Debate on the Address

My Lords, the noble Lord, Lord Wade, has combined traditional northern common sense with a very distinguished career in business and in politics. I am sure Members of the House were listening very carefully to his wise advice. He has been a very distinguished chairman of Midas. It is also a pleasure to record thanks to others who have taken part in this interesting debate, which has not ranged over too many subjects but has concentrated on very interesting ones, such as the relationship between government and business, which is an important matter for all Governments. First, I have pleasure in congratulating the noble Lord, Lord Truscott, on his arrival on the government Benches. For some time, we were both members of European Union Sub-Committee C. I deliberately embarrass him by saying that when he made his many contributions in that committee, I guessed that it would not be long before he was on the government Benches, making contributions such as that made today. We thank him for his remarks. Equally, I am sure that the noble Lord, Lord McKenzie, in reply will concentrate on the many important matters that have been raised in the debate. Of course, the greatest pleasure, as already recorded by a number of noble Lords, is to thank our two maiden speakers, the noble Lords, Lord Bilimoria and Lord Rowe-Beddoe. The passion of both was very extraordinary indeed and it was a great privilege for us to hear their speeches. I do not want to embarrass or annoy the noble Lord, Lord Bilimoria, by constructing a totally artificial and false connection, but it was marvellous to hear him in the House today. He mentioned with pride his antecedents as a Parsi. That coincides with Julian Barnes’ excellent book about the son of a Parsi vicar. The vicar was Parsi by birth but became a Church of England vicar in Staffordshire and his son was cruelly, wrongfully and illegally imprisoned for crimes he did not commit in Staffordshire in the first part of the 20th century. Although there is absolutely no connection, it is wonderful to see the progress of the Parsi tradition. I hope he takes that in the spirit in which I offer it. I wish him well in his career in this House. The noble Lord, Lord Rowe-Beddoe, showed all the passion for Wales that we expect from our colleague, my noble friend Lord Roberts, when he is in his place. He too is well known for that passion. We wish him great success. It is worth repeating that the noble Lord, Lord Sainsbury, made a great contribution as Minister and I am sure we all hope that he will continue to be a very active Member of this House. Considering the Queen’s Speech, the contributions made today and people's thoughts on the economy, business, future progress and the huge problem of climate change, a number of themes emerge. What a contrast to the sad and terrible disaster in Iraq and the mess in the Middle East which is partly the responsibility of the US—and Britain in following the US unwisely down paths which I am sure the Government now regret. That has also been a personal tragedy for the Prime Minister who has been a very competent Prime Minister in many other ways. There is an extraordinary contrast between that failure overseas which commands so many column inches now in British newspapers—quite rightly as the mess continues and everyone wonders how we will get out of it—and the extraordinary competent success of the Government on the British economy. I believe that, since 1997, the Government are entitled to claim full credit for a number of significant achievements, especially after the years of stop-go, which were referred to when Ministers first took office after the 1997 election. Against a background of higher than usual economic growth and lowish interest rates—not as low as they could be perhaps—until the recent rise from the Bank of England to 5 per cent, and substantial new public sector and private sector capital formation, the UK has been judged to be doing very well in recent years, with a spectacular growth in earnings from some invisibles and an excellent record in foreign direct investment. As ever was, there is always a price to pay for those tangible achievements. Pollution and damage to the environment from consumer and corporate excess has become alarming in a small national territory where thinking people feel increasingly vulnerable to congestion, traffic chaos and even overshopping, including on Sundays. Some people remain opposed to that concept but we have had to accept it, although—increasingly as time goes on—it may not be to people's liking. The house price boom has added its own pressures, not all on the plus side. At the same time the UK is, as ever, a curate's egg economy if ever there was one. Our output base remains fundamentally small and truncated, as the noble Lord, Lord Brookman, said, particularly in relation to manufacturing. While we have many individual examples of highly successful companies—entrepreneurial companies, very impressive companies not only in retailing and clothing and those obvious sectors but also elsewhere, and in financial services too—sadly, for some reason, we cannot shake off our perpetual chronic trade deficit, except temporarily when the United Kingdom, post-war, has from time to time devalued. This deficit has to be propped up, as do our long-term debts, by interest rates that are often double the euro-land figures. In other words, in contrast to very successful trading corporations of all sizes in Britain and small companies, the United Kingdom and its economy is like someone who is perpetually in debt and who cannot get out of it. Our investment rates in new assets as well as our savings ratios remain stubbornly low relative to other like nations, except for recent years' big rises in public sector investment. Furthermore, the huge mistake of not joining the euro earlier has added millions of often uncalculated extra costs to companies and consumers alike in onerous exchange and bank transfer rip-off costs. Meanwhile the consumer debt ratio has rocketed to an unacceptable level in Britain. The noble Baroness, Lady Noakes, referred to that with some concern, which I share. There is increasing concern about a large number of households’ viability. As a ratio of GDP the figure recently had risen to 17.4 per cent compared with 8.5 per cent in France, 7.5 per cent in Germany and 3.4 per cent in Italy. With the size of our excess imports, including of course finished durable goods, it means the public are now almost uncontrollably locked into massive unsecured debts with bank and credit card real interest rates of 30 per cent or more, and the Government do nothing about that at all. The comics called newspapers in the UK are now up to 350 pages of weekly or daily rubbish in huge supplements urging people to buy things they do not even need. It always amuses me how the right-wing neo-con economic fanatics and journalists such as Anatole Kaletsky castigate Germany and Japan for having low rates of domestic consumption, very high savings ratios and massive trade and export surpluses. How sinful can they get? In many ways, Japan has the reverse syndrome to our own economy. It has high output, massive exports and a large manufacturing and processing base, but more backward farming systems shielded from competition and quite old fashioned service structures in some areas. As the noble Lord, Lord Brookman, said, we have a pitifully small manufacturing and industrial base, perpetual deficits in visible trade and too much private debt, but highly efficient agriculture—notwithstanding the problems of the common agricultural policy—and highly organised and impressive service sectors in many fields. As my noble friend Lord Lee mentioned, tourism is an important area of success and achievement. Perhaps the best blend of the two examples of the more virtuous dual economy in Europe is therefore to be found in Germany, despite the huge on-costs of East Germany it is currently bearing. However, the UK will benefit from the recent rises in FDI I referred to—presumably in terms of output and some job creation, at least—which was $165 billion in 2005. That is well ahead of the US at just under $l00 billion and, successively, the People’s Republic of China, France and then, interestingly for a small country, the Netherlands. I hasten to add that the UK figure is, however, overwhelmingly dominated by mergers and acquisitions activity. Indeed, one transaction, Royal Dutch/Shell merging with Shell Transport (UK), accounted for $74 billion of the total. So the right-wing economists should not get too excited about magic new developments appearing here, there and everywhere. In the last full period, incidentally, the number of production industry workforce jobs fell by 47,000 and the number in service industries rose by 256,000—an illustration of the changing trends in the British economy. The largest fall and the lowest rate of unemployment were in the West Country at 9 per cent down and now at 3.4 per cent, while the London region showed 8.4 per cent jobless. I was glad that the noble Baroness, Lady Noakes, reminded the House that the real unemployment figure is well over 5 million, adding back those on long-term benefit who the Government are trying to persuade to get out of that situation as fast as possible. While house prices are fuelling inflation pressures, things like transport costs are exerting downward pressure, especially for personal transport costs. It is sad to note that the biggest upward boost to the annual inflation figures came from the rise in university tuition fees. I am sure there will be many future cases of students in financial difficulty because of that. I hope the Minister will have time today to deal with a number of queries. Can he clarify the Government’s future intentions on the further penalising of the anti-social, polluting, gas-guzzling 4x4s hinted at by the Chancellor? That follows the excellent example in Liberal Democrat-controlled Richmond, and Mayor Livingstone’s commitment to deal with Chelsea tractors outside Chelsea as well. A sharp fall in second-hand prices of these obnoxious vehicles, particularly the civilian version of the American Hummer—I do not know how many Lords have seen the civilian Hummer, but it is grotesque and right in your face—will concentrate the minds of these selfish motorists. Indeed, it should be happening already. Secondly, will the Government help the EU Commission in its battles to control outrageous mobile phone roaming costs and excessive bank and credit card transfer charges across national borders from 1 January 2007? This is an important matter for the Government to watch carefully, ensuring that the Commission succeeds in reducing those excessive costs. They should now be single market transactions, rather than across national frontiers. Consumers also need to be helped to get out of the debt I referred to earlier, when a chronic case of family disutility arises. Finally, can the Minister confirm that the programme of reform in the public services—here we usually mean mainly hospitals, other NHS entities and schools—will of course continue, but on a rational basis? Will it have heed to the urgent necessity of restoring morale to the operatives at all levels in both sectors, who feel increasingly battered after so much government spin and tampering in recent years? Although the debt figures of some NHS trusts need tackling, the deficit figure remains minuscule in relation to the total of NHS activity, and no hysteria engendered in the media about this is necessary. Economic achievements have to be tempered with social well-being and the avoidance of gratuitous alienation.