be issued when the security situation permits. There have been various initiatives among ourselves and our European partners. The Russian Government have taken note of the EU position, but so far the EU representatives have not succeeded in persuading the Russians to change their approach in Chechnya.
Lord Howell of Guildford: My Lords, I am glad that the noble Baroness raised the question of the behaviour of the Russian army. Will she and her colleagues, when next in dialogue with their Russian opposite numbers, say that although we have every sympathy with and support for President Putin in his battle against international terrorism, particularly after the Moscow theatre horror, it is the sheer brutality and hideousness of the incidents in which the Russian army is involved, when it seems to behave more like a rabble than a disciplined force, that are losing him the support that he needs? Would she see that he gets that message? If he wants more support he must, as the noble Lord has just said, seek to conform to the highest international standards and to involve the international community in his fight against international terrorism.
Baroness Symons of Vernham Dean: My Lords, I have already indicated that we have pressed the Russian Government to investigate thoroughly any allegations of human rights abuses. We have also said that we believe that those responsible for such violations should be prosecuted and, where appropriate, punished. But it is terribly important for us constantly to keep some balance in answering these questions, both publicly and in private discussions. The fact is that a number of these groupings in Chechnya have either directly or indirectly been involved with international terrorism. The latest
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outrage might have cost the lives of 800 innocent people in the Dubrovka theatre. I pause merely to make the deduction for the number of people perpetrating the violence. But there were almost 800 innocent people in that theatre who might have lost their lives.
Baroness Cox: My Lords, does the noble Baroness agree— I think she has already said that she does—that this second Chechnen war is not primarily a war of independence but is an Islamist-funded and inspired war with the objective of obtaining the oil from the Caspian oil field for militant Islamism? That is well documented. The intention was also to extend that war into Dagestan. The Russian response must be seen very much in that context and perspective. Indeed, as the noble Baroness has already said, the Russians themselves suffered appalling violations of human rights at the hands of the Chechnen terrorists.
Baroness Symons of Vernham Dean: My Lords, I cannot agree with the noble Baroness that the war is fundamentally inspired by Islamic extremists. I agree with the noble Baroness that some Islamic extremists have allied themselves with international Islamic extremists. I have mentioned Shamil Basayev who was responsible for what happened in Moscow: I could equally mention Abu Walid who leads the Mujaheddin operating in Chechnya. But there are other elements who, although they are by Russian lights behaving murderously, are not necessarily so closely linked with Islamic terrorism but who are perpetrating acts of violence still against civilian objectives in Chechnya.

Individual Learning Accounts
2.53 p.m.
Baroness Blatchasked Her Majesty's Government:
What was the extent of fraudulent activity during the administration of individual learning accounts.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, the department's Special Investigations Unit has been asked to investigate 152 learning provider organisations. Ninety-nine of those cases have been passed to the police. The total amount paid to those organisations is £70.9 million. The department is withholding £10.8 million in outstanding claims. The precise extent of fraudulent activity will not be known until the investigations are complete.
Baroness Blatch: My Lords, I am grateful for that reply. However, does the Minister not accept any responsibility whatever for the department in this matter?
Baroness Ashton of Upholland: My Lords, as our permanent secretary made absolutely clear when he appeared before the Public Accounts Committee, we

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do take responsibility. This was a brilliant scheme: 91 per cent of those who participated received a valuable learning experience. However, there is no question but that it was badly implemented.
Baroness Walmsley: My Lords, does the Minister accept that, before their withdrawal, ILAs presented a welcome respite from the tangled web of funding available to those seeking qualifications in early years education and childcare? Given the urgent need to recruit more workers into that sector and to improve the quality of provision, how urgently will the Government replace the system with a new fraud-proof system of ILAs?
Baroness Ashton of Upholland: My Lords, I agree wholeheartedly with the noble Baroness, Lady Walmsley. There are key issues here in terms of the advantages to those taking up that learning. We want to have a successor scheme, and we have decided to link this very firmly to our school strategy, which will be published next June. Work has already been undertaken to produce a successor scheme, which has now been fully integrated into the programme. I look forward to putting that before your Lordships' House.
Lord Marsh: My Lords, can the Minister give the House any indication of how long it took to discover this somewhat strange problem?
Baroness Ashton of Upholland: Well, my Lords, as noble Lords will be aware, and as we have mentioned in your Lordships' House before, we have been examining complaints from individuals which they brought to us in the preceding months. I can give the noble Lord some figures. In September 2000, we had five complaints; by October 2001, we had 8,448 complaints, by which time the number of accounts opened had reached 2,529,000.
It is quite clear that, towards the time that we took action, we began to see systematic activity that needed to be addressed. We undertook a variety of different schemes in order to try and prevent the situation. When it became very obvious, in October of last year, that we had to do something dramatic, we did exactly that and closed the scheme.
Baroness Sharples: My Lords, can the noble Baroness say when we will hear the true cost of this disaster?
Baroness Ashton of Upholland: My Lords, we know from our discussions with the police and with those investigating the matter that it could take up to two years to know the full extent. I have given some preliminary figures, but I speculate that the total figure could be up to £97 million. I am speculating only
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because I want to give your Lordships as much information as possible. It is speculation and I would not wish noble Lords to see it in any other way.
Lord Roberts of Conwy: My Lords, can the Minister tell us what lessons the Government have learned from the poor implementation of this brilliant scheme?
Baroness Ashton of Upholland: My Lords, the noble Lord, Lord Roberts, makes a very important point. There is a great deal to learn, not only for the Government, but also for Capita, which administered the scheme for us. As I said, 91 per cent of people had a good experience, but we have a number of lessons to learn.
There is much to learn about how to make a scheme as unbureaucratic as possible without making it so unbureaucratic that fraud can occur. We need to make sure that we have the proper registrations in the process, and we need to make sure that we have a scheme that does precisely what this scheme attempted to do and was successful in doing—to attract those who would not go through the normal learning routes. We are looking very carefully at those lessons, and I am sure that the scheme which comes forward will be to the benefit of those whom the noble Lord would wish to benefit.
Lord Rotherwick: My Lords, is Capita liable for any of these losses since it was administrating the scheme? Will the Government again use Capita to administer a new scheme?
Baroness Ashton of Upholland: My Lords, decisions on who will administer such a scheme will be for a tendering process at the point at which we move forward with that. We are in discussion with Capita, particularly about the robustness of some of the systems it has in place. That is all that I am able to say to the noble Lord at this stage.
Baroness Blatch: My Lords, why is it that, in view of the failure by Capita in this matter, the Government have given a contract for criminal record checks to the same company?
Baroness Ashton of Upholland: My Lords, the decisions on Criminal Records Bureau checks were taken by the Home Office, and taken on the basis of the right kind of proposals being put forward in the normal tendering process. The Department for Education and Skills has a number of contracts with Capita which are running very successfully. There are particular lessons to learn in this case and we should all learn them.
The Earl of Listowel: My Lords, can the Minister confirm that there are more teachers in training than there have been at any time in the past 12 years, and that, this year, there has been a 7 per cent increase in

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the number of teachers in training? Does she, in the face of this very sad episode, take some consolation in those facts?
Baroness Ashton of Upholland: My Lords, I do indeed take comfort in the number of teachers in training. I am sure that noble Lords across the House would welcome the fact that there are more teachers in training. This scheme was not applicable to teachers, but it was important because of the number of those who were consequently able to develop their skills.
Lord Swinfen: My Lords—
The lord Privy Seal (Lord Williams of Mostyn): My Lords, we are now well out of time, I am afraid.

University Top-up Fees
3 p.m.
Baroness Sharp of Guildfordasked Her Majesty's Government:
How far they consider the imposition of top-up fees, as proposed by some universities, to be compatible with the Government's objectives of widening participation and promoting social inclusion.
Baroness Ashton of Upholland: My Lords, the Government have promised to publish a strategy document setting out a 10-year vision for higher education in January. I assure noble Lords that the Government remain absolutely committed to widening participation in higher education and are determined to reduce the traditional barriers that have prevented able people from benefiting from it.
Baroness Sharp of Guildford: My Lords, the Government cannot have their cake and eat it. The current crisis is entirely of their making, because they failed properly to implement the recommendation of the Dearing report to invest new funds in higher education. Instead, they milked universities of the extra funds raised and heightened the crisis that they now face. Is the Minister aware that if they concede to the demands of some of our top universities to charge substantial top-up fees, they will perpetuate in our universities the damaging and class-ridden two-tier divide from which we already suffer in the public/ private school system? Is that really what the new Labour Government want?
Baroness Ashton of Upholland: My Lords, this new Labour Government do not want further widening of the divide. It is worth noting that we have allocated £1.7 billion to university funding for the six years to 2003–04. That is a 37 per cent increase in cash terms and an 18 per cent increase in real terms, so I do not accept that we are not investing.
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However, noble Lords who had the good fortune to read the article written by my right honourable friend the Secretary of State in the Sunday Times will understand the issues as he set them before us. He recognised the existence of the funding deficit—a backlog estimated by him at £5.3 billion. Noble Lords will be aware that my right honourable friend has asked for a little more time to consider all the proposals buzzing around the press—if I may put it that way—but wants to reach a conclusion. I hope that I have made clear some of the fundamentals about that conclusion.
The Lord Bishop of Portsmouth: My Lords, can the Minister tell us exactly what is government policy on top-up fees? If not, will she tell us exactly how and why the Government will arrive at such a policy and express it publicly?
Baroness Ashton of Upholland: My Lords, the Government made a manifesto commitment not to introduce top-up fees. As my right honourable friend the Prime Minister made clear last week, he stands by that manifesto commitment. On future university funding, noble Lords will be well aware that we have spent considerable time considering how to balance university requirements, which are substantial and recognised, with the requirement to ensure that students are able to go to university, recognising the substantial benefits that they will receive from doing so, but not preventing them doing so because of fear of debt.
Baroness Blatch: My Lords—
Lord Morgan: My Lords—
Lord Williams of Mostyn: My Lords, perhaps we should hear from the noble Lord, Lord Morgan.
Lord Morgan: Diolch yn fawr, my Lords, thank you.
When the reappraisal of university finance takes place, will the Minister note that many universities are not in favour of top-up fees—including Cambridge, which I suppose would be considered a top university, and all of the Scottish universities, that cradle of the democratic intellect? Scotland does not have top-up fees, other fees or a poll tax but the much fairer system of a graduate tax based on the ability to pay.
Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord, Lord Morgan, for explaining the position in Scotland. I am clear that there are many differing views—in your Lordships' House and far beyond—on how we should approach the matter. The debate has now reached an interesting point. We are reviewing all the options to ensure that

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when we return to your Lordships' House in January we can present a policy that can receive the benefit of your Lordships' scrutiny.
Earl Russell: My Lords—
Baroness Blatch: My Lords—
Lord Williams of Mostyn: My Lords, perhaps we may hear from the noble Baroness.
Baroness Blatch: My Lords, there is confusion. Who should we believe: the Prime Minister—and the manifesto—who says that there are no plans for top-up fees, or education Ministers, who are using radio, television and the newspapers to tell us that they are actively considering top-up fees? If they are actively considering them but the Prime Minister is also right, does that mean that nothing will be done for universities for at least four years?
Baroness Ashton of Upholland: My Lords, I agree with final implication of the noble Baroness of the need to do something for universities as quickly and efficiently as we can. I reiterate: there is a manifesto commitment; we shall of course stand by it. That is important. In considering the future for universities, short-term and longer-term issues are involved. It is right for my right honourable friends the Prime Minister and the Secretary of State for Education and Skills to consider the full range of views advanced by many universities, institutions and individuals.
Earl Russell: My Lords, will the Minister consider the effect of top-up fees not only on student entry but on graduate employment? Is she aware that, both in the United States and here in the 1990s, the introduction of loans produced a massive movement of graduates into high-paid lawyers' firms and management consultants? In the light of that, what does she think will be the effect on the recruitment of teachers? Please will she not give me an answer in terms of entry to teacher training which, as today's edition of The Times confirms, is a poor guide to teacher recruitment.
Baroness Ashton of Upholland: My Lords, I shall not give the noble Earl an answer in those terms. One issue that must be addressed when considering the future of education and higher education is indeed the recruitment of teachers and people with the skills that we need.

Business
3.6 p.m.
Lord Grocott: My Lords, with permission, I should like to make three brief announcements. The first concerns today's Statement. At a convenient time after 3.30 p.m., my noble friend Lady Hollis of Heigham will repeat a Statement which is being made in another
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place on Welfare to Work and benefit uprating. Secondly, on today's debate, Members of the House will remember that, following a decision made in July, we have a target rising time for this evening of 10 p.m. If I may say so, the system of an advisory time worked well on Thursday. If Back-Benchers were to restrict their speeches during today's debate to 10 minutes, the target time of 10 p.m. would not be exceeded.
Finally, on my favourite subject, which is recess dates, your Lordships will be aware that an announcement about recess dates was made in the Commons on 31st October by my right honourable friend Robin Cook well in advance—right up to next autumn, which is quite a precedent. I cannot go as far as that, much as I should like to. Many people naturally want as much as advice of recess dates as possible. Before I announce them, perhaps I may say that there is no need to make notes, because I shall ensure that the dates are placed in the Library, where I am sure that they will be popular reading matter. I strongly stress that, as everyone will appreciate, they are provisional and dependent on the progress of business. That is especially true because I have tried to give such good notice.
The dates are as follows: at the Christmas recess, we aim to rise after business on Thursday 19th December and return on Tuesday 7th January—or possibly the previous day. That is always the proviso. At Easter, we rise after business on Thursday 10th April and return on Monday 28th April. At Whitsun, we rise after business on Thursday 22nd May and return on Tuesday 3rd June or the previous day.
The eagle-eyed among your Lordships will have noticed that those dates pretty well match those for the other place, with the exception of their February break, to which they have become accustomed. Sadly, I cannot make any promises about a February break but, if business were to move speedily, it may be possible to arrange for a day or two during the week beginning 17th February.
I think that I said that the dates would be available in the Library. They will not; they will be in the Printed Paper Office. I am sure that wherever I had put them, your Lordships would have found them. As for the summer, which is the area to which I cannot progress at this stage, my view is that the two Houses of Parliament work best when the sitting patterns of the two Houses run roughly in parallel—as has been the case in the past. That now means that, if we were to follow precisely the pattern in the Commons, this House would rise two weeks earlier in July and sit for two weeks in September. That would, of course, be a major change, and the House will, naturally, wish to express an opinion on it. Therefore, my noble and learned friend the Leader of the House will table an appropriate Motion on an agreed date. The usual channels have agreed to that, and it will now take place on Monday 25th November, as first business after Questions.

Address in Reply to Her Majesty's Most Gracious Speech
3.10 p.m.
Debate resumed on the Motion moved on Wednesday last by the Baroness Turner of Camden—namely, 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."
Baroness Ashton of Upholland: My Lords, in opening the debate, I shall outline the content of the Bills coming forward from the Office of the Deputy Prime Minister and the Bills relating to environmental and rural policy. I shall also outline my department's continued commitment to raising educational standards and the ways in which it will continue to tackle the problems of truancy and other anti-social behaviour and promote the development and reform of higher education.
I shall begin with the local government Bill from the Office of the Deputy Prime Minister. The Government believe that local government is of critical importance in delivering high quality public services to local people. As the White Paper Strong Local Leadership—Quality Public Services stated, we want vibrant, innovative and responsive local government, delivering the quality of local leadership and public services that their communities need. We want to work in partnership with local government to make that happen. The Bill represents an important part of the new agenda for local government and will help councils to deliver more effectively, so that they can make a real difference to the quality of life for local communities.
Perhaps the most important measure in the Bill is the replacement of borrowing approvals with a new prudential regime that gives local authorities greater freedom to borrow, provided that they have the means to service the debt. Deregulation is an important aspect of the new agenda, and the draft legislation will help to cut red tape and improve efficiency, by giving freedoms and flexibilities to councils as well as additional incentives to high-performing councils. All local authorities will have the power to charge for discretionary services. New trading powers will be conferred on best value local authorities. That will be available to local authorities depending on performance. Local authorities will, of course, not be allowed to charge for services that they have a statutory duty to provide.
In addition, the introduction of the business improvement district schemes will allow authorities and businesses to work together as partners to put in place local projects to improve town centres and
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commercial areas. Small businesses will also benefit from a new small business rate relief scheme that will benefit properties with rateable values of under £8,000.
The Bill will keep council tax fair, through a fixed 10-year cycle of revaluations. It will be made clear that additional bands can be created without new primary legislation. Authorities will have greater freedom on the discounts and exemptions from council tax that they grant, notably allowing them to reduce the discount on second homes. The Bill will also remove rent rebates and rent rebate subsidy from housing revenue accounts. There will be additional flexibility in the determination of housing revenue accounts subsidy, and perceived barriers to rent restructuring will also be removed.
I turn now to the planning and compulsory purchase Bill. As noble Lords will be aware, planning plays a keyrole in the delivery of other government priorities, such as new housing, transport infrastructure, hospitals and schools. Without an effective planning system, we risk constraining the economy, at a cost to everyone in the UK. In our reforms, we will ensure that the changes do not erode the ability of the public to participate as appropriate. The planning system has served us well over the years. However, 90 per cent of councils fail to meet their speed of decision-making targets, while the process of updating plans is expensive and takes several years.
In July, the Deputy Prime Minister announced an extra £350 million for the planning system over the next three years. More money, however, must mean a better standard of service. Extra money will go only to authorities that demonstrate their commitment to high quality planning. We will not hesitate to take action if local authorities are not performing.
Alongside those additional resources, the planning Bill will put in place the reform needed to make the planning system fairer, faster and more predictable. We want to bring clarity, certainty and a better sense of strategic direction to planning. Therefore, the Bill will speed up the planning system at national, regional and local level; reform the process for handling major infrastructure projects; increase the participation of the local community from the start; simplify the development plan process, ensuring a more responsive plan-led regional and national system; improve the development control process; introduce business planning zones to help businesses start up and grow; and take forward some of the necessary reforms to the compulsory purchase system that were announced by the Deputy Prime Minister on 18th July.
With the proposed changes contained in the planning Bill, we seek to introduce a planning system for the 21st century. We want a system in which the role of the community is strengthened but in which the shackles are removed from business. Most of all, it will have agreement and consultation at its heart, ending the damaging adversarial system that has held too many of our regions back for too long.
The Regional Assemblies (Preparations) Bill was published on 14th November. It takes forward our commitment to establish elected regional assemblies in

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the English regions that want them. Part 1 provides for the Government to cause referenda to be held on whether a region should have an elected assembly, sets out the questions to be asked and defines those eligible to vote. An elected assembly will happen only if the people in each region want it. The Bill sets out the conditions to be met before the Government can require a referendum to be held, including consideration of the level of interest in holding a referendum.
Part 2 provides for local government reviews to be conducted by the Boundary Committee for England before referenda are held. They would determine the best unitary structure of local government for the parts of a region that currently have both county and district councils. The changes would go ahead if—only if—an elected assembly were established. Part 3 provides for the Government to require the Electoral Commission to give advice on the electoral areas for an elected regional assembly, if the Government propose to establish one. Part 4 provides a power for the Government to pay grant to the voluntary regional chambers.
Our approach offers prospects for all our regions. It offers elected regional assemblies to regions that choose one, while strengthening existing arrangements in all regions. Assemblies will have real powers to make a difference in key areas—jobs, transport, housing, culture and environment—and to tailor regional solutions to regional problems. In short, they will help all regions to contribute to and share in the nation's prosperity.
I turn now to the measures proposed by the Department for Environment, Food and Rural Affairs to protect our environment in the Water Bill and the Waste and Emissions Trading Bill.
The Water Bill takes the Government's commitment to the sustainable management and use of water resources in the face of climate change to a new level. Reform of abstraction licensing will give new impetus to water conservation but will also reduce the regulatory burden. The Bill will also help to build a more stable and transparent regulatory environment for the water industry. At the same time, it will put customers at the heart of regulation and extend the opportunities for competition within the Government's wider agenda for water.
The Bill will reform abstraction licensing to improve water resource management and promote greater water conservation by water companies, giving the Environment Agency new powers to manage licensing in the interests of the environment. The Bill will also simplify the abstraction licence application process and set a threshold, so that many smaller abstractors will no longer need a licence, while removing most of the existing exemptions based on the purpose of use of the water.
The Bill will replace the existing Director-General of Water Services with a regulatory board, amend the regulator's duties to strengthen regulatory certainty—thereby giving greater weight to customers' interests—
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and give the regulator a duty to contribute to the achievement of sustainable development. The Bill will also provide for the setting up of an independent consumer council for water to represent and pursue the interests of customers and consumers and to extend the opportunities for competition in the supply of water for large non-household users.
The Waste and Emissions Trading Bill will help to address two key environmental challenges: climate change and sustainable waste management, which is part of sustainable development. The Bill will take forward the UK's policy to combat climate change by putting on a statutory footing penalties for the world's first economy-wide greenhouse gas emissions trading scheme. It will also help meet our obligations under the landfill directive to reduce the landfilling of biodegradable municipal waste, which is itself a source of methane, a powerful greenhouse gas.
This Bill shows our firm resolve to meet both our domestic and Kyoto commitments on combating climate change and to take forward sustainable waste management following the waste summit last November and the strategy unit's report on delivery, which will be published very shortly.
As the Gracious Speech made clear, a Bill will be introduced to enable Parliament to reach a conclusion on hunting with dogs. My right honourable friend the Minister for Rural Affairs will bring forward a Bill based on evidence and principle once his considerations of the consultations are concluded.
Finally, I wish to turn to the business of my own department and to reaffirm the Government's commitment to raising standards in education. As mentioned in the gracious Speech, raising educational standards remains the Government's main priority for Britain's future prosperity. We have already achieved significant milestones as a result of the increased sustained investment in education. These have included making a real difference to the lives of children, families and their communities through the Sure Start programme; through the Early Years commitment to education; and, through the childcare provision, more than 1 million children now benefit from new childcare places.
We have the best ever results at key stage 2; we have made sure that infant class sizes have been cut; 50 per cent of our 15 year-olds achieve five or more GCSEs at grade C or above, a target we met a year early; and record numbers of students are starting university, with a 3 per cent increase in the number of UK-domiciled students enrolling at UK higher education institutions between the academic years 2000–01 and 2001–02.
Despite these achievements, we want to go further. The transformation of secondary education will continue to raise standards, improve classroom discipline and enhance choice for pupils and parents. The £12.8 billion investment in education announced in this year's Spending Review will provide the investment we need to see through the programme of transformation.

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With the implementation of the new Education Act, the reforms will see a new school system that will be specialist both in the distinctive ethos of each school and in the focus it will bring to each child's individual talents. This means diversity, not uniformity, with every school being unique and having the incentive to improve. This means a move away from the one-size-fits-all model with the expansion and creation of different types of schools. We therefore want to increase the number of specialist schools to 2,000 by 2006, create 33 new academies and 300 advanced schools.
We want to use our best schools to raise the standards of the rest by encouraging schools to learn from each other and, where necessary, take over weak and failing schools. Success will, in turn, be rewarded with greater freedoms and flexibility.
To take these reforms to the next level we need clear and effective leadership at all levels within our schools. The new national college for school leadership will lead the transformation in the quality of school leadership, and the new leadership incentive grant will ensure that our most challenging schools have the leaders they need.
It also means a relentless drive against poor behaviour, indiscipline and truancy. Parents have a legal and moral responsibility to ensure that their children attend school regularly, but, as noble Lords know, about 50,000 children are absent every day without their schools' permission, and in our recent truancy sweeps half the children stopped were with their parents. The Government are determined to reduce unauthorised absence and to make parents face up to their responsibilities and are already implementing a number of measures to help achieve that. These include setting targets for local education authorities and schools; funding electronic registration schemes in high-truancy schools; a sustained publicity campaign, including leaflets setting out parents' responsibilities; regular truancy sweeps, including a national campaign in December; and powers for magistrates to impose a variety of sentences on parents, including parenting orders, fines of up to £2,500 and imprisonment.
We are also launching a pathfinder scheme to speed up the existing prosecution process. Parents will be given 12 weeks to ensure that their child attends school regularly. A hearing date will be set for the end of that period and if there is no sustained improvement the case will come to court then.
But unauthorised absence has a wide variety of causes and so local authority education welfare services, which work with parents to secure regular attendance, need a range of tools to deal with parents in different circumstances. We are therefore considering ways of extending that range, including options for swifter and more effective action against parents who refuse to take their responsibilities seriously. We will be bringing forward proposals in this area in due course.
The development and reform of higher education forms a central part of the Government's commitment to education. We believe that the country's record on
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higher education is already first class. Our universities and colleges are crucial to our economy and if we are to sustain our position against increasing global competition a programme of rigorous and continuing reform and investment is essential.
In January we will publish a strategy document setting out our vision for the development and reform of higher education over the next 10 years. The strategy will have three key elements: ensuring that our universities can continue to compete with the best in the world in terms of the excellence of their teaching and research; widening participation towards our target of 50 per cent of 18 to 30 year-olds having the chance to enter higher education by 2010; working to break down the traditional barriers that have prevented people from disadvantaged backgrounds benefiting from higher education.
The strategy will also outline the Government's plans for making the most effective use of the additional resources we are making available for higher education, and will set out how we will be developing the student support system so that it reinforces our aims of excellence, access and participation while sharing the costs of higher education fairly among all those who benefit from it.
In conclusion, the Government are committed to building a strong society through the continuing reform of the public sector with reforms to secondary education, higher education and local government, as well as protecting our environment through the promotion of greater water conservation and meeting both our domestic and Kyoto commitments t o combat climate change and take forward sustainable waste management. The Bills and programmes that I have outlined today support these aims.
3.26 p.m.
Baroness Blatch: My Lords, I thank the noble Baroness for opening today's debate on the gracious Speech. I always consider it a privilege to take part in these debates which signal the start of a new Session of Parliament.
It was once regarded as a cardinal sin to leak the contents of a Budget or a Queen's Speech. Today things have changed dramatically. There are no more witch-hunts to find the perpetrator of the leak because no less a person than the Prime Minister himself openly—some would say blatantly—uses radio, television and newspapers to disclose the contents of the gracious Speech. I, for one, lament this trend. I believe that it does a great disservice to Her Majesty.
The subjects covered by the debate make it very difficult to do justice to the many issues which arise from the seven Bills mentioned in the gracious Speech. It is also inconsistent with the time allowed under the new procedures of the House. However, I shall be ably assisted by my noble friend Lady Byford, who will wind up the debate for these Benches. My noble friend will also deal with environment and rural affairs issues. I can think of no one more able to deal with Bills on the environment and the countryside, or more dedicated to these issues, than my noble friend Lady Byford.

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I am also conscious that my noble friend Lady Hanham will be taking at least three of these Bills through the House and, including pre-legislative scrutiny, perhaps even four. My noble friend has a distinguished record in local government and I know that she will bring her expertise to bear when it comes to the detailed scrutiny.
I make one plea to the Leader of the House—that is, that the recent procedural changes do not impede in any way our ability to scrutinise and revise the Bills set out in the gracious Speech.
By way of pre-emption, I should like to make one procedural comment about the Hunting with Dogs Bill. As I understand it, when introduced, the Bill will be on the basis of a free vote in both Houses. The Minister, Alun Michael, said in another place:
"The votes this week leave the two Houses diametrically opposed—indeed, I have rarely seen an issue on which the divisions have been greater. It is precisely for that reason that it is right to see how it can be resolved with as much agreement as possible".
He went on to say:
"We promised in our manifesto that this issue would be resolved. Should there be no way through, and should the new Bill be frustrated in its passage rather than scrutinised and improved, the Government could not properly stand in the way of the application of the Parliament Act, which of course would be a matter for this House".—[Official Report, Commons, 21/3/02; col. 457.]
I have no doubt that the Prime Minister and Mr Alun Michael are genuinely seeking the widest possible consensus on this issue. It is my fervent hope that sensible and tolerant minds will prevail.
However, apart from the inordinate use of parliamentary time, if an acceptable compromise is thwarted by a Back-Bench amendment for a complete ban, and if the two Houses remain "diametrically opposed", to use the Minister's own words, the Government—and it would be the Government—would be unwise to use the Parliament Act on the back of a free vote and on an issue which not only divides both Houses but divides colleagues within each House. It is an issue which is very divisive throughout the land between town and country people.
My noble friends and other noble members who wish to defend hunting with dogs will not deliberately frustrate the Bill, but you can be sure that they will defend their right to fulfil the role and duty of this House, which is to scrutinise the options with energy and much expertise. Should the Government continue to defend the use of the Parliament Act on the grounds that the commitment was a manifesto pledge, might I remind the Prime Minister, so was the promise not to introduce tuition fees before the 1997 election—a promise that was broken within months of coming to office. I shall return to that later.
The local government Bill, which has been considered in draft form, was described by the Deputy Prime Minister as "dry and technical". When my noble friend Lady Hanham comes to discuss this Bill—technical it might be, but dry—no—my noble friend, on behalf of these Benches, will be concerned to
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influence the final form of the Bill to ensure that the reforms will be in the interest of local government and of local people.
Certainly, the Local Government Association has welcomed the new freedom for local councils. However, like us, it will be interested in the detail of the proposals, especially those features of the Bill which were not included in the draft version. Of course, the Bill comes at a time when local government funding is a very vexed issue. As we all know, there is a review of the local government funding system under way which will report before too long. The Government have stated that they are concerned to make the new system more easily understood and that it will improve transparency and accountability. I am tempted to say, "Do not hold your breath". The system is about as transparent as a London smog of yesteryear and it is subject to constant manipulation.
Some say that the system should be fair and simple. We believe that it should be transparent and as fair as possible. However, too much simplicity creates too much rough justice. And talking about rough justice, it is understood that substantial moneys are to be moved from the south of England to the north and the metropolitan areas. To emphasis that point, I quote from the words of my right honourable friend Sir George Young, in another place:
"More than £304 million is being taken from a group of people who happen to live in one part of the country and given to a group of people who happen to live in another".
He continued:
"A Hampshire teacher will contribute towards 47 per cent of the county council budget whereas a teacher in Durham will contribute towards 20 to 25 per cent. That is a geographical stealth tax".—[Official Report, Commons, 24/10/02; col. 432.]
It looks as though the situation for the southern local authorities is about to get worse.
An issue that will be dealt with by my noble friend Lord Howe in the debate on health nevertheless has an impact on local government finance; namely, the Government's plans to tackle bed blocking by the elderly in hospitals. How crazy it is to levy a financial penalty on a local authority that is already spending above its standard spending assessment on social services and which cannot afford the money to fund sometimes expensive home support packages, especially where the relationship between the local authority and the health authority is good and where much is being done in partnership to tackle the problem. Perhaps the Minister, when he winds up, will explain the logic behind that proposal.
Before I leave the issue of funding I must raise one more point on behalf of local government. What percentage of the police and fire service budgets is now being spent on meeting pension obligations? The last time I saw figures it was over 25 per cent and still rising. I ask that question because it must be having an impact on that part of the respective budgets to pay for operational services.
The regional assemblies Bill will be vigorously opposed by my noble friend Lady Hanham on behalf of these Benches. The United Kingdom is top heavy

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with governments—European, national, a separate parliament and assembly for Scotland and Wales respectively, London government, county councils, district councils, town and parish councils, town mayoral offices and now regional government.
Public services will not improve by creating a new type of politician and more talking shops will not boost economic growth or help the vulnerable. The taxpayer is funding that inexorable additional cost of more committees, more politicians and their support systems, much greater bureaucracy and a burgeoning number of quangos. The argument that regional government will be closer to the people is fallacious. The regions are enormous and local knowledge will be at a premium which will result, as we all know, in a poorer service to local people.
Many of us have suffered the frustration in this House of trying to get answers to questions about how national taxation is being spent in Scotland, Wales and London. Even given the ingenuity of my noble friend Lord Peyton and the omnipotent and always courteous noble Lord, Lord McIntosh of Haringey, we still do not succeed.
Those who may be seduced by the idea of regional government because they believe it will bring more money to their area are very naïve indeed. The first call on funds will have to pay for buildings to accommodate officers and members of the authority, the bureaucracy, staffing and members' costs and, if Wales is anything to go by, the growth of many quangos—even before one penny is spent in their area. The Government, of course, will argue that the buildings and offices are already there in the regions. That is what we thought with Scotland, Wales and London which, between them, have spent hundreds of millions of pounds on accommodation and member services.
We are all aware of the Deputy Prime Minister's agenda—bigger, costlier institutions, more distant from the people and strengthened central control. Regional government will inevitably threaten the future of county councils and that will be fiercely resisted. When the Minister comes to reply, it will also be helpful if he can confirm that the future of the lieutenancy and the office of High Sheriff is secure. I ask that because there are rumours that they too are threatened. Therefore, reassurance from the Minister of their future would be welcome.
One issue that is being lost with this piecemeal approach to reform of government is the integrity and coherence of the United Kingdom. Already we hear siren voices from Scotland calling for more powers and separate representation in the European Union. Wales is also looking enviously at the powers enjoyed by the Scottish Parliament. No doubt London will follow suit in due course. Also, if and when, one or more regions is formed, what will provide coherent government for England? Surely, just as the whole of Scotland and Wales voted in a referendum, why cannot the whole of England?
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If the Government genuinely believed in local communities they would be reducing the size of national government and resisting the constant urge to intervene in local government. Instead, such interference has soared under Labour. Anything that further undermines the integrity and coherence of the United Kingdom will not have our support.
An issue that will inevitably be discussed when the Bill comes before the House is a threshold for the referenda. We have witnessed what happened in Wales and London and now we have the experience of electing town mayors. For example, in Bedford, a mere 18 per cent out of an electorate of 96,000 turned out for the referendum. The turnout for the actual election, with eight candidates, was only 25 per cent. The winning candidate polled 9,500—less than 10 per cent of the electorate. That is hardly the settled will of the people. Therefore, is it any wonder that one town voted for a man in a monkey suit? If the Government succeed in getting their way with this reform, we must fight for a meaningful voting threshold below which there will be no case for change.
We agree that the planning system is in need of reform and should be streamlined. Therefore, much of the planning Bill will be welcome. However, a point that has been discussed many times in this House, particularly by my noble friend Lord Renton, is that people's confidence in the planning process will be damaged if their voice cannot be heard in a meaningful way. As the Government's proposals stand, local communities will be stripped of their involvement in the local planning decisions. The county council's role in the planning process will be abolished and the new regional authorities will have the power to ride roughshod over local councils and local people.
Reference was made in the gracious Speech to a Bill for pre-legislative scrutiny to improve the standard of housing and the standards of management of private rented accommodation by landlords. Housing is a very complex issue and therefore the pre-scrutiny process is well advised. We all wish to see better housing and more people in accommodation of a good standard. However, we do not want a repeat of what happened to care homes for the elderly. The changes brought in by government, however well intentioned, had the effect of closing down hundreds of much-needed homes for the elderly.
The balance has to be to legislate in such a way that the range of rented accommodation is increases; that people are prepared to consider homes for rent; and that the rules regarding standards are practical, affordable and fair to the landlord and the tenant. I ask Ministers not to start from the premise that all landlords are crooks, for the majority of them are not. While safeguards are important, such an attitude will destroy the sector.
It is almost impossible to know where to start on the issue of education. Although there was no specific Bill mentioned in the gracious Speech, we shall no doubt see many pieces of secondary legislation which will be spawned by the recent Education Bill.

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The gracious Speech included the words:
"Raising educational standards remains my Government's main priority for Britain's future prosperity. Secondary school reform will continue to promote opportunity and choice through greater diversity for parents and pupils. University reform proposals will be published to improve access and build on excellence".
These are fine words with which it is not easy to take issue. However, let us look at the state of education after almost six years of Labour government. Teacher recruitment and retention is in crisis. Morale among teachers is low. Too few teachers are applying for key posts in our schools. Teacher vacancies have doubled in recent years. Schools are trawling around the world to fill vacancies in their schools. Record numbers of teachers are leaving the profession early and many are citing not pay as the reason for leaving but workload, bureaucracy and meddling government interference. Far too many temporary teachers are employed, which creates insecurity for children. Too many teachers are teaching subjects for which they are not trained. Of the 20,000 extra teachers the Government claim to have recruited since 1997, 5,600 are unqualified, 2,800 are trainees and 2,520 posts remain vacant.
A survey has shown that 80 per cent of teachers believe that behaviour in our schools is getting worse. According to the Association of Teachers and Lecturers, assaults on teachers have risen fourfold. Standards in primary schools have not reached the Government's targets. In fact, they have been virtually unchanged for three years. Added to that, there is now concern about the way in which the 11 year-old tests are administered.
Truancy remains a real problem for schools. I have lost count of the press releases from the Department for Education and Skills with headlines such as, "Ministers to crack down on truants", or, "Ministers to get tough with parents who fail to send their children to school".
Stephen Clarke, a director of Truancy Call, has estimated that 50,000 children play truant each school day. That has now been confirmed by the Minister. However, much more seriously, Mike Tomlinson, as head of Ofsted, said that up to 10,000 are effectively lost to the system. What are the Government doing to find them? I hope that those of us who listened to the gracious Speech will be forgiven for feeling somewhat cynical when we hear the words,
"My Government … will also bring forward proposals to tackle problems of truancy".
Since the Government came to office in 1997, initiative after initiative has been tried, including fast track prosecutions; parenting orders; fines of up to £2,500 and imprisonment; police patrolling schools; taking away child benefit; and tens of millions of pounds have been spent. And yet, truancy levels are as high as ever and now we are to expect yet more proposals. I wonder whether it has occurred to Ministers that there may be a link between disaffection and the lack of high quality vocational education both pre-16 and post-16.
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Then there is the A-level and AS-level debacle. Thousands of students had a very unsettled time and to make matters worse, while the issue was being reviewed, without any hard evidence and in order to deflect criticism from Ministers, Sir William Stubbs was sacked. That in itself created even more panic than was necessary. Then we had the failure of the ILA scheme due to poor oversight and leadership from the department and the continuing problem of criminal record checks which is disrupting the ability of schools to employ staff and to use volunteers.
The aims of the Government for choice, diversity, greater autonomy, more power to heads, governors and parents, and less bureaucracy and interference by government are music to our ears and if they were to be achieved, they would have our enthusiastic support. I have just one small question en passant. If Ministers really trust schools, why is a place reserved on governing bodies of academies for a DfES official?
Finally, there is the future of higher education. Margaret Hodge, the higher education Minister, said to an audience in a room in this House only about three weeks ago that the report of the review would be published this month. We now hear that it is delayed. On coming into office in 1997, the Government reneged on a promise to students that tuition fees would not be introduced. However, not only were they introduced within months of taking office, but maintenance grants were abolished at the same time and against the advice of the Dearing report recommendations. Now we have a manifesto pledge not to introduce top-up fees, with the Prime Minister confirming this at Question Time in another place. At the same time, Ministers are appearing on radio and television telling students that there is no such thing as a free lunch and that they are actively considering top-up fees.
There is no doubt that there are problems with the funding of higher education. It is true that under the previous Conservative Government entry into higher education expanded from one in eight young people to one in three and that the unit funding per student was reduced. That was one of the reasons why the Dearing committee was set up in 1996 with, I might say, all-party support. However, the present system and the present problem are of the Government's own making, as the noble Baroness, Lady Sharp, said earlier today.
The Government have been in office for more than five and a half years and in that time they have set a target of 50 per cent of young people to enter university without any thought of how it shall be funded. The Betts report on higher education salaries has gathered dust for years. And the introduction of post-code entry into university is social engineering at its most patronising. Money has been tagged for the universities which admit students from nontraditional backgrounds. Such interference with academic freedom would have my late noble friend Lord Beloff spinning in his grave.

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The key to enter university has to be to improve the education of young people in order for them to qualify for entry on merit. Secondly, it must be to support the many excellent schemes which are working to persuade school children to think positively about education, both in further and higher education, post-16. And instead of shoe-horning students whose qualifications barely, if at all, merit it into a university place, one answer is to make greater provision of high quality vocational education. That is where the weakness in the system lies and it is those skills that the country needs badly.
A recently produced report by CIVITAS found that students who enter university with poor qualifications are seven times more likely to drop out. Nothing can be more dispiriting than spending a year or two amassing a debt and leaving because it was the wrong decision to attend university in the first place. No one is pretending that the solutions to the way forward for our universities are easy, but much time has been wasted by this Government and time is running out.
The strength of this House is the seriousness with which it carries out its function of scrutiny and revision. One of its pleasures is the unfailing courtesy between Members on all Benches and especially between the Front Benches on all sides of the House. The programme before the House will be testing, for the devil, as we know, is always in the detail. I look forward to the rest of this debate and I wish my noble friends Lady Byford and Lady Hanham, who have the prime responsibility for seeing through the seven Bills under discussion today, every success, for they shall have my full support.
3.49 p.m.
Baroness Sharp of Guildford: My Lords, I thank the Minister for her wide-ranging and clear speech on the various issues covered in today's debate. A strange conglomeration of issues are pulled together: regional and local government; environment; agriculture; and education. I shall not emulate the Minister and the noble Baroness, Lady Blatch, by trying to cover all the issues. Some of my noble friends will speak on other issues, and my noble friend Lady Hamwee, like the noble Baroness, Lady Hanham, will guide the two Bills on regional and local government through this House when they come to be considered.
I shall concentrate on education. It has some common ground with the other issues; for example, local government finance is very important, particularly given that under the local government funding review the Standards Fund is to be amalgamated into the local government grant. Likewise, issues such as the closure of village schools in rural areas can strike at the heart of agricultural communities. I shall dwell not on cross-cutting themes but on mainstream educational issues, particularly the two raised in the gracious Speech.
The gracious Speech contains only one paragraph, of 42 words, about education. As the noble Baroness, Lady Blatch, mentioned, it did not promise legislation. That is welcome after so many years of education Bill
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after education Bill adding to the complexity of the bureaucracy. This year we will not have one. First, it promises the continuation of reforms to the secondary sector,
"to promote opportunity and choice through greater diversity".
Secondly, it promises the publication of reform proposals for the universities,
"to improve access and build on excellence".
We have already had a skirmish about universities on these Benches today. Next week we shall devote an entire afternoon to debating developments in this sector. Therefore, I shall point out only that the two aims set out in the gracious Speech—to improve access and to build on excellence—are not necessarily compatible unless the Government are prepared to put their own share of resources into the pot and not just to expect students to fork out money.
I am glad that Ministers have finally admitted that the universities are in crisis. For many a long year, they were not prepared to admit that. Little funding has gone into the universities other than into the science budget. If I have one bone to pick with the Minister about her reply to me earlier, it is that in quoting the billions of pounds poured into the university sector she mixes the research budget with the teaching one. She knows well that the unit of funding per student has decreased over the past few years and remained static. We are concerned about that. At £4,500 per student, most universities now subsidise students. Unless that unit of funding is raised, there will be difficulties in universities. This crisis confronts universities today. I add one word of warning: no magic formula will provide the answer to the universities' problems, which are very complex. It will take time and commitment on all sides to restore trust and to bring changes necessary to the system if it is again to become a jewel in this country's crown.
I shall concentrate most of my remarks on the other aspect of education policy mentioned in the gracious Speech, namely secondary education and reforms to promote opportunity and choice through greater diversity. We do not deny the achievements that the Minister outlined when talking about education. We thoroughly welcome the developments in the foundation stage and the commitment to early childhood education. We accept that we have seen considerable improvements in achievement at key stages 1 and 2, even though in some respects they seem to have stalled recently. We accept that over 50 per cent of students now achieve grades A to C at GCSE. We should not forget that this year's results at A2-level, the new second phase of A-levels, were so good that some people did not believe them to be true. There hangs a tale that is not necessarily to the Government's credit.
As the gracious Speech made clear, this Government see offering more choice and diversity in the secondary sector as the way forward. They are accelerating the conversion of what they call "one size fits all" comprehensive schools into specialist schools, each picking up one of what is now a very wide range of possible specialisms and half a million pounds along

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the way. In this so-called post-comprehensive era, we now have a wide range of different institutions at secondary level, including community schools, foundation schools, voluntary-aided schools, city technology colleges and the new city academies. All have different specialisms, different governance arrangements, funding schemes and admissions arrangements. Diversity certainly exists, and choice in the cities is enormous—too wide, sometimes, for parents to comprehend. As always, middle-class parents learn quickly where the best deal can be found. Outside cities, in urban areas, the choice is more limited. In rural areas, choice is non-existent. If your local secondary school happens to be a sports college, that is your lot.
The Minister knows well that on these Benches we share little of her enthusiasm for the diversity of institutions. We do not see education as a marketplace with schools competing against each other, and with different offerings to meet different tastes. That is partly because the market does not work other than in a city environment—it is questionable whether it works well there—but mainly because we see schools as a community resource. They are part of a network of educational establishments serving their local community and, ideally, funded by, and accountable to, that local community. As a part of a network, their relationships with one another should be co-operative, not competitive. In that respect we are far from the market-driven model of new Labour thinking.
The reverse side of the coin of achievement is failure. Fifty per cent of students may achieve five A-C grades at GCSE, but 50 percent fail to reach that standard. Ten per cent of students—60,000 a year—still leave school each year with no qualifications, largely illiterate and innumerate. They become part of what is known as the NEET group—not in employment or education or training. These numbers have not changed over the past 10 years. Each year, 60,000 pupils, many aged 13 or 14, drop out of school. Once they have dropped out, they are the core of our antisocial behaviour problems.
My noble friend Lady Walmsley will talk at greater length about the issues that create and perpetuate the NEET group of young people. I add one thought: this Government came to power on the back of two powerful slogans that we got to know very well: "education, education, education" and "tough on crime and tough on the causes of crime". The gracious Speech reflects very well the first half of the second slogan. We are confronted by a raft of legislation that will be very tough on crime. But they are neglecting completely the joined-up thinking that links education and being tough on the causes of crime. Fining the parents of truants or locking them up in jail will in the long run do nothing to lessen the problems of vandalism or hooliganism. It may make them worse.
I return to the issues of diversity and choice. The leader of my party in another place, in response to the gracious Speech, remarked that for our party it was no longer a question of whether policy was left or right, but, rather, whether it was liberal or illiberal. The
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essence of a liberal education policy is that it is child-centred. We believe that each child, each pupil, each student, and each young person has the right to be treated as an individual, developing at his or her own pace, with different skills and aptitudes, and motivated by different phenomena; and, of course, coming from different backgrounds with different needs and requirements. Schools have to accommodate those differences. Where needs are greater, we know that we have to provide more support and help and, indeed, that the earlier such support is provided, the more effective it will be in helping a child overcome any disadvantages.
However, are we taking enough cognisance of the other innate differences in children? Is there not a danger that in imposing a curriculum that is increasingly dictated by a series of age-related standard aptitude tests we are imposing a "one-size-fits-all" education on our children? Maths and English now dominate the primary school curriculum, but what has happened to the history and geography, art and music, drama and sport, that they used to do? Are we not in danger of losing the spark and the creativity that used to be such a mark of the upper classes of our primary schools? And in our secondary schools, is not the drive to achieve the academic A to C grades in GCSE and to go on to take academic A-levels putting those whose skills lie in learning by doing at a disadvantage compared to those who are good at learning by rote? Is there not a danger that here, too, we are stifling the more creative parts of the curriculum in our drive to promote basic literacy and numeracy? Does this not ignore the fact that there are many children who learn only when they are motivated? Are we really confident that this top-down, test-oriented, one-size-fits-all, illiberal curriculum is the best way of motivating and teaching our children?
The Government now pour scorn, if I may put it this way, on the "bog standard" "one-size-fits-all" comprehensive school. Yet the ideal, for which many on their Benches once fought, was, and is, precisely the opposite. It is for secondary schools to recognise and provide for the diversity of abilities, aptitudes, talents and rates of development among their pupils. The best, and there are many such schools—indeed, many of us have visited them—achieve these ideals and offer outstanding opportunities to those who attend. I do not deny that this is not always the case and that there are others, particularly in our poorer metropolitan areas that struggle, often overwhelmed by the poverty of their surroundings. We should not forget that 90 per cent of schools in special measures are located in low-income areas. Does it ever occur to the Government that the problem lies not in the lack of diversity among the institutions on offer, but in the inappropriateness of the regime that they are trying to impose?
Noble Lords on these Benches welcome many of the achievements of this Government in the education sector—the extra resources that are now finally finding their way into our classrooms; the recognition of the professional status of teachers; and the provision of more adult hands to help in the classroom. We continue to warn of the problems of recruitment and

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retention because, despite the rhetoric, the shortages are still there. There is a grave danger that in a subject as important as maths the supply of teachers may dry up completely.
We reject completely the top-down nature of the Government's interventions. Liberal Democrat education policies seek to treat the child as an individual, not just as a statistic. We reject the prescriptive, authoritarian policies of this new Labour Government that have resulted in directive after directive landing on teachers' desks, thus piling on the bureaucracy, undermining their professional status, and leaving the individual child as little more than a test result—a statistic—in the growing flood of performance indicators. As I have said previously to this Minister, Gosplan, with all its plans and performance indicators, killed innovation and creativity in the Soviet production system. This new Labour Government is in grave danger of doing exactly the same with our education system.

Benefits Uprating
4.4 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Work and Pensions. The Statement is as follows:
"With permission, Mr Speaker, I should like to make a Statement on the next stage of our welfare to work strategy for people with health problems or disabilities, and to report to the House the annual uprating of benefits.
"On the benefit uprating I can confirm that most national insurance benefits will rise by the retail prices index, which is 1.7 per cent. For the third year running retirement pension will be uprated by more than the RPI—with an increase of f 100 a year from next April for singe pensioners and £160 a year for couples.
"The minimum income guarantee will rise by over £200 a year in line with the Government's aim of targeting extra help on the poorest pensioners. There will also be above inflation rises in maternity allowance and statutory maternity pay. These will be uprated from £75 a week to £100 a week. Most income-related benefits will rise by the Rossi index—1.3 per cent—in the normal way.
"I shall place details of the uprating in the Vote Office and arrange for figures to be published in the Official Report.
"Ensuring that as many people of working age as possible are in employment is central to this Government's strategy to tackle poverty and social exclusion. We inherited a major problem of worklessness—not just among those traditionally seen as unemployed, but for millions of other people who were offered little or no help to find work.
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"Between the 1970s and the mid-1990s. the number of lone parents on benefit and the number of people claiming sickness and disability benefits both trebled. As industrial restructuring took place, one in three men aged between 50 and state pension age were out of work and reliant on benefits. And one in five men aged between 50 and state retirement age were receiving an incapacity benefit. At a time when many people should have been given the help that they needed to find other work, they were written off.
"Over the past five years we have started to tackle this legacy through economic stability and our active labour market policies providing people with individually tailored help to move into work. As a result, employment is at record levels, with well over a million more people in work than in 1997. Long-term unemployment has been massively reduced and the number of lone parents in work continues to grow.
"But there is still more to do. There are nearly 4 million people of working age who are out of the labour market and on benefits. Of these, 2.7 million are receiving an incapacity benefit—that is nearly three times the number on jobseeker's allowance.
"But, as is clear from surveys, many people with health problems and disabilities want to work. Indeed more than three quarters of a million people on incapacity benefits tell us that they want a job. Just because people are on incapacity benefit it does not follow that they cannot work—nine out of 10 people who start a claim to incapacity benefit expect to get back to work. It is right that we provide the proper support to help them do just that. We must continue to reform the tax and benefit system from one based on what people cannot do to one based on what they can do.
"For people off work—through illness or disability—it is often a lack of confidence or knowledge about the support and advice available that stops them getting back to work.
"Today I want to announce the first steps in a new approach to remove these barriers and help people realise their potential. Our proposals are set cut in the consultation paper: Pathways to work—-Helping People into Employment. This sets out a new framework of help for those who through illness or disability have applied for incapacity benefit. It combines better and more intensive advice with mandatory work-focused interviews, new opportunities for rehabilitation, and new financial incentives to encourage people to move into jobs. We propose phased pilots of the new approach in six areas around Great Britain from next autumn.
"Let me make it very clear, this is not about forcing sick or disabled people into work. It is about encouraging people to look at their options and helping those who want to work to achieve their goal of getting a job. I should like to reassure the House that those with the most severe conditions will not be required to attend the ongoing intensive interviews. We all understand how important it is

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that the development of this initiative does not threaten their security and the vital support that incapacity benefit provides for them.
"Our new approach has a number of aspects. First, we need to provide the right support from the outset of a claim. We shall build on the current framework offered through Jobcentre Plus, and ensure that new claimants get early and frequent support once their claim has been sorted out. We shall train a new team of specialist personal advisers to help claimants stay focused on their capabilities, building on their expectation that they will return to work. We want as many as possible of those moving onto incapacity benefit to be seen as people with a working future, not people at the end of their working life.
"Secondly, some people with disabilities and health problems need specialist help to get back to work. In the past this has not been available, so we will be introducing ground-breaking rehabilitation programmes, working with the NHS, GPs and occupational health specialists to combine work-focused support with health-focused rehabilitation for conditions such as back pain and depression.
"These programmes will be tailored to people's individual needs—helping people to understand the effects of their condition and working to increase their confidence to move back into work. Making the move from welfare to work is a big step. It creates uncertainty and financial worry. There is already a range of extra help available. The Disabled Persons Tax Credit guarantees a weekly income of £167 for a single person working 30 hours per week. This will increase to £189 per week from April next year when new tax credits are introduced.
"Today I can announce that we will build on this support by piloting a return to work credit for people leaving IB for work. It will be paid at £40 per week for 52 weeks where personal income is less than £15,000 per year. For someone returning to work 30 hours on the national minimum wage and the new working tax credit, this will guarantee an income of at least £229 per week for the first year in work, compared with £167 under the current system, and just under £80 per week on incapacity benefit.
"We realise too that the first step into work is a big one. Finding money for the first month's bus pass or for work clothes can too often be barriers to work. That is why today I can also announce we will extend access to the Advisers' Discretion Fund, enabling advisers to make awards of up to £300 to spend on anything that will help their client move into work.
"Better support for people with health problems will not stop with IB. We will also increase support for people with less severe health problems who move from IB to JSA but who might nonetheless face significant barriers to work, by ensuring that they automatically see a specialist adviser when they first claim JSA. I can also announce that we will
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refer these people to tailored support through the relevant JSA New Deal, without the normal waiting period of 18 months. We will further reform the system so that people awaiting an appeal are not moved onto reduced rate income support, but receive JSA and work-focused support.
"People with health problems or disabilities get support from a number of sources. Today I have outlined the role the state will play, but others have an important role too. We want to encourage an environment where as many employers as possible are managing health at work actively and positively. This makes good business sense. In an era of full employment and a tight labour market people with health problems or disabilities are an untapped resource that employers and the country cannot afford to ignore.
"We also want to support doctors who can sometimes face pressures to sign people off work. There is now clear evidence of the medical, psychological and therapeutic benefits work can have. So we will work with doctors to raise awareness about the importance of work retention or resumption in improving the health of their patients.
"To conclude, this package of reforms is about providing support to help people with health problems or disabilities move back into work. It is about fulfilling their desires to work and realising their own ambition. It is about changing attitudes—both their own and others. Those claiming IB will, I believe, respond to a focus on what they can do rather than on what they cannot. We are not abandoning them and denying them opportunity, as in the past, but supporting them with help towards a better future."
My Lords, that concludes the Statement.
4.14 p.m.
Lord Astor of Hever: My Lords, the House will be grateful to the Minister for repeating the Statement. The Government have lost their way on welfare reform. Recent figures from the department itself have shown that by the end of the Government's second term in office, the welfare bill will have increased to over £141 billion per year.
Between 1996–97 and 2005–06, it is predicted that welfare spending will increase by approximately £46 billion in cash terms and £20 billion in real terms. This means that by 2005–06 more will be spent on welfare than on health and education combined. These figures are nothing short of staggering, more so given the Prime Minister's pledge to reduce the "welfare bills of social failure".
What has happened to Labour promises on welfare reform and the abolition of means testing? Benefit expenditure is out of control, means testing is growing and real reform of the social security system seems to have been dodged. Instead we have had a confused mish-mash of spending on means-tested benefits, on universal benefits and on complicated tax credits.

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Despite promises to the contrary, the Government are means testing more and more people. I wonder whether the Chancellor of the Exchequer remembers his words to the 1993 Labour Party conference. He declared,
"I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved. The end of the means test for our elderly people".
Yet today we see further confirmation of an altogether different agenda.
The minimum income guarantee is to be worth far more than the basic state pension and is to increase in line with earnings, not prices. It will provide the base for the pension credit. More than half of pensioners will therefore have their total income determined by that means test and the value of the basic state pension will become irrelevant for them.
Once the pension credit is up and running, almost 60 per cent of pensioners will be subject to means tests. Does the Minister accept that the implications of the policy are not as clear-cut as the Government would have us believe when affirming that the pension credit represents a reward for savings? Can the Minister be so confident that she is rewarding savings when more pensioners than ever will face benefit withdrawal rates of at least 40 per cent?
It is widely acknowledged, including by the Government, that we are facing a pensions crisis and that many people are facing an impoverished retirement because of inadequate pension provision. I therefore add my voice to the rising swell of criticism of the Government's increasing use of means testing—both on the grounds that the system is too complicated and also that it offers an acute disincentive to save.
According to a report published earlier this year by the Prudential, more than £1.2 billion in benefits is going unclaimed each year because pensioners do not understand what they are entitled to. This situation will only be exacerbated by the introduction next year of the pension credit.
I turn to the Government's "Welfare to Work" agenda. This demonstrates a strange dichotomy in the Government's welfare policy. While statistics show an ever-increasing welfare bill, at the same time they show that unemployment is at a record low. That contradiction is in part due to Labour's failure to grasp the nettle of welfare reform. While moves to eradicate the so-called unacceptable culture of worklessness are to be welcomed, I question the validity of the Government's declarations on this issue.
For example, in a keynote speech in June, the Prime Minister outlined plans aimed at helping people on disability benefits back to work. However, as commentators were quick to note, his words represented nothing more than a reaffirmation of previously announced policy. There is a sense that we are continually going over old ground, throwing yet more wise words at a problem that has persisted and continues to persist. We do need to help people who are out of work back into jobs. We must seek to do more to help them. The Government are rightly seeking to help those on incapacity benefit who wish to
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work. Sadly, since 1997 we have witnessed increasing numbers of incapacity benefit claimants and this is a trend we must seek to reverse.
Despite all the activity in that area in the past, there has been much recent criticism of the Government's approach. A Public Accounts Committee report published in October on the New Deal for young people, found that many people would have found jobs without the programme, that the Government are not measuring outcomes effectively and that just 0.2 per cent of New Deal participants have suffered sanctions.
A report from the Work and Pensions Committee in the other place, published in July, concluded,
"Within the New Deal programmes, performance needs to improve",
while recent press coverage has affirmed that half of the Government's pet projects to help people in deprived areas are to be scrapped or merged, including action teams for jobs, the ethnic minority outreach service and employment zones. This all leads me to conclude that announcements on Welfare to Work represent reworkings of the script, often made in the run-up to the pre-Budget, or Budget, report.
The next 12 months represent a challenging time for the department. The scale of change is immense, with the pension credit, housing benefit framework changes, Jobcentre Plus roll-out and the Pension Service implementation to name but a few. The Government have set themselves a demanding programme. The need to ensure accurate and proper delivery in all these areas must be a central point of focus for the Minister and her departmental colleagues.
I take this opportunity to seek assurances on perhaps the most fundamental of the reforms currently being undertaken—the implementation of the universal banking service from next April. Can the Minister assure the House that the project is on track and that the transition to the new system will be both smooth and efficient? In the other place, Ministers have admitted that the number of benefit claimants who lack a suitable bank account rose by a quarter of a million over the past year for which figures are available. Moreover, the most detailed research on the issue has found that nine out of 10 people who will have to move over to the new system think that it has disadvantages and that four out of 10 were "entirely negative".
4.22 p.m.
Earl Russell: My Lords, I have always said that it is a basic skill of opposition to see all hell in a grain of sand. The noble Lord has just demonstrated that skill very clearly indeed. I see something a little more complicated here. One might possibly describe it as all purgatory in a grain of sand but it is even more complicated than that.
I remember one occasion when I became very tired of setting the same exam questions over and over again. I asked my wife to supply me with some, which she duly did. Our minds work in very different ways.

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One of my pupils who had just sat the paper came in, having no idea who had set it, in an utter rage, and said that it was an incredible paper that looked as if it had been set by Hieronymus Bosch. I add that it was the only paper that year on which he got a first-class mark, so it cannot have been too awful.
I wonder whether the Statement has been drawn up by Hieronymus Bosch as I see an incredible mixture of things within it. I see a good deal of generosity and a good deal of imagination in some of the small proposals. Many of the proposals concerning the new disabled person's credit and the run-on are welcome but I see them as coming within a general analysis of the difficulties of those who are out of work, which I regard as mean-spirited, harsh and, as I think the Minister knows, totally mistaken. These sit uneasily together. Hieronymus Bosch is perhaps somewhat to the point.
I wish to make a couple of points about uprating. I note that, as last year, we are told that most national insurance benefits will rise by 1.7 per cent. For form's sake I should ask what are the exceptions to most. I have done that before and have been told that it is trivial but those exceptions should be on the record.
I refer to another point that needs to be on the record. The MIG rise is in itself welcome but what is happening to the take-up figures for MIG? That has always been the interesting and the difficult point.
As regards the analysis of the New Deal and incapacity benefit, I should like, first, to remind the Minister of the passages in the Acheson report, confirmed in many other pieces of research, that there is a clear link between unemployment and sickness and that being unemployed makes one more liable to become ill. So, there is a causal connection that flows rather the other way from the way this document has it.
I should like the Minister to attempt at some stage a breakdown of incapacity benefit figures by area to see whether there are—as I have been told by some of the voluntary organisations—a great deal more people on incapacity benefit in those areas where people have long-term difficulty finding work. I am glad that the Statement raises the question of the number of people over 50 who are out of work. Last time I was given that figure at the end of the previous government, it was 2,594,000. I should be glad to know what the corresponding figure is now and for some allowance to be made for the economic cycle in the change. It must, I think, have come down. The question is how much it has come down because it is on that that the Government should be judged.
As regards the analysis of people on incapacity benefit, we are told that they were written off because they were given benefit. Here is one of the places where I simply cannot follow the logic of the Statement. When someone is ill and unfit to work, I simply cannot understand the idea that giving them benefit, and indeed waiting for them to get better, is writing them off because, after all, this is not the Department of Health we are dealing with here. It was the
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Department of Social Security and is now the Department for Work and Pensions. It is not responsible for curing those people, it is responsible for making sure that they do not starve until they are cured. Calling that "writing off" is beyond my understanding.
What seems to me to be true of most of the areas concerned is that they are areas in which there is no work, or at least no work for unskilled, able-bodied and often ageing men. That, incidentally, has been grossly exacerbated in places such as South Wales by the failure of Corus. It makes one regret the more that there is no definite statement in the gracious Speech about the euro. The fall in inward investment has been catastrophic and that can only make the problem of shortage of work worse.
I happen to live next door to one of those areas, Carlton Ward, Kilburn, in which during the worst of the recession the percentage of the population on means-tested benefits rose as high as 37 per cent. The latest figure I have seen was only 24 per cent, which is a good improvement, but it is still one of the worst wards in the country. I cannot help having the suspicion that there is a postcode discrimination against job applicants coming from that particular ward. I believe that it has a reputation for being a rough and drug ridden place. I suspect that employers avoid employing people from there. Will the pilots investigate the question of whether there is genuine postcode discrimination? Will the pilots also investigate whether there is any correlation between the supply of local services and facilities and the difficulty of finding work, the decline of local bus services, the post office and the universal bank about which I agree with everything the noble Lord said? There is also the fate of the village shop which in many cases has closed after several arson attacks. Possibly, we can be told what happens to people when they believe that they have been totally forgotten. All these matters need attention.
When we begin to help those who are out of work, the first thing to do—if there is anything about incapacity benefit which is constructive—is to reform the all-work test, because people who are classified as unfit, according to that test, do not in any way correlate with those who are working. Can the Minister say whether it is still true, as stated in DHSS Report No. 86, that one is more likely to get work if the all-work test finds one unfit to work?
The Annunciator has just announced that no further action is required. I should add that that statement did not come from these Benches. Indeed, we on these Benches would like to see the all-work test fundamentally reformed. It cannot be a proper test of unfitness to work if one is more likely to get work if one is found unfit rather than fit. As we have always said from its introduction, the test does not measure the effect of fatigue and acute pain. I am in correspondence at the moment with a former pupil of 40 years ago whose son suffers from myalgic encephalomyelitis and who has been found by the all-work test to be fit to work. Anyone who knows anything about ME, the medical genuineness of which

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has recently been confirmed by a major survey, will know that saying that people are fit to work when they have that disease can be at least a very limited statement. They need a better test before anything else.
When talking with people about the work they can do, one needs very badly to listen to their judgment of what they can do. Only the person concerned can know how much pain is being felt; no one else possibly can. Unfortunately, there are no decibels in which pain can be measured. So telling people that it is something which they can afford to ignore is a statement which must always be made from ignorance. One has to work with the grain of what the person is fit to do. Even if they believe that they are unfit when in fact they can work—and this does happen—until they can be convinced, they can be taken to the water but they cannot be made to drink. One has to go with the grain.
Finally, we have here a revised version of the Chancellor of the Exchequer's press release. I heard what the noble Baroness, Lady Blatch, said earlier today about the delay between making statements to the press and making them to Parliament. In this case it is quite a substantial matter. It might have been saved for just a few days until the secret could be shared with this House. It would not have cost a great deal. What was in that press release, but which is not in the Statement, is a very big threat of coercion. The Chancellor of the Exchequer said that people must take the jobs which are offered. That is an attempt to judge people's medical condition for them and that cannot be done.
As a result of the absence of those words from the Statement, am I to take it that wisdom has struck the Chancellor of the Exchequer in his old age or is it just that the nasty bit is hidden under the carpet? It may be that the Minister can tell us which.
4.34 p.m.
Baroness Hollis of Heigham: My Lords, I am in a dilemma because I should not reply at all as 20 minutes has expired. I am not quite sure what I should do, whether I should simply sit down and write to the noble Lord, Lord Astor, and the noble Earl, Lord Russell. I believe that the understanding of the House is that the Opposition speeches and my reply take 20 minutes. I do not know what to do.
Noble Lords: Reply!
Baroness Hollis of Heigham: In that case, I am counting on the understanding and the tolerance of the House if I also transgress the conventions which we have so recently arrived at. I shall be as brief as I can.
The noble Lord, Lord Astor, spoke about welfare spending. He was running together benefits spending with the tax credits which support people who are in work. Primarily, as the noble Lord will know, wages do not reflect family need and therefore for many people with a large number of children in particular, they may be better off not being in work given the low level of income which many people experience. That is why I am delighted—and make no apologies
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whatever—for the work of the Chancellor of the Exchequer in targeting family poverty by supporting those in work whose wages are low and who as a result need increasing support. That is the place of tax credits and I am delighted that we are providing them.
I link to that the question asked by the noble Earl, Lord Russell, about which benefits are not subject to RPI. Most of them will be more generous than RPI, such as the retirement pension. The only provision I am aware of which has been frozen for several years is the lone parent additional premium.
The second issue raised was that of pension credit. The noble Lord, Lord Astor, pressed me about means testing. It is not means testing but targeted support. We are talking about a five-yearly assessment or very broad bands of income which will only need to be changed if there has been a life-changing event in a pensioner's family such as the loss of a spouse. The noble Lord asked me whether it was a reward for saving. Yes, it is. At the moment the primary beneficiaries of pension credit are older women. For example, the widow of a manual worker might be receiving a local authority pension of £100 a month. At the moment she sees not one penny of it because she is no better off than if she had a minimum income guarantee.
As a result of pension credit (which is almost like an ISA wraparound in some respects) that widow will receive £60 per month. For the first time the pension credit will ensure that those with modest savings, which in the past would not have floated them off the minimum income guarantee, will now enjoy the majority of those savings. I hope that, the whole House will welcome them.
I now turn to incapacity benefit. It is the case that 2.7 million people are on incapacity benefit. About 1 million people have told us that they want to work but they are not doing so. We cannot read across from the degree of disability to the degree of ability to work as those receiving the independent living fund support tell us. It is the case that when people first go onto incapacity benefit 90 per cent of them expect to work. Of that number 40 per cent are still receiving incapacity benefit a year later and of that percentage fewer than one in five go on to find work.
I know that with the noble Lord's expertise in the field of disability, he will want, with us, to make these proposals work. This may give reassurance to the noble Earl, Lord Russell. It is a consultation document which in due course will lead to six pilot schemes. 'They will be assessed. The schemes will run to April 2006. Only then will we decide whether it is the right way forward.
I emphasise that the thrust of these measures is t o try to keep people attached to the labour market. We know that someone on incapacity benefit who gets back to work within a year of receiving that benefit, will stay in work. If that is not so, as my statistics show, it is unlikely that that person will ever return to work. The point about the interviews is not to make the person return to work. As the noble Earl, Lord Russell, said, that is the person's choice. We want to

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keep the person attached to the labour market with information, rehabilitation and extra material which they may not know about. Above all, there is the return to work credit thus showing the financial advantages of returning to work.
I do not believe that we have an alternative but to seek to keep people attached to the labour market so that they can make informed choices when they are ready to return to work. Many of them wish to do that at the moment, but do not do so. We shall see whether the pilot schemes are the right way forward and we shall all share that knowledge.
Finally, the noble Lord, Lord Astor, asked me about universal banking. I can assure him that the Post Office tells us that everything is on track. We hope to set out more details of our implementation plans shortly. However, universal banking will help us to overcome financial exclusion; it will help us to offer greater flexibility to people as regards budgeting—they will be able to take out small parts of their benefit rather than the entire benefit; they will be able to go to any post office in the country; and they can be assured that, as a result of universal banking, there will be greater safeguards against fraud, theft and error than in the past. I hope that, as a result, we shall deliver a service which allows people both to claim and to take up the benefits to which they are entitled.
I have trespassed on the House for only six minutes. I apologise to both noble Lords if I have not answered all their questions. However, I shall write to them on any aspects that I have missed. I could have taken another 10 minutes but shall not do so.

Address in Reply to Her Majesty's Most Gracious Speech
4.40 p.m.
Debate resumed.
Baroness Massey of Darwen: My Lords, it is a pleasure to speak in this debate following the gracious Speech and the very stimulating introductory speeches during the first part of the debate. I shall focus on education and, within that, the importance of citizenship education and personal, social and health education. Those subjects used to be referred to as the "soft underbelly" of the curriculum. I shall argue that they are fundamental to the whole body of the curriculum, contributing to raising standards of academic achievement, social and moral responsibility and health and well-being, as well as reducing antisocial behaviour.
The main concern that I shall raise is the importance of putting children and young people at the heart of any government agenda and all Bills. I must apologise to the House for having to be absent for much of the afternoon. As co-chair of the All-Party Parliamentary Group for Children, I shall be involved in an event in
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Westminster bringing together 70 young people to meet Ministers and all-party politicians at the launch of our first annual report.
This has been a good Government for children—probably the best over the past 50 years. They have introduced many positive initiatives, such as investment in education, referred to by my noble friend Lady Ashton, tackling child poverty, neighbourhood renewal, Sure Start, strategy development by the Children and Young People's Unit, Quality Protects, the Children's Taskforce and the National Service Framework for Children. We must now ensure that those initiatives meet at a community level and interface with schools in delivering citizenship education and personal and social education. I know that Ministers are concerned about that, and my noble friend Lady Ashton has been instrumental in supporting schools to encourage social as well as academic development and achievement.
I shall first describe some issues for children which are still areas for attention before I go on to suggest that citizenship and personal social education can make a difference. A recent Save the Children report expresses concerns about the number of children who are still in poverty—about 4 million. The NSPCC is concerned about violence towards children, with one or two children dying every week at the hands of parents or carers.
Research suggests that, by the age of two, many indicators for social and academic achievement are set and that, by the age of three, behavioural indicators can detect the likelihood of committing offences and being convicted. The charity, Young Minds, has produced evidence that 20 per cent of children between the ages of five and 15 have a mental health problem. It insists that schools must promote mental health to reduce social exclusion.
Truancy is still a problem for schools. There is serious concern among experts about what has been described as an "epidemic" of child obesity, which is likely to lead to problems of diabetes and heart disease in later life. Schools may not he able to resolve all those issues but they can certainly contribute and, indeed, are contributing.
It is always interesting to hear what young people have to say about their own concerns. Recent messages from the consultation carried out by the Children and Young People's Unit to inform the UK strategy for children and young people showed that all children and young people surveyed were concerned about their health and fitness and about being safe. Those above the age of 12 felt that more emphasis should be given to the importance of families, happiness and love. Schools can help to address some of those concerns.
Citizenship education, which is statutory in secondary schools from this year and recommended in primary schools, is intended to develop the knowledge, skills and understanding required to play an effective role in society, to help young people to become informed, thoughtful and responsible citizens, aware of duties and rights as active citizens, and to develop

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values and skills to deal with difficult moral and social questions as they grow up. In a changing and often material world, such skills and values of citizenship surely need emphasis in families and in schools.
Surely there is also a need to include parenting education for both boys and girls before they leave school and become parents. Sure Start is helping with such skills. But Sure Start is not everywhere and is intended to help existing families. In my capacity as chair of the National Treatment Agency for substance misuse, I visit family rehabilitation centres and prisons where parenting skills are taught. Surely that is a little late. Being a good citizen must also involve being a good parent. It is not only a matter of being punitive and prosecutory. This may be an issue for a separate debate and further discussion.
I spoke earlier about consulting young people. That is surely an area that must be taken seriously in schools and other institutions. Much good work is being undertaken by, for example, the Gulbenkian Foundation and many children's charities. Consultation with young people is key if we are to improve services for them; we cannot extol democracy and involvement without engaging young people in it. This is not just a matter of trying to increase the numbers who vote in local and national elections, although that may be an important by-product; it is about respecting the views and concerns of others, and it should begin at an early age.
Perhaps there is a fear that young people will not be able to cope with responsibility. I cannot support that view. The school council in the primary school where I am a governor takes itself very seriously and has produced. among other things, guidelines for behaviour which pupils are expected to follow. It works. If we give young people responsibility, then of course we sometimes have to risk that they will disagree with us or not conform. That is an essential part of growing up and of democracy.
I was told a story the other day about a school council in a secondary school which took democracy very seriously. The head teacher was ill and he received a letter from the school council saying:
"Dear Sir, the School Council has voted to send you a get well card. The vote was in favour by seven to six, with five abstentions. This vote will, of course, need to be ratified by the plebiscite".
The point is that young people will, thank goodness, be unpredictable and that they need, with support, to try out and experience systems and relationships in order to develop their own values and ways of operating.
Personal social and health education also helps young people to do that. The framework for PSHE has been in place since 2000 for pupils aged five to 16. Through the four key stages there is a structured programme of learning through which pupils can develop the knowledge, skills and understanding to have self-respect and respect for others. White Papers on education and health have recognised the importance of education in promoting better health and emotional well-being for children.
The national healthy schools standard award for schools has been a phenomenal success in engaging teachers and communities in developing local
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programmes to improve health, school ethos and achievement for all and in reducing anti-social behaviour. The impact of the national healthy schools standard is now to be evaluated formally. That should be worth watching for evidence of how personal social and health education can influence teaching and learning and partnerships with parents, carers and local communities.
In summary, the Government deserve congratulations on their emphasis on trying to improve the health and well-being of children and young people. The All-Party Parliamentary Group for Children will be watching to see how collaboration between initiatives at a local level shows real benefits for children and how government. Bills impact on children and young people. My noble friend Lady Ashton is aware of those concerns.
My noble friend Lord Whitty has the mammoth task of trying to summarise this debate, so I do not ask for much response. I know that he, too, is concerned about children and young people. I know that all noble Lords on all Benches are prepared to work on improving the well-being of children and young people and on supporting families. No doubt we shall have many constructive debates in the future.
4.50 p.m.
Lord Waddington: My Lords, I want to talk about regional government which, we are told, Mr Prescott has been dreaming about for a long time. I am extremely suspicious of politicians who do not know the difference between a dream and a nightmare. The prospect of granting democratic legitimacy to wholly artificial entities drawn on the map by bureaucrats really is a nightmare.
We are not talking about regions such as those on the Continent that were units long before the nations of which they have become a part had been invented. We are talking of wholly artificial areas which, with the possible exception of the North East, reflect no natural regional loyalty or community of interest whatever. Does anyone but Mr Prescott seriously believe that good would come of Cornwall being governed from Bristol, or Cumbria from Manchester? Frankly, if anyone believes that, he has taken leave of his senses.
Before making this speech I promised myself that I would not utter the word "Europe", but I cannot resist mentioning that while our ancient counties that are rooted in our history, and to which people feel a loyalty, are under threat, a recent Brussels publication states that the South East, drawn on a map attached to the publication as stretching from Kent to Oxford, and down to the New Forest is—wait for it—
"a region of the European Union with Roman and Norman ties that stretch back into history".
Reading such utter balderdash, one does not know whether to laugh or cry.
Some say, "What's all the fuss about? Every region can choose whether to have an assembly or not". But what kind of a choice will it be? We already have the spectacle of bishops lending respectability to this

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grubby exercise by chairing constitutional conventions. It amazes me. If those bishops feel the need to fight disenchantment with politics among the young, why do they not direct their energies to teaching people the importance of our Parliament at Westminster? Indeed, why do they not urge Labour MPs to turn up there now and again to scrutinise the activities of the Government rather than working a two-day week. That would be an excellent exercise on which the bishops of this land should embark.
The Government say that there will be a free choice. Although the north west convention is housed in a dilapidated hut at the back of a pub, one can be certain that the convention's very existence, with a bishop at its head, will be taken as evidence of some popular support in the North West for an elected assembly. I fear that when there is a referendum in the North West, the unthinking will not ask why bigger and bigger regional bureaucracies have been created and powers transferred to those wholly artificial regions; they will say, "Now the regions have been given the powers, there had better be assemblies to control them". They will be encouraged to say so by Labour politicians salivating at the prospect of election to super councils where all will be paid generous salaries. And of course once one region has voted for an assembly, Mr Prescott will hint broadly that others would be foolish not to follow suit, because if they do not they will miss out on government largesse ear-marked only for those regions that have voted themselves a proper democratic structure. One can see it a mile away.
One thing is certain: regional government à la Prescott will not mean more power for local people; it will mean taking power away from them. It will not mean government closer to the people; in most of the country it will mean making it much more remote. We know all that from the Queen's Speech which tells us that county councils' powers over planning will be abolished and given to the regions. If that does not make government more remote I do not know what does.
In the North West, where the assembly will be completely dominated by representatives from Manchester and Merseyside, the voice of those living in the countryside and small towns will be drowned and the chances of our countryside disappearing under brick and concrete greatly increased. Meanwhile, as a result of the local government changes that we are told will accompany the arrival of such monstrosities, local authorities like my own Ribble Valley, will be destroyed and their powers given to more remote unitary authorities also dominated, in the case of my part of Lancashire, by urban interests. The whole thing is, quite frankly, horrific and will mean the end of any sensible and meaningful local government to which people can turn to have their concerns dealt with.
Already in the regions bureaucracies are burgeoning, often with a proliferation of pointless non-jobs. Every week the Guardian is full of advertisements not for teachers and nurses, but for consultation officers, outreach workers, ethnic minority project leaders, community development
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workers (Turkish speaking). Boris Johnson wrote recently about an advertisement for the post of director of infrastructure and community affairs in the Government Office of the East Midlands. The fatuous job description read:
"Responsibility for ensuring GOEM delivers the step-changes we are seeking in the implementation of joined-up policy throughout our own geographical structure".
Have noble Lords ever heard such absolute nonsense?
Already 40 people are employed in the GOEM— Government Office of the East Midlands—but I can assure noble Lords that that is only the beginning. Wait until people are recruited to service the elected assemblies and the fourth-rate party hacks elected to them. We do not have to speculate; we only have to look at Scotland. MSPs draw up to £48,000 per annum for a one-and-a-half day week; the First Minister in Scotland draws more than £100,000; 22 other Ministers—five were needed before devolution— receive more than £80,000.
Baroness Michie of Gallanach: My Lords—
Lord Waddington: My Lords, I am sorry, I do not have time. I am sure that it will soon become apparent to everyone that the Liberals apparently subscribe to this ridiculous exercise. I hope that they suffer the electoral consequences as a result. All of those 22 Ministers are served by an extra 1,000 civil servants.
I shall tell your Lordships what regional assemblies will mean: committees in each region willing and dining with other regions in the name of liaison; other committees visiting their regional offices in Brussels to see whether they can screw more out of the Commission than the region next door; and costly visits to the European Union Committee of the Regions and its many sub-committees. Does anyone seriously imagine that any of that will be good for amity or for national cohesion? Will any of it make for a happier country? If anyone believes that, he has taken leave of his senses.
Frankly, I am amazed at the sheer absurdity of most of the arguments put forward for regional government. Some speak as though it is the English answer to Scottish devolution, when we all know that there never has been the slightest chance of powers being devolved to the regions remotely like the powers devolved to Scotland. Some suggest that regional government is necessary to ensure that England receives as fair a share of public expenditure as Scotland, when all that is necessary to right that wrong is an adjustment in the Barnett formula.
Of course the north/south divide exists and there is reason to be worried about it. Of course I want to be sure that people in the north of the country are able to articulate clearly what they need and to get the resources that they deserve. But surely what the burghers of Bootle and Gateshead need is not new regional authorities, but more authority in the hands of the councils that already exist. What the citizens of Newcastle want is not more councillors but more investment.

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Not for the first time I quote the Prime Minister. Not so long ago, and before he found it necessary to give Mr Prescott something to do, he said:
"We need regional government like a hole in the head".
5 p.m
Earl Russell: My Lords. the noble Lord, Lord Waddington, reminds me vividly of a 17th century MP who once declared:
"The Britons are divided from the world".
The figures are quite interesting. The proportion of taxation and spending administered nationally in the UK is 78 per cent. The second highest proportion anywhere in the European Union is France at 44 per cent. Germany is at 29 per cent. I have not observed that either France or Germany is at the point of immediate collapse. So, what is proposed can be done in other places.
If the noble Lord, Lord Waddington, thinks that there is something absolutely peculiar about the British, which means that we cannot do what everyone else can, then I should be glad to know what it is. Furthermore, it has not only been done in other places, it has been done to a large degree within this country in towns.
In the 17th century the majority of government in this country was county government, which, in terms of the geography of that period and the difficulty of travel, was much the same degree of devolving that is now envisaged in regional government. It is only since 1988 that this totally centralised political universe that we now live in has been created. Although that may be a long time in politics, it is not time immemorial in history. So what we have done before we can do again.
The north and, for a brief period, the west of England had regional government. So we have done it before. I do not see why we cannot do it again. The noble Lord, Lord Waddington, observes that that is nonsense.
Lord Waddington: It is nonsense.
Earl Russell: My Lords, if the noble Lord would like to maintain that opinion, I will willingly give way to him. No? Very well, then.
What I wanted to talk about today was our plans for public services. We have just had a working group on that subject on which I happened to be one of the Back-Bench members. Since that concerns both regional government and education, I thought that this was perhaps the proper place in the debate to bring the matter up.
Both the private sector and the public sector are good, but they are good at different things. The private sector is normally better in the production of goods and services, where one needs innovation, change, a variety of experiments and risk and seeing which succeeds and which does not. But there are certain things at which the private sector is not good. It is not good at managing monopoly, because the basic discipline of the private sector is competition. Where
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that is missing the private sector is inappropriate. The private sector is not good at managing anything that cannot be left to go bankrupt because the other basic discipline of the private sector is the need to remain solvent. If that had been understood before the privatisation of NATS or the railways it would have saved us all a great deal of trouble.
The other thing that the private sector is not good at delivering—this is vital for the future of the public services—is universal access. It is not in the nature of a market to have no losers. So if one is trying to bring that about, one is asking a market not to be a market. That is an unfair request. One has only to look at the problem of the supply of school places in the London Borough of Bromley. One has only to look at the 40 million Americans with no health insurance, including, I believe, 64 per cent of American children. That is a frightening figure. So we think that where universal access is needed the public sector is also needed.
Private delivery of a public sector service on the other hand is a different matter. That is not necessarily wrong in principle, but it carries several difficulties. In particular, one must avoid conflicts of interest. Where that has been tried before—mainly in the reign of James I—it led to a conflict of interest almost every time. The nearer the service is to a monopoly the more likely is a conflict of interest, because one creates a situation where one gets a bigger profit by delivering a worse service. That is in my book a conflict of interest, which is to be avoided. The PFI, for example, needs to be far more transparent than it is at the moment before it is to be a really constructive vehicle for investment.
One needs also to look carefully at the public sector comparator, which we believe is fairly heavily biased in favour of the private sector. That needs investigating. We have two general lines of complaint about the public services. One is about funding and the other is about freedoms. The Government seem to think that there is nothing that is not their business.
Mrs Hodge, whom I know and like, spoke recently about government taking decisions about what should be the standard and content and classification of a degree. That is simply not the Government's business. I would no more trust Mrs Hodge to do that than I would trust her to conduct a tonsillectomy on ine. I daresay that she would do both with the best will in the world, but she simply does not have the qualifications or the knowledge. But if one gives people absolute power they are tempted to use it.
When people talk about a monopoly in the public service, they are looking in the wrong place. Any hospital competes against any other hospital. Any university competes against any other university. The monopoly is not in the provider, it is in the purchaser. The monopoly is the Treasury. That applies equally whether one's service is being purchased privately or publicly. With the new public sector contract, where one can regulate even the number of paperclips used by the organisations concerned, one perhaps has even tighter central control under privatisation than under public ownership. So, the only way to stop the

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situation where the monopolists can force costs down to below the economic costs so that an organisation cannot work, where the Treasury can meddle with everything that it cannot understand—the Aeroflot system of funding as I always used to describe it—is to break up its monopoly. That is why we want to regionalise the purchase of' our public services. We want a guaranteed level of central funding, minimum standards of provision to be worked out by negotiation between the Treasury, the regions and other interested parties and not just decided by the Treasury. We want regional government, with a power to raise local income tax, purchasing the services.
That will mean that standards of services will not be the same in one place as in another. That must be accepted. It is the way that competition works. It will lead to a competition to make services better, to counteract the competition the Treasury always builds up to make them cheaper. It will produce what I referred to as the "Cubie effect". The day after Cubie was published, one of my pupils came in through my door and said:
"Why can't we have this here?"
To which my answer was:
"Yes, if you are prepared to pay for it".
So voters will be able to choose whether they want to pay the extra money for better services. If they do not, they will have to do without them.
I hope that that will produce competition to improve services, instead of competition to continue to worsen them. As I remember once saying to the noble Baroness, Lady Blatch, when she was a Minister: efficiency is not efficient. We end up by reducing costs to the point at which nothing works. If we do not try something such as I described, soon we will not have any public services. This is urgent.
5.10 p.m.
Baroness Warwick of Undercliffe: My Lords, I shall speak on education—in particular, the future of higher education. I declare an interest as chief executive of Universities UK. Although there is to be no higher education Bill this Session, I welcomed Her Majesty's reference to the on-going review of higher education. Indeed, if a White Paper emerges after all, it may well lead to future legislation, so this is an ideal time to shape the results of the review.
I am quite clear what I want to see in the review and any future legislation. It is a vision that will safeguard our world-class university system, a system that has strength in diversity, delivers world-class teaching and research, and to which there are no financial barriers to participation for those from less well-off sections of society.
Your Lordships may rest assured that I do not in this short speech intend to deal with all the aspects of higher education policy that may be covered in the Government's review. I shall concentrate on one key issue: resources. There is little disagreement—this was said during Questions earlier today—that our universities have been seriously underfunded for more
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than 20 years. I am sure that all noble Lords agree about that. Indeed, in a paper published on the department's website only yesterday, the Secretary of State acknowledged the funding deficit. He stated:
"there is a funding gap which needs to be filled. I accept the case for filling it".
Evidence shows that the sector now faces a major investment backlog. The bill to clear that backlog is huge. If we are to meet government targets, the £10 billion identified must be found. However, I fear from ministerial statements that the bill cannot be fully met from public funds. Of course. it is for the Government to decide whether that is the case and whether part of the bill will be met from increased private contributions. But such increases in private contributions will not, on their own, meet the bill. Public funding must remain central to the delivery of excellence in higher education.
So what can we expect in the review? There has been much speculation about where the Government are heading and talk of so-called top-up fees, of a graduate tax, or even of a return to grants. We clearly need a full debate about what will strengthen our universities and what unforeseen dangers may lie ahead. I hope that my noble friend agrees that it is vital to consult widely and genuinely across the whole higher education sector about any proposed changes to how universities are funded. I hope that he further agrees that detailed modelling of any proposals is vital to insure against unintended consequences of any reform.
Whatever new system the review leads to should be based on a number of key principles, which have been enunciated by Universities UK speaking on behalf of all universities. They are essential to the successful implementation of any reforms.
First, any recommendations must generate sufficient additional funds so that the sector is placed on a sound financial footing. If the Government decide to increase private funding for universities, that must be truly additional, not offset by reductions in existing taxpayer support.
Secondly, any changes in the level of private contributions must be judged by their impact on the participation of students from lower socio-economic groups, so that universities' efforts to widen participation are not compromised.
Thirdly, if a more market-based fee system were to be introduced, as has been suggested by the media, a transparent national bursary scheme would be needed to meet the cost of fees for those who were not liable to pay them from their own resources. It certainly cannot be left to individual institutions to create their own schemes. That would be unaffordable for many universities and could create a confusing mess.
Fourthly, a new funding scheme for universities will need to be accompanied by revised arrangements for maintenance support for students based on the principles of clarity and consistency.
Fifthly, any funding solutions must address the financial problems of all universities, not just of some. It would be iniquitous to create what would in effect be a two-tier system. That would betray the promise that

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the Government want to make to talented but disadvantaged young people: that they will be guaranteed a first-class higher education that will open up great opportunities for their future; nor would it solve the financial problems of the sector, and it could seriously damage the reputation of British higher education at home and abroad.
Sixthly, we must ensure that standards are maintained as a result of the review, with universities maintaining their control over the award of degrees. That is vital to safeguard the attractiveness of UK higher education in the international market-place.
I realise that my noble friend will not at this stage be able to state which path for increased funding the Government may eventually choose. As I said, a White Paper is expected on that in January. So does my noble friend agree that, despite all the problems of past funding faced by universities—and acknowledged by the Secretary of State—universities across the board have maintained the world-class reputation of British higher education? Does he further agree that the maintenance of a wide range of institutions across the country—all different but all with their own strengths—is vital to achieve targets to widen participation and promote high quality research and involvement in local communities?
Finally, will my noble friend confirm that the Government are committed to maintaining high standards and quality across the higher education sector by providing new investment that benefits the sector as a whole and does not draw artificial boundaries between different institutions?
Perhaps I may ask for the indulgence of the House and take advantage of the wide-ranging nature of the debate to raise an entirely different issue that has been raised with me: the common agricultural policy. Commissioner Fischler has called for change to the common agricultural policy. Earlier this year, the Curry commission set out a clear way forward for farming and the food chain that involved farmers in fundamental change. Can my noble friend tell us how much progress will be achieved at UK and European level to achieve what the Secretary of State has referred to as a new settlement for agriculture, respecting the environment and, in particular, meeting consumers' needs?
5.18 p.m.
Lord Jenkin of Roding: My Lords, by its nature, this debate tends to range widely. I shall pursue the question of education and, although she is not in her place, follow up the point made about citizenship by the noble Baroness, Lady Massey. Those who have spoken about education have already cited a sentence from the Queen's Speech:
"Raising educational standards remains the Government's main priority for Britain's future prosperity".
There are two aspects to that. There is the question of educational standards and of its link—which I entirely accept— with our prosperity. In my few minutes, I shall draw attention to one important aspect of' that aspiration and connection: the serious situation affecting science education in our secondary schools.
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I declare an interest as this year's president of the Association for Science Education, although I hasten to add that what I shall say represents my view, not necessarily that of the ASE.
The House may remember that, two to three years ago, I chaired the Select Committee inquiry Science and Society. Our report, published in March 2000, drew attention to the need for science in schools to,
"adapt itself to a dual role: it must maintain its traditional and vital focus on preparing the most interested and talented pupils for science courses at university; at the same time, it must equip all—
we stressed "all"—
"students for what has been called 'scientific literacy' or 'science for citizenship"'.
Both aspects of that dual role are vital, and, three years on, I am depressed to realise just how far the country is from achieving those aims.
More recently, the Select Committee on Science and Technology in the other place held an inquiry, which reported in July this year. The report was called Science Education from 14 to 19, and that committee went into the subject in much greater detail than we had two years earlier. The Government's reply was published last month, and I must say to Ministers that it largely failed to reflect the dual aim that the Select Committees in both Houses had identified. I was not in the least surprised, therefore, to read in the short commentary that the Select Committee in the other place made that it found the Government's reply "unsatisfactory" and intends to ask the School Standards Minister to appear before it. That may, in fact, not be the noble Baroness, Lady Ashton of Upholland, so she may escape that; it will he one of her colleagues.
Our main complaint—certainly my main complaint—is about the curriculum and the examinations that are based on it. Science became a core subject of the national curriculum for all children aged 5 to 16 as long ago as 1989, but the syllabus has not changed fundamentally since the days when it was designed primarily for the 10 per cent of students going on to do science at A-level and at university, rather than the 90 per cent that had other ambitions. Some of the most compelling evidence that my committee received argued that that needed to change, if what is taught and learnt is to equip all students with scientific literacy.
Witnesses called for less emphasis on imparting facts and more on the nature and processes of science. People need to know more of the history of science, so that they can begin to understand that a scientific theory is valid only until it is displaced by later work leading to a new theory. One distinguished scientist told us that the present way of presenting science as facts,
"leaves people unprepared to encounter as adults the uncertainties of much current science".
Others blamed the emphasis on facts for,
"a profound misunderstanding of the whole scientific process amongst the general public".

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Three years later, the same points were made by the Select Committee in another place. It said:
"What is important is not that citizens should be able to remember and recall solely a large body of scientific facts, but that they should understand how science works and how it is based on the analysis and interpretation of evidence. Crucially, citizens should be able to use their understanding of science, so that science can help rather than scare them".
I mention, in passing, that one of our science centres advertises one of its exhibitions as "Science for the Terrified". We must recognise that that reaches out to part of our public.
There is no lack of advice to Ministers as to how the matter should be tackled. My Committee drew attention, three years ago, to the report Beyond 2000: Science Education for the Future by Professors Robin Millar and Jonathan Osborne. Since then, there has been a new, experimental AS syllabus, from the same stable, called "Science for Public Understanding". The SPU course aims to do just those things that we identified three years ago as likely to make science more enjoyable and more relevant to students' lives and help them to develop an understanding of scientific knowledge as the product of sustained work by scientists over time. There is much more, but time does not allow me to go into it.
Six hundred students sat the SPU examination in 2001 and 800 in 2002, and it is still in its early days. However, the course is not even mentioned in the Government's reply to the Select Committee in another place. It was not referred to in any way in Ministers' replies. Why is there no reference to that ground-breaking work? A few weeks ago, I attended a Nuffield seminar on a survey of the SPU syllabus. The survey was entitled Breaking the Mould?, and its main conclusion was as follows:
"this course does offer an educational experience about science that is significantly different from traditional science courses and is engaging and interesting for students. In that sense, this course has broken the mould and framework which has structured science education for the past 40 years and is to be welcomed".
Do the Government share that assessment? If not, why not? If they do, why do they not refer to it? Why do they not applaud it? Why do they not say that they want to see the course expanded? The importance of the SPU course is not so much at AS-level, although it is valuable at that level; it is in the influence that it will have on the development of GCSE syllabuses for the 14 to 16 age group, on which work is going on at York University.
I recently chaired a Foundation for Science and Technology seminar on the Sir Gareth Roberts report on the supply of scientists and engineers for the future. Towards the end of that evening, discussion focused entirely on the question of science in schools. One participant said:
"If students had not been persuaded from the age of 14 that science or engineering was a good choice, that science would give them a better chance than other subjects of getting to the university of their choice and be 'fun', the battle was lost".
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That is a sobering reflection, and it indicates the importance of the subject. We need to know whether Her Majesty's Government really understand and welcome the new work on the curriculum and will help it forward.
Like the noble Baroness, Lady Warwick of Undercliffe, I have a related question to ask. I hope that I will get an answer. It concerns the science centres and the contribution that they make to scientific citizenship. Last July, Mrs Estelle Morris received a delegation from the centres and invited them to explore with the DIES how they might move forward in harmony with the department's objectives. I hope that the noble Lord, Lord Whitty, will give me a clear assurance that there will be continuity in that consultation process under the new Secretary of State, Mr Charles Clarke.
There is a great deal of wisdom in the science and education communities. I hope that the gracious Speech means that Ministers will start to listen to their advice.
5.29 p.m.
Baroness Walmsley: My Lords, in my contribution, I shall talk about the link between the Government's stated intention to "promote opportunity and choice" in education and their other proposals in the gracious Speech about how to deal with truanting and antisocial behaviour. There is a strong link between those two things, but, sadly, the solutions to anti-social behaviour and truanting that are being proposed by the Government are nothing to do with education.
That is hard to understand from a government who purport to want to be tough on the causes of crime and to be enthusiasts for joined-up government. There is a whole raft of research showing that many of those who offend have been failed in one way or another by our education system, so why not start there? That is the cause of much of the crime on our streets, and it can certainly be the solution.
Most medical practitioners will tell you that prevention is far better than cure; most economists will tell you that it is cheaper; and most social scientists will tell you that it is much better for the fabric of society that we prevent the alienation and dysfunction that leads to offending behaviour than to have to deal with the damage to both offender and victim after it has happened.
It is therefore hard to understand the Government's emphasis on crackpot ideas such as on-the-spot fines for parents of truanting children when the same idea for yobs on the streets was laughed out of court. I should like to see effective measures to stop offending behaviour, but on-the-spot fines are not an effective solution.
Many young offenders are truants or have been excluded from school. Let us be clear about the damage that truanting and exclusion do and put the emphasis on preventing them rather than punishing the children or their parents. At a time when the Government are introducing citizenship into the curriculum—presumably in order to foster a sense of

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responsibility and inclusion among our young people —is it not ironic that the only substantial mention of young people in the gracious Speech was about punishing them when they reject what the state has to offer them? Real inclusion, like real drug rehabilitation, has to be voluntary. It cannot be imposed. Punishment of the parent will not lead to the inclusion of the child. Identification of the problems and putting resources into tackling them will.
One of the major causes of crime is exclusion from school, according to a Home Office report by Berridge, Brodie et al in 2001. Let us consider the extent of the problem. Every year 8,500 children are permanently excluded, with 12,000 out of school at any one time. There are also 65,000 fixed-term exclusions from school each year. Unless all of them are very rapidly found alternative provision, which they are not, that is an awful lot of children roaming around the streets getting into mischief.
Research shows that excluded children feel alienated because the criteria for exclusion are inconsistent and often perceived to be unfair. Their attitude to society is coloured by a sense of injustice, failure, and lack of belonging, and this affects their educational attainment and long-term employment prospects, and vastly increases the likelihood that they will get on to the wrong side of the law. Many of them have parents who cannot cope with them. Often they have a long history of truancy. Does it make sense to fine or imprison those parents for their inadequacy, or would it make more sense to support them and help them to cope?
Just because we are biologically capable of being parents does not mean that we all know how best to bring up children in the society of today, which is very different from the one in which we grew up. We all need help, but those parents facing multiple social problems are the ones needing most help. Social workers tell us that they can identify as much as 80 per cent of the future prison population before the children are 10 years-old. Why do we not heed these warnings and put resources into changing the factors which lead to such a situation?
There are many common denominators among children who truant and children who are subsequently excluded. Most children who are excluded from school come from backgrounds of extreme social and economic disadvantage. Children with special needs are six times more likely to be excluded; children in public care are 10 times more likely to be excluded; and 40 per cent of them come from single-parent families. There has been a 400 per cent increase in exclusions since 1998. Does this indicate that the Government are coping with the problem? I do not think so.
Does excluding the child solve the behaviour problems that arise in the classroom? I do not think that it does. It also leads to other agencies going into a crisis response when they could have been positively involved in preventive and restorative work instead. Would it not be better for teachers, parents, school managers, LEAs, social workers and specialist
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voluntary agencies such as INAURA to work together on a zero exclusions programme to prevent the situation reaching crisis point in the first place, but then, if it appears that remaining in the school is wrong for the child, to manage the transfer of the child to alternative provision that meets his or her needs?
My noble friend Lady Sharp of Guildford referred earlier to the NEET group of young over-16s—those that are neither in education and training nor in employment. These young people who have dropped out of the system are more likely to be the ones who have found the education offered to them to be so inappropriate to their needs that they either truanted or behaved so badly that they were excluded from school. The system has failed these young people. The horse has bolted and all the Government are now trying to do, with the proposals in the gracious Speech, is to close the stable door.
If asked what would be my solution to truanting and anti-social behaviour, I would give the Irish answer to the person asking directions, "I would not have started from here". But where should we have started? First of all, with high quality nursery education and care for the very youngest children. The Government must be given credit for the progress that they have made in this sector, but there is still a long way to go. Without more investment in early years, the changes to secondary education which the Minister announced earlier are just fire-fighting. The issue of the curriculum has already been covered by my noble friend Lady Sharp of Guildford and I shall not say any more about that.
There is a need to treat young people as individuals, to look at why they are rejecting school and to deal with their underlying problems. That way is better for the child, better for the other children in the school, better for the teachers, better for the parents and better for society. We in this country lock up more children than does anywhere else in Europe. That is more an indictment of our society than the fault of the children themselves. British children have as much innate ability and character as any in Europe. It is how we treat them that is different. It is time that we took a very critical root and branch look at that issue. Sadly, I regret that I did not find that in the Prime Minister's programme for government in the forthcoming Session.
5.37 p.m.
Lord Morgan: My Lords, this is a miscellaneous debate, which has certain advantages. It enables those of us engaged in regional policy to reflect on the great success of the Government's policy in regard to devolution. I am sorry that the noble Baroness, Lady Blatch, is not in her place. Her observations on the subject—the stern, unbending unionism which she expressed—might explain why the Conservative Party scored zero in Scotland and zero in Wales.
The noble Lord, Lord Waddington, threatened dire electoral consequences for the Liberal Democrats. Whether they would score less than nought I do not know, but it is a rather dire prospect. Devolution has been a great success, and I hope that it will be extended

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to regional government in England. Although I gather that the noble Lord is not in total agreement on that, he at least spared us the details of the Anglo Saxon Heptarchy which we heard about from another speaker on a previous occasion.
As for agriculture and rural affairs—and I live in the country—this debate gives the Government an opportunity to say something about DEFRA, and to explain how the department is ensuring that rural areas receive their share of prosperity and access to public services. Perhaps the Minister could tell us about the progress being made in relation to the excellent rural White Paper which was published two years ago.
I wish, however, to talk primarily about education—to which the Government have given priority, and in which, as the noble Baroness, Lady Sharp, said, the Government have scored considerable successes in literacy and numeracy. I almost feel that I should declare an interest as I was the moral tutor of the person who was mainly responsible for that strategy, Professor Barber. He was my pupil, as was one of his Downing Street colleagues. At one stage, I was also in charge of the supervising arrangements for Mr Adonis. I take some reflected pleasure from the achievements of these distinguished former pupils.
Higher education, however, has not been a success. It has been a sad story, from the failure fully to implement the Dearing report, to the failure as yet to announce higher education funding in the Comprehensive Spending Review. Too often, we have taken the approach—which I do not believe is part of the progressive or democratic socialist tradition in this country—of regarding university education as something for the middle class, something for an elite. That is not the tradition with which I grew up in Wales, where universities were thought of as people's universities.
There has not always been such sympathy, or even respect. The term "elitism" has been appallingly misused and misunderstood, and I hope that, now that Charles Clarke has exposed it, it will finally go into the dustbin of history. There have indeed been signs of a welcome departure so that, rather than use the abused term "elitism", we are talking about institutions of excellence and international quality. I hope that we will have no more talk of "elitism", no more cases such as that of Laura Spence, and no more insults to university institutions.
The Labour Party has a proud record in higher education. The much criticised Wilson and Callaghan governments of the 1960s and 1970s—and my noble friend Lord Jones was a member of one of those Governments—fulfilled the Robbins report and promoted higher education. In many ways, the years 1964–79 were a golden era for our universities. I am sorry that the noble Baroness, Lady Thatcher, is no longer in her place. She was Minister of Education in that period, and she saved the Open University. I do not know whether she would agree, but I regard that as one of the great achievements of her career. The Open
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University benefits our society enormously. That was perhaps the only period in which we took our education as seriously as other countries do.
As we have heard, there has been positive action from the Government, particularly in scientific funding. The Science Research Investment Fund, in 2000, was one important initiative. Nevertheless, there are some well-known problems—as we discussed not long ago in our debate on the encroachments on university autonomy and academic freedom. Free universities are everywhere in chains, albeit paper chains, because of excessive assessment and auditing. Now, however, those bureaucratic encroachments show welcome signs of diminishing.
It appears that the role of the Qualifications and Assessment Authority is to be scaled down in terms of both intensity and frequency. Moreover, the RAE—the research assessment exercise, which has done enormous damage to scholarly and intellectual life in this country—will also be conducted less frequently. It is welcome that Charles Clarke and the Prime Minister have made a priority of defending academic independence and saying that it should not be jeopardised.
My noble friend Lady Warwick clearly and admirably explained the funding situation; she did so much more expertly than I could. However, we know the problems. We know that many great universities are in debt but are without the power to raise additional finance. The problem is therefore getting worse, particularly for many universities which, socially, are doing a valuable job. Universities in the London area, for example, that cater for ethnic minorities and poorer people are in particularly dire straits. The problems that that causes for students, and particularly for mature students, are well known. I believe—speaking from memory—that mature students comprise approximately one fifth to one quarter of the student population at the University of Wales. Their percentage has not increased as it should, and that demonstrates a serious social weakness.
Speaking as a former member of the AUT—where my noble friend Lady Warwick was our admirable "shop steward"—I know that university staff are dreadfully underpaid. Since the 1980s—when I ceased to be a university teacher pay has increased by just 6 per cent, whereas pay for comparable professions has increased by 44 per cent. We are losing not only teachers, but, alarmingly, the graduate students who supply the teaching profession in many key areas such as modern languages.
The remedies will undoubtedly be unveiled in January, and not before time. Although we shall debate this topic next week, I should like to consider a few possibilities now. Top-up fees would be better than what we currently have, as they would allow some of the more prosperous universities to survive, but they are a poor option. Not only are top-up fees opposed by many vice chancellors, including, as I said, every vice chancellor in Scotland; they divide even the famous—or notorious—Russell group. They would be very harmful to some of our newer universities whose

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students simply could not begin to afford such fees. It is an illusion to imagine that they can be made up by bursaries. The figures simply do not add up.
I am still a teaching member at Oxford, and what has been done there is excellent. However, although some colleges there could add to the sum, they could not supply the necessary £4,000, £5,000, £6,000 or whatever is worked out. Such fees would lead to impoverishment and social exclusion, and they would also damage the sciences.
I prefer the graduate tax, which is based on fairness. However, more important than my own views is the fact that, today, Clare Short expressed support for it. I believe that Charles Clarke also supports it. Such a tax would be based on fair principles. Collection of the tax might initially be slow, but, as we know, Gordon Brown is very interested in university access. The amount of time which can elapse before the tax is collected will be an important test of the Treasury's resolve on higher education.
Scotland presents an excellent example—indeed, devolved Scotland seems to be a model community. One previous speaker was not too keen on Scotland, but I believe that there is a great deal to be said for it—particularly in respect of higher education, the absence of fees, and the way in which its graduate tax makes special provision for mature students, single parents and the disadvantaged.
I hope and believe that the advent of Charles Clarke will mean a new deal. Yesterday, in the Independent on Sunday, he wrote about protecting "and even celebrating" diversity. The present system talks about diversity, but it does not celebrate or help achieve diversity. The current funding system promotes uniformity in a way that damages the stronger universities without helping the weak ones. If Charles Clarke amended that system, he would amend 20 years of erroneous policy in university funding.
I hope, finally, that the Government will not make too much of a target of 50 per cent of pupils at university by 2010. Targets can, as we have seen on hospital waiting lists, lead to fudging. I believe that such a target would diminish quality, or, alternatively, lead to false accounting. I hope that the advent of Charles Clarke means not only a new departure, but that, for the first time, "education, education, education" includes higher education.
5.48 p.m.
Lord Pilkington of Oxenford: My Lords, I rise today to ask the Government if they will consider giving some attention to the problems that are facing our examination system, particularly the difficulties facing A-level. Please forgive me for reminding your Lordships of a little history—a little less distant than that mentioned by the noble Earl, Lord Russell, but a little history nonetheless.
A-level was designed 40 years ago to assess those who wanted to do demanding—and I emphasise demanding—academic courses at university. As such it worked well for about 30 years. It is true that only 10 to 20 per cent of the ability range took this
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examination. However, because it was such a defined group it meant that examining was much easier. The patterns of performance changed little from year to year when dealing with a group as narrow as 10 to 20 per cent of the ability range. Therefore, it was possible to use the method of assessment known in the trade as "norm referencing". That sounds more technical than it is. It simply meant that a certain percentage were awarded As, a certain percentage awarded Bs, and so forth. It continued in the same way from year to year.
I have never opposed the desire of this Government and previous governments to extend the number of those who go on to further education. I acknowledge that in a more technical and developing world it is valuable that more and more of our citizens go on to higher education. However, the point I am making today is that it is a mistake to use only A-level as a method of assessing a larger and more varied group. One is deciding whether students in such a group are accepted by, say, Imperial College for a demanding course in pure science or mathematics or are accepted by another and different kind of university for a vocational course.
Germany and France share the desire of this and previous governments to expand the number of citizens who participate in higher education. However, it is interesting that neither of them use one examination to assess who should go on to further education. For example, France has the academic baccalaureate which bears comparison with A-level. Germany has the Abitur which also bears comparison with A-level. However, each has evolved a separate, more vocationally based examination. France has the professional baccalaureate and Germany has a number of vocational examinations.
Our attempt to use A-level, which was designed for a particular academic group of the age range, as an assessment of the wider group led to the disasters of this year. As we all know, one examination group suddenly and in panic decided to use a crude method of norm referencing, like that of the past. And of course it was a total failure. I gather from the Observer. on Sunday that there is much more to be revealed. It was a problem which everyone in the trade could see coming.
Norm referencing cannot be used for such a varied group. What has been used is "criteria referencing" where examiners are told that each candidate must have certain points. They must tick that he or she has covered this, that and the other. It is a little like saying that 10 per cent of the apple is red and fruity, forgetting to say that a bit is discoloured at the bottom. Criteria referencing plus modules and course work, if not carefully controlled, can lead to grade inflation. Grade inflation, like monetary inflation, means that the examination loses its value.
Therefore, is the Minister in reply today prepared to give us a clue as to whether the Government are examining the problems in education and will he delight my heart by saying that he might even look at the French and German experience and not be dogmatic as regards the UK? But I urge him to beware

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of those siren voices which urge him to opt for the international baccalaureate. It has set subjects and it would suit the brilliant—I emphasise brilliant—all-rounder. However, for those who are dedicated scientists but not so good at modern languages, and for other dedicated specialists it could be a disaster. In many ways, the English pattern of specialisation has been more beneficial to such people.
One could of course turn to the French baccalaureate, which is very different. The French have a series of set menus, some with a science base, some with a humanities base, some with a classics base and so forth. It has much to recommend it; for instance, a wider range of subjects. But I think that Ministers' hearts will tremble when they realise that every baccalaureate on the Continent demands four-year university courses. I do not know whether they are prepared to consider that, but if so Mr Brown will have to open the Exchequer much more than he has hitherto.
My purpose today is to ask the Government to try to avoid dogma: let us not have the argument that there are two examinations, one of which is élitist and the other is not. I agree with the noble Lord, Lord Morgan, that the word " élitism" ought to be banned from public debate. It has caused more harm in English education than almost anything else. I hope that in reply the Minister will find time to give a little thought to the problems I have outlined.
5.54 p.m.
Lord Ezra: My Lords, I want to turn to environmental issues. The gracious Speech, in referring to the Johannesburg World Summit, states that the Government,
"will focus on tackling climate change and finding new ways to meet our energy needs".—[Official Report, 13/11/02; col. 4.]
I will concentrate my remarks on that, which is particularly appropriate in view of the forthcoming White Paper on energy policy.
There are two interlinked issues of energy policy. They are the need to reduce emissions and the need to provide energy security. The two are indissolublely linked. It would be unacceptable to deal with the emissions problem and risk security, just as it would he to deal with the security problem but not with emissions. The trouble is that if we go on as we are, we are unlikely to achieve either objective. Emissions are currently rising and are likely to rise more. Security is imperilled by the substantial prospective imports of gas which, far from the self-sufficiency we now have, could reach 90 per cent of our requirements by 2020. Therefore, the need for positive policies in the White Paper is urgent.
The electricity generating market is crucial in all this. The major emissions savings in the 1990s were achieved by the increased use of gas in power stations and the reduction in the number of coal-fired power stations which in fact produced greater savings than anywhere else in the economy. However, we are now going to face a reverse situation. With the progressive
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withdrawal of nuclear plant and the increased use of gas or other fossil fuels, we are likely to see an increase in emissions in the power sector and elsewhere too. The way in which electricity is to be generated in the future is therefore crucial to the whole debate.
The Government have put a major emphasis on renewables, with which most people would agree. In practice, that presently means wind power. But the Government's modest targets—a 5 per cent contribution to electricity generation by 2003 and one of 10 per cent by 2010—are most unlikely to be met, let alone fill the gap left by the nuclear withdrawal. In fact, the contribution of wind power to electricity generation in 2000 was less than 0.5 per cent. We all know the planning difficulties which stand in the way of the expansion of wind power.
Therefore, a more broadly based approach is required. This could be provided by promoting the production and use of clean energy of which renewables could form a part. There are other important contributors to clean energy; for example, combined heat and power. That is a way of producing electrical energy but making use of the waste heat by using smaller plant than the conventional stations. The Government fully support that concept, but unfortunately CHP is going through a bad time. Having increased by 800 megawatts of new capacity in 2000, it increased by only 38 megawatts last year and is now declining in its contribution. That is due partly to the fall in wholesale prices, to which I referred earlier in a Question, and to the way in which the balancing mechanism operates in NETA, the new electricity trading arrangement.
There is also micropower, which is a very small form of CHP—and in which I declare an interest. This is a technological breakthrough. These appliances, which would fit into domestic premises to produce heat and electricity, would provide a degree of security hitherto unknown. How many people in various parts of the country suffered as a result of the recent storms? If they had had a combined heat and power installation in their homes, they would have been quite secure.
There is clean coal technology, which has long been advocated by supporters of the coal industry. Now, apart from clean coal technology, if CO2 is extracted by known methods, in environmental terms coal could in the future compete with renewables.
There is methane from abandoned coal-mines—of which, unfortunately, there are now a large number. This too, if converted into electrical power, could reduce emissions substantially. If methane enters the atmosphere, it is very harmful.
All these aspects of clean energy should be treated on all fours with the way in which government are presently treating renewables. Unless some such major effort is made, it is difficult to see how present trends can be reversed.
There is the question of the future of nuclear power. But, as the PIU report indicated, this raises enormous financial, environmental and security problems. The

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Government are taking a first step to deal with these issues by means of the proposed legislation on the management of nuclear liabilities.
But all this will take time to sort out. Meanwhile, more immediate steps must be taken to widen the scope of the efforts to achieve reduced emissions as well as energy security. I have made certain suggestions to that end.
6.2 p.m.
Lord Sawyer: My Lords, decent affordable housing provided in sustainable communities for people on modest or low incomes is a particular concern of mine. I declare an interest as chairman of the Notting Hill Housing Trust.
Earlier this year, we heard from the Deputy Prime Minister in his July Statement that radical action is needed to reform the planning system. It was a good speech. It was an admission of failure by all governments, including his own. He talked about a step-change in attitudes.
This issue will require more than a step-change. It will require a wake-up call to all those involved in planning and housing: local government, the Civil Service. housing associations, developers and builders. Everyone involved will have to take one giant step, think differently, work in a new paradigm, if we are to make a difference to the housing problem in this country.
We are all acutely aware of the failures in housing provision. We see an increase in demand for housing, but we are building 150,000 fewer homes today than we were 30 years ago. That is not good enough. Regional planning guidance aimed for 23,000 new homes a year in London and 39,000 in the rest of the South East. These goals are clearly not being met. It is obvious that our regional planning policies have no teeth. Will the new planning legislation enable regional bodies and central government, if necessary, to take quick and effective action if local planning authorities do not deliver? That is a key point.
Housing is not just about legislation or numbers; it is most of all about communities. Good housing that is sustainable has the support of local communities. Too often, our planning process fails local communities and falls victim to loud and often powerful interests or pressure groups, with communities being sidelined or not being considered at all.
We need to speed up the planning process. I applaud the proposals to help with the training of staff in local planning authorities. However, we must look at the processes themselves, and particularly at the democratic element in the processes.
We have to ensure that everyone in the community has his or her view taken into account. We must listen not merely to our own peer group and to the movers and shakers in the industry, but to the next generation of young people who will have to be housed in villages and towns in the future. We must answer their question: where will the affordable housing be built to meet their needs? We must listen to local businesses.
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How can they attract the investment that will produce jobs and allow communities to grow and develop successfully?
Radical reform of the consultation process is needed to make it community driven in the widest sense. The narrow background of local development control is a dreadful waste of energy, and leads to fewer and fewer houses being built.
Where in the forthcoming legislation shall we see fundamental improvements providing facilities, resources and back-up for local communities that want to be involved in the process of local consultation—the processes and involvement that will lead to sustained development being welcomed and understood in communities, rather than being unwelcome and misunderstood, as it often is, through a lack of proper consultation, support and advice within those communities?
Good housing that is sustainable provides for a mix of incomes. I am afraid that even under this Government too much of our housing is segregated in terms of income groups, most of it going to the wealthy rather than to the poor. Yes, there are many more examples now of affordable housing being provided alongside higher cost homes that are for sale; but examples of affordable housing to meet the needs of the less well-off are still relatively few and far between.
The Notting Hill Housing Trust has been a pioneer of mixed tenure development and we are proud of the positive results. A recent survey indicated that 87 per cent of our customers were satisfied or very satisfied with their neighbourhood. However, in our experience, the majority of house-builders and developers want to segregate one housing type from another. Some go to great lengths to put the affordable housing on the other side of brick walls or even on separate sites. That does not provide for mixed, sustainable communities.
The lesson that we have learnt is that better results come from having control over the land. In this way, we can design better for sustainability; we can provide the amenities that the community has sought; and, most importantly, we can cross-subsidise from housing that is for sale to make affordable housing truly affordable for those on modest incomes.
I ask my noble friend what measures we shall see in the new legislation to make sure not only that affordable housing is built in mixed tenure communities, but that its availability reflects the gain in land values that is so often generated by the granting of consent to build. We must capture the land value gained for the benefit of the community, not merely for the developers and builders.
The surest way of doing that is to use compulsory purchase orders. Without these, we have to wait not only for the painfully slow planning process, but for house-builders to decide at what point to release part of their land bank. A wider use of compulsory purchase orders could help to ensure that the outcomes for our communities are those that they seek.

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In addressing the ills of our planning system we should re-examine the role of compulsory purchase orders: to assemble sites and bring forward housing supply; to ensure that the essential infrastructure is put in place; and to deliver the financial leverage that makes a sensible proportion of the new housing affordable housing. When will we see effective measures to make that happen? When will we see compulsory purchase orders used as a more effective tool in housing and planning policies? When will we see effective measures that lead to genuine community consultation supported and financed by government, and when will we see effective measures to ensure that regional planning targets for housing have really been achieved?
Finally, I see in the newspapers that the Deputy Prime Minister has taken issue with IKEA about the development of its superstores. I do not know the arguments on either side—the newspapers rarely provide such information—and I will be careful. Affordable furniture is as important as affordable housing, and no one does it better than IKEA. I have no interests in this regard. It combines high-quality design with fair prices. If as many people queued to get into the meetings of my party on a Sunday morning as queued to get into an IKEA superstore, we should have a flourishing democracy.
We want affordable furniture. IKEA is one of the companies that provides it successfully for those on low or modest incomes. Whatever happens, we must ensure that we do not obstruct its ability to deliver that. We should help it to serve the community in the same way as the Government should be so doing.
6.10 p.m.
Lord Prior: My Lords, I am tempted to speak on rural affairs but I had better leave that in the very capable hands of our Front Bench spokesman, who made an absolutely outstanding contribution in the previous Session, as in every Session, in relation to the horrendous problems that rural affairs and agriculture now face.
Instead, I shall say a few words on education, which is a subject on which I believe I have not spoken in either House for more than 40 years. I shall focus on one small but vital part of education; that is, the subject of learning to read.
About 18 years ago, a constituent got in touch with me to say that she was having considerable success at teaching phonics in a primary school in Lowestoft, which was in a rather depressed area, and the children would normally perhaps have been rather behind. I looked into the matter and found that she was having great success. As a result, I wrote to the local education authority and the then Secretary of State, my noble friend Lord Baker, asking them what they were doing about it and whether they had notification and experience of what my constituent was able to do. I had a very polite reply from the local education authority saying that it was aware of what was going on in that school and of its success but that phonics
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was only one of a number of ways of teaching to read and that this particular lady was obviously an extremely gifted teacher who was so good that she could probably teach her children to read by using any method. The reply from my noble friend was much along the same lines but perhaps even more anodyne.
I am afraid to say that I did nothing further but now, some 18 years later, I return to the attack. During. that time, various others have joined in the attack to try to get something done about phonics teaching. Some very intrepid teachers, who now form the Reading Reform Foundation, have managed, by sheer persistence, to persuade teachers in all parts of the United Kingdom to adopt what is now known as synthetic phonics. That is also being done in Canada, New Zealand, Australia and parts of the United States.
I turn to my first question for the Government Front Bench, although it is not for the Minister who is currently sitting there; I hope that the noble Baroness, Lady Ashton, will write to me. My question is: why does the DfES keep ignoring the available research on phonics? I refer to the Clackmannanshire research, the classroom findings of the exemplar synthetic phonics schools and the classroom findings of many schools that report a rise in standards since using phonics and other synthetic phonics programmes. Even Conor Ryan, who I gather is Mr Blunkett's former education adviser, is asking similar questions.
I apologise for giving a brief lesson on phonics. We all know that "C", "A", "T" spells "cat" and so on; basically, that is phonics. I suspect that it is the method on which most of us in this House were brought up when we were learning to read. Broadly, I advocate returning to that.
Where has it all gone wrong? Following the war, new ideas began to emerge, including that known as "look and say": whole words were shown on flash cards. Fifty per cent of children succeeded quickly, 30 per cent struggled and 20 per cent failed altogether. After that came the "real book" method. whereby teachers would read an exciting book to children, which would encourage them to pick up naturally how to read for themselves.
However, by the late 1980s concern was growing about poor standards of reading. Phonics was therefore put back in the curriculum but, unfortunately, "analytical" phonics was involved; it is based on the sight of a whole word rather than simply the sounds of an individual word. In essence, by putting back analytical phonics, those involved tried to please everyone by recommending a bit of everything without proper research. That is really the basis of the national literary strategy. I welcome the emphasis that has been placed on learning to read and the energy with which that has been done. It is having some beneficial results but they are nothing like as good as they could be, particularly for the bottom 20 per cent. For them, we now have early literacy support. That is not necessarily for the bottom 20 per cent who are the most stupid; it is for those who find particular difficulty in learning to read. That is very

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cumbersome in the classroom, because generally the class has to be split into a number of groups, which involves difficulties for the teacher and requires other people to take the groups, so it is expensive.
The whole scheme—the NLS and the ELS—was introduced without scientific testing and it was not tested or compared to other approaches. Why? What really worries me is that head teachers and others, including teacher training establishments, appear to accept the Government's programmes without question or investigation, even when alerted by the Reading Reform Foundation. What are LEAs and Ofsted" which has an advisory role, doing about that? Even more worrying, those who have questioned the NLS and its programmes have been made to feel professionally compromised. They are actively discouraged from teaching any programme that is not part or the NLS. That is very distressing for young teachers, who fear for their careers if they adopt synthetic phonics. Surely it is overdue that the DfES produced research statistics to support the NLS and which contrasted it with synthetic phonics.
I say in parenthesis that in trying to research my short speech I have been appalled to learn of the frustration caused to teachers by constant bureaucratic officialdom demanding tests, reports and so on: a veritable avalanche of electronic mail pouring forth from the DfES. That really does need to be looked at. Teaching children to read early and fluently is the most important contribution that education can make to the future success and well-being of our nation.
To coin a phrase, it is time to get back to basics. The Reading Reform Foundation must be listened to. It is made up of teachers at the coal-face of learning. That is a real challenge for the new Secretary of State. His constituency is only 20 miles from where my former constituent lives. I suggest that they get together for the benefit of the country.
Earl Peel: My Lords, in addressing countryside matters. I shall not cite all the ills embracing rural Britain today, for two good reasons: first, it would take too long; secondly, every noble Lord is well aware of the ills and how serious the situation is. I declare an interest as the owner of land in the north of England, all of which is subject to tenancies.
Not even the most short-sighted optimist could have doubted that change in farming was inevitable, even before BSE and foot and mouth disease ravaged the farming sector so tragically. But change is difficult to embrace. It needs to be supported by guidance and encouragement from above. Uncertainty, combined with a lack of confidence, is the real blight that needs to be addressed.
CAP reform remains a pivotal part of the future. Most people now acknowledge that the present agricultural support system, with all its baggage and distortions, must be phased out. Most in the rural sector appreciate that, if we are to earn public support, we must provide a wanted and respected service. Let us not forget that nearly £3 billion a year comes from the
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CAP into rural countryside in Great Britain. Support for well co-ordinated and well researched environmental schemes, along with support for new rural enterprises and new crops, is the way forward. I noted with great interest that Ben Gill, the president of the National Farmers Union, predicts that 12 million hectares of new crops could be planted by 2010, which would help to soak up harmful carbon dioxide emissions. I am certain that the noble Lord, Lord Palmer, would welcome that.
I welcome the mid-term review of the CAP announced recently by Herr Fischler, the Agriculture Commissioner. His recommendations for the decoupling of production support to paying farmers a flat rate in exchange for certain environmental and animal welfare standards seems a move in the right direction. I accept that the devil is in the detail and that the proposals must be realistic. But, in broad terms, I thought it was the sensible way forward. I also thought that it was generally accepted by most member states not simply as a means of providing the taxpayer with a more acceptable use of public funds but also of complying with our obligations under the various world trade organisations.
It seems that things are not quite as we assumed. Lo and behold, the old alliance of France and Germany at the European heads of state gathering re-emerged with their own cosy version of reform. I am hound to say that our Prime Minister appeared to be spectacularly sidelined in a manner that defies his claim of being at the centre of Europe. Will the Minister explain how two member states can claim to have introduced their own version of CAP reform, when such matters—I thought—were dealt with under qualified majority voting? Secondly, and just as baffling, how can two member states agree the financing of Europe's largest policy, the CAP, until the year 2013, when there has been no decision on the general level of financing of the EU after 2006. The real question is: does Herr Fischler's mid-term review remain a realistic proposal or simply one that Mr Chirac and Mr Schroder can scupper to meet their own narrow objectives? We need answers to those questions.
Returning to the more realistic world of domestic rural policy, I welcome the Government's decision to modulate 4.5 per cent of this country's shares of CAP by 2004; in other words, to put 4.5 per cent of the money that would have been distributed in agricultural production subsidies into agri-environment schemes and rural development. I also welcome the introduction of the broad and shallow environmental management scheme as suggested by Sir Don Curry in his very forward-thinking and comprehensive report. It is now called entry-level stewardship, as the original names are never retained. I also welcome the extra £500 million that the Government have committed to supporting such schemes over the next three years.
Farmers are the stewards of the countryside. There is no reason why, through proper support, the wellbeing of the countryside should not be put at the top of the rural agenda. But there remains one simple and overriding caveat, recognised and acknowledged by

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Sir Don Curry: farmers can survive only if they make a profit. It is essential that these environmental schemes, important though they are, give the farmer a proper return on his labour and capital, and that our farmers are not discriminated against by other EU states not engaging in modulated schemes. A payment based on profits forgone may be acceptable in the good times but it is simply unacceptable during the bad times.
I urge the Government to carefully monitor the success or otherwise of all such schemes. All too often in this country, environmental schemes are established, at considerable cost to the public, with the sole purpose of habitat restoration. When that is achieved, those responsible often sit back in the belief that the job is done. That is not enough. Only when the creatures associated with such habitats return can the scheme be deemed a success. Too often that does not happen. I compare this to the building of expensive houses that no-one lives in. It is essential to work closely with those who have to make such objectives operate, for it is often a worthless exercise, when those responsible for the financing and planning of such schemes fail to engage those with the practical skills and know-how, from the outset. It is not just about nature conservation or bio-diversity objectives. They do not just happen; it requires management and taking people with you.
Recently, in Johannesburg, Clare Short accused Greenpeace of being "eco-imperialists", pushing one agenda and ignoring the human dimension. I think she has a point. Important though the environmental initiatives are, and important though it is to secure public support for any subsidies that may flow from the public to the private sector, there remains one overriding essential that is dangerously overlooked at times. It is incumbent on every Minister, official, government agency, NGO, quango, tsar, retailer and consumer to do everything in its power to ensure that we have, once again, a healthy and profitable agricultural industry. I wish people would stop taking every opportunity to talk down what we produce in this country and that they would start looking at the good, which is there to be seen in abundance. Unless British farming is profitable, there may not be anyone left to look after the countryside, which we all wish to see well cared for.
To bring my concerns into context, a recent report by Deloitte and Touche claims that Britain's £65 billion food industry, which employs 500,000 people, is on the verge of collapse. The social fabric of the countryside, its infrastructure and management, are all at risk. So, too, is the tourism that flows from it. The lack of young people prepared to commit to farming is another barometer of concern. Farmers know they must change. But there are too many regulations, and those from Brussels are gold-plated on every occasion.
I am driven to ask the question: what has happened to the report of the noble Lord, Lord Haskins, entitled, Environmental Regulations and Farmers? How many of those recommendations have been implemented by the Government? To the best of my knowledge, the answer
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is none. We have imports coming into this country which are below the standards demanded of our own farmers and which undercut them. Our farmers are having to produce food of a very high standard, but at a very great cost to themselves. I know the answers to these problems are not easy, but solutions must be found. The Government must be seen to be leading from the front in putting farming back on its feet for all our sakes.
6.30 p.m.
Lord Beaumont of Whitley: My Lords, I regard it as a privilege to follow the speech of the noble Earl, almost all of which I agreed with; indeed, it was tremendously important. I calculate that this is the 26th debate on the Queen's Speech in which I have taken part, and for nearly the 26th time, I find myself concentrating more on what is not in it, but should be, than on what is.
My personal disappointment is that we had understood that the Government were contemplating the creation of an offence of corporate homicide. That is well overdue. I and my party, the Green Party, believe that as great a threat to both society and the citizen is posed by the power of transnational corporations (TNCs) as is posed by terrorist organisations. We may have been heard to say from time to time that TNCs metaphorically get away with murder. All too often, as we have seen in recent cases, they do so literally. This would have been an occasion to put an end to that state of affairs. I can only hope that the Home Office, the Lord Chancellor's Department, or whoever has such responsibility, has not abandoned the idea completely.
I should also like to comment that my party believes that a lot of the Home Office legislation, which looks, as usual, as if it wishes to impinge on the rights and liberties of the subject, would be better replaced by adequate finance for the present system of justice. But the main thrust of my party's domestic policy is concentrated on making the economic life in this country sustainable. As I hear from time to time the other parties represented in this Chamber paying lip service to the same principle, I live in hope that, sooner or later, something will be done about it. Indeed, I am sure that it will, although I fear that I shall not still be on the planet to benefit from it.
The principle of sustainability is that we should he able to pay a fair price for what we get in life. I shall no doubt be talking from time to time during the next year, as I have in past years, about our failure to pay for our food and our farming and rural community—a failure that is rapidly destroying the last two, as the noble Earl has just pointed out.
However, today I want to raise the subject of aviation. Of all the many ways in which we rob the planet when we travel by plane, the most obvious is our complete and utter failure to tax aviation fuel. This week sees the publication by the Green Party of a startling report by leading transport expert professor John Whitelegge, entitled Aviation's Economic Downside. Aviation is the most highly polluting

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transport mode in the world, and its pollution constitutes a major hidden cost to the economy. Professor Whitelegge's report calculates the health costs of air pollution by the UK aviation industry as more than £1.3 billion a year, the economic costs of aircraft noise at £3.3 million a year, and the costs of its contribution to climate change at £2 billion a year. None of this includes sums such as the £500 million of subsidy given to British Aerospace to help it to develop a new airbus.
Aviation is massively under-taxed compared to other sectors. Flight tickets, aircraft and aviation fuel are zero-rated for VAT. HM Treasury collects a billion pounds in air passenger duty per year, but forgoes £3 billion due to VAT zero-rating of aviation products and loss of excise revenue. Aviation fuel pays no tax at all.
I turn to the cost to the country of the massive size of airports, which we are constantly urged to expand. Many of your Lordships will have received an invitation to a celebration of the life and heritage of Five Parishes. This heritage, which has in the past nurtured such artists and creators as Shaw, Pissarro, Louis McNeice, Gustav Hoist and John Pudney is now threatened by the proposed Stansted airport expansion.
The inhabitants of these villages are to be congratulated on the campaign that they are mounting against this threat, and are not to be dismissed as selfish NIMBYs. They may be saying, "Not in my backyard", but I hope that they are also saying NIABY (not in anyone's backyard). Aviation should be paying the full cost of the damage that it does to the community. If paying the full cost means that many fewer people will be able to afford to fly than do at present, so much the better.
This is not conventional wisdom, but then Green Party policy is usually ahead of conventional wisdom. We were warning about climate change when it was dismissed as the idea of cranks; and we were opposing huge roads expansion programmes long before other political parties and 61 per cent of the population agreed with us.
Professor Whitelegge's report proposes a seven-point plan for making aviation sustainable. We can no longer play with the idea of expanding our airports. We can no longer allow aviation fuel to go untaxed. Air traffic congestion charges have been proposed by the Greens in the London Assembly. We must concentrate on supporting other means of transport. It is a national disgrace that we have trailed so far behind the French in the Eurostar project that we have to travel al half the speed in our trains that they do. An article in today's Financial Times suggests that there is a sizeable switch on the Continent from travelling by air to travelling by rail, wherever the trains are good and efficient.
If the Government were to embark on these actions they would be carrying on the good work of the NGOs, which have organised this as aviation awareness month—including, the Aviation Environment Federation, CPRE, FOE, Transport 2000, and the
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National Society for Clean Air—and to which the report by Professor Whitelegge for the Green Party has made a valuable contribution.
I do not expect the Minister to reply to these points today. The noble Lord has far too much ground to cover, without having also to take to the air. But I shall return to the fray. Your Lordships might like a later opportunity to debate the report Aviation's Economic Downside when we could persuade the Government to at least think about the economic cost of sustainability instead of merely using it as a parrot cry.
6.37 p.m.
Lord Kimball: My Lords, I cannot follow the noble Lord, Lord Beaumont, regarding what is not in the Queen's Speech, because, like many others, I am very much concerned about what is in it. I must begin by declaring an interest. I am deputy chairman of the Countryside Alliance, and chairman of the Cottesmore Hounds in Rutland.
I was once lucky enough to be chosen to move the Loyal Address in your Lordships' House in 1989. I can still remember the Prime Minister of the day saving, "Chief Whip, guard the door", in order to ensure that there would be no leaks of the Queen's Speech. The door was unguarded and wide open on this occasion, as my noble friend Lady Blatch has already mentioned. I hope that we can return to the established custom of not leaking the gracious Speech in advance.
I was among the 1 million feet walking through London on 22nd September in support of country sport. At that point, I was much encouraged by the Prime Minister's remark:
govern for the whole of the country, and will take note of opinions that are democratically expressed".
I realise the difficulties that the Government will face to gather sufficient support in both Houses of Parliament. But the Countryside Alliance will continue to approach the subject in a really constructive way.
The alliance feels that there is no evidence to justify a ban on any properly conducted hunting with hounds, especially in view of the evidence that emerged in the course of the consultation that took place in Portcullis House in September. There is, however, a need for a solution that would give public confidence as to the manner and circumstances in which hunting is conducted. We have never contested the relevance of utility and the need to avoid cruelty in the context of such a solution. We will maintain that stance.
Recent public opinion polls have confirmed a sharp and consistent swing away from a ban and in support of a regulatory system. which we support. If the Government were minded to regulate hunting with hounds by a fair licensing system, that would be supported by the hunting community and the broader rural community.
I would go so far as to say that if there were objections to the granting of licences, provided that the burden of proof lay with the objector, they would also be supported. If the Government declared that certain activities could not be licensed and were unlawful,

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there would be no objection provided that those forms of hunting with hounds were already outlawed by the hunting association and by the Independent Supervisory Authority for Hunting.
Any attempt to include properly conducted hunting with hounds would result in fierce resistance within the rural community, because no evidence has emerged to justify such a form of hunting being banned, either because of an inherent lack of utility or the infliction of unnecessary suffering.
6.41 p.m.
Lord Palmer: My Lords, it is once again an honour for me to be able to take part in the debate on the gracious Speech. For the past three years I have done so in the belief that as one of the 90 elected Peers it would possibly be my last contribution.
As usual, I was distressed that rural affairs have not featured, other than the vague reference to a Bill about hunting with dogs. Here I echo the comments of the noble Baroness, Lady Blatch. To my mind, even to consider the implementation of the Parliament Act on such a Bill is a parliamentary scandal. I think that political commentators will look back in 30 years' time in sheer and utter disbelief that Westminster, and indeed, the devolved fiasco in Edinburgh, have wasted so many hours in debating the welfare of the fox while crime is rampant, hospital waiting lists are at an all time high and, as we have heard this evening, Her Majesty's Government's education policy is in tatters.
I must declare an interest as someone who is struggling to farm, as a lover of the British countryside and as president of the British Association for Biofuels and Oils. Farmers, who are the custodians of our rural environment, as the noble Earl, Lord Peel, so eloquently said in his powerful contribution, have always faced a tough life. They are out in all weathers and they cannot farm from nine to five, whether they be arable, livestock or dairy farmers.
The right weather at the right time can be all important to yields and quality. For example, I have just finished sowing all my winter sown crops. During the past 15 days we have had half our annual rainfall. I have stopped preparing budgets as I have no idea what my winter sown crops will cost me to grow, to harvest, to dry and, more importantly, what they will be worth.
No other business has to operate under such conditions of uncertainty. There are far too many uncertainties which are beyond the control of farmers. This, of course, discourages investment, especially bearing in mind the long turn around period that shrouds the farming world. In layman's terms, to change or expand an agricultural enterprise takes very careful long-term planning. When I used to make biscuits, technically speaking we could produce a new product and market it within weeks, whereas in the farmers' case it takes years.
I wish for a moment to quote some statistics which I hope will emphasise the real and perilous plight of the farming community. I make no apology for quoting
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my own figures, but at least I can guarantee that they are accurate. In 1982 I received £114 per tonne for my wheat; this year, 20 years later, the gross figure I received was £62—a drop in actual terms of 52 per cent. The farm gate price of malting barley has dropped 38 per cent and yet the price of a nip—it is nice to see the noble Lord, Lord Mackie of Benshie, arriving at such an opportune moment—has increased by 116 per cent in the past 15 years. Wages in the agricultural sector have risen by 179 per cent while the basic hours worked have decreased by 3 per cent.
Of course, I am aware of the introduction of the IACS payments but in reality they fall very far short of giving farmers a decent return. Pre-IACS, my cereal income 20 years ago was £314,000 and this year my cereal income along with my IACS payment is £176,000, which in actual terms is a drop in income of £182 per acre. Milk is perhaps the only bright star on the horizon. The price paid to the producer has increased by 2.6 per cent over the past 20 years—2.6 per cent in 20 years. Yet most producers are losing 2p per litre on every tanker that leaves their farm. Fortunately I no longer produce milk, but my neighbours do and to think that bottled water is more expensive than milk is a classic example of the mess, muddle and confusion that we are in.
I turn to potatoes. The current producer's price of top quality white potatoes is £60 per tonne. That is £13 per tonne less than it was 20 years ago. How much does that tonne cost to produce today?—£73 per tonne. Yet those same potatoes are retailing at just under £1,000 per tonne. Farmers cannot and will not be allowed by the banks to struggle on in such a crazy financial climate.
I wish I had the answers to help the country out of this frightening situation—and I believe it is frightening. I have not, but for the twenty-first time on the Floor of your Lordships' House, I am going to beg, to beseech and to implore Her Majesty's Government to take on board the really positive role that biofuels could and will play in rural regeneration given a little help—and I emphasise the word "little"—from Her Majesty's Government.
Biofuels are a cost effective means to help the Government meet the terms of the Kyoto agreement and indeed their domestic energy targets. Biofuels reduce greenhouse gas emissions by as much as 50 per cent in comparison to fossil fuels. In the long term, biofuels will stimulate economic development in rural areas. Even a 5 per cent blend of the total fuel use would create a substantial number of jobs.
Biofuels increase national fuel security which, at this particular moment in time, I should have thought must be paramount. One must not forget that North Sea oil is not going to last for ever. A 30 pence per litre reduction in excise duty for a minimum of five years would be sufficient to start investments in the UK for both bio ethanol and biodiesel.
Everyone I meet from any walk of life who knows my interest in agriculture and, indeed, in biofuels asks the same question, why won't the Government listen? I simply do not understand the Government's

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reluctance to grasp this lifeline to help not only the rural economy but to meet their environmental obligations and for the sake of national security.
I should like to ask Her Majesty's Government how the £81 million of public money spent on biomass support for electricity generation and CHP has benefited the taxpayer, how many tonnes of carbon have been saved and at what cost per tonne? I should also like to ask Her Majesty's Government what amount of public money has been spent on support for liquid biofuels for road transport in the past five years?
It is worth reminding your Lordships of the report of the Commons Select Committee on Environment, Food and Rural Affairs published only last Thursday which states:
"The framework in which agriculture operates, which determines whether it is able to function profitably, is largely dependent on decisions taken by the Government and the European Union. Whether it likes it or not, DEFRA is more than just an interlocutor for agriculture and a wide range of other related industries; it is a funder, regulator, negotiator and mediator. It is important, therefore, that DEFRA makes clear the central role played by agriculture in delivering a host of its objectives and in particular those relating to rural communities, the countryside and sustainable development".
I believe most sincerely that the electorate will never forgive a government who put food and fuel supplies in jeopardy and I hope that Her Majesty's Government will act now and act before it is too late.
6.52 p.m.
Lord Livsey of Talgarth: My Lords, the noble Lord, Lord Palmer, graphically described the situation in farming at the present time. I make no apology whatsoever, therefore, in addressing the subject of agriculture as it has tended to be shaded out by the creation of DEFRA which has many functions other than purely agriculture.
Under the DEFRA mantle, water appears as an important topic in the gracious Speech. I believe that the hunting with dogs legislation is, frankly, an absorber of parliamentary time and a misconceived utiliser of Back-Bench energy. Therefore, I should like to speak about an alternative measure that we should adopt; namely, a new agriculture Bill and, indeed, Act. It seems extraordinary that the Labour Party that created the epoch making Agriculture Act of 1947 now seems unable to tackle the enormous crisis in farming, which is at its most serious since the 1930s. I believe that a new agriculture Bill is required due to the virtually terminal crisis afflicting UK farming. No one should underestimate the impact that the farming recession is having on the rural economy.
There is only one small glint on the horizon in the gracious Speech in the form of the possibility of entry into the European single currency after June next year. In the past 12 months, 15,000 people have left the land, 8,700 of them farmers. As a former Member for Wales, I am aware that if 15,000 people lost their jobs in a steelworks—as, indeed, they did in the early 1980s—that would be considered a major crisis. However, the situation in farming constitutes a drip, drip of erosion of the rural population from viable employment.
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The issue of abysmal farm incomes has been ignored. The most recent farm management survey results indicate for the year ending March 2001 that the average net income of all UK farms was £5,000—a figure substantially lower than the national minimum wage. In the same year hill farm incomes in Wales were as low as £2,000. Reports from the 2001–02 year show that many farms are making a loss. At this rate making a living from farming in the UK is now unsustainable. The very future of farming is at dire risk and many young people are leaving the land. Is that really what the Government want? I hope not.
The report by Sir Don Curry proposed a number of routes out of the crisis although I cannot agree with its comments on world prices because in my book there is no such thing. Nearly all food production in the western world is subsidised in one way or another. Making farming sustainable in terms of making a living as well as sustaining the environment must surely be the objective, but such is the level to which farm commodity prices have sunk in the UK that, as we have just heard, grain prices are at the level they were 25 years ago. Until very recently, lamb prices were at the level they were 20 years ago. However, I am happy to report that the situation is slightly better now. However, milk prices are lower than the cost of production.
Making rural areas sustainable is in large part linked to the fortunes of agriculture. Adding value to Gann and horticultural produce must surely create rural jobs and improve incomes for all rural communities. I refer to competition from food imports into the UK marketplace that are eased in at prices less than the cost of UK production. Added to that is an excessively strong pound and subsidised farming in many countries that contribute to the global market. UK farmers, with practically no marketing infrastructure, are being picked off by the big battalions in their own marketplace.
What is required now is the kind of vision that we saw in the early 1930s when UK farmers were in almost the same dire position. The riposte then from government was the creation of the marketing boards, not least the late lamented Milk Marketing Board. Cooperative power against the big battalions to which I have referred is absolutely essential if higher prices are to result. The answer must surely lie in new style cooperatives that should address milk, meat, grain, horticulture and biofuels, as have just been mentioned. Otherwise, we simply cannot compete in the marketplace. The alternative is that the rapacious big retailers offering ever lower prices will create a situation where farming is totally unsustainable. A new agricultural marketing Bill is also needed. That is an important point. Such a measure must come in a new guise that conforms with the rules of the European Union.
As has already been mentioned, UK farmers received £3 billion in support. I believe that supermarkets have siphoned off most of that money by exerting downward pressure on commodity prices; in fact, a 30 per cent decline. In other countries, for example, the United States, it is illegal for retailers to

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purchase farm produce at less than the cost of production. Eight years ago, UK farming had a £3 billion net profit. Today it is less than £1 billion. I believe that the supermarkets have pocketed a good deal of the deficit of £2 billion lost by UK farmers. In fact, the taxpayer has paid for this. Indeed, the Competition Commission carried out an investigation about two years ago. The supermarkets were supposed to be subjected to farmgate prices in the investigation. That was sidelined into whether consumers were getting a fair deal and the conclusion, of course, was that they were. The Welsh Select Committee in the other place, of which I was a member, called the four main supermarkets before it. They produced four different accounting methods to try to prove their case. The waters were muddied and indeed they all said that they were whiter than white. In fact, they had marked up by a factor of four many depressed produce prices. Now they are deconstructing organic prices, too, and organic farming in the process.
Supermarkets are a social phenomenon. They are convenient and lead food fashions. They even persuade the consumer to buy the produce they have, even when, possibly, six months earlier the consumer did not really want it. Their main preoccupation is the bottom line of their accounts and I believe that any other interpretation is very naïve indeed. We should compare the situation when the UK milk co-operative wanted 35 per cent of the market about three or four years ago, which was ruled out of order by one Stephen Byers of the DTI. This was at a time when the Dutch and Danish co-ops had 80 per cent of their market. It is a one-in-three hill climb for UK milk producers.
The Government want cheap food at the cost of family farms. That results in mammoth profits for the supermarkets. Indeed, some of the money is pocketed by two political parties. I believe that there are other big issues which cannot be ignored and in the next two minutes I shall try to mention them. We support CAP reform and the mid-term review and the decoupling of support from commodity prices. I am glad that the Government do as well.
Modulation is a very important matter and the capping of modulation will assist family farms. The Chirac-Schroder deal was devious and pre-emptive, but by capping the budget to 2006 and then to 2013 means that transition is going to be less painful for UK producers. It takes a long time to turn around natural systems of production.
The 10 new accession countries will be a huge problem, but gradual transition arrangements should take care of that. I was going to go into the problems of DEFRA, but the noble Lord, Lord Haskins, is looking into it. I shall be most interested to learn of his results.
As regards the rural economy, the regional development authorities in England have made a good start. Devolution in Wales and Scotland has proved very successful indeed and I congratulate the Government on the creation of these bodies. The countryside is the jewel in our crown. I believe that tourism has enormous potential.
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Finally, I make no apology for saying that we need a new agriculture Bill and a new marketing Act. We want a sustainable rural community with proper rewards for sustaining the environment and the countryside. We want an income on which people who live and work in the countryside, and family farms in particular, can live because they are not going to be there much longer at the present rate.
7.4 p.m.
The Lord Bishop of Hereford: My Lords, it is a privilege to take part in this debate and bewildering to know on what subject to speak given the very wide variety of topics we are talking about today. The right reverend Prelate the Bishop of Truro had been hoping to make his maiden speech on this debate on agricultural and rural affairs on which he is a considerable expert but, sadly, he is not able to be here today. So I should like to divide my brief time between that subject and another arguably even more important one, the environment.
I am tempted to start with three cheers, or at least with two cheers, because I believe that this is the very first time that the gracious Speech has included two references to environmental matters to,
"measures to protect our environment, including legislation on the conservation and proper management of water",
to which the noble Baroness referred in her opening speech, and to the,
"implementation of agreements reached at the World Summit for Sustainable Development in Johannesburg, tackling climate change and finding new ways to meet our energy needs".
That is indeed very welcome, especially the emphasis on water conservation.
But I fear that the government proposals lack a sense of urgency and fail to make any adequate provision to deal with the most pressing of all the problems that confront the human race. Climate change is having a much more serious impact and much more quickly than even the most expert people believed to be the case. Drought in southern Africa, drought in the Horn of Africa, drought in Australia, catastrophic flooding in many parts of the world and rising sea levels are already having a devastating impact on people and often on the poorest and most vulnerable, those least able to cope or to take countermeasures, those without any resources of food or water to sustain them over a period of crisis.
The Government's own document about the Johannesburg conference, Reaching the Summit which, incredibly, failed to mention the Kyoto Protocol—although it was doing its best to find some good news stories—emphasised that,
"environmental problems affect us all. but they affect the poor most … The poor live in the most marginal areas: they are the most vulnerable to natural disasters and they often depend directly on natural resources for their livelihoods".
So for their sake, if not for our own, we must give a higher priority to tackling climate change. Although Kyoto was most welcome as a beginning and the Government's proposed emissions trading Bill is a step in the right direction, all this is totally inadequate to

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deal with the colossal scale of the problem. I have been involved in correspondence with the noble Lord, Lord Sainsbury of Turville, about this without receiving a lot of satisfaction. I would urge the Government to look again, with much greater enthusiasm and commitment, at the project called Contraction and Convergence developed by the Global Commons Institute and now vigorously championed by the Institute for Public Policy Research, and specifically affirmed by the Anglican Congress on the Environment, which brought together representatives of the 70 million members of the Anglican communion around the world and which met in South Africa in the week before the Johannesburg summit.
In the barest outline, Contraction and Convergence involves calculating the maximum tolerable level of greenhouse gases in the atmosphere—450 parts per million volume. That is a considerable increase on present levels and reflects on what present levels are already doing to the climate. Then one has to calculate the reduction in emissions which would enable us to stabilise that degree of atmospheric pollution by the end of this century. Then one has to allocate to every member of the human race an identical target for per capita emissions —the principle of equity—then place a financial value on that target figure, the "permission to pollute"; and then introduce a system of emissions trading by which the developed countries, which are already grossly exceeding the per capita target which we would have to aim at, would be able to buy from developing countries during the period of convergence the right to continue excessive pollution while they took vigorous measures to bring their own emissions down to the permitted per capita level. That would involve all those wise things which the noble Lord, Lord Ezra, was speaking about, and many others besides, in terms of biofuels, energy conservation and so on. There would he a dramatic change in our lifestyles and transport systems. It would require an enormous effort.
Contraction and Convergence is scientifically based, as Kyoto was not. It is equitable, as Kyoto is not. It would help developing countries by giving them the means to invest directly in clean energy technology which we in the developed world could provide for them. The most extraordinary thing is that it would overcome every single objection raised by the United States Government to the Kyoto Protocol. It sounds too good to be true, but it is possible.
Let the United Kingdom Government take a vigorous lead in propounding this scheme. There is not much time. Alas, I have not time to quote to your Lordships from an article underlining the desperate urgency of this matter. But let not the Government of this country simply express vague and polite interest in Contraction and Convergence; let them make every possible effort to bring it about for the salvation of the planet.
I turn to rural affairs and, in particular, to matters which have already been mentioned by many noble Lords—that is, the deepening crisis faced by the farming community and especially by small and medium-sized farms. Is there any good news? I believe
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that there is some. But, in trying to draw up a balance sheet to weigh the encouraging factors against the problems, I fear that the outcome looks very gloomy with the difficulties far outweighing the actual or even potential signs of hope.
What are those signs of hope? From what some noble Lords have said, one might imagine that there are none at all. I believe that there are a few, and the fact that the Curry report is being implemented is a matter of congratulation for the Government and a matter for some rejoicing. Entry-level stewardship and some degree of modulation are good news. But there are pressing questions as to how quickly any of those benefits can, in practice, feed through to farmers and whether they are economically sustainable, even if they are environmentally sustainable.
Secondly, land prices remain remarkably stable, which is good news for those who own their own land. Thirdly, the rural White Paper of two years ago, with its emphasis on vital villages, market towns, rural housing and transport and planning issues, gave some grounds for hope. Fourthly, the food chain initiative is very welcome as an attempt to enable farmers to retain a higher proportion of the value of what they produce. Fifthly, farmers' markets are excellent and very encouraging so far as they go; but of course they can help only a limited number of farmers and are patronised by a very small percentage of the shopping population.
That seems to be the sum total of the good news that I can think of. I shall now embark on the task which the noble Earl, Lord Peel, perhaps rather prudently avoided—that is, to catalogue the downside. Briefly, it includes: desperately and impossibly unsustainable low prices; the fall-out from foot and mouth disease; globalisation; ridiculously cheap imported food produced in often highly dubious conditions; the power of the supermarkets; the ruthless demands and often cynical manipulation of contracts; and red tape and gold-plating—again, again and again.
There is a new threat—this time from the European Union—to small abattoirs from EU documents 1420 and 1774. To its credit, DEFRA is vigorously opposing them, but they are seriously bad news. Inadequate import controls are still a hitter cause of complaint. I believe that there are still only two dogs, unless the noble Lord, Lord Whitty, has been able to find some more since he spoke about this a week or so ago. There are new threats of animal disease, such as blue tongue. Shall we foresee animal disease this lime, as we did not in the case of foot and mouth? Bovine TB is a desperate problem, and there is still no proper solution. The 20-day rule is inflexibly and damagingly insisted on, despite the very different judgment made in Scotland on the same scientific evidence.
There is still no retirement scheme for farmers, especially tenant farmers, and still no help for young enthusiastic entrants to the industry. There are delayed payments to farmers—whether arable area payments or foot and mouth clean-up payments. There are organophosphate health problems and a reluctance to acknowledge them. There is the unwelcome and

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unrealistic demand that producers pay a levy to share the cost of future outbreaks of animal disease. From what income, I ask, can it possibly be done?
There are at least 15 reasons to be deeply, deeply concerned and there is, once again, no mention in the gracious Speech of the need to support farming. No food and farming Bill has been promised. We face a meltdown of farming. The Deloitte & Touche report, to which the noble Earl, Lord Peel, referred, is only one of many showing just how desperate the situation is. By the time that some of these hopeful or beneficial measures begin to take effect—if they do—very few farmers may be left to enjoy them. Like other Members of your Lordships' House, I beg the Government to take the extreme seriousness of the farming crisis to heart and to take some vigorous action on it.
7.14 p.m.
Lord Smith of Leigh: My Lords, in this wide-ranging debate, I want to beg your Lordships' indulgence and bring the discussion back towards the matters of local and regional government with which we started. In doing so, I need to declare my interest as the leader of Wigan Council, as the former chair of the North West Regional Assembly and the English Regions Network and, in view of something else that I want to say, vice-chair of the Special Interest Group on Municipal Authorities. Perhaps, although he is not in his seat, in the view of the noble Lord, Lord Waddington, I am therefore a fourth-rate political hack.
I turn, first, to the proposed local government Bill, which I welcome very much. I believe that it will give legislative backing to the Government's promise to give greater freedoms and flexibilities to local authorities, while still exposing them to the rigours of delivering successful local services. I believe that they will find a positive way of rewarding performance and a far better way of maintaining a proper partnership with local authorities than the more negative methods used by previous governments and by this Government. Therefore, I welcome the Bill.
As is often the case with the Office of the Deputy Prime Minister and its various predecessor organisations, it does not always march to the same beat of the drum. We shall find that some parts of the department are not consistent with that message. To raise a point which is particularly personal to me, the allocations for housing capital, housing renewal, disability grants and so on will go down for my own authority by approximately £0.5 million this year. Why? Because we are a good performer; we are rated as three-star and likely to improve. We have beacon council status in this area but, because the performance measure is being taken down by the regional office, we shall begin to lose money. Therefore, it is more difficult to sustain such a policy.
I turn to a matter which has already been referred to by noble Lords—that is, the proposed changes to the council tax. I certainly welcome the idea of increasing the number of bands, but I hope that the Minister will
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remember that they have to work at the lower as well as at the higher level. In my own authority, only 48 houses out of 130,000 are in the current high band of H. Therefore, we need to see more distinction at the lower level to ensure that people can afford to pay what is necessary.
However, I am more interested in the proposed revision to council tax values, which the Government are proposing to carry out over a 10-year timescale. I am very disappointed to see that timescale. We should recall that, when Mrs Thatcher introduced the council tax in order to get rid of the embarrassment of the poll tax, it was not done in a scientific way. The then Secretary of State employed a few estate agents to drive round areas and guess what the council tax banding might be for particular housing. On the whole, it stuck. It seemed a sensible and reasonable compromise. But the fact that we are still working on the valuations of the early 1990s and that one has to ask what a new house built in 2002 would have been worth more than 10 years ago is something of a nonsense.
All building societies and many government agencies keep on record the rate of house price inflation. I believe that the measures of council tax bands could be updated on a regional basis so that it did not come as a big shock to people to find that, because such an exercise had not been carried out for a very long time, their properties suddenly came under a different valuation. If the job could be carried out more slowly, that would help to make the tax a little more buoyant to local authorities. I hope that my noble friend will regard that as being a bolder approach because I understand that someone said that we are at our best when we are bold.
In view of the comments made earlier by the noble Baroness, Lady Blatch, I want to comment also on the review of local government finance that she mentioned. I believe that we need to remind ourselves that the Government are proposing a reform of a system that, again, was introduced in 1990 by the then Conservative government. What happened then was the exact reverse of what the noble Baroness implied would happen now; in other words, funding was moved away from the North and into the South and London. If the Government do what they say they will do, they will only be getting the playing field back to the same level that it was at previously.
However, this time the Government are proposing to include in any changes floors and ceilings which balance out any large shifts that might occur in the system. In 1990, as we found to our cost, the government simply offered us crude capping. That was not the way forward. The council tax levels in the North tend to be much higher for the same band of property than in the South and in London. That is reflective of the funding gap. Those authorities have benefited for 12 years or more from generous funding. I hope that the noble Baroness is right and that my noble friend will assure me that the Government will put money into northern authorities like mine.

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I turn to the regional assemblies. I am sorry that the noble Lord, Lord Waddington, is not in his seat. I speak as one from the North West, as he claims to, but I speak for the 72 per cent of those in the North West who, in a recent opinion poll, said that they would welcome the introduction of regional assemblies. The party opposite is quite used to being in a minority. That is why it is in its present state. As was said earlier, it opposed devolution to Scotland and to Wales. It was wrong then and it is wrong on this issue now.
When the Conservatives were last in government they recognised that there was a regional dimension to what happens in Britain; that there is not just national and local government, but that there is a regional tier of government. Their solution was two-fold: first, to appoint a load of unaccountable quangos to run big public services in the regions; and, secondly, they came up with a wonderful idea of regional offices with regional directors. From my perspective that was the last vestige of empire. Whitehall civil servants were appointed to go into the far reaches of the empire—now much reduced—to the North East, the North West and Yorkshire, and administer to the natives to ensure that they do not become too uppity but understand what is taking place.
Local people have no influence over all the key decisions taken in relation to them. In the North West the quangos and the government offices are responsible for £7 billion worth of public expenditure over which the people in the region have no real control. I believe that we should have more elected, democratic, regional government to fill that deficit.
However, that is not the only reason. As there is now devolution in Scotland and in Wales, English regions are at a disadvantage because no one is able to voice a coherent view and develop coherent government in the areas. In the North West we have contact with Scotland and Wales and we see the way in which those locally devolved bodies are much more dynamic in dealing with issues. They may make mistakes, and may do things that I would not want them to do, but they are accountable to local people, and if they do not conduct matters correctly the local people will treat them in the way that they should all politicians who do such things and kick them out.
Eighteen months ago I heard a Cumbria farmer on the radio comment on the foot and mouth disease and on the different way in which he was treated in Cumbria as opposed to a farmer across the Border in Dumfries, which was more responsive to farmers and was much more successful in controlling the disease. That is a reason to have regional governance.
Economic performance is another point and the key to the matter. It is not surprising—I believe the noble Lord, Lord Waddington, admitted this—that those regions in the North that lag behind are those that are most supportive of regional self-governance. The GDP of the North West is over £3,600 less than in the South East. The neglect by previous Conservative governments helped to reinforce the view that the people will get nothing from London and that they will have to do more for themselves.
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Unfortunately, at the moment the gap is not narrowing. That is not just bad for those in the North West, but it is also bad for the country as a whole. We are failing to maximise our production potential, but there is also the danger of over-heating in parts of the country where all the development takes place. In my area we do not have the wonderful increase in house prices that appears to be causing problems in the South. We need to understand that parts of the country are behaving differently economically from other parts. When the regional assemblies are in place it is important that we apply that test.
One thing that made up my mind in regard to regional government was what happened to a major scientific investment in Daresbury. Welcome decided to move it to Oxford, of all places, because it did not believe that the North West was suitable. No one could voice the opposition that a regional government could supply so I support it.
7.25 p.m.
Lord Elliott of Morpeth: My Lords, like the previous speaker, I want to refer to the proposal in the gracious Speech that legislation will be introduced to provide for the holding of referendums on the issue of regional governance.
In another place I represented a constituency in the North East for a considerable period. In the 1950s of the last century the region knew considerable social problems consequent to the rapid contraction of the then principal industries: shipbuilding, steel and coal. In my early days in another place the major concern of those of us who carried responsibility for the social wellbeing of so many people was unemployment. Redundancy became a dreaded term. I have many memories of interviewing decent people who were facing redundancy at such times as Christmas and knowing falling incomes and a bleak future.
However, things are different now in the North East. Today the position is that much old industry has been replaced by new industry: the pits have gone altogether and the steel mills have disappeared. They and other redundant industries have been replaced by long-term, good, new industries, employing a remarkable number of people. Unlike the North West, the improvement has been rapid indeed. Regional unemployment in the North East stands at 6.2 per cent; the national average is of course lower than that, at 5.3 per cent. I well remember, over a long period, the gap between those two percentages being much wider than it is now.
Government aid in the dreadful days of the 1950s and 1960s during the time when both major parties were in government was considerable but local effort—it is important to emphasise that as we look to the future—has also been considerable. I remember Consett in County Durham having its main source of employment, the steel works, closed in September 1980. Immediately an enormous number of people were made redundant and to add to the difficulty at that time, two adjacent collieries were closed. In the other place I used to be asked whether in the North

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East one could see unemployment and I used to say, "No, the centre of Newcastle looks very prosperous", but in the Christmas Recess following the closure of the Consett ironworks one could see the effects of unemployment. However, because of the efforts of the Derwent Development Agency—an excellent body—which at that time had full local government support and co-operation, Consett now has a remarkable trading estate filled with new, shiny factories, employing ex-steel workers and their descendants and ex-miners and their descendants. Now Consett is a remarkably prosperous town.
I suggest that that well-known phrase "the north/ south divide", which has already been referred to in our debate today, no longer applies. The North is always described as the deprived area, but in some respects that situation has been reversed.
A recent survey was conducted nationwide in England. It should be noted that the best place to live, according to that survey, in England was not in the South or the South East but in Northumberland. The town that won the highest marks for being the most desirable town was Alnwick, which is right in the middle of Northumberland. Just 20 miles south of Alnwick is the town of Morpeth where I was born.
Morpeth has always been referred to as "the ancient borough". It is an ancient borough. The historian Gibbon once wrote:
"Morpeth was a borough before Newcastle was there at all".
He added:
"'Tis a fairer town than Alnwick".
Alnwick and Morpeth, both of which I know well, are typical today in the prosperity of the comparative well being of the North.
Therefore, my suggestion is—in the short time that I have available—that the North East has recovered enormously from being a deprived area to being a quite prosperous and, in industrial terms, an advancing area. So do we need a regional council? I do not believe that we do.
We have had agencies in the North East which have done very well. There have been three in past years. I was a member of each. It is quite right that such agencies have representatives from members of another place. Whenever they were set up the agency had a wide choice of Labour Members from Newcastle, Tyneside and Wearside. There was just me on the Conservative side. So I was on every body. I used to call it a temporary embarrassment. Unfortunately, it is still an embarrassment.
Those agencies did well. The present agency, One North East, an RDC, is doing a very good job in the North East of England. All the good work done by the agencies and by local effort has been in co-operation with democratically responsible local government. When we hear talk of regional government, there is always the great fear that this will be the end of county councils. I think that that would be disastrous. County Councils are good bodies. They have representatives from each area of each county. The representatives on
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the council know their people, their region and their areas. I should be very sad indeed if such bodies were abolished in favour of regional government.
Long-established bodies such as Northumberland County Council or Newcastle City Council should remain in being to ensure the continuing progressive well being of the North East of England.
7.33 p.m.
Lord Mackie of Benshie: My Lords, I have listened to the agricultural part of this debate so far with great approval. I think that the criticisms made are right and proper. It is quite extraordinary the lengths that the Department for Environment, Food and Rural Affairs went to in order to avoid the word "agriculture". There is tremendous suspicion in the farming community that DEFRA does not care what happens to it; that DEFRA is dominated by people who care more about corncrakes than crofters.
However, I must say to the noble Lord, Lord Whitty, that among his colleagues and the farming community he is reckoned to be by far and away the best Minister. Having buttered him up a little, I shall now proceed to produce one or two more useful figures. The noble Earl, Lord Peel, said that he would not produce the many figures available. But I think that there are one or two quite significant ones that illustrate the state of agriculture in the country generally and its effect on the country.
One is that household food consumption is up 18 per cent. Retail food prices are up 19 per cent, but the input costs are up 14 per cent. That means that the people of this country are able to buy the food at the price, but that its main cost is borne by the farming community.
Another significant point is that in 1990, 86 per cent of foods that we grow well in this country were produced in this country. That is now down to 75 per cent, which means more are imported. The percentage of GDP is only 0.7 per cent or some such figure. We are falling short in manufacturing goods and relying more and more upon services. So I do not think there is any question about the plight that farming is in.
This concerns not only the small farms. No one can tell me that the big farms can make money out of selling feeding barley at £50 to £60 when it was £120 five years ago. It is not possible. The figure of £5,000 income, which was quoted by my noble friend, is devastating. There is no doubt that applications for positions in the Fire Service from the farming community could be very large indeed.
The figures are quite interesting, but I turn to the total position. In the 1930s we had globalisation. In this country we were subjected to imports from all over the world at very cheap prices. Farming was in a desperate state. In Norfolk, for example, the people who care about the environment would have been delighted. The hedges were 10 yards wide. The fields were filled with weeds, thereby supporting a large number of rare species, I suppose. But it is better to see countryside doing something real—producing food and supporting people who maintain it properly.

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Modulation and converting a large amount of the acreage payments into payments for the environment is a good idea. But it must be administered with great care. It will be enormously difficult to administer.
We should consider the history of globalisation and a free market in agricultural produce. Every time, all over the world, the farmer has been hit. For example, if we ask the countries in Africa that are suffering at present to import their food at world prices, they will denude their countryside. That is what happened in Nigeria when they received oil money: they ruined farmers who were growing peanuts and so on in the north of the country. They flocked to Lagos and produced one of the most dangerous cities in the world.
There is no question but that millions of small agricultural producers will be hit by globalisation and we need the sort of measures that are in the common agricultural policy—not those of the present system but we need support. The reorganisation of the CAP will be enormously difficult. France, Germany and Austria have a point when they say that their countryside and tourist industry are dependent on it being a living countryside, not an empty one.
All those things pose enormous difficulties for the Government, but the noble Lord, Lord Palmer, is right to be fixated about bio-fuels, because nothing could help the environment so much as to produce bio-fuels in this country. A small amount put into diesel enormously improves diesel's performance as regards the environment. Government tax concessions and grants should be helping the setting up of large concerns. That will not be done unless the Government push it, but it must be done.
The Government say that farmers should co-operate, but they destroyed co-operation through the competition committee after the abolition of the Milk Marketing Board—for which I did not see the reason. I may say that this is the first time that I have heard a speech made from the my party's Front Bench with which I entirely agree, but it is true that without a real push, nothing will be done.
Farmers are willing. All over the country, people are producing new marketing schemes and companies, but they need a little more assistance. Milk Marque was broken into four, with the result that the supermarkets have simply been able to do what they like with farmers.
I end my speech with a little investigation of my own. Apples in the supermarket to which I went were £1,450 a tonne; carrots were £460 a tonne, of which farmers were receiving £50; tatties were 49p a kilo, which is £490 a tonne, of which farmers may have been receiving £60; and milk was 61p a pint, which is 109p a litre, of which farmers were receiving 17p. A little co-operation is necessary before we can combat the great power of the supermarkets—although, in many cases, I applaud what they do.
Bureaucracy is appalling. Perhaps the Minister will listen to this little tale of a friend of mine, who is a progressive fruit-grower who needs to employ a lot of students from Europe. They are happy to come, and he
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was installing four sewage tanks—septic tanks. He had to apply for permission for them and the geological surveyors came along, said that they had surveyed the area and that it was okay, but sent in a bill for £550. Then the Scottish Environmental Protection Agency said that it needed to inspect, but that before it inspected the four tanks—which were all in a short radius—it had to be paid. Its fee for inspecting four tanks, paid in advance, was £2,320.
That may not seem a lot to some people, but it is the greatest possible discouragement to enterprise. The fellow— the inspector—was there for half an hour, walked round the four tanks and said that they, were okay. That is only a small example, but it is something of which the ministry should take notice.
7.46 p.m.
Lord Hanningfield: My Lords, as a Member of the House and leader of Essex County Council, I welcome this opportunity to comment on the gracious Speech.
The Government have set out their stall to reform public services, but reform is not an end in itself. It must be a path that leads to improvement in the delivery of services. My colleagues and I in local government are absolutely committed to delivering improved services. We support modernisation and the development of improved working practices and we welcome new ideas and fresh thinking.
However, the Government's vision for local government does not support those objectives. Their approach seems rigid and bureaucratic. Modern local government is not about institutions, it is about outputs, processes, flexibility, partnerships and networks. The plans set out in the gracious Speech will take us a step backwards. The Government have put forward old-fashioned, out-dated, ill-judged and expensive proposals. They are committed to reform, but have no feel for local government and no idea about local government's role in bringing about real improvements in the lives of real people.
Many in local government will welcome sections of the local government Bill. However, there are sections to which we take exception. Through comprehensive performance assessment, the Audit Commission has established a template that defines the relative importance of every service for every local authority in the country. Every authority of the same type will be judged on the basis of the same template—regardless of size, demography, local circumstances or local priorities.
Essex County Council, serving a population of 1.3 million people, with a budget of £1.1 billion a year and a staff of almost 40,000, now gets marks out of 48. Wherever one goes in local government circles, one will hear whispered discussions about whether an authority has 36 or 37 points and how one might squeeze another point out of the Audit Commission. The irony is that the Audit Commission has now said that if those inspections do not result as expected, the results will be adjusted, so the whole thing could be a waste of time.

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Inspection does not come free. It costs us £800 million a year. It also shifts the focus of authorities onto the inspection process and off the delivery of services. We need inspection, but not as the only tool in the box. Real improvements to public services will be made only when central government gives local government genuine freedom to deliver. The local government Bill does not do that.
The local government Bill was a missed opportunity; the proposed planning Bill is altogether more disastrous. Of course, we support the creation of a faster, simpler, more accessible planning system, but why do the Government think that removing counties from the process will achieve that? According to the ODPM's analysis of responses to the planning Green Paper, nearly 70 per cent of local authorities, 75 per cent of businesses, 93 per cent of environmental and community groups and 96 per cent of the public were opposed. Perhaps everyone else in the world is wrong and the Government are right. There is a first time for everything.
The obvious reason for removing counties from the process would be their performance. That is not the Government's reason. The planning Green Paper contained no criticism of county councils' performance of their planning responsibilities. The Government's rationale is that counties are no longer the most appropriate level at which to deal with strategic planning issues because many of those issues cut across county boundaries. Of course they do; they always have done. They also cut across regional boundaries. Thames Gateway—a national priority for Government—cuts across the eastern and southeastern regions, as well as London.
The Government's proposals are centralising, rigid, static and dogmatic. They will cost upwards of £60 million a year in one-off costs and £62 million in additional running costs. We have talked about many things in the Chamber today, but we have not talked much about money. The Government's proposals will make planning decisions less transparent. The Council for the Protection of Rural England has said:
"The regions remain too big, too unaccountable, and too remote to be making vital strategic decisions on where new development should go".
I shall end by speaking about the Government's proposals for elected regional assemblies. Again, it seems that, while the rest of the world moves forward, the Government remain stuck in the past. We must free ourselves from the obsession with structures. In order to respond flexibly and quickly in the modern world, we need a system in which partners can join together to work for their mutual benefit. That may mean different partners at different times for different projects. That is what modern governance is all about.
The Government's proposals for the regions will bring massive upheaval. The reason given for the abolition of county and district councils is that three tiers are too many. That is not an argument. The Government have put forward no coherent argument to justify the dismantling of the existing structures.
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The cost of reorganisation in Essex alone would be about £120 million. We have barely mentioned money today. For people in Essex, it will beggar belief, given the pressures faced by public services, that the Government cannot find a better way to spend such a colossal sum.
The Government show little respect for and little faith in local democracy. One size does not fit all. What is right for Essex—a county not much smaller than Northern Ireland and bigger than at least one existing member of the European Union and at least three of the countries trying to join—may not be right for smaller units. The Government continue to believe that central command and control is the key to improved public services. That is a big mistake. John Stuart Mill said:
"It is but a small portion of the public business of a country, which can be well done, or safely attempted, by the central authorities".
The sooner the Government heed that warning, the better off we will all be.
7.54 p.m.
Baroness Maddock: My Lords, like the noble Lord. Lord Sawyer, I wish to discuss housing matters. In doing so, I declare several interests, as president of the National Housing Forum, a vice-president of the National Federation of Housing Associations and a vice-president of the National Home Improvement Council.
I shall begin by setting the scene. In this country, we have an insufficient supply of homes for the ever-growing number of households. Many homes are old and in poor condition. There are one million older people living in homes that are in poor condition. The new houses being built are not environmentally brilliant, if we are to be serious about sustainability. Some 750,000 homes lie empty. In areas of high demand and high economic growth, key workers—particularly those in public services—find themselves priced out of the market. Yet, in other areas, there is a total collapse of the housing market. Whole streets of houses can be bought for the price of a modest house in a boom area. The Government have introduced some measures that have made inroads into some of the problems, particularly street homelessness. That is to be welcomed. However, the number of people in temporary accommodation. particularly in bed and breakfast accommodation, continues to rise.
How have we got to that situation, although we are one of the richest economies in the world? For 20 years, we have built far fewer homes than we have created families and households. In 2001, the total figure for new housing completions was the lowest since 1924, excluding the war years. UK completions per thousand of population are among the lowest in the European Union. In the United Kingdom, between 1985 and 1998, gross fixed investment in residential building as a proportion of our gross domestic product was consistently the lowest in the developed world. Producer subsidies and personal subsidies for housing from governments have reduced in recent years. I find it even more surprising that, after

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five years, this Labour Government have never managed to equal even the figures for producer subsidies for housing for the last year of the previous Conservative administration.
That has a direct influence on the production of affordable housing. Over the past three decades, house prices have risen by a factor of 20, while construction prices have risen by a factor of only 10. That translates into higher land prices in areas of land demand and/or low supply. For obvious reasons, high land prices are particularly problematic for social housing developers. More money alone is not a total panacea. Our planning system has created ghettos of rich and poor. That ghettoisation has been exacerbated by land and property prices.
The Government seem slow to act on housing, despite the fact that tackling housing problems would greatly assist with many of the problems that they want to tackle, such as poverty—particularly fuel poverty—social exclusion, health inequalities and the rising cost to us all of our health service. On these Benches, we believe that housing is an important area. It defines people and their life opportunities. Where someone lives can dictate social position, access to education, the attitude of potential employers and what people think about themselves and the life opportunities that are available to them. That is why we need a coherent housing policy that tackles the long-term underlying problems, as well as taking immediate action in some of the crisis areas, such as bed and breakfast accommodation, affordable accommodation for key workers and the lack of affordable housing in rural areas, which we heard about briefly this evening.
What do we see in the gracious Speech to assist with the provision of more housing, better housing and more affordable housing? First, in the local government Bill, the freeing-up of capital finance and the reduction in the number of statutory plans is a step in the right direction. On these Benches, we welcome particularly the prudential framework for capital finance. It is largely based on proposals that the Liberal Democrat group in the Local Government Association has been putting forward for at least four years. However, the proposed system to pool and redistribute capital receipts threatens to undermine those proposals. The Government need to look carefully at the effect of those proposals on debt-free councils.
We also welcome local authorities being given the right to remove council tax discounts on second homes. Again, that is a measure we have proposed in the past. We particularly welcome the fact that council tenants will no longer subsidise housing benefit for other people in their area through the housing revenue account.
However, there seems to be relatively little movement on some of the key ideas raised in consultation over the draft local government Bill, particularly on those designed to achieve deregulation. The Government's approach remains interventionist and additional regulatory measures will only
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compound problems for local authorities. How does penalising poor-performing local authorities help the communities suffering under such administrations? Central government must learn to let go of its overzealous hold over local authority income, especially if we are to speed up more affordable housing provision and improve poor housing conditions.
As to the planning Bill, it is interesting that in the introduction it was referred to as the "Housing and Compulsory Purchase Bill". Is that the only addition to the Bill since the consultation, I wonder. We welcome the Government's intention to speed up the system and to improve the involvement of local authorities. However, we wonder whether what is in the Bill will achieve that.
We also welcome a simpler, fairer and quicker compulsory purchase system. This will greatly assist local authorities in two main areas— tackling the problem of long-term empty properties and enabling faster land assembly.
As to Section 106 agreements, simpler, more transparent agreements will be welcome, but the Government's reliance on them to produce more affordable housing is misplaced. Research by Alan Holmes has shown that perhaps 15,000 homes were produced under Section 106 agreements, not all of them additional homes. As many people believe that we need at least 200,000 additional dwellings each year, one can see that that is a drop in the ocean.
The Liberal Democrats believe that Britain needs a planning system which is driven from the ground upwards rather than directed from the centre. We believe that the United Kingdom should have a federal form of governance—my noble friend Lord Greaves will say more about this—with the powers at each level clearly defined.
Elected regional governments, free of central government interference, should be allowed to draw up their own spatial strategies in partnership with local authorities. We are particularly keen that house hold numbers should be decided at local and regional level and not at national level.
I did not intend to say too much about regional governance but, after listening to some of the contributions today, I should say particularly to the noble Lord, Lord Elliott of Morpeth, that now that I live in his area I strongly disagree with him about what he believes is happening in the North East of England. I have stood in this Chamber previously and I have reeled off statistic after statistic after statistic which shows that the whole region is under-performing and is one of the poorest in the country.
As to the regional government plans, we want to see a decoupling of arrangements for changes in local government organisation and the regions. That should not go together.
If we are to make the planning system work effectively, there need to be taxation incentives to encourage better land use. Once again we propose equalising the VAT on new build, refurbishment and conservation.

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As to a specific housing Bill, we are told that there is only a draft Bill and that we shall have to wait until the new year for that. Five years, and still there is not even a draft Bill to regulate houses in multiple occupation.
The private rented sector has much the largest proportion of properties in poor condition—more than 50 per cent—and recent research shows that the level of rent has little bearing on the amount of money invested in them.
Many of the homes in disrepair are in the privately-owned sector. Most are occupied by elderly people. The houses are in poor condition, lack decent heating and are in a hazardous state of disrepair. This means that when the occupiers go to hospital they cannot go home, which contributes to bed blocking.
I look forward to seeing the draft housing Bill. I hope that it will tackle some of these problems. In looking at all the local government Bills and any housing legislation, we on these Benches want to create neighbourhoods which are economically, environmentally and socially sustainable with a demographic balance. More importantly, they need to be under a system which gives the greatest freedom to local communities to organise their own local solutions for their own local needs.
8.5 p.m.
Baroness Billingham: My Lords, having spoken in the House before on regeneration, I make no apology for doing so again. But this time my comments and questions are against the background of the Queen's Speech, and in particular with reference to the planning proposals.
As the chair of an urban regeneration company in Corby, I acknowledge that planning is a vital—perhaps even the key—issue for successful outcomes. While drawing on and using Corby as an example of the tasks involved in urban regeneration. I have no doubt that very similar comments would be made on behalf of the 10 other urban regeneration councils, the URCs, which face the task—indeed, the uphill task—of renewing and revitalising their own areas, all of which show considerable decline and are among the poorer parts of our country.
My first question in regard to the planning legislation is, quite simply, will that legislation provide us with a solution to one of our greatest difficulties—that is, planning delays? We need the shortest possible timetable from the beginning to the end of the planning process to give investors the confidence to undertake essential long-term investment. Since the launch of Catalyst Corby some two years ago the timescale has been a key issue. Essential baseline and master plans have to be drawn up. They are all time-consuming but essential. The raising of public expectation following a launch has to be acknowledged and the time from the launch to tangible evidence of regeneration is crucial. Time saved in gaining the requisite planning permission would be invaluable and enormously welcome.
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I also express the hope that the planning legislation will be helpful in setting out proper road and rail infrastructures in relation to URCs. Regeneration is totally dependent on first-class accessibility and excellent public transport. Indeed, does Corby have the prospect of shedding from itself the unwelcome tag of being the largest town in Europe without a passenger railway station?
The Corby project is ambitious. It is set to double its size from 50,000 to 100,000 people. Critical mass is crucial to the huge investment needed to develop a first-class town. We aim to build at least 28,000 new homes, homes which will be served by public open spaces and excellent leisure facilities—in fact, all the features of a modern, vibrant town. All those factors hinge on a proactive planning framework. More specifically, will the planning legislation give special help to the regeneration of our town centre? Like many other towns, the centre has sadly declined with too many charity shops rather than retail outlets.
So, my Lords, my heart lifted when I read about the "Ikea issue", if I may call it that. At last, the concept of out-of-town giant retailers is being challenged. Is that a planning philosophy for the future? If so, it will be music to regenerators' ears. There has to be a better way forward. The heart of a town can be rejuvenated. Sensible compromise could see those excellent stores, such as Ikea, being brought, so to speak, "inside the city walls". Everyone would benefit— environmentally, socially and economically. In addition, will the planning legislation provide a framework, not just for new build, but for better build?
My noble friend Lord Rogers has set out those objectives in his fine report. Will we have the stimulus to strive for designs which will last and be a delight for generations to come? I am aware that the Deputy Prime Minister will be making a major statement in January specifically on the subject of sustainable communities, but there is no doubt in my mind that planning will form the backbone and, as such, is crucial to us today. There is a real urgency, not only in local regeneration, as has already been said by several other speakers, but within the framework of national need.
Nationally we are building fewer new homes than at any time since the 1920s. At the same time we have population growth, social and domestic change and higher expectation. Combined, those factors are stoking up demand at a greater rate than ever. With overarching planning needs so apparent, surely it is timely to remind the planners that Corby is ready, willing and able to expand and help address the shortfall. As part of the Corby/Milton Keynes axis, will we be given greater support?
I have dwelt solely on the planning aspect of forthcoming legislation, but be assured, we shall be lending our support to measures to make our community safer, applauding the strengthening of our health and education systems, and looking forward to further protection of our environment. I have no doubt that we shall even look positively at the

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liberalisation of the licensing laws, which will bring us in line with continental Europe and should bring the welcome benefit of more sensible drinking practice.
In short, we look to measures which will help us provide a decent town for young and old to savour. To conclude, perhaps I may add a note of hope that URCs will be increasingly well funded. As the real generators of regeneration, the 11 URCs must be supported and sustained. The proposals in the Queen's Speech give us real cause for optimism. We look forward to seeing our aspirations become reality and our poorer towns and cities become the focus for better living and a better future.
8.12 p.m.
Lord Dixon-Smith: My Lords, I am sure that the Minister will understand if I do not view the world through quite the same rose-tinted spectacles with which she introduced this particular part of the debate on the gracious Speech. In part, that is inevitably the consequence of my own experience. I began in local government in 1965 when the late GLC was created. Reforms have been planned, discussed, and implemented in the restructure of local government within about five years of every reorganisation that has previously been completed. That has continued until the present day, at huge cost. My noble friend Lord Hanningfield mentioned the costs of the proposals now under discussion and possible legislation. We have lived with that process for nearly 40 years. The cost in cash terms is huge, but the cost in physical terms, intellectual effort, disruption of service and the lack of concentration on the provision of service to the public is incalculable. At least, I have not yet seen anyone attempt to do so.
Now we come to a matter in respect of which I had hoped the Government might have learnt from the previous government. They have not and they intend to continue the process. Other countries have managed without such constant upheaval. They have modernised and restructured by co-operation, but we have constitutional turmoil. The fact that my own party initiated much of it gives me no satisfaction whatever. One might have thought that others might have learnt, but we are to consider the creation of regions.
The White Paper dealing with the subject has a glossy shop-front feel about it. It looks attractive and invites one in. But the consequence of the elimination of county councils and district councils—unitary authorities will have to be created—is not touched on except to say that the local government boundary commission will consider the consequences.
It is necessary to look at the White Paper a little closer and pick out some of the key phrases which reveal the Government's thinking. The White Paper states that the proposal will bring decision-making closer to the people it affects. That can only be a reality if the Government cede real executive decisions and authority to the regional development authorities. But if that is not the case—and I have seen nothing to make
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me believe that it is—regions and unitary authorities are further from the people. Communities will be diminished as a consequence.
One sees a little of the Government's deeper thinking when on page 26 one reads:
"The Government believes that regional planning bodies which involve only local authorities",
that is, locally elected representatives,
"are not sufficiently inclusive and does not propose to recognise them for purposes of the new regional spatial strategies".
I hope I might be forgiven for believing that the Government have no confidence in local democracy as representing communities.
At page 35 things begin to get Machiavellian because one sees that a regional elected assembly,
"will set out its key objectives in a small number of high-level targets, which it will agree with central government".
Well, we know what that means; that central government's targets will be applied.
Therefore, I believe that I have grounds for saying that two conclusions can be drawn from those statements. First, that the Government have no confidence in local democracy; and, secondly, that the Government will use their legislative programme to ensure that they get their own way. Of course the Government are the paymaster and they must have the right to oversee local government, but a large majority of local government is under the control of the Government's own political party. I have to wonder whether the Government either know too much about the membership of its own party or they do not trust the members of their own party.
There are other key indicators to which I shall turn. Let us consider the proportion of specific grants as a percentage of the revenue support grants paid to local authorities. My local authority, Essex, receives more than 45 per cent of its central government funding as specific grants. In 1997–98, that was 19.4 per cent. That is almost a ravishing increase in direct government control over the allocation of resources in a particular area. I regret that I do not have the national figure, but it follows that trend. This is specific government control over what happens in local areas. It is a reduction in the freedom of action of local communities.
An interesting point already touched on in the debate is that in regard to the local government finance Bill that will come before this House—and which has been subject to pre-legislative scrutiny—I have seen no explanation of the way in which revenue support grant might be distributed in the future.
Then there are all the other administrative tools used by government to whip the machine into line: regulations, guidance and plans—with funding tied to compliance. I asked my county council in Essex for a summary of the number of returns and plans it has to submit annually to the Government. The list is 23 pages long. I shall not attempt to explain it. With money linked to compliance, that is desperately controlling.

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If that is the case with local government, how about all the other government services, which are under direct government control anyway? My advice to any hospital that is considering its right and privilege to become a foundation hospital is that it should examine the small print very carefully. It will have to comply with a host of conditions before it does so, and it will still be rigidly controlled financially after it has acquired that enhanced status. It may be worth having—I agree with the principle of what the Government are doing—but the small print may well be wrong.
Industry and commerce do not escape. I am guilty, along with every Member of this House and indeed the whole of Parliament, of passing a flood of regulation and law annually. We look in detail at the way in which that law will work and we do our very best to make it practical. We rarely stop to see whether the overall impact of the combined effect of those laws is benign, even if the intention is benign in the first place.
It is an interesting fact that, as the quantum of legislation and controls has increased, the standing of politics and politicians has diminished. If I were to propound "Dixon-Smith's law", it would be just that: the standing of politics and politicians is in inverse proportion to the volume of law that they pass.
History has played its part, but this Government in particular have accelerated and exacerbated the situation. They believe in control. That will not be able to continue. The time will come when people will begin to demand that Parliament should once again take control over the "divine right" of the executive.
8.24 p.m.
Baroness Seccombe: My Lords, I shall confine my remarks to the issue of regional government.
I have always referred to myself as a mongrel, having a Scottish grandmother and a Welsh grandfather, in addition to two English grandparents. But having lived all my life in England, I do consider myself to be English and I am enormously proud to be so. I am proud of the wonderful heritage that has been left to us by our forefathers and the magnificent contribution that they and our fellow citizens today have made round the world. I am conscious also that this has been possible because of being British and because of the power of the United Kingdom. The UK is respected world-wide and our permanent membership of the Security Council reflects our standing in world affairs.
Maybe it is the Celt in me that gives me an understanding of the romantic desire of the Scots to have their own Parliament. However, I did not agree with them and I did not agree with the Welsh having an Assembly. Nor do I believe that the majority of Welsh people agreed with that, either. We should not forget that in Wales only just over half of the electorate voted and of those only 50.3 per cent voted in favour of devolution. For me, devolution was an error, and a costly one at that. One can only guess what Londoners think about their assembly.
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Excessive bureaucracy, extravagant new buildings and escalating expenditure place increasing financial burdens on taxpayers. We heard endlessly that the priority of this Government was "education, education, education". By their action it should have been, "bureaucracy, bureaucracy, bureaucracy". Ministers are indeed past masters at regulating everything and everybody. The problem is that the Prime Minister and his colleagues have let the genie out of the bottle and we are left in England with an Administration that is very Scottish in membership and that passes laws that affect our lives but do not touch Scottish and Welsh lives, while we in England have no say about laws in their countries. The West Lothian question has never been resolved and both Scotland and Wales are over-represented at Westminster.
Regional government in essence would replace county councils with regional assemblies that would be more under the control of the Government. Surely if the Government were really interested in devolving power and turning decision-making over to the people, the obvious answer would be to strengthen and to give more powers to existing local government. It would be a much cheaper and more flexible solution. The Government's main argument for regional assemblies appears to be the belief that by handing down decision-making from Whitehall to the regions, local people would be better able to tackle local problems. But county councillors representing smaller divisions are much closer to their local communities whereas a regional assembly member would overlap with the Member of Parliament. County councils could easily do much of the work envisaged for the regional assemblies. Why create artificial units where, within the same region, one community has little in common with another? I now declare an interest by describing the situation in my home county of Warwickshire. I live in the south of the county and five miles to the south-east is my doctor's surgery, and that is in Oxfordshire. Ten miles to the west is Gloucestershire and about 10 miles to the east is Northamptonshire. Under the proposals, Warwickshire—a small county, much of which is rural—would be situated in the West Midlands region, Oxfordshire would be in the South East region, Gloucestershire would be in the South West region while Northamptonshire would be in the East Midlands region. It seems crazy to me to draw new artificial boundaries lumping together communities that face very different local problems. People within about a 10-mile radius from me have little in common with, and face very different local issues from, those in Gravesend, Land's End, Deritend in Birmingham or Hulme End in Buxton. I believe that local government should be just that: local. Those vast regional assembly areas would be bound to be dominated by the large urban conurbations. The smaller rural counties would be overwhelmed and their very real and important concerns would not be understood and would be seen as insignificant in the grand scheme of things. Rural issues such as agriculture would be neglected in favour of urban priorities. That would benefit urban areas directly to the detriment of the countryside.

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I understand that there would be between 25 and 35 members of a regional assembly, with a total of between 250 and 350 countrywide. This could lead to constituencies three times the size of a Westminster one. At present, we have more than 20,000 county councillors, who know their areas and their constituents. Surely that is a much better way to get local people involved in making informed local decisions. Getting rid of historic county councils, far from bringing the Government closer to the people, would destroy an institution that people associate with, and feel an allegiance to. It would exacerbate the very real problem of apathy and would serve only to further alienate voters.
This Government say one thing and do another. The executive says it believes in devolving powers, but it centralises all it can by bypassing Parliament and keeping tight control in Downing Street. It may be convenient for European structures to have countries divided into regions, but it would be wrong for a small island to be insensitively hacked into chunks in such an arbitrary manner.
My father went through the First World War, so every year I support and watch the Remembrance Day programme. Last weekend, I was deeply moved as the horror of those terrible events was displayed before me. I cannot forget the pictures of young men laying down their lives for future generations, nor the haunting melodies of the songs that kept them going. As I was contemplating what I would say today, I heard "There'll always be an England". If this Government have their way, I fear that will not be so.
8.32 p. m.
Lord Cobbold: My Lords, I shall touch on two topics, the first of which relates to the Government's commitment in the gracious Speech to continue investing in the public services. I shall comment on public services specifically in relation to the beleaguered motorist. The motor car, perhaps more than anything else, has given more freedom, convenience, variety, travel and excitement to millions of people from all walks of life, particularly in the five decades since the last world war. That was not foreseen in the early days. The first new towns built under the 1947 Act were designed without garages. Now there is hardly a household without at least one car.
I am sure that noble Lords will agree that, by and large, motorists are a law-abiding, long-suffering bunch with an admirable safety record, given the volume of traffic. Why, then, are they so persecuted, and why do they not fight their corner more strongly? In all the Government's talk about improving public services, little is said about improving Britain's ageing and inadequate roads system.
As an inhabitant of the South East, based in Hertfordshire, I shall give a few examples, although there are obviously many others across the country. The first is the obvious need for a new east-west road linking Luton and Stansted, which would naturally form part of a new outer ring road to relieve the gridlock ed M25 and create a link from Reading. via
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Luton and Stansted, to the east coast ports of Ipswich and Harwich. Another example is that we were long ago promised a widening of the two-lane sections of the A1 motorway. We were promised that, until as far north as its intersection with the M1 in Yorkshire, the A1 would be upgraded to motorway standard. Nothing has come of these promises. As many noble Lords coming from the North may agree from bitter personal experience, at the A1's London end, the recent so-called improvements to the Apex Corner roundabout are a joke, given the retention of the Totteridge junction. Mill Hill is an obvious candidate for a flyover. There are many such pressing examples across the country. Not much investment seems to be going into this public service.
Could the situation be improved by toll-charging for motorways? Have the Government considered the Swiss system, for example, whereby road-users buy an annual pass that is displayed on their windscreen and permits usage of the country's motorways? This system avoids the need for expensive toll gates, and related traffic jams. One wonders how long the patience of road users can be relied upon. I urge the Government to face up to the problems, and the cost, of our increasingly inadequate road network.
My second topic concerns the housing situation—once again, specifically related to the South East and the Home Counties. I should declare a possible interest in that I am a landowner with an indirect interest in farming. As the noble Lord, Lord Sawyer, and the noble Baronesses, Lady Maddock and Lady Billingham, mentioned, there is a chronic shortage of housing supply in the South East, especially of affordable housing. When a small cottage in a Hertfordshire village is on the market for £625,000, something has to be amiss.
All of us share a desire to preserve the countryside, but the English countryside would not be what it is today without the farmhouses and cottages dotted about among the trees and hedgerows. I ask the Government: is it sensible to freeze the situation exactly as it is now and never to permit any further natural evolution? Is it fair to deny the children of rural families the opportunity of living in the countryside of their birth, and of their parents and grandparents? Council housing avoided the problem in the past, but such housing is now a thing of the past. Is it right for villages to become 100 per cent commuter dormitories?
It is obviously sensible to make the best use of brownfield sites where available, and where not required for employment. But there are many bits and pieces of greenbelt land where housing would in no way threaten the countryside and where affordable housing could be built. Given the problems of the farming industry, about which we have heard from many noble Lords this evening, one idea to help farmers might be to permit them to build one or two cottages on their land for rent or for sale, with the number being related to the size of the farm. The planners would concentrate more on what was built rather than where it was built. Traditional styles and materials would be priority criteria.

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The plea that I wish to make to the Government is that the planning rules should not be totally inflexible. They should make some room for the individualism, imagination and diversity that has created our English countryside over the centuries.
8.37 p.m.
Lord Greaves: My Lords, we now enter the final straight of today's debate on the gracious Speech. It has been a fascinating debate from all sides of the House. I do not intend to rehearse the ground that has already been covered by my noble friends, who made some outstanding contributions. My noble friend Lady Sharp of Guildford made an absolutely splendid declaration in favour of what education is all about. I refer to "what education is all about" because if it also relates to something else, it is not education. Many people may have thought that what my noble friend Lady Sharp said was perhaps very old fashioned. However, I suggest that the wheel turns, as always. What she said is visionary—a reaction against the present obsession with the mechanics of teaching, testing, and so on. I propose to say nothing further about education.
I should like to thank my noble friends Lord Ezra and Lady Maddock for their contributions on energy and on housing. In today's debate, which covers such a wide range of subjects, we heard eight speeches overtly on education, six on rural affairs, seven on the regional proposals, but only two speakers concentrated on the environment. Perhaps that says something about noble Lords' interests, and about the way in which the environment has been sidelined by this Government. It has, to some extent, been put within DEFRA, but the Government lack an overarching strategy in relation to the environment. Therefore, it is most difficult to get a handle on the subject in such debates.
I turn to the proposals for regional government outlined in the Regional Assemblies (Preparations) Bill. The noble Baroness, Lady Blatch, asked the Minister whether he would tell us the Government's proposals for the lord lieutenants and high sheriffs of the land. I come from Lancashire, where we have not only a lieutenancy and a shrievalty, but also a duchy. I counsel the Minister to keep his hands off the duchy; the Duke of Lancaster has enough problems at the moment. I had better move on quickly, as I do not want to be seized, put in a boat and taken down the river. It is widely thought in Lancashire that the Duke of Lancaster takes precedence over the sovereign!
I listened with great entertainment to the noble Lord, Lord Waddington. He is always good value when talking about regional government and regional affairs. I do not believe that everything he said was wrong—although most of it was. He was most wrong in his suggestion that the North West of England is an arbitrarily carved-up region with no sense of identity or belonging. I am no expert on Saxon or medieval history—I leave that to my noble friends behind me—
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but I believe that in this day and age there is a strong sense of identity in most of the North West. That is a basis for going forward with regional government.
I have been campaigning for regional government for some 40 years, so I am a great enthusiast. I have some doubts about the Government's proposals. I am not sure that they are devolving, rather than gathering up powers from local government. I am not convinced that they are taking democratic control over the existing regional quangocracy. I am not sure that their proposals will be sufficiently representative of such a large region either with the electoral system or the small size of assembly they propose. But at least the proposals are a basis for discussion and a step forward.
However, there are two great problems with the Bill, which no doubt we shall discuss when we debate it. One was raised by the noble Lord, Lord Waddington, who was not completely wrong: the linking of it to local government reform. There is something fundamentally wrong in proposing that people in Lancashire do not have the final say in the future of local government there. There will be a vote, if there is a referendum in the North West, which will involve dramatically changing the local government structure in Lancashire, Cheshire and Cumbria to a unitary system, on what basis we know not yet. But that vote will be determined by the votes of people in the two much larger sub-regions in the North West: Greater Manchester and Merseyside. It is entirely wrong that the future of the local government system in Lancashire and other counties should be changed by the votes of people in the other counties and regions of the North West. That is a flaw at the heart of the proposals that needs to be looked at.
The second problem is that people will be asked in a referendum to vote for a pig in a poke, because the referendum will come before the legislation setting out the powers, duties, size and other matters in relation to the regional authority. That is the wrong way round.
The Government will say that that is what happened in Scotland, but in Scotland there was a clear constitutional convention; everyone knew what was on the table. If the Government are to introduce regional government satisfactorily, we must know what is on the table before those of us who live in the North West, for example, are asked to go out and vote for it. I repeat what I have said before: I fear that regional government is one of those areas where, if you give New Labour a good idea, they will mess it up.
I turn to DEFRA. It covers two broad areas: the environment; and food, farming and rural affairs. As regards the environment, we are a little disappointed with the Bills that are to come before us although they are perhaps important in their own right. The Water Bill is certainly important, as is the Waste and Emissions Trading Bill—which no doubt will be known as the WET Bill—which we shall discuss the week after next. We should have liked to see a more ambitious programme of environmental Bills, for example, an environmental protection Bill, a clean energy Bill, a flood protection and marine habitats Bill and an animal protection Bill. If my party was running

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the Government—noble Lords should not laugh as we may be doing that sooner than they think the way things are going in British politics; noble Lords can laugh at that—we would introduce such Bills. However, we have to deal with the Bills that come before us.
I do not want to say much about the hunting Bill as we all have our individual views on it. I do not hide the fact that when the time comes I shall vote to ban fox-hunting. However, that is a personal decision. We on these Benches will be as split on the matter as noble Lords on other Benches. However, if the Government bring the hunting Bill forward in this Session, they should bring the matter to a close one way or the other. We cannot as a Parliament go on talking about the matter Session after Session after Session, Parliament after Parliament, for ever and a day. A decision has to be made one way or the other that people must then accept. That is my view.
A report was published last week by the Environment, Food and Rural Affairs Select Committee. I have not seen a copy of the report, which I look forward to reading, but I have read the BBC's account of it, which states that DEFRA appears to be,
"a jack of too many trades and master of none".
The BBC suggests that DEFRA rose from the ashes of the discredited Ministry of Agriculture, Fisheries and Food. Those are the words of the BBC, not of the Select Committee. The BBC further states that DEFRA's aim was to lead renewal in rural areas and to streamline decision-making. We cannot disagree with that. But, according to the report, the,
"significant change to the culture of the department is far from complete—indeed it has barely begun".
The report also states,
"we remain concerned about the ability of senior managers to ensure [the changes] take place".
I do not want to criticise civil servants; the people responsible for this matter are not civil servants but Ministers and the Secretary of State and they must be accountable for it.
The report voices concern that the focus on promoting sustainable development—I raise my eyebrows at this—has led to a lack of priority for rural concerns. The report states:
"It is vital that, as with sustainable development, mechanisms are put in place to enable Defra to exercise influence over other government departments to ensure they take account of the rural dimension in policy-making".
Surely, that is the real problem with DEFRA: it is responsible for everything in the countryside but, apart from farming, effectively it is responsible for nothing. Unless mechanisms are deployed to ensure that all the different government departments take proper account of the effect of their actions on rural areas, their efforts will come to nothing.
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I raised my eyebrows when I read of the great praise that appeared to be lavished on DEFRA's efforts with regard to sustainable development. However, the account related that even with sustainable development the MPs state that they,
"are pessimistic about Defra's ability to ensure that government departments will do more than pay lip service to the objectives of sustainable development".
In other words, the Select Committee's report simply states that DEFRA is not working. However, it is in all our interests that DEFRA does work in terms of rural development, its work in the countryside in general and its work on sustainable development and the environment. It is absolutely vital that that department is a success as, if it is not, so much of what is needed in this country will not be implemented. I do not want to be too critical of the Minister who is to reply to the debate. I simply say to him that if he and the Secretary of State take measures to turn round the deplorable state of affairs in their department, they will have our full support.
Finally, I turn to agriculture and its future. A great deal of what I might have said has already been dealt with by a number of noble Lords, such as the noble Earl, Lord Peel, the right reverend Prelate the Bishop of Hereford and particularly my noble friend Lord Livsey of Talgarth. They all set out the absolute crisis which is now facing British agriculture. I wish that sometimes Ministers would admit that there is a crisis. Clearly, it is not all their fault; in fact, it is possibly not their fault in the main. All kinds of international, European and British local events have impacted on the situation. But if the Government would accept that a crisis exists and that it has to be dealt with, I believe that they would be in a much better position to begin talking with the farming industry to bring it round.
We are supposed to be in the middle of a big debate at the moment on the Curry report. We are supposed to be discussing what that report defines as "public goods", which are things done for the public good, for which it is reasonable to pay out public money in subsidies. I do not believe that that debate is taking place outside the farming industry, and I do not believe that most people in that industry understand the terms of the debate. All kinds of word are being used, many of them European which very few people understand, such as "digression", "decoupling" and "modulation", the "first pillar" and the "second pillar" and so forth. How many farmers understand all that and what politicians are talking about? I do not know. What I am absolutely certain about is that most people do not know.
If we are to move to a situation, as the Minister and the Secretary of State keeping telling us, in which subsidies for production and to support prices are to be abolished over a particular time-scale, and if in return there are to be subsidies for the public goods, what are they? It seems to me that the implications for half of the agricultural industry in this country of removing production subsidies and forcing it to compete without subsidy in the world market are that it will become more and more efficient; the number of

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units will decrease and their size will increase; and we shall move to a countryside which is full of prairies and ranches.
It is absolutely clear that we do not want that. We want a traditional British countryside— and that can be maintained only by small and medium-sized family farms in a great deal of the countryside. Let us be clear if that is what we are talking about. Let us be honest about it and let the Government tell us what it is they are saying. How do they see the industry in 20 years' time and how do they see the subsidy structure then? Unless they can be far more specific about what they are doing now, the decline of agriculture, which has been very well set out by other speakers, will simply continue.
8.53 p.m.
Baroness Byford: My Lords, it is my great honour to respond to the debate on behalf of my colleagues on these Benches. I consider it a great honour so to do, but it is a somewhat daunting challenge, I must declare. Perhaps I may also declare my family's farming interests and remind the House of them. I also have a brother who is not only a parish councillor, but a county councillor and a husband who is a governor of two schools, one a village school and one an inner city school, both with very different problems.
The education front this last year has appeared to many people as a parade of muddle and mismanagement, including the question of the Criminal Records Bureau, doubts about the A-level results and the threat of top-up fees to students at our universities, which have been referred to by many speakers already today.
However, there are other uncertainties, too. I move swiftly to some of them. For example, responsibility for funding home-to-school transport has remained with local education authorities. The more rural local authorities are facing huge increases in their transport costs. It is likely that local councils will restrict in some way the money made available for transport for those in post-16 education. That will affect the numbers who stay on into the sixth form and stick it out for those two years, both at school and at local FE colleges. There will be a consequent adverse effect on the moneys from learning and skills councils to fund post-16 education. Is that what the Government intend? Perhaps the Minister will enlighten us further when he comes to respond.
Another problem is that the Government have introduced a performance-related pay policy. Two years ago many teachers passed the threshold. From September they are entitled—or are they?—to a rise from upper pay spine level 1 to level 2. Will the Minister clarify how a governing body can refuse increments on budgetary considerations, even though the head teacher has attested to,
"sustained and substantial performance and contributions to the school"?
Once again, I believe that the Government have created a situation which other people—many of them unpaid volunteers— will have to resolve. The
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Government are supplying only partial funding for those increases, and I believe that many schools—particularly those in counties low down the SSA tables—will have difficulty in finding the balance.
The question of funding and the timing of funding goes all through this Government's dealings with local authorities. Many noble Lords who sit in on our debates will know that there are fields full of fridges because the Government put in place legislation before money was made available to set up the mechanisms for dealing with the problem. Belatedly, funds have been found but it will take all of six months before the systems are ready to tackle a growing problem.
The Government have tightened the local authority budget protection system so that, under the Education Act 2002, a council must notify the Secretary of State for Education of its schools budget not later than 31st January preceding the new financial year. At the same time, they propose to change the current education SSA for each local authority. That seems unfair.
In addition, regulations were laid on 12th August requiring each authority to establish a schools forum no later than 15th January 2003. Some councils are doing so now in order to involve the forum in the entire budgeting process. But they are working in partial darkness because the department has not yet finalised various matters—for example, the detail of the reshaped Standards Fund, the precise definition of the "schools block" and the "LEA block", and how to calculate the passporting of the schools block. Yet decisions are supposed to be made on that basis.
We heard very good contributions from all around the House on the subject of education. The fine standard was set by my noble friend Lady Blatch, who has gained knowledge and experience over many, many years in the field of education. We are grateful for her contribution. Other Members touched on specific matters. My noble friend Lord Jenkin referred to the importance of science and the importance of the teaching of science in view of today's rapidly evolving knowledge on the subject. I believe it is important that science and the teaching of science move forward in a way that attracts people to participate in the subject. We need them badly.
My noble friend Lord Pilkington touched on the whole question of the exam system. We are seeking clarification from the Minister on the Government's thinking. My noble friend Lord Prior, who I thought was also going to speak on rural issues, reminded us of the importance of the phonics teaching system. It is a matter that I knew about but which had slipped my mind. We were reminded of how we have lost something that was considered to be most valuable. The teacher to whom my noble friend referred is known to my noble friend Lady Blatch.
My noble friend Lady Blatch then highlighted some of the big problems that we face. The question of truancy was raised earlier. Every day 50,000 children fail to attend school. That is a diabolical situation.

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There is also the situation with the A-level and AS-level examinations and the criminal checks that disrupted schools at the beginning of this term. First we were told that the children could not go back to school because the checks had not been carried out and in the end the Government had to make a U-turn and allow them back to school before all the checks were completed. The whole situation was a mess. Many noble Lords have raised the matter of top-up fees for university students. Are there to be top-up fees or not, or is the jury still out? Perhaps the Minister can clarify the position.
The most sobering and frightening points, touched on by my noble friend, are teacher recruitment and teacher retention. We all remember our school days and how important a particular teacher was as he or she inspired us to gain qualifications and to seek jobs. I believe that at the moment we are failing our children. The situation must be rectified quickly.
Beside the matters that have been brought to my attention, there is also a concern about a headline in The Times for today which states:
"Labour misses 75% of targets 'tied to funding"'.
There are three that relate to education:
"An increase in the proportion of those aged 11 meeting the standard of literacy for that age from 63 per cent to 80 per cent by 2002: not met.
An increase in the proportion of those aged 11 meeting the standard of numeracy for that age from 62 per cent to 75 per cent by 2002: not met
A one-third cut in school truancies by 2002: slippage".
All noble Lords will agree that all is not well in education, education, education.
Education is not the only aspect of the gracious Speech about which we have concern. However, we also welcome some points. We welcome the Waste and Emissions Trading Bill and the water Bill and hope that they will achieve what I believe they will set out to do. I hope that they will tackle the problem of waste. It is not just a matter of trading, but tackling it at source to ensure that we reduce the amount of waste. Water is the most important commodity in life. Without it we cannot survive and yet we waste it. I hope that that Bill will deal with the core issue and not just tinker with the edges.
We have heard speeches on the environment. The environment in which we live is highly prized by our citizens and by the many visitors who are attracted each year to our land, whether to ancient monuments, hills, mountains or just to our gentle lowland landscapes. 'The role of agriculture in the formation of those landscapes is absolutely crucial. Sadly, agriculture is still in decline. It is threatened by demography, by an ageing population—people are living longer—and by smaller families. In former years most farming families could be sure that at least one member of their family would work on the family farm. Nowadays people do not want to take on such a challenge. It is not considered glamorous; it is hard work and, most importantly at the moment, there is no future in farming so one understands the reservations.
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This morning's "Farming Today" broadcast gave the figures which are stark. Over the previous six years, 67,000 people have left the land and have not been replaced. In the past year, 8,500 farmers and 2,500 agriculture workers have gone. That cannot go on. Agriculture, as many have reflected, is still funded by handouts, whether from Brussels or from the Government. Some of those subsidies are outdated. We believe that they should be looked at urgently.
The gracious Speech made no mention of CAP reform, but its reform is urgent. Even more important—noble Lords have not touched on this matter today—is the reform of the common fisheries policy. A Britain without cod and chips is rather like a France without escargots and red wine. It is interesting to speculate that whereas our Continental neighbours would fight for their farmers, we believe our government are failing to fight for ours.
What steps have the Government taken to look at, for example, by-catches? What representation has been made about the industrial fishing of sand eels? What research has been carried out on the importance of sand eels to the ocean environment? There arc so many environmental questions that need addressing.
I return to where I started—fridges. Attempts to control disposal of waste shows the other side of the coin. We must be careful that the new restrictions do not result in increased fly-tipping and illegal dumping. So far the signs do not augur well. Fly-tipping and illegal dumping of waste of all kinds is now a regular part of living in the countryside and in the city. It is not just a countryside matter.
My noble friends have covered that particular section fully. There was a moving speech made by my noble friend Lord Peel. He spoke about, and highlighted what I believe is crucial, the total effect that a declining industry may have on our food industry—65 billion. Many thousands of jobs may be lost if we cannot get agriculture back on the rails. and able to make a profit. Profit is not a long word and one that at least I can spell.
Other noble Lords touched on the question of alternative fuels. The right reverend Prelate the Bishop of Hereford listed some of the good news. I share his view that the Curry report is an exciting report. I hope that the Government push ahead with its recommendations.
I turn finally to the question of regional government. I have declared that I have a brother who is a county councillor. Perhaps noble Lords will not be surprised that I have great reservations about regional government. To me government should be as local as it possibly can. Noble Lords will remember—it was perhaps only about 18 months ago—that there was a rumour that the Government wanted to get rid of parish councils. We fought a strong fight to stop the Government getting rid of parish councils. They are the nearest elected government. We feel equally strongly about regional government.

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Regional government is remote. My noble friend Lady Seccombe spelt the matter out clearly. Poor Warwickshire would be divided into four regions. Leicestershire I suspect would get lumped into East Midlands. That is not quite so bad. But what really does rural Lincolnshire have in common with urban Derby, Nottingham and Leicester? And which would carry more say? I would wish it to be the rurals. We shall certainly fight our corner. But I suspect by the very nature of what is being proposed that it would not be thus.
The debate we had this afternoon, which looked at local government, was interesting. One or perhaps two noble Lords spoke in support of regional government. That surely should send warning signs to the Government. I wonder whether they have got the matter wrong and whether even at this late stage they might have a rethink. Certainly, this Chamber has not given them the all clear today.
I turn briefly to the four proposed Bills. One deals with local government, about which I have spoken and about which we on these Benches have great concern. The second is the local government Bill. We have concerns about the comprehensive performance awards. Thirdly, there is the planning Bill—I understand that there were some 15,500 respondents—which proposes that 90 per cent of applications, including major developments, would be decided not by elected members but by the officers. If I am wrong, perhaps the noble Lord will clarify that matter for me.
It is absurd to take away the role of county councillors who know their area well, who know their locality, and hand that responsibility over to a vast organisation in regional government and, even worse, to people who are not elected and not democratically representative of anything. We need clarification on that.
Fourthly, I turn to the Housing Bill. The Government intend to increase affordable housing for key workers by 25,000 a year for the next 10 years. How will they do that? If that is to be on greenfield sites, will that devastate their greenbelt policy? If it is to be on brownfield sites, will they allocate more money to clear the sites in the first place and provide extra road and water infrastructure? Those are simple, basic questions that must be answered.
My noble friends Lord Dixon-Smith and Lady Seccombe spoke clearly about their view of regional government, but, if I may say so, they were outweighed by my noble friend Lord Waddington, who made it extremely clear why he thinks that regional government should not be introduced. I could not agree more with him. If I smiled slightly, that was only because it seemed so ridiculous that it could not possibly happen. But here we are: the truth faces us and it will happen. That is a nightmare for all of us.
Finally, I turn to a couple of smaller points on which I should like the Minister to comment. The article in The Times that lists the 75 per cent of targets missed
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mentions two others that return us to the Minister's brief and mine. I am sure that he will be as disappointed about them as am I. It states:
"Other targets are dropped when events supersede them. A target in 1998 pledges to 'prevent outbreaks of serious animal, fish and plant diseases by March … 2002",
was abandoned—after, we accept, the biggest ever outbreak of foot and mouth disease. But the target has now disappeared. I do not see why, just because we had an outbreak of foot and mouth disease, a target disappears. Again, perhaps the Minister can tell me.
I turn to the other target, which again returns to my concern about the environment. The article cites a target to
"Improve air quality by meeting our national air quality strategy targets".
The comment reads: "slippage". Does slippage mean that the target has finally disappeared, or will it return?
I asked the Library if it could help me. We would all agree that this Government have been full of consultation but not so full of action, so I thought that I would prepare my own brief. I asked the Library how many consultations DEFRA had undertaken— bearing in mind that it was formed in June 2001. Five, 10, or 20? Our English cricket team would be pleased with the figure: 83 consultations since June 2001.
Who pays for that? How many outside consultancies have been brought in for that? The cost of all of those must be huge. How many of those consultations have been acted on? I rest my case. We have heard that the Government have been consulting, but we look for action.
We welcome some of the Bills in the gracious Speech, and I have expressed our support for them. The Minister knows that I will try to support them in any way that I can. It is our role to ensure that they are workable. But the jury is out and we should have liked other Bills to have been mentioned—including, as the noble Lord, Lord Greaves, suggested, one to deal with labelling.
9.14 p.m.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, I thank all noble Lords who have participated in this wide-ranging debate, which is always difficult, covering as it does so many departments. I shall attempt to reply as best I can in the 20 minutes imposed by the new regime.
I will save a little time by saying that I do not propose to go into detail on hunting. As the noble Lord, Lord Greaves, said, the issue must be resolved, and the way to resolve it was spelt out in the Queen's Speech. It will be resolved, and I say to the noble Lord, Lord Palmer, that there is no constitutional reason why the Parliament Act should not be used, if that is necessary—I hope that it will not be. I will, therefore, put to one side what is likely to be the most controversial part of DEFRA's brief and concentrate on some other issues.

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Having agreed with the noble Lord, Lord Greaves, on one issue, I shall disagree with him on the next. The Select Committee in another place was excessively harsh on DEFRA. There are some things that we do not yet have in place, but to argue that we have had no influence over the rest of government policy on rural areas is wrong. We will respond to the committee's report in a few weeks, but, as a result of the impetus that established DEFRA and of DEFRA's influence, we have, for example, already doubled the amount of money available for affordable homes in rural areas. We have also helped health and social services ensure that there will be another 100 new primary one-stop mobile units in rural areas. The DTI decision to allocate £270 million to the Post Office to minimise the effects of the closure of, in the main, rural post offices is also due to that pressure. We have given another £30 million to ensure that there is additional rural policing in the coming year. From next year, public transport will be allocated another £239 million for rural areas.
All those things reflect the importance that the Government as a whole put on rural areas and the influence that my department has managed to exert on the Chancellor and on the delivery departments in Whitehall. That is a major effort. It must be improved and sustained, but it is not, to put it at its mildest, a record of failure for our rural areas—quite the opposite.
I must respond to the noble Baroness, Lady Byford, about DEFRA's targets. The animal disease target is now subject to the new contingency plans and the animal health strategy that we debated only a few weeks ago. It will continue to be a priority for the department. The air quality target, which is a target for the Department for Transport and DEFRA, has slipped. We intend to make good that slippage.
The noble Baroness made a point about consultation. Given all that has been said about being close to the people, listening to what they say and taking decisions that take account of their views, the fact that we have engaged in such a range of consultation ought, surely, to be a matter for congratulation, rather than criticism. I certainly do not take any criticism on that.
Agriculture continues to loom large among DEFRA's direct responsibilities for rural areas. The noble Earl, Lord Peel, my noble friend Lady Warwick of Undercliffe and others asked about the common agricultural policy and the reform of agriculture. Others referred to the difficult situation faced by much of British agriculture. The Curry report, of course, pointed the way forward for the UK. That was reflected by the way forward pointed out by Commissioner Fischler when he made his proposals for the mid-term review. The so-called Franco-German deal, which really related to the overall budget post-2006, does not, in any way, inhibit the progress that we intend to see in the mid-term review. Commissioner Fischler made that clear, we made it clear, and the German Chancellor made it clear.
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We expect radical reform following Commissioner Fischler's proposals, and we expect that, in the coming six months, there will be some difficult but, I believe, ultimately successful negotiations on the mid-term review. As I said when the mid-term review came out, it is clear that a sea-change has taken place in the approach to the common agricultural policy. The Fischler proposals give a new sense of direction, and the only questions are how fast, how far and in what timescale we go down that road. It is clear that the intention is that the common agricultural policy, like the Curry report, will deliver a shift away from production-related subsidies and towards subsidies that are for the public good, promoting environmentally sustainable systems of land management and the overall development of rural communities and rural areas.
A number of references were made to the present situation in agriculture which clearly deserve a reply. There is no legislative programme—primarily because much of this is dealt with at European rather than British level—but where we can within the CAP move faster than the CAP decisions along the lines outlined by the Curry report, we will do so unilaterally and as rapidly as possible. Indeed, the spending review has allocated the resources to enable us to do that.
But we have to consider how we deal strategically with the problems of low incomes in the agriculture sector now and the changes in agriculture which are taking place. We believe that the change in support for land management and for agriculture as a whole needs to shift away from production-related subsidies into broader support for effective environmental land management and contributions to the rural development theme. We need to phase that in and we need to take the farming community with us.
But we also need to transform the way in which farming relates not only to the remainder of the food chain— because this is a food chain problem, not only a farming one, and responsibilities rest on the remainder of the food chain as much as on the Government and the farming community to ensure that we get a sustainable farming sector in this country—but also relates to the environment and to the rest of the rural economy. How we manage our landscape will clearly have major effects on the desirability of operating many businesses—tourism and others—in our rural areas.
That will require a change of approach in much of farming from looking at subsidies towards looking at the market. The support will come for the public goods of a better landscape, a better environment and a better rural community, but the operation of the farming community over and above that must be more closely related to the market it ultimately supplies.
That does not mean that we are competing with world prices on commodity markets globally. It may mean that some parts of the farming sector can develop niche markets in their own areas—high added value products and so on—but others will be competitive. Those with proper investment, proper technology, training and support from the rest of the food chain and from government will be able to compete very well on a European basis and on an international basis.

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The noble Lord, Lord Greaves, asked me to say what agriculture will look like in 20 years time.
Lord Prior: My Lords, I am grateful to the Minister for giving way. Can he explain how, if the costs of production of many of the commodities produced by farmers are now not being met by the price obtained by farmers, and the subsidy as such is to be removed from production to some other kind, farmers will sustain themselves if nothing is done about controlling imports or if there are no other methods for raising the price of those commodities?
Lord Whitty: My Lords, it is not the Government's responsibility to determine the price of food and we are living in an increasingly globalised world. There is no going back on either of those points. Clearly there will continue to be a need for some significant structural adjustment in the farming sector. Not all farmers will survive. There will be a reduction in the total number of farmers.
There will be a concentration, in particular, on farming markets where we can develop products which will give a return to farmers over and above the return they will get from the generalised environmental and landscape support. That will give them a base income from which to work. But, over and above that, there is no reason why farmers should operate any differently from other small businesses. They will have to go for the market where the price is right over the medium and long term. That still means some serious adjustment.
I have only 20 minutes to respond to the debate. If noble Lords intervene now I am unlikely to be able to respond for the other departments.
Earl Peel: My Lords, perhaps I may seek an assurance from the Minister that there will be a radical review of the return that farmers will receive for delivering environmental goods to the public. At the moment, the existing schemes do not reflect a proper return on capital and labour. I hope that the Minister can assure the House that in future such schemes will do that and that farmers will be paid properly for the services they will be providing to the public through the public purse and the switch from pillar one to pillar two.
Lord Whitty: My Lords, as has already been made clear, the switch into what Sir Donald Curry originally called the "broad and shallow" scheme, or the entry level environmental scheme, will be without the overload of bureaucracy which many of the current agri-environment schemes have developed. It will also not depend on the principle of income forgone, on which those schemes are based. Therefore, there will be a return to farmers in return for the improved environmental output.
Clearly, we are not working on the basis of guaranteeing any particular profit level or return on capital, but that would make a contribution towards a
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more profitable farming sector. Over and above that, an adjustment to the farming sector towards meeting what are the demands of consumers rather than a structure of Brussels subsidies will enable it to operate to greatest economic effect.
As regards my department's other areas of responsibility, they include those relating to broader rural areas and the diversification of agriculture. I support looking carefully at the returns that we can get from developing, for example, bio-fuels and alternative crops and products. We should look at the structure of fiscal incentives as against other fuels. We need to look also at issues of how we use land, how we make it easier through the planning process and elsewhere to diversify the use, for example, of redundant farm buildings, and look at the planning process as regards the use of agricultural land. Certainly, a greater flexibility on both of those fronts is necessary if we are to be able to sustain an effective and growing prosperity within our rural areas.
In regard to the broader environmental aspects of my department's brief, I draw noble Lords' attention briefly to two Bills before us, both of which have been largely welcomed. They are called the "WET and water" Bill which is slightly misleading. The "WET" Bill deals with waste and emissions trading and is an important contribution both to the more effective use of our resources and not using landfill to the grotesque extent that is currently the case within this country for the disposal of waste, and makes a contribution through the market towards reducing CO2 emissions through an effectively-based emissions trading scheme.
The noble Lord, Lord Ezra, raised some detailed points on the energy contribution to our environmental objectives. The right reverend Prelate the Bishop of Hereford and others raised the broad strategy on climate change. We have a detailed policy on climate change to which energy, the contribution of renewable energy and, indeed, CHP, including micro-CHP, will make a major contribution. Further work on the direction of energy policy is now under way. We intend to publish an energy White Paper dealing with those issues and the medium and long-term objectives of energy policy to take account of the need posed to us, for example, by the Royal Commission for a 60 per cent reduction in carbon emissions by 2050.
I now move on to other parts of the debate. A good deal of time was spent on dealing with the issues of regional government. Taken together with our Bills on planning and local government I believe that there is a widespread misunderstanding of what the Government are trying to do. The Government believe that certain aspects of planning, transport and spatial development are best dealt with at regional level. Past governments have also believed that because we already have regional transport plans and regional spatial development plans which are dealt with by groups of county and unitary authorities. It would be better if that were dealt with by a democratic process rather than an indirect process which tends to relapse into Buggins' turn in terms of the priorities of the various county and unitary authorities.

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That is one reason why we would like to see democratic control of those regional institutions. The other reason is that some people want them. How many people want them will be the subject of a referendum. No region is being forced into it; every region will be able to have a choice. When they have that choice, they must also consider the implications for the current structure of local government within their region.
We are not laying a blueprint stating that we will abolish the counties; quite the opposite. We are saying that we need either to strengthen the counties or to strengthen the districts. If we have a regional authority, we do not want an additional tier; we want to look at the way that region will decide as a whole what the structure of its local and regional government should be. Therefore, when regions take the decision on whether they want a regional assembly, they also take a decision on the structure of local government beneath that level.
Likewise, on all the policies relating to local government and the planning Bills, contrary to what has been suggested today by the usual contingent from the Kingdom of Essex—that we are trying to be more centralised, bureaucratic and rigid—we are trying to provide more flexibility. We want to provide flexibility in relation to funding; flexibility to allow local authorities to raise capital; and flexibility to alter the way in which they approach their decision-making in respect of, for example, planning, regeneration and transport. All of those areas require more local decisions.
It is true, as the noble Lord, Lord Dixon-Smith, knows, that on occasion I have shown sympathy with his view that central government of all complexions occasionally legislates too heavily. However, this is a move in exactly the opposite direction. It is decentralising, deregulating and providing flexibility. I would have thought that noble Lords from both parties opposite—certainly the Conservative Party in its period of opposition—should be in favour of such moves towards greater flexibility.
I turn briefly to education, which I am sure my noble friend Lady Ashton will—
Lord Pilkington of Oxenford: My Lords, the Minister has imposed his own burden. Many of us are concerned about education. The House rises at ten o'clock, so I hope that he will not tie himself to winding up in 20 minutes. We want our questions answered.
Lord Whitty: My Lords, as I understand it, the House has agreed that all Front Bench speeches should be limited to 20 minutes. The noble Baroness and the noble Lord opposite observed that and it would be only right that I do so too—
Lord Pilkington of Oxenford: My Lords, I am sorry to interrupt. Questions were asked and they are
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important. We did not agree to that and I hope that the Minister will answer the questions on education. Two minutes is not enough.
Lord Whitty: My Lords, I appreciate that two minutes is not enough, but I would have had five minutes had there not been interruptions. The education questions related largely to the issues set out by my noble friend Lady Ashton at the beginning of the debate. They relate to our funding of higher education. In response to the noble Baroness, Lady Byford, the jury is out in relation to the longer term, but our manifesto commitment clearly stands for the moment as regards top-up fees. There is no intention to introduce top-up fees in the period of this Parliament and no decision to do so beyond that. But we will be looking at the whole issue of funding for higher education.
It is important to recognise that during the course of this government we have provided substantial additional funds for higher education. In terms of funding per student, while in the period 1989–97 that fell by approximately 36 per cent under the previous government, it rose in the first two years of this government and has remained static since. Therefore, the resources that the Government have allocated to higher education cannot be attacked in that way.
A number of points were raised, including by the noble Lord, Lord Pilkington, relating to vocational education. We provided an overall strategy in relation to that in the Green Paper, 14–19: extending opportunities, raising standards, published in February 2002. The intention is that we deliver to young people their individual requirements for qualifications, both through their schooling and through the wider education systems, and that vocational output from the education system will be as valid as it is, as the noble Lord, Lord Pilkington, indicates, in Germany and to some extent in France, more or less on a par with academic achievement. That is an important part of the mix of reforms that we have suggested and are pursuing in the 14 to 19 year-old strategy.
On teacher recruitment, referred to earlier today by my noble friend Lady Ashton, the latest figures show an increase of 9,400, indicating an increase since 1997 of 20,400 teachers in post over that period. The figure for teachers entering training has increased by 7 per cent over the past year. Understandable anxieties remain regarding the shortage of teachers, especially in certain disciplines. However, the overall picture is of substantial additional resources being put into teacher training and recruitment and teachers in post in schools.
We are reviewing the totality of higher education. We are examining not only the funding aspects but the diversity to which my noble friend Lady Warwick referred and the need to ensure excellence in all parts of the university sector, not merely in some parts of it.
The noble Lord, Lord Jenkin, referred to science education. I agree with him, and I commend the work that he himself has put in on this front. We are in the early stages of trying to turn around the situation—of

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trying to re-engage pupils with science education. The new GCSE course which starts this year is effectively a hybrid GCSE in relation to science, which is a new approach to getting relatively young pupils interested in science. We have also extended what was the science year into a second year, so that we can now focus attention on science in that further year.
The noble Lord, Lord Prior, referred to literacy. It is the one area of education about which I know something—which is probably why I have never been an education Minister. That is taken on board in the overall approach.
The noble Baroness, Lady Walmsley, referred to exclusions and truancy, which are continuing problems—although under the previous system pupils with special educational needs were seven times more likely to be excluded than the average pupil; whereas now the figure is three times that level. That in itself is an indictment of the previous system of exclusions. It is important, therefore—
Baroness Blatch: My Lords, the reference was to truancy, not to exclusions.
Lord Whitty: My Lords, the noble Baroness, Lady Walmsley, clearly referred to exclusions and to the crime and social problems caused as a result. Truancy is a parallel problem, but the noble Baroness's reference was to exclusions.
I have had to rush through my remarks. Reverting to the local government side of the debate, the only area that I have not covered is housing. There is a substantial commitment to look at housing, and particularly at the provision of affordable housing. The department of my right honourable friend the Deputy Prime Minister will be looking to deliver a larger programme of affordable housing both through the planning system and through the provision to local authorities of the new powers that they will have in terms of their internal funding arrangements to
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provide some support for affordable housing within their areas, particularly that which can also house the essential service workers that we need, particularly in inner city areas that are subject to housing stress.
I was given a signal from my noble friend the Chief Whip that I could speak for an additional five minutes. I have done so, and I must now sit down. My noble friend or I will write to other noble Lords.
Baroness Farrington of Ribbleton: My Lords, on behalf of my noble friend Lady Hollis of Heigham, I beg to move that the debate be now adjourned until tomorrow.
Moved, That the debate be now adjourned until tomorrow.— (Baroness Farrington of Ribbleton.)
On Question, Motion agreed to, and debate adjourned accordingly until tomorrow.

London Local Authorities and Transport for London Bill [H.L.]
The Chairman of Committees acquainted the House that, pursuant to the resolution of 31st October, the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent; the Bill was presented, read a first time, read a second time pro forma and committed to an Unopposed Bill Committee.

London Local Authorities Bill [H.L.]
The Chairman of Committees acquainted the House that, pursuant to the resolution of 31st October, the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent; the Bill was presented, read a first time, read a second time pro forma, reported from the Select Committee and recommitted to an Unopposed Bill Committee.
House adjourned at nineteen minutes before ten o'clock.