Budget Statement
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Lord Bilimoria (CB)
My Lords, the UK economy is forecast to grow by 1.5% in 2017, and we still have debts of £1.7 trillion. Within eight months, the OBR’s GDP forecasts for the next five years have been revised down to the lowest in our history. In those eight months since the last Budget, our productivity growth forecasts have been drastically reduced and, in eight months, the OBR expects the UK to perform worse than our main competitors, with the table of real GDP per capita growth in the G7 from 2016 to 2022 listing in the following order: Germany, France, United States, Japan, Italy, Canada and then the UK. The IMF says 6%; the OBR is even lower at 5%. It makes for pretty grim reading. Mr Johnson of the IFS says that,
“We are in danger of losing not just one but getting on for two decades of earnings growth”.
So what are we going to do about this? George Osborne talked about fixing the roof while the sun is shining. He wanted to achieve his growth by balancing the budget by 2020. This is a pipe dream; it is not going to happen. The IFS calculates that it will be,
“well past 2060s for debt to fall to its pre-crisis levels of 40% of national income”.
There have been some indications recently that we might be heading for recession within the next year and a half. Does the Minister agree? Every 10 years, whatever happens, we have a recession. Are we going to have another? And then we face the longest period of falling real incomes since records began more than 60 years ago.
There are some good things in this Budget. For example, the Government listened to the Economic Affairs Finance Bill Sub-Committee, on which I sit, when we said of making tax digital that they should trial it out and not implement it straightaway. I am grateful for that. They will pilot it and limit it to turnovers above the £85,000 VAT threshold.
When it comes to research and development and innovation, the good news is that the Government say that they will invest more in this area. But what is “more” and what is required? We spend 1.7% of GDP on R&D and innovation; Germany and America spend some 2.7% and 2.8% respectively. Two billion pounds a year is a good move, but it is £20 billion a year that we need just to catch up with them, let alone the backlog.
What about agriculture? The National Farmers’ Union said that it was,
“disappointed to see no meaningful measures to help prepare farming businesses prepare for life outside the EU”.
Just wearing my Cobra Beer hat, I am grateful to the Government for the fact that duty on beer was frozen. On a very serious note, the British pub desperately requires encouragement and protection. This measure will help the great British pub at the heart of our communities.
It is good that the Government want to reduce single-use plastics waste, and there is no question but that the 5p carrier bag charge has reduced the use of plastic bags by 80% in the past two years. I applaud the Government for going down that route.
On business rates, much more needs to be done. Yes, there has been a move to CPI, but more needs to be done. Where rates are concerned, there is an initiative for pubs in England to continue to receive a £1,000 discount. Much more needs to be done there, too. Will the Minister agree to that?
And, of course, the Oxford to Cambridge rail line being revived is wonderful news. I congratulate the Government on that.
The noble Lord, Lord Tugendhat, has mentioned the £3 billion to prepare for Brexit over the next two years. However, in spite of the national living wage and national minimum wage being increased, we know how low they are going to be. In February 2016, this country was flying: we were the fastest-growing economy in the western world. We were at the top table of the world. Today, I am ashamed to say that we are no longer at the top table. There is only one reason: Brexit. There is only one reason behind this Budget being called lacklustre and boring: well, the Chancellor survived. Alan Milburn resigned because he said that social mobility is not happening. He said that many people voted Brexit because they were dissatisfied with the Government of the day—it was an anti-establishment, dissatisfaction vote. Just yesterday, the poverty figures were released. Britain, a rich country that spends £800 billion a year on government expenditure and is the sixth-largest economy in the world, has poverty today. That is what the focus needs to be on; that is where the Budget needs to focus.
Three reasons were given for Brexit, and they are all linked to the Budget. The first was: take back control of our money; take back control of £8 billion a year, the net contribution. I have just said that £800 billion is our government expenditure per year—a pie chart, a line, an arrow: 1% of our government expenditure per year is Brexit. A second reason was: take back control of our laws. I ask people and businesses, “What laws? Tell me one law that affects you on a day-to-day basis”. They cannot name one, because the laws that affect us every day are made over here in this Parliament, in this House and in the other place. The third reason was: take back control of our borders. There are no exit checks at our borders. Whatever the Minister may say, there are no physical, visible exit checks at our borders. I ask people what percentage of our population of 65 million is made up by the 3 million people from the European Union. The answer is less than 5%. It is said that that 5% is a “burden” and causing our public services to collapse; without them, the public services would collapse, with 130,000 EU citizens working in the NHS and care sector alone and 250,000 working in the construction sector.
Then we talk about skills. The university sector is hardly mentioned in the Budget. International students alone bring in £26 billion to the economy. There are 450,000 international students—I am president of UCISA, representing them—with 130,000 from the EU. What will happen if we leave? They count as domestic students; they are entitled to loans. What if they reduce the billions of pounds with which they enrich our universities? What about research funding from the EU and research collaboration with the EU? What about the academics from the EU? Some 20% of academics in most of our universities are from the EU. These are the things that will affect our economy, because when it comes to R&D and innovation, it is investment in university research and innovation that is going to work.
What about the negotiations now? They have stalled. We have heard the news: the lunch was lunch; fudge was served. The bill is to be £40 billion to £50 billion, yet Boris Johnson said they could go whistle and Priti Patel said words that I could not repeat in this House. We are now prepared to pay £40 billion to £50 billion and perhaps give some control to the ECJ. Then there is the question of the Irish border. We will not allow Brexit to break up our union. And then there was the £3 billion in the Budget for Brexit expenses. What about all the expenses that have already taken place?
I conclude on the issue of trade—again, not mentioned much in the Budget. Fifty per cent of our trade is with the EU and another 20% is through free trade agreements via the EU, including now with Japan. Seventy per cent of our trade is FTAs and Liam Fox talks about going after the other 30%, of which the Commonwealth makes up less than 10%—including India, Australia and Canada. We need to do more with those countries, but the Indian high commissioner said very clearly, “Yes, we’ll do a free trade deal with you, but it might take till 2030 and, by the way, it includes the movement of people as well”.
This Budget is completely overshadowed by Brexit. It is only a matter of time before the British public wake up to the realities, realise that the Brexit emperor has no clothes and we will not be leaving the European Union.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I thank all noble Lords for their contributions to this extraordinarily good debate. It has focused on all the issues, which tended to coalesce around five themes which I will direct my remarks to: housing; social care and the NHS; living standards and social mobility; business and industrial strategy; and Brexit. It has been good for me and my noble friend Lord Young to have the benefit of all the contributions, but I will single out those from my noble friends Lord Balfe and Lord Dobbs and the noble Lords, Lord Goddard and Lord O’Neill of Gatley. I do so because they began with an optimistic outlook. I confess that I am an optimist: my blood group is B-positive. I am afraid I am drawn to that concept. If the House will indulge me I will take a few minutes to point to the many good things that are happening.
I begin with the noble Lord, Lord O’Neill of Gatley, who has a distinguished record and made observations on the global economy. His forecast—which I trust very much—was that the economy might grow by as much as 4%. If it does, and you take the global economy as somewhere between $70 trillion and $80 trillion, I make that growth of the size of the United Kingdom economy being added to the world economy this year. There is therefore a huge opportunity out there for us to tap into. The noble Lord, Lord Horam, talked about export potential and there is an example of it. The world is growing, markets are growing and most of the fastest-growing markets are outside the European Union. That global strategy therefore strikes a chord.
We should also remember that employment is up by over 3 million, with over 32 million people in work. The noble Lord, Lord Balfe, referred to the hard-working people of this country. The challenge that we face is to add to their hard work increased productivity—which I will come on to later. Unemployment is down by over 1 million since 2010. The unemployment rate has not been this low since 1975. We had lots of nostalgia in this debate, not least for Led Zeppelin and Dusty Springfield. Even Lord George-Brown had a look in among the distinguished figures from the past, including Lord Whitelaw and Lord Healey, the latter’s Budget debate being the first to which my noble friend Lord Wakeham contributed. I believe it was also the first Budget for my noble friend Lord Young.
The noble Lord, Lord O’Neill, mentioned the northern powerhouse and the growth taking place in the regions. It is worth mentioning—the noble Lord, Lord Goddard, echoed this—that employment numbers are growing faster in the north-west than anywhere else in the country. That is something to welcome. It is not happening by accident; it is happening because of a designed policy—a long-term economic plan to rebalance the economy.
We have cut income tax for over 30 million people, taking 4 million people out of income tax altogether. We have frozen fuel duty for eight years in a row, saving the average car driver £850 since 2010. Last month we doubled free childcare, which is worth £5,000 a year to families—an issue referred to by my noble friend Lord Farmer. We have also invested in 3.4 million apprenticeships. The noble Baroness, Lady Kramer, and the noble Lord, Lord Rooker, speculated as to whether the investment plans would be manifested. So far since 2010, we have invested £500 billion in infra- structure projects and have delivered 1,000 such projects.
At the same time, we have seen corporation tax for small businesses—a concern of my noble friend Lord Wakeham—go down from 28% to 19%, making it one of the lowest tax rates in the G20. An interesting point in looking at the yield from corporation tax is that, as the noble Lord, Lord Darling, will recognise, it is not just the tax rate that counts but the tax take. When we had a corporation tax of 28%, the revenue was about £43 billion a year. With a current tax rate of 19%, the amount of money being brought in is close to £50 billion. Therefore, although the rate has come down, the take has gone up. Should any opposition party be foolish enough to postulate that reversing that beneficial and benign occurrence of falling taxes and rising revenues would somehow be a way to reduce the deficit, I suggest that it might not be the way forward.
Perhaps I may address some of the points that were raised concerning international attitudes towards this country. The noble Lord, Lord Lea of Crondall, talked about foreign direct investment here. The UK remains the leading foreign direct investment recipient in Europe, attracting a record total of 1,144 financial foreign direct investment projects since 2016—an increase of 7% over 2015. So people here may be losing confidence in themselves but it is noticeable that the world is not losing confidence in Britain. With our world-class universities, our incredible market and our technical abilities, the UK attracted $254 billion in 2016, second only to the United States.
At the launch of the industrial strategy, referred to by the noble Baroness, Lady Randerson, we also celebrated two major new investments in cutting-edge pharmaceutical companies—MSD, which will develop a research facility in London by 2020 aimed at finding new drugs, and Qiagen, a leading diagnostics company, which, partnered by Health Innovation Manchester, will develop genomics and diagnostics at its campus in the city. Facebook announced just today that it will create another 800 new jobs in the UK in 2018, and not quite the low-skilled jobs that some noble Lords referred to. Toyota announced a £240 million investment to upgrade its car plant in Derbyshire, Rolls-Royce announced a £150 million investment in UK aerospace, and BMW will build a fully electric version of the Mini in the UK. All these are investments in the UK. They express a belief in the United Kingdom and what we, the people of the United Kingdom, have to offer. That point was touched on by the noble Lord, Lord Skidelsky, who then rightly asked us to focus on the importance of investment. I will come to that point first.
In the Budget, we proposed that an increased amount will go into the productivity investment fund. This will bring investment in R&D to its highest level in over 40 years—again, another welcome forecast.
The OBR forecast that the UK contribution to the EU, net of public sector receipts, will be £7.7 billion over 2017-18. This figure does not include receipts received by the private sector.
On the points raised by my noble friend Lord Maude, obviously he did a tremendous amount of work in raising activity across the public sector during his time as Cabinet Minister in the Cabinet Office. The figure he quoted of £50 billion saved in the delivery of front-line services has made a tremendous difference to the working of government and to the impact on our financial position. My noble friend Lady Neville-Rolfe said that we ought to maintain pressure on this and not let up, because the battle was not won, and she is right that we should focus on that.
Perhaps one of the most inspiring contributions was from my noble friend the Duke of Wellington, who talked about the King’s College maths pilot school. Of course, we recognise that if we are to compete in the world and attract more foreign direct investment of the type we are talking about, building more tech companies in this country, we need to attract high- quality maths teaching. That is why we announced in the Budget that we will invest £42 million in a pilot teacher development premium. We will also triple the number of fully qualified computer science teachers from 4,000 to 12,000, raising maths attainment packages through a support plan. I am happy to convey my noble friend’s recommendation of the noble Baroness, Lady Wolf, who was behind that particular school, and I commend them for their work.
A number of noble Lords referred to social mobility issues: the noble Lord, Lord Tunnicliffe, the noble Baroness, Lady Donaghy, my noble friend Lord Farmer and the noble Lord, Lord Skidelsky. It is worth recognising at this point that some other things are of note. The number of young people from the most disadvantaged areas who attend universities has increased to its highest level on record—19.5% for England—and, as my noble friend Lord Balfe mentioned, income inequality is down to its lowest level. The noble Baroness, Lady Donaghy, referred to the impact of the Budget on women; in April 2016 the gender pay gap for full-time employees decreased to 9.4%, and there are record numbers of women in the workplace.
On comments by the noble Lords, Lord Lennie, Lord Beecham, Lord Goddard and Lord Shipley, particularly on the north-east of England, people who work in that area will benefit from an ambitious devolution deal in the north of Tyne area, covering Newcastle, North Tyneside and Northumberland, which will give them greater freedom—which my noble friend Lady Eaton called for—to get on and do the work they are supposed to be doing on investment and looking after their local communities. That will be worth a significant amount—£600 million over the next 30 years or, more precisely, £20 million per year. There is also the mayor of Tees Valley’s initiative on the SSI site, to which the noble Lord, Lord Lennie, referred as well as the investment in rolling stock on the Tyne and Wear Metro, which again is something that should be welcomed and shows that investment and prosperity are heading out across the UK.
I turn now to universal credit. The right reverend Prelate the Bishop of Portsmouth referred to that and the measures that were being taken. We are ensuring that households that need it and have an underlying entitlement to UC will have access to a month’s worth of support within five days via interest-rate-free advances. Universal credit is paid monthly and in arrears to mirror the world of work. We have listened to representations from your Lordships’ House, among others, and have made changes that will continue with the principle but ease the impact as the programme is rolled out.
Housing was raised by my noble friends Lord Ryder and Lord Horam, the noble Lords, Lord Darling and Lord O’Neill of Clackmannan, and the noble Baroness, Lady Blackstone. The issue that we have at the moment is one of unaffordability. The noble Baroness, Lady Kramer, referred to the issue of supply. Of course it is about supply, which is one reason why we have announced the housing White Paper, Fixing Our Broken Housing Market, and announced a whole series of initiatives within that package of £15.3 billion about how we release more sites for development. That is entirely a supply measure. The housing infrastructure fund at £5 billion is a supply measure. Oliver Letwin has been asked to undertake a review about the situation referred to by the noble Lord, Lord Shipley, and my noble friend Lord Ryder where developers are granted planning permission but do not go on and build the houses that are necessary. That is looking at blockages in the supply area. It has to be seen that the focus is not just on demand, such as the measure on stamp duty; there are supply measures as well.
The noble Lord, Lord Beecham, and my noble friend Lord Horam referred to the Homelessness Reduction Task Force. That has been established to develop a cross-government strategy with the initial focus on delivering a commitment to halve rough sleeping by 2022 and eliminate it by 2027. There will be three housing pilots—the first in Greater Manchester, the next in the West Midlands Combined Authority and then another in the Liverpool City Region.
The noble Lord, Lord Campbell-Savours, asked about online VAT fraud and how HMRC will implement and monitor it. HMRC has discretionary powers that it will use on a case-by-case basis where there is clear evidence that a UK business trading via an online marketplace is not complying with VAT rules. Compliant UK sellers who are legitimately trading below the VAT registration threshold or are VAT registered correctly accounting for all VAT due will need to be addressed in this particular context. The requirement to display a valid VAT number applies to those companies that are provided with one.
My noble friend Lord Balfe asked whether we could introduce a surcharge on foreign-owned empty residential properties. The Government are keen to encourage owners of empty properties to bring the properties back into use, which is why the Budget announced we will give the power to local authorities to increase the council tax premium on empty homes from 50% to 100%.
The noble Lord, Lord Ryder, asked about stamp duty and observed its impacts on the housing market. Stewart Baseley, executive chairman of the Home Builders Federation, has said that first-time buyer’s relief will provide the certainty of demand to allow builders to invest with confidence, directing and increasing supply.
The noble Baroness, Lady Young of Old Scone, asked about housebuilding measures and whether they will have a negative impact on standards. The Budget confirms the Government’s commitment to maintain existing green belt protections. We are consulting to make sure that minimum densities are set at the right level for all concerned, including local people who will live in the homes. I will take her suggestion of green villages back to the Treasury, if I may.
My noble friend Lady Neville-Rolfe and the noble Baroness, Lady Randerson, asked about railway investment, Heathrow, local roads and the national planning infrastructure fund. That £1.7 billion fund will be used for transport in cities. It is spread across the regions, with £250 million for the West Midlands, £243 million for Greater Manchester and £377 million for the north-west for intra-city transport.
The right reverend Prelate the Bishop of Portsmouth asked about UK defence. The UK will meet the NATO target to spend 2% of GDP on defence. In the 2015 spending review, the defence budget was protected and increased by 3.1% in real terms until 2019-20.
The noble Lord, Lord McKenzie of Luton, referred to debt falling only due to the housing association reclassification. My answer is no: we would have met the fiscal targets in 2021, regardless of the change to the classification of housing associations.
The noble Lord, Lord Tunnicliffe, asked whether deficit reduction has failed, to which the answer is no, it has not. Of course, we inherited a deficit of 9.9% of GDP in 2009-10; that has been reduced to 2.3% in 2016-17.
The noble Lord, Lord Livermore, questioned whether we will reach the Government’s targets. In November 2017, the OBR forecast that the Government will meet both their fiscal targets for this Parliament. The deficit is forecast to be 1.1% of GDP in 2022-23—the lowest level since 2001-02—and debt is forecast to peak in 2017-18 at 86.5% of GDP, then fall every year of the forecast period to 79.7% in 2022-23.
My noble friend Lord Balfe asked about tax avoidance and evasion. Since 2010, we have introduced 100 measures, including in this Budget, to tackle tax avoidance and evasion. As a result, the tax gap is now at its lowest level and is one of the lowest in the world—some 6% of the total forecast.
I come to social care. The noble Baroness, Lady Bakewell, asked me to ensure I mention social care in my winding-up speech. I am happy to do that, as I mentioned it in my opening speech. There is a critical element that we need to bear in mind. One of the most staggering statistics we have come across is that there are some 15,000 centenarians living in the UK. From the population in this country living now, that figure will rise to some 10 million. Therefore, the issue to address in social care is intergenerational fairness, which was referred to, and the impact on areas such as those mentioned by my noble friend Lord Freeman, including pension funds. Those are vast concerns that will have to be addressed over the long term and reflected on. There will have to be Green Papers and discussion papers. Some £2 billion was announced in the Spring Budget. That will have to be kept closely under review in the light of any Green Paper.
I think I have addressed a number of the questions, though I am sure not all the points raised. In conclusion, I simply say that this is a Budget that invests in the infrastructure, skills and technology we need to succeed while providing immediate support where it is needed the most.
Lord Bilimoria
I am so sorry to interrupt the Minister as he is winding up after 23 minutes. He has addressed so many issues. Right up front he said, “And I will address Brexit”. Many Members have mentioned Brexit. It is the elephant in the room that overshadows the whole of the Budget and the Minister has not given it one minute.
Agriculture and Food Industry
Lord Bilimoria Excerpts(9 years, 9 months ago)
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Lord Bilimoria (CB)
My Lords, less than 2% of our labour force meets 60% of our food needs. Agriculture and food is a crucial aspect of our economy. However, I do not believe that the sector is given the appreciation or recognition that it deserves in light of its importance. I do not believe that we take enough pride in our food and agriculture, as we could and should do. I believe that we take it for granted.
In my industry, my own product, Cobra Beer, is made predominantly from agricultural products, and the vast majority of that is, of course, malt, which is made from British barley. My joint-venture partners are Molson Coors, the American-Canadian global brewers, and I have heard Pete Coors, the vice-chairman, speak with immense pride about the relationships that Coors has had with farmers for more than a century. Such is the interdependence that exists between agriculture and industry.
I thank the noble Lord, Lord Plumb, for his excellent speech and for leading this debate with authority—as we heard from the noble Lord, Lord Palmer—as a former driver of “NFU 1”. The agri-food sector, as the noble Lord said, contributes almost £100 billion to the economy, or 7.4% of our GVA. That is huge—3.6 million people, or 13% of national employment. Nevertheless, can the Minister confirm that employment in the agri-food sector has actually fallen over the past 12 months, which is the largest decrease in agriculture, falling by 18,000?
The Minister, George Eustice, has said that the industry should have “confidence in its future”, and that there is,
“growing consumer interest in food provenance”.
He mentioned, as we have heard in today’s debate, that the world population is set to top 9 billion, so we will see increased demand for more westernised foods, including dairy products and meats. The demand for food is forecast to rise by 60% by 2050, and we need a vibrant, profitable farming industry in the UK to cope with this demand.
In February 2014, George Eustice said:
“The rural economy is worth £211 billion a year. Rural areas are home to one fifth of the English population, yet they support nearly a third of England’s businesses”.
This is excellent. However, the vast majority of these businesses are SMEs, and we need to create the right environment for these businesses to flourish. Cambridge University, in a report by the Centre for Industry and Government and the Institute of Manufacturing, said that,
“many descriptions of the food and drink sector are oversimplified”,
and that,
“the food and drink sector is a key element of future strength for the UK, providing value to the national economy in financial, strategic and social terms”.
As the noble Lord, Lord Plumb, said, the NFU has said:
“agriculture’s contribution … has increased by a staggering 54 per cent between 2007 and 2012”.
The UK has 142,000 businesses that are registered as farm businesses. This is phenomenal. The levels of growth are incredible. We should be proud that we are the third largest wheat producer in Europe. We are the third largest milk producer in Europe. We are the largest producer of sheep meat in Europe. We are the fourth largest producers of beef in Europe. Yet we have heard that there is a trade deficit and that our self-sufficiency is actually declining. This is a concern.
On the positive side, British shoppers actually want to back British farming. According to the NFU, 86% of shoppers are,
“as likely or more likely to want to buy more traceable food that has been produced on British farms”.
In the other place, the House of Commons Environment, Food and Rural Affairs Committee produced a food security report earlier this year and made the point:
“The UK is currently 68% self-sufficient in foods which can be produced here”.
However, it says:
“There has been a steady decline … over the last 20 years”.
A lot of our food is imported from Europe. The report goes on to say:
“As part of the CAP, many of our farmers receive support from the EU”.
Can the Minister give us an update on the CAP? Is it working to our advantage? It is a contentious issue.
We have heard before about the £160 million agri-tech strategy, which is about supporting collaborative research and development and translating this into practice. However, I would submit, and the committee submitted, that this is insufficient. The proof of that is the first round of bids for this was six times oversubscribed. Do the Government agree?
I am proud to have been appointed recently as the chancellor of the University of Birmingham, and last week I visited our department of chemical engineering and saw the amazing work that the food microstructure group is doing in linking up with industry and helping the food industry. If more of this can take place, the better it will be. The green revolution in India, a country that for centuries had famines, took place only because of bold innovation; India no longer has famines.
The UK must ensure that we work with the EU to address the issue of CAP and also the issues of food security and innovation. The reality is that from 1940 to 1990 yields were rising. Since then, farm wheat yields have stalled; there is no rising trend. Will the Government confirm that the yields have plateaued and that we desperately need innovation? In this sense, we need to increase agricultural output, including GM. What is the Government’s view on GM? The NFU policy is that it is in favour of GM technology. It believes that GM will be one of the solutions. Do the Government agree? Are they willing to work with the EU in tackling the issue of GM? There is a lot of resistance in the EU. The EU regulatory framework has prevented development of GM and has one of the strictest approval procedures for GM products in the world. AB Sugar has suggested that the Government could help change the perception of GM foods by seeking to move the public debate away from viewing GM as a blanket technology and instead focus on the benefits it can bring to society in specific applications. Will the Government work towards doing this, because we desperately need it? Again, the relationship between universities, innovation and research is crucial.
The next issue is agriculture as a business. I have seen with my wife—who is South African; her family had farmed for more than a century in South Africa—that although farmers can be great farmers, they are not always great business people. What are the Government doing to encourage business training for farmers in the UK, encouraging them to attend business schools and attend courses in business, particularly given that so many of them are SMEs? For example, there is the business growth and development programme at Cranfield, which I attended. Are there equivalent programmes that the Government can encourage to be tailor-made for farmers, to encourage them to be more competitive?
I conclude with the GREAT Britain campaign, which promotes all that is great about Britain, both within the UK and abroad. Why does it not feature agriculture and food products more? This is an industry that is not appreciated enough, that we should be proud of and that should be a top priority for this Government.
India: Aid
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Baroness Northover
I thank the noble and right reverend Lord for his tribute to the work conducted by DfID in India. I am happy to write to him with a great deal of detail on what is happening. I think the noble and right reverend Lord saw the Odisha project for girls; boys are also being brought into secondary schools, initially supported by DfID. That is being taken over by the government there. DfID is in talks with both central and local government about how best to take forward the various projects in which it is involved, with the intention of carrying forward looking after the poorest and most vulnerable in India.
Lord Bilimoria
My Lords, to build on what the noble and right reverend Lord, Lord Harries, has just said, we own the only factory and brewery in Bihar. I work closely with the government there, and they appreciate so much the work that DfID does on the ground, helping the state to be more efficient, such as the Right to Public Service Act and the BLISS programme to help teachers learn and teach English. Will this work carry on? It is generally appreciated. This is not just aid, it is goodwill being generated. Do the Government agree?
Baroness Northover
I thank the noble Lord for his tribute. The British Council will continue to be supported in India, and some of the programmes the noble Lord mentioned may well fall under that. DfID will continue to be in India. It will have a hub of expertise there and is working closely with the Indian Government on the nature of that. It will be giving technical support. I remember visiting India and seeing how DfID acted as a lever for access to other funds, such as the Global Fund, and a great deal can happen in that regard.
Foreign Affairs: Global Role, Emerging Powers and New Markets
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Lord Bilimoria
My Lords, at the outset, I apologise to the noble Lord, Lord Howell, as I was not in the Chamber when he started this debate. It is such a pity that he is no longer a Minister because he did such a brilliant job at the Foreign and Commonwealth Office and it is the Government’s loss and ours that he is no longer there.
Just over six decades ago Britain had the largest empire the world has ever known. Today, that empire has gone and yet this tiny country of just 60 million people, making up not even 1% of the world’s population, is still one of the 10 largest economies in the world. It still sits at the top table of the world and still holds great influence. All this is despite the dramatic rise over the past three decades of countries such as China, and more recently India as an emerging global economic superpower. There, at the other extreme, we have two countries that together make up one-third of humanity.
Looking ahead, we will not be able to compete with these countries head on. We can only compete on our strengths, many of which are historic. We have amazing institutions in every field, whether it is in the City of London, cultural institutions such as the British Academy and the Royal Society of Arts or the traditions that are part of this nation’s fabric. There are the traditions of our Armed Forces expressed through the esprit de corps—which is amazing—and the traditions of the Royal Family, shown so marvellously in Her Majesty’s Diamond Jubilee this year, and in the traditions of this Parliament and in our very Chamber here, which is the only self-regulating Chamber in the world.
Then there are institutions such as Lloyd’s of London and our great universities, with Oxford and Cambridge being more than 800 years old. The noble Baroness, Lady Morris, spoke about our creative industries. Our design firms are the best. The designer of Apple, the most valuable company in the world, Sir Jonathan Ive, is British. Our law firms are the best of the best, as are our courts and, although only 7% of our children attend them, our private schools are the best in the world. The BBC for all its recent problems is, as the noble Lord, Lord Judd, said, a source of soft power, in particular the World Service.
The noble Lord, Lord Howell, spoke powerfully about the Commonwealth. It is such a huge asset and we are at the centre of it. There is even the possibility of a free trade zone within the Commonwealth, from the tiny islands at one extreme to a 1 billion population country such as India at the other. The Commonwealth has done so much with so little money. Just imagine how much more it could do if it had a proper budget. Can the Minister say that he will encourage this to happen?
The City of London is still the world’s leading financial centre. We still have a flexible and open economy that welcomes foreign investors such as the Tata Group. It is an economy where we will now have a Canadian as the governor of our central bank. Despite the awful cuts that have been made to our Armed Forces, where we temporarily lack aircraft carriers and the number of our troops has fallen to critically low figures, we still have one of the highest levels of defence spending in absolute terms in the world. We talk about soft power but soft power cannot exist without the hard power to back it up.
In tourism, we have one of the most attractive destinations in the world, with London being the greatest of the world’s great cities despite our awful weather, particularly this year. However, it dismays me when we talk about trade. As founding chairman of the UK-India Business Council, I regularly speak to business audiences around the country and I ask them how many of them do business with India. To this day, among hundreds of people, only a few hands go up.
I am delighted to hear that the Government have increased funding to UK Trade & Investment. We need constantly to encourage businesses to look abroad because the potential of emerging markets is phenomenal and we are just scratching the surface. However, while we talk about emerging markets, we must recognise that our principal international partner will be, and always has been, the United States. It always will be one of the most powerful nations in the world and we have stood side by side for more than a century, and that will not change.
Partnering with countries means working together not just on a business level but within our civil services, the Armed Forces carrying out exercises together, and in research and development. I chaired the Cambridge University India Partnership Advisory Board and we are working more closely with India. The UK-India Education and Research Initiative has been so successful, with hundreds of research interactions between the UK and India. We need to encourage this and to do a lot more of it. Importantly, to maintain our influence we must maintain our competitive edge. I do not think that we are investing anywhere near enough in research and development. We invest a fraction of a country such as the United States as a proportion of our GDP.
Most importantly, as a country, we must always be seen to be fair and just. Historically, as a nation, we have never followed the herd. We have always led our own way and done our own thing. Even in Europe, where we are, whatever anyone says, one of the most prominent members of the EU, we sensibly stayed out of the euro. Despite everything that is going on, we are still seen by many businesses around the world to be the gateway to Europe.
Again, importantly, our role in the world will be based on respect and trust. We have to continue to earn that respect among nations today. Despite all our economic woes, we need to be ahead of the game. We need to be best friends and partners to countries such as India, Indonesia, Brazil, South Africa and Turkey, quite apart from our longstanding partners such as the United States, which I have mentioned, Canada, Australia, New Zealand and Singapore. These emerging markets cannot switch on in an instant, or even in a few decades, the competitive edge that this country has built up, as well as its institutions, over the centuries.
As the noble Lord, Lord Alderdice, said, our foreign policy must be based on the confidence that we can maintain this competitive edge with integrity through mutual trust and respect. In that way, we will be able to bring mutual benefit and security to our economies as countries partner together. To conclude, our foreign policy, our global role and our global influence go hand in hand with our competitiveness. We cannot have one without the other.
Poverty: Developing Countries
Lord Bilimoria Excerpts(11 years, 10 months ago)
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Baroness Northover
My Lords, I pay tribute to my noble friend for all his work in this area, in particular through the Loomba Trust, which supports widows and their children in many developing countries, and for his work in securing that UN designated day for widows on 23 June. I recognise his point about double discrimination. Although it would not be appropriate to ring-fence money specifically for widows, it is extremely important that we identify in-country those women who are suffering from that double discrimination in the way that he indicates so that they can be supported.
Lord Bilimoria
My Lords, ever since the inception of the Loomba Foundation in 1988 by Raj Loomba, I have chaired its advisory council. On International Widows’ Day on Saturday, 23 June, the Deputy Prime Minister, Nick Clegg, made the best speech that I have ever heard him give.
Noble Lords
Lord Bilimoria
In that speech, he asked why no one had highlighted the plight of widows around the world until Raj Loomba did all those years ago. Can the Minister tell us what the Government’s priorities are, where DfID is concerned, in the billions of pounds of aid that we give every year to help the 245 million widows and the 500 children, particularly with the education of poor widows’ children around the world?
Baroness Northover
I am glad that the noble Lord heard yet another stunning speech from my right honourable friend the Deputy Prime Minister. Of course, my right honourable friend was quite right, as is the noble Lord, that the Loomba Foundation has done a huge amount in emphasising the particular challenges faced by widows through double discrimination. As my noble friend mentioned in the previous Question in relation to the United Kingdom, it is absolutely right that education is so important in terms of children’s prospects. We recognise that internationally as we as we do nationally. We are especially aware that when somebody is widowed or loses their partner for any other reason, it is girl children in particular who suffer. That is why DfID emphasises the support of girl children.
Universities: Impact of Government Policy
Lord Bilimoria Excerpts(12 years, 7 months ago)
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Lord Bilimoria
My Lords, we are dealing with a world where the giants of China and India are surging ahead. How will a tiny country like ours compete? I have built a business from scratch and I have always tried to focus on core competences and unique selling propositions. Even when I have nearly lost everything on three occasions, when you have had to cut costs to survive and adapt or die, the one thing you never cut is your core competence because that is what enables you to survive, grow and compete. One of the utmost core competences of the United Kingdom, the jewel in our crown, is our higher education system. As we have just heard, on any ranking we have four out of the top 10 universities in the world—after the United States we are No. 1—including Oxford and Cambridge. We have ancient universities and modern universities. I was chancellor of Thames Valley University for five years and proud of it. It is now the University of West London. At the other end of the spectrum, I hold four positions at Cambridge, my old university. We are to elect a new chancellor this weekend.
I thank the noble Lord, Lord Giddens, for initiating this debate. I agree with a lot of what he said and will reinforce it. This Government’s decision to cut public expenditure is absolutely right. It has been far too high, approaching 50 per cent of GDP.
It is cutting away at the Government’s call for us all to be in this together. The Government are using a broad-brush approach to cutting expenditure when they should be much more selective. Why did they have to cut university teaching funding by 80 per cent? Why, as a result, did they have to force student fees to increase nearly threefold to £9,000? The average fee is going to be £8,200. The Government’s higher education White Paper, Students at the Heart of the System and the review of my noble friend Lord Browne on higher education funding are all very well. My noble friend produced an excellent report, but he was conned. That report was used by the Government as a way of cutting higher education funding, as a result forcing the fees to go up by nearly three times.
There is a basic misunderstanding about the starting point, which is that we as a country spend between 1.2 per cent and 1.3 per cent of our GDP on higher education, while the United States spends 3 per cent. The OECD average is 1.5 per cent and within the United States, as we have heard, public spending is more than 1 per cent. So we should not have cut higher education spending, we should have maintained it, increasing and encouraging more funding from student fees, philanthropy and the private sector. That is what we have not done.
Universities generate £60 billion of revenue, £12.5 billion from foreign students. This is phenomenal. They employ 700,000 people, a workforce that benefits the whole country. It is wrong to say that the public who do not go to university should not pay for those who do go. Those who leave university benefit the whole country and its competitiveness. What the White Paper completely neglected was postgraduate studies, Masters and PhD research. The Government have frozen funding. They have not cut it, although they have done so in real terms. We spend 1.7 per cent of our GDP on research, while the United States spends 2.7 per cent. How can we compete and continue to punch above our weight when this is the situation?
Students will leave higher education with loans repayable over 30 years. It is a noose around their necks. Is this the way to encourage wider access? Is it not going to deter students going to university, particularly as we have heard, those from poor backgrounds? Also, what about the burden of these loans on the Exchequer? Many indications say that the taxpayer would have been better off by keeping funding for university teaching and not providing long-term loans, which are expensive.
We are letting down our universities and the Immigration Rules do not help. I sit on the advisory board of Cranfield School of Management, where I am an alumnus, and we have noticed a drop in foreign students, particularly those from India. Anecdotally we hear comments from students from India, asking: “Does Britain want us any more?”. Do we not want to attract the brightest and the best from the world? As the noble Lord, Lord Giddens, said, there is far more to it than the fees that foreign students bring in. There is also the soft power and the generational links. My grandfather came to university in this country. My mother did and so did I and that will carry on for generations to come.
What about philanthropy? At Cambridge, to celebrate our 800th anniversary, we raised £1 billion. That is what we can do. What about access? Thames Valley University has so many part-time students, and I am delighted that there is to be funding of part-time students. It is wonderful news and I congratulate the Government. The Open University has been doing great work in this area for years.
We are being penny wise and pound foolish, trying to save £2 billion in teaching funding when the cost of running the Department for Work and Pensions, whose expenditure is £200 billion a year, is also £2 billion. I was privileged to write the foreword to Big Ideas for the Future, published by Universities UK and Research Councils UK. This is a publication of more than 200 world-changing research initiatives coming out of our universities, in health, humanities, business, high-tech, energy, food and drink. These are transforming this country and the world. This is what our universities produce and they enable us to be the best in the world: in high value-added manufacturing, engineering, design and creativity. These are the things that put the “great” into Great Britain and come from the foundation of our universities. By cutting university funding and deterring access to universities, we are shooting ourselves in the foot.
What about this ivory-tower mentality of trying to create a market? Who are the Government trying to fool? What nonsense is this? We need a balanced education in humanities, science and the arts and in every way. If we are to provide a balanced higher education, we need a balanced economy and society.
We are tampering with something very precious and I urge the Government to reconsider what they have done, not just in the interests of our students, nor of our universities, but in the best interests of this country to enable us to compete in the future.
House of Lords Reform Bill [HL]
Lord Bilimoria Excerpts(13 years, 5 months ago)
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Lord Bilimoria
My Lords, it is a great privilege and an honour to follow the maiden speech of the noble Marquess, Lord Lothian. As expected, it was superb. This House is renowned for having distinguished individuals who are the best of the best in their fields, with oceans of experience. In Michael Ancram, we are truly fortunate to have a distinguished lawyer, a Queen’s Counsel and, as he has told us, a former chairman of the Conservative Party, a former shadow Secretary of State for Defence and a former shadow Foreign Secretary. He was also a Minister. He fought, lost and won parliamentary seats on many occasions. In fact, he first tried for West Lothian and did not succeed, but he won East Lothian. Then, he may not quite have become Prime Minister himself, but he defeated the future Prime Minister Gordon Brown to win Edinburgh South. He is a true politician’s politician, who has bounced back time and again and never given up, and always with a smile. As Nelson Mandela said,
“The greatest glory in living lies not in never falling, but in rising every time we fall”.
Many of us know that the noble Marquess is an accomplished musician who has often played his guitar in front of thousands at Conservative Party conferences. I am afraid that we could not break with 800 years of tradition and allow him to use a guitar to accompany his maiden speech, but he will certainly be music to our ears over the coming years.
Next year, we celebrate the centenary of the Parliament Act 1911. A hundred years ago, it was decided firmly to establish the supremacy of the House of Commons. Since then, as the noble Baroness, Lady Boothroyd, said, we have had evolution, not revolution. Arguably, the House of Lords operates more effectively today than it has ever done. Whenever we debate the reform of the House of Lords, we tend to focus on its legislative role, but our role is much wider. The House of Lords is defined on our parliamentary website as:
“A forum of expertise, making laws and providing scrutiny of Government”.
We are a check and balance on the other place. There is no question that, during the past 100 years, there has been evolution in the other place as well, but that has unfortunately created a House of Commons where career politicians predominate, many of whom have had no careers outside politics.
It is amazing that the breadth and depth of expertise of Members of this House, particularly, I am proud to say, among the Cross-Benchers, give this House the ability and the capacity authoritatively to scrutinise legislation every day and challenge the Government of the day, whether that be in our debates, our daily Questions, our Statements or our hugely respected committees. That is the guardianship role of the House of Lords, and it is done at a quarter of the cost of the other place.
There is no question about the fact that many accuse our democracy and our elections of creating, as we have heard from our maiden speaker, elected dictatorships. Many feel that the Government have become too powerful. Many feel that the Government of the day, though the whipping system, can always have their own way due to the majority that they hold in the House of Commons, as the noble Marquess, Lord Lothian, has pointed out. I remember from my days in the Cambridge Union the classic motion that we debated at least once a year: “That this house has no confidence in Her Majesty's Government”. In the real world, how often do the Government lose a vote of confidence? You can count the number of times that it has happened. Who is there credibly to challenge the power of government? The role of the House of Lords is to do that in a way that is independent and with an objective frame of mind.
I admire the noble Lord, Lord Steel, for persevering with this Bill—this may be the nth time lucky. The reforms that he suggests are certainly worthy of consideration, in particular the proposal to make the House of Lords Appointments Commission statutory. However, most important, this Bill is about evolution, not revolution.
As your Lordships know, a debate was arranged last week by the independent Cross-Bench Peers—I thank our Convenor, the noble Baroness, Lady D’ Souza, and her team for that—at the Royal Opera House with Intelligence Squared. At the beginning of what was a public debate, the chairman, Nik Gowing, took a show of hands on the audience’s views on the motion, “That an elected House of Lords will be bad for British democracy”. The show of hands at the beginning could be divided roughly into thirds—for, against and undecided—although there may have been a little bias towards those in favour of the motion. At the end of the debate, after several speakers and questions, the chair’s conclusion was that the show of hands had moved towards the motion. Time and again, whenever I have conducted my own straw polls of members of the public, I have found that they initially say that they prefer an elected House of Lords, because it feels and sounds more democratic, but when you explain the role, function and composition of the House, they invariably change their minds and prefer for it to stay appointed. That is exactly what happened in the Royal Opera House debate last week, in spite of superb contributions from the noble Lord, Lord Adonis, who surprisingly said that the House of Lords was toothless. If we are toothless, why are 40 per cent of our amendments accepted by the House of Commons?
It is clear that we have not thought through clearly the aftermath of a decision to have an elected or partially elected House of Lords. There is no question that there would be needless duplication, as the noble and learned Lord, Lord Howe, said. There would be conflict with the Commons and there might even be, as was pointed out by Professor Vernon Bogdanor at the Royal Opera House debate, deadlock and gridlock between the two Houses, as has happened in Australia. There is no way that the House of Lords, if elected, would settle for less power than the House of Commons. If an elected second Chamber were to materialise, we would almost definitely end up with a written constitution and an appointed Supreme Court. We already have such a court, but as in the United States the Supreme Court would then have strike-down powers. In such an instance, what would we clamour for next? Elected judges in the Supreme Court? What is more, do we want to vanish into anonymity via the route of proportional representation, as has been suggested, in the European mould? As I have said before, how many members of the public know their MEPs? The MEPs are out of touch with their constituencies and their constituents. This is a road to ruin, not the road to reform. Do we really want to become House of Commons-lite?
This country is unique in not having a written constitution, but our democracy has evolved over centuries. We are regarded as the mother of Parliaments around the world and, regardless of all the scandals, we are still one of the most respected Parliaments in the world. We do not have to copy anyone. Let us not throw the baby out with the bath water; let us, as the Bill suggests, strengthen our appointments system, our independence, our expertise and our ability fearlessly and unwaveringly to question, challenge and hold to account the Government of the day every day.
To conclude, I am really proud to serve as a Member of this House. It brings out the best in Britain, and this House is the best for Britain. We are in many ways the guardian of the nation. This unelected Chamber is, ironically, the cornerstone of our democracy. Only through evolution, not revolution, will we able to continue to protect the fairness, justice, freedom and liberty of our great nation.