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House of Lords
Wednesday, 18 May 2005.
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Liverpool.
Several Lords—took the Oath or Affirmed.
Charities Bill [HL]
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, I beg to introduce a Bill to provide for the establishment and functions of the Charity Commission for England and Wales and the Charity Appeal Tribunal; to make other amendments of the law about charities, including provision about charitable incorporated organisations; to make further provision about public charitable collections and other fundraising carried on in connection with charities and other institutions; to make other provision about the funding of such institutions; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Baroness Scotland of Asthal.)
On Question, Bill read a first time, and ordered to be printed.
Equality Bill [HL]
The Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer of Thoroton): My Lords, I beg to introduce a Bill to make provision for the establishment of the Commission for Equality and Human Rights; to dissolve the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission; to make provision about discrimination on grounds of religion or belief; to impose duties relating to sex discrimination on persons performing public functions; to amend the Disability Discrimination Act 1995; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Falconer of Thoroton.)
On Question, Bill read a first time, and ordered to be printed.
Fishery Limits (United Kingdom) Bill [HL]
Lady Saltoun of Abernethy: My Lords, I beg to introduce a Bill to make provision for the United Kingdom to withdraw from the common fisheries policy of the European Union; to amend the Fishery Limits Act 1976; and for connected purposes. I beg to move that this Bill be now read a first time.
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Moved, That the Bill be now read a first time.—(Lady Saltoun of Abernethy.)
On Question, Bill read a first time, and ordered to be printed.
Address in Reply to Her Majesty's Most Gracious Speech
Debate resumed on the Motion moved yesterday by the Lord Dubs—namely, That an humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament".
Lord McKenzie of Luton: My Lords, it is with special pleasure and a little surprise that I find myself opening today's debate. The Government's economic objective is to build a strong economy and a fair society where there is opportunity and security for all. The long-term decisions that the Government have taken—giving independence to the Bank of England, new fiscal rules and a reduction in debt—have created a strong platform of economic stability.
For the first time in half a century, Britain has been growing faster and for longer than any other G7 country. The UK was the only G7 economy to avoid any quarters of negative growth between 2001 and 2003, and the Government have delivered 51 consecutive quarters of growth, the longest period of continuous economic growth on record. The UK continues to enjoy the lowest sustained inflation for 40 years, with unemployment and interest rates low and stable. This stability allows business, individuals and the Government to plan more effectively for the long term, improving the quantity and quality of investment and helping to raise productivity.
As the world economy has strengthened, although not uniformly, UK growth has become more balanced. I am sure your Lordships will have noticed the recent figures on manufacturing output growth, but let us not forget that these figures can be highly volatile. The survey of manufacturing conducted by the Chartered Institute of Purchasing & Supply showed manufacturing output growing for the 23rd consecutive month in April.
The key to a sustained improvement in manufacturing is the rising level of business investment. Business investment, exports and manufacturing output have all risen in the past year. Indeed, business investment growth last year was the strongest for six years, while manufacturing growth was the strongest for four years. For a second year, the forecast is for GDP growth of 3 to 3.5 per cent. We shall doubtless hear challenges to those forecasts but I am sure that I do not need to remind your Lordships of this Government's excellent forecasting record. It is not only the Government's word at stake;
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analysis by the European Central Bank shows that the UK had the best performance of all member states in forecasting GDP growth between 1999 and 2003.
Some contributors to this debate and some other commentators may express worries about both household and government indebtedness. The official labour market figures published today show that since 1997 we have created 2,200,000 jobs—a remarkable achievement. Unemployment has been below 1 million for four years, having reached 3 million in 1993. Between spring 1997 and autumn 2004, the number of workless households fell by 308,000 and the number of children in workless households fell by 477,000.
Interest rates, at 4.75 per cent, remain low by historical standards. Mortgage rates are close to their lowest levels since the 1950s and households are benefiting from robust growth and employment. Real disposable income grew by 1.5 per cent during the year to 2004, quarter four, and by 2.8 per cent a year on average since 1997, and households' net wealth is up almost 70 per cent since 1997. The increase in household indebtedness is therefore grounded on strong economic fundamentals.
Total consumer spending, of which retail sales represent a third, is expected to slow this year as the economy continues to rebalance. However, strong macro-economic fundamentals will continue to provide support for consumption expenditure to go forward. At present, consumer confidence remains well above its long-term average and the housing market continues to show signs of stabilising.
Concerns have been raised regarding an alleged black hole in the public finances. In 1997, the Government created a framework for the management of fiscal policy. The Budget 2005 projections for the public finances show that the Government are meeting their strict fiscal rules over the economic cycle on the basis of cautious assumptions—I stress "cautious assumptions"—with public finances remaining sound and sustainable in the long term. Public sector debt is projected to remain low and stable, stabilising at a level well below the 40 per cent ceiling. In 2004, along with Canada, the UK was the only G7 country with net debt below 40 per cent of GDP. Public sector borrowing is forecast to be 2.9 per cent of GDP in 2004–05, or £34.4 billion. That compares favourably with historical levels of net borrowing, which peaked in 1993–94 at 7.8 per cent of GDP, and is equivalent to net borrowing of around £90 billion at current prices.
The use of cautious audited assumptions and tough decisions taken in the past on tax and spending mean that the Government have been able to allow fiscal policy to support monetary policy and safeguard investment in priority public services, ensuring medium-term sustainability. The domestic stability delivered by the Government's macro-economic framework has enabled the UK economy to cope well with the significant challenges that have faced the world economy over recent years and will enable us to cope well with new challenges as they arise.
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We are enjoying sustained economic growth, as I have emphasised. However, with the challenges emerging, particularly from China and India, whose growth rates are three times higher than any in Europe, and whose potential customer markets are five times bigger with wages close to one-tenth of ours, we cannot ignore the growing elements of international competition. We all recognise that there is a fiercely competitive global environment and that the challenge for all nations is how to create knowledge, to tap it and then to transform it into wealth and jobs.
Britain now has one of the most open competition policies in the world. We are the most active advocate of free trade. Today the enterprise challenge is to enhance the flexibility needed for a successful economy and to tackle the regulatory concerns that all industrial economies face while securing the standards required in a successful society.
Productivity growth, alongside high and stable levels of employment, is central to long-term economic performance and rising living standards. The UK has historically experienced low rates of productivity growth compared with other major economies. In recent years, however, the UK's relative performance has been improving. The UK now has output per worker similar to Germany, and has narrowed the gap with France. However, despite some progress, there remains a significant gap with the US. The Government's long-term goal is for the UK to continue to close the productivity gap by achieving a faster rate of growth than its main competitors.
Enterprise is a critical ingredient of a flexible, modern economy. A thriving small and medium-sized business sector is important in driving productivity growth and generating new prosperity in disadvantaged areas. The creation and growth of new firms promotes the exploitation of new ideas and opportunities, and sharpens competition.
The Government's strategy for closing the productivity gap in this environment has two broad strands: maintaining macro-economic stability to help businesses and individuals to plan for the future; and implementing micro-economic reforms to remove the barriers that prevent markets from functioning efficiently and flexibly. Effective and well focused regulation can play a vital role in correcting market failures, promoting fairness and competition, and driving up standards. However, inefficient regulation can impose a significant burden on business.
The company law reform Bill will simplify our company law framework and bring it up to date with today's business needs. Modernising company law is key to promoting enterprise and growth. This Bill will enable more flexibility for companies and more effective shareholder engagement. It will bring deregulatory benefits of some £250 million a year, including £100 million for small companies. It will also build on what the Government have already done to improve our framework for business, including raising audit thresholds, improving
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the transparency of executive remuneration, and increasing investor confidence in company reporting and enforcement. This Bill is the next step in our ongoing programme to create the best climate for business success.
Sitting alongside the Government's economic objective is the Government's aim to promote a fair and inclusive society where everyone shares in rising national prosperity and no one is held back from achieving his or her potential through disadvantage or lack of opportunity. The Government's reforms of the welfare state reflect their aims of eradicating child poverty, supporting families to balance their work and family life, promoting saving and ensuring security for all in old age.
As the first milestone towards meeting their long-term goal of eradicating child poverty by 2020, the Government are on track to reduce the number of children in relative low-income households by a quarter between 1998–99 and 2004–05. The most recent data show that by 2002–03, the numbers of children in relative low-income households had fallen by 0.5 million before housing costs and by 0.6 million after housing costs, from 3.1 million and 4.2 million respectively.
A fair society ensures that all pensioners can share in rising national prosperity. In 1997 the poorest pensioners received just £69 a week. By 2007 that will be £119 a week. In total the pension credit, which is rising in line with earnings, will benefit a total of 3.2 million pensioner households and, in all, 3.7 million pensioners.
The Government are also committed to promoting fairness across the regions through overcoming regional disparities in economic performance. The Government's long-term regional economic aim is to make sustainable improvements in the economic performance of all English regions, while reducing the gap in growth rates between the regions. The Government believe that the best way to do this is to allow each region the freedom, flexibility and funding to tackle their own challenges, to exploit indigenous sources of growth and to meet their own priorities.
Another way in which the Government have demonstrated their commitment to fairness is through the national minimum wage. So the Government are committed to promoting fairness alongside flexibility and enterprise to ensure that everyone can take advantage of opportunities to fulfil their potential. With this in mind, the DTI will be introducing a number of programme Bills aimed at entrenching fairness for all.
The work and families Bill will give families more choice in balancing work and caring responsibilities, and in doing so help businesses to retain and recruit the very best people, by alleviating barriers to work. With unemployment at record lows, there is a real need to ensure that we use the talents of everyone. Many businesses already recognise the benefits of policies that offer more flexibility to their employees who in turn respond positively to the opportunities to manage home and work responsibilities better.
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We have a diverse population with diverse needs and diverse working patterns. Only by recognising and catering for that diversity will we enable people to contribute their full potential to wealth creation and take on the challenges of the 21st century global economy.
The hugely successful right to request flexible working shows the way forward. It was developed in close consultation with business, and proceeds in a light-touch way. In the first year after introduction, we saw 800,000 new flexible working arrangements. This Bill, if this is what we decide as a result of the DTI consultation, can be used to extend the successful right to request flexible working to other people with caring responsibilities. Through our commitment to extend maternity and adoption pay and to enable mothers to transfer some of their leave and pay to fathers, we will help to fulfil our commitment to give children the best start in life and to give more choice to families about balancing work and caring responsibilities. But these measures also have to work for business.
As part of our consultation we are looking closely at how we can make the legislation and the administration work better for employers. We have put forward specific proposals—for instance, to require longer notice periods if mothers change their return dates from maternity leave and to improve communication during leave to the benefit of employers and employees.
I shall now turn to the Equality Bill, which is a major plank in the Government's strategy to ensure that discrimination and prejudice have no place in our society. But equality is not just a basic moral principle; it is also an economic imperative.
Britain's businesses need to draw on the talents of the whole workforce if we are to remain successful. Yet unacceptable inequalities in opportunity remain. Too many people still face discrimination and prejudice. So we must equip Britain to tackle the root causes of discrimination and to promote human rights in the 21st century.
The Equality Bill will establish a single Commission for Equality and Human Rights. This will be a radical and powerful new body, promoting equality and, for the first time, human rights as keystones of an inclusive and prosperous society, bringing together the work of the Commission for Racial Equality, the Equal Opportunities Commission and the Disability Rights Commission. It will provide institutional support for religion and belief, sexual orientation and age as well as human rights.
For 30 years the consumer credit market has helped to build today's thriving economy. It has enabled our consumers to achieve the high standards of living they now experience and ensured that our businesses can flourish as the world-class institutions that serve us every day. The UK has one of the strongest and most efficient credit markets in the world. We now represent a quarter of the EU credit market generally and half of the EU credit card market. But the market has become increasingly dangerous for consumers. Unscrupulous lenders can destroy lives, coercing borrowers into credit agreements they either do not need or do not understand.
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More than half of households which are over-indebted have incomes of less than £7,500 per year. So we will bring about a full-scale reform of consumer credit legislation and create a fair, clear and competitive consumer credit market fit for the 21st century. The Consumer Credit Bill will update consumer credit law to provide greater protection from unfair lending practices and create a fairer and more competitive credit market.
The land transactions Bill is also aimed at improving consumer protection and will extend FSA regulation to cover home reversion plans and Ijara (Sharia compliant) home finance arrangements, bringing benefit to vulnerable and minority sections of the population. The Bill will extend valuable consumer protections to elderly consumers when making one of the most important financial decisions they are likely to take. It will ensure that consumers of Sharia-compliant home finance arrangements also benefit from the protection of FSA regulation. Regulation should help improve consumer confidence in these products and so facilitate future market growth.
We must not be complacent, but the UK remains strongly placed to see the economic imperatives of the global age fully met. The programme we have outlined addresses some key challenges we face and I commend it to the House.
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