Sterling: Euro Exchange Rate
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Baroness McIntosh of Pickering
To ask Her Majesty’s Government what assessment they have made of the impact of the relative value of the euro to the pound sterling on individuals and businesses.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, the UK has an inflation target, not an exchange rate target, and the Government do not express a view on the level of exchange rates. The value of sterling adjusts flexibly in response to economic conditions and market forces and sentiment. The Government will continue to monitor economic developments closely, while at the same time taking steps to promote economic growth and to support individuals and businesses.
Baroness McIntosh of Pickering (Con)
My Lords, since 2015 the pound has lost between 20% and 30% of its value against the euro, leading to the loss of Monarch Airlines and Air Berlin, among others, in the last few months. Does my noble friend the Minister believe that the quantitative easing programme embarked upon by the Bank of England to shore up the level of the pound and keep interest rates down is sustainable? Will the Treasury come clean on what the real cost to the UK economy—to individuals and businesses—will be if the United Kingdom crashes out of the European Union without a deal?
Lord Bates
We can certainly say that a number of those elements are, rightly, matters that are independent of government. The Bank of England has been given the UK macroeconomic mechanisms to make those judgments on interest rates. Interest rates are at an historically low level. Exchange rates can have a negative effect on imports but a positive effect on exports. It is important that we emphasise that the fundamentals of the British economy remain strong. Employment is at record levels and we continue to grow and expand, and we want to see that continue. That is very much the positive outcome we want from this complex negotiation.
Lord Davies of Oldham (Lab)
My Lords, if the economy is so strong, why was our credit rating reduced recently? Sometimes Governments preside over the depreciation of their currency in order to improve their balance of payments and trading position. Why is that clearly not working under this Government?
Lord Bates
Since 2010, the economy has grown by 15.3%. That is 1.5 times the level of France. I do not necessarily want to remind the noble Lord, who was standing on this side of the Dispatch Box during 2008-09, that the economy contracted by 6.3% during that period. The fact that we have record levels of employment and are seeing sustained growth should be welcomed and built upon.
Lord Fox (LD)
My Lords, a fall in the relative value of the pound was advanced by some of the most enthusiastic Brexiteers as the antidote to future potential export tariffs. Can the Minister tell this House whether that is also Her Majesty’s Government’s policy? If the answer is yes, what evidence has been amassed over the last 12 months of a phenomenally low pound to support that view?
Lord Bates
As I have said, the Government have not said exchange rates are their responsibility. Those matters are driven by the markets and sentiment. We have to make sure we have a strong, competitive economy. That is why we have lowered taxation rates, why we have high employment levels and why the Chancellor has announced a new national productivity investment fund of £23 billion. We have to do everything in our power; the markets will respond as the markets respond.
Lord Forsyth of Drumlean (Con)
My Lords, will my noble friend take this opportunity to remind people that the strength of the euro has been bought on the backs of those unemployed young people in Greece and the southern European states, that the eurozone is embarking on a project to screw that down even harder, and that the misery that will create is one of the reasons why we are best out of the eurozone?
Lord Bates
My noble friend is absolutely right that we are out of the eurozone as far as that is concerned. The strength of the UK can be recognised not only in how people respond to our market but in how they respond in terms of foreign direct investment. That is a much more concrete and long-term form of investment. The UK continues to be the second-largest recipient of foreign direct investment in the EU and second in the world only to the United States. The fact that companies such as Nissan, Toyota, Apple and Bloomberg are making major long-term investments in the UK should encourage us to do the same.
Lord Lea of Crondall (Lab)
My Lords, in saying that we do not have an exchange rate policy but simply an inflation policy, the Minister has repeated the Written Answer that he gave to a Question that I tabled. In the hypothetical situation of the pound falling further, is it not ever more obvious that it is a totally false binary to say that we have a policy on inflation but not one on the exchange rate, when the one feeds into the other in a very material way?
Lord Bates
I acknowledge the noble Lord’s great professional experience in economics, but I am saying something slightly different. I am not saying that we do not pay attention to that and do not watch it at all; I am saying that the way in which it has been configured, through successive Governments, is such that this is a matter for the Monetary Policy Committee of the Bank of England to respond to. Where inflation rises above 3%—its target is 2%—it has to respond. Where it sees matters which are causing concern, it can choose to cut interest rates—as it did after the referendum, to historically low levels of 0.25%. We are not saying that we do not have any policy; we are saying that we have a core set of policies which the Government are responsible for and we are acting on them.
Lord Brooke of Alverthorpe (Lab)
Will the Minister explain to the House why we have been downrated?
Lord Bates
If someone wants a historical lesson on the accuracy of the ratings agencies in making predictions, the events of 2008-09 might raise some question as to what they were doing then. We are talking about a downgrade of one notch. That reflects some concerns that they have about the transition period as we exit the European Union. They are perfectly entitled to say that. We are saying that we have a clear plan as to how we want that exit to happen, we want it to happen as soon as possible and we believe that the prospects for this country thereafter are very positive indeed.
Mental and Physical Health: Insurance
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Lord Blunkett (Lab)
My Lords, in asking this Question, I draw attention to the fact that I have a personal interest.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, it is for private health insurers to decide the cover they offer for different types of conditions. However, the Government are determined that insurers treat customers fairly. Under the requirements set out by the Financial Conduct Authority, consumers should be widely protected, including in the health insurance market. Furthermore, where a condition is classed as a disability, equalities legislation places specific obligations on insurers to prevent unlawful discrimination.
Lord Blunkett
My Lords, I am grateful to the Minister. This is a Question not about private health provision for individuals but about cover for primary care professionals indisposed by illness or accident, where alternative staffing is required. Does he agree that it is totally unacceptable for a policy to be enunciated or, as in this case, unilaterally altered so that requirements for the practice entail, where stress or mental health is concerned, a psychiatrist and/or a consultant psychologist to be engaged within the first eight weeks in relation to cover? It is not only impractical but impossible to fulfil such a requirement, it is totally against normal clinical practice, and it clearly engages discrimination against those suffering from stress or mental ill health. Will the Minister consider asking the brokers’ association to issue a code of guidance so that insurers of this kind are not taken on in the future?
Lord Bates
I am very grateful to the noble Lord for his characteristic courtesy in giving me advance notice of the context of the Question he raised today. Although the situation he describes would obviously cause concern, I remind him, as I said, that the Financial Conduct Authority—the regulator of the insurance brokers and potentially of the insurance company—has certain duties under the FCA rules, but also under equalities legislation, to behave in an appropriate way in these matters. Where there are complaints, there is a route to take the matter up not only with the FCA—and I encourage the noble Lord to make these facts available to it—but with the financial ombudsman.
Baroness Meacher (CB)
My Lords, some 20% of GPs suffer from depression at some time during their careers, yet GPs rarely take time off work because of course they know that their colleagues have to cover for them; there just does not seem to be any provision. Does the Minister accept that the growing number of GPs who are retiring early, or who are cutting the number of sessions they work, could be greatly eased if doctors’ mental as well as physical ill health were properly dealt with? Despite the comments that he has already made, I ask him to take this very seriously in view of the incredible crisis in general practice because of the diminishing numbers of GP hours being worked.
Lord Bates
While we recognise the great service and the demands placed on GPs and their practices in this regard, most people who seek support, particularly for mental health issues, are not necessarily going through private healthcare providers but seeking it through the NHS and through GPs themselves. That is why it is important to put on record that the funding going into mental health services within the NHS is at record levels—it is now at £11.6 billion—and we have the Five Year Forward View for Mental Health, under which that figure will grow year on year. That is not to be at all complacent; we are very mindful and cognisant of those important strains and how they are responded to.
Lord Davies of Oldham (Lab)
My Lords, I am just back from Bhutan, a constitutional monarchy that has been in existence for only nine years and needs some help with the development of democracy. However, the noble Lord, Lord Layard, went there a few years ago after his book Happiness and the king welcomed him on the basis that this was part of the constitution of Bhutan—one of their key issues is increasing support in the area of mental health. I hope that the Minister will convince us all that the Government give similar priority to mental health in this advanced country.
Lord Bates
First, welcome back. It is good to see the noble Lord in his place. I do not know how long he was away in Bhutan, but there has been quite a bit of movement in this area in recent years. The Health and Social Care Act, led through this House by the noble Earl, Lord Howe, played an important role. It introduced parity and this was a significant advance. The serious discussion in the media now about mental health issues—particularly among young people—and how we respond to them, and the resources which are moving into this, bode well. As to whether we will match the constitution of Bhutan, I can say that parity of esteem is now in the constitution of the NHS.
Baroness Jolly (LD)
My Lords, is there any evidence that insurers are dealing with treatment for mental health differently from that for physical health? How many instances have there been, say over the last three years, of complaints about parity to the Financial Ombudsman Service and what were the outcomes?
Lord Bates
I do not have those specific figures to hand. The data on such experiences would be obtained through the Financial Conduct Authority. The Question asked by the noble Lord, Lord Blunkett, shows the importance of raising awareness of insurers’ responsibility to treat their clients equally, as set out under the Equality Act 2010. If people do not feel they have been treated fairly, they should seek redress.
British Overseas Territories: Transport and Infrastructure
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The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I first join other noble Lords in paying tribute to the noble Lord, Lord Shutt, for securing this debate on transport and major infrastructure needs of St Helena, Ascension, Tristan da Cunha and the Falkland Islands. He and several noble Lords began their remarks—correctly—by expressing their thoughts and prayers for all the people in the Caribbean, including those on Anguilla, Montserrat, the British Virgin Islands and Turks and Caicos Islands who are dealing with the effects of Hurricane Irma. The noble Lord, Lord Collins, referenced the Statement made by Sir Alan Duncan in another place earlier. There will be a COBRA meeting starting at 2 pm today; further announcements will be made following that. The Secretary of State, Priti Patel, has announced that the Royal Fleet Auxiliary “Mounts Bay” is already in the Caribbean and should reach the affected territories today. The ship carries Royal Marines and Army engineers and her primary task is the protection of the overseas territories. She is loaded with a range of equipment, vehicles, tents, stores and hydraulic vehicles, specifically intended to respond to disasters such as this. As I say, we are aware that further action will be needed and it will be forthcoming, as an expression of not only our humanitarian concern but, of course, our legal obligation to those territories.
I will deal with as many of the points that have been raised as possible. My approach will probably be one that is fairly positive. It is in my nature—I am afraid that my blood group is B positive and I therefore live in that positive world. I recall that the St Helena air service is indelibly printed upon my ministerial memory at DfID: I was appointed in the morning and, in the afternoon, I faced my first Question on the issue from the noble Lord, Lord Foulkes. I am grateful that noble Lords have acknowledged that we have tried to work together through this. We have had several meetings, which I have been grateful to noble Lords for attending. We have tried to keep noble Lords informed throughout the very difficult progress and as we wrestled to find a solution for this. We met with a quality assurance panel and with the team and have been sharing that information. I hope very much that the conversation we have been able to have with those who are interested in the future of these overseas territories can continue, even beyond the start of the service.
The noble Lord, Lord Collins, has already referred to the commercial air service, by SA Airlink, which is expected to start on 14 October. These are exciting times for St Helena. This service will end centuries of isolation for the island. My noble friend Lady Hooper referred to the fact that communications are vital to these remote communities. This connection will be extremely important. For those who are looking for our commitment to these islands, I think the fact that we spend £285 million of British taxpayers’ money on the airport is a real commitment. One thing that we are absolutely sure of is that we want to ensure that not only the Saints but the British taxpayers see that there is good value for money from that very significant investment in the air service. The service will end centuries of isolation for the island which, until recently, had been accessible only by sea.
Some noble Lords commented on the parity between the existing link with St Helena and the number of places that are available. The air service will have an initial capacity of 76, which will increase to 87 in early 2018. Reference has been made to the capacity on RMS “St Helena”, but it takes five days to get to the island. Airlink will get there in six and a half hours. The costs are less: proposed ticket prices start at £804, making it a real, affordable opportunity for people to take advantage of. The service will be extended every month, providing a much quicker connection to St Helena for Saints on Ascension Island. DfID has supported the St Helena Government throughout the process, from designing and building the airport to the commercial negotiations necessary to have reached this stage. We have also supported a substantial programme of technical work to better understand wind conditions on the island. That work has been key to securing significant interest from commercial airlines to operate the service.
St Helena is a beautiful island. The noble Lord, Lord Collins, referred to the ambition for an increase in tourism over the long term, which justified the initial investment for up to 30,000 visitors. We know that will be a significant ask and that significant investment in infrastructure will be required, but we are confident that once people discover St Helena’s amazing scenery, attractive walks, varied bird and marine life—including whale sharks—and Napoleonic and other historical heritage, those numbers will increase.
Enterprise St Helena, the island’s economic development agency, is working on a number of fronts to enhance the tourism product, including assistance for start-ups and expanding businesses, skills development, and improving standards of accommodation, catering and transport services. With the UK’s investment in the airport and the air services starting, we are working with the St Helena Government and Enterprise St Helena to attract further international private sector investment in tourism infrastructure alongside the growth in the airport.
Lord Foulkes of Cumnock
Will the Minister remind us about the frequency of the air service?
Lord Bates
Initially, the frequency of the air service will be once a week. We have said that number. We expect that will increase, but it has to be on the basis of demand. The agreement we have is to support the service and make it viable. That is part of our confidence that once people see the attraction of the island, the service will continue. We are looking at other ways we can talk about the business support operation, which I know the noble Lord, Lord Foulkes, told me not to mention, but the noble Lord, Lord Collins, asked me to mention. I am happy to reference that operation, through which we can offer support to the organisations and business that have had difficulties as a result of the delays.
In addition to investment in the airport, we have provided £16.5 million over three and a half years to improve the island’s infrastructure, which I know the noble Lord, Lord Shutt, was keen to know about. That investment has enabled the St Helena Government to make improvements to areas such as social housing, education, health and utilities. The investment has improved the lives of the people of St Helena. For example, the level of healthcare available on the island has increased following the refurbishment of the hospital. There have also been improvements to power generation and water distribution.
The noble Baroness, Lady Smith, the noble Lord, Lord Shutt, and several others, referred to the internet and to the CDC. We had a very interesting discussion at that point and I know those discussions are ongoing. Sometimes it is not necessarily that we do not want to answer questions, but these matters are very complicated. I assure noble Lords that those discussions and ideas are being taken very seriously. We funded the feasibility programme for the submarine internet connection to the islands because we see it as complementary to our tourism ambitions. We have also continued our support to the core budget of the St Helena Government, which the noble Lord, Lord Foulkes, mentioned as the man paying the piper; in this case, it was Priti Patel, a female, paying the piper. That commitment continues and we have agreed a further project of up to £4.8 million over the next three years to help support tourism and economic development.
We have invested nearly £13 million in Tristan da Cunha’s infrastructure. That has kept the harbour open, allowing access to the island and allowing the lobster catch, which is very important to the island’s economy, to be landed. In addition, the newly built health facility opened its doors in June 2017. This replaced the failing hospital with a facility which offers an improved level of medical care. The UK Government have received positive feedback from the islanders and clinicians.
Turning to Ascension, the rerouting of the South Atlantic Airbridge has clearly had an impact on the lives of people on the island and on operations with the organisations based there. However, the runway remains open should there be a need for medical evacuation and the MoD military flights are still running. I recognise the particular interest which the noble Baroness, Lady Smith, has through her Armed Forces Parliamentary Scheme experience. Let me just add, on maintenance of the runway, that it is the US Government who own the runway on Ascension and contract and patch repairs. It is they who have asked that, until further notice be given, the RAF should cease from operating the heavier Voyager aircraft, due to the deterioration of the runway that has occurred during that time.
Lord Foulkes of Cumnock
The Minister is reading a speech rather than answering the debate. Will he answer the question as to why the Americans are still able to fly in, as they were before, but we are not?
Lord Bates
This is a debate we are having here. I thought it would be helpful for noble Lords to hear what HMG are actually doing in these areas. Discussions with the United States Government are of course ongoing under the terms of the agreement about how this will operate. I am very happy to write to and update noble Lords with the outcome of those.
The majority of those on Ascension are from St Helena. The new once-a-month air service to St Helena, with onward travel to South Africa, will drastically improve travel times, allowing Saints to return home to visit their families and friends, as the noble Lord, Lord Shutt, requested. The Government are clear about the importance of continued access to Ascension before and during the planned runway repairs. My noble friend Lord Ahmad spoke to the Ascension councillors on 7 July to hear their views, and the FCO is in close contact with the Ascension Government, employing organisations and representatives of the people of the island. Ascension continues to have a role in delivering a number of strategic priorities for the UK and our allies. The UK Government are committed to working with the Ascension representatives to find a sustainable operating model that works.
Travel to and from the UK to the Falkland Islands has been maintained by rerouting the South Atlantic Airbridge through Cape Verde, for which Her Majesty’s Government are very grateful. The responsibility for infrastructure investment on the Falkland Islands is a devolved matter to the Falkland Islands’ Government, which I know the noble Baroness, Lady Smith, is interested in.
I again thank the noble Lord, Lord Shutt, for calling this debate and to all who have contributed. It shows the depth of support in this House for the people of the overseas territories, to whom we have a special responsibility. I hope the House can continue to support the work of the UK Government in discharging this responsibility to some of the most remote and challenging places in the world, and that the investment which we have placed already and the communication which we have already invested within this House can continue into the future for the benefit of the Saints and other organisations elsewhere.
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
The first debate has now concluded and the Committee will stand adjourned until 2 pm.
Financial Services: Regulation
Lord Bates Excerpts(6 years, 8 months ago)
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Lord Leigh of Hurley (Con)
I beg leave to ask the Question standing in my name on the Order Paper and draw your Lordships’ attention to my register of interests.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, the Government are committed to reducing unnecessary regulation in the financial services industry, but also recognise the need for an effective and proportionate regulatory regime to ensure that markets function well and consumers are appropriately protected. The Government do not believe that the FCA is going beyond what is appropriate and necessary to fulfil the Government’s policy.
Lord Leigh of Hurley
I thank the Minister for that Answer and I draw his attention to the Queen’s Speech. I am sure he will agree that the commitment to further strengthen our resilient economy, following press reports, means that a specific review in this Parliament of the somewhat opaque policies and procedures of the FCA will be most welcome, in particular to the financial services industry.
Lord Bates
We have to recognise that the review that took place in light of the situation that occurred 10 years ago, with the financial crisis, necessitated a wholesale reform of consumer protection and also of the strength and stability, including the systemic strength, of the financial services industry. That was why these radical reforms were brought forward: to put consumer protection at the heart of this and to improve the conduct and authority of the mechanism by which that is done. That comes at a cost, and the cost has to be borne, ultimately, by consumers. That is one reason that it is important that the FCA pays attention, which it does, to the fact that it is required, as well as protecting consumers, to create an efficient and effective market for consumers so that they get good value for money as well as protection.
Lord Tomlinson (Lab)
Will the Minister undertake to tread very carefully in this area? We all know what we have been through in the last decade; it was as a result of being seduced by appeals for lighter-touch regulation, and we do not have any desire to go through that sort of process at all. Any change will have to be justified, not just because the industry wishes it but as a way of respecting the needs of consumers in this country to have a properly regulated financial sector.
Lord Bates
The noble Lord is absolutely right. Virtually every adult in the United Kingdom is a consumer of financial services, be it for mortgages, credit cards, loans, insurance products or pensions. It is essential that consumers continue to have confidence in the institutions that provide those services so that they continue to do those things, which are very much a social and economic good for this country.
Lord Cromwell (CB)
My Lords, does the Minister agree that, at a time when many of our major financial institutions are embroiled in scandals over how they have treated their customers, this is not the time for deregulation but for more effective regulation and, in particular, the use of more personal accountability for malefactors?
Lord Bates
It is certainly a time for better regulation; I very much agree with that. There has been a suggestion that the way in which the FCA has conducted these matters has not focused on the areas of greatest risk. One area it has looked at is the small businesses, in particular, that have been affected by the regulation, whereas perhaps, historically, they are at lower risk. That was why the Enterprise Act 2015 required the FCA to look at the proportionality and the cost of regulation, particularly on those small businesses, which I think was the right step forward.
Baroness Kramer (LD)
My Lords, does the Minister agree that in fact the FCA is becoming an effective protector and guardian of individual consumers in regard to the financial services industry? Does he also agree that it is time now to consider expanding its remit to small businesses, especially microbusinesses? We do not need a repeat of the abuses that have happened with RBS and HBOS, and an expanded, proactive role for the FCA in this arena would be very much welcomed by small businesses, the backbone of the country.
Lord Bates
Those major banks, of course, are covered by the Prudential Regulation Authority, through the Bank, but the FCA has a prudential role as well as its regulatory role. As I mentioned, it is important that we recognise that where regulations apply it is done in a proportionate and appropriate way for consumers and also for the businesses that are being dealt with.
The Lord Bishop of Southwark
My Lords, when do Her Majesty’s Government intend to implement in full the principal recommendations of the Parliamentary Commission on Banking Standards, published in June 2013?
Lord Bates
I do not have an answer for that, but I am very happy to write to the right reverend Prelate.
Baroness O'Cathain (Con)
My Lords, does my noble friend agree that one way to reduce regulation would be to review the excessive checks being made on politically exposed people in the UK, including me?
Lord Bates
I suppose we can all declare an interest in that. My noble friend may be encouraged to hear that as a result of the money laundering regulations that were laid before the House in June 2017, the FCA has issued guidance on politically exposed persons to ensure that they are dealt with on a case-by-case basis and in a proportionate way, and that organisations focus on those individuals who would be at highest risk and recognise those who are at lowest risk, which I am sure would include all Members of your Lordships’ House.
The Earl of Kinnoull (CB)
My Lords, UK non-life insurance brokers are regulated by the FCA and bear the costs of that regulation. Is the Minister aware that the relative cost in the UK is more than twice that in Ireland, Hong Kong and Bermuda? The multiple is bigger in France and Germany. Does he agree that this is unhelpful to the industry and is actually evidence of overregulation?
Lord Bates
I respect the knowledge the noble Earl has in this area but there are differences in the way that the regulation is funded in different jurisdictions. I come back to the point that we need to look at how regulation is applied effectively on those who are at highest risk and recognise those who are at lowest risk. The FCA has a statutory duty to establish and consult a small business practitioners’ panel on policies impacting on small and medium-sized enterprises, and I think that is the right way forward.
Lord Soley (Lab)
The Minister will know that the European Banking Authority, currently located in London, has a duty to maintain financial stability and ensure the integrity of the system. That authority will go after Brexit. What thinking have the Government done on whether we should seek equivalence or strike out on our own on a further strand of regulation?
Lord Bates
All those matters are being dealt with through the repeal Bill which is going through the other place, but we have made it very clear that financial services are extremely important to this country. Access is extremely important. We want to be able to continue to offer the UK’s world-beating export of financial services to the eurozone area and around the world after exiting the European Union.
East Africa: Refugee Crisis
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The Earl of Sandwich
To ask Her Majesty’s Government what further action they are taking to address the ongoing refugee crisis and acute food emergency in East Africa.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, across east Africa the UK is providing life-saving humanitarian support, including reaching over 3.3 million people with food assistance and over 2.4 million people with water and sanitation. We are leading a new approach to support refugees, who are often displaced for many years, focusing on the provision of long-term investments in jobs and education.
The Earl of Sandwich (CB)
My Lords, I thank the Minister for that reply. I know that our humanitarian aid and our soldiers are making a huge contribution at the moment, as are the Ugandan Government, as he knows. However, my concern today is about security. This is one of the most dangerous places in Africa. He will recall that the United Nations almost overlooked the rapes and killings that were going on quite close to Juba in July last year. Can the United Kingdom do any more about this? Does the UN have it in its power to make this country more secure?
Lord Bates
It is trying its best. It is a dire situation, to be quite frank, and some 80 humanitarian workers have lost their lives since the beginning of this crisis. The 400 British troops there are doing incredible work as part of the UN mission and are led very ably by David Shearer. There was a commitment last year at the UN for a further regional deployment of 4,000 troops. That needs to happen. However, ultimately it is for the Government and the Opposition to honour the ceasefire that was declared and to allow humanitarian aid to get through. We continue to keep that under review. Major General Patrick Cammaert undertook a review into the incident he talked about and we will continue to follow that inquiry very closely.
Baroness Manzoor (Con)
My Lords, I welcome the humanitarian aid that the Government are giving to east Africa but there are reports that the crisis is being used by some people to traffic women from east Africa into Europe. Can the Minister say what steps the Government are taking to minimise this traumatic experience for some of the most vulnerable women?
Lord Bates
It is a fact that that is happening. That is the reason why we are a party to, and led off on, the Khartoum process; why we are signatories to, and urging forward, the joint Valletta agreement on human trafficking, which was a follow-up to that; and why it is important that we work particularly with the African Union and European Union colleagues in that area to clamp down on this evil trade.
Lord Judd (Lab)
My Lords, the situation is appalling, the suffering is acute and the courage and resilience of thousands of people is amazing. I am glad that the noble Lord has been able to reassure the House that our humanitarian commitment is firm. However, would he agree that this situation is, sadly, a symptom of what lies ahead in the world, and that crises of this kind will recur, with inevitable pressures on Europe? Is not this the very time we should be working flat out with our international partners, not least in Europe, to think about the strategies we must develop to meet the crises that lie ahead?
Lord Bates
The noble Lord speaks with great authority and understanding of these issues and I totally agree with him. We need to look at the underlying causes. This is sometimes portrayed in the media as a climate issue which has caused suffering to the people of this region. However, it is a manmade crisis, which needs a manmade solution. This means people putting their civilian populations first and protecting them, and the international community needs to come forward—as it did through the G20—with radical plans to bolster job creation, economic growth and security in that region so that there is the potential for peace in the future.
The Lord Bishop of Salisbury
My Lords, I thank the Minister for his responses. In the case of South Sudan, where conflict is the main cause of the crisis but it is also being further exacerbated by low rainfall, what is the UK doing in relation to internally displaced people? Perhaps I may also ask him to comment on the very different example of Burundi. Is this also an opportunity for him to say a bit more about how UK overseas aid is not a charity but is in our enlightened self-interest?
Lord Bates
I agree with that assessment. In terms of what our aid is actually doing, at the basic level, during 2017 it will put 200,000 girls into education and help to construct and support 2,000 schools. It will provide food and medicine. We have committed £100 million to this crisis, which is one of the largest interventions that we have made. Moreover, we made it very early on and we have been leading in this area. What we are also trying to do is help refugees in neighbouring countries, where significant pressures are developing as the result of 2 million people having fled into them to escape from the fighting and violence.
Baroness Sheehan (LD)
My Lords, the situation in east Africa is truly awful and I commend the fantastic work that DfID and other UK agencies are doing there. The Minister will know that for every £1 we spend on preparing for disasters, around £7 is saved in recovery costs. I have two questions for the noble Lord. First, is DfID planning to increase investment in humanitarian aid for disaster risk reduction? Secondly, will the department commit at the very least to extending the excellent Disasters and Emergencies Preparedness Programme when it expires in March 2018?
Lord Bates
My Lords, we have not taken a decision on that particular programme, but I am happy to write to the noble Baroness once the processes have been gone through. This is at the core of what we do, and the humanitarian mission is absolutely critical in this area. We want it to be continuously strengthened. One thing that I am most proud of is that, in the case of Somalia in particular, we were there right at the beginning, and we led the initiative—because we know that sometimes there can be a lead time of months before much-needed supplies get to a region. We were starting our work in February, which has contributed to saving tens of thousands of lives in that particular country.
Barnett Formula
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Lord Wigley
To ask Her Majesty’s Government what changes they propose to make to the application of the Barnett formula to Wales and Scotland arising from any potential additional financial provision for Northern Ireland.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, the Government remain committed to the Barnett formula, which is designed to ensure that devolved Administrations are funded to deliver their priorities within their devolved responsibilities. Like those previous interventions, this exceptional funding will be made outside the normal ongoing Barnett funding system. It will therefore not attract Barnett consequentials.
Lord Wigley (PC)
Surprise, surprise. The noble Lord will be aware that £1,000 million has been allocated primarily to hospitals, schools and roads in Northern Ireland—mainstream Barnett elements. Clearly the Government have perceived an extra need in Northern Ireland, however that is defined. Will they therefore move towards a needs-based formula for Scotland, Wales and indeed, for the regions of England, to ensure that valuable and important economic projects, such as the M4 in south Wales, the A55 in north Wales and the Swansea Bay lagoon—things that are important to the economy—can move ahead and are not constrained by the way in which these matters are approached at present?
Lord Bates
The noble Lord will be familiar with the long-running debate over the needs-based versus the population-based formula. The Government always remain responsive to needs. That is one reason why a number of investments have taken place in Wales, for example, outside the Barnett formula. There is the Cardiff capital region city deal of £500 million, the Swansea city deal of £115 million, and I hope the north Wales growth deal. All those will be outside the Barnett formula and reflect the particular needs of Wales, as the deal to which he referred reflects the particular needs of Northern Ireland.
Lord Anderson of Swansea (Lab)
What advice will the Minister give us? What do we in Wales have to do to get an extra £1 billion? It would be extremely helpful to have that advice. For example, on the Swansea Bay lagoon, investors now say they are becoming wary of keeping their money on hold. Are the Government capable of making a decision?
Lord Bates
We are certainly always open. That is why we spend £120 in Wales for every £100 that we spend in England. We continue to be committed to that. It is why we increased the overall capital borrowing limit to £1 billion from £500 million, and we continue to look for opportunities to grow the economy in Wales, both within and outside the Barnett formula.
Lord Forsyth of Drumlean (Con)
My Lords, given the Prime Minister’s emphasis on fairness and on strengthening the United Kingdom, why are the Government so resistant to taking the advice of the late Lord Barnett and of the committee of this House that looked at the Barnett formula, which unanimously concluded that Wales lost out as a result and that a system based on needs would unify the United Kingdom and be fair to England, Scotland, Wales and Northern Ireland?
Lord Bates
I recognise that—and of course for 40 years there has been an ongoing debate about the Barnett formula. Our response to that, as my noble friend will recognise, is to believe that we should devolve to the devolved Administrations more responsibilities and financial accountability in taxation and how money is spent in the Budget. That is the best way in which to eventually work towards a needs-based rather than population-based formula.
Baroness Kramer (LD)
Do the Government understand that this is an issue of trust? While the Barnett formula is not a legal requirement, it is clear to everyone in this House that the additional £1 billion for Northern Ireland is a sort of pork barrel, as they would say in America—a politically induced donation—which ought to fall within that formula if one was keeping to the conventions of Parliament.
Lord Bates
It is wrong for the noble Baroness to refer to it in that way. First, the details of the deal have been made very clear and published on the website on 26 June. There have been Written Ministerial Statements about it. As for terming this a donation, I stand by a donation that gives £100 million extra for health and education, £400 million for infrastructure, £50 million for mental health, £100 million for severely deprived areas and £150 million for broadband in one of the most needy parts of the United Kingdom.
Lord Bew (CB)
In the context of the discussion of a possible needs-based formula, is it worth the Minister noting that Northern Ireland appears to have considerably more disadvantaged young people per percentage of population as against Scotland, and cannot afford the sort of things that Scotland appears to be able to afford, both in certain provisions of social care and in tuition fees?
Lord Bates
That is a good point. It is recognised, of course, in a lot of funding that goes through at the moment. When we look at employment in the UK, which we are pleased to say reached record levels this week, we recognise that there is a 75.2% employment rate in England, 74.1% in Scotland, 72.6% in Wales but only 68.7% in Northern Ireland. That is one reason why this is a good investment in the future of young people in Northern Ireland.
Lord Spicer (Con)
Is my noble friend aware that the person who was most perplexed by the Barnett formula was the much-loved Joel himself, who came to believe that it was distorted and very unfair—for instance, to the north-east of England?
Lord Bates
He did. Although I am no student of history on this, it was introduced very much as a short-term formula to get the then minority Labour Government through to the 1979 election. It was not intended to be ongoing but it has been ongoing, and we have come up with a better solution, which is to have greater fiscal and political devolution.
Lord McAvoy (Lab)
My Lords, all regions and nations across the United Kingdom have been subject to cuts, so if this fund can go towards ending austerity in Northern Ireland that is a positive step—but most regions and nations will continue to struggle, and government policy is only exacerbating that further. As the Industrial Strategy Commission reported this week, the United Kingdom is by far the most regionally unequal EU economy. The Cambridge area has twice as many jobs in scientific research and development establishments as the whole of the Midlands, more than Scotland and Wales combined, and only 2,000 fewer than the whole of the north of England. How do the Government intend to structure their policies to ensure that every region and nation in the United Kingdom benefits from them?
Lord Bates
Part of it is through devolution, but part of it is through recognising the particular needs of Northern Ireland. Owen Smith, the shadow Northern Ireland Minister in the other place, said last week that:
“Talking about parity between the sorts of treatment that Northern Ireland gets and other parts of the UK isn’t what we’ve done in the past. Northern Ireland is a special case and it will always need special consideration”.
He is absolutely right on this and we are following that advice.
Public Sector Pay Cap
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The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I pay tribute to the noble Lord, Lord Haskel, for securing this debate, and to noble Lords who have taken part in it. In a spirit of trying to shed more light than heat on this issue, I thought it would be useful if, rather than leading off with my set text, I went straight into trying to respond to some of the key questions that have been raised.
A number of noble Lords questioned our commitment to the public services, saying that we were very happy to pay tribute to the workers when crises arose but questioning whether we were backing that up with resource. It will not surprise noble Lords to hear me say that we pay tribute to our public services, particularly given the horrific events that we have seen in recent months. Their performance has been utterly outstanding, as has that of the Armed Forces. How do we respond to that? We respond to the Armed Forces through signing up to the 2% pledge in NATO for defence expenditure, thereby investing in the Armed Forces. We speak up for our nurses and health workers in England, where we have responsibility, through an £8 billion increase in real terms in expenditure on the health service. We have protected expenditure on schools and protected front-line policing. As a result, we have seen that crime is falling, more patients are being treated than ever before and more pupils are being taught in good or outstanding schools.
The noble Lord, Lord Monks, and the noble Baronesses, Lady Blackstone and Lady Dean, spoke about nurses and the issues around nursing. It is absolutely right that the public sector review bodies should take into account the recruitment factors here. It is worth noting that they said:
“We do not see significant short-term nationwide recruitment and retention issues that are linked to pay”.
We have seen an increase of 13,000 in the number of nurses but there are also 52,000 nurses in training. That should be welcomed. The noble Lord, Lord Tunnicliffe, will probably not be surprised that I return to the following point. One needs to make comparisons when one talks about average pay in the public sector. The average pay might be set by a pay review body at 1% in terms of an increase but actual pay settlements in terms of pay progression have averaged between 3% and 4% in the health service. The comparison was made with other European countries. The OECD looked at the purchasing-power parity of the average salary of nurses and found that where, in the index, the UK was measured—
Lord Tunnicliffe
Would the noble Lord be willing to share with us by letter the source data for those statements?
Lord Bates
I can give that information. It was from the NHS Pay Review Body’s report of March 2017. It said:
“We do not see significant short-term nationwide recruitment and retention issues that are linked to pay”.
Returning to my key point about UK nurses, where the UK is measured at 100 in the OECD index, France, which was cited, is at 84.2. Therefore, I think that average salaries bear some comparison.
I want to turn in particular to the point made by the noble Lord, Lord Sawyer, about the importance of public opinion here—a view that I recognise. The Government are seeking to balance the opinion of public sector workers with that of taxpayers, who contribute to the maintenance of our public services. Frequent mention has been made of comparisons with real wages in 2010—the noble Baroness, Lady Blackstone, referred to that. Of course, 2010 is a particular point at which to make the comparison. The noble Lord, Lord Haskel, will recognise that if you make the comparison with the situation at the beginning of the great financial crisis of 2008-09, you get a different result, because at that point there was a significant reduction in private sector pay, which has recovered recently.
In response to a point made by the noble Lord, Lord Sawyer, taxpayers’ confidence is maintained by looking at reductions in the deficit. I know that that may be greeted by groans in some quarters of the House, although perhaps I am wrong about that, but we should bear in mind that the interest that we pay on the debt—£50 billion—is equivalent to the entire pay bill for the NHS. Therefore, it is simply not true to say that macroeconomic and fiscal responsibility does not have a bearing on the public finances. However, it is true to say that at present we have record levels of employment—we have never seen them at such a high level—and that in itself leads to pressure on recruitment in the professions.
It is also true that, because we are seeking to manage the economy well, interest rates are at historically low levels, and that reduces the cost of living. The noble Lord, Lord Monks, and the noble Baroness, Lady Kramer, referred to the fact that inflation has increased to 2.9%, which is outside the target. We believe that that is associated with short-term exchange rate issues relating to last year’s decision to exit the European Union and that over time the rate will return to being within the 2% target that we want to achieve.
The noble Lord, Lord Monks, quoted the Prime Minister at the party conference and referred to equity between public service employees’ salaries and the taxpayer—a point I mentioned in response to the noble Lord, Lord Sawyer. On 4 July—that is, last week—he said, “It’s all coming out of the same pot. Therefore, you have to, as a government, have a view on how much you are prepared to spend on pay and how much you are going to spend on the day-to-day running costs of the services you provide”. That is a very fair observation and we would go with that.
The noble Lord, Lord Haskel, referred to productivity, which I recognise is important. Between 2010 and 2016, total public service productivity is estimated to have increased by 3%, with growth of around 0.5% per year. This represents a longer, sustained period of growth in public service productivity since the start of the series in 1997. We have also invested £13 billion to improve productivity, supporting Charlie Mayfield’s work, to which the noble Lord referred.
I am very grateful to the noble Lord, Lord Adonis, for having given me notice of the points he raised, and I want to make sure that they are covered. He asked a number of questions about pay. I think that the House will have been in some shock as he quoted the numbers relating to public sector pay for vice-chancellors and the specific example of the University of Bath. The answers may not surprise him but I put them on the record. Universities are independent and autonomous institutions, and are responsible for setting the pay for their staff. As such, government does not have pay controls in place for senior university staff. The Government have no current plans to intervene in universities’ remuneration. Vice-chancellor pay is decided by official university remuneration committees, which include expert representatives from outside the sector. We expect these committees to examine robustly the evidence for pay increases for all relevant staff. As I said, I know that those answers—
Baroness Blackstone
My Lords, would the noble Lord accept that, where the regulatory function of remuneration committees in universities is obviously not working properly, as in the case of the University of Bath, the Higher Education Funding Council ought to intervene to see that it is put right? It cannot be accepted that a pay package of £0.5 million is appropriate for any vice-chancellor, particularly the vice-chancellor at the University of Bath.
Lord Bates
I certainly undertake to relay to colleagues the views and concerns raised by the noble Lord, Lord Adonis, the noble Baroness, Lady Blackstone, and others in the House to see what further can be done, and I will be happy to write to the noble Baroness when I have done that.
Our position remains that we value the public services. We recognise that we have a duty of responsibility to the people who pay for them and to those who work in them. These are difficult judgment calls but we believe that we are delivering a balanced approach, involving fiscal responsibility to get our financial status in order. It is delivering benefits, whether through average pay growth, through benefits and pensions or through taxation policies. The personal tax threshold has been raised significantly over a period of time, meaning an increase equivalent to £1,000 a year for the average person, and 1.3 million of the lowest-paid people have been taken out of tax altogether.
I am grateful to noble Lords for their contributions to the debate. I will review them to see whether there are any points that I have not responded to and will write to noble Lords accordingly.
Supply and Appropriation (Main Estimates) Bill
Lord Bates ExcerptsTuesday 11th July 2017
(6 years, 10 months ago)
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Education: Disability Financing
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Lord Low of Dalston
To ask Her Majesty’s Government what assessment they have made of the #CostingEquity report on disability responsive education financing, published by the International Disability and Development Consortium, which outlines the steps and resources necessary to deliver the United Nations Sustainable Development Goal 4 on inclusive education.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, we welcome the IDDC’s report. Disability has been underprioritised in the past and, as a result, insufficient global resources have been allocated to education. We recognise the challenge and are steadily taking steps to scale up our own response and encourage others to do more.
Lord Low of Dalston (CB)
My Lords, I am very grateful for that Reply. The Minister will be aware that more than 32 million children with disabilities in low and middle-income countries are out of school and denied an education. That is why 40 NGO leaders have endorsed a joint call to action to invest in disability-inclusive education, in which they have agreed to make education for children with disabilities in developing countries a top priority and to urge donors to increase funding for inclusive education and make disability inclusiveness a necessary criterion for accessing funding for all education programmes and projects. Can the Minister assure the House—and from his Reply I am very hopeful that he can—that the UK Government will follow the same approach and support these recommendations?
Lord Bates
I am very happy to give that assurance, and I pay tribute to the noble Lord for his work on the steering group of this very valuable report. We are still digesting a lot of its conclusions—but, undoubtedly, the one that we should focus on is that 90% of children in the developing world with disabilities are not in school. Clearly, that is contrary to the UN Convention on the Rights of Persons with Disabilities and to at least goal 4—and probably goals 8 and 10—of the sustainable development goals. It is something that we are committed to responding to, and I will be very happy to speak to the noble Lord afterwards to outline some of the thoughts that we have in this area about what we hope to bring forward in response to the report.
Lord Bruce of Bennachie (LD)
In response to the report on disability from the International Development Committee three years ago, the Government adopted a disability framework. What progress is being made in evaluating the data to identify how many disabled children in particular are affected in countries where DfID has programmes and to what extent is DfID targeting them, as well as on employing disabled staff in the department to ensure that there is a real connection between the rights of disabled people and the need to serve their needs?
Lord Bates
One thing that was identified in the report to which we have just referred was the lack of data about what the need was and what the responses were. We have a disability framework in the department, which guides everything that we do across our aid strategy. We are looking at finding better practices for what is working; for example, we are working in Kenya and Uganda with Leonard Cheshire to try to find better examples of what is working on the ground to address this problem.
The Earl of Listowel (CB)
Is the Minister looking at how many of these children are in institutional care and whether it is always appropriate for them to be so? Many of them could be better placed in foster or kinship care. Is that a matter that the Minister might look at?
Lord Bates
A number of excellent charities are working in this very area. It is certainly something that we are sympathetic to; disability has been one of the core criteria for UK Aid Direct, a new round of which has come in. We also have the Girls’ Education Challenge, which has educated some 46,000 girls with disabilities in schools. The next round of that project will increase the allocation still further to 15% of the total fund.
Lord Collins of Highbury (Lab)
My Lords, promoting inclusive education is obviously a key priority for DfID. The International Development Committee of the other place recommended that DfID should spend at least 10% of its budget on that, but it is currently 8%. What steps is the Minister going to take to ensure that we reach that target so that we can deliver the promise referred to by the noble Lord, Lord Low?
Lord Bates
There is a significant financing gap in global education. The UK is one of the better ones—in fact, the report on page 26 highlights that DfID was ranked number one by donors for its disability education as a priority, and number 2 for its funding overall. The amount is currently at 8.5%, about £650 million; we also spend about £227 million through multilateral agencies, so I think we are doing better than most. But with the scale of the problem that has been identified, we cannot afford to be complacent and we will certainly keep that under review.
Lord Polak (Con)
My Lords, perhaps I may refer to the Minister a charity called Wheelchairs of Hope. Using old plastic chairs, the inventors have created strong and sturdy wheelchairs for the developing world at a cost of somewhere between $50 and $100 per chair. This has been a great thing for people in the developing world, especially for young children who would otherwise not be able to get to school. I suggest that the Minister has a good look at it. I hope that DfID might help these children get to school and give them a bit of mobility which they have not had before.
Lord Bates
I am very happy to look at that. I also encourage the charity itself to see whether it would be eligible for the UK Aid Direct funding round which is in place at the moment, or the small charities challenge fund, which has just been launched.
Baroness Royall of Blaisdon (Lab)
My Lords, one noble Lord mentioned earlier the need for DfID to employ people with disabilities. This is extremely important: we need their talents and we need them as role models. What is DfID’s policy? Also, what is its policy towards other organisations to which it gives grants? It is extremely important that they, too, employ people with disabilities.
Lord Bates
Through the disability framework, we now ask a question about disability inclusion as part of all business cases. I am very happy to write to the noble Baroness with specific numbers. Our annual report was produced last week and the numbers are listed in it, as they should be. I am sure that there is more that could be done, but we can take a degree of pride from the report on what UK aid is doing for those with disabilities around the world.
Lord Elton (Con)
My Lords, this is obviously work of great international importance. However, does the provision for our own children meet the criteria that we are recommending for international communities?
Lord Bates
The international standard that has been adopted by the UN recommends that between 4% and 6% of GDP should be spent on education. In the UK it is currently 5.6%. In many of the countries that we are helping most, such as Pakistan and Bangladesh, it is 2.4% and 2.2% respectively, so there is a lot more that those countries can do themselves—and, of course, there is always a need to keep spending in this country under review to ensure that we continue to maintain our standards.
Business: Exports
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Lord Empey
To ask Her Majesty’s Government, whether they are planning to provide tax incentives to businesses to encourage their staff to obtain recognised qualifications in exporting skills.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, the Government are committed to supporting businesses to export. Businesses can currently deduct the costs of staff training from their taxable profits. The Government keep all tax policy under review, and any proposed additional relief must be assessed for its effectiveness, ability to stand up against abuse and cost to the Exchequer.
Lord Empey (UUP)
My Lords, the Minister will be aware that we have just been talking about Brexit—of course, in this House we do little else. I draw to his attention the fact that more and more emphasis needs to be placed on our ability to trade and provide services internationally; there are certain skillsets that people need in order to achieve that. The apprenticeship levy will apply only to England and not to other parts of the UK, and it would good for Her Majesty’s Government to send a signal to companies to encourage them to export and to upskill their people so that they could use the costs incurred by that qualification to offset against corporation tax. Surely that would send a signal to business that we are now focused on exporting, because it is going to be our lifeblood in the years ahead.
Lord Bates
The noble Lord is absolutely right to point to the tremendous opportunities that are going to open up to the UK in global markets for exporting. We are very mindful of that. We also recognise, of course, that significant investment needs to be made in understanding the complexities of trade. I pay tribute to the work of the Export Institute, of which the noble Lord is a member. The apprenticeship levy is available across the United Kingdom. In England it is for companies to determine how that is spent and offset against budgets; it is for devolved Administrations to determine how it is spent, but I would have thought that any investment in training our young people in the opportunities in trade, in particular, would be money well spent.
Baroness Kramer (LD)
My Lords, this House will know that yesterday the EU and Japan agreed a free trade deal. Will the Minister tell us the cost to UK SME exporters and supply chain of exclusion from this deal?
Lord Bates
The EU agreed that deal with great support from the United Kingdom. We have made it very clear that we want to replicate such deals and potentially get even better terms for our markets. We have seen a tremendous increase in the value of exports over the past year—up by 5.8%, and up by 34.8% since 2010. We believe that we can do better than that outside the European Union.
Lord Flight (Con)
My Lords, will the Government look at arrangements for the financing of exports in comparison to both the US and France? This country is much less helpful and, post-ECGD being privatised, quite a few businesses still find it difficult to get exports financed.
Lord Bates
My noble friend will be aware, of course, that the export finance levels were doubled by the Chancellor in the Autumn Statement last year. That will be a significant increase. Some 279 companies had access to export finance and more than 70% of those were small and medium-sized enterprises—precisely the sorts of organisations that we need to encourage to do more.
Lord Tunnicliffe (Lab)
My Lords, ONS figures show that Britain is currently the worst performing major economy in the world right now, so upskilling our workforce is vital. However, the LGA has recently stated that skills and employment funding is confusing, fragmented, untargeted and ineffective in its current form, where it is run by eight different government departments or agencies. How do the Government intend to better co-ordinate their haphazard approach to skills?
Lord Bates
I simply do not recognise this pessimistic view about the UK. We are the fifth largest economy in the world, according to IMF rankings; we were the fastest growing among the major economies last year; and this year we will be the second fastest growing among the major economies. Our exports are on the rise, our employment is at record levels and the United Kingdom is a fantastic place to do business. We produce some fantastic products that will be in demand—increasing demand, in my view—around the world.
Lord Foulkes of Cumnock (Lab)
My Lords, the House is deeply grateful to the noble Lord, Lord Empey, for drawing our attention to these qualifications in exporting skills. Does the Minister not agree that it would even more useful if Liam Fox and some of his Ministers had these qualifications? Could he arrange for them to go on one of these courses?
Lord Bates
There is a factual answer to that—I am not sure whether it will play right into the noble Lord’s hands—which is that the Export Institute is an accredited training provider to the Department for International Trade. It is actually doing that already. The reality is that the future is going to be about exports, and exports outside the European Union: the fastest growing economies in the world are all outside the European Union. We need to broaden our horizons and take advantage of the opportunities. That is going to be the future of business, for which we need to train, and be encouraged and inspired about.
Lord West of Spithead (Lab)
My Lords, as regards advice to exporters, what advice are the Government giving to exporters and indeed UK citizens who are dealing with South Korea—a very big market for us—bearing in mind that there is, I am afraid, an inexorable march towards a war within that peninsula? What advice are we giving to our people and our companies there?
Lord Bates
These are very complex matters, which are being dealt with at the Security Council. They are on the agenda for the G20 and the Foreign Secretary has made statements about them today. We are taking these matters very seriously indeed. We recognise that the Republic of Korea is a major trading partner for the UK and we want to maintain those relationships and maintain peace and stability on the Korean peninsula.
Lord Wallace of Saltaire (LD)
My Lords, given the statements by a number of ambassadors from the United Arab Emirates that they may be asking their trading partners to choose whether they wish to trade with Qatar or with the rest of the GCC, do the British Government yet have a position on whether they will focus on future trade with Qatar, from which we take a third of our liquid gas imports, or with the rest of the GCC, with which we have, happily, a very substantial trade surplus?
Lord Bates
We do not recognise that we will be in a position where we will have to choose. We recognise that these are very important trading partners. The Secretary of State for International Trade was in the Gulf recently and announced an increase in the export finance available for companies exporting into that region. Again, we recognise that that needs to be built on peace and stability, and we very much hope that the situation will be resolved as soon as possible.