Sitting of 25 November 2004

Preamble
The House met at eleven of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Oxford): The CHAIRMAN OF COMMITTEES on the Woolsack.

Disability Discrimination Bill [H.L.]
Lord Grocott: My Lords, on behalf of my noble friend Lady Hollis, I beg to introduce a Bill to amend the Disability Discrimination Act 1995; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Grocott.)
On Question, Bill read a first time, and ordered to be printed.

Inquiries Bill [H.L.]
Lord Evans of Temple Guiting: My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton, I beg to introduce a Bill to make provision about the holding of inquiries. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Evans of Temple Guiting.)
On Question, Bill read a first time, and ordered to be printed.

Borough Freedom (Family Succession) Bill [H.L.]
Lord Graham of Edmonton: My Lords, I beg to introduce a Bill to make new provision relating to admission to borough freedom. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Graham of Edmonton.)
On Question, Bill read a first time, and ordered to be printed.

Renewable Energy Bill [H.L.]
Lord Redesdale: My Lords, I beg to introduce a Bill to make provision about the microgeneration of electricity; to provide for small renewable energy developments to be classed as permitted development; and to provide for a renewables obligation for public suppliers of energy other than electricity suppliers. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Redesdale.)
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On Question, Bill read a first time, and ordered to be printed.

Address in Reply to Her Majesty's Most Gracious Speech
11.2 a.m.
Debate resumed on the Motion moved on Tuesday by the Baroness Lockwood—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".
Lord Davies of Oldham: My Lords, Britain has never worked so productively, created so much wealth and generated so many jobs. For the first time in half a century, Britain has been growing faster and for longer than any other G7 country. We have overtaken France to become the fourth-largest economy in the world. The Government have delivered 49 consecutive quarters of growth, the longest period of continuous economic growth on record. The UK was the only G7 economy to avoid any quarters of negative growth between 2001 and 2003. The UK continues to enjoy the lowest sustained inflation for 40 years. Unemployment is at its lowest in a generation and, at 4.7 per cent, is the lowest in the G7.
As the world economy has strengthened, UK growth has become more balanced. Business investment, exports and manufacturing output have all risen in the past year. The Budget forecast is for GDP growth of 3 per cent to 3.5 per cent this year, and independent forecasters agree. It is not only the Government's word at stake; analysis by the European Central Bank shows that the UK had the best performance of all member states in forecasting GDP growth between 1999 and 2003.
Under this Government, employment has increased by more than 1.9 million. Interest rates, at 4.75 per cent, are still low by historical standards. Mortgage rates are close to their lowest levels since the 1950s, saving mortgage payers an average of around £2,600 a year. Households are benefiting from robust growth and employment. Real disposable income grew by 3.3 per cent during the year to the second quarter of 2004 and by 3 per cent a year on average since the second quarter of 1997. Households' net wealth is up almost 70 per cent since 1997.
I anticipate that some contributors to the debate will express worries about household debt and government debt levels. The background is one of confidence in the economy, in terms both of other nations' perspectives and of households. The simple fact is that the indebtedness of our people is balanced by their confidence in being able to manage household debts against full employment provisions and the opportunities to earn.

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We often speak about Treasury issues as the context for government policies in the debate on the Queen's Speech, but there are Treasury Bills too. The first is the child benefit Bill—the first such Bill since 1975. It is very much focused on the key theme of the Government, which is extending opportunity. It is a sign of our commitment to ensuring that all young people reach the age of 19 ready for higher education or skilled employment.
It is well known that the child maintenance support system and educational maintenance allowances have helped young people to continue in full-time education. They have helped to prepare them to go on to higher education, if they so choose, and have widened such opportunities. Of course, the gap has been the very limited support for those who seek training and skills—skills that we all recognise as one of the crucial gaps in our economy that need to be strengthened.
It is a continuing theme of the Government that skill enhancement should be developed across the range of economic life. In particular, we need to give the same support to those who have dropped out of the formal, full-time education system as to those who remain in it. That is what the Bill does. As young people develop skills in relation to work, it will ensure that trainees without pay will get support, and that those who need to leave work for a short time to complete their training and submit to assessment will have financial support.
The Commissioners for Revenue and Customs Bill seeks to extend opportunity to all, while maintaining fiscal discipline. We also have to look at the issue of administrative savings and the ways of reducing burdens on business. The Bill delivers in both those areas. It integrates the Inland Revenue and Her Majesty's Customs and Excise to form a single new department—Her Majesty's Revenue and Customs—implementing the key recommendations from the O'Donnell review of revenue administration.
A single department will deliver improvements for customers through more joined-up services. It will improve fairness, making better use of information to help to target compliance activities. It will reduce the compliance burden on honest taxpayers, and make life more difficult for those who seek to avoid their obligations. It will deliver efficiency improvements, with integration contributing 3,000 posts towards total savings in the department of 16,000 posts by 2007–08. Integration requires a comprehensive programme of work and consultation. Maintaining business as usual in the mean time is paramount to avoid impacting on services to customers or on flows of revenue to the Exchequer. The Bill also creates a new prosecutions office to prosecute cases in England and Wales, implementing a key recommendation of the Butterfield review.
The Treasury background is supplemented by the crucial work of the Department of Trade and Industry. We are enjoying sustained economic growth, as I have emphasised. However, with the challenges emerging
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from China and India, whose growth rates are three times higher than any in Europe, and whose potential customer markets are five times bigger with wages close to one-tenth of ours, we cannot ignore the growing elements of international competition. We all recognise that there is a fiercely competitive global environment and the challenge for all nations is how to create knowledge, tap it and then transform it into wealth and jobs.
Last week the Secretary of State for Trade and Industry launched the DTI five-year programme, "Creating Wealth from Knowledge". It recognises that a nation's wealth and prospects are determined by how well it creates, manages and uses knowledge. Crucially, it places science innovation at the heart of government strategy to secure our future prosperity. By 2007, DTI spending on scientific research and infrastructure will have more than doubled since 1997 to £3.3 billion.
We have other successes in which we take pride. New businesses are starting up at the rate of 500 a day. Britain attracts more inward investment than any other European country and our scientists are the most successful in the world. Knowledge-based business services have accounted for over half our job growth in the past two decades. We lead Europe in our share of value-added coming from knowledge-based and high-tech businesses. Put simply, the world increasingly wants to buy what we are good at producing. But there is no room for complacency in this increasingly competitive environment.
So Britain is working and we should all be proud of it. But we cannot stand still. We need to do even better in future. To promote science, technology and innovation, the DTI will invest £370 million in emerging technologies, establish a multi-million-pound fund for high profile "Newton awards" to reward achievements in solving major public policy challenges through critical breakthroughs in science and technology, and the DTI will directly intervene to protect those being targeted by animal rights extremists.
As well as supporting British scientists and their work, we need to attract the very best scientific brains to Britain from around the world. So we will target the Highly Skilled Migrant Programme in order to attract more global entrepreneurial talent and academic expertise to the UK. We will establish a comprehensive policy towards the recognition of foreign credentials. We will also work with the Home Office to develop policies to attract and retain foreign students who successfully complete a PhD in a "shortage" subject at an accredited UK university. All this builds on a record of delivery for business.
The DTI will sponsor two Bills. The draft company law reform Bill continues in this vein of reducing burdens, particularly for smaller firms. Company law is central to the effective operation of our economy and it is vital that our system remains as flexible, modern and accessible as possible. We are therefore committed to taking forward the important reforms suggested by the major independent Company Law

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Review, which provided an authoritative assessment of the sorts of changes that need to be made to bring our law into line with the needs of modern business.
The draft Bill, which we will be publishing for public consultation, will follow that route map. It will make the law simpler and more accessible, produce better regulation and introduce a "think small first" approach to the law, give greater clarity to directors on their responsibilities and help to promote shareholder engagement and a longer-term investment culture.
We will also introduce the consumer credit Bill to enhance consumer rights and to provide for redress, improve the regulation of consumer credit businesses and make regulation more appropriate for different types of consumer credit transaction. That Bill will be the concluding package of legislation that draws together the Government's review of the Consumer Credit Act 1974. It is designed to equip the credit sector to continue to develop in the modern marketplace.
A successful economy and thriving business environment in part rely on an effective, reliable and safe transport system. Our economy is growing and is set to grow further. A strong economy means that people will choose to travel more and choose to travel greater distances. All of that will put greater pressure on the road and rail networks and on air travel. Decades of under-investment in transport have resulted in ageing and over-stressed networks, which are now coping with levels of travel that were never anticipated when they were designed.
We are now sorting that neglect to make journeys, whether by road or rail, safer and more reliable. We have already made considerable progress. Over 100 road schemes have been completed. The M25 is being widened. Bus use is increasing year on year. The number of light rail passengers has increased by 95 per cent since 1997. More people are using trains than at any time since the 1960s. Rail freight is up 24 per cent since 1997. Our first high speed rail line opened on time and budget. Highways Agency traffic officers are patrolling motorways to clear incidents as quickly and safely as possible to get traffic moving. The Nottingham Express Transit opened in March. We are guaranteeing half fares on local buses for older and disabled people.
The transport White Paper published in July this year set out how government will provide sustained investment and plan for and manage transport in this country in a way that is consistent with our environmental objectives. The White Paper also outlined expenditure plans to 2015. Spending by the Department for Transport will rise by an annual average of 4.5 per cent in real terms between 2005–06 and 2007–08. This higher level of spending will then grow in real terms by 2.25 per cent each year through to 2015. That sustained investment is allowing us to spend some £73 million each week on railways, matched by a similar amount from the private sector.
The first of the transport Bills that we are introducing is the railways Bill, which will implement the policy changes that need legislation. The Government will take
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charge of the strategic direction of the railways, have clear agreements with each part of the industry, set levels of public expenditure and the SRA will be abolished. The Office of the Rail Regulator will be responsible for safety, performance and cost. Devolved administrations in Scotland and Wales and the passenger transport executives in England will be given more responsibility.
We will also make other changes alongside the legislation. Network Rail will be given clear responsibility for operating the network and its performance. Track and train companies will work more closely together. In time, the number of franchises will be reduced. Freight operators will be given greater certainty about their rights on the national network, to help to promote the efficiency and growth of rail freight.
We will also introduce a hybrid Bill regarding Crossrail to give the powers needed for the construction maintenance and operation of that scheme.
The road safety Bill will help to build on existing measures to make road—
Lord Forsyth of Drumlean: My Lords, I am grateful to the Minister for giving way. I noted in the gracious Speech the commitment to introduce a Bill to allow for the construction of Crossrail. But will the Government be footing the bill for that project? What resources will the Government make available for that project to be completed?
Lord Davies of Oldham: My Lords, the House will recognise that this is a very substantial investment programme in which not only the Government intend to ensure that they provide their share; investment from private interests, which will benefit hugely from the development of Crossrail, is an important part of the development. There has been enormous pressure from whole areas of private business with regard to the construction of this feature. So the answer to the noble Lord is straightforward. We could not expect this project to be financed solely with government funding. As we anticipate that it will take a decade for the project to be fulfilled, the noble Lord will also recognise that at this stage it is a little early for us to go into minute detail about finance.
Lord Forsyth of Drumlean: My Lords, I apologise for pressing the Minister but this is a very important project for the whole of the capital and for the whole infrastructure of our country. Surely it is not unreasonable to ask the Minister what proportion of the finance or what level of commitment we can expect to come from the taxpayer.
Lord Davies of Oldham: My Lords, all in good time. The hybrid Bill will set up the framework for construction and will guarantee that the necessary resources are available to begin the project. But the noble Lord will recognise the intricacy of the negotiations and the importance of a match of private and public funds. I am not sure why he is being critical in this respect. Surely he must see that our advantage

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as regards the railway system as a whole is our ability to bring in both substantial government investment and private investment.
I want to refer briefly to the subject of road safety. The Government are introducing a Bill to improve driving standards, to increase penalties in crucial areas—not least in respect of driving while using a mobile phone, in which I declare a past interest—and to ensure that the police have access to insurance data in order that they can detect uninsured drivers at the touch of a button.
My noble friend Lord McIntosh will reply to the debate and to all those who introduce the fourth dimension of this debate, which relates to the Department for Culture, Media and Sport. The department is sponsoring two Bills. The National Lottery Bill is an important element of our reforms to the lottery to make it responsive to people's priorities and to widen the opportunities which it offers.
The Gambling Bill, too, is about reform to deliver better outcomes. We need to address the changes resulting from new technology; we need to ensure that where adults want to gamble, they can do so with the knowledge that they are being properly protected; and we need to ensure that that protection extends to children and the vulnerable. We shall have a constructive and wide-ranging debate on its contents. That debate has already begun in the other place. We look forward to the debate developing with the usual rigour in your Lordships' House.
Our proposals will enhance economic stability, promote prosperity and jobs, enhance mobility and create a fairer, more secure and more just society. They offer opportunity for all, and I commend them to the House.
11.22 a.m.
Baroness Noakes: My Lords, I thank the noble Lord, Lord Davies of Oldham, for setting out the Government's view of the topics before us today. As usual, he paints an elegant picture. But I am sure that the noble Lord will not be surprised to find that we on these Benches find it a little like modern art—we have great difficulty in recognising what he has painted.
We are honoured that five noble Lords have chosen to make their maiden speeches today. I look forward to them all but especially to those of my noble friend Lord Steinberg and of the right reverend Prelate the Bishop of Durham.
We have a curious mixture of topics today. For these Benches, I shall be covering economic affairs, including trade and industry matters, and my noble friend Lady Buscombe will be closing for these Benches and will cover cultural affairs. Sandwiched between those is the topic of transport. For the sake of completeness in covering today's topics, perhaps I may say that we believe that the Government's transport policies have been little short of inept. I notice that the noble Lord, Lord Davies of Oldham, did not even mention the Government's 10-year transport plan, whose targets we are on track comprehensively to fail.
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Three transport Bills were announced in the gracious Speech. First, there is a Bill to streamline the organisation of the national rail system. We support a reduction in railway bureaucracy but not if the result is to give civil servants and politicians more control over the railways. Secondly, there is a road safety Bill, and we shall want to see that this is not another opportunity for the Government to pursue their anti-motorist agenda. Lastly, there is a Bill to enable the development of Crossrail, which we support but not at any price. My noble friend Lord Forsyth has already pressed the Minister on the issue of financing. We do not believe that this is a minute detail; we think that the black hole of £4 billion or more at the heart of the financing of Crossrail is a crucual issue which must be addressed and addressed soon.
We look forward to scrutinising Bills announced in the gracious Speech which deal with consumer credit, child benefit, the creation of a single equality body and the merger of the Inland Revenue and Customs and Excise. We fully expect those Bills to be worthy in intent but also full of undesirable features. And, as we have come to expect a combination of inadequate scrutiny and poor drafting in another place, the work of this House as a revising Chamber will continue to be essential.
We regret the fact that the gracious Speech did not contain any proposals for the creation of a properly independent national statistics service. The Minister will not have missed the comments earlier this week by Rachel Lomax, one of the Deputy Governors of the Bank of England, when she said:
"The statistical fog surrounding the true state of the economy has proved a particularly potent breeding ground for policy errors in the past".
I hope that the Minister will say something this afternoon about the Government's plans to protect and enhance the integrity of our national statistics.
Lord Eatwell: My Lords, I apologise for interrupting the noble Baroness and I am grateful to her for giving way. Does she accept that when Rachel Lomax made those comments she was referring to the difficulties involved in collecting statistics accurately in any environment and that it had nothing whatever to do with the proposal of the noble Baroness concerning an independent statistical service?
Baroness Noakes: My Lords, I do not accept that it had nothing whatever to do with the creation of a national statistics service because I believe that there have been problems with the quality of data produced by the Office for National Statistics for some time. That is why the proposal, which has not come from these Benches alone, for the creation of an independent body is very pertinent to the concerns expressed by Mrs Lomax.
In 1997, the Labour Government planned to create a reputation for sound economic management. The leading architect of this grand plan was the Chancellor, who invented a golden rule to exemplify his sound management of the economy. Because the Chancellor inherited a strong economy, that was a relatively easy

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task at the outset. But we are now heading towards the time when we shall discover whether the Chancellor's golden rule has any clothes.
We debated the golden rule just a few weeks ago in connection with the Maastricht Motion on the last Budget. Both we and those on the Liberal Democrat Benches doubted whether the golden rule would hold. Since then, commentators have become increasingly united on the view that there is a black hole at the heart of the golden rule and that, if this Government are re-elected, there will be third-term tax rises. We are not talking about the views of journalists; we are talking about practically every national and international body. They all think that a third Labour term would involve tax rises.
The latest evidence shows that in October, for the first time in 10 years, the Government had to borrow. That, and other evidence, points to an overshoot of between £6 billion and £10 billion this year. We can compare that with the headroom in the golden rule, which had a margin of only £11 billion to cover both this year and the next.
The picture on growth is looking less rosy. The US trade deficit is overhanging the global economy and the Bank of England's latest view is that next year growth will dip below the long-term trend.
I have just one question to the Minister in relation to the golden rule as I do not expect him to depart from the Treasury orthodoxy that it will be met. My question concerns measurement. Will the Minister simply confirm that the Government have no intention of changing either the timeframe for measurement or the mechanics of measurement? I know that the Minister will want to agree with me that this is not the time for creative accountancy.
I do not want to rest my case on the Government's economic management on whether they have complied with their own rule on borrowing over the economic cycle. There is a much longer list of failings that will need to be remedied. Our rate of productivity growth is now the slowest for two and a half years, is the slowest among the English-speaking world and is even below the EU average. That has contributed to a slump in our position in the international league tables on competitiveness.
Our businesses are regulated to distraction. The truth is that the Government have issued 15 new regulations for every working day since 1997. All of that bears disproportionately on small and medium-sized businesses, particularly small businesses, which are estimated to spend as much as 4 per cent of their sales on compliance with government regulations.
The Government are all talk on deregulation. We had more of that last week when the DTI announced a new five-year plan to relieve business of regulatory burdens. I do not think that anyone will get excited about the remote prospect of £1 billion coming off a bill of £30 billion imposed since this Government came to power. It is simply too little and too late.
But the story on productivity is not just a private sector one. A recent report for the European Central Bank showed that if our public sector performed at the level of the best, we would need to spend only 84 per
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cent of what we actually spend. That came as no surprise to those of us who have seen the Government try to wriggle out of the analysis that, however accommodating the Office for National Statistics has been, in recent years the public sector has been going backwards in efficiency terms.
The Chancellor admitted this year that his spending performance has been accompanied by inefficiency to the tune of over £20 billion each year, as identified by Sir Peter Gershon. We see the scope for even more savings but the question is whether this Government can deliver. With Civil Service numbers up 14 per cent in five years and no track record of achieving savings, we agree with the president of the CBI that this looks unrealistic.
We have had concerns about an economy whose growth has been built on the back of debt-financed consumption. We have consistently drawn attention to the rising level of personal debt, which topped £1 trillion last July, and, in particular, to the associated stresses on personal finance which are now showing up in the rising level of bankruptcies and the meteoric rise in the number of referrals to citizens advice bureaux.
We support the principle of a Bill on consumer credit, but we do not believe that that will solve everything. In particular, it will not solve the plunging savings ratio, which is now one-third lower than in 1997. It is a pity that pension matters are being discussed during another of our days of debate on the gracious Speech because that is where the Government have done huge damage to the savings culture, including their £5 billion annual ACT raid on pension funds.
Let me give an example of the Government's complacency on savings. The noble Lord, Lord Davies of Oldham, said on 9 June 2004:
"The fact that the people today are prepared to reduce their savings ratios is a reflection of the fact that they have faith in the Government's handling of the economy".—[Official Report, 9/6/04; col. 339.]
We totally reject the assertion that a reduced savings rate is acceptable. That is a key part of the pensions problem going forward. It is about time that the Government stopped attacking savings—for example, trying to destroy PEPs and ISAs—and started concentrating on helping people to save for their financial future. The absence of any reference to savings in the gracious Speech is a further testament to the Government's poverty of action.
I look forward to the rest of today's debate. I am sure that the Benches opposite will do their best to put a shine on the Government's record on economic affairs. But I doubt that they can explain away the rising tax burden under this Government, with 66 tax rises achieved largely by stealth, or that they can rationalise why the Chancellor has been spending so much but has so little to show for it.
We believe that this country deserves a government who can deliver not only cleaner hospitals, school discipline, controlled immigration and more police, but also lower taxes. This Government have certainly not delivered those things and their programme for this Session gives us no confidence that they ever will.
11.35 a.m.
Lord Newby: My Lords, today we are in for a typically wide-ranging Queen's Speech debate, which I am sure will be greatly enhanced by the five maiden speeches to which we look forward. I want to concentrate on economic policy and my noble friends will deal with transport and issues under the remit of the Department for Culture, Media and Sport. On the legislation that falls under the Treasury and the DTI, we on these Benches are likely to be broadly sympathetic to those measures, although, no doubt, there will be specific issues on which we shall wish to disagree with the Government.
My question on the legislation is, "How much will we see before a possible election in May?". Will we, for example, see the quick introduction of a Bill in respect of the Inland Revenue and Her Majesty's Customs and Excise, and will we see the quick introduction of a Bill to deal with consumer credit? I could not forbear chuckling slightly at the reference to the draft Bill on company law. Such a Bill has been promised year in and year out, and we are now to have a draft Bill before an election—certainly no legislation before an election. There is an issue about delivery on some big reform issues, particularly when the legislation stems from the Department of Trade and Industry, whose track record in that respect is poor.
Will the Minister also comment on a report in today's Financial Times about possible amendments to the Financial Services and Markets Act 2000 to change the regulatory framework for investment companies in the light of the splits scandal? Could he tell us a little more about the Government's plans in that area and the possible timetable for the introduction of legislation?
I would like to talk about three matters: first, the overall macro-economic situation; secondly, the uneven pattern of regional growth in Britain; and thirdly, the view of the Government and, in particular, the Chancellor about conducting economic relations with the EU.
First, on macro-economic policy and the overall macro-economic position, there is universal agreement that we are entering choppier waters. In recent years, economic growth has been fuelled principally by growth in consumer spending which, in turn, has been based on rapidly rising house prices, rocketing equity withdrawal, and a more general rapid expansion of credit. This period is clearly coming to an end. Retail sales figures last month were down 0.4 per cent, and house prices are now falling—the question is, how far and how fast?
Those trends will, of course, have an impact on the rate of growth, but will have an even greater impact on government finances. In this financial year, it is already looking as though the Government will miss their targets for revenue generation. As we have debated before, and as the noble Baroness, Lady Noakes, has pointed out, that has serious implications for the golden rule.
As I said when we last discussed the issue, there is widespread scepticism about the methodology under which the rule is calculated and increasing scepticism that it can be kept in this cycle—far less the next. There is also the prospect of entering the next cycle with large
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deficits and, therefore, the prospect of significant belt tightening at some point in the next cycle, if the rule is not to be breached.
I have argued before that we should have an independent assessment of the methodology which underpins the rule and of the assumptions made by the Treasury to underpin the Budget judgment. I was pleased to see, therefore, that since we last discussed the issue your Lordships' Select Committee on Economic Affairs made a broadly similar recommendation in its report published on 11 November. It stated that,
"we respond more positively to the idea of having an independent assessment by experts of whether fiscal policy is being conducted within the fiscal framework. We think that either there should be a body like the Council of Economic Advisors in the US, or parliamentary scrutiny of these macroeconomic issues should be increased. It would be premature to make a firm recommendation to set up such a body before more work has been undertaken to examine its feasibility and advantages, but we do recommend that the Treasury undertakes such a review".
Will the Minister give an undertaking today that the Treasury will conduct such a review?
The purpose of such a body would be to reinforce a stable macro-economic climate, which everyone agrees is essential for a successful economy in the medium to long term. It is also important that growth across the UK is evenly spread. Indeed, the Government have committed themselves to reducing the gap in growth rates between the regions.
However, in reality, the Government's policy decisions in this area are at best contradictory and in some respects positively counter-productive. As always, the Government cannot be faulted for rhetoric. In one of the obscure documents on devolving decision making published at the time of the Budget, the Chancellor talks lyrically about the end of the era in which the man in Whitehall knows best and about moving,
"towards a new Britain strengthened by local centres awash"—
I repeat, "awash"—
"with initiative, energy and dynamism".
That was to be achieved by,
"allowing each nation, region and locality the freedom, flexibility and funding to exploit their indigenous sources of growth".
Since that wonderful rhetoric, we have seen two examples of how the Government have completely failed to match the words by the reality. Both failures arguably fall more at the door of the Deputy Prime Minister than that of the Chancellor; but they are failures none the less. The first relates to regional assemblies. The failure to win the north-east regional assembly referendum reflects a failure by the Government to be prepared to devolve real powers. They came forward with such timid proposals that their proponents simply did not have enough in the shop window to persuade voters that they were worth the bother. The collapse of the assemblies will, in reality, give greater power to unelected Government Offices in the regions who look first to London rather than to the region for policy guidance.
The result is that, by the time of the next election, the only achievement of the Government in England in enhancing regional decision making will be limited to the establishment of the regional development agencies,

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which, although they do valuable work, have no say in the bulk of government expenditure in the region and—despite the regional chambers—lack the democratic cover to give them real clout. Their performance is, I think, generally agreed to be patchy.
The second failure relates to the Government's plans for additional housing, with their concentration of huge housing development in the south-east. Those plans have been rightly attacked on sustainability grounds, with substantial fears expressed about the ability of the infrastructure of the region to cope with the increased development. These fears include the fact that there is already unacceptable traffic congestion, a shortage of affordable housing, and a strain on natural resources and the quality of the environment, all of which will get worse.
The proposals have also been attacked on economic development grounds. The IPPR has argued convincingly that the argument that more growth is needed to match our continental counterparts simply is not borne out by the evidence. The south-east is already doing as well or better than other European regions with major centres of commerce. It also argues that the south does not have an overheated labour market, nor does its future lie to a greater extent than elsewhere in the knowledge economy.
The real problems with the south-east's economy are the disparities of growth and employment in the region. London, for example, persistently has one of the highest unemployment rates in England. Those disparities will simply not be significantly addressed by the Deputy Prime Minister's plans. The Chancellor at least seems to accept that there is a problem with the plans. In a speech in Newcastle upon Tyne last month, he argued in favour of balanced economic growth and against a situation in which we have,
"unemployment and emigration and under-use of resources in one part of the country and congestion and overcrowding and huge inflationary pressures in the other".
I agree. The Government, however, need to decide what their priorities are. At present, their regional policy—to the extent that it exists—will widen the prosperity gap between poorer and wealthier regions, not close it.
The final area, which I shall address briefly, is Europe. We on these Benches, like everyone I am sure in the House, support the Lisbon agenda but disagree almost entirely with the Chancellor's chosen method of promoting it across the EU; namely, by hectoring, patronising exhortations to be more like the UK, instead of engaging in a constructive way at the formative stages of policy development.
As the CBI said in its recent report on promoting the financial services sector:
"The approach taken by the government"—
namely, the Treasury—
"in championing the financial sector has been something of a curate's egg in recent years. It has, on many occasions, secured 'good wins' on behalf of the financial sector around the negotiating table in Brussels. But these are often reactionary, and focused on retrieving situations where the UK is on the back foot. The financial sector would benefit from the government taking a more proactive approach to setting the agenda in the EU".
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The position of the UK, as a non-euro member, on exerting influence on economic and financial issues is hardly strong in any event. As long as the Chancellor seeks to achieve success by brute force rather than by early, positive engagement with the issues, he will continue to sell the UK short in Europe.
A classic example of this misguided approach was to be seen last week. The Chancellor berated the rest of the EU for discriminating against the UK on public procurement contracts. He vowed to challenge the other finance ministers to do better. He went to an ECOFIN meeting, but left early, presumably before he had had a chance to tell them to do better, to come back to London to see the US Treasury Secretary. Of course it was something of a novelty that he turned up to an ECOFIN meeting at all, but it would be difficult to devise a form of behaviour less likely to influence EU opinion in the direction he claims he wants.
The Chancellor's increasingly Euro-sceptic noises are also helping to turn business opinion against the EU, which will make it more difficult to win a referendum on the EU constitution, far less a referendum on the euro. There is a view at the higher reaches of the Treasury even yet that, once a referendum comes and the Chancellor endorses a "yes" vote, a grateful nation will automatically follow suit. If only life were so simple. It is not.
The Chancellor has gloried—I would not go so far as to say "gloated"—in his stewardship of the economy to date. Yet, even leaving aside likely macro-economic problems ahead, his approach to regional policy on the one hand and European policy on the other is at best patchy. A sound economy does not just depend on action inside the Treasury itself, it requires a framework which leads decision makers at all levels to take decisions to reinforce the macro-economic stance. That has simply not happened. The Queen's Speech is silent on those issues. The Chancellor has much to be silent about.
11.49 a.m.
The Lord Bishop of Durham: My Lords. I am delighted to have this opportunity to express my thanks to the officers and staff of your Lordships' House for their care and kindness in my introduction. Having looked across the street at the Western Front of this House for the four years when I was living at the end of Little Cloister, where I could look out from my window at your Lordships coming to and fro, I have been delighted and grateful that, paradoxically, by moving to the other end of the country, I have now been invited to come inside here at last and that I have found such a warm welcome and ready help on all sides. Thank you.
I am particularly honoured to be able, along with the right reverend Prelate the Bishop of Newcastle, to represent the north-east of England on this Bench. Being myself a native of Northumberland, part of the ancient palatinate of Durham, I share with the region as a whole a consciousness that goes back to the days of Cuthbert and Bede and which has been strikingly exhibited in the work of my predecessors over the past

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century and more; namely, that the Church is there with and for the whole people, not simply ministering to its own fully paid-up, regular attenders. It is in that connection of partnership that I want to take up two points in the gracious Speech concerning the work of volunteers and the funding of heritage and renewal.
I suspect that your Lordships all know well the breathtaking sight of Durham itself, whether seen from a passing train or enjoyed closer at hand. As your Lordships will know, the peninsula, comprising cathedral, castle and university, is itself a World Heritage site, displaying not only the massive magnificence of the Norman cathedral but also the minute gems of artifacts, such as the cross of St Cuthbert, a replica of which I am proud to wear, which take us straight back to the Anglo-Saxons. We are hoping that the wonderful Bede's World project in Jarrow may soon be granted similar recognition. Those are treasures not for a minority only, but for the whole community.
Similar things could be said, mutatic mutandis, about many of our other churches. Only recently, I installed a new vicar in Norton, on the outskirts of Stockton-on-Tees, where the ancient Saxon church stands on a site which had been used for religious worship for many previous centuries before its christianisation. The Regis Professor in Oxford, Oliver O'Donovan, recently argued forcefully that Western culture has almost entirely lost its sense of place. That loss is indeed grievous and culturally dangerous, but it is heartening to discover locally that a great many people still know in their bones that their ancient church buildings speak powerfully of a love and hope that has sustained them through many generations, and that they can look to those buildings and to those who worship and work there for help and support in good times and bad.
When I was Dean of Lichfield and now again as I work in Durham, I have been constantly delighted by the way in which the whole wider community, the county, district and city, look on their respective cathedrals both as symbols of their identity and as the one place for many miles around which can host gatherings of 1,000 and more, whether for an industrial or harvest festival, a sequence of concerts or mystery plays, a display of prison art and craft or yet another school celebration.
Indeed, cathedrals and churches are now routinely stitched extremely closely into the life of their local communities, not least with education and the young. I cherish a remark from a young boy stepping for the first time through the great west doors of Lichfield Cathedral. As his jaw dropped at that magnificent yet welcoming sight, he turned to his teacher and asked, "What's it for?" Great question. By the end of the day, he had found out the answer. But it is not just children who know it. A 2003 survey for the Church of England and English Heritage showed, remarkably in view of the impression we sometimes get from the media, that 86 per cent of those surveyed had been into a church or place of worship in the previous year, with 17 per cent going there for a concert or cultural event.
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It is therefore all the more important that we maintain and sustain that remarkable heritage for the benefit of the whole community. I was delighted to hear in the gracious Speech that the Government regard the voluntary sector as a great strength. In that connection, it is always worth drawing attention to the millions of volunteers who, through their work in and for the churches, contribute vastly to the cultural, educational and social as well as spiritual wellbeing of our country. They are willing, committed and energetic and they have achieved some remarkable things, but they face a continual uphill struggle.
Because of that, I would like also to highlight the Government's intention, as expressed in the gracious Speech, to consolidate the distribution of lottery money to good causes and express the hope that, within this natural and proper exercise, care will be taken to think through the support needed for those buildings which embody so much of our national heritage and ongoing multi-faceted community life.
The Church Heritage Forum's recent report, Building Faith in our Future, which underlines and gives examples of all that I have said, also makes it clear that the combined effort to maintain our heritage and make it work for the future good of the whole country will need renewed efforts in the days to come and greater partnership with a range of bodies. English Heritage and the Heritage Lottery Fund have between them made major grants, for which we are grateful. In fact, since the Heritage Lottery Fund opened in 1995, it has given a total of £237 million to Christian places of worship in the UK, £167 million of which has been spent in England, with £23 million going to cathedrals.
That is impressive, but it is in fact only a small amount compared with the actual needs. English Heritage and the Heritage Lottery Fund have set aside £25 million in the current year for the repair grant scheme that they run jointly, but that could be taken up immediately in projects in the dioceses of Chelmsford and Norwich alone, to say nothing of my own diocese. In 2003–04, English Heritage and the HLF received 489 applications from churches, but were able to offer grants to only 293—some 60 per cent.
As the Government seek to consolidate distribution of funds, my episcopal colleagues and I hope that the good work already done will be enhanced and strengthened, not undermined. For instance, the HLF often helps with a long-term project for which significant sums need to be set aside for some while. That must not be pounced on by those who want only short-term solutions and statistics.
I have one further point. Ten years ago, the noble Baroness, Lady Howe, chaired an excellent report on cathedrals entitled Heritage and Renewal. As with heritage, so with renewal: there are many projects of community renewal that have been launched jointly by the Church and local agencies and volunteers that have brought hope and light to many dark parts of our country. Such projects have often received short-term, start-up funding and have used it to marvellous effect.
I think, for instance, of the St Chad's Family Centre in Bensham, in Gateshead, which, in 2002, won the British Urban Regeneration Award and has also gained the

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Investors in Children Award and the higher Ofsted standard. But such projects are not and cannot he businesses. Start-up funding cannot in such cases be expected to produce long-term, self-funding enterprise. Tragedy then threatens when no one addresses the question of how to continue the funding of such established and proven projects. Whether in heritage or renewal, we must work together for the good of all.
From time to time, there is a lot of fuss in the press about establishment and disestablishment. Speaking from my experience in Lichfield, Westminster and Durham, I must say that what establishment actually means on the ground is not some high-flown theory, still less a secret plot for the Church to take over the state or vice versa. It is that rich, cheerful and many-sided partnership in heritage and renewal that has sustained this country for many centuries and, God willing, will do so for many more. I hope that the Government will be as happy to support and develop that partnership as we in the Church will be to work with them as they do so. I thank your Lordships once again for your gracious welcome.
11.58 a.m.
Lord Haskel: My Lords, it is my privilege to welcome the right reverend Prelate on behalf of the whole House. This is not the first time that I have heard him speak; I have heard him on the radio. It was not a religious programme, it was on "The Brains Trust", and his warm personality and well informed views came across then, as they have this morning. We should not be surprised. The right reverend Prelate has been exposed to a large variety of faiths. After all, he has been a visiting professor at the Harvard Divinity School, at the Hebrew University in Jerusalem and at the Gregorian University in Rome. If that is not versatility, what is? We thank him for his wise words about volunteering and the value of heritage and look forward to hearing from him many times in future.
The noble Baroness, Lady Noakes, in her introductory speech, spoke about 15 regulations a day. She knows perfectly well—it has been pointed out to her several times in this House—that most of those regulations are about such matters as holes in the road and bus timetables. They are minor administrative matters, which for legal reasons must be put down as regulations. Her figure is misleading; I am pleased to be able to point that out yet one more time.
However, the noble Baroness, Lady Noakes, asked for a government that deliver, and I agree. How will we deliver prosperity and growth when globalisation is moving jobs to India and China, as my noble friend told us in his opening speech; when the new European Union countries have even lower costs than ours and are educating yet more graduates; when we are becoming increasingly dependent on others for energy; and when our commitment to tackling climate change puts us at a disadvantage to those with less commitment than us? We can neither prevent nor shut out globalisation, rising standards, climate change and gas and oil depletion. We must respond by lifting our economy through enterprise
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and technology, by lifting our productivity through skills and innovation, and by lifting the added value of our products and services.
How do we achieve that? What are the practical issues about which the noble Baroness spoke? There are three main elements: trade in Europe, innovation through technology and science, and skills and enterprise. Getting these three elements right is the key to prosperity and the international competitiveness of our economy. Europe is our link with prosperity, simply because it is a market of 455 million customers. If we can liberalise and win in that market, the potential is enormous; then the rest of the world is our oyster. Thanks to the Lisbon agreement, there is a general wish to achieve that, but progress is patchy.
The House of Lords European Union Select Committee recently reported that if the gas market in the European Union were liberalised, the supply would be more certain and the price less volatile. That applies to not only energy but many other services and products. Liberalisation puts the customer first and creates proper competition. Competition forces existing firms to get their products and services right for people, and if they do not, new firms come into the market. Economists estimate that that process accounts for nearly half of the improvements in productivity. In addition, more liberalisation means less regulation, which itself stimulates greater productivity.
Thankfully, we are not alone in recognising the need for that. In a review of the Lisbon process last month, conducted by Mr Wim Kok, he suggested that there should be a league table of member states to name and shame countries delaying liberalisation. Chancellor Schroeder argued that the emphasis now should be on accelerating domestic reform in each member state. So we are not alone in recognising the link between liberalisation and prosperity. I hope that Tory dogma about the European Union will not stand in the way of those developments, which are being championed by the DTI, promoting trade.
On technology and scientific research, our already strong bases have been given a tremendous boost by the Chancellor's 10-year framework. There is a commitment to develop publicly funded science, at least in line with the trend growth rate of the economy—about 2.75 per cent in real terms. There is a goal to spend 2.5 per cent of our GDP on research. That framework has been welcomed by the entire science and research community: business, universities, charities and independent laboratories. The key concern for those organisations is whether the new programme would survive a change in government. Long-term stability is essential. Science and technology are a long-term business, so I hope that in their winding-up speech in this debate, noble Lords opposite will take this opportunity of confirming their commitment to the framework. Business would welcome a progressive consensus that will encourage the private sector to invest and participate in the framework.
The Minister spoke about science and the DTI. Some, in welcoming the framework, have observed that as a country we have not always been good at getting science out of the laboratory and into products

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and services. Consequently, one of the elements of the scheme is to strengthen and speed up the knowledge and information networks which carry new science to business and bring back to our laboratories the scientific needs of business. Those knowledge and information networks receive initial funding and encouragement from the DTI. Indeed, I am proud to declare an interest as the chairman of TechniTex, one such network. In this way we are committed to speeding up this whole process of innovation by transforming science and ideas into new services and products and thereby creating more jobs and prosperity for Britain.
This brings me to the third area where we must ensure our future prosperity: skills and enterprise. Instead of taking enterprise for granted, we now reward it and put few hurdles in its way. The OECD regularly puts us at the top of the league table for ease of starting businesses in Europe. We also take a much broader view of enterprise; it operates in the public and private sectors. Social enterprises now run some of our local public services. Indeed, the DTI has prepared legislation for a community-interest company, which is specifically designed for social enterprises that want to use their profits and assets for the public good. Not only are there special funds to help start social enterprises but also special skills and training are available.
The Minister spoke about skills. Skills training throughout business and industry, especially in the service sector, has come to mean much more than just plain ability; it has come to mean employability. That means that people can work more effectively in a knowledge economy and be enterprising in their own jobs and work. Employability enables people to get the best paid job for which they are capable. That is the best insurance against poverty. The good news is that more people are at work than in the past 30 years; the bad news is that there are still many unemployed because they lack the skills, and there are fewer and fewer jobs for the unskilled. Ensuring decent standards in the workplace and flexibility in the labour market means that we will use our human capital to the best effect. I welcome the efforts of the DTI to bring these benefits to all in our community: minorities, women and even those on disability allowance who still want to work.
Noble Lords will have noticed that all these tasks—trade in Europe, technology and science, innovation, skills and enterprise—are centred on the DTI. Employers understand that. Digby Jones, of the CBI, asked that the DTI should have the resources that it needs to do the job. He said:
"We must not lose services that are critical to business competitiveness".
I agree. He also realises that the DTI speaks up for British business against excessive or unnecessary regulation by the European Commission.
But what do noble Lords opposite want to do? The Liberal Democrats want to abolish the DTI and devolve its work to other departments. We all know what the result of that would be. Within months,
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business and industry would be clamouring for a one-stop shop and for it to be brought back. Business does not split up different elements in that way; it keeps them together so that they can work as a team, and so should government. So I hope that when winding up the Liberal Democrat spokesman will say that they are reconsidering that policy.
The Tories want to impose cuts on the DTI. I hope that their spokesman when winding up will say what those cuts will be and give an undertaking that the work I have outlined, which is so crucial to our prosperity, will not be cut.
Those policies for the DTI to shut up shop are small minded and inward looking. A more broad-minded outward-looking change would be to devolve some of these responsibilities for those activities to the regions. Indeed, that is beginning to happen. In that way, the RDAs can carry out their essential work for our future prosperity in ways which suit their local conditions. This devolution will widen success beyond our more prosperous regions.
That is how I think that we should face up to global competition and create the growth and prosperity mentioned in the Queen's Speech. I hope that my noble friend the Minister will agree.
12.11 p.m.
Lord Steinberg: My Lords, I know that it is tradition to thank all Members and staff for their help in my making the transition from commoner to the peerage—I do so with relish. It is remarkable to me how quickly I am recognised by the ever-vigilant police and ushers on arrival. It is an absolute delight to have received so many welcomes and good wishes from fellow Peers. Not being able to speak until now has been akin to a dog straining at the leash.
Perhaps I may tell noble Lords something about myself. I was born in Belfast into a Jewish middle-class family. When I grew up and started to understand things, I became interested in politics. Who in Northern Ireland is not? I joined the Ulster Unionist Party; when I emigrated to Manchester, I became a member of the Conservative Party, something that I cherish and promote. Along the way, I became a bookmaker and an ardent Zionist. Therefore, noble Lords can well imagine the heavy burden that I have had to bear.
I am at present non-executive chairman of Stanley Leisure plc, a company that I founded nearly 50 years ago. When I received my peerage, the most common question that I was asked was how did I feel. I answered in the words of Bob Hope, the great American comedian, when he was presented with a gold medal by John F Kennedy for his work with American troops. He said:
"I feel ever so humble, but with my strength of character I'm sure I shall overcome it".
Some noble Lords may have anticipated that I would use my maiden speech to talk on the Gambling Bill. That is not so, except for one pointed comment. I am not a Christian, but when we all talk about declining family values, how on Earth there is a clause in the Bill proposing horse racing on Christmas Day

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and Good Friday is completely beyond me. I can assure your Lordships that when the Bill comes to the House of Lords, I shall talk against that clause, which is all that I shall say on the Gambling Bill.
Education in Northern Ireland has always seemed to me to be of a very high standard. Indeed, it must he the case because there are now three "old boys" from the Royal Belfast Academical Institution, commonly known as "Inst", who are Members of this House. There are the noble Lords, Lord Carswell and Lord Laird, and myself. I have not come across the noble Lord, Lord Carswell, yet in the House, but when I was in the second form in school, he was my head boy. So I hope when I bump into him, he will not give me lines.
Gambling affairs obviously interest me, particularly as my company, Stanley Leisure, employs more than 7,000 people and operates more than 600 sites. I must confess a degree of worry about the economy. Customer care and service have deteriorated recently, which does not help our economy. We keep talking about red tape, but as long ago as the 1800s Disraeli said:
"There is no economy where there is no efficiency".
With the amount of red tape that we have, I do not think that we can be as efficient as possible.
I am worried about the manufacturing business. Whether I am right or not, newspaper reports suggest that the Royal Navy will build two massive new aircraft carriers. It would be wonderful if the order for at least one of them came to shipyards in Britain, which have been suffering dramatically in recent years. When I was a boy in Belfast, Harland and Wolff employed 30,000 people. It now struggles to employ 1,000 people. In Northern Ireland gangsterism has replaced terrorism.
We must take risks in the economy. As General George Patton said:
"We must take calculated risks and that is quite different from being rash".
I am sure that it is an economic matter when we look at the problems surrounding pensions. It is very sad that people who have worked all their lives find that their pension is under threat. It is something that we must work to put right as soon as possible.
I have been a long-term transport user for many years. Coming to and from this House, I generally travel by train. Sometimes, I do not travel very quickly because there are leaves on the line. On other occasions, there are different excuses. In this country, our railway service is poor and the prices are high. Although I know that strenuous efforts have been made to try to improve it, it is still bad. I am not clever enough to be able to give reasons for that, but surely we all deserve a better service at a reasonable price. Travelling by aeroplane also presents a problem—probably because the amount of traffic in our skies is seriously high. We must do all that we can to ensure that with safety comes punctuality.
Turning to cultural affairs, I hope that noble Lords will forgive me if I say something about political correctness, which is a cultural matter. That is a problem which causes a great deal of pain. Perhaps I
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may, by way of a light interlude, describe something for your Lordships. Next year, we will be celebrating, I hope, the 200th anniversary of the Battle of Trafalgar.
Let us imagine the following scenario. "Order the signal, Hardy", says Nelson. "Aye, aye sir". "Hold on, that's not what I dictated to the signal officer. What's the meaning of this?". "Sorry sir?". "England expects every person to do his duty, regardless of race, gender, sexual orientation, religious persuasion or disability. What gobbledegook is this?". "Admiralty policy, I'm afraid, sir. We're an equal opportunities employer now. We had the devil's own job getting 'England' past the censors, lest we be considered racist". "Gadzooks, Hardy, hand me my pipe and tobacco". "Sorry sir, all naval vessels have been designated smoke-free working environments". "In that case, break open the rum ration. Let us splice the mainbrace to steel the men before battle". "The rum ration has been abolished Admiral. It's part of the Government's policy on binge drinking". "Good Heavens, Hardy, I suppose we'd better get on with it. Full speed ahead". "I think you'll find that there's a four knot speed limit in this stretch of water". "Damn it. We are on the eve of the greatest sea battle in history. We must advance with all dispatch. Report from the crow's nest". "That won't be possible, sir". "What?". "Health and safety have closed the crow's nest. There is no harness. And they said that the rope ladder doesn't meet regulations. They won't let anybody up there until a proper scaffolding can be erected".
I am not in favour of political correctness. I loved playing conkers when I was at school. So I occasionally got my knuckles rapped, and also by the teacher. It did not do me any harm. My brother is currently in hospital. I was amazed to learn that he cannot have a soft-boiled egg for breakfast. Apparently, only hard-boiled eggs are served because of salmonella.
The yobbish culture is destroying our towns, villages and cities. We must start to protect the victim and not the criminal. Elderly people are frightened to go for a walk—one of their greatest pleasures. I am also against the compensation culture, where lawyers chase ambulances and where minor accidents often end up in court with so-called "victims" claiming thousands of pounds.
Perhaps I may tell noble Lords what I favour and support. First and foremost, I support freedom. I believe that every citizen of this great country has a contract with the government saying, "If you'll allow me my freedom, I'll behave like a model citizen". I believe that our culture should allow us to make choices, not to be told what to do. I believe in respect for each other and not doing things which will aggravate our neighbours. I believe in the law, and I believe that those who break the law should be punished. I believe in the great traditions of our land, and I believe in our great history being taught in schools, and being proud of our heritage.
When my grandparents came to this country, they did not receive state aid arid yet they became loyal subjects. I am a proud Jew, but I am also equally a proud British subject, and that is something we should instil in all our citizens.

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So, in conclusion, I hope that noble Lords will understand me somewhat better, and in future will listen to my arguments and suggestions. Noble Lords do not always have to agree with me—that would be too much to expect.
Finally, I hope that, in my time in the House, we see true and genuine peace in Northern Ireland and in Israel. I shall do my best to see that both of these dreams happen. People on every side of these conflicts suffer. Let us hope for peace, not only in these two troubled spots, but peace throughout the world, and may it be soon.
12.21 p.m.
Baroness Walmsley: My Lords, it is my privilege to pay tribute to the interesting and entertaining speech of the noble Lord, Lord Steinberg, who I see is a fellow resident of the beautiful county of Cheshire. The noble Lord has been in the gambling business all his working life and knows a good bet when he sees one. Your Lordships might therefore find encouraging the fact that he has bet on joining this House at a time when we are threatened with redundancy.
The noble Lord is very well known for the energy and generosity of his charity work, and in business he has shown enormous dynamism and shrewd judgment which I am sure will be brought to bear on our deliberations in this Chamber. However, noble Lords may not know that he is also a cricket lover, and he has chosen to play on a new wicket here. I therefore wish him many sunny days, straight bowling and plenty of boundaries during his new career in your Lordships' House.
I too have a new job. My noble friend Lord McNally has reshuffled his Front Bench, so I am to share the education brief with my noble friend Lady Sharp as spokesman on schools and early years, and shadow Minister for Children. It is in that context, since the children brief is so broad and cross-cutting, that I intend today to make a brief canter around the course of the issues relating to children in the gracious Speech.
Because transport is one of the suggested topics for today, I start with the School Transport Bill. While we support the principle that local authorities are usually in the best position to know what works best in their area, this Bill is worrying because it will take away the entitlement to free school transport for hundreds of thousands of children, and presents the danger of doing the very opposite of what it seeks to do; that is, to reduce congestion and pollution of the environment that is caused in many areas by what is known as the school run.
While we are very supportive of the provision of good quality bus-based school transport and praise the "safe routes to school" initiatives for walking and cycling, we oppose the introduction of charges for school transport. It is a stealth tax on working families. We are concerned that parents of large families, or those who live a long way from school, will choose to use their cars for the school run instead of paying for bus services.
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The noble Lord, Lord Filkin, who will be dealing with the Bill in this House, generously gave us a meeting last week. I asked him how the 20 pilot schemes were to be evaluated and whether saving money would be one of the criteria. The Minister responded with a firm denial. I hope that I will be able to give him an opportunity to repeat that from the Dispatch Box in the very near future. There are only three valid criteria for these pilot schemes: equality of access to the school of the parents' choice, wherever the child lives; ensuring that poorer families do not lose out on access to the best schools; and genuine protection of the environment.
We also expect an education Bill. This is expected to include provisions for state-funded independent schools in the interests of more choice. It will provide no choice for children in rural areas where there is only one school within reach. As the Government have failed to meet all their targets at GCSE and key stage 3 this year, their first priority should be to address the serious issues raised by Mike Tomlinson in his report into the fundamental changes required to secondary education. The Government's choice agenda is really selection and fees by the back door, and increased testing and targets do nothing but add to teachers' workload and increase stress on children. We want to see reduced class sizes, improved teacher training and career development, and reform of the curriculum, particularly that between ages 14 and 19 to allow all pupils to gain the knowledge and skills they need to succeed in life.
The Bill is also expected to reduce the role of local education authorities to strategic partners. We are opposed to that because we see LEAs as crucial in managing things such as the new wrap-around care initiatives in schools, so that services are organised and accountable.
On streamlining schools inspections, finally the Government are admitting that endless inspections do not improve standards, but we do not need superficial cost-cutting measures. We need a fundamental change in the way Ofsted operates. Schools must be trusted with the responsibility for maintaining standards. The point of inspections should be to audit school improvement and offer constructive advice, not to increase stress on teachers and students and take valuable time away from teaching. I am very concerned about any inspections that do not include the observation of a lesson.
During the passage of the Children Act 2004, the Government insisted that inspection would be a lever to ensure that schools participated in the wider local children's agenda. Therefore it is essential that any streamlined inspection scheme should inspect against the five outcomes identified in Every Child Matters and that schools are not only inspected against academic performance, but also on how they contribute to child safeguarding, welfare and development as a whole.
Throughout the passage of the Children Act 2004, my noble friend Lady Sharp and others raised concerns about the lack of specific inclusion of schools within the frameworks and duties established to improve children's well-being. This new Bill focuses on

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further autonomy for schools. I hope that it will translate clearly from LEAs to schools the duties put on them by the Children Act 2004.
However, there are measures in the expected Bill which we welcome, including additional financial support for 16 to 19 year-olds engaged in training and education, and the expansion of the Teacher Training Agency.
We understand that draft legislation is to be published to safeguard the welfare of children in circumstances of parental separation and inter-country adoption. We give this a cautious welcome. We on these Benches believe in the principle of equality of parenting responsibilities where it is safe to do so, but consider that the needs of the child should come first in all circumstances. This may mean that it is not always in the child's interest to split access equally between both parents if the stability and security of the child's home and school life might be compromised. Each case should be assessed individually, preferably with a team of professionals who are familiar with the details of the family's case and background. We also very much welcome the Government's proposals to introduce more mediation between parents to overcome disputes and to avoid conflict, so minimising any negative impact on children.
We also welcome the expected Disability Discrimination Bill, with its proposals to extend the Disability Discrimination Act 1995 to public bodies, and to introduce a new duty on those bodies to promote equality of opportunity for disabled people. One of the most critical issues is which public bodies are to be included. The recent consultation document, Delivering Equality for Disabled People, suggests that bodies will be specified in regulations. We welcome the proposal to extend the Disability Discrimination Act to criminal justice system functions but are very concerned at the suggestion that schools may be treated differently. Schools are singularly the most important public sector agency that impacts upon children's lives and have a critical role in promoting disability equality.
The new duty to promote equality should incorporate the five outcomes for improving the well being of children set out in the Children Act 2004 and must set out clearly the inclusion of all public bodies in its provisions, including schools.
We also expect an equality Bill. These Benches are very supportive of the proposal to create a single body to tackle discrimination and disadvantage for all and, in particular, the decision to include human rights in the remit of the new body. In fact this has been Liberal Democrat policy for many years. My noble friend Lady Thomas of Walliswood will say more about this later in the debate.
This is an opportunity to place age equality on an equal footing with other equality issues and to deliver a fairer deal to children and young people. Given the weak powers of the new Children's Commissioner on the matter of children's rights, it is crucial that standing up for the rights of children is central to the work of the new commission. It is important for the new commission to monitor and advise on children's rights under the Human Rights Act 1998 and the UN Convention on the Rights of the Child.
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There are two measures which I should like to have seen included in the gracious Speech. One is the scrapping of student top-up fees and tuition fees. The Government broke their promise on top-up fees. The Liberal Democrats would have removed unfair tuition fees for university education in England, building on our achievements in Scotland which have already had a significant effect. This should ensure that no one is deterred from the chance of a university education because of fear of debt.
I should also like to have seen included a measure to ensure that, at least while they are at school, children have a healthy, balanced diet. It is unfortunate that most of the products that come out of vending machines in schools are high in sugar, high in fat and low in nutrition. I should very much like to see action to change that.
The right reverend Prelate the Bishop of Durham made an excellent maiden speech. Like him, I am encouraged by the Government's support for the voluntary sector. I should like to take this opportunity to pay tribute to the many children's organisations within the voluntary sector which do so much good work.
We have before us a legislative programme which will have a great effect on the lives of children in this country. I shall work energetically and constructively with the Government and spokesmen from all other Benches to improve the Bills before us in the interests of those children.
12.33 p.m.
Lord Bhattacharyya: My Lords, like everyone, I warmly welcome the Government's commitment to,
"continue to pursue policies which entrench economic stability and promote growth and prosperity".
How has this growth and prosperity come about? The OECD annual survey was a glowing report on our economy. It stated that,
"Wide-ranging structural reforms and sound macroeconomic policy",
had produced this wonderful performance. Credit goes to the Treasury for the macroeconomic policy but, in pursuing the "structural reforms", credit must also go to the Department of Trade and Industry.
As the first professor of manufacturing and director of the Warwick Manufacturing Group, I have more than 30 years experience of working with the DTI. At first, my work with many of Britain's largest engineering businesses meant that I had to talk to their owners; over time that evolved into wider advice. So during that period I had the pleasure of working with most of the Secretaries of State in the department.
The DTI's role has changed enormously. When I first started I thought that Whitehall owned half of Great Britain. No longer trying to sustain failing businesses, the DTI's role now is maintaining markets and promoting technological innovation—key ingredients for success. Our prosperity has to be underpinned by trade and industry together.

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Globalisation is not new to Britain. For hundreds of years trade has been central to our economic performance. The Privy Council set up the Board of Trade in 1621, making it an old institution even by the standards of this House. I have never understood the reluctance of the British to admit to "being in trade". After all, it is something at which the British are remarkably good.
Having joined many trade missions to far away countries, I do not recognise the tabloid image of the political junket. All Ministers of all parties and many members of the Royal Household work hard to make the case for doing business with Britain. However, there is one place in which it is essential that the voice of trade and industry is heard loud and clear—and that is inside the Cabinet.
Today's trade is governed by a set of rules that has opened up markets like never before. We have trade regulated by the WTO and the European Union. Regulation, unfortunately, brings bureaucracy. The price of free trade—like that of freedom itself—is eternal vigilance. Political expediency can drive even our closest allies into protectionism. We can all remember the French and British beef and the United States closing its door to steel. It is no longer the role of the gunboat to re-open these markets but that of the bureaucrat. This is one area where the pen is indeed mightier than the sword.
For the UK, agile, flexible businesses backed up by a dynamic science base quick to exploit technological opportunities is the only way to stay ahead. The case was well made in the DTI's Innovation Report. As knowledge becomes more portable, our national economic performance will be determined by our ability to absorb and speedily exploit that knowledge. Hence the importance of the skill base, an area which we have neglected for four decades and about which the Government are trying to do something.
It is at this point that the two halves of the DTI come together. Open markets bring the kind of globalisation that encourages technology and development; trade links and good quality foreign direct investment bring access to markets and technology. The fact is that globalisation has given hundreds of millions of people standards of living higher than most economists thought possible.
A major role for the DTI is to strengthen our system of innovation. Effective innovation policies need a better understanding of business. For this, the DTI must acquire the necessary experience, skills and attitudes. Some restructuring of the department will be needed, but not the wholesale dismemberment that some suggest. Under the leadership of the Secretary of State, Patricia Hewitt, the DTI is evolving into the kind of department we need to satisfy these ambitions. The five-year plan for the DTI, Creating Wealth from Knowledge, shows that there is more to come, including—which is most important to me—the fact that it is to be retitled as the Department for Technology and Innovation.
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Getting closer to business will require greater regional devolution of DTI activities. I served on the board of the West Midlands Regional Development Authority for four years and saw what devolution can do. Local intelligence and rapid response can only be achieved at a local level, and that is what devolution is bringing. Devolving Business Links and the Manufacturing Advisory Service not being run from Whitehall but from the regions has had a remarkable effect in a very short space of time. The closer one can get to firms the better.
I have also been working to establish the West Midlands Regional Innovation and Technology Council, which will complement the National Technology Strategy Board—the centre and the regions working together. Good science needs a critical mass for success, but we also need to engage with a large number of firms if we are to enhance our national competitiveness in technology transfer alone.
We need a more strategic business-orientated approach to innovation and technology, engaging with a wide range of companies and working more closely with research councils; championing more and larger-scale collaborative programmes; sharing insights into technology and business market trends, as the Engineering and Physical Sciences Research Council is already doing.
The DTI will have to be able to influence the regulators to ensure that they enable, rather than inhibit, business innovation. Public procurement practices must also encourage innovation. This is a significant programme of work by anybody's standards. While it is not the highest, investment in British science is hugely efficient. We have, per pound spent, the largest number, as a proportion, of papers published and patents. It is essential, and it remains essential for our future economic success.
In the decade from 1997 to 2007, the UK science budget will have doubled. While not a scientist himself, my noble friend Lord Sainsbury has been a great champion of British science. We have some of the best universities in the country including my own, Warwick. Extra spending in science innovation and the top-up fees will ensure sustainability in a global world.
A commitment to science, however, should not mean a rerun of the 1960s "white heat of technology" that could easily lead to a set of white elephant projects. There is a popular misconception that new technology and science equals new companies. But many of our most everyday products, such as cars and washing machines, are packed full of new technology.
I spent a lot of time in Japan when I was young. I was impressed with the way its Ministry of International Trade and Industry—MITI—worked with firms such as Honda. The way in which the Department of Trade and Industry is evolving will be very similar in the future to MITI. In a very short time, it will be able to catalyse technology, not just fund it.
Honda has, within a period of 10 years, become the largest engine manufacturer in the world. It was obvious when it began working with the Rover Group

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which firm had the technology. I used to visit Japan quite often, and MITI's key role was the way it identified and disseminated technology.
Many British visitors took away superficial lessons from Japan. I am with John Humphrys on this. They latched on to what has sadly become the meaningless mumbo jumbo of MBA speak—taking the Japanese language of lean, just in time and can/ban, and raising these concepts from common sense into a new scientific language. That has been the problem in all our White Papers until this one. I remember the chairman of Sony telling me, "You are making science out of common sense".
We have been stealing Japan's clothes but not taking the technological peg on which they hung. Your Lordships should not get me wrong—I like nice clothes as much as the next man but it is important to have a well nourished body beneath them. Here again, I commend what the DTI is doing with technology.
All of today's successful businesses have to harness technology. There is no substitute for sustained technological leadership. Let us compare the contrasting fortunes of two parts of the old British Leyland. Until about five years ago, BMW in Oxford was destined for an asset regeneration site; it now produces a technology-driven, high-value product, the leader in its class, and is a great exporter. However, MG Rover at Longbridge struggles to sell technologically redundant products.
The difference in performance is not a function of investment in plant or workers, which are pretty much the same. The difference is the ability of managers to absorb the latest technology and develop exciting new products.
During most months, I travel to India or China. Recently, I opened a new centre in Suzhou, which is near Shanghai. I think we must face the fact that we will never have the vast number of scientists that China or India are able to produce. Commentators speak of high labour content work migrating to China and India, but because technology is portable, a lot of their development is at a higher level of technology than even we have.
Meanwhile, all western nations are struggling to get the type of people they need into postgraduate work in science and engineering. This is a challenge for the UK's higher education sector. In the USA, up to 40 per cent of PhD students are from overseas. We will have to be as open as they are if we are to compete. This also means supporting and expanding programmes which get more science and engineering graduates into small and medium-sized firms.
These days we hear a lot about red tape, yet it proves very difficult to remove any particular regulation. Regulation is often driven by our greater knowledge. Examples include the health impact of asbestos or the carcinogenic agents in certain petrochemicals. Today we are grappling with the mounting knowledge of the impact of global warming.
Sadly, in the times in which we live, security for both our citizens and our businesses has become a major issue. I hope that the Government will do all they can to ensure public safety without putting undue burdens
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on business. It is ironic that huge amounts of regulation are often needed for deregulation. The opening up of the telecommunications market is a case in point. All businesses should welcome the new approach to regulation that is contained in the DTI's five-year programme.
Many of the rules that make the world a good place to do business stem from British attitudes and practices. I do not wish to begin a debate about the pros and cons of the British Empire. Its sins are well documented but its achievements are often taken for granted. Would modern-day globalisation be the same without the internationalisation of the English language, the spread of English common law, English forms of land tenure or Scottish and English banking practices?
This process has been called Anglobalisation. Encouraging free trade was not simply a process driven by economic determinism. For free trade to be successful, it needed a framework for it to work. This is Britain's unique gift to the world. Having effectively created the modern world, Britain has to have more confidence in its ability to do business with it. Hence, it is bizarre that anyone can talk about getting rid of the DTI.
12.46 p.m.
Baroness Young of Hornsey: My Lords, first of all I would like to echo the comments made in earlier maiden speeches and thank noble Lords and the staff here who have done so much to make me feel so welcome and to reassure me that I am not the only one having difficulty in finding my way around this magnificent building. It is indeed a privilege to be admitted into this Chamber and to be given the opportunity to work for the citizens of this country. It is also, of course, a great responsibility, of which I am keenly aware.
In addressing the Government's intention to establish a new body to ensure that fairness, equity and respect form the bedrock on which our society is based, I am particularly pleased to be able to address your Lordships for the first time on a subject about which I feel strongly, and which concerns us all. However, I will do my best not to stray into controversy, as is the convention with maiden speeches.
I work in the cultural sector and have done for many years. There is often a perception that those who work in culture and the arts are somehow detached from the "real world". I can assure your Lordships that that is not the case. For example—especially relevant in the context of this subject—many people in the cultural sector continue to work very hard to lessen the damaging effects of discrimination that lead to the scarring of so many lives.
Although it happens less and less these days, I am still occasionally asked where I am from. I often reply that I am a Londoner—born and brought up in this great world city. People talk proudly of the capital's diversity and, increasingly, that of Britain as a whole, but I can clearly remember the time when having a rich mix of different communities, ethnicities and lifestyles was not seen as an asset at all.

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Some of your Lordships will recall the sign in the windows of houses with a room to let in the 1950s and 1960s stating "No blacks, no Irish, no children, no dogs". Women were called upon simply to make the tea in the office as "Girl Fridays" and would lose their job should they become pregnant. Terms such as "access" and "rights" were largely meaningless to people with disabilities, and to be an active, consenting adult homosexual was to be subjected to criminal prosecution. Differing religious practices were unrecognised, and people over 45 were virtually written off.
Successive legislation has ensured that racial discrimination is now widely seen as unacceptable. It is an offence to discriminate against women in the workplace, and the Disability Discrimination Act at last recognises that people are disabled by structures and barriers erected by society, and that these can and should be dismantled. Homosexuality has been largely decriminalised, and the passing of the Civil Partnership Act represents a landmark for same-sex couples.
However, those legislative advances should not lull us into a false sense of security about how far we have progressed. Racist, misogynist and homophobic acts of discrimination and physical violence; the denial of the right to practise deeply held faith; the denial of the right to live as full a life as possible, no matter how old you are or what level of physical or mental ability you have—these negative actions and behaviours blight the lives of us all because they compromise our integrity as a society. We need structures and laws to protect those who are most vulnerable to discrimination.
It is proposed that the Commission for Racial Equality, the Disability Rights Commission and the Equal Opportunities Commission merge and join with those equality strands relating to age, sexuality and religion and human rights to form a new body: the Commission for Equality and Human Rights (CEHR). The stated core aims of the CEHR are to build and nurture respect for equality, diversity and human rights; to work towards compliance with equality and human rights legislation; and to promote good relations between communities.
The CEHR holds the promise that it will enable a more cross-cutting approach to combatting, documenting and monitoring unlawful discriminatory practices. That is potentially very good news.
There is widespread support for the CEHR among agencies and organisations whose role it is to progress the interests of people represented by the six strands. The business sector has expressed strong support for the proposed organisation because of the advantages of a single agency with which to work to clarify legal obligations and responsibilities. Many are keen to realise the potential of a single point of reference across all the equality strands, but although there is overall support, many also have considerable reservations.
Those who have the greatest interest in, and commitment to, the issues to be dealt with by the new body must feel confident that it has enough resources—human and financial—to tackle unlawful
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discrimination in a rigorous, robust manner. This confidence is not yet there. Significant numbers of those who responded to the White Paper, Fairness for All: A New Commission for Equality and Human Rights, expressed concerns about the balance between the CEHR's enforcement and promotional activities. Many organisations that represent black communities are concerned that the ability of the new organisation actively to address the specifics of racism and the structures that perpetuate it will not match that of the existing Commission for Racial Equality.
Importantly, virtually all the organisations that participated in the consultation on the White Paper commented on the inconsistency of the various existing areas of legislation. Current laws regarding the different strands of discrimination vary considerably. For example, there is a positive duty for public bodies to eliminate racism and promote equality of opportunity, but that is not yet the case for gender or disability, although the Government are committed to extending the duty to those areas. Similarly, there is a legal protection from discrimination on grounds of gender and disability in the delivery of goods and services, whereas the protection to be offered on religious, sexual orientation and age grounds is restricted to employment and training under the EU employment directive.
Without legislative harmonisation, the confusion about who has what rights in which contexts will exacerbate anxieties about hierarchies of rights across the various communities concerned. An appropriate level of resources will be key to the success of the CEHR; otherwise, it will be viewed as a cost-cutting exercise and a talking shop. That would seriously undermine the support it needs in order to have credibility with national and local stakeholders. All those are major challenges.
I am pleased to note that, in response to submissions during the consultation process, the Government have strengthened enforcement powers and made some other changes. None the less, concerns remain.
With continuing open dialogue between Ministers and stakeholders, I hope that it will be possible to form an effective organisation that will serve 21st-century Britain well. I look forward to contributing to the forthcoming discussions on this important Bill. I thank noble Lords for their kind attention.
Noble Lords: Hear, hear!
12.54 p.m.
Lord Hunt of Chesterton: My Lords, I congratulate the noble Baroness, Lady Young of Hornsey, on her maiden speech. Professor Young was head of culture at the GLA from 2002 to earlier this year. She was responsible for the development of the Mayor's draft culture strategy and the delivery of an events programme for London.
The noble Baroness's tremendous career shows how talented she is in so many fields. She began as an actor and a social worker—acting is quite an important part of being in this House. She became an academic at

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Middlesex University and wrote a book on film, entitled, Fear of the Dark: Race, Gender and Sexuality in the Cinema. I hope that the House of Lords Library will branch out more to include some of her books in the future.
The noble Baroness rapidly rose to become a professor at Middlesex University. Her previous public appointments and responsibilities have included membership of the boards of the Royal National Theatre and she is Chair of the Arts Council's cultural diversity panel and the British Council's arts advisory committee. She was awarded an OBE in 2001. We greatly look forward to her contributions to all the work of this House.
Before making my own comments, I extend a welcome to the noble Lord, Lord Broers, who will make his maiden speech after me. He will find that many others here share the great experience of having been educated at Trinity College, Cambridge.
The Queen's Speech highlights the need to improve international security; enhance economic growth; limit nuclear proliferation; and deal with climate change. Those issues of course last for many electoral cycles, and it is good news that there is cross-party agreement on the essential priorities.
I shall highlight the way in which the Government's energy policy and executive actions are contributing to achieving these goals, but I have some suggestions as to how energy policies might be developed and explained in order to achieve those wider and interconnected goals.
In opening the debate on the gracious Speech yesterday, the noble Lord, Lord Bach, emphasised the connections between international action on energy policy and dealing with climate change, while the noble Lord, Lord Howell, rightly pointed out the connection between energy policy and security.
Experts from Princeton University and BP have shown that it is necessary to use all measures and technical solutions to ensure that the world has the energy supplies that it needs for its economic growth and reduces the growth of emissions of carbon dioxide. The Royal Commission on Environmental Pollution has recommended that the rise of carbon dioxide in the atmosphere should be limited to a level that is about twice the level before the Industrial Revolution. The present level is already about one third of the way towards that level, and there is no sign of it slowing down. The German Government have suggested an even lower level as an objective.
The Government and the major energy companies are quite rightly developing renewable sources of energy and more efficient means of using existing energy systems. The recent report of the House of Lords Science and Technology Committee and a report of the European Union Select Committee noted progress, but they recommended that the Government introduce more flexible arrangements in the electrical grid to enable localised power networks to be developed, as Woking has so brilliantly demonstrated, with London planning to emulate it. Does the Minister have any progress to report?
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The Government are to be given two cheers, as E M Forster once said, for at last instituting an energy institute, but the Government are, I understand, still spending less than Belgium on energy research. The new centre at Imperial College in London University will be primarily a policy institute. Where is "the B&Q element" of energy plans to demonstrate to people all the developments and the choices that they could make now about their energy consumption and energy systems?
The noble Lord, Lord McIntosh, will reply to this debate. He is responsible also for the Department for Culture, Media and Sport. Why does he not use the excellent museums of science and technology around the country, some of which are in a parlous financial position, to act as great centres for demonstrating all the possible energy developments? The Netherlands has such an institute at Petten, where the developments of energy technologies are studied and on view. Surely the UK should be able to afford something similar.
Nuclear energy also should be a significant component of the UK's energy mix. At present, it is in the form of fission reactors. It is likely that this source of energy will decline unless decisions are taken to renew and extend the current power stations. However, the Government must first ensure the UK's technical and industrial capabilities are not allowed to disappear, which is a real danger. Currently, the energy, environmental and security issues of nuclear energy are considered quite separately. Building fission reactors is opposed by environmentalists and the general public, largely because of fear about waste products, which may remain radioactive for thousands of years.
There is an alternative form of nuclear energy—namely, nuclear fusion, which was described by the Daily Mirror in the 1950s, when it was first proposed, as "taming the hydrogen bomb". The source of energy in that case would be hydrogen. That led to a famous Giles cartoon in the Daily Express; he thought that the sea would be so effective in producing hydrogen that we would run out of sea. There was a marvellous cartoon of a vanishing sea and a huge beach—saying that this was the Government's energy policy in the 1950s. To bring us up to date with the popular view of energy, in 2004, Figaro described fusion energy rather more poetically as "l'énergie des étoiles", or the energy of the stars—because it is the source of the sun's energy that keeps us warm.
Great progress has been made since the 1950s in fusion science and technology. I declare an interest, having worked in that area. Very high temperatures at millions of degrees of gas or hydrogen conducts electricity so that it can be confined by intense magnetic fields within a large doughnut-shaped or tokomak tube. That confinement has been demonstrated, and the predicted nuclear reactions in the plasma have occurred, though for only a few seconds. The next stage will be a massive international project—ITER—which the Government are pressing, and the Government's chief scientist hopes that it might be agreed fairly shortly. That should increase the confinement time and is also likely to

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increase the size. If that is achieved, the intense radiation in the tube could be used to heat water in the walls of the tube, and make steam and electricity.
Strong doubts have been expressed publicly by scientists, even in countries likely to have the instrument—namely, France—and elsewhere, about whether materials can possibly exist that will be able to confine such a system. Because of those doubts, some very large countries are not participating in the ITER. However, there is a very interesting alternative—to combine fusion and fission. That idea has been promoted by Mr Paul Rebut, who was the first head of the European project in the UK, at the Joint European Taurus. I was present at a remarkable meeting with the leading United States, Russian, and United Nations experts at the Eisenhower Institute in Washington in October. It was opened by Susan Eisenhower, the grand-daughter of Dwight Eisenhower, who showed a breadth characteristic of her grandfather.
The concept is to use fissile material in the walls of a fusion reactor. That reduces its size and the materials problems and utilises the intense radiation from the fusion plasma to transform the fissile material, which would lead to waste products with a half-life of only 100 years rather than the thousands of years associated with the current fission system. In turn, reduced dangers of proliferation of nuclear waste and weapons materials would result. In fact, it would provide a method of utilising those materials—all the nuclear waste and old weapons—for everyone's benefit.
United States colleagues have argued that there must be a substantial international effort in that direction of at least 100 million dollars a year to push forward those technologies, which would help to solve energy, security and environmental problems. In fact, if we developed nuclear energy in those ways, it would reduce the UK's overwhelming and risky dependence on overseas gas—the point referred to by the noble Lord, Lord Howell, yesterday. I hope that those imaginative concepts will attract the environmental, non-governmental organisations, which are currently so hostile, to recognising that appropriate nuclear energy should be an objective.
I conclude with a couple of specific points in support of the Government's policies for trade and industry. I applaud the remarks of my colleague and my noble friend Lord Bhattacharyya; we were also colleagues at Warwick University over the years. Based on my experience with a small company, the liberalisation of business and technology in the EU is developing apace. I would not have believed it possible a few years ago that governmental agencies in continental countries would be purchasing technology developed in the UK in many different ways. I believe that the UK pressure in Brussels is working. The Opposition have emphasised the difficulties of small companies; my experience is that many government policies have been very helpful to small, hi-tech companies, especially ones with a high proportion of women, like the one that I have helped to set up in Cambridge.
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Finally, I commend the proposed legislation to deal with violence against those working on animals in scientific procedures. Our House of Lords committee urged that, but I wonder whether our recommendations should not be adopted in the strength that was suggested. In the United States, perpetrators of violence are prohibited from, in the inimitable phrase, "crossing the county line". That seems a more appropriate response to the fear that those people have caused than the rather weak suggestion envisaged in UK legislation of banning their presence within a few hundred yards. I hope that your Lordships' House will take a very strong stance when those issues come before us.
1.5 p.m.
Lord Broers: My Lords, I am grateful to be the fourth Member of this House today to have the opportunity to address your Lordships for the first time and to thank your Lordships and the loyal staff of this House for my generous welcome. I thank especially the noble Lord, Lord Hunt of Chesterton, for his particular welcome.
I warmly commend the commitment of Her Majesty's Government, expressed in the gracious Speech, and elaborated upon by the noble Lord, Lord Davies of Oldham, today, to streamline the organisation of our national rail system and to improve performance.
The path that led me to this House today was a varied one, beginning in Calcutta, taking me to school in England and Australia, then to university—first in Melbourne and then in Cambridge, then at length into a 20-year career in research and development for IBM in the United States. Following that, I returned to Cambridge, some 20 years ago now, to Trinity College and to be professor of electrical engineering. I wanted to get back to basic research, to my life-long interest in electronics, and especially to discovering new ways in which to fabricate nanoelectronic devices. I also wanted to try my hand at teaching, although I assure your Lordships that the considerable anxiety that I have felt about speaking to this august body was nothing compared to the prospect of first lecturing to a very large class of undergraduates on a gloomy Monday morning.
After 10 years of frontline academic life, I took on other responsibilities—and, following a rewarding time as master of Churchill College and head of the engineering department at Cambridge, I eventually served for seven years as the university's vice-chancellor. I now have the privilege to be the president of the Royal Academy of Engineering, and to have time to return to my industrial and business interests. The fellows of the academy regard as one of their main responsibilities that of enhancing national capabilities. There is no more important capability than that of our transport system.
Transport is the lifeblood of the nation; all our other achievements, in science, medicine and the arts, are diminished if people cannot gain access to them. Rudyard Kipling even wrote that transport "is" civilisation. It is well established that there is a strong link between the increase in movement of people and

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goods and the growth of GDP. Over the past 50 years, the number of road vehicles in Britain has grown almost sevenfold, and traffic by a factor of eight. Today there are around 8,500 kilometres of road traffic per capita, and because we have not planned adequately for that volume, Britain's roads are probably the most congested in Europe, which costs us an estimated £15 billion a year, a sum that is likely to double in the next decade.
Perhaps more serious is the consequent increase in the emission of CO2 and its impact on global warming. Transport already accounts for 28 per cent of all CO2 emissions in the UK. In addition, it is sadly the case than an average of over 100 people are killed or seriously injured on our roadways each weekday. Britain can be proud of its record in reducing road accidents compared to other industrialised countries, but we must all welcome Her Majesty's Government's proposal to legislate in order further to reduce injuries and fatalities.
Rail transport can provide solutions to these problems, and there has been a significant growth in rail traffic—for example, 46 billion passenger kilometres in 2002—but rail still represents only 7 per cent of total travel and a further increase in traffic to rail is hampered by lack of railway capacity. We are already close to saturation.
Solutions to our transport problems will not be simple. It is inevitably difficult to balance people's desire for personal mobility with the wider benefit in reduced pollution and congestion. To rebuild our infrastructure while services are in operation necessarily causes long-term inconvenience, and that will be nowhere more apparent than in the long-delayed rehabilitation of London's Underground. But creative engineering can provide the solutions and our engineers do a superb job when they are empowered to do so. Take for example the completion of phase II of the Channel Tunnel Rail Link—CTRL—which is expected to open on time in 2007 and the record performance of tilting trains on the re-engineered London-to-Manchester line.
For Eurostar the opening of phase 1 of CTRL has contributed to a 17 per cent growth in traffic. Market share is now 68 per cent of all London/Paris trips, a substantial increase over 2003. Completion of CTRL II in 2007 will further cut the journey time to Paris to two hours 15 minutes. That will be an engineering triumph of which we will be proud—Britain's first ligne é grande vitesse and the first new main line for a century.
However, with the completion of CTRL and of the West Coast Main Line upgrade, no further major improvements are in prospect. There appears to be no incremental plan, no rolling programme for improving the quality and capacity of our railways. For engineering designers and suppliers that is a disaster. They cannot maintain expert and skilled teams on the uncertain prospect of future work. The pace will be lost; the cost of restarting will be higher.
In the crucial area of railway rolling stock, the end is in sight for manufacturers in the UK. The order for CTRL trains has gone to Japan. There are very few further orders, apart from London Underground, and
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they may also go overseas. I understand that the year 2006–07 is expected to see no new trains delivered for our national rail system.
Having said that, it is especially gratifying that the Government propose the construction of the long-delayed Crossrail project which is so essential to London's future competitiveness. Let us hope, as the noble Lord, Lord Forsyth, and the noble Baroness, Lady Noakes, have already expressed, that in addition to the planning and engineering proposals, the financial framework for this large and essential project is also put in place.
Those achievements and plans are surely good news, as is much that is in the White Paper, but they fall far short of what is required. We need to develop an overall transport strategy and plan and let our engineers put it in place. It is the experts, in many cases the engineers, who need to be involved in the early planning and not brought in after the mistakes have been made and there are problems to fix.
Everything in our society depends on transport—schools, hospitals, retail, the supply of industry's goods to and from our ports and airports, culture, entertainment and sport. There is virtually nothing in our society that cannot be harmed or enhanced by transport. If we do not wake up to the need for a coherent plan and ensure that it is put in place, we will not be able to meet the severe international competition referred to by the noble Lord, Lord Davies of Oldham. I, as an engineer, will do what I can to help with this task.
1.14 p.m.
Lord Beaumont of Whitley: My Lords, when the noble Lord, Lord Berkeley, told me that he had unfortunately to leave and would not be able to follow the noble Lord, Lord Broers, I was much taken aback—first, because I always welcome listening to what the noble Lord, Lord Berkeley, has to say. I also believe that the noble Lord, Lord Berkeley, would join me in agreeing entirely with the content of the maiden speech that we have just heard.
Secondly, looking at the details I was given of the noble Lord's career, I did not see where there was much overlap on which I could fix. I do not really understand engineering. However, I am always filled with admiration and awe when I come across Fellows of the Royal Society, particularly when they have been vice-chancellors of Cambridge.
Listening to the noble Lord's speech, I was reassured, as I say, to find that I agreed with almost everything that he said. Those who follow a maiden speech always say how good the speech was, but they are not always able to do so quite as wholeheartedly as I am. I can see that, in future debates in your Lordships' House, the noble Lord and I will find ourselves in agreement on many subjects.
I welcome also the noble Lord's mastership of Churchill College. I had the great honour and pleasure, at the instance of Hugh Montefiore, later Bishop of Birmingham, to give a chapel as a present to Churchill. I was very pleased and proud to do so. I established an enormous affection and respect for

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Sir John Cockcroft, who was at that time the master and was president of the Liberal Party, a job which I persuaded him to take on.
We very much welcome the maiden speech, the expertise and the mindset and policies of the noble Lord who has just spoken. We hope we hear him again.
I should also like to say a brief word about the right reverend Prelate the Bishop of Durham. My mother came from Durham. She was a Pease of the Quaker family there, who rapidly joined the higher parts of the Church of England. I have great respect for the Bishops who hold that particular see. I had the pleasure of serving under both Michael Ramsey and Ian Ramsey. I thought that they were both very great men. I very much look forward to the contributions of the present Bishop.
My contribution and that of the Green Party today will be mainly on the subject of transport, both on what is in the gracious Speech and what should be but is not. My party's contribution, of course, could be considerably more if the Government would get themselves organised and see that more Members of your Lordships' House were members of the Green Party. Judging by the representation that we get, for example, in London and in Europe, when there are fair methods of election, we deserve at least one speaker for every day of the debate on the gracious Speech, instead of which I have to choose one particular subject and one particular day on which to speak.
First, I have a major complaint and some rather mixed bouquets, some of them containing a few sprigs of stinkweed. The major complaint is the relegation of the most important matter for our country today—that we are in the middle of a war which many of us think to be illegal—to three lines in the penultimate paragraph of the gracious Speech, which talks of providing "security and stability" for Iraq, but which in practice seems to consist of assisting the United States in its now monotonous strategy of bombing the hell out of everything and killing everybody: "They make a desert and they call it peace".
I, of course, welcome a Bill for animal welfare, though I have considerable doubts about its scope, as I think it highly unlikely that it will do anything for battery and broiler hens or for ducks, to whose inhumane treatment I once again hope to draw your Lordships' attention in this Session. I do not think that we can expect much in an animal welfare Bill from a Government who have just forced through a Bill which will ensure the destruction of a great many dogs and horses and make the relatively humane control of the fox population virtually impossible.
The mixed bouquets go to the vast number of Bills which sound on the surface good—well, they would, wouldn't they?—but in which the devil will be in the detail.
To turn to transport, I am delighted that there will be a Bill to help to reduce the number of those killed or injured on the roads. However, the sole sign that the Government recognise that the only serious way of doing it is by getting cars off the roads is the Bill for the authorisation of Crossrail, which we warmly welcome.
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We hope that they will give some thought to the financing of the same. The Government have not shown real determination in this field.
I will not waste my breath urging the Government to combine their policies for planning and transport so that journeys become naturally less lengthy owing to people living near their work, as I know that they will say that they already do so. However, I do not see much sign of that. Nor do I see any sign that the Government are paying any attention to the problem of air transport, the concreting over of the countryside, often attended by the destruction of habitats, and the pollution and destruction of the ozone layer caused by emissions and the refusal to consider ways of tackling these activities.
What about the necessity of tackling bus services outside London? Bus usage is rising in London, and that is a very good thing, but that is largely because bus services in London are sensible and are regulated. However, bus usage is falling badly outside London and that could easily be rectified if it were regulated.
I will continue my efforts to try to make the Government face up to the squalor, hardship and misery caused to many individuals by their refusal even to gather central information about unadopted roads. I also very much welcome all that the noble Baroness, Lady Walmsley, said about school transport.
In conclusion, I hope that Her Majesty's Government will seize the opportunity of the visit of their Majesties the King and Queen of Norway to learn of the manifest advantages of not being members of the European Union. I must dissociate my party from that last remark as, incurable optimists as its members are, they still regard the EU as being reformable, although the EU persists in trying to reform itself in the opposite direction from what they want. I also welcome the chance we will have to register our views in a referendum. While, of course, I join in praying that the blessings of almighty God will rest upon our counsels, I beg leave to doubt whether this Government are giving Him much assistance.
1.24 p.m.
Lord Drayson: My Lords, the fact that the very first sentence of the gracious Speech states that the,
"Government will continue to pursue policies which entrench economic stability and promote growth and prosperity".—[Official Report, 23/11/04; col.1.],
reflects the pivotal importance that successful businesses and a prosperous economy have in enabling our country to afford the quality of life that we all wish.
Unless Britain succeeds as a dynamic, competitive economy, all our plans to create a happy, stable society, from whatever end of the political spectrum we come from, will be for nothing. Therefore, it was heartening to hear about the robust state of our economy as described by my noble friend the Minister.
This success is reflected in the mood of British business. In 2004 British industry is in great shape. We are competitive. It brings a smile to my face to say—we do not say this often enough, so it is worth

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emphasising—that British business is doing well. The confidence that British business has today comes in part from an acceptance that competition, from whatever quarter it may come, is healthy and brings out the best in us, and that we can now rise to the challenge. That is why I believe we have not heard much support for the protectionist viewpoint on the issue of offshoring.
That is not to say that there are no problems, and that business has no issues of concern—it does, and I want to deal with them in a moment—but just that we must place them in context. Now that Britain is doing well our focus must be on how we can build on that success and not reprise the arguments of the past.
I believe that the policies of the present Government demonstrate a grip on the issues that will determine whether Britain's industrial and commercial renaissance continues, or whether the gains of the past 10 years will melt in the heat of 21st century global competition. Therefore, I welcome the Government's policies that maintain a stable economic platform, provide funds for investment in skills, education and science and shift the emphasis from competing on the basis of lowest cost to competing on added value and unique design—the domains where UK enterprise will succeed or fail in the future.
However, there is a question in the minds of many business people, not just here in the UK but abroad as well; namely, can government or, indeed, the political process itself, respond effectively to the astonishing pace and complexity of change that characterises global business today? Europe is a key example. The Lisbon Agenda set out in 2000 had as its objective to,
"make Europe the world's most dynamic and competitive economy by 2010".
Yet here we are, almost at 2005, and as Wim Kok recently reported, with very little progress to show. Business people question whether politicians have the will and expertise to grasp the barriers to innovation in Europe, to liberalise markets and to provide an efficient home base so that European companies can become truly global players.
The concept of creating added value—of using knowledge and innovation to get the most effect from limited resources—is as relevant to government as it is to business, and will become more so in future years.
We are seeing an increasing convergence of approach across the industrialised world as more and more countries enter the race to occupy the high ground of knowledge-based enterprise. I believe that the debate around industrial policy is moving on. There is wide agreement across the developed world on the policies needed for a country to compete in the 21st century. The question now is: which countries, having set out to implement those policies, will actually get them done? Many factors will affect this here in the UK, but a central issue, I believe, will be the effectiveness of the DTI—how well the DTI helps the nation to make the right investments in science, education and skills. How effective will be its regulatory touch? Too heavy and enterprise and innovation become stifled; too light and it allows bad practices to develop.
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It is because I believe that the effectiveness of the DTI is so central to Britain's continued success that I am so astonished by the policy of the Liberal Democrats to abolish it. While this may seem a beguiling prospect to create a windfall saving, to do so would fatally undermine this country's competitive position. Business needs a voice in government, making the case on its behalf, fighting its corner over planned regulation—both at home and in the EU. The saving of 10 billion euros achieved by the DTI under the chemicals directive is a case in point.
Having a clear national technology and manufacturing strategy and understanding the relationship between the two is vital, as is having the expertise to be able to determine what is and is not a strategic R&D investment in a new industry such as nanotechnology. Arguing the case for a single European patent at a cost to business that is competitive with the US system is also important; so are incentivising industry to invest in R&D and simplifying the process of new company formation to facilitate the creation of new businesses.
Those and many other issues need championing within a coherent strategic framework. There must be a clear vision of what British business needs to succeed against global competition, within a ministry that is itself globally competitive at getting those vital things done. That is not to say that the DTI is perfect. There is much being done and needing to be done to simplify the DTI's activities and focus on those that add most value to the pursuit of enterprise in this country. But, in my 25 years in business, I have seen the vital role that the DTI plays in sponsoring business and enterprise in the country.
A recent excellent example of the DTI's role has been the work of its bioscience unit with the biotech industry, addressing issues ranging from animal-rights extremism through to shareholder pre-emption rights in its quest to develop an environment where that vital new industry can thrive. The result is an industry in the UK that is second only to the US in the world.
I am optimistic about the future for British industry. Having witnessed the remarkable turnaround that has been achieved over the past 10 years, I am sure that we can rise to the challenge of the next decade. I am encouraged by the Government's commitment to the importance of economic stability and prosperity, and convinced that the DTI will play a vital role in delivering those goals.
1.32 p.m.
Viscount Trenchard: My Lords, I am grateful to the noble Lord, Lord Davies of Oldham, for introducing the debate. I also want to say how much I enjoyed the contributions of the four maiden speakers, especially that of my noble friend Lord Steinberg. The Minister took too much credit, and I regret that there was much in his speech with which I could not fully agree. He expressed the view that the rising indebtedness was balanced by borrowers' growing confidence in the economy. He may be mistaken. Surely much of the

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increased debt burden has arisen in compensation for increased taxes and retirement incomes that are lower than expected.
The gracious Speech started with a statement that Her Majesty's Government,
"will continue to pursue policies which entrench economic stability and promote growth and prosperity".—[Official Report, 23/11/04; col. 1.]
However, it is finally becoming clear how the Government's actions now tend to achieve the very opposite of their expressed intentions. One of the most serious problems may be the decline of the savings culture, encouraged by the Government's mean-spirited reductions in the annual amounts that can be invested in ISAs, and by the abolition of advance corporation tax credits on UK dividends. The savings ratio has fallen by more than a third, from 9.5 per cent to 6 per cent since 1997.
When the Government came to office, our pensions were the envy of the world. Many companies took pension holidays because they were so confident that their pension fund assets would continue to grow at least as fast as their liabilities. As many of your Lordships are aware, membership of final-salary defined benefit pension schemes has halved since 2000. The much less satisfactory defined contribution pension schemes that are replacing them have contribution rates below the level likely to be required to provide adequate pensions. Around 9 million people are saving too little, at a time when longevity is increasing and will continue to increase. The latest survey published by the National Association of Pension Funds found that 55 per cent of private sector final-salary schemes in its sample closed to new members in the past three years.
I apologise to noble Lords for again returning to the subject of advance corporation tax credits. When I spoke on the subject in the debate on 5 November, the noble Lord, Lord McKenzie of Luton, who followed me, admonished me for omitting to mention the fact that previous Conservative governments had also reduced the value of ACT credits. Incidentally, I wonder why it is again ordained that he should follow me today. It is certainly curious; I wonder whether I might have the privilege in future of following him. He knows well that it was entirely logical to reduce the rate of advance corporation tax credits to reflect the progressive reductions in income tax introduced by the previous government.
The effects of the abolition of those tax credits on pension schemes and charities are consistently understated. The damage inflicted is far more than £5 billion a year for the five years since the abolition, because the effects are cumulative. Each year, pension plan managers have received less dividend income to invest, which has led them to reduce their weightings in UK equities. Both factors have resulted in a reduction in the amounts that they have invested in the UK stock market.
That is the principal reason why the UK stock market's FTSE 100 index has risen by only 2.1 per cent since 1 May 1997, by far the worst performance of any
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of the major industrialised economies. The equivalent figure for France is 42.1 per cent, and for the United States it is 49.8 per cent. The average increase over the period in the stock markets of comparable developed economies was 46 per cent. That extremely poor relative performance has taken place against a background of relatively good economic growth. The GDP growth rate has been slightly above the average for all countries in the OECD universe, at 18 per cent over the period.
Stock market investors have actually done even worse than those figures imply, because inflation over the period has amounted to 18 per cent in total. Such investors are therefore worse off in real terms by 15 per cent. That is before taking into account the effects of the abolition of the ACT tax credits. It would appear that new Labour is every bit as bad for the stock market as old Labour. The Government enjoyed a golden inheritance in May 1997, but the competitive advantages that they inherited have been progressively eroded by new regulations and tax increases. The costs of those have resulted in an additional annual burden on business amounting to £18 billion, which dwarfs the benefit of an estimated gain by business of £3 billion resulting from the cut in corporation tax from 33 per cent to 30 per cent.
That situation has been developing against a background of a growing budget deficit. PricewaterhouseCoopers has predicted that the budget deficit is likely to rise to about £36 billion this year—3 per cent of GDP—and to around £40 billion next year.
As my noble friend Lady Noakes clearly explained, the growing structural current budget deficit will most probably lead to fresh tax increase in the medium term, amounting to some £10 billion. So much for the Chancellor's cherished "golden rule". Perhaps the Minister would confirm when the Government think that the current economic cycle will end for the purposes of determining the extent of adherence to, or breach of, the golden rule.
In his Budget speech, the Chancellor announced a reduction of 14,000 staff, resulting from the proposed merger of the Inland Revenue and Customs and Excise. Today the Minister said that the figure was 16,000. I should like to ask the Government to what extent that reduction has been achieved. It is, in any event, dwarfed by the relentless net increase in the Civil Service as a whole, which now numbers some 520,000 people. This figure, of course, does not include large numbers of officials employed by the rapidly expanding regional administrations. The electors of the north-east have given their verdict, but the Government take no notice. In those circumstances, there should be no question of any reduction in the powers of your Lordships' House. It is arguable, indeed, that this House does not have enough powers to protect the freedoms of minorities and to act as an effective check or balance against the overwhelming power of an elected majority in another place.
I agree with the noble Lord, Lord Newby, that the Government's regional policy is in tatters. I also agree with him that the Government's attempt to force far

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too much new housing on the south-east must be resisted. But I fear that my agreement with the noble Lord does not go as far as agreeing with him on the remedy. Rather, I would advocate that planning powers be immediately restored to county councils, which I believe are the tier of government to which powers should be devolved—not to Mr Prescott's artificial, unloved and expensive regions. I was appalled to learn that representatives of developers have votes in regional assemblies which can overrule county councils' decisions on planning. The recent decision by the East of England Regional Assembly that Hertfordshire should have an extra 15,000 houses out of the 18,000 demanded for the region by the noble Lord, Lord Rooker, in spite of the strong condemnation of that plan revealed by the strategic environmental assessment of the plan, is a case in point. I fear that the Minister was too complacent in his introduction to this debate. The economy is now beginning to feel the effects of the Government's economic stewardship over the past seven years.
I welcome the Government's commitment to strengthen the voluntary sector and I look forward to seeing their proposals to modernise charity law. I wish that the gracious Speech had used the verb to "improve", rather than to "modernise", because it certainly does not follow that what is modern is necessarily an improvement over what was there before. As a former trustee of the Royal Air Force Benevolent Fund, I can say that the abolition of advance corporation tax credits has reduced the amount available for distribution as direct charitable expenditure by more than £1 million a year.
In conclusion, the gracious Speech seems thin on measures that would help to arrest the deterioration of the savings culture in this country; and it is, therefore, hard to be optimistic that our stock market will soon rise to levels which fairly reflect the success and continued growth of the private sector. But, to ensure the continuing future prosperity of that private sector, we need different policies that will restore the savings culture and a vibrant stock market.
1.44 p.m.
Lord McKenzie of Luton: My Lords, like other noble Lords, I welcome the opening sentence of the Queen's Speech. It is a particular pleasure again to follow the noble Viscount, Lord Trenchard. I would say on this occasion that what he said in relation to the reason for the withdrawal of the imputation credit was correct—the alignment to the rate of income tax. Nevertheless, the impact on exempt funds is, as I described earlier, that under the previous Government the amount of imputation that was withdrawn almost equates to that which was withdrawn in 1997.
The Minister, my noble friend Lord Davies of Oldham, has given us the data on our outstanding economic performance—uninterrupted growth since 1997, 2 million more people in work since 1997, our lowest unemployment for 29 years, the longest period of sustained low inflation and interest rates since the 1960s and new businesses starting up at the rate of more than 1,000 per day. That is an impressive
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economic record and one which has enabled record investment in our public services and the challenges of eradicating child and pensioner poverty to he confronted.
But, as other noble Lords have stated, there is no room for complacency. We are now the world's fourth largest economy. We know that if productivity matched the US, domestic output would be £6,000 per capita more a year. If women started businesses at the same rate as men, there would be 100,000 more start-ups each year. If all regions of the UK performed to the same rate as the existing average, our national wealth would increase. As well as those internal challenges, as the DTI's five-year programme sets out, we face extraordinary challenges from the world economy.
The economies of some of today's emerging markets will dwarf that of the UK within two generations—none more so than China, which in 40 years is projected to be the largest economy in the world, overtaking the US and by that time, possibly, 10 times the size of the UK economy. India will by then have overtaken Japan to become the third largest economy in the world. Those currently emerging economies will not only be aggressive producers and exporters; they will be huge markets, presenting us with fantastic opportunities if we can deliver appropriate products and services on an attractive basis.
Because those emerging economies have come late to the market, they have the benefit of skipping one or more generations of technology that are the norm in developed economies. They will go straight to state of the art in parts of their economic infrastructure, particularly IT and communications, as well as seeking technology transfer as part of their inward investment approvals. Many thousands of bright young students, future leaders in all spheres of life, will study at universities in the UK and elsewhere.
The UK has some 25,000 students from China each year studying at our universities, 1,000 of whom, I am delighted to say, are at the University of Luton. Many of those students are focused on business and computing studies. They come for a variety of reasons: the quality of the courses available, the opportunity to improve their English—the language of business and science—and because of current lack of capacity in China despite rapidly expanding programmes.
The challenges will come not only from Asia, but from South America and from central and eastern Europe. So what should the UK's response be to those changes to the world economy and what role does government have? Our analysis is not, of course, unique. Other developed economies, especially in the EU, will be making the same analysis. The position has been put most forcefully by Professor Michael Porter in a recent DTI paper. It states:
"The UK has now reached a transition point. Competing on relatively low input costs and an efficient business environment is no longer sufficient to achieve the levels of prosperity the country is aiming for. To achieve higher prosperity UK companies will have to upgrade their productivity by competing on more unique and more innovative products and services".

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There are many facets to this but two of the challenges involve more effective commercialisation of technology and a sustained programme of cluster development.
As to the first, we make up I per cent of the world's population, we undertake 5 per cent of the world's science, we produce 9 per cent of all papers and we have 12 per cent of all scientific citations. Yet if we look at patenting in the US by UK-based institutions—the data are not totally current but are a reasonably reliable indicator of world-class innovation output—we are but average. There is strong representation from international companies but low representation from universities and other public institutions, highlighting perhaps that some are less active in converting the science into commercialisation efforts.
In the past, the UK has invested less public sector money in R&D than have most other advanced economies. My noble friend Lord Haskel made that point. It is good to see that policy changes under this Government have started to address that situation, and there has been a significant revamping up of public sector R&D spending. But, as in other areas of investment in public services, it will take a while for the years of underinvestment of the past to be overcome.
Clusters are groups of interconnected companies located close to each other, being suppliers, service providers and associated institutions in a particular field, linked by commonalities and complementarities. Classic examples would include the IT cluster in Silicon Valley and the Boston Life Sciences cluster.
Clusters tend to affect competitiveness in a number of ways. They help productivity because the proximity of suppliers generally means lower levels of stockholding. Innovation is increased by the presence of, and interaction with, world-class research institutions and competing companies, which provide a fertile ground for new ideas. They also lead to a congregation of expertise and funding opportunities, which stimulate new business formation. The UK has some strong cluster developments in some markets but more progress is needed.
I can report that we have been doing some work on that locally via the national Centre for Competitiveness, which is part of the University of Luton. Indeed, it was opened by the noble Lord, Lord Heseltine. This has involved workshops and analysis of the Cambridge cluster phenomenon, seeking to understand how it might be replicated in Luton and the south Bedfordshire conurbation. It is not easy to bottle, but learn from it we must.
It is against those challenges that we must measure the role and strategy of the DTI, and that is why I welcome the five-year programme aptly entitled Creating Wealth from Knowledge. The focus in on locking in and building on existing competitive advantages but also on seizing the opportunities needed to build prosperity for the future. As well as continuing to bear down on regulation and extend competitive markets, the programme is about strengthening science and boosting innovation,
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promoting enterprise, particularly through business-led RDAs, boosting skills and enhancing consumer information and rights. The programme encompasses a recognition that, just as business must adapt, invest and innovate in the global economy, so must those parts of government which speak for, regulate and promote business and skills. It is about making the DTI fit for purpose.
Like others who have spoken, I find it extraordinary that at the current time, with all the opportunities and challenges which face business, the DTI has become a football to be punted around the political landscape—either a candidate for abolition or emasculation to plug the inconvenient gap in the tax-and-spend arithmetic which opposition parties feel unable to face.
What has the DTI ever done for us? Frankly, the list runs from Business Link, which has helped more than 600,000 people with small business advice over the past 12 months, the Manufacturing Advisory Service, which has provided support for 6,400 SMEs since 2002, UKTI's help for 20,000 UK exporters, billions of pounds in costs saved for business through influencing EU regulations, and the promotion of British business success in overseas markets, particularly aerospace, and much more.
The DTI's influence on the local economy in Luton and south Bedfordshire has been profound in recent years. This is an economy in transition from one previously heavily reliant on manufacturing, and it has struggled, especially since the brutal recession of the early 1990s, to cope with the long-term decline in heavy manufacturing. Matters were made worse by a precipitate and unwarranted decision to close the Vauxhall car plant.
It was the DTI which led the response to that, causing the Luton Vauxhall Partnership to be set up under the chairmanship of the East of England Development Agency. The work which flowed was extensive, covering retraining, a supply chain support programme and support for an innovation centre. The latter is being built as we speak—the funding gap being filled by £4 million from the DTI. It will provide a high-quality base to increase the number, quality and growth performance of knowledge-based enterprises in the Luton and south Bedfordshire area, thus helping to transform our local economy. It is a practical example of the DTI making a significant difference to the present and helping to invest for the future.
The economic strength of the UK places us in a powerful position to face that future. If we are to make the best of it, we need to build a consensus, as my noble friend Lord Drayson said, so that business can be assured of a clear and consistent framework for it to plan to meet these fierce global challenges. I am delighted that the Government are leading the way on that, and I hope that other parties will now follow.
1.56 p.m.
Baroness Thomas of Walliswood: My Lords, my main purpose in speaking today is to respond to the Government's legislative ambitions in the field of equality. That should not surprise anyone. Before

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doing so, I welcome the three maiden speeches to which I was fortunate enough to be able to listen. They certainly confirmed that three extremely varied, interesting and able people have been added to our Benches, and they will all be able to contribute in their own way to our discussions in this House. I apologise to the noble Lord, Lord Broers, that I was not able to be present during his speech.
I also want to say a few words about the consumer credit Bill which will come before us at some point. As my noble friend Lord Newby indicated, we welcome such a Bill. The present Act is very old, personal debt has reached more than £1 trillion, and the ratio of debt to income is also at unprecedented heights. In recent weeks, we have seen very vivid examples of the way in which a relatively small debt can be escalated until it acquires monumental proportions with which virtually no family could be expected to deal due to the combined circumstances of occasional inability to pay interest and the claims of the lending company.
The Bill will be very important and it has been welcomed by the National Association of Citizens Advice Bureaux. That is not surprising because sorting out debt problems has become the single biggest job of citizens advice bureaux. That is certainly the case in my part of the world and I should not be at all surprised if it were true countrywide. We should like to see the financial institutions give just a small percentage of their profits to the citizens advice bureaux so that they are better equipped to deal with the very large numbers of clients coming before them in such circumstances.
I was amused by Martin Hall, director general of the Finance & Leasing Association, which represents the big lenders in the credit industry. He said:
"New requirements for fairness in lending practices will undermine the enforceability of agreements and make lenders more cautious in whom they lend to".
I discovered that quite what that means depends entirely on the tone of voice in which one reads it out, but I shall not experiment in your Lordships' House. However, I think that I can describe the welcome as lukewarm at best.
I turn to the question of the equality Bills which will shortly be before us. I start by drawing attention, once again, to the fact that equality is nothing to do with political correctness and everything to do with the success of this country in all its aspects. I shall restrict myself to what I know on the subject of equality for women.
Seven out of 10 employers agree that recruiting more young people of the non-traditional sex would help to solve the skills shortage. Yet only 15 per cent of girls and boys receive any advice on work placements in areas dominated by the other sex. At least 36 per cent of girls would like to try a work placement more traditionally carried out by boys, and 67 per cent of them would have considered a wider range of career options had they realised that there is a different rate of pay in jobs usually filled by men as opposed to those usually filled by women.
In the construction industry—an important industry, especially in recent years—38 per cent of current vacancies are the result of skills shortages, but
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only I per cent of employees are female. The best employers achieve return rates of over 90 per cent as regards women returning after maternity leave, yet only 47 per cent of women actually return to the same employer after giving birth. Many of those who return to employment return at a lower level. I could go on and on.
We are talking about a catastrophic waste of human resources which our economy, even after the glowing words spent on it by the noble Lord, Lord Davies of Oldham, who introduced the debate, can hardly afford to lose and continue to lose. In fact, some of the indications to which I have referred suggest that, were there to be more equal employment of men, productivity, which has been extremely reluctant to grow now, as in the past, might actually be increased. Added productivity is one way of combating low costs in other people's economies.
Turning to the matter of equality and human rights legislation, in March 1997—I quote this because it shows quite a long gestation process—the Labour and Liberal Democrat Joint Consultative Committee on constitutional reform published a report looking forward to a human rights commission to advise and to assist people seeking protection under the European Convention on Human Rights. That was in 1997. Over the years that suggestion has been elided into the present proposal for a new commission to deal with both equality and human rights—equality issues as defined by legislation and the wider area of human rights. That is the commission with which the legislation will deal.
That combination has in itself been controversial because many practitioners and onlookers have pointed out that there is a difference between human rights in their broad sense and how they affect our ability to pursue our interests in the courts and the specific rights given to various groups and people through legislation. In many countries, including Ireland, separate institutions have been established for those two, separate matters. However, that is not what has been done here. It seems to me that the rights movement appears resigned to welcome the new CEHR—the combined rights body—in the form determined by government. We must hope that the modus operandi determined by the new commission will give the right weight and value to each of its major new responsibilities.
Another source of concern in recent years has been the worries of some of the existing equality strands that their particular concern will be swallowed up in a single equality commission. The noble Baroness, Lady Young, told us about the large number of different pieces of legislation that play their part in equality issues. I shall not go through that again, but if one looks at the different rights provided by these different pieces of legislation, it is understandable that people should have such concerns. The quite recently established Disability Rights Commission was perhaps particularly concerned about being rapidly integrated into a different body. At least some members of the Commission for Racial Equality were worried about the impact on their ability to serve their clients as effectively as before.

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However, after a long period of government consultation, response and reconsultation, it seems to me that those anxieties have gradually abated. Perhaps the very process of joint discussion itself has helped to break down mutual suspicions and to allay concerns. Certainly the same thing happened within the All-Party Group on Sex Equality when it considered these matters some years ago. Gradually, just talking, listening and thinking together over a series of meetings, changed our attitude from at least partial hostility to acceptance and even welcome.
I hope that a particular problem will have been solved by the Government's expected legislation. The extension of a duty to promote equal treatment from its current application on the race equality strand to the sex equality strand is greatly to be welcomed.
The Disability Discrimination Bill will introduce a similar duty to promote equality for disabled people. So the duty to promote is now becoming more widespread and more equally distributed between the major strands of equality. That Bill will also cover the extension of protection on religious grounds to include the provision of goods, facilities and services. In another part of the forest, age discrimination will also be addressed.
There are still concerns that a single commission will be administering a jumble of legislation dating from 1975 to the present day. Many of us would wish to see the creation of a new single equality commission within the context of a single equality law. On these Benches we welcome that legislation. No doubt, when the time comes for it to he presented to Parliament, we shall have constructive criticisms to make, but that is for the future. For today, I merely ask the noble Lord when he hopes to introduce those Bills to Parliament.
2.7 p.m.
Lord Giddens: My Lords, I would like to comment on the Government's economic record on inequality and what has been called the opportunity society. Among the industrial countries, at the moment the UK is doing very well; it has a good rate of economic growth—better than competitor countries; it has a low level of unemployment; it has a fairly good ecological record; and it also stands up well in terms of levels of expressed satisfaction. In a recent survey, the UK came fourth out of the 15 EU countries in terms of how much people like living here. However, there is one respect in which the UK stands out like a sore thumb: that is on inequality and poverty. In 1997, the UK was ranked fourteenth in levels of child poverty in the European Union. It is consistently ranked low in terms of embedded poverty and multiple deprivation.
Sometimes this Government are said to have acted with an attitude of some insouciance in the face of those problems. That assertion is wholly false. One cannot find an area of social policy where some initiative relative to inequality has not been introduced by the current Government. The list is very long. It includes the working tax credit, the child tax credit, the pensioners' tax credit, the minimum wage, Sure Start, New Deal and a plethora of area initiatives.
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The Government have taken a different approach to inequality and poverty from previous Labour governments. They have insisted, first of all, on the primacy of economic policy over social policy. The issue is to create a dynamic, entrepreneurial economy and to promote job creation. These things are central to social justice, rather than social justice producing them in the first place. We must connect economic and social policy. I wholly approve of that emphasis.
Secondly, the Government have concentrated more on equality of opportunity than equality of outcome, although obviously the two are connected. That is important in a society in which we want to encourage people to develop their full potential.
Thirdly, the Government have decided—again I think rightly—to level up rather than to level down. We should not be seen to penalise success in a society that needs entrepreneurs and successful people. The approach has borne fruit. It is generally agreed that the best route out of poverty is to get a job and to stay in that job. The UK has an employment rate of 75 per cent—75 per cent of the active labour force is in work. That compares to an average of 64 per cent for the EU countries.
A prime criterion of social justice has to be full employment, and the UK has close to full employment. In the period from 1997 to 2002, using a relative measure of poverty —the EU measure of poverty—about 1.5 million people have been leveraged out of poverty; on an absolute measure, comparing, say, 2002 with 1997, something over 2 million people have been moved out of poverty.
Most experts in the field are agreed that the Government are on course to reach their target of reducing child poverty by a quarter by 2005. The UK has moved up the European league of child poverty from 14th to 11th. For some 30 or so years, economic inequality has been on the increase. According to the latest figures, this has now come to a halt. The Institute for Fiscal Studies attributes that to government policies. Economic inequality would have continued to increase without the policies which the Government have instituted.
Therefore, these are tangible and real achievements, and the Government deserve credit for them. However, we have to ask at this point whether existing policies are enough. Do we have a package of policies adequate to push us on to a new stage of tackling issues of inequality in this country? The level of inequality, the level of poverty in this country, which is an affluent country, is still scandalous. My answer to that question is that that is questionable. There are several areas where I think that we need further thought and reflection and probably have to look at existing policies. I shall list four of them.
First, our policies so far have probably allowed us to gather the low-hanging fruit. It is easier to get people into work who are on the verge of entering the labour market than it is to cope with people whose poverty is more deeply entrenched. I am not at all persuaded that the existing policies on the second phase of the child poverty programme, which is halving child poverty by 2010–11, are sufficient to get us there. We have gone a long way, but do we have adequate policies to get us

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further? I am not completely convinced that just an extension of existing policies—mainly based on tax credits, even when they are complemented by the investment that is now rightly going into child care—will get us far enough to a prime target which we must seek to achieve.
Secondly, I am in favour of the opportunity society. My father worked on the London Underground, and I know what it is like to have to make one's way in the world. But there are problems with it. There are problems to do with the level of social mobility in our society. My generation was able to move up the social ladder, largely because of economic change.
Over the past 30 or so years, we have essentially moved from a manufacturing economy to a knowledge-based and service economy. Thirty or so years ago, over 40 per cent of the working population in this country worked in manufacture. That proportion is down to 17 per cent. People of my generation had opportunities and were able to move on and up because of that structural change. There was not a lot of mobility where people moved up and down the social ladder; most social mobility was caused by the expansion of white-collar service and knowledge-based occupations. It does not look as though a comparable process of expansion can happen again, because over 80 per cent of the population already work in these new-style occupations. We might therefore have to work much harder to generate further opportunities for the new generation than we had to for the generation to which I belong.
Thirdly, we have to ask questions about the role of tax credits. Tax credits have been extremely effective. Most of the improvements in levels of poverty that I have referred to are the result of the introduction of the diversity of tax credit schemes to which I alluded. Tax credits have numerous advantages. They are not perceived as stigmatising by those who accept them. They do the important job that I mentioned earlier, which to me is part of what new Labour is all about—connecting programmes of social justice with economic dynamism. The working tax credit does precisely that. We should certainly not seek to abandon the use of tax credits.
How far can they go? There must be some limit to their usefulness. Tax credits have well known problems of complexity and targeting. In order to move further on a programme of testing inequality, which is where we should move, we have to look again at the nature of those limits.
Finally, the Government should articulate a more effective vision for what a more egalitarian society would look like than they have hitherto. The Government have instituted, as I said, a barrage of schemes to do with reducing poverty and alleviating inequality. Those schemes have been substantially successful, but they have introduced so many schemes that even experts in the field have trouble assessing what they all add up to.
I should like to see the schemes more integrated. I would like to see a vision of a more egalitarian society which goes along with a vision of public services. A
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good, solidary society needs a good public sphere. Investment in public services is therefore crucial to it, but why not have alongside that a commitment to a more egalitarian order, which is also part of producing a more inclusive and solidary society? I repeat: the level of inequality and poverty in our society is not acceptable in a civilised society. We must look to push on to a new stage of contesting the scars which poverty produces, because poverty scars our attempts to improve health, reduce crime and improve education.
I ask Ministers to take seriously the issues which they raise and that they give a commitment to your Lordships' House that these problems will be discussed and analysed with the intensity and depth which they demand.
2.19 p.m.
Lord Marlesford: My Lords, yesterday, we spent quite a lot of time debating the international consequences of terrorism. Today, we are primarily talking about the economy. If it were not for the shadow of terrorism emanating from Islamic fundamentalism, I would feel pretty confident about the outlook for the economy of much of the world. The United States, fuelled by its normal boundless optimism and its incredible flexibility and with a second-term president who should be able to resist the forces of protectionism to which I fear that John Kerry would have succumbed, should in any case turn in a healthy economic growth rate this year and probably next year as well.
China, which I visited last week, is populated by the most entrepreneurial race in the world, bubbling with activity. I had the chance of spending one hour with the Central Party School in Peking which, on behalf of the Central Committee of the Communist Party, is seeking to ensure that the foundations of the thought of Marx and Mao can be adapted with "Chinese characteristics" to the real world of Deng's black and white cat. The one message that I received was that the Communist Party is united in a determination to continue the development of the market economy.
Even India, for so long a sleeping giant, plagued by that stultifying, almost Stalinist combination of socialism, bureaucracy and corruption, is beginning to stir. The old order, based on the wretched caste system, is breaking down and India is moving into the high-growth league.
Every epoch needs an engine for economic growth and it is clear to me that, today, that engine is in Asia. Sadly, of the great continents, only Africa remains something of an economic basket case. Despite all the help and advice from the rest of the world, every time that an economic dawn seems about to break, some African leader or would-be leader presses the self-destruct button and darkness once again descends on that continent. Russia, too, is a source of real worry. Although the Russian economy has been well fuelled by higher oil prices, the political and structural changes under an increasingly authoritarian leader must make us all pause for thought.

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Of course, Europe is of closest concern to us. When Donald Rumsfeld referred to old Europe, he was speaking in political terms, but his definition is even more relevant in economic terms. Although the euro-land economy has been performing lamentably, with a combination of sluggish or even negative growth in the past few years and intolerably high unemployment, I believe that the enlargement of the EU has brought a new dawn. Not only has French hegemony been destroyed, I hope for ever, but the great majority of the 10 new countries, as well as a number of the previous 15, have made clear that they want to be part of a thrusting and vibrant entrepreneurial Europe.
I caught a glimpse of that when I visited the three Baltic states with the All-Party Group on Arts and Heritage in September. Liberated from half a century of the most brutal Soviet rule, they are bursting to get going. So, I understand from many anecdotes, are former Warsaw Pact countries, including Bulgaria and Romania, which hope soon to join the EU. Britain, along with Italy and Spain, has been a leader in forming the new Europe with its Atlanticist outlook: a Europe of lower taxation, low employment costs and a smaller public sector. Unfortunately, following the Madrid bombing, Spain seems to have changed sides: another victory, I fear, for the Islamic terrorists.
The gracious Speech made much of the fight against terrorism and I shall refer only to the economic costs of it. There are three. First, the public spending cost of fighting it is considerable, especially in the USA, where it has contributed to a large budget deficit. I suggest that here too it may threaten the Chancellor's Budget arithmetic. When the noble Lord, Lord McIntosh, replies to the debate, he may be able to give us some estimate of the direct public spending cost of fighting terrorism.
The opportunity cost is almost certainly, at least in part, in denying help to those who most need it. I was very struck by the speech that we have just heard from the noble Lord, Lord Giddens. I very much agree with the underlying philosophy that he was expressing; whether our actual recipes would be the same I do not know. Michael Howard made a speech setting out his eight "I believes" a while ago. I would have added one, which is that I believe it is immoral to give taxpayers' money to people who do not need it at the expense of those who do. There is much scope for changes of policy along those lines. We could reduce some of the unacceptable levels of poverty to which the noble Lord referred.
Secondly, there is the effect of terrorism in disrupting trade and commerce. That is probably not measurable, but I am sure that it is considerable. We can all think of examples of it. Thirdly, there is the rise in oil prices. In economic terms, that is exactly the same as a tax increase. If an economy is fragile, a hike in oil prices can have a seriously deflationary effect.
In that connection, I should point out that the UK is now moving towards the end of being a net oil exporter. We have had an annual trade surplus in oil for many years. In 2003, it was more than £4 billion.
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But the quarterly balances have been slipping since the beginning of last year and very soon we may well lose that great advantage.
What can be done about the rise in oil prices? One answer is nuclear power, and I was very struck by the remarkably interesting speech of the noble Lord, Lord Hunt, who spoke of the possibilities of uniting nuclear fission with nuclear fusion. I do not pretend to understand the full implications, but it sounds to me as though, for the moment at any rate, in the timescale in which we need to act, we should probably stick with nuclear fission, while recognising that the reactors must be safe, that the waste must be properly disposed of—because, as the noble Lord pointed out, it lasts for very many years—and that the reactors must in due course be properly decommissioned.
France produces more than 80 per cent of its power by nuclear means. We produce less than 20 per cent, but consume about 25 per cent of our power as nuclear because we import electricity from France. Even China is recognising the importance of nuclear power. It plans to increase the number of nuclear power stations from the present nine to 40 by the year 2020. That would be a considerable help. We need that nuclear power not just to counter the high price of oil—to add to the supply of energy to help to reduce it—but, perhaps above all, for environmental reasons.
Sadly, Her Majesty's Government are dodging the nuclear issue—there was not a word on it in the gracious Speech—as is the United States, but, again, perhaps a second-term presidency should give us hope. I hope very much that the big oil companies—which, after all, increasingly refer to themselves as energy companies may go into the generation of nuclear power, because they have the resources and the management capability, and it is in their own interests to do so.
The noble Lord, Lord Davies of Oldham, who opened the debate, made much of Britain's economic performance under the new Labour Government. The Government and the Chancellor are indeed due credit for their stewardship. That stewardship has been of the economic achievements of the person whom I see as the great revolutionary of the 20th century: my noble friend Lady Thatcher. It was she who dealt with the problem of over-mighty unions. It was she who encouraged the industrial restructuring that turned Britain from a smoke-stack economy to a service and high-tech economy, with, as the noble Lord, Lord Giddens, pointed out, no more than 18 per cent of our GDP coming from manufacturing. It was she who returned the utilities to private ownership, which, with the outstanding exception of the railways, has been a very considerable success. It was she who encouraged supply-side economics. She encouraged her first two Chancellors, my noble and learned friend Lord Howe and my noble friend Lord Lawson, to cut the top rate of income tax from no less than 98 per cent to 40 per cent. Adjusting for inflation, that would mean that anyone earning more than £80,000 would have been paying 98 per cent tax, rather than the present 40 per

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cent. It is to the credit of our present Prime Minister and the Chancellor that we still have that 40 per cent tax rate.
Further changes in tax policy are needed. There has been much talk about the problems of inheritance tax and housing. I note with great interest that Italy has completely abolished inheritance tax and gift tax. Perhaps even more surprisingly, the parliament of Sweden, a country not normally seen as being on that side of the equation, is currently considering government proposals to abolish inheritance tax and gift tax. I hope very much that the Government will give radical thought to the possibilities along those lines.
Britain is well placed, compared to many other countries, to benefit from world economic growth and to contribute towards it. I hope very much that, whoever is in power, we shall continue to play our part.
2.33 p.m.
Lord Eatwell: My Lords, your Lordships' House is scheduled to discuss pensions on Tuesday. Unfortunately, I cannot be sure to be here then, therefore I crave noble Lords' indulgence to address the topic today. I do so with some confidence because I want to consider the issue not in terms of the various technicalities debated during the passage of the recent Pensions Bill but as an aspect of general economic policy, especially fiscal policy and the promotion of economic stability. Pensions policy is also highly relevant to the diminution of poverty, referred to by my noble friend Lord Giddens a few moments ago.
Speaking at the CBI conference on 9 November, my right honourable friend the Chancellor of the Exchequer said:
"I will resist demands from wherever they come, such as on linking pensions to earnings, where this would put at risk the fiscal position today and in the long term. Such short-termism is not the best way forward … almost every one of our major competitors is grappling with high fiscal deficits and fast rising levels of debt. But at every point we have been able to meet our fiscal rules".
There are two ways of interpreting what the Chancellor of the Exchequer said. First, my right honourable friend may be interpreted as arguing that by not raising pensions as rapidly as earnings and so cutting state pensions in relation to average earnings, the cost to the Treasury of our ageing population is accordingly reduced. The "fiscal position" is not "put at risk" because the Treasury has less to pay out. Pensioners may be impoverished, but that is a price worth paying if fiscal stability is to be maintained. Our foolish competitors in, say, Germany, where 85 per cent of pensions are state pensions, will face the choice of huge fiscal deficits or higher taxes as their population, like ours, ages. That is one interpretation, but I do not believe that my right honourable friend meant that.
The second interpretation is more likely. It is that a balanced pensions system, underpinned by a state pension but enhanced by comprehensive private pension schemes funded from accumulated savings wisely invested, will provide security in old age, allow pensioners to benefit from the fruits of economic growth
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and at the same time protect the Treasury from the rising pensions commitments that could endanger the fiscal stability of countries reliant on state pensions. That, I believe, is what the Chancellor has in mind.
However, I am afraid that my right honourable friend has been seriously misled. I hope that today I can convince noble Lords of the following proposition: for any given level of pensions, the fiscal strains created by an ageing population are exactly the same whether pensions are state pensions, funded via private pension schemes, or a mixture of the two. Whether in a British-style private pensions system or a German-style state pensions system, taxes will have to rise to sustain the fiscal balance as the population ages. Before the Benches opposite become overexcited by that statement about rising taxes. I should point out that I am referring, as was my right honourable friend, to the long term—that is to say, the fiscal adjustment that will be necessary between 2030 and 2050.
It is clear that a pensioner's standard of living is sustained by a flow of goods and services, such as food, clothing, transport and medical care, and the services of capital investments such as houses to live in. There are two ways to secure that standard of living after retirement. The first is to store goods and services, like a squirrel hiding nuts. That is inefficient; indeed, for many goods and services, with the exception of housing, it is impossible. We cannot store up the medical care that we will need in 20 years' time.
So the second approach to sustaining our standard of living predominates. Living standards are secured in retirement by acquiring money, either from the state or pension funds, to purchase part of the contemporaneous flow of goods and services produced by the workforce. A vital component of the pensions problem is to ensure that retired people have sufficient money to buy what they need. That much is obvious.
However, there is a further, equally important problem. Some way or another, the working population producing the goods and services that the pensioners need must be persuaded not to consume all that they produce; otherwise, there would be nothing left over for pensioners to buy. There are two means by which goods and services are made available to pensioners: first, the working population saves, so they do not consume everything; secondly, the working population is taxed, reducing their income and preventing them consuming everything that they produce. Those are the only means by which pensioners' standard of living can be secured. The total real worth of pensions, pensioners' standard of living, is fixed by the amount saved by, or taxed away from, the working population. That is totally independent of how pensions are actually financed.
The problem that a Chancellor of the Exchequer will face in 20 or 30 years' time, whoever that person might be, is that to sustain the standard of living of a growing number of pensioners, in the absence of an historically unprecedented increase in savings rates, taxes will have to rise.
Let us consider what would happen in a British-type pensions system. We encourage people to save more for their retirement, so the population as a whole

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accumulates large amounts of paper assets in the form of stocks and shares in their pension funds. Come 2050, they all want to transform the money that they have accumulated into the goods and services that they need to live on, so demand in the economy rises.
If the successful policies pursued by my right honourable friend are still in place, and no Conservative government have been elected to return the economy to their tradition of boom and bust, the economy will be operating at or near full employment. So the extra demand will create inflationary pressures.
To contain those inflationary pressures the government of the day will be forced to raise taxes. The increase in taxes will have the dual effect of reducing demand to an appropriate level and, at the same time, releasing the goods and services the pensioners want to buy from the working population.
That is but one possible scenario. There are a number of different ways that things could work out, but they will all end up with the same conclusion. If the standard of living for pensioners is to be sustained, taxes will have to go up.
What then are we to make of the oft-cited solutions to the problems of an ageing population—for example, persuading people to save more and/or work longer? From what I have said already, I might have led noble Lords to believe that increased savings is an excellent means of eliminating the need for increased taxation. In the sense that increased contemporaneous savings play that crucial role of releasing resources from the working population, it is. But it is contemporaneous savings that matter; that is, savings in 30 years' time, not savings today. Indeed increased savings today could damage future pensions prospects if reduced spending resulted in slower growth and hence lower income for all in the future.
But the real problem is that increased savings today will result in a great accumulation of financial assets. As people retire they will want to cash in those assets to fund their standard of living. But who will buy them? The working population who will be saving for their retirement will be falling in numbers, so their savings will not be enough to sustain asset values. The recent report from the Pensions Commission chaired by Mr Adair Turner suggests that the,
"baby-boom effect … first raises asset prices by between 15–35% … with this effect then unwinding and then generating falling prices as the baby boom generation retires".
A fall in asset prices in excess of 35 per cent is a recipe for serious financial instability and for old-age impoverishment as pensioners, attempting to cash in their pensions, see the value of their pension funds fall. So when the noble Baroness, Lady Noakes, said at the beginning of today's debate that increased savings today are a "key part of solving the pensions problem", she was quite wrong.
The only way to avoid the unpalatable choice of higher taxes or pensioner impoverishment is to reduce the number of pensioners. Lest noble Lords take
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alarm, I should make it clear that I am not proposing a cull. The number of pensioners can be reduced simply by people working longer.
I am not in favour of raising the retirement age for everyone. Some of those who work in hard physical trades should retire relatively early, though perhaps they might be given the opportunity of taking up some other occupation. Far better than raising the retirement age would be to replace the whole concept. We could have a "flexible decade of retirement" in which people could choose when to retire between the ages of, say, 60 and 70. It has been estimated that if people were given the choice the average age of retirement would rise to around 67. If that happened a significant amount of the pressure on the Treasury would be reduced. Setting the flexible decade at a slightly higher level, say, 63 to 73, would reduce the pressure altogether.
That is the real answer to the Chancellor's commitment to fiscal stability. In the circumstances that we face today, with greater longevity and a falling birth rate resulting in an ageing population, fiscal responsibility points to the need for a higher average retirement age. At a time when older people are fitter and healthier than they have ever been, this is a solution that we can all rejoice in.
2.44 p.m.
Lord Bradshaw: My Lords, I am glad that the noble Lord, Lord Marlesford, said that one of the mistakes of the previous Conservative government was railway privatisation. I could give a number of other mistakes, but I shall accept the fact that that was a mistake. In fact, it was a mistake against the advice of every engineer and rail operator who knew about railways; it was a mistake which was forced on them by financial engineers.
The error has not been compounded elsewhere in the world. In Europe or further away, say, in Japan, the infrastructure has remained in the ownership of the state. The fable peddled from the Benches alongside me—that it was required because of some EU directive—was wrong. Simply a different system of accounting was required, which meant that operators paid a fair price for access.
I turn first to the position of Network Rail, which I understand is in the transport Bill, although I have not yet seen it. I have to pay tribute to the fact that it is reining in cost and promoting efficiency. But it remains a monopoly and a bureaucracy, and it has an extremely poor system of governance. There is a stakeholder board that is unwieldy and a few non-executive directors. That is a matter which merits attention. Even if the present people who have been appointed are doing the job, it is no recipe for running a company or a body holding public assets.
In particular, I plead with Ministers to keep open the possibility of vertical integration; that is, the train operator being responsible for signalling, planning the timetable and the day-to-day maintenance of the infrastructure. I am not talking about owning tunnels and bridges; they must remain as part of the basic infrastructure belonging to the state. I believe,

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particularly in Scotland and Wales, and on the periphery of the system, that there is a need to ensure that the management of the railway is brought under one person who is responsible to the general public for the standards of service that they experience.
I also plead with Ministers to address the subject of the length of franchises. Franchising is an extremely expensive business, which costs millions of pounds. It takes a huge amount of management and, perhaps I may say, official time. It creates a tremendous hiatus in training and investment. It is something that one should not enter into lightly. There is a very good case for saying that a franchise should continue as long as the person holding it meets the specification of government, which should, of course, improve over time.
I am particularly struck by the excellent speech made by the noble Lord, Lord Broers, and the need to think about the future of the engineering industry that supplies the railway. I should like to turn the Minister's attention to the northern franchise, which has just been let for a mere eight years with the possibility of two years' extension. The people in the north of England will have to put up with rotten rolling stock, which no one in the south-east would contemplate riding in. The people in the north have got that sort of prospect before them for 10 years. It needs a long franchise that will enable the franchisee to invest in new rolling stock and give the people of the north of England a railway of which they can be proud.
South East Trains is the one franchise that is still in public ownership following the failure of Connex. Provided the management continuously improves, why are the Government talking about letting the contract to people such as those in Hong Kong who the Evening Standard last night lauded as providing something much better than anything here? But they have got new trains and a new railway. I am afraid that South East Trains has got an old railway and is just getting new, rather unreliable rolling stock because it was forced to be produced so quickly.
The Atkins report on the north-south rail link was commissioned by the SRA. It has gone to the department, but I believe—to put it in the vernacular—it has been kicked into the long grass. But this is the sort of project to which the noble Lord, Lord Broers, referred. It would produce a 21st century railway like that of France, rather than keep on patching up GNER and the West Coast Main Line, which are very busy railways. By building a railway that enabled people to travel quickly to Glasgow and Manchester, the roads would be relieved of an enormous burden while at the same time the issue of regional disparity, to which my noble friend referred in his opening remarks, would be addressed. We would begin to make the north of England and Scotland even more attractive to live in. That would stop people crowding into the south of England. We need to consider this—we have not done so yet—and to address the great problems we face both on the roads and in the air.
My last comment on rail provision concerns rural lines, which we are told the Government propose to devolve to some form of local government. The costs of
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rural lines lie at the core of the system. Even rural lines have to be fenced to a high standard and have to maintain the same standards of safety required of the West Coast Main Line. Given that, we must be realistic about the kind of costs such rail lines can absorb. I take as an example the line from Middlesbrough to Whitby. It provides four trains a day, giving a miserable service over a miserable railway. Yet next door is the North Yorkshire Moors Railway, a thoroughly vigorous service run by someone who cares about it. The two could be amalgamated, but that would require the grip of Network Rail to be relaxed and the Government to he imaginative about the future of such railway lines many of which, while they would never be profitable, could operate much more efficiently.
I turn to Crossrail. I want the Government to be sure that they back the best scheme, one that brings the greatest possible relief to the Underground and to the congested railway lines around London. It must also serve the areas that have been designated for expansion, giving good access both to business and the airports. I hope that the Select Committee that is to consider the Bill will turn its attention to those needs.
On the subject of inquiries, I do not know whether the Government intend that inquiries relating to transport infrastructure should be included in their examination of the inquiry process. I think it is the opinion of most noble Lords that such inquiries are too lengthy and too expensive. I commend an inquisitorial system of inquiry such as that in France. Inquiries should not be seen as a lawyers' meal ticket, which so often they are. They should be led by the inspector who, following debate, should make his decision.
No mention was made of road pricing in the gracious Speech, but that could be beneficial to 60 to 70 per cent of motorists. They would be able to pay less tax if those who use the roads the most paid their fair proportion of tax. This proposal needs leadership from government to get it going. Similarly, congestion charging in towns should he a condition of funding local transport plans.
We are pleased about the road safety Bill, but we are concerned that too much is made of the persecuted motorist and not enough consideration given to the effect of speed cameras on severance, noise and speed on local communities. I would not like to be the first local county councillor to take away the speed camera from a village which has had the protection of one. We welcome the other proposals, but we believe that non-insurance is a big and growing problem among, cars on the roads.
Turning to bus services, the noble Lord, Lord Beaumont of Whitley, drew attention to the continuing decline in bus performance outside London. I ask the Government yet again: when are we going to get camera enforcement of buses outside London? We have been waiting years for something to be done, even though it seems to be a simple issue.
The noble Lords, Lord Haskel and Lord Drayson, spoke of the benefits of competition. However, I would say that in public transport the benefits of

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co-operation are far greater than those of competition, and I believe that a public interest test on competition would be much more valuable than the ones now being used. Moreover, congestion remains the biggest problem outside London.
We have no national port strategy. Although my noble friend Lord Davies referred to growing trade with India and China, we simply do not have the capacity to go on importing through our inadequate infrastructure goods from those places. On aircraft, we know that international co-operation is desperately important, but we would prefer to see taxation focused on aircraft rather than people. That would encourage better load factors and would enable us to levy the same charges on freight.
On policing, I cannot understand why the money for British Transport Police has to flow through the train operating companies, and I draw the attention of Ministers to the fact that the British Transport Police force is about to suffer cuts in manpower because it simply does not have the money to maintain force numbers. Again, this is an issue outside London. Within the capital the Mayor has made money available.
We welcome the transfer of safety issues to the Office of Rail Regulation. We hope that in the future these matters will be evaluated on a cost-benefit basis and on the appropriateness of the safety measures for the railway to which they are directed.
Lastly, I reserve a few words for the department. It is ultra cautious. It is penny-pinching while at the same time wrestling with certain legacy issues such as Railtrack. Many projects are being delayed for years. It has no independence from the Treasury. It suffers from ever more frequent changes of Minister. It has a long memory and little vision, and it is now exposed to the problem of complaints about the day-to-day failings of the railway being directed at Ministers rather than at another agency. The department has a poor record and requires vision and a programme to deal with transport's future success and growth.
2.57 p.m.
Lord Maxton: My Lords, it is with pleasure that I rise to make my first speech in your Lordships' House. I would like to take the opportunity to thank all the staff of the House for the courteous, efficient and friendly way in which they have eased my entry to this place. I would also like to thank my noble friends Lord Clark of Windermere and Lady Ramsay of Cartvale for acting as my sponsors, and for their support before and since my introduction. Lastly, I thank my noble friend Lord Hogg for his advice as my mentor, and all the old and new friends from all sides of the House who have given me such a warm welcome.
I am the first Maxton to have been elevated to the peerage, and there are those who will say that some of my ancestors will be turning in their graves or, in fact, probably swirling in their urns as I stand here. But I
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suppose if the Labour movement, particularly in Scotland, has an aristocracy, then I am a minor part of it.
Jimmy Maxton, the Red Clydesider, was my uncle. His sister, my aunt Annie, was a national chairman of the Independent Labour Party. My own father preferred to practise his socialist principles as an academic, being one of the founding fathers of the science of agricultural economics. My mother's father, James Alston, was an ILP Member of the Glasgow Corporation from before 1900 and up to the First World War, and my mother could remember Ramsay MacDonald and Keir Hardie staying in their home when she was a small girl. Indeed, she always described Ramsay as the most beautiful man she had ever met. I never knew what my father thought of that. One of my mother's sisters was married to another ILP Member of Parliament, Bob Nicol.
I served in the House of Commons for 22 years, moving during those years from being described as "a humourless man of the hard left" by Private Eye to a fully paid-up member of new Labour, but believing that in a rapidly changing world this Government's policies are very largely right and effective. During those 22 years I served on various Select Committees, was an Opposition Whip and a Front-Bench spokesman on Scottish affairs, working with my friend, the late, much lamented, Donald Dewar.
After the defeat in 1992—some noble Lords may not consider it a defeat—I resigned from the Front Bench and joined the National Heritage Select Committee. I was a member of that committee and its successor, the Culture, Media and Sport Select Committee under the chairmanship of Gerald Kaufman, until my retirement at the last election. Gerald was an excellent leader of the committee but he and I did not always see eye to eye. In particular we did not agree on the future of the BBC, and it is to that issue that I wish to address my remaining remarks today.
The Government have done much to improve the cultural and sporting life of this country, both with increased direct funding and through the lottery. But the future of the BBC is their next big task in this area and, although it is not mentioned in the Queen's Speech, during the next year the Government will begin the process of renewing the BBC charter by issuing first a Green Paper and then a White Paper. I hope and expect that they will give the BBC a charter for a further 10 years; that they will keep the present form of governance; and that they will retain the licence fee as its major form of financing. Those of you who know Gerald will know now why I disagree with him.
In saying this, I make it clear that I do not believe the BBC is perfect—very far from it—but for many, particularly the older sections of our society, it remains the major source of both entertainment and information. It is still probably the best broadcaster in the world, producing high standard television and radio programmes.
Nor do I say that as someone who believes that the BBC should continue to do the things it has done in the past or even what it does now. During my lifetime,

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technology and science have transformed the world in which we in developed countries live. Almost all of it has been for the better. We live a more varied and comfortable life than our parents, let alone our grandparents. It has been a massive revolution the like of which the world has never seen before, and it continues to accelerate at an ever increasing rate.
Nowhere is this truer than in the world of information technology, of which broadcasting is a very important part. Rapid changes in delivery methods mean that we are quickly reaching the point where we will watch whatever we want to watch, when we want to watch it and where. It has long been my view that broadband Internet will be the main vehicle for the delivery of news and entertainment within the next 10 years.
Can the BBC in its present form continue in this brave new world? I believe that it can and must. In this world of infinite choice and variety there will be an enormous demand for high quality, well produced and innovative entertainment; for balanced, unprejudiced news reporting and documentaries; and for education programmes that can be trusted to tell the truth. This demand will not be limited to this country; it will be world wide—particularly as English becomes increasingly the international language. As my noble friend Lord Davies, the Minister, said, this country must sell what it is best at producing—and high quality television and radio is exactly that. The BBC will be uniquely placed to meet this demand.
So why continue in its present structure rather than change it? First, the BBC must have a 10-year period of proper planning if change and innovation are to be successful. Secondly, the licence fee gives the BBC funding that is almost unique in the world in being independent of both political and commercial pressures. This allows it to experiment and to criticise without fear of loss of funding.
I have some sympathy for those who wish to transfer the regulation of the BBC's content to Ofcom but, on balance, I believe that if that were to happen the regulators would view the BBC as a commercial operation alongside other commercial companies.
The BBC is at its best when it produces programmes which are innovative and are not designed to compete with the commercial companies for viewers. Few of the great comedy series it has produced were made with the expectation of commercial success. No commercial company fixated on viewing figures would have ever given Dennis Potter air time or produced the great costume dramas based on our wonderful literary heritage.
In the new technologies, however, the BBC has also been in the forefront. Its website is recognised for its excellence and inventiveness. It has led the way in putting programmes live on the Internet and I personally enjoy the ability to listen to Humphrey Lyttelton's "Best of Jazz" when and where I want for a whole week after it has been broadcast.
Soon the wonderful archive of all the TV and radio broadcasts that have been recorded over the past 75 years and more will be available on the Internet. Perhaps being
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able to watch again and again football, rugby and cricket matches that you have seen before may pall eventually but, for those who come from Scotland, the thought of watching Scotland beating England again and again may be welcome. It is something that we do not do very often these days.
The BBC has moved successfully into the digital world and can and must continue to do so with new channels and new programmes. Eventually, in the Internet world I have forecast, the BBC may become a producer of programmes rather than a broadcaster as we know the term today, but I believe that that is still a role the BBC should play.
However, I should like to finish by outlining some criticisms of the BBC. First, it is at its best when it does not look constantly over its shoulders for viewers; it is at its worst when it does. This sometimes creeps into its news coverage. Some of us do not believe that it has been as balanced as it ought to have been in its reporting on the Iraq war.
I am more concerned, however, about the cynical view of politics that the BBC sometimes presents to the world—a cynicism that not only damages those of us who are active in politics but the democratic process itself. The BBC does this not because it thinks it is the right thing to do but because it thinks it is the popular thing to do and that it is meeting a populist demand. This is damaging the BBC as well as damaging politics.
I have criticisms of the BBC but I believe that it will have a very important role to play, in this country and throughout the world, in the next decade. As a result, urge my noble friends to ensure that the licence continues as it has in the past.
3.8 p.m.
Lord St John of Bletso: My Lords, I have the pleasure of congratulating the noble Lord, Lord Maxton, on his powerful maiden speech. The noble Lord joins your Lordships' House after a most impressive career in the other place from 1979 to 2001, having taken the seat from Teddy Taylor. He is well qualified to speak on the BBC having served on the National Heritage Committee and the Culture, Media and Sport Committee in the other place from 1992 to 1997. As the noble Lord mentioned, he served with Donald Dewar as the Opposition Front Bench spokesman on Scotland from 1985 to 1992.
Among his many other interests he is a keen athlete and sportsman. I shall be recruiting him into the House of Lords swimming team for our swim next year against the House of Commons.
I entirely concur with the noble Lord on his vision for the BBC, especially with the advent of the broadband revolution and the move to the digital world. Certainly the BBC is well positioned to expand its footprint across the world. I look forward to hearing a lot more from the noble Lord in your Lordships' House in the months and years to come.
Turning to the gracious Speech, the first paragraph states:
"My Government will continue to pursue policies which entrench economic stability and promote growth and prosperity".

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Clearly, this is a key objective as we approach the next general election, which is commonly believed to be on 5 May next year. Rather than make a general comment on our Government's economic policy, I should like to focus my remarks on three issues. First, what measures are being taken to stabilise the housing market?
Secondly, the gracious Speech referred to our Government's commitment to,
"reducing bureaucracy and the costs of Government",
and to the goal of promoting more efficiency. Here I should like to make a brief reference to the implementation of the Gershon report.
Finally, a central theme of the gracious Speech was security. I am particularly concerned by the increase in e-crime—that is, electronic crime—over the Internet and the impact that this is having on British business.
On the state of the housing market, the Financial Secretary, Ruth Kelly, in her foreword to the consultation paper in March this year on promoting more flexible investment in property, started with the words:
"A healthy and stable property market is a key element in any successful economy. In the residential market this is of crucial importance to individuals, not only as a place to live, but also as a form of long-term security and savings".
Over the past decade, we have seen a steady increase in the price of residential property, but we are now experiencing, if we are to believe what we read in the media, the start of what could be a major correction in property prices, particularly in the residential market.
In contrast to the rather bleak outlook for the residential market, we are seeing a steady flow of investment into commercial property. This is, in part, driven by the reasonably stable yields but also in expectation of the Government's proposal for a form of REIT—a real estate investment trust—or, in the Chancellor's words, a "property investment fund"—a PIF—which would change the tax treatment of property and make it more attractive to institutional investors.
As I am sure your Lordships are aware, REITs are all over the world; not only have they been a major spur to investment in commercial property, they have also been a huge boost to low-cost housing which is currently one of the major challenges facing our Government.
Consultation responses to the Government's proposal for the introduction of PIFs, as they are now referred to, were sought by 16 July this year. Can the Minister elaborate on the Government's timetable for considering these responses and say when a formal announcement will be made to move this much needed initiative forward? Can the Minister also elaborate on how the initiative will benefit not just the commercial property market but also the residential property market?
On the reference in the gracious Speech to our Government's commitment to,
"reducing bureaucracy and the costs of Government",
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can the Minister elaborate on what measures are being taken to implement the findings of the Gershon report? Among the report's many findings, Sir Peter Gershon believed that £15 billion a year could be released in efficiency savings by more efficient procurement and by government departments, councils and health authorities combining back-office functions. It appears to me that one of the greatest challenges facing the OGC—the Office of Government Commerce—in delivering the savings and achieving greater efficiencies is breaking down the many silos in national, regional and local government, let alone all the different silos among the National Health Service trusts.
Sir Peter also believed that another £5 billion could be saved in productivity gains from better use of information technology and more support staff in schools, policing and health. Controversially, he recommended that some 80,000 Civil Service jobs could go, as back office functions are merged, and purchasing improved, with additional job savings in the wider public sector.
The Chancellor has confirmed that he is seeking £20 billion of savings to spend on frontline services by 2008. The OGC has been tasked with delivering these savings. The Government have set out a very ambitious e-government programme, with 2005 the deadline for e-enabling public sector services. The "e" in "e-government" does not just stand for "electronic", it also stands for "efficiency" and "effectiveness". For the e-government initiative to be truly successful, there needs to be far more customer-centred government service and more efficient technology-driven processes. I certainly do not believe that the public have any idea of all the various benefits that are being driven through the e-government initiative.
There needs to be a lot more experience-sharing between the public and private sector. E-business is all about changing processes as well as changing technology. The noble Lord, Lord Bhattacharyya, spoke eloquently on the importance of business embracing technology and the need to promote more investment in technology commercialisation as well as knowledge transfer in the sciences. I entirely support his wishes.
Finally, I make brief mention on the theme of e-security and e-crime. At a time when more and more businesses are reliant on broadband and e-mail, e-crime is becoming a major threat to the success of both private and public organisations. Recent statistics have revealed that over 50 per cent of home computers are subject to hacking and over 70 per cent of all e-mail consists of spam. It is estimated that spam costs British business between £3 billion and £4 billion a year.
Recently, many businesses have suffered what are called DDoS attacks—distributed denial of service—by what the National High Tech Crime Unit at Scotland Yard refers to as botnet armies. In one of its recent reports, the Gartner Group claimed that the greatest security risk facing large companies and

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individual Internet users over the next 10 years will be the increasingly sophisticated use of social engineering to bypass IT security defences. Time precludes me from elaborating on this subject. I simply recommend that the Government give serious consideration to the recommendations of the recently published report of the All-Party Parliamentary Internet Group on the revision of the Computer Misuse Act. The report makes some 24 very powerful recommendations on this subject.
In conclusion, these days of debate following the gracious Speech are, in my opinion, a classic example of the value of your Lordships' House, with its multidisciplinary talent pool. If only the public had more exposure to the works of your Lordships' House. With the election forecast for 5 May next year, I wish the Government good luck with their long list of legislation.
3.18 p.m.
Lord Macdonald of Tradeston: My Lords, the coming year will be an important one for the future of public service broadcasting and therefore for our cultural affairs in Britain. I am sure that discussions in your Lordships' House will be much better informed, given the impressive contribution made earlier by my noble friend Lord Maxton in his maiden speech. As my noble friend said, early in 2005, the Department for Culture, Media and Sport will publish a Green Paper on the renewal of the BBC charter, followed later in the year by a White Paper. I hope that what I am about to say will complement my noble friend's cogent analysis.
The BBC and its governors are discussing radical restructuring of the corporation, with thousands of jobs transferred from London to the regions of England or to the nations of Scotland, Northern Ireland or Wales. Whole departments or even channels in television and radio will be rebased, along with their staff, beyond the M25.
Meanwhile, other areas of broadcasting also are in flux, as their regulator, Ofcom, advances its ongoing review of public service broadcasting in Britain. Ofcom is issuing new digital replacement licences for the ITV regions. Ofcom also proposes to cut the amount of ITV local programming that is made about regional matters. Channel 4, which does not have a regional broadcasting opt-out, has dropped plans to merge with Channel Five, but now warns that it might be hard pressed financially to sustain its public service commitments and its programme quality by the time digital switch-over looms at the end of the decade. Ofcom seems none too alarmed by Channel 4's potential plight and proposes instead that public money might better support quality and innovation through a new public service publisher—PSP—an intriguing, but, I think, deliberately undefined option.
It is in that changing context that I wish to comment on two aspects of public service broadcasting policy and their impact on cultural affairs: first, the important role of programme production in the nations and regions of the UK; and, secondly, the opportunities offered by Ofcom's PSP proposal to enhance cultural, educational and socially purposive programming in the digital age.
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On the first issue, the BBC must play the key role, devolving UK production to the regions. This will not be easy. Encouraged by Prime Minister Ted Heath in the early 1970s, the then BBC Chairman, Lord Swann, made real progress in building production capacity in Bristol, in Manchester and at Pebble Mill studios in Birmingham. In the 1980s, the devolutionary thrust weakened at the BBC, as it did elsewhere in political affairs, but in the 1990s, John Birt, as director-general, gave more support to the regions, and Greg Dyke, taking over in 2000, recommitted to the cause of devolution.
The new team leading the BBC now, Michael Grade as chairman and Mark Thompson as director-general, seems too to be committed to radical change, including the outsourcing of more BBC programming to independent producers. Michael Grade has of course unrivalled experience across the full range of television and film production, both here in the UK, with ITV, Channel 4 and now BBC, and in America. Mark Thompson also has led Channel 4, which commissions its programming from independent producers, allowing it to function with fewer than 1,000 core staff against the 27,000 currently employed at the BBC, with most based in London.
They can see that decentralising and outsourcing make sense politically and culturally as well as being good for viewers. I trust that both men, on past form, will ensure that the BBC is sensitive and supportive to the staff whose in-house roles in London and career prospects might be at risk. The only comfort that I can offer those London-based BBC staff comes from 30 years spent in ITV before joining government, having worked for Granada in Manchester and Scottish Television in Glasgow. I know that worthwhile programmes can be made very congenially outside the metropolis.
My concern is that such worthwhile programmes will not in future be made in such quantity and quality for the UK network schedules by the ITV regions. The old ITV federation of 15 separate companies was a unique system that saw London-produced programming outweighed by peak-time drama, entertainment, comedy and factual programming produced by Granada in Manchester, Yorkshire in Leeds and Central in Birmingham and Nottingham, with notable contributions also from Norwich, Southampton and Newcastle as well as from Scotland, Ulster and Wales.
That robust regional variety must now be reduced by the inexorable consolidation of the old ITV regional network into ITV plc, largely based in London. I welcome the goal that might be agreed by ITV and Ofcom that 50 per cent of ITV's domestic network production would still be sourced outside London. That said, it is still important that the proposed BBC plan for devolution is encouraged to compensate for what will be lost at ITV. It is important that life throughout our varied regions is represented and celebrated on UK screens.
Programme production centres can employ thousands of people and stimulate local economies and local cultural life when creative talent is

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encouraged to thrive outside London, challenging, as Granada in Manchester always did, the metropolitan mindset of London-based companies.
Those aspects are particularly important in the nations of Scotland, Wales and Northern Ireland. While viewers in those three countries make up about 17 per cent of audiences and licence payers, the volume of programming they produce for UK network schedules is much lower. Indeed, I would be surprised if more than 1 or 2 per cent of peak time UK programming was made in Scotland, Ireland or Wales. Surely, that cannot be right.
There are also more onerous local obligations on broadcasters in the national areas, as we would expect. Certainly they must make more local programming than any region of England, for obvious reasons. But I encourage Ofcom and the BBC to make a special effort to ensure that peak-time network schedules in the UK become a bit more British. I urge my noble friend the Minister to suggest ways in which that might be brought about in the forthcoming DCMS Green Paper.
My second concern is for the future of public service broadcasting in education, the arts, and minority and social action programming. As I mentioned earlier, the Ofcom proposal for a public service publisher with a budget of £300 million to fund good works is left largely undefined. Is it a centre for commissioning, scattering its PSB programmes across a multitude of digital channels? Would the PSP support its own channels? Will it he used simply to plug the gaps created by commercial competition and declining revenues in the old linear schedules? Or will the PSB anticipate the convergence of broadcasting, telecoms and IT; and the advances of interactivity and of personal video recorders, video on demand, electronic archive retrieval and electronic programme guides?
That is where I sense the future lies, but the options change with bewildering rapidity. Could the PSP with its notional annual budget of £300 million—still only a proposal out for consultation, I stress—be made to add up to something more than the sum of its programme parts? Could the PSB be a coherent, future-proofed, more purposive entity, working with other interested parties, potential customers and audiences in the communities of education, of arts, of industry and the voluntary and social action organizations—allied, of course, with that dominant supplier of public service programming, the BBC?
I conclude by again inviting my noble friend the Minister to consider constructing a few paragraphs in his Green Paper which might support a more detailed exploration of the prospects for a public service publisher.
3.28 p.m.
Baroness Bonham-Carter of Yarnbury: My Lords, as has been said, the gracious Speech contains no proposals for legislation directly relating to broadcasting. Nevertheless, as the noble Lord, Lord Maxton, in his excellent maiden speech, and the
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noble Lord, Lord Macdonald of Tradeston, in his equally excellent speech, have demonstrated, there are major challenges for Her Majesty's Government over the next 12 months.
In highlighting my concerns, I should declare an interest as an independent television producer. Broadcasting is changing, and changing rapidly. The advance of the digital age means that there will soon be a multi-channel landscape very different from the one we inhabit today. This will pose particular challenges to the role of public service broadcasting of which this country, as the noble Lord, Lord Maxton, said, has a unique system that is the envy of the world.
So I welcome the setting up of Ofcom and its excellent report, both phases 1 and 2, on the present and future state of public service broadcasting. Its rigorous and detailed contribution to this very important debate is, I believe, invaluable. Its warnings about the effects of the digital TV age on this area of broadcasting should be heeded. Its strong endorsement of the BBC and its assertion that the BBC should continue to be funded by the licence fee should be applauded, as well as its affirmation of the need for a not-for-profit Channel 4.
Some of Ofcom's conclusions awaken in me cause for concern, however. Like the noble Lord, Lord Macdonald, I am concerned about regional programming. ITV is to be allowed to reduce its off-peak regional output. This, it is argued, is eminently sensible because nobody watches those programmes. I am reminded of the tactics employed by British Rail when it wished to close down local railway stations. The timetable would become more and more impractical; passengers, used to catching trains to get to work, to go shopping and to pick up their children, would find that they no longer existed. And what a surprise—they would stop patronising the station, leading to its closure as unused and uneconomic. In the same way, ITV regional programmes have been shunted to graveyard slots, as well as being severely underfunded.
That brings me to another concern—that of content. There is much talk about quantity, but not enough about quality. When there were only three or four channels, there was fierce competition to make striking programmes that achieved critical acclaim and wide audiences. With the explosion in the number of channels, the pressure on broadcasters is increasingly to make money and minimise investment in unprofitable areas such as news and current affairs. It is essential that an eye is kept on quality of content.
As the noble Lord, Lord Macdonald, said, Ofcom has a big idea: the setting-up of a public service publisher, a channel devoted to public service broadcasting, created to maintain plurality. That is intriguing—indeed, thought-provoking, as the speech given by the noble Lord, Lord Macdonald, proves. But again, I have concerns. Where will the £300 million a year come from, which Ofcom suggests the channel will need? One suggestion—a tax on commercial broadcasters—seems odd, as the multiplication of channels squeezes revenues. Another, an enhanced licence fee, risks damaging the unique relationship between the BBC and the public. And where does it leave Channel 4? I am alarmed at the

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plight of Channel 4, whose nightly news is public service broadcasting at its very best. Would not the existence of a second publicly funded competitor undermine Channel 4 as the public service alternative to the BBC, pushing Channel 4 even further away from its original remit?
Finally, what of the BBC itself? As we have heard, the process of charter renewal will be a big factor in the forthcoming year—this against the background of unprecedented internal upheaval. As my colleague in another place, Don Foster, put it, the war led to regime change not only in Iraq but in the BBC. It also exposed a crucial problem in the area of governance. It cannot be right that BBC governors are both champions and regulators of the corporation. In a changing world, the BBC must change, too—and I believe that it recognises that.
In a recently published favourable independent review of its digital radio services, the BBC is described by the distinguished former TV executive, Tim Gardam, thus:
"I see the BBC like a well meaning herd of elephants, stomping through the jungle, trumpeting its achievements, each executive holding onto the tail of the one in front. They are undoubtedly a force for good, but unfortunately can be oblivious to what might get crushed under their enormous feet".
I wish I had written that. The image is taken from Walt Disney's "The Jungle Book".
The task is to ensure that that force for good is ready to meet the challenges of the future, that it learns where to place its enormous feet and to pick its way through the jungle—as I believe that elephants can—rather than stomp. As the noble Lord, Lord Maxton, said, a well run, independent and securely funded BBC has to be the cornerstone of high-quality public broadcasting in the digital age.
3.35 p.m.
Lord Rosser: My Lords, at the risk of causing a walkout from your Lordships' House, I shall make a few comments on the state of association football and in particular the position of smaller Football League clubs and those in the non-league game. "Non-league" in England is the term usually applied to those clubs below the Premiership and the 72 clubs in the Football League. My comments relate primarily to those many hundreds of non-league clubs that compete at a level that enables them to charge for admission to games.
I have no interest to declare in the normally accepted sense used in your Lordships' House, but I do have a keen interest in watching live football, and in particular the non-league game. I cannot though match the involvement and interest of my noble friend Lord Pendry, who has had a stand named after him at Stalybridge Celtic's football ground. I can claim though, on two occasions when seeking directions to a ground, to being asked if I was the referee. I am not sure what that says about me. I am even less sure what it says about referees.
The major Premiership football clubs in this country have become major commercial enterprises behaving like major commercial enterprises. However, for smaller Football League clubs and, in particular, non-league
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clubs, the position is very different. Except for a very limited number with full-time playing, management and coaching staff, non-league clubs are dependent on the support of committed volunteers in the administration and organisation of clubs, the raising of money and the running of junior teams. Many of the volunteers put some of their own money into their clubs to ensure their continued existence or future development.
Some money is available to non-league clubs for specific projects, such as improving ground facilities for players and spectators, from bodies such as the Football Foundation. But regular sources of income to clubs might come from sponsorship, clubhouse bar and function hire receipts, ground and programme advertising, draw tickets, and gate receipts from home matches. In a successful year there might be some prize money for progressing in national cup competitions. If a non-league club is really fortunate it may secure money from the transfer of a player still under contract to another club in a higher league. The total income though from all those sources is likely to be relatively small. Very few non-league clubs have average attendance figures in excess of 1,000 spectators and most play in front of fewer than 300.
However, such clubs are very much a part of their communities, whether those communities are an area in a large conurbation, a small or medium-sized town or city, or a large village. Local newspapers carry reports on their games along with the latest news about them. Many clubs also run a number of junior teams for youngsters of different ages, and some now run women's teams. Without them there would probably be little or no regular organised sporting activities for many young people during the football season.
The costs of running such clubs though are not inconsiderable, even with numbers of committed volunteers. The expenditure incurred on running and maintaining the ground and pitch, travel to matches, purchasing equipment and gear and paying part-time senior team players and managers all adds up. Many clubs are dependent on a chairman or key directors providing financial support. While such individuals have clearly been a great help, and will continue to be a great help, to many non-league clubs—as well as to well-known major clubs, such as Chelsea—there is a potential downside if a club's survival is dependent on the financial support from one individual continuing. Sometimes the potential downside has turned into reality.
At the end of last season, one of the biggest non-league clubs, Telford United, went out of existence because the business interests of the owner on whom the club had become dependent got into financial difficulties, and the money to run and finance the club dried up. Thanks to the efforts of committed supporters a new club, AFC Telford, has risen from the ashes and has started life playing in a league three tiers lower down in the structure than the now defunct Telford United.
A further club, Hornchurch, in Essex, has just run into financial difficulties, again because the individual who had recently taken over the club, and provided money to pay very large salaries by non-league standards to attract higher quality players, found his business interests

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crumbling around him. The result has been that expenditure, including the wage bill, has had to be suddenly reduced part of the way through the football season. Players have left for other clubs, and the hopes of supporters and committed activists at the club for future success and development, which were raised so dramatically by the new owner, have been dashed just as suddenly.
Another club, this time in south-west London, was also taken over by a new owner whose money some felt might save the club from folding. However, the ground has now been sold and the club is now a tenant in what was formerly its own home, while it is claimed that the new owner made a considerable sum of money on the sale. Once again it is the supporters of the club who have felt frustrated, powerless and ignored.
A long-established Football League club, Wrexham, is also currently in a situation where its future existence is in doubt due to significant outstanding debts, amid allegations that the controlling owner has no real interest in football and sees the sale of the ground in a prime site as the source of a sizeable capital sum.
The news, though, is not all bad. Other clubs are run by the supporters themselves. One such club is AFC Wimbledon which was created and established some three years ago by disillusioned and angry supporters of Wimbledon Football League Club when they found out that their club was literally being taken away from them by the owner through being moved, with the agreement of the national football authorities, from south London to Milton Keynes. AFC Wimbledon, owned and run by its supporters, is one of the best-supported non-league clubs in the country with attendances for home matches of around 2,500 to 3,000 despite the fact that it is currently three leagues below the top level of non-league football, albeit working its way up fast.
Supporters Direct is a government initiative, funded by public money, to help people who wish to play a responsible part in the life of the football club they support. It exists to promote and support the concept of democratic supporter ownership and representation through mutual "not for profit" structures, and to promote football clubs as civic and community institutions. Supporters Direct works to bring about the formation of supporters' trusts on football club boards and the ownership of shares in clubs by supporters' trusts, and the pooling of individually held shares in a club under the influence of the trust.
There are more than 100 supporters' trusts across England, Wales and Scotland. Some 59 hold equity within their football clubs, and 38 football clubs have supporter representation within the boards of their clubs. There is supporter ownership or control at two Football League clubs and supporters' ownership at six non-league clubs. Supporters' trusts have been crucial in saving some 13 clubs, either by providing significant funds towards the reconstruction of the business, or by organising supporters and awakening interest in the club from the local community, which has encouraged local businesses and individuals to come forward.
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The message, I believe, is clear. Football clubs are part of their community and should be making an important contribution to the life of their community, and both clubs and communities should seek to foster and develop their relationship. Clubs are at their strongest and most stable when the direct involvement of committed supporters in the running of the club is real and meaningful.
The financial support of individuals, either direct or through a company, where they are committed to the club, is welcome, indeed in many cases essential; but in some instances such support, where it has involved a controlling interest, has proved, like fire, to be a bad master. Football clubs are not toys or status symbols for the well off to be picked up and discarded as the fancy takes, or as financial failure dictates. Neither are they, as has happened in more than the odd case, sources of quick gains through the sale of the ground for development to the financial advantage of a new or relatively new owner rather than the club itself.
I hope that the Government will strengthen their encouragement of democratic ownership and control of football clubs by those with the interests of the club at heart, and real and meaningful involvement in the running of clubs by supporters. I hope they will also encourage the relevant national football authorities in this country, in particular the Football Association, to look at introducing arrangements that will ensure that a club has the financial resources to enable it to complete a season and not be vulnerable to financial problems faced by, or other decisions made by, a controlling owner or company during the course of a season.
The relevant football authorities should also be encouraged by government to develop codes of good practice and governance for the running of all clubs and to require evidence of the good intentions and commitment of new owners to the continuation and development of a club. Such measures would at least make some of the recent difficulties which have been encountered, and seem to be on the increase, less likely, and would also give those who actively support a club and recognise its value to the community greater confidence and a greater influence as well as a better chance of ensuring their club's survival if its future is suddenly placed in doubt.
This is an issue of concern to many who love the game of football. I hope that the Government will use their influence to ensure that appropriate actions are taken by the relevant bodies. As a former manager of Liverpool, Bill Shankly, once apparently said,
"Football isn't a matter of life or death, it is far more important than that".
3.46 p.m.
Lord Clement-Jones: My Lords, it is a great pleasure to contribute to today's debate in a new Front-Bench role. The debate has covered a very interesting pick and mix of policy areas and has, I suspect, been neatly designed to span the areas of responsibility of the noble Lord, Lord McIntosh.
The format of today's debate clearly has great advantages. We have, for example, elicited five excellent maiden speeches. There was also a very high professorial

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content in the debate, and there seemed to be a high and rising Trinity Cambridge content as well. But I think the most notable aspect of the debate has been the spontaneous uprising on the government Benches in defence of the DTI. It has been a very valiant attempt to break the reforming spirit on these Benches. I am afraid, however, that that attempt will ultimately be unsuccessful.
I should like first to say a word about past legislation. Although the Government are always keen to trumpet the benefits of new legislation, they seem overcome by reticence to talk about the Licensing Act which went through this House not so long ago and which increasingly conflicts with the Government's concerns about binge drinking. In fact there are growing concerns about the impact of the legislation, including the cost to local authorities of administering the Act; the massive increase in licensing fees for sports and recreation clubs despite assurances from the Secretary of State when the legislation was considered by Parliament that it would not prejudice them; and police concerns about the impact of the legislation on crime and anti-social behaviour, as we ourselves warned at the time.
The Gambling Bill was also unmentioned in the Queen's Speech, and for similar reasons. We on these Benches welcome a number of aspects of that legislation, notably the strengthening of the regulator—to be renamed the gambling commission—and the regulation of online gambling. We also welcome what appears to have been a considerable climb-down by the Secretary of State in moving from 40 regional casinos to eight pilots. However, our reservations, first articulated by the Joint Committee, are still present and are shared by many.
Despite the contrary experience of Atlantic City, we accept that there may be potential regeneration benefits from the creation of super or destination casinos. From the outset, the concern on these Benches has been about the possible proliferation of and increase in problem gambling which could result. It does not require close study to be aware that considerable health and social problems could be created. What, therefore, will the pilot schemes consist of? What will they be designed to pilot? Can the Minister confirm that the eight in the pilot will all be destination casinos and not on the high street? How will they be evaluated? How long will the pilots last?
Another reservation is that, generally, there has been a lack of detailed impact assessment. The Government do not even appear to know how many existing casinos there are in this country and what the impact of super casinos on them will be. Also, little assessment appears to have been made of the impact of the super casinos on the National Lottery and hence on Olympic funding.
Exactly what pledge has been given on taxation to US operators? Above all in this new regime the planning powers and obligations of local authorities must be absolutely clear. We welcome the concessions that have been made by the Secretary of State. However, local authorities must be able to approve one scheme over another and one operator over another. Local
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authorities must not have the threat of legal action and massive compensation hanging over them. We welcome the undertaking to bring forward a national policy statement that will help to give greater certainty, but that will not be enough. The Government claim that there is a triple lock with regional and local planning approval and then the required endorsement of the Gambling Commission. However, what are the underlying principles that must be satisfied if planning permission is to be given?
We are promised a new lottery Bill. I have always been a supporter of the National Lottery and I welcome the prominence given to its tenth anniversary in recent celebrations. However, it is very unlikely that we on these Benches will support the new Bill. Essentially the Bill tries to rubber stamp the fait accompli—the merger of the New Opportunities Fund and the Community Fund to form the Big Lottery Fund. That will take half of the available lottery money. It is no wonder that public concern is rising about the use by government of lottery money.
When the New Opportunities Fund was created many of us had reservations about whether it was right for the Government to have access to lottery funds in this way and about the danger of lottery funding being used as an alternative to expenditure out of taxation rather than as additional to it. Our fears were realised. This is a further step in the creeping takeover by the Government of the lottery, and my party will oppose it.
A further object of the Bill appears to be to give the Big Lottery Fund more power over balances. But what does that mean? Does it include those that have been allocated by the heritage fund? The right reverend Prelate the Bishop of Durham spoke of the importance of those heritage projects. Balances allocated by the heritage fund require disbursement to be made over a period of years. Definitions in this context will be vital.
Many other aspects of the Minister's DCMS portfolio will require decisions and/or legislation over the next year or two. The first of these is sport. The Government have trumpeted their commitment to require PE for a minimum of two hours a week for all children aged five to 16. To be effective the CCPR and other bodies are rightly calling for PE to be put into the school curriculum. The Government seem to have ducked this issue but are already increasing the target to four hours when the two hours do not even feature in the National Curriculum.
I want at this point without encouraging complacency—I refer to the disgraceful example of Real Madrid fans in this regard on two occasions in the past week—to acknowledge the great progress that has been made in eradicating racism from our football grounds. I hope, however, that we will shortly be able to provide good examples to other European countries in another way—by the increase in numbers of people from ethnic minority communities becoming involved in football management at the highest level, which is long overdue. In that context I wish to put on record our support for the creation of the new CEHR, but I share many of the reservations expressed by the noble Baroness, Lady Young of Hornsey, in her excellent maiden speech and by my noble friend Lady Thomas.

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The debate on the future of public service broadcasting in the digital age continues. The Ofcom review of public service television broadcasting is of great importance, as was pointed out by my noble friend Lady Bonham-Carter, the noble Lord, Lord Macdonald, and the noble Lord, Lord Maxton, in his excellent maiden speech. We need to examine carefully ideas put forward such as that of having a public service publisher. We will also watch very carefully the financial health of Channel 4 as the digital age approaches. I refer to the crucial issue of how, in the face of lowering income to public service broadcasters as digital switchover approaches, the appropriate level of subvention can be given to those broadcasters.
However, the absolute essential in the middle of all this, as the BBC charter review is carried out, is to make sure that we secure a strong independent and securely funded BBC. I was one of those people massively disappointed by the Hutton report, supportive of Greg Dyke and Gavyn Davies, and angry at the way in which the governors of the BBC conducted themselves with an abject apology to the Government, especially now it is clear that Gilligan was in substance right. I welcome, however, the changes that have already been made by Michael Grade, the new chairman, to the governance of the BBC, and his and Mark Thompson's outsourcing and decentralising agenda, as outlined by the noble Lord, Lord Macdonald.
But clearly there is a conflict between the representative and regulatory role of the governors of the BBC, as was pointed out by my noble friend. At the end of the day we need to move further and recognise that a new independent regulator for all public service broadcasting needs to be created. At the same time we need to make sure that the BBC licence fee continues at roughly the same level and that the arrangements are given a 10-year run. The timing of digital switchover is, of course, sensitive. We very much welcome the remarks made yesterday by the noble Lord, Lord McIntosh, as regards the needs of vulnerable consumers being crucial in this respect.
A neglected corner of the DCMS portfolio is tourism. Currently there is a major tourism deficit with expenditure on holidays by Britons abroad far outweighing what foreigners spend here. We need a major programme of promoting our tourism facilities to redress that deficit.
In the remit of the DCMS I hope that the Minister will carefully consider the merits of using our influence in the EU to secure an extension to the copyright in the EU to sound recordings, as advocated by the vast majority of organisations representing the creative industries. US copyright lasts for at least 70 years after an author's death, in contrast to a fixed period of 50 years in the UK. This term, common across the EU, is among the shortest worldwide. The UK is the home of many music artists. Our creative industries make a major contribution to our
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economy as well as to our social and cultural life. We are a world leader in this area. There is a major discrepancy between the treatment of audio visual material and sound recordings. I very much hope that the Minister will review the situation carefully and make recommendations to the Commission and other EU member states.
I turn to some of the other subjects covered by the debate. My noble friend Lord Bradshaw dealt comprehensively with transport. We welcome with reservations the new Railways Bill and the Bill to establish Crossrail. The former rightly plans to give greater control over rail services to the Scottish Executive and the Welsh Assembly, and we welcome that as giving opportunities for integration of transport services. But how will the detail work out in practice? Will closing rail lines be made that much easier? Are we due for another Beeching experience? It is with some trepidation that we see the Government taking control of rail strategy.
We on these Benches have long supported the concept of Crossrail. However, after the Montague report there remain significant questions. The new Bill will be a hybrid Bill. I too ask: what is the Government's financial commitment at this stage? Is the Bill a genuine step forward? Like my noble friend Lord Bradshaw, I ask: is it the best scheme available?
As a Londoner I know that there is greater dissatisfaction with transport than with any other aspect of life in the capital. Inaction is not an option. We should take note of the very important points raised by the noble Lord, Lord Broers, in his absorbing maiden speech.
I do not propose to dwell on the economy and industry as my noble friend Lord Newby dealt with that area at length. We, of course, have major concerns, both domestic and international. The indicators appear to be turning down. We have had the worst fiscal October for 10 years. Retail sales are down significantly and house prices are falling. Will the Chancellor break the golden rule? Many questions arise that I hope the Minister will answer.
What will be the impact of the continuing dollar weakness? On his recent tour the US Treasury Secretary made it clear that little action to cure the deficit would be taken by the US Government. The answer simply lies in increased growth. Is our own Treasury happy to live with that approach? My noble friend Lord Newby touched a real chord when he mentioned regional assemblies and housing development. A completely inadequate regional policy is being pursued by this Government. Indeed, the Chancellor is pursuing a completely counter-productive policy as regards Europe.
Inevitably, I have been critical of many aspects of the Government's policies today. However, I wholly share their enthusiasm regarding the desire for the Olympic Games to be held in London in 2012. Clearly, for the Olympics to be successful, all the strands discussed today—sporting organisation, financial backing, transport planning—will have to be pulled together. If successful, the Olympics in London will benefit the UK as a whole. The funding plan is robust, and there will be a strong legacy from

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the games. The bid has complete support from these Benches, and we want to support all efforts made by the noble Lord, Lord Coe, and his colleagues right up to the deadline of 6 July to make sure that we secure the games for London.
4 p.m.
Baroness Buscombe: My Lords, we have had a very interesting debate in response to the gracious Speech. I want to join other noble Lords in congratulating the right reverend Prelate the Bishop of Durham, my noble friend Lord Steinberg, the noble Baroness, Lady Young of Hornsey, and the noble Lords, Lord Broers and Lord Maxton, on their excellent, informed and sometimes very entertaining speeches.
This Session promises to provide the opportunity to debate a number of issues central to the way in which our economy is managed. Falling under the umbrella of the economic affairs brief are subjects of great yet often understated importance to the cultural well-being of this country, including the arts, music, broadcasting, tourism and the National Lottery.
Changes are proposed to the National Lottery, a relative newcomer to the culture of this economy. When Her Majesty's then government established it 10 years ago, it was understood that money generated for good causes would be allocated to projects that the Treasury would not fund. That founding principle has been seriously eroded by this Government, as ever-increasing funds have been used to support state projects. As a direct result, many good causes have suffered.
If passed, the lottery Bill purports to create a single lottery identity—the Big Lottery Fund—by merging the current New Opportunities Fund and the Community Fund in a single community distributor. Any reduction in bureaucracy and consequent cost-savings afforded by effecting such a merger must be welcome, but that intended union must surely sound alarm bells, as the Government will effectively acquire control of an even greater share of lottery money. Only recently, the new chairman of the Big Lottery Fund, Sir Clive Booth, went so far as to encourage greater investment in state projects from lottery sourcing. At a recent conference entitled "Funding the Future", he stated:
"We want to add value to the Government's own programmes".
Further increase in the level of state project funding seems certain to appear, and we will unquestionably require assurances that, in particular, the levels of charitable support provided under the Community Fund will not simply be forgotten and swallowed up in the new conglomerate. The repercussions of such profound changes to lottery funding may affect numerous non-profit organisations that rely on such funding. For that reason, we must ensure that lottery funding is preserved for deserving causes and not merely utilised as an addendum to facilitate government policy implementation, which should rightly be funded through the traditional mechanisms. It seems as though I shall join the noble Lord, Lord Clement-Jones, in some interesting debates on the Bill.
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On the arts and our national heritage, I would like to touch on four issues that help to outline the importance to our nation of the tourism industry and both public and private heritage. First, I am pleased that the Government have responded to the Theatres Trust report, Act Now!, by setting up a working group to consider the future of our much loved privately owned theatres. I hope that, in the coming months, we will learn more about what the Government are prepared to do to underpin and support the long-term future of those theatres.
Secondly, we are disappointed by the failure of the Government to implement any of Sir Nicholas Goodison's recommendations set out in his report, Securing the Best for our Museums. It followed a review undertaken by Goodison at the Treasury's suggestion, given the widespread concern at the continuing sale of works of art overseas. In contrast, we welcome where there are good things happening for our museums. I include the current initiative for renaissance of our museums in the regions. Thirdly, with regard to English Heritage, I take with good faith the assurance that I received last week from the Minister in the House that the current efficiency drive is not designed to cut services.
On a separate and fourth note, we are deeply concerned about the unremitting pressure placed on the very survival of our privately owned heritage. In essence, we need to recognise that those who work tirelessly to preserve artistic entities in our privately owned historic houses for the benefit of the public are burdened with ever-more stringent regulation and costly repairs. That inevitably leads to the sale of more and more of the historical contents of our houses, diminishing our history, heritage and sense of place. The overall ability of the majority of owners to maintain their historic properties has deteriorated over the past seven years, and the new catch-all tax on pre-owned assets will exacerbate the problem and has already created great uncertainty. The Government have taken on board the need to address the future of our privately owned theatres; will they now also look to the long-term sustainability of our historic houses?
The Gambling Bill will pose a real challenge when it comes to our House early next year. We on these Benches appreciate that there is a serious need to consolidate our outdated gambling legislation and, in particular, to cover online gambling, betting exchanges and fixed-odds betting terminals. On a personal note, I must express my frustration that, after five years of consultation including the Budd report and two reports by the Joint Committee, the Government are in the process of changing their mind and amending the Bill. This feels like the then Licensing Bill all over again.
We note that the Government have agreed to limit the number of regional casinos to eight. Yet there is no excuse after five years for having got things so wrong. We are forced into a situation where we have to wait while the Government return to consultation. That is a deeply unsatisfactory and pretty shambolic way of legislating. In any case, we are still missing crucial information such as details of the code of conduct that

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the gambling commission will draw up and the information about the taxation regime, not to mention the huge swathes of secondary legislation which will carry most of the fine detail; gosh, I have heard that before. I hope that some of it will be available, at least in draft form, when the Bill reaches this House from the other place.
The Bill offers further complications because it involves co-operation and interaction between the DCMS, the Treasury and the ODPM, all three of which have different priorities and agendas. That is particularly apparent on the issues of planning—there is serious concern about that—taxation, tax breaks, incentives and bribery. I was not encouraged by the comments of the Minister at Second Reading in another place that:
"It is my job as Secretary of State for Culture, Media and Sport to establish the regulatory framework; it is the Treasury's responsibility to establish the taxation regime".—[Official Report, Commons, 1/11/04; col. 30.]
We must ask ourselves who is to benefit from this Bill. We need to be sure that we are legislating in such a way as to protect our own citizens, our towns and our existing indigenous gaming. Here, I wish specifically to include the bingo and casino industries. There are many people who believe that all three are threatened as a result of the Bill. We will do our utmost to ensure that that will not be the case.
The term ahead presents further challenges, once again, for the media industry—particularly for the BBC through the period of charter renewal. Furthermore, as technology progresses at an ever-increasing pace, the advance towards digital television and analogue switch-off is gathering momentum. The broadcasting industry as a whole will be forced to deal with issues concerning the opportunities and pitfalls provided by the switch to digital television, in addition to the challenges presented by the development of new medium and methods by which television and radio can be accessed.
In addition to the challenges confronting the industry in general, the BBC will be forced to face a fundamental re-examination of its unique role, scope and financing throughout the charter renewal process. A Select Committee on charter renewal will be established in the new year in your Lordships' House to scrutinise primarily the effects of four BBC-initiated reviews which are currently under way. In addition to those reviews, the BBC is undergoing a number of further changes, the most notable of which is the physical separation of the governors from BBC management. This is a move to correct the system whereby the Board of Governors was required to act both as external regulator and as the top tier of management—or, as has already been described, the champions of the BBC.
This move demonstrates a will to change which is welcome and should result in the better management and allocation of project funds. However, although the physical relocation of the governors may help to inspire confidence in their independence, this move alone does not go far enough to protect the public's
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investment and expectations of the BBC. Only two weeks ago, in a speech to the CBI, the chairman, Michael Grade, stated:
"The board I now chair at the BBC has just as clear an idea of the value it expects the BBC to create as the board of any FTSE company".
I worry that there is a view that the problem is already fixed.
We still need to be persuaded that this internal separation of roles is sufficient and fit for purpose, having long believed that the governance of the BBC should be conducted by an independent board possessing the necessary levels of expertise and experience. Governors must no longer be "place men" to meet the usual politically correct criteria; they should be properly resourced and focused to ensure that optimal value is derived from the licence fee—currently standing at around some £2.8 billion annually, and growing. In short, proper mechanisms need to be put into place to monitor the work of the governors to ensure that efficiency and accountability are delivered as of right.
There is an onus on the BBC to ensure that all of its activities are consistent with its public service remit. The Graf review of the BBC's online services arm criticised the BBC for competing in some areas with commercial services. By virtue of the public funding that the BBC receives, it is placed in a uniquely strong position when faced with competition from the independent sector. In possessing such power, it is time to review the BBC's fair trading commitment to ensure that those powers are not wielded unfairly. Notably, the BBC has recently ventured into the competitive world of subtitling, having won a contract with Channel 4 to provide its subtitling from January 2005. That ended a 15-year association that Channel 4 previously had with a commercial company. One must consider whether this sort of transaction really falls within the core strategy of the BBC's business. If there are questions marks, then there should be better and more direct ways to address such concerns.
A further prominent concern is that of the BBC's consistent failure to meet their 25 per cent independent production obligation and, therefore, its failure to assist in underpinning independent production itself. Under its public service obligations, the BBC should be doing far more to support and develop the independent sector, rather than concentrating on less relevant internal interests.
It would be entirely wrong to concern ourselves in this debate solely with the BBC. The onset of the digital age and the impact of changes to the internal workings of the BBC will have a significant impact on the wellbeing of all other broadcasters. In fact, the strength of the BBC is very much dependent on the health of the other beasts that inhabit the broadcasting landscape—the commercial public service broadcasters, Channel 4, ITV and Channel 5.
Strong, healthy competitors that are able to invest heavily in quality and innovation are essential to the BBC, because they help to keep it on its toes and to ensure that it raises its game. We do not want in this

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country a system where the BBC is the only broadcaster synonymous with high quality, indigenous programming. The market place must remain diverse, with interaction from multiple players who all play significant parts in servicing the public's programming needs.
Beyond your Lordships' House, much time has already been spent debating the future sustainability of Channel 4 and ITV. However, the process of digital switchover raises fresh issues. Historically, commercial public service broadcasters have relied on their privileged access to viewers to maintain high advertising premiums and high levels of investment in public service content. Unlike the BBC, those channels do not enjoy direct public funding. They have to earn their money in the market-place and, as the digital revolution spreads, so the privileges that have underpinned their historic investment in public service content are eroded.
In its first five-yearly review of public service broadcasting, Ofcom recognises that. In fact, the noble Lord, Lord Currie, recently suggested that broadcasters such as ITV and Channel 4 are standing very close to the centre of a volcano that is about to blow. It is against that backdrop that we need to consider with some urgency what measures might be necessary to maintain competition in public service television. Not only are broadcasters being asked to contribute to the vast cost of digital switchover; they are also being asked to buy into the fact that every additional digital household will mean less audience share, the result of which will be less advertising revenue.
In order for ITV to sustain its high levels of investment in original UK content, Ofcom proposes a lightening of its regulatory burden, both in terms of remit and licence payments to the Treasury, as we approach switchover. This is an inherently sensible proposal. The transition will not be easy and there is little point in maintaining obligations on ITV that are in the interests of neither the station nor the public. The focus must be upon allowing ITV financial room to manoeuvre so that it may invest more in programming and compete fairly with the BBC.
For Channel 4, less immediate assistance has been offered. Ofcom accepts that Channel 4 may be forced to pursue an ever more commercial agenda in order to maintain its market share, although that would be at the expense of its public service remit. That outcome should be avoided—not only for the benefit of the public but also because Channel 4 is a strong competitor to the BBC in terms of public service content.
The truth of the matter is that, at the point of switchover, Channel 4 will face a huge funding gap. Simple reductions in programming spend or commercial endeavours will not be sufficient to bridge it.
In the context of the wider broadcasting ecology, the BBC charter offers the opportunity to look at each of these concerns in detail and to get them right from the start.
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Ofcom itself has realised the difficulty of maintaining the public service remit in the digital age and has tabled a proposal for a new public service body—the public service publisher. This is developing into an interesting debate. However, prior to spending millions of pounds on a new service provider, everything possible must be done to sustain the vital public service contributions of Channel 4 and ITV.
Ofcom has adopted an ever more important and expansive role since its establishment in 2002. While hard work is being undertaken to preserve public service aspects within broadcasting, and while Ofcom's further role as industry regulator is being fulfilled, there are latent fears that Ofcom could overstep the mark and assume the role of governmental policy consultant rather than that of a body designed predominantly to review and regulate. Ofcom now employs more than 880 staff and it would appear that, as the headcount expands, so does the remit of Ofcom's governmental brief. The regulator's resources must be preserved for its activities as a regulatory body. Ofcom's role is, and should remain, one of consultant and barometer of industry health and capability.
I turn now briefly to the creative industries and, in particular, the music industry. It is important to note that the economic benefit provided by the music industry to this country is huge and not merely the peripheral issue that it is sometimes perceived to be. The law in relation to the protection of intellectual property rights, although well established, is not always well known or well used in industry circles. Copyright, for example, is a large and complex area, and the changes encouraged by digital radio and television raise new issues and challenges. A degree of commercial awareness and an understanding of the basic copyright principles employed in protecting works—musical or otherwise—is highly important and essential in fostering commercial exploitation of the opportunities afforded by the digital age.
However, with such significant changes being made within the media industry in relation to digital methods of broadcasting, it is important that, in addressing those opportunities, we also ensure that this springboard is used to address the current problems and interests of the industry as they presently stand.
An appropriate duration of copyright for performances and sound recordings is fundamental to the ability of the music sector in Britain to continue to take a leading role, culturally and economically, on the international stage. The discrepancy lies in that, while performers in the United States are assured of a lengthy period of protection for their performances and sound tracks, artists residing within the EU may face the prospect of having their rights expire after 50 years and during their lifetime. How can that be deemed proportionate when the songwriter enjoys copyright of his lyrics for a term of life plus 70 years? This obvious inequality now experienced by some of our most famous and longstanding artists who recorded tracks in the 1950s and 1960s serves no other

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function than to place our music industry on a weaker footing in comparison with other commercial centres such as the USA.
This commercial bias is likely to be ever more apparent as the digital age of streaming media and downloadable soundtracks reaches full pace during the coming years. Not least, the distinction in copyright term between Europe and the USA serves to confuse and bewilder both artists and producers alike. The commercial impact of such erosion of confidence in the European legislation is that both performers and producers move abroad in search of better terms. For example, the term of copyright will shortly expire for certain key repertoire in EMI's catalogue, thus deeming those tracks available for remixing, tampering or altering, while the artist or producer stands by helpless. That is a needless drain on our talent and on the business that supports it. In the forthcoming Session, we hope that we shall have the opportunity to discuss that important matter in depth and, in particular, to persuade the Government to lean on the EU Commission to review the EU term of protection.
It has been a very interesting debate. Many different issues have been highlighted. I very much look forward to the Minister's response and to a lively Session.
4.20 p.m.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I am grateful to everyone who has taken part in this debate. I have heard all of the speeches, although I missed a small part of two of them. The debate has been of a very high quality indeed. In particular, I express my appreciation of the five maiden speeches delivered today. I shall not insult them by general applause, but I shall refer to each of them in my speech, when I come to the subjects to which they were devoted.
The most outstanding point to any objective observer who subsequently reads the debate will be the incredible intellectual firepower of the contributions from the Labour Benches. I say that without in any way denigrating the quality of the speeches from the Benches opposite. As regards business experience, both in manufacturing and in services, relevant academic skills, scientific qualifications, and almost every sphere that one can think of, my noble friends have today shown an outstanding command of the subject matter of the debate. I believe that anyone looking objectively at the record will confirm that point.
I propose to start with a few words about macro-economic policy, to deal with the matters raised on each of the four departmental briefs covered by the debate, and at the end I shall return to the wider aspects of macro-economic policy. My noble friend Lord Davies in his opening remarks gave the basic facts about the success of this Government in macro-economic policy, so it is not necessary for me to repeat that. However, I have participated in such debates for
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seven and a half years and on each occasion it has been possible for those of us at the government Dispatch Box to say how successful this Government have been and, in particular, how successful the Chancellor has been in macro-economic policy. We have told of the way in which the Government have used macro-economic policy to achieve unprecedented levels of growth—49 successive quarters of growth; how they have attacked poverty, particularly child poverty, and how they have reduced to an unprecedented level the scourge of unemployment.
On each occasion, no one on the Benches opposite has been able to find any fault with those arguments. In fact, the noble Lord, Lord Newby, claims what I suppose is a new Liberal Democrat slogan for the election. First, he denigrated the Chancellor by saying that the Chancellor gloried in his success—if the noble Lord had had such success, would he not glory in it?—then he described the Chancellor's performance as patchy. That is a slogan for the Liberal Democrats to take into the election: no more patches.
This is a feeble attempt on the part of those who do not have a clue about the reasons for the success of this Government in economic policy to denigrate it and to do it down. On each occasion on which I have heard that over the past seven and a half years, what the Government have said has been proved to be right and what the critics have said has been proved to be wrong.
I shall deal with other Treasury issues. Very little was said about the Commissioners for Revenue and Customs Bill. I think that only the noble Lord, Lord Newby, asked for a quick introduction. We shall have a quick introduction.
I am sorry to say that nothing was said about the child benefit Bill and the issue of social justice, on which I have fought for 30 or 40 years. A most important benefit was what we used to call educational maintenance allowances—in other words, financial support for young people of 16 to 19 to allow them to stay on at school or in full-time education. We will have a dramatic improvement with the child benefit Bill. No one on the Benches opposite thought it appropriate to refer to that.
Baroness Walmsley: My Lords, if the Minister looks in Hansard, he will see that I briefly welcomed that.
Lord McIntosh of Haringey: My Lords, that must have been at the moment I took my very brief comfort break. I apologise to the noble Baroness, Lady Walmsley, for missing that point. The matter is enormously important.
There have been criticisms of the Government's economic forecast. Of course, there have to be: Members opposite have to refer to independent forecasts as though they had more credibility than the Government's forecasts in order to attack the claims which we make for the success of our economic policy. I am sorry that in doing that the noble Baroness, Lady Noakes, found it necessary to describe the Office for National Statistics as "accommodating". I think that the word "accommodating" implies that

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they are doing something wrong or something improper in yielding to government pressure. Clearly, there is no government pressure.
The Office for National Statistics was set up in 1996 by the previous government. In 2002, it adopted a code of practice. It is independent of government and has retained that independence. It has very often said things which are unappealing to government, but the last thing that could be said about the Office for National Statistics is that it is "accommodating".
Requests were made for the assumptions of the Office for National Statistics to be given an independent audit. That is why the Statistics Commission has been set up, and why all the Budget assumptions are audited by the National Audit Office, to be sure that they are correct. I simply do not accept those criticisms of our statistics.
It is perfectly proper for people to talk about pensions but it is not proper for me to respond in detail, except in so far as the points made refer to Treasury policy.
I was really taken aback by the noble Viscount, Lord Trenchard, coming back to the issue of what he calls wrongly advance corporation tax, which is in fact the double counting of dividend tax credit. He was answered very effectively last time by my noble friend Lord McKenzie of Luton. I rely on that answer. The noble Viscount must know that the fundamental influences on the financial situation of pension funds are life expectancy, low inflation and a flat stock market, and of course the £90 billion taken out of pension funds—by the very companies that he seeks to protect—in pension holidays at a time when pensions were easier. The continuing attack on the dividend tax credit does not have any effective credibility.
I thought that the noble Lord, Lord Newby, made some valuable points about regional variation in the economy. It is certainly true that, although statistically there has been a reduction in regional variation, it is a very hard thing to achieve, and we certainly have not gone anything like far enough in achieving it. The Chancellor of the Exchequer has always been open in what he says about that.
Comments were made about our relationships with Europe. The noble Lord, Lord Newby, accused the Chancellor of the Exchequer of bullying Europe when he went to the last ECOFIN meeting. If it is bullying to tell our European partners about the findings of the inquiry held by Alan Wood, the chief executive of Siemens, I accept the charge. However, it seems that Alan Wood, a highly respected industrialist, made a very good case for the difference in the way in which European legislation is transposed and applied in different countries. It would not be right to sweep that under the carpet; it was a proper thing to say. I was grateful for the more constructive approach of my noble friend Lord Drayson.
There was consideration of the business and manufacturing sector. The noble Baroness, Lady Noakes, pointed out, quite properly, that although our productivity has improved relative to many other countries, there is still a significant
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productivity gap. That is acknowledged and is being addressed by the Government. The words of my noble friend Lord Bhattacharyya on that point, when he talked about the DTI's work in tackling the productivity deficit, were very appropriate.
I shall have to deal with transport very quickly. There was a valuable welcome for the road safety Bill from the noble Lord, Lord Broers, in an excellent maiden speech, and the noble Lord, Lord Beaumont. The noble Lord, Lord Bradshaw, made so many individual points at staccato pace that I shall have to write to him about them. Some of his points were about the road safety Bill but others related to the British Transport Police, the structure of railways and other issues which I could not list within a reasonable timescale. The noble Lord's point about uninsured driving is addressed in the road safety Bill. The power to seize uninsured vehicles is included in the Serious Organised Crime and Police Bill.
I was grateful for the welcome given by the noble Lord, Lord Broers, and others to the Crossrail hybrid Bill. It is well known that the Bill is hybrid because the project is to involve a mixture of public and private finance. Therefore, we are consulting on alternative funding mechanisms while there are still open questions about the configuration of Crossrail. It would therefore be inappropriate under those circumstances to give a definitive answer about state financing. I was grateful to the noble Lord, Lord Broers, for his remarks about the success of the Channel Tunnel rail link. He and the noble Lord, Lord Bradshaw, are right to say that we need to continue with forward planning of rail projects. That is what the White Paper The Future of Rail is about.
I heard the concerns of the noble Baroness, Lady Walmsley, about the School Transport Bill. If I may, I shall leave that matter to be debated when we discuss the Bill.
I was surprised to hear the noble Lord, Lord Bradshaw, say that we did not know what the Railways Bill would contain, because it follows the White Paper published in July. Certainly the issues relating to that Bill which were discussed today are relevant. Matters such as the length of the franchise and rural rail lines are all discussed in the Bill and will be in the Explanatory Notes and the regulatory impact assessment. Many of the changes required to Network Rail do not require legislation and therefore will not appear in the Bill.
I record my gratitude to the noble Lord, Lord Bradshaw, for his remarks on safety cameras, and on congestion and road pricing. He says that there is no mention of congestion and road pricing: there is no legislation proposed on congestion and road pricing.
Alistair Darling was exceptionally forward looking and imaginative when he said earlier this year that the issue of road pricing will not go away. Although the timescale may be well outside that of a single Session—indeed, it must be—or a single Parliament, those are things that any government have to face in the future.

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As regards issues concerning the Department of Trade and Industry, the noble Baroness, Lady Noakes, appears to have excessive expectations from a relatively modest consumer credit Bill. It will not deal with savings ratios or pensions. It will enhance consumer rights, give better redress and improve the regulation of consumer credit businesses. The noble Baroness, Lady Thomas, who is on the Woolsack, will be glad to hear that her points were particularly apposite.
Turning to the equality Bill, we heard a first-class maiden speech from the noble Baroness, Lady Young of Hornsey, who expressed the concerns of black communities and recognised the inconsistencies in existing legislation. Although she did not give unqualified support by any means to the Bill, which I would not have expected—nor would I have expected it from the noble Baroness, Lady Thomas—I think that we have a good basis for discussion when the Bill reaches this House.
Certainly, this Bill is nothing whatever to do with political correctness. Much as I enjoyed the diatribe on political correctness made by the noble Lord, Lord Steinberg—indeed, I enjoyed the whole of his speech: I think that he has been saving up a lot of those things, which he is glad to get off his chest now—the equality Bill does not have anything to do with political correctness. It is about righting injustice that has existed over many years. We can debate the detail of the organisation in a calm and constructive way.
The noble Lord, Lord Newby, asked about the company law reform Bill. He commented that it had been promised on many previous occasions. Indeed, it had. We published a two-volume, draft, full-fledged companies Bill something like 18 months ago. When it turned out that that would have been the first two volumes of something like a six-volume Bill, we consulted among those affected. They took the view that a more limited company law reform Bill, which did not attempt to revise the whole of company law, was the right thing to do. That is what we will do: we will publish it in draft this Session.
I do not need to answer the attacks that have been made on the Department of Trade and Industry. I appreciate and sympathise with the embarrassment of the noble Lord, Lord Clement-Jones, on a decision that was clearly not taken by him. To do that in the way that his party proposes, or the death of 1,000 cuts as proposed by David James in a report to the Conservative Party that it has not openly and fully accepted, is clearly not the right way to proceed. Indeed, a number of my noble friends have made that point very effectively.
Energy is a matter that did not appear in the gracious Speech. Of course, my noble friend Lord Hunt is right that we need all forms of energy. He made a very useful suggestion about museums, which I shall certainly take up. I was surprised that my noble friend Lord Haskel was the only person, I think, to refer to the quite outstanding achievements of the Government in the encouragement of science. Of course, my noble friend Lord Sainsbury of Turville is responsible for that, which is one of the most
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significant things in the Department of Trade and Industry five-year plan. I assume that I am right in thinking that silence means, very largely, consent.
I shall have to race through the issues relating to the Department for Culture, Media and Sport. We shall receive the Gambling Bill early in the new year. Yes, we have taken account of the issue of problem gambling and we believe that many of the features of the Bill are designed to and will reduce problem gambling. But we have to accept that gambling is increasing in this country. I cannot say that there will be no increase in problem gambling, but I can say that there will be a smaller increase in problem gambling with this legislation than there would be if it is not enacted.
In answer to the noble Lord, Lord Clement-Jones, of course we will be giving more details of the pilot phase of regional casinos when the amendments are ready for presentation to the House of Commons; and no, no pledge on taxation has been made to US operators or anyone else. As the Secretary of State said, that is a matter for the Chancellor of the Exchequer. I think that answers to all the questions put to me by the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Buscombe, will be found in the regulatory impact assessment. In particular I emphasise the power of local authorities, set out in Clause 157, to have an absolute and unqualified veto on any more casinos in their own area.
I heard what was said about the National Lottery Bill, but I do not recognise that in the Bill which I have seen. The Bill will not increase in any way government control over grants from lottery funds. On the contrary, the great feature of the Big Lottery Fund, consisting of the New Opportunities Fund and the Community Fund, will be the increase in public involvement. Lottery distributors will be able to consult and take account of public views when they make distribution decisions. It also goes without saying, although I think it was questioned, that there will be no reduction in the 16.7 per cent division within the good causes between now and the end of the current period in 2009, and no consideration has been given to any reduction at a later stage.
I should say in response to the point raised by the right reverend Prelate the Bishop of Durham in his very interesting maiden speech that there is no threat to the heritage good cause in any of the proposed legislation. I sympathise with what he said about churches as heritage and I was privileged to speak at the launch of the report of the Church Heritage Forum. I can say to the right reverend Prelate that the repair grant scheme for churches announced by the Chancellor of the Exchequer has not been limited to £25 million or any other figure; it is an open-ended commitment, which is rather astonishing for the Treasury. Applications will be considered on their merits, not on the basis of a particular budget figure.
I turn to charter review. The maiden speech of my noble friend Lord Maxton was the first of a series of thoughtful contributions on the BBC. He was followed by my noble friend Lord Macdonald, who spoke with experience of the need for a continued effort in the devolution of production to the regions and nations.

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We agree with that; it is set out and enshrined in the Communications Act 2003, and my noble friend confirmed that the BBC is committed to it. He also made valuable points about the public service publisher idea from Ofcom, in particular in education and the arts. In welcoming the report, both he and the noble Baroness, Lady Bonham-Carter, asked how it will work, along with many other questions. The consultation being undertaken by Ofcom on phase two of the report finishes today and we look forward to phase three, which is the result of the consultation, and we shall respond accordingly.
I was interested in the welcome given by both the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Buscombe, to the changes being proposed by the noble Lord, Lord Grade—I am speaking too soon—being proposed by Michael Grade to the governance of the BBC. I note the point made by the noble Baroness that they do not go anything like far enough. These issues are still in play pending the publication of a Green Paper early next year. I hope that the Green Paper will have some white tinges in contrast to the normal situation where, whether or not they are meant to, White Papers have green tinges. But, pending the publication of the paper, our position is that we want a strong BBC which is independent of government—and that requires general agreement.
I agree with the noble Baroness, Lady Buscombe, that there are huge opportunities and challenges with digital switchover. We shall all hear more about that in the future.
I hear what has been said about the fees for the Licensing Act, but that issue is out for consultation until December. Fees have not been fixed and we are aware of the concerns that have been expressed.
I was grateful for the positive point made about the Theatres Trust. We have received the Goodison report and we are taking it very seriously. We have responded to Sir Nicholas Goodison privately, expressing our grateful thanks for the work that he has done. It has not been forgotten.
I am not sure whether the noble Lord, Lord Rosser, was asking me to do anything about supporter involvement in football, although I appreciate the
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force of what he said. I am grateful for the support of the noble Lord, Lord Clement-Jones, in our bid to host the Olympics and the Paralympic Games.
My final comments have been prompted more than anything else by the remarks of the noble Lord, Lord Giddens. We have referred to macro-economic measures and the success of the Government in the economy as a whole, but the noble Lord rightly reminded the House that macro-economic measures, while necessary, are not a sufficient condition for human measures—in other words, for social justice.
The noble Viscount, Lord Trenchard, referred to the pains of stock market investors and it is not my job to underestimate those pains. But when you look at the reduction in poverty, particularly in child poverty; when you look at the fact that there are no longer anything like as many people who want to work but cannot work and at how employment levels have increased and unemployment levels have decreased in this country so that they are among the best in the world; when you look at the effect of that on family cohesion and the quality of life in this country; and when you look at the way in which the huge sisyphean struggle to diminish inequality, in this country and in any country in the capitalist world, has been carried out by the Government—we have been attacking this problem, as the noble Lord, Lord Giddens, rightly said, from the bottom up rather than from the top down—you will see a new dimension altogether of the Government's economic success.
I believe that that economic success has been a condition of a hugely successful series of government policies, over a period of seven years, to make this a better country in which to live.
Lord Davies of Oldham: My Lords, on behalf of my noble friend Lady Scotland of Asthal, I beg to move that the debate be adjourned until Monday next.
Moved, That the debate be adjourned until Monday next.—(Lord Davies of Oldham.)
On Question, Motion agreed to, and debate adjourned accordingly until Monday next.
House adjourned at eleven minutes before five o'clock.

  Queen's Counsel
  The Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer of Thoroton)
  In May 2004 I told the House that I had asked the legal professions in England and Wales and in Northern Ireland to devise an improved scheme for appointing Queen's Counsel. I am pleased to be able to say that the Bar Council and the Law Society in England and Wales have reached agreement on a set of competences against which applicants for the QC rank should be assessed, and on an outline of the process for doing so. I have placed copies of both the competency framework and the outline process in the Library.

  Considerable work still needs to be done to refine some of the details and to develop the mechanics of the assessment process. None the less, this is a very encouraging development. I congratulate the professional bodies on what they have achieved so far, and look forward to the introduction of a new and better system.

  The Bar Council and Law Society in Northern Ireland are continuing to work on a similar scheme tailored to the requirements of their jurisdiction. They hope to make an announcement soon.

  NHS Estate
  The Parliamentary Under-Secretary of State, Department of Health (Lord Warner)
  A £17 billion improvement programme is being undertaken to improve the NHS estate. As a result of this investment the amount of the estate dating from before 1948 has halved since 1995. However, because of flaws in the current methodology, backlog maintenance figures do not reflect these improvements. A validation exercise has been undertaken on the 2002–03 backlog maintenance figures, prompted by concerns expressed by the NHS that these figures were both unrealistically high and not being consistently calculated and collected across the NHS.

  We have decided to revise the way we measure backlog maintenance to give a more accurate picture of the condition of the NHS estate, to give the NHS a clearer idea of its priorities in improving its buildings and to allow managers to continue making the improvements that will build even better environments for both patients and staff. It will help the Healthcare Commission more accurately to measure NHS performance on the new national standards.

  To ensure the estate continues to be maintained and improved, a much more constructive and consistent revised backlog measure—risk adjusted backlog maintenance—has been developed with the NHS. This places greater emphasis on identifying and measuring
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  risk to business continuity and safety to patients, visitors and staff and has a greater focus on the quality of the estate and the remaining life of the building.

  Backlog maintenance figures and the estimated risk adjusted figures for 2003–04 have been placed in the Library.

  Health Inequalities: Spearhead Group
  Lord Warner
  My honourable friend the Parliamentary Under-Secretary of State for Public Health has today made the following Written Ministerial Statement.

  The public health White Paper, Choosing Health: Making Healthy Choices Easier, set out the importance of ensuring that as the country strives to improve its health a priority must be given to tackling health inequalities so that all groups in society benefit from improvements in public health.

  The Government have set public service agreement targets to address geographical inequalities in life expectancy, cancer, heart disease, stroke and related diseases. The targets aim to see faster progress compared to the average in the "fifth of areas with the worst health and deprivation indicators". Achievement of the targets will be assessed on the outcomes for this group in 2010. The local authorities and primary care trusts which are in these areas, the so-called Spearhead Group, has been published.

  The Spearhead Group is made up of 70 local authorities and 88 primary care trusts, based upon the local authority areas that are in the bottom fifth nationally for three or more of the following five factors:

  Male life expectancy at birth;

  female life expectancy at birth;

  cancer mortality rate in under 75s;

  cardiovascular disease mortality rate in under 75s;

  Index of Multiple Deprivation 2004 (local authority summary), average score.

  The list of local authorities and primary care trusts in the Spearhead Group is available in the Library.

  For more information on health inequalities and on the Spearhead Group, visit http://www.dh.gov.uk/healthinequalities.

  Human Fertilisation and Embryology Authority: Annual Report
  Lord Warner
  My honourable friend the Parliamentary Under-Secretary of State for Public Health has today made the following Written Ministerial Statement.

  The 2003–04 annual report of the Human Fertilisation and Embryology Authority was laid before the House today. Copies of the report have been placed in the Library.

  Low Pay Commission: Government Evidence
  The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
  My honourable friend the Parliamentary Under-Secretary of State for Trade and Industry (Gerry Sutcliffe) has made the following Statement.

  I am pleased to announce that the Government submitted their evidence to the Low Pay Commission today. The commission will take this and all the other evidence received into account when preparing its next report, which will be submitted to the Government by the end of February 2005. Copies of the Government's evidence have been placed in the Libraries of both Houses and on the Department of Trade and Industry website (www.dti.gov.uk.)

  Operating and Financial Review
  Lord Sainsbury of Turville
  My right honourable friend the Minister of State for Industry and the Regions and Deputy Minister for Women and Equality (Jacqui Smith) has made the following Statement.

  My department published a consultation on 5 May 2004 seeking views on draft regulations to implement a new statutory operating and financial review (OFR) and certain provisions of the accounts modernisation directive, requiring an enhanced review of a company's business in the directors' report.

  This Statement explains how the Government intend to proceed in the light of responses to the consultation document. I am grateful to all those who responded to the consultation. A summary of the responses will be placed on the DTI website next month and in the Libraries of both Houses.

  Our OFR proposals have been subject to extensive public consultation over the past four years. In making this statement today I am clear that the OFR will improve the quality, usefulness and relevance of information provided by quoted companies—helping investors, shareholders and other interested parties get a better understanding of a company's operations and its future business prospects.

  The OFR represents a real opportunity for business to promote long-term value creation. Improved shareholder engagement will help strengthen corporate performance and boost confidence in UK companies. The OFR is a vital part of the DTI's drive for effective corporate governance, which will benefit investors, business and the economy at large by improving the quality of investment decisions and the allocation of capital.

  I have considered consultees' comments carefully with a view to ensuring companies are able to provide full and frank disclosures in a cost-effective and efficient way. This will enhance the usefulness of the OFR for both shareholders and other stakeholders. As a result, I am amending some of the earlier proposals to ensure that the regulations achieve the Government's overarching policy objectives.
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  On coverage for the OFR, I have considered the arguments for both extending the OFR to large private companies) and for narrowing it (to larger quoted companies only). I have concluded that the draft regulations should stand as drafted. There will be no extension of scope for the OFR and it will apply to quoted companies only.

  I have also considered the standard of care required of directors preparing the OFR, as well as the role of auditors. On the first point, I have decided to drop the requirement that auditors give an opinion on whether the directors have used "due and careful enquiry" in preparing the OFR. This should address concerns that we might be requiring a different legal standard for this type of corporate report.

  On the second point, I am simplifying the role of the auditors. I am retaining the requirement that auditors should consider whether the OFR is consistent with the company's accounts, and whether it contains any inconsistencies based on any matters that have come to their attention while conducting the company audit.

  This reflects concerns that having auditors review the process would prove difficult and costly, and have the unintended consequence of discouraging full and frank reporting by reducing the OFR into an anodyne, "box-ticking" exercise.

  I believe directors can be open and candid with information on the basis that a distinction can be made between those statements made based on good faith judgments, and those made based on objectively verifiable data. Guidance notes will make clear to companies that they may wish to advise members of the need to treat with caution good faith judgments, in particular those relating to future events or prospects. As well, the regulations will make clear that directors will not be required to disclose specific information about impending developments or specific matters in the course of negotiation.

  Following the consultation, we believe the objectives and content of the OFR are right. No changes of substance will be made therefore and there will be no extension of content.

  Having met the review objective and general requirements of the schedule, directors will then need to consider and include information relating to their environmental, employment, and social and community policies to the extent necessary for shareholders to understand how these are impacting the business and wider community.

  With regard to enforcement, I believe the OFR warrants the implementation of a sturdy regime but must be allowed a chance to bed-in. I have therefore decided to delay the FRRP's role in administrative enforcement until one year after the duty to prepare OFRs has kicked in. This means the FRRP will start looking at OFRs prepared for financial years starting on or after 1 April 2006.

  I have also addressed potential cost burdens arising from our proposal to make mandatory hard-copy circulation of the OFR. Where shareholders have agreed to receive summary financial statements, there will be no requirement for the full OFR to be sent, and

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  shareholders will be notified of the availability of the OFR on the company website.

  In addition, potential duplication of reporting requirements occasioned by the introduction of the EU modernisation directive will be avoided. All companies in a group other than small companies will be required to produce individual directors' reports or, if they are quoted, individual OFRs with the ultimate parent company also producing a group report (but not an individual report). Where the parent is a quoted company, the OFR will be prepared for the group. Small and medium-sized companies will be allowed to take full advantage of reporting exemptions under EU accounting directives, including those that that are part of a group.

  Finally, on timing, I intend to lay the regulations within the next two months. Given concerns expressed in consultation about the need for adequate preparation time, the date the regulations come into effect will be delayed until financial years beginning on or after 1 April 2005 (and not 1 January 2005), thus giving business three extra months to absorb the new reporting standard and prepare for implementation.

  We know the business environment is changing dramatically and at an accelerating pace. Companies are becoming increasingly complex and information needs are changing. This was reflected during the consultation and in the responses from stakeholders: companies, institutional investors, professional bodies, auditors, trades unions and representative organisations.

  It is evident that vibrant capital markets rely on interventions and institutions that promote the governance of companies. Corporate governance structures ensure shareholders receive reliable information about the value of companies, while motivating directors and managers to maximise long-term value creation. I believe that the OFR is a crucial element in the corporate governance agenda, and will contribute to raising the productivity of British companies, helping generate prosperity for all.

  British Council: Indemnities
  The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean)
  The British Council, although not a government department, receives a substantial grant-in-aid from the Foreign and Commonwealth Office. The council regularly organises or sponsors exhibitions overseas of works of art loaned from national galleries and private collections in the United Kingdom. It provides certain assurances or guarantees in respect of loss or damage while these works are on loan.

  In the six months ending on 30 September 2004, the British Council provided such assurances to four national lenders and undertakings to 85 private
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  lenders. The value of the contingent liabilities outstanding on 30 September in respect of private lenders was £6,120,870. No liabilities to national galleries existed at that date.

  Iraq: Export Licences
  Baroness Symons of Vernham Dean
  Following consultation with the Foreign and Commonwealth Office and the Ministry of Defence, the Department of Trade and Industry recently approved an open individual export licence for a media company to export non-lethal military list goods for the personnel protection of its staff worldwide.

  Her Majesty's Government consider it appropriate to grant licences, on a case-by-case basis, for the export of non-lethal military list goods, including protective clothing and armoured vehicles, for the use by media companies and non-governmental organisations working in hostile environments, including embargoed destinations. Future applications will continue to be assessed on a case-by-case basis against this policy decision and the consolidated EU and national arms export licensing criteria, taking into account the circumstances prevailing at the time.

  Freedom of Information Act 2000: Section 45 Code of Practice
  The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Baroness Ashton of Upholland)
  The Secretary of State for Constitutional Affairs has today laid before Parliament, in accordance with Section 45(5) of the Freedom of Information Act 2000, a revised code of practice on the discharge of public authorities' functions under Part 1 of the Freedom of Information Act 2000. This code of practice has been revised after close consultation with the Information Commissioner's Office.

  The previous Section 45 code of practice was issued in November 2002, and quite rightly incorporated a great deal of best practice information. This information is now contained in the suite of guidance recently issued by the DCA, and in the series of awareness guides issued by the Information Commissioner's Office. This revised code of practice relates to those areas specified by Section 45(2)(a) to (e). It provides clear guidance on providing advice and assistance to applicants, transferring requests to other authorities, consulting third parties, the use of confidentiality clauses relating to information disclosure in contracts and the provision of internal complaints procedures in public authorities.

  I will keep the Section 45 code of practice under review once the Freedom of Information Act has been fully implemented, and shall work closely with the Information Commissioner to identify those areas where any further guidance is necessary.