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Lords Chamber

Volume 734: debated on Thursday 19 January 2012

House of Lords

Thursday, 19 January 2012.

Prayers—read by the Lord Bishop of Chichester.

Health and Social Care Bill


Asked by

To ask Her Majesty’s Government what were the estimated costs of implementing the Health and Social Care Bill when it was originally introduced to the House of Commons one year ago, and whether they have changed.

My Lords, in January 2011, we estimated the costs of implementing the Health and Social Care Bill at £1.4 billion. When we published the revised impact assessment in September, we estimated the costs of implementing the Bill to be between £1.2 billion and £1.3 billion. This will reduce administrative costs across the system by one-third by the end of this Parliament, saving £1.5 billion per year from 2014-15 onwards.

My Lords, I thank the Minister for that Answer. Many people in the medical world believe that the cost is mounting and that the cost which the Minister cites is not accurate. It is safe to say that this upheaval is costly both in money and in the risk to patient care. As well as the cost, at a time when the NHS has to find £20 billion of efficiencies, today the nurses and midwives have asked for the Bill to be dropped, arguing that their concerns have not been answered. Can the Minister give the nation and the NHS a first birthday present by listening to what is said and advising his right honourable friends Mr Lansley and the Prime Minister that it is time to pull back—

I am asking a question; I am in the middle of asking it. You may not care about the NHS but, on these Benches, we do. When the medical professions and nurses say that the Government should think again, it would be wise for the Government to do so. My question is whether the noble Earl will ask his colleagues to do so, and whether we can then move together, with consensus, as my right honourable friend Andy Burnham has now twice asked the Secretary of State to do.

My Lords, I understand that the noble Baroness is asking me to deliver a certain message to my right honourable friend. I am not quite sure what that message was, but if it is to do with the Health and Social Care Bill, I have to say that we need that Bill. We believe that reform of the NHS is essential if it is to be sustainable in the future. Every penny saved from this reform will be reinvested in front-line patient care. The previous Government had, as we do, an ambition to save £20 billion—the so-called Nicholson challenge—over the next three or four years. This reorganisation will enable us to contribute to that total. The modernisation will also move the NHS to a much more patient-centred system where good providers are rewarded for high-quality services. We are spending money on redundancy now to gain in the future.

My Lords, will the Minister tell us whether the report in this morning’s Guardian that the NHS regulator is proposing that a hospital should be credit-rated is correct? If it is correct, why are the Government pursuing this commercialisation of our hospitals? They are not supermarkets; they are places of care.

My Lords, I have not seen that report, but clearly there is concern, following Southern Cross, as to whether difficulties such as those should be predictable in some way. I am sure that a lot of thought is being devoted to trying to avert such crises in the future. I will look at that report and write to the noble Lord with any comments.

The Bill is called the Health and Social Care Bill. If the recommendations of the Dilnot commission for social care are implemented speedily with cross-party support there will be a huge saving to the NHS, where many frail and vulnerable people are inappropriately treated because the impending crisis in social care has not been addressed. Does the noble Earl agree that that is the case?

I strongly agree. The noble Baroness will know that running right the way through the Bill are duties around the integration of services between health and social care and indeed between different aspects of healthcare. By giving clinicians greater autonomy to decide what good care looks like for their patients in an area, I am confident that we will see fewer unplanned admissions to hospital, which cost a great deal of money, and much better preventive care for patients delivered by healthcare and social care professionals.

My Lords, has my noble friend noticed that this upsurge in criticism of his proposed reforms in the health service has coincided with an upsurge in the demands for more pay by some of the people who are making the criticisms? Perhaps if they were a little more modest in their demands, there might be a little more money for patients.

My noble friend makes a good point. Of course we wish to see professionals properly rewarded, but it behoves everyone in the public services to bear in mind the difficult economic circumstances in which we currently live. Many public servants, I am pleased to say, are responding to that call.

Is the Minister aware that his message about the imperatives of health service reform does not appear to have reached the Royal College of Nursing and the Royal College of Midwives, based on statements that they made yesterday? Does he share the view of his right honourable friend the Secretary of State in another place, who has stated that these are not disputes about the health service but politically motivated strikes?

I do think that the objections that the Royal College of Nursing has raised have very little to do with the Health and Social Care Bill. They are much more about what may or may not be happening in certain hospital trusts, which are matters that, in general, the Bill does not affect.

My Lords, health reforms rarely come at low cost. Can the Minister tell the House how much the previous Government’s health reforms cost between 1997 and 2010?

My noble friend is right to remind the House of the repeated reforms of the health service made under the previous Administration. I do not have a figure for how much they cumulatively cost the taxpayer, but it was clearly a great deal and I recall that one of the reforms took place over the course of the summer without any reporting to Parliament at all. The contrast between those reforms and this one is marked. We are doing this to get better care for patients. The previous Government were really only doing it to rearrange the deckchairs.

Does the noble Earl agree that, contrary to my noble friend’s comments, there is a real regret in the health service that our excellence awards—as you know my trust in Chase Farm has received one—have been done away with by the Government with the CQC. I do not know what the Guardian article said and I do not know what it means by “credit”, but getting credit for good services and proper care is something that everyone in the health service would welcome. The focus for us in the health service is indeed to join social care and healthcare. Can any emphasis that can be given by the noble Earl or the Department of Health come as quickly as possible please?

The noble Baroness was absolutely right in what she said in the last part of her question. I apologise to the House if I misunderstood the previous question about credit ratings, which I took to mean something to do with finance rather than gold stars, which I think the noble Baroness was talking about. I will try to clarify that in a letter.

Violence against Women


Asked by

To ask Her Majesty’s Government when the outcome of the cross-Whitehall consultation commissioned by the Home Secretary on the Council of Europe convention on preventing and combating violence against women and domestic violence will be made available to the House.

My Lords, the cross-Whitehall consultation identified a number of issues requiring further consideration before a final decision can be made on whether to sign the convention. As part of this further consideration, the Home Office launched a public consultation on 12 December last year on whether to create a new criminal offence of forced marriage. The consultation ends on 30 March.

I thank the Minister for that reply. Given the importance that the Government give to tackling violence against women and their view that it is essential that the UK takes a strong lead on the issue internationally, can he advise the House of the timetable for signing the convention, which would both indicate their commitment to this issue and give a lead to other Council of Europe member states—18 of which have now signed up to the convention?

My Lords, I cannot take the noble Baroness much further than saying that the consultation on forced marriage will end on 30 March. We will obviously have to respond after that and consider—as the Prime Minister made quite clear last year—whether forced marriage should become a criminal offence in itself. However, we also have to look at other issues, particularly whether extra-territorial jurisdiction should be extended. There are very real problems in that area. The simple fact is that we can only sign up to the convention as a whole—we cannot sign up to it in part. Until we can get decisions on all parts of it, we will not be in a position to sign up. However, I make it quite clear to the noble Baroness that we broadly support the intention behind the convention.

My Lords, we currently have the chairmanship of the Council of Ministers in the Council of Europe, and this issue affects and concerns noble Peers across all sides of the House and is widespread in this and other countries. Would it not be a wonderful opportunity, despite the reservations that my noble friend has rightly announced, to get on with this and get our signature on the paper before we leave the chair of that excellent organisation?

My Lords, we would like to make progress on this, but the concerns, particularly in relation to extra-territorial jurisdiction, are very real indeed. My noble friend will be aware that, at the moment, we believe that extra-territorial jurisdiction should apply only to very serious crimes such as murder or torture. To sign up to this, we would have to change the law to make it cover such matters as common assault or harassment. We do not think that that is necessarily the right way to go about these things. However, colleagues in the Ministry of Justice will certainly look at these issues.

My Lords, major events such as the Olympics tend to attract a lot of visitors to this country, particularly from groups involved in things such as trafficking, which, as we all know, involves violence against women. Will the Minister give an assurance that he will get the report out as soon as possible to the vast majority of those who are interested in this subject, not least because we have been looking at this subject of violence against women for very many days under the Welfare Reform Bill and the Legal Aid, Sentencing and Punishment of Offenders Bill.

My Lords, I would not want to foreshorten the consultation, which ends, as I said, on the 30 March, but obviously we want to respond as quickly as possible after that. As for trafficking, the noble Baroness will be aware that we have recently brought in some amendments to the Protection of Freedoms Bill that help us to comply with the convention on those matters, and I believe we will be very broadly compliant with that convention. However, that goes slightly wider than the Question on the Order Paper.

My Lords, do the Government have any intention of accepting the advice of ACPO and, indeed, of his noble friend Lady Trumpington on tackling violence against women working in the sex industry, who are afraid of reporting assaults on them because if they make those reports they are likely to be charged under the laws relating to prostitution. Is it not time that the law on prostitution was changed along the lines adopted in New Zealand and as ACPO suggests?

My Lords, the noble Lord is taking the issue way beyond the Question on the Order Paper, which relates to the Council of Europe’s convention. Obviously we will consider those points, but those are matters for domestic law and not matters relating to compliance with this convention, which relates to combating violence against women.

My Lords, I welcome the consultation being across Whitehall, because many agencies are involved in the many issues. How are we to reconcile the localist approach of police and crime commissioners and candidates with an eye to election with the need to ensure that police budgets contain an adequate line for what is essentially not a very populist issue? In other words, how do we make it a populist issue?

My Lords, again my noble friend is going way beyond the Question on the Order Paper in bringing in the subject of police commissioners. We are talking about whether we can comply with this Council of Europe convention—compliance that involves changing the law in a number of areas. That is what we are consulting on at the moment, but we are also looking at other issues, particularly extra-territorial jurisdiction.

Is the Minister aware that the Prime Minister is going to visit the Council of Europe next week and that his right honourable friend the Attorney-General will visit in April? I do not expect anything from the Prime Minister next week, but the period of consultation will be finished by the time the Attorney-General comes. Would it not be a good opportunity to build some bridges with other countries if the Attorney-General were in a position to make a positive statement on this issue at the April plenary session?

My Lords, I have already indicated our broad support for what is going on, but it involves some quite serious changes to domestic legislation in this country and, I must stress, also in Scotland and Northern Ireland, the devolved Administrations, so we would need their agreement as well. It is not that easy suddenly to say that we will extend extra-territorial jurisdiction to all the issues to which I referred earlier, such as assault, when we have had the tradition of reserving them only for more serious offences. These are matters that we will obviously want to look at very seriously within government.

EU: Sow Stalls Ban


Asked by

To ask Her Majesty’s Government what information they have about the likelihood of other European Union member states complying with the forthcoming European Union ban on sow stalls.

My Lords, the European Commission has sought data on how member states are progressing with complying with the sow stall ban, which comes into force on 1 January 2013. To date, the Commission has not released this information.

I am very grateful to my noble friend for his comments. Can he confirm that our farmers have invested very substantially to remove sow stalls here? Bearing in mind the current difficulties over another important farming issue, how confident is he that there will be full compliance with the ban on sow stalls throughout the EU by 1 January 2013?

In this country, as noble Lords will know, sow stalls have been banned since 1999, so my noble friend is right in saying that there has been considerable investment. In the light of recent experience, he would not expect me to be fully confident that other states will be compliant. We can be confident in our own position, as I have said, because we are not prepared to compromise on the welfare of sows, which is why we moved away from sow stalls early. We will not tolerate livestock regimes that compromise animal welfare and we will work hard in Brussels to ensure full compliance across Europe by the deadline.

That is a totally separate issue. The sow stalls directive is an individual directive focused on sow care and welfare.

My Lords, this country can be proud of being ahead of the game on banning sow stalls, as we have heard. As a regular customer of Pampered Pigs of Tolpuddle, I know that happy pigs are tasty pigs. But the current problems with eggs, as we have heard, demand a more robust position on enforcement of EU directives. Will the Government give notice now, with almost a year’s notice, that they will take legal action against other countries’ non-compliance as soon as this directive comes into effect so that the Commission can get its ducks and sows into a row?

As I mentioned before, we have already sought information on this matter. We are knocking at the door, and the Commission has already learnt lessons from the cage ban on laying hens. We have sought early information that it is asking all member states how close they are to compliance. To date, we do not have that information, but we are determined to press on this issue. We are hoping to have on the agenda of the February Agriculture Council a discussion topic on this item.

The “happy pigs are tasty pigs” message is a very forceful one but UK government procurement policy over the past decade since the sow stall method was changed here has not really been got over, either in government procurement or by UK supermarkets to their customers. What do this Government intend to do about procurement policy on UK pork and bacon?

As my noble friend will know, the framework of public procurement is complex and it is not easy to lay down criteria that are not covered by directives. However, following the sow stall ban, it will be possible to ensure that that is the case. At the Oxford farming conference recently it was said that 70 per cent of pig meat imported into this country would be illegal if produced here under our regime.

I hope the Government’s response to the pig directive is more robust than their response to the egg directive. As an egg producer, I am appalled that the Government’s answer to the import of eggs produced in illegal battery cages is not to send the lorry back to the country of origin, not to fine the importer or impound their vehicle, not to destroy the illegal eggs, but to send the eggs for processing into food for sale in the United Kingdom. Why do the Government not see what a devastating effect this will have on the UK’s legal egg industry, which, frankly, is stunned by their feeble response? When we joined the Common Market in 1973, we were promised a level playing field. After nearly 40 years, is it not about time we got one—or might pigs fly?

I have to say I share my noble friend’s frustration if not his anger. The Government have investigated the possibility of taking unilateral action and bringing in a UK ban on imports of eggs and egg products produced in conventional cages in other member states, but I have to inform my noble friend that, given that there are significant legal and financial implications in enforcing such a ban, coupled with practical difficulties in enforcing it, this is not a realistic option.

My Lords, are we not entirely capable of deciding our own standards about this sort of thing? Does this Question therefore not remind us of the hopeless fraud of subsidiarity, which indeed it has been since inception? Are the Government aware that under the EU treaties, although individuals and companies can be made to pay Brussels fines by the courts in the countries in which they live or operate, there is no way that a country can be made to pay a fine? Why do we not just emulate the French and ignore this and all similar mischief?

I can assure the noble Lord that the Commission is equally disappointed by the response of some member states on the egg-laying issue, which is why I am perhaps more confident that there will be a grip on the sow stall issue. It has already sent pre-infraction letters to non-compliant countries.



Asked by

To ask Her Majesty’s Government what discussions they have had with the Government of Pakistan and other interested parties regarding the current political situation in Pakistan.

My Lords, when I visited Pakistan last week, I called on Prime Minister Gilani and Foreign Minister Hina Rabbani Khar, and I had discussions with President Zardari, Chief Minister for the Punjab Shahbaz Sharif, the governor of Sindh and Imran Khan. We are following the situation of Pakistan closely. We want it to enjoy free and fair elections and we believe that it is important to avoid escalating tensions. A strong and stable constitutional democracy is in the interests of Pakistan and we encourage all involved to act in a way that respects the constitution and helps to ensure stability.

I thank the Minister for the very interventionist stand that the Government are taking. I would not expect her to agree with the proposition that, while normal states have a military, in Pakistan’s case it is the military that has a state. However, would she nevertheless agree that when there is a highly interventionist and politically motivated supreme court, a military that challenges the civilian Government over the dismissal of the Defence Secretary and a military and intelligence service that supports rival candidates in an election, the position in terms of democracy in Pakistan is very dangerous? Can the Minister tell the House whether the UK Government, as a friend of Pakistan, are considering a Commonwealth Eminent Persons Group to intervene to bring about a break in the impasse that currently holds?

My Lords, Pakistan faces challenging political times but that is not new. All parties in Pakistan recognise that this is a huge opportunity for Pakistan, for once, to have a full-term democratically elected Government pass power to another democratically elected Government. From all the discussions that we have had with all parties in Pakistan, they all recognise how high the stakes are. The noble Baroness will be aware of a Friends of Pakistan group, and it may well be that these are matters that can be discussed there.

My Lords, I particularly welcome the way in which the Minister reached out during her visit to Pakistan to people from minorities, especially religious minorities. Has she noted that this month is the first anniversary of the assassination of Salman Taseer, the former governor of the Punjab, who was murdered along with Shahbaz Bhatti, the former Minister for Minorities in Pakistan? Can she tell the House whether, during her discussions, she considered how British aid is being used in Pakistan? Is it being used to create and promote the sort of values espoused by Members of your Lordships’ House and the British Government, or is any of that money being siphoned into causes and groups that promote the kind of sectarian violence that led to the deaths of Shahbaz Bhatti and the governor of the Punjab?

My Lords, the assassinations of Salman Taseer and Shahbaz Bhatti were tragic for both Pakistan and the rest of the world. They were a personal tragedy for me because of my personal relationship with Shahbaz Bhatti. However, as I promised him, I visited Karachi when I was in Pakistan, and specifically visited a convent school for girls and met the Archbishop of Karachi. The school is an excellent example of service to education and to interfaith relations. It is run by an Irish nun who has been in Pakistan for 58 years. I was delighted to hear from the Archbishop that the Christian community in Karachi is doing well, despite its challenges.

Our main commitment to aid in Pakistan is through the education programme. We are committed to 4 million more children being educated as a result of DfID’s commitment in Pakistan. I am sure that all in your Lordships’ House would agree that the best way to open minds and to deal with the challenges of extremism is through better educated young people.

My Lords, in the midst of the current political difficulties in Pakistan, will the Minister take the opportunity to reaffirm that the stability of Pakistan, and its friendship with this country, remain key political objectives of the Government, not only because it is a member of the Commonwealth and a sovereign state with nuclear weapons, but because of its important role in the whole of that region?

My Lords, since Britain is an ex-colonial power in Pakistan, the level of respect for Pakistan and our relationship with it always surprise and please me. There is a historical and cultural link. Pakistan’s biggest diaspora lives in Britain and Britain’s biggest diaspora is of Pakistani origin. There are 1.4 million journeys between the two countries each year. In all discussions with all interlocutors in Pakistan, we are consistently told that Britain’s relationship with Pakistan is respected and deeply supported. In those circumstances, we have a responsibility to use that relationship for a stable and prosperous Pakistan, which we recognise will lead to a more stable and prosperous Britain.

My Lords, will the Minister please tell the House what steps Her Majesty’s Government are taking to reduce the tension between the United States and Pakistan that has grown and is born out of the incident at the Pakistan army check-posts a few months ago, which resulted in the loss of 24 Pakistani army personnel?

My Lords, the Government have expressed their deepest condolences to the families of the 26 young men who were killed in that incident. However, we also recognise that, despite our special relationship with Pakistan and our special relationship and friendship with the US, it is for the US and Pakistan to resolve their relationship.

My Lords, I welcome the focus on education because that is clearly so important within Pakistan, but is this money and support for education going down through government routes or is it going out separately to educational institutions? When I was the Security Minister, I was somewhat appalled that money seemed to get diverted and that the amount of money that actually got to the schools and to where it was required became very small compared with what was injected at the top.

My Lords, the commitment is to educate 4 million children. It is a very specific commitment. It is not to give an amount of money but to ensure that 4 million additional children are put into education as well as providing training for a specific number of teachers and a specific amount of resources for schools. That money is channelled through the Government, predominantly on a provincial basis, but it is also channelled through NGOs—about 40 per cent of it passes through the provincial Governments and about 60 per cent passes outside.

Queen’s Diamond Jubilee


My Lords, this year, 2012, marks the happy occasion of the Queen’s Diamond Jubilee. My right honourable friend the Leader of the House of Commons and I are today able to announce that an early celebration of this extraordinary anniversary will be the attendance of the two Houses on Her Majesty in Westminster Hall for the presentation of humble Addresses on the morning of Tuesday 20 March. I will move the necessary Motion for an Address a few days earlier on a date to be arranged through the usual channels. The ceremonial arrangements will be organised by the Gentleman Usher of the Black Rod in the usual way. I hope that the House joins me in looking forward to an important and happy event.

Business of the House

Motion to Agree

Moved by

That the debates on the Motions in the names of Lord Stoneham of Droxford and Lord Storey set down for today shall each be limited to two and a half hours.

Motion agreed.


Motion to Take Note

Moved by

My Lords, I am very grateful for the privilege of leading this debate and thank all noble Lords who have agreed to participate in it. I look forward to an interesting debate on a key issue for the coalition Government and the country’s economy. I declare my interest as chair of First Wessex Housing Group and Housing 21, two housing associations.

My motives for initiating this debate are threefold. First, I believe that housing needs to be higher on our national agenda as it defines our national life and so many issues—the economy, health and social well-being and energy conservation—impinge on it. In fact, it underpins everything in society. Secondly, housing is critical to the national economy. It is a driver of growth, jobs and social mobility. Its multiplier impact is not surpassed in any other sector. The deputy director-general of the CBI said this morning:

“The only way to resolve unemployment in the short term is to pull out all the stops to get the economy moving and business growing”.

Housing has to play a fundamental role in that.

Thirdly, there is a huge demand for more housing to be met, and we are not meeting it. More than 4 million people are on social waiting lists, and 100,000 homes were built last year while demand is growing at the rate of 232,000 new households each year. In fact, we face a critical situation in housing. As I have said, we built only just over 100,000 homes in 2010 and building since the credit crisis has been at the lowest level for many generations. The number of construction jobs has reduced by 150,000, and in the wider economy the number of housing-related job losses will be much more. As I have said, 4.5 million people are on social housing waiting lists. Over the past 30 years we have sold off more than 2 million of our social housing stock. There remains a huge need and demand for affordable housing.

The Government were right to review the housing strategy, and their document has encouraging themes, but it is arguable that it is a bit like a box of liquorice allsorts—there are some very tasty items but it is not yet a totally satisfying meal. The questions are: how far are we prepared to go and will we be able to respond quickly enough? I accept, however, that the Government see themselves at this stage as laying the foundations.

I should like to emphasise a number of encouraging themes from the document. The first requirement is that we have got to rebuild confidence in the housing market. That is not easy when house prices are still uncertain and unemployment is growing. There is huge variability across the country. Here in London and the south-east, we are relatively unscathed compared with the rest of the country. As to the measures that the Government are introducing, I welcome the new-build indemnity scheme to deal with buyers frozen out of the housing market by the need for large deposits. That is an important measure. Other funds are important—the £500 million Growing Places Fund for infrastructure, to unlock housing and economic growth; and the £400 million Get Britain Building investment fund to support building firms that need development funding but have been deprived by the banks. I also welcome the £150 million for the Empty Homes fund to bring vacant properties back into affordable housing.

Probably most important in terms of driving an increase in housing is the freeing up of public sector land to deliver up to 100,000 new homes, with its “build now, pay later” proposition. I welcome the advisory group set up under Tony Pidgley, for whom I have huge respect, but I wish that the group was a task force committed to driving the building of housing on that land.

I also recognise and welcome the commitment to the private rented sector and the recognition that it has a major role to play in future housing. The growth in this sector is remarkable: 16 per cent of households are now privately rented—an extraordinary growth of 30 per cent since 2005, representing 3.4 million households. The problem with the private rented sector is that it is a polarised marketplace. Sadly, it is still associated with Rachmanism, but there have been huge improvements. The document shows that, in surveys, satisfaction in the private sector in many categories outperforms social housing—85 per cent are satisfied with their accommodation, compared with 81 per cent of social tenants. Seventy per cent are satisfied with their repairs, compared with 69 per cent of social tenants. The private rented sector also has a better ongoing record on energy efficiency than owner-occupied properties. I also welcome the important tax changes to encourage private rented investment and the examination of barriers to investment in this sector that are laid out in the paper.

The third theme that I welcome is on social housing. I am pleased that there is now a firm commitment to providing 170,000 new affordable homes over the next four years. Together with a commitment to replace rent-to-buy properties, this Government could well achieve the first net increase in social housing stock of any Government for 30 years. Some of us have been nervous about the new basis of this funding, but I have to accept that this tranche of investment has worked and has eased pressure on government debt. The problem is that this does not actually meet the demand. The key question is how we can expand the building of more affordable housing.

I also welcome in the document the ongoing commitment to improve community designs through a variety of initiatives—the commitment to review building regulations for the improvement of energy efficiency and carbon emission standards for new buildings, the commitment to zero-carbon homes by 2016, and the launch of the Green Deal this autumn to revolutionise the energy efficiency of existing housing stock.

I emphasise one final theme which is very important. I am pleased that the Government recognise the paramount need in a recession to protect the homeless and vulnerable. Recession always impacts on the most vulnerable, and I welcome the special funding for national night schemes and the ministerial group to look at the wider implications of homelessness. Vulnerable people need particular attention in a recession when unemployment is growing, and we have to ensure that the broadest backs take the greatest pain.

We can note the foundations of the housing strategy, but how do we achieve a radical change going forward to ensure that the foundations lead to construction of more housing on a significant scale? First, the Government must have real ambition and drive. It is 60 years since Harold Macmillan was appointed as Housing Minister in October 1951. No one has repeated the mark he made in that position. We had nine Housing Ministers in the previous Labour Administrations. Sadly, neither party in the coalition had a conference resolution to build 300,000 homes a year. Nor do we have the public funding that Macmillan had available. Nor do we believe that housing can be achieved simply by top-down directives. However, there remain many loose ends that require constant drive: bullying the banks and lenders, getting the public sector to provide vacant land and encouraging, incentivising and cajoling local communities and providers to extend the capacity to build. Above all, we need new funding vehicles to meet the need for more affordable homes. We want our ministerial team to have the ambition and drive of Macmillan's team of Marples, Sir Percy Mills and Dame Evelyn Sharp.

Private funding will remain the key to success. We will have to regulate the mortgage market better, so that it does not end up in an unsustainable speculative boom once the economy recovers, but low interest rates now mean that funding housing could be cheap. Housing associations have significant surpluses this year because of lower than expected interest rates. One percentage point off mortgage rates puts £10 billion back into consumers’ pockets. There is a potential revolution in housing association sector funding under way. Banks and building societies are seeking to obtain greater liquidity and are moving away from the sector. Pension funds and other funds want to lend to us direct. Last week, pension funds were investing in 30-year, index-linked government gilts with a negative real yield. Surely it should not be beyond us to develop vehicles which could provide 1 to 2 per cent real yields to fund social housing. That could benefit both housing associations and local councils. Housing seeks pension funds, which do not have the liquidity pressures of the banks but want long-term secure income. The Government also need to look at the significant level of government social grant which sits on housing association balance sheets as a liability. If part of it could be converted to equity, it could leverage rich significant funds for affordable housing.

Housing strategy must be based on a mixed housing approach involving owner-occupied, private rented and social housing. Some of our old, deprived estates remain a national disgrace. They are often hidden away by the apartheid design style of past generations. Those estates will be transformed only if partnerships are formed to transform them. I have been personally involved in the Rowner estate in Gosport for 17 years. It took the vision of a social entrepreneur to see that it could be transformed by breaking it up, selling part of it and using the proceeds to rebuild social housing, to effect a real social transformation in people's lives by providing a mix of social, owner-occupied and private rented accommodation through a partnership of Taylor Woodrow, a housing association and Gosport Council. It is no good councils telling housing associations that they can build houses more cheaply. In my view, they can do it more effectively if all sectors work together in these problem communities. The last thing the housing sector needs is to rebuild the old silos of the traditional sectors.

There are two other areas that I should like to mention briefly. The first is that planning for retirement is as important in relation to housing as it is to people. We need a closer interest in this future demand. The objective should be to cope with the underoccupation of property and reduce future care costs while enabling people to live independently for longer, and I am sure that the noble Lord, Lord Best, will have more to say on this. It is recognised but it needs much greater recognition and attention.

The second area is the Green Challenge. I do not believe that we will tackle fuel poverty unless housing is transformed. The economics of better insulation and energy-efficiency need tackling in order to reduce costs. There are huge benefits to be had in tackling older stock, and the Green Deal is a classic means by which to involve the private sector in funding it. A gradual upgrading of new build and decent home standards, covering insulation, should follow.

Many of us are concerned about the state of the economy, and therefore housing has become the focus of our attention as a regeneration force. It will not be revived by a traditional rivalry between owner-occupation and public housing. The objective should be a balanced approach involving the public sector and the private and voluntary sectors, with a choice of different housing in mixed communities. Private funding will have to leverage what limited public funds there are.

There is an action plan in the Laying the Foundations document and I suggest that it is ruthlessly followed. We should hector, probe and argue so that it is delivered and expanded. It took Macmillan three years exactly to transform housing in this country in the 1950s. The coalition has the same timeframe in which to double housing construction and make a real impression on housing provision, which will revive the British economy as well. It should be its central mission to do this.

My Lords, this is a very important subject and I am grateful to the noble Lord, Lord Stoneham, for leading the debate today at this crucial moment when decisions are about to be made that will affect the lives of millions of people in the UK. He covered the subject and the report widely, and I shall not try to repeat his comments, although I endorse them.

Together with health and welfare, housing is crucial in our individual lives and in creating and maintaining a fair and just society. In this excellent report, many of the desirable options are set out clearly, but not all. I intend to draw attention to some of the significant omissions that I believe the Government should add to their considerations.

My interest is on record in the Register of Lords’ Interests. As a small-scale landlord, I have had residential property for over 40 years, and I have been able to do what I see one in two people in the UK would wish to do, according to the report—that is, build my own home. In my local government days and as a member of the Greater London Council, I was responsible for almost one-quarter of the council stock, including in the Barking and Dagenham area, which features in this report. I was on the boards of the Woolwich Building Society and a housing association, and I was a vice-president of the National House-Building Council for seven years. However, none of that is current; it is all in the past, so I am giving your Lordships a view of what I saw then and how I see things now.

Two days ago, the Minister answered my Question in the House about leaseholders and the problems they experience with managing agents. One aspect not covered yet of considerable concern—and those with an interest have come back to me about it since—is the lack of transparency and the possible practice of managing agents receiving commission, which they are not disclosing and about which they often refuse to answer questions, for services they are providing, such as insurance and works.

The noble Lord, Lord Best, in his supplementary question raised the subject of an ombudsman scheme to protect leaseholders. At present, this is voluntary but I think that it should be obligatory for managing agents to belong to such schemes. There are almost 2 million leaseholders, and this lack of transparency impacts on everybody from social housing associations to those in premier leasehold properties. The right of tenants to have their deposits protected, whether held by a landlord or an agent, has been of great benefit to tenants.

The concept of commonhold was introduced in the Commonhold and Leasehold Reform Act 2002. I took part in those debates from the point of view of my direct experience of the equivalent strata title in New South Wales. Sadly, commonhold has gone nowhere and very small numbers of such developments have been built. I feel very strongly about the idea of commonhold and it is time to look further at this form of tenure which works so well. Freeholders here do not like it because it means that they lose the right to sell and resell leases over many years. It is definitely in the interests of flat owners and it is much more effective than any available right to manage.

There is no mention in this report of looking further at these issues or of encouraging developers to opt for commonhold in new blocks under construction. The Federation of Private Residents’ Associations has told me that many members would be interested in converting their properties to commonhold but that the barriers are too great for existing blocks as 100 per cent of the residents must support the change. Therefore, conversion to commonhold is too difficult. The 100 per cent proviso is why there is commonhold in only a very small number of newly built blocks. It has not been given a real opportunity to test the system. Obtaining even a simple majority may be difficult, especially in blocks where some people are resident only for limited periods, such as a year.

However, it would be desirable for the Government to conduct consultation on this issue, as I am convinced that it would be a preferable system to the present leasehold management system. Commonhold is a system whereby all the leaseholders in a block are members of the body corporate which owns and controls the block. They are able to select managing agents or arrange for matters to be handled by some other person, but they are the body corporate. Paragraph 2 of the Executive Summary to the report says that,

“we need to get the housing market—and in particular new house building—moving again”.

Paragraph 29 of Chapter 2 quotes 133,000 stalled units. Here is an opportunity for the Government to provide an incentive for the construction of enough commonhold properties to be able to see clearly the effectiveness or otherwise of this form of tenure.

I am pleased to see that Tony Pidgely is to lead an advisory group as, although I do not know him personally, I know that he is not only a hugely successful property developer but also an imaginative innovator with great experience. Paragraph 44 of Chapter 2 says:

“We are keen to see innovative approaches and a wide range”,

of new experiences.

I have made a real mess of my papers, for which I apologise. At paragraph 46, there is talk of where infrastructure exists and does not exist. Again, I raise a point which I raised on the Localism Bill, that for areas which are supposedly green belt but have small patches of infill and where all the infrastructure already exists, I think that the documents and the advice sent out by the department should make it clear that there is a possibility of using those small patches.

I want to talk about the mortgage market because I strongly support the idea of people buying their own homes. In the past few weeks, I have been involved in helping a young person to try to buy their flat. The flat was formerly a social housing flat. It is on about the 15th floor of a block. I went with the person to Barclays, which apparently is willing to offer mortgages to most people, subject to their circumstances. The young person was going to buy the property, let it for two years and then, when they had finished their studies, move to where they were going to work and live in the flat. There was no problem about the fact that the flat was let to someone on housing benefit. The young person would buy it in that way; the housing benefit was enough, although there is no way of knowing whether that will remain the case with the coming changes to housing benefit. The young person was urged to check carefully the present circumstances under which the person on housing benefit was renting the flat.

What stunned me was when Barclays said that it lends on only a small number of high-rise properties. I asked what was regarded as high-rise and was told: everything above seven floors. In London, seven floors is not high-rise; one has only to look out of the front door here to see tower blocks everywhere. Barclays further said that its restrictions applied particularly to former local authority properties. That made it a double problem for this young person to buy a flat which was within their means and which would have given them a home to live in when the time came.

Barclays is out of date; I do not think that high-rise is something that people worry about. I know people on the staff here who live on about the 20th floor. They say that they have to get used to a small amount of movement in the building because the structure has to have a degree of flexibility. They say that you get used to it very quickly and that people are very happy in these places. To condemn former social housing because it was built by local authorities is very wrong. In my day, local authorities were still building to Parker Morris standards, which were way above any standards that could be afforded by private developers. Far from being below standard, they were almost above standard. There is something very wrong if people now say that these blocks, particularly if they are social housing, are not acceptable for mortgages. Unless people can get mortgages, how will we increase home ownership, which should be our aim?

Another thing that is not mentioned in the document is rent-to-buy schemes, of which I am very much in favour. I think that at one time that type of scheme existed in Ireland. When my uncle, who was a housing Minister—a Labour housing Minister, I may say—in New South Wales, introduced social housing, it was all done on the basis of rent to buy. People drew lots to be the first half-dozen tenants in the first houses. The policy was that every penny of rent that you paid counted for something. Why cannot the Government, in encouraging people to buy their own homes, now develop a rent-to-buy scheme? If you go to Boots or Sainsbury’s, they give you points for every penny you spend. Would it not be a good idea for people to build up a tiny equity in a property that at present they can afford only to rent but which in due course they would like to buy?

I strongly support Home Swap Direct. It existed when I was on the GLC. However, it has become almost impossible for people to move from social housing in one area to a home of similar type in another. Home Swap Direct will do much to improve that.

I will comment further on the housing benefit issue. I was very disturbed to be told that many new landlords who were letting a property—I reported this when we were dealing with the Localism Bill—would not take tenants who were receiving housing benefit. The reason they gave was the possible changes in housing benefit and in people's personal circumstances, and the fact that they, the landlord, would have to meet the cost of getting repossession of the property if payment was not made or the property was not kept up to standard. There are problems here.

There is another problem with building; I have done a little bit of building over the years, and I know that the moment you develop a huge scheme, there is a shortage of builders. Whenever we have wanted to build, people who were highly skilled in their particular field become like gold dust. They train others on site—I remember a time when they were trying to train bricklayers in six weeks, because they needed them so desperately. The tragedy is that we are losing so many people who have these building skills; they migrate to places overseas, such as my homeland, because of the opportunities there. They are desperately short of engineers, even in western Australia, just as we are short of engineers here. There are major problems that have to be faced.

The issue of squatters is very important, particularly as so much squatting has been highly organised. One person who views an empty property makes a point of unlatching a window so that others can come back and say that they did not need to break in because the window was open. That really is a fraud, to say the least. A couple who were expecting a child could not get back into their own home because squatters had moved in while they had gone on a brief holiday. These are sad cases and some action has to be taken. However, first we need to produce more homes; we cannot solve anything unless we do that. This housing report gives us a great deal to think about.

My Lords, I, too, congratulate the noble Lord, Lord Stoneham, on securing this debate and on the care and breadth of his presentation, although I should point out that he was perhaps slightly overenthusiastic about this document. Nevertheless, he described the size and immense difficulty of the housing crisis in all forms of tenure, and pretty much all parts of the country.

I declare an interest as I am chair of the campaign Housing Voice, which is looking at ways of increasing the flow of affordable housing. We are conducting an inquiry, and had our very first public session just before Christmas in the noble Lord’s own part of the country, and mine too these days—the south-west. This session in Exeter spelt out some of the difficulties in the south-west.

As noble Lords will know, the south-west has some special features in relation to housing: it has the highest ratio of house prices to average income, with a significant number of seasonal tourist homes, second homes, empty homes and retirement homes. However, in essence, the problems are the same in that the cost of housing in that area, as in large parts of London, is out of the reach of even relatively well paid first-time buyers. Social housing is under stress, and rents are going up in the private rented sector, which puts it out of the reach of a lot of people. Although some more property is coming on to the market and some improvement has been made in the quality of private rented-sector housing, as the noble Lord, Lord Stoneham, said, there is also, at the margin, some very difficult property coming on to the market in which people are forced to live. It is also very difficult to get a mortgage, of course, even if the arithmetic works out.

Unlike previous housing crises, which have usually been confined to one or other of those tenures, we now have dysfunction and crisis in all forms of tenure. The difficulties in one form have a knock-on effect on the others. We have a perfect storm in the housing market, so it is important that we take a holistic approach and debate this subject outside the traditional silos of housing policy and expertise, and look at the totality.

I was therefore extremely pleased when I heard, round about October, that the Government were going to come forward with a new strategy that puts all aspects of housing together in a new document. I was glad to hear that and I am pleased that they have attempted it, but having now read about 88 pages of the document I have to ask the Minister whether it is in one document because it does not face the size of the crisis with which we are confronted.

There are a lot of little policies, some of which I approve and some of which I have doubts, but they do not add up to anything like tackling the central problem, which is, as the noble Lord, Lord Stoneham, has said and as has been repeated many times, that the rate of new household formation is running at twice the rate of housing dwellings of any sort coming on to the market. What is the aggregate of all the policies in this document? Even if they were all to work, they would come well short of meeting that rate over the period of a Parliament.

The reality is that the Government started out by going backwards. I am the first to admit that they did not have a great inheritance on this front. Indeed, during the period of the previous Administration, in government and outside, I was quite critical of their failure to come to grips with the size of the problem. Nevertheless, the new Government’s first act was to make matters significantly worse by cutting social housing provision by nearly two-thirds, but they have made up for that with affordable housing in general. Although they have made up for some of it, they have not made up for the cut in the initial stages of the public spending review.

Therefore, we need to take a step back from this, to go beyond what is in the document before us today and to look at a new and more ambitious approach. Regrettably, the Government’s approach has been piecemeal. Not only are the schemes relatively small in this document—although some of them might help a few families—but the legislation that has just gone through Parliament compounds the problem by dealing with this in a piecemeal way.

The Welfare Reform Bill, which is still before this House, deals with social housing. We have probably reached the point where we should ask ourselves whether the main subsidy for housing should be in the housing benefit budget or whether we should, as we used to until about 20 years ago, invest more in the provision of housing on the capital and supply side than on the demand side. The Welfare Reform Bill is solely concerned with bringing housing benefit and other housing subsidies into the universal credit system.

That may be desirable in the long term, but in the short term it is leading the Government down a lot of blind alleys. It is an attempt to exclude certain people from social housing. It is an admirable aim to attempt to move people within social housing to more appropriate accommodation, but in doing so it will move people, to their detriment, out of areas where the cost of social housing is too high to be met under the new benefit cap into other areas. It will attempt to move others out of what is called “underoccupancy” into smaller accommodation, but in many parts of the country that is not available for such people, who are often in old age or infirm. On the face of it, it should be more appropriate, but in many parts of the country, including large parts of central London, smaller accommodation will not be available for them to move into. In any case, all those moves simply move the problem around. They move it out of social housing into the private-rented system or from one part of social housing into another. In some cases, they move it into homelessness. That does not in aggregate solve the problem.

In a different part of the legislative timetable, the Localism Bill, which has now gone through, includes two parts on housing. There are provisions to ensure that more housing is available and that the planning system is modified. I am afraid that in many areas, including many small towns and rural areas, those two will negate each other. There are provisions under the housing Bill to allow local authorities rather than any more regional or central determination of housing targets to decide what housing will be built.

Over and above that, even if the local authority, the district council or whoever has approved the new development, it could theoretically at least be overridden by other provisions for localism in local referenda. I hesitate to use the word “NIMBY”, because their arguments are sometimes quite good and I have some sympathy with those in rural areas who do not want to see parts of agricultural land taken over by housing, but the net effect will be that if we allow objections to all forms of housing in areas that are currently not scheduled for housing, or where no housing is being built, we will not meet the problems of rural areas and small towns in the next, let alone the current, generation of housing.

I have recently seen a study of Devon and Cornwall that shows that local people will not approve of additional housing where they currently live unless it can be shown that it will benefit local people and their families. The problem with most developments is that those people will not occupy those houses because, in the vast majority of new developments that are proposed under the planning system, they will either be sold on the open market—in which case they will be beyond the reach of the sons and daughters of those who already live there—or be social housing, where the local authority priority systems may well bring people in from elsewhere.

In most, but not all, cases, sensible propositions for increasing the housing supply in our rural and small-town areas are going to be made more difficult by the provisions under the Localism Bill and the planning guidance. I accept that the regional targets did not work to great effect, but replacing them with highly localised responsibility will not work either.

The noble Baroness, Lady Gardner of Parkes, spelt out some of the difficulties in a region at the other end of the price and income scales: London. Some of the changes under the Welfare Reform Bill and the Localism Bill will even drive out relatively low or medium-income families from areas within two or three miles of this place, where there has been a positive and healthy mix of tenure, housing types and families in the past. Next to the good and well utilised provision of social housing and other forms of affordable housing, a few streets away from where the only first-time buyers are Russian oligarchs, we see that that mix has worked. If we drive out from those areas the kind of people who are living in what was initially, and in many cases still is, social housing, the totality of the community suffers.

These examples could be multiplied in almost all areas of the country. The legislation that the Government have put before us in bits and pieces to address this does not amount to a strategy. Indeed, it is difficult to devise a strategy. I have some sympathy with the Government in this respect. Are we at the end of the period when the growth of home ownership is the natural conclusion of all housing policy? It has actually gone backwards over the past few years, but increasing home ownership, and seeing housing as a bit of a hierarchy, is still in every political party’s ambitions. This is not the case in many other countries.

There are other forms of tenure. The noble Baroness referred back to commonhold, which was in the first Bill that I was responsible for, which fell at the 2001 general election. It was a useful idea, but it has not taken off. There may be other forms of commonhold, or movement from rent to ownership, that we should address. The clear division between owner-occupation, private rented-sector and social housing needs to be readdressed. There need to be new ideas about the legal structure and the landlord/tenant relationship, and about how to promote investment.

The noble Baroness and her colleagues have a big problem before them that is frankly not addressed in the White Paper that was issued before Christmas. The noble Lord referred to Harold Macmillan and Dame Evelyn Sharp. Where are they today? I hope that the Minister can reassure me but, on the evidence so far, I fear that they are not actually in DCLG just now.

My Lords, I very much welcome the opportunity to discuss housing given to us today by my noble friend. I must declare one or two interests: I am a vice-president of the fuel poverty group National Energy Action, vice-president of the National Home Improvement Council and president of the Micropower Council.

I often reflect on why an interest in decent homes has dominated my political career. It is probably due to a couple of early experiences in my life. First, I spent my teenage years moving from one rented property to another, barely staying in any of them for as much as 12 months. Secondly, in my early 20s, I lived in the most wonderful newly built flat in Stockholm, Sweden, that was very well appointed and properly designed. It was insulated to a level where my fuel bills were a whole lot cheaper than they had been in my box in England before I arrived, despite the fact that one winter I experienced temperatures of minus 27 degrees centigrade outside.

On my return, I lived in the city of Southampton. In large chunks of the area I was living in there were a lot of properties in disrepair and a lot of empty properties. Some of that was because in those days we had a stop-start on whether there was to be a by-pass around that particular area. That is where my first political campaigning came in, as we tried to do something about the empty properties and to improve run-down housing in my area—so much so that I can still remember the name of the first house that we succeeded in getting done: it was 23 Langhorn Road, Swaythling, Southampton. I think it is still there as a rented property.

Over the years, I have served as a city councillor in Southampton on the housing committee and I have been a spokesperson on housing for the Liberal Democrats across both Houses of Parliament. Over that time, I have seen all sorts of policies come and go. Recently, one—right-to-buy—has come and gone and may come back again in some way. What has saddened me over the years is, first, the inability of Governments to have comprehensive housing strategies. The noble Lord, Lord Whitty, has explained how difficult that is, and he has been through it in government and is looking at it from outside government now. Those strategies must actually connect across the sectors. The second thing that has saddened me is the inability of Governments to track the changes and trends and to develop policies and actions for the long term rather than the short term. They are always trying to fix the latest crisis.

If I look at some of the problems—and previous speakers have talked about them already ready this morning—many of them are the same problems that were there when I started in this area. We have vast quantities of older housing stock that is in disrepair. We have vast numbers of properties standing empty and we do not have enough affordable homes across all the sectors. That leads to homelessness, which goes up and down, as well as to repossessions and other factors that go up and down. We also have large numbers of homes that are incredibly difficult to keep warm, and many of the most vulnerable in our society are living in those homes and living in fuel poverty.

What is even more disconcerting is that we failed to address many of these problems even over the years when our economy was growing quite strongly. The noble Lord, Lord Whitty, referred to this, but I have to say that I was particularly disappointed that, when the Labour Government were in power, they had huge receipts from stamp duty as the price of houses went up but very little of that money was actually ploughed back into trying to do something about the problems that we face today.

I welcome the fact that the coalition has put forward this housing strategy. It is a difficult subject to cover and this strategy is only the beginning of what people would like to do. I strongly concur with my noble friend Lord Stoneham in his opening remarks about the challenges and where the strategy stands. However, as others have said, strategies are not enough; the challenge is to make them effective in practice. One of the things I welcome is that there is an action plan, with some timetables, in the back of the strategy, on which I will ask some questions as I go on. I hope that when the Minister winds up she will be able to reassure us that there will be plenty of mechanisms in place to monitor and evaluate the progress we are making, so that we do not end up with schemes that are announced to great fanfare but actually run into the sand and do not go anywhere. We have all seen that happen.

Given my opening remarks, it is not surprising that I want to concentrate on two particular policy areas: empty homes, and the energy efficiency of homes and those in disrepair. First, the figures for empty homes have not changed much in recent years, although they have gone up and down a bit. We have possibly up to 1 million long-term empty homes across the United Kingdom. Many of them are privately owned but there are large numbers of empty homes owned by the Government and local authorities. It is probably fair to say that we have made better progress with bringing local authority and government-owned homes back into use than we have managed in the private sector.

The part of the strategy devoted to empty homes is particularly strong. Over the years, I have been involved on and off with the Empty Homes Agency, which is particularly glowing in its words about this part of the report:

“In previous government housing strategies it has been hard to see any mention of the potential of empty homes to meet housing supply. This strategy however devotes one of it’s seven chapters exclusively to the issue, and has for the first time directed specific funding at getting empty homes into use. Whatever you might think of the government’s approach ( and we think more could still be done) it is clear that at a time when less public money is being invested in housing, more is being invested in empty homes. There is no escaping the conclusion that the government thinks this is a viable and cost effective source of housing, and has put their money where their mouth is. For that they should be congratulated”.

As someone who has been in this area for a number of years, I am very pleased.

The Government are proposing a new £100 million empty homes grants programme, which will pay out towards the capital costs of getting homes into use. Although the grants cannot be used on housing association and local authority homes, as I said, the private sector is the area that we have found most difficult. As part of this, there is also a community grants scheme, whereby community groups, charities and housing co-operatives will be able to apply for funding. I know that the Government are trying to make the bureaucracy of dealing with these issues as simple as possible. We were told to expect the community grants programme before the end of the year but it has not opened yet. Can the Minister give us an update on where we are on that? In addition, there is a new grant fund of £50 million, funded separately and aimed at areas where there has been housing market renewal collapse. The story of how those things have been dealt with has not been a happy one.

There is also something called the new homes bonus, which was not originally intended for empty homes but the Government have seen the sense of including empty homes in this. Councils will be rewarded for increasing housing supply, and if new homes are brought back into use, they will get a bonus, whether they dealt with it or not. Looking at the various figures, it could be up to £10,000 per property in some areas. The Government have looked at empty dwelling management orders—something the last Government brought in—and they have looked at some of the experience and changed those a little. I do not know whether they have any other plans on that, but maybe the Minister can talk to us about it.

The other thing that the Government are doing, which is quite contentious and has been over the years, is to consult on changes to council tax exemptions and discounts to see how we might influence people with empty properties. It is a bit of a tricky one, because if you do not give them a discount at all people will not come and tell you that their properties are empty and it is rather harder to collect the figures. I am also disappointed that over the years, although we have changed it, councils have been unable to use any money that they have made out of changes to the rules. The Government are consulting on that, so I wonder whether the Minister has a timetable for that and how well it is going.

As I say, the Government are putting a lot of work into providing guidance and help to local authorities to help to take up these proposals. Will the Minister tell us what else they are thinking about? Over the years there was a scheme called “Flats over shops”, which tried in town centres to bring back empty properties over shops. I wonder whether they are looking seriously at this again. Also, what about redundant offices, and so on? That was not part of the programme. Could the Minister tell me whether the Government are considering that further?

Secondly, I want to move on to disrepair and energy efficiency in homes. I am a bit disappointed that there is not more on that area in the strategy. I recognise that sustainability and energy efficiency are being tackled in some other areas, but there is a lot of consultation on sustainability in new build, whereas a large proportion of our housing stock was built before the First World War and we have been very slow to bring it up to a decent standard. Over that time, even our new houses are still doing catch-up when we look at the standard of housing that we see in our neighbours in northern Europe and Scandinavia, particularly with energy efficiency.

Progress was made during the years of the last Labour Government, but people who want to spend money to make their homes better and more energy efficient still find it quite difficult to know where to go and what grants they can get. It is a challenge to us even now in government as to how you can help policies to be joined up and do not have too many little bits of things happening all over the place. So I hope that the coalition can do better with this.

There are very ambitious plans for the Green Deal, although it will be a serious challenge to make it work, for reasons that I have just explained. In that respect, I am pleased that the Government recognised the role of local authorities in helping to co-ordinate a joined-up approach to improvements. Over the years, when I was a Member of the House of Commons, I helped to steer a Bill through that was about energy efficiency in homes. That was at the end of the Major Government. Unfortunately, Labour let it wither on the vine a bit and when our Government came in I am afraid that they thought they wanted to get rid of it as well. I am very pleased that, as the Energy Bill was going through Parliament, they realised that there was something there that would be of use, although it has now been repealed. I believe that those measures will enable more joined-up thinking locally among all the people who will be involved in the Green Deal.

One other area that I am pleased the Government have committed to, although we will see how it works out, is that of properties that are not in very good condition—the really poor end of the private rented sector. We had big discussions about this when the Green Deal was going through, and I am very pleased that the Government have committed themselves to ensuring that some of the very worst properties that are rated F and G will not be allowed to be left out in future years. However, if we are really to help with the refurbishment and improvement, we need to look at the question of VAT. New build is zero-rated, whereas refurbishment and repair is taxed at 20 per cent, except for some defined categories where the rate is reduced to 5 per cent. But it is so complicated that many people do not know where they can get the reductions, and when they try to get them it is even more complicated—many little builders still do not understand it. I know that a response on VAT is probably not in the Minister’s winding-up notes today, but I hope that she can take the matter back to her government colleagues and make the point that this is an important issue that affects how we see the housing market develop and how we are going to deal with disrepair.

In conclusion, I think that we have made a good start, but it depends on what happens in future and whether we monitor it properly and react at the right time.

My Lords, I declare my various housing interests as set out in the register. I am grateful to the noble Lord, Lord Stoneham, for initiating this debate and would underline the powerful case that he has made that the nation is facing a daunting under-supply of the homes we need and that these acute shortages are creating a great deal of human misery.

Although I am currently locked in battle with the Government on their plans for radical reductions in housing support for poorer tenants, in the Welfare Reform Bill, I am pleased to congratulate the Government on the direction that they are taking with many of the measures set out in the new housing strategy, Laying the Foundations. I am going to argue that these sensible measures can, and should, now be taken further and faster forward.

I know that the Housing Minister, Grant Shapps, who has a special commitment to tackling homelessness, understands that new home building, with all its knock-on benefits for pulling the wider economy out of the doldrums, should be given greater priority. I believe that the Government have got that message and that most of their policies are pointing in the right direction, but they now need to be bolder.

On the planning side, I am sure that the National Planning Policy Framework can be rephrased to make it more acceptable to those fearful about inappropriate development. But broadly the NPPF takes us in a positive and sensible direction and is commendable in highlighting the need for speed and simplicity in the planning process. I also welcome engagement of local people in sorting out where new homes should go through neighbourhood plans, which should prove to be complementary and not oppositional to the council's own local plan.

Alongside the reformed community infrastructure levy and a new Growing Places Fund, with other measures in the Localism Bill, I welcome the Government's New Homes Bonus, which received the seal of approval from the noble Baroness, Lady Maddock. This will reward those local authorities that show leadership in saying “yes” to the development of additional homes despite local opposition. With housebuilding running at half the rate needed to keep pace with household formation, this nudge is badly needed to encourage councils to support the building of homes, not least for those in rural areas. To quote from Charles Moore writing in the Spectator last autumn:

“Only in Britain—actually only in England—do people believe they are doing country life a good turn by refusing to build houses for the next generation to inhabit. It is a more powerful attack on rural culture and the rural poor than was the Highland Clearances”.

But while encouragement for the development of new homes is very necessary, it is not sufficient to make serious inroads into this country's ever-growing backlog of the homes we need.

A key problem, of course, is that housing is dependent on borrowing—borrowing by first-time buyers, borrowing by housebuilders, borrowing by housing associations, borrowing by local authorities, and, indeed, borrowing by central government itself. Yet this is absolutely not the right time for borrowing. Internationally, an excess of borrowing in the housing market contributed significantly, from the sub-prime mortgages in the US to excessive over-building in Ireland, Spain and elsewhere, to the ongoing financial crisis. In the UK we are spared the blight of millions of unsold and unsaleable homes, since our housing boom, because we have had such difficulty in delivering enough homes, has mostly comprised paying more and more for existing property. However, avoiding a glut of surplus homes has come at a price. Our acute housing shortages mean high house prices and high rents—and therefore high housing benefit costs—and leave hundreds of thousands in overpriced properties and overcrowded and substandard conditions or actually homeless.

All these problems come back to the abject scarcity of decent affordable housing that is the UK’s unique national problem. How can we step up housebuilding when borrowing is now so difficult? I propose five measures. First, the Government’s new housing strategy announces a new build indemnity scheme, which has already received some plaudits—help for buyers who cannot find the huge deposits now required, provided that they are purchasing new, not second-hand, homes. This should encourage the housebuilders to develop more of the extensive land banks that some now hold. I note that the big builders are now making healthy profits—I see, for example, that the largest, Persimmon, has just reported a 50 per cent uplift in profits—but housebuilders will build only if they are quite sure they can sell at a decent profit.

The Government’s help for buyers, along with their build-now-pay-later sales of publicly owned sites and their revival of Labour’s Kickstart programme for stalled developments, now called Get Britain Building, should give builders confidence not to hold back but to get on with the job of constructing new housing. However, I recommend that help with deposits for first-time buyers be extended those to purchasing existing properties, not just new ones. Many of those who are trying to sell—often in a chain of sales that needs to be unlocked—will be buyers of new homes too.

My special interest is in seeing more high quality retirement apartments built, since those moving into such homes will usually be releasing much needed family homes, often with gardens, for the next generation. New retirement apartments do not generate the same opposition as new family housing. They take up less land and do not lead to much of an increase in traffic. Assistance with the deposit arrangements—guarantees are pretty cheap—for those buying existing family homes from older owners could help to get the market moving and address the needs of new buyers while simultaneously assisting the older homeowner to downsize to somewhere more manageable and, indeed, release equity for other purposes.

My second recommendation to get new homes built for those unable to buy or only to afford shared ownership is that a greater stimulus be given to the housing associations. They have had their levels of grant cut by nearly two-thirds, and if they replace the missing grant with additional loans then they have to charge much higher rents, which can force working tenants on to housing benefit with consequent work disincentives, and they will run out of borrowing capacity in approximately two years and their programmes, already too modest, will dry up. An investment in grants to housing associations can be multiplied by their extra borrowing, giving the Government a hearty bang for their buck. The National Housing Federation reckons that another £l billion could mean housing associations raising £8 billion, delivering 66,000 more homes while creating 400,000 jobs, saving hundreds of millions in benefits and boosting tax revenue. Go for it.

Thirdly, I recommend that local authorities be allowed to borrow more against their assets, in the spirit of greater localism. The current reforms to the housing revenue account towards a self-financing regime for councils are very welcome but need to go further. Within the confines of prudential borrowing rules, more housing investment could be unleashed. Many councils have small parcels of land they are keen to develop; for example, for attractive bungalows that entice underoccupying older people out of larger council homes. In other cases, local authorities can work imaginatively in providing land as well as finance in partnership with housing associations, alongside using their hugely important Section 106 planning powers to secure private sector deals for affordable homes.

Fourthly, during the passage of the Localism Bill, the Government, while rejecting my amendment to allow councils to retain 100 per cent of right-to-buy sales proceeds, agreed to a concession that I proposed to allow 100 per cent of the proceeds of sales of vacant council homes to be recycled to new building or regeneration. I recommend that advantage is taken of this important change in the Treasury rules. In my view, sales of vacant properties represent a preferable way of creating a mixed community of owners and tenants on council estates, to the alternative of the Government’s plans for enhancing the old right to buy. Selling selected vacant properties means no discounts, which are windfall gifts to those already satisfactorily housed, so it allows larger sums to be reused for new housing and, indeed, makes it possible to achieve a one-for-one replacement of any homes sold, which seems unlikely where large discounts are doled out. Such sales introduce new home buyers on to council or housing association estates, often with young children who then go to the local school, and achieve a mix of incomes that can avoid these estates being stigmatised as only for the poorest.

Fifthly, I ask the Government to accelerate their consideration of cost-neutral amendments to the arrangements for so-called real estate investment trusts. So far these REITs have failed to materialise in the residential property sector, yet they could draw in substantial investment for housing from pension and other funds and other financial institutions, as in other countries.

These are difficult times for an area of the economy that utterly depends on borrowing, at a time when borrowing is very much out of fashion. Yet I suggest that there are measures that build on the Government’s new housing strategy and could get housebuilding going again—if not yet to make an impact on the horrendous backlog, at least to prevent the gap between supply and demand widening still further. I look forward to hearing the reactions of the Minister, who has herself proved to be a sympathetic and helpful Housing Minister in this House.

My Lords, I warmly congratulate my noble friend Lord Stoneham, not only on securing this important debate but on his powerful and overarching introduction.

I am a little sad that one of the contributions that we would have had during the past 10 years of debate would have been from the noble Lord, Lord Graham of Edmonton, on the small but important sector of park homes; but time passes. A lot of people live in them and a lot are still purchasing them; if you drive down any motorway, you will see a number of them on lorries. It is an expanding sector that, in spite of the lack of the noble Lord reminding us of it and asking questions about it today, the Government need to keep their eye on.

Before I pass to the topic that I want to address, I say to the noble Baroness, Lady Gardner of Parkes, that we will have the opportunity to debate the issue of squatting in the forthcoming Clause 130 of the legal aid Bill. I am sure that she will be aware of the briefing that went around from the Law Association saying that the law as it stands is quite adequate, and the issue is actually its enforcement. Before we leap to yet more legislation, which Governments often see as a panacea for everything, we should make proper use of the law that there is. As I say, we will have a chance to debate that when we get to that clause.

Today I want to talk about the issue of self-build homes. I am glad to say that when the Government came in, one of the first meetings that Grant Shapps had as Housing Minister was with the National Self Build Association, which has been going since about 2009, although self-build as a form of housing has obviously been going for much longer than that. Grant Shapps was very positive and keen to help the association to promote its growth. They met again in January 2011, when he announced that he was setting up a government self-build industry working group with the association to look at what could be done to boost the level of self-build in the UK. I am glad that the Government recognise the importance of the sector.

It is very good that the Government have the National Self Build Association to work with. This will not be a plea for funding but, to date, the association has not received even the smallest pump-priming grant. Its members are all volunteers. An extremely small grant to help with such things as the portal that it is creating for self-builders—I am talking about just a few thousand pounds—would be incredibly helpful.

I want to talk about why we should think about this sector in particular. What does it bring to the communities where self-build happens? To answer that, it is helpful to look at some of the examples that have already happened. I got involved in this sector when I was still a councillor in Somerset and I learnt a lot from the self-builders who came forward for planning permission in a small village called South Petherton. It had a site that was very difficult to develop. It was on a hillside, not that accessible and surrounded by other housing. The private sector was not interested in developing it but the self-builders were interested because it was a very affordable plot. They developed it using a Walter Segal method, which adapts itself very well to steep and difficult-to-develop hillsides. Since then I have seen many other West Country examples. Ashley Vale in Bristol is very much an example of an inner-city scheme, while there is a small-town scheme in Stroud. We are not talking about a small-scale thing. Self-build can lead to 20,000 homes a year, so it is a major part of the housing sector.

I want to concentrate on community self-help schemes, rather than the sort of thing your Lordships may occasionally see on “Grand Designs”—a quite wealthy person building a state-of-the-art palace. That is easy to do if you have all that money. However, I am interested in the community schemes for people with very limited funds and, very often, for young people who have some skills but not all those they need. The sort of model that is productive is one in which a group comes together—perhaps 20 different individuals or households with skills that vary across plumbers, carpenters, electricians and bricklayers and people who have no skills to date but develop them. Such schemes take an awful lot of time in the planning—perhaps as long as five or eight years—because they have to find a site, which is the hardest bit and something that I shall come back to in a minute. They also have to go through planning permission. It is my hope that the Localism Act will enable and promote this very strong form of community self-help in housing. The noble Lord, Lord Whitty, said that local people often put up objections to any housing being built. I certainly agree with him on that, but if it is the sons and daughters of the community who will build their own homes, it has a much more than even fighting chance of getting community support in the first place.

Self-building is also a very economical way of gaining your own home. The plot of land will be the most expensive aspect, but after that it just depends on how much time the self-builders put in and whether they have to buy in any help. The costs can be driven down. Many people on the site I visited do their self-building in the evenings between April and October and at weekends all the year round. Working in that way, they have managed to complete their homes in 18 months to two years.

You certainly have to be tenacious to be a self-builder and not get downhearted. When one family or individual drops out of a scheme for one reason or another, it obviously puts an extra strain on it. That is something that has to be carefully built into the agreement and is part of what takes up the fairly long lead-in time.

Such homes are often much better designed, too, because people design them themselves so they suit people’s very distinctive needs. They are almost always much greener; I have not seen a case where they are not. Their carbon footprint is one of their joys. People often turn to self-build for environmental and ecological reasons as well as economic ones. They make every effort to ensure that their home has a very small carbon footprint.

One of the other organisations with which I have been involved over the years is the Ecos Trust, formerly Ecos Homes, again in Somerset. The wife of the noble Lord, Lord Cameron of Dillington, has also played a leading role with it. It has created a number of demonstration models to show all the different environmental benefits that you can get—not only energy efficiency in the building of the homes but all the different materials that can be used. It runs workshops so that people can learn different methods of working and see different models that have been developed.

Self-build is a very exciting sector with many possibilities. One of the issues that has come across to me very strongly from having visited the same sort of thing in France—this addresses rural housing—is the ease with which local French mayors, especially in rural areas, consider this a viable form of housing. They will purchase for their community a small or middle-sized field on the edge of their village and put in the infrastructure so that it comes with gas, electricity, water and sewerage provision. The plots are then sold to individuals. I am sure a number of your Lordships will have seen the advertisement “lotissement”, showing that plots are for sale. For the young of that village, and those from elsewhere should they want to move to that village, it is a very affordable form of housing.

This is something that I hope the Housing Minister will pursue with all vigour and some imagination. Two things would make all the difference. One is definitely land availability. My suggestion to the Minister today is that when large sites are being considered for housing, perhaps for 100 houses, some of that—perhaps 20 per cent—could be set aside for self-build. It is something on which there should at least be much more consultation. Where there is a great demand for it and a community that will take it up, it would be a very affordable way for the younger generation, in particular, to develop housing.

There are also other sites that we do not often consider, such as ex-Army sites. They often have a lot of infrastructure. You can imagine a whole self-build eco-town on an ex-Army site, which would be quite a “swords into ploughshares” experience and one that would be very exciting.

As well as land availability, the other issue is the value of self-build in upskilling people. It allows people to work on NVQs and exchange skills while they are self-building. Their local college often gets involved, which is an extremely helpful development, too. It not only upskills the younger generation but provides them with an affordable home. I hope that some positive messages are about to come from the Government on further help for this sector.

My Lords, I join other noble Lords in thanking my noble friend Lord Stoneham for initiating this important debate. I declare my interests as a member of Newcastle City Council and a vice-president of the Local Government Association.

It is now widely recognised and understood that the housing bubble has been at the heart of Britain’s economic crisis. We know that we must not return to the days of continuously rising house prices. That means that we have to build more homes for people to live in, address the issue of empty homes where too many of them exist and ensure that land with existing planning permissions actually gets built on. Therefore, I welcome the Government’s housing strategy, Laying the Foundations. It delivers a mortgage indemnity scheme to help around 100,000 buyers who are unable to enter the market to do so with 5 per cent deposits on new homes. That will reduce the pressure on the rented sector where we have rising demand and, in several parts of the country, rising rent levels. That policy will help. I welcome the new £400 million budget for the Get Britain Building strategy to help get construction going where it currently cannot do so because of a lack of development finance. That will help. I also welcome plans to reward councils that bring empty homes back into use with the £150 million which is available to councils and housing associations. That, too, will help.

The problem is that buyers are not buying and lenders are not lending, so builders are not building. There were just 115,000 new build completions in 2010-11, when, as we have heard, the number of households is rising at twice that level and is forecast to do so for the next 20 years. These things are difficult to predict, but even if this projection is too high it is still evident that the rate of new building is much too slow. Therefore, we need to break through the barriers which stand in the way of building, particularly the building of affordable homes both for rent and for first-time buyers.

Consider the following: the value of British homes is some £4.3 trillion. It has risen 6 per cent in the past five years but it has gone up 20 per cent in London and the south-east. However, owner-occupation is in decline with a 250 per cent increase in renting in the past 10 years. The south-east now accounts for 26 per cent of housing stock but 36 per cent of value. One of the Government’s stated aims, which I warmly welcome, is their intention to rebalance the UK economy away from overdependence on the south-east and on financial services. However, a key element of this will be to increase housebuilding rates in the north and the Midlands.

However, we cannot escape the inevitable conclusion that constrained public subsidy is likely to be not just a short-term blip but something that is here to stay for the foreseeable future. We still desperately need to generate new affordable homes. However, if we probe a bit deeper, there are examples out there that provide a model of what the future may look like. Increasingly, those within the sector are looking to enter into longer-term partnerships and use public land in an innovative manner. There are examples of pioneering joint ventures between private sector developers, local authorities and affordable housing providers such as Home Group in the north-east of England. Working with Galliford Try and Gateshead Council, Home Group’s Evolution Gateshead project is, at £250 million, one of the largest regeneration projects outside London. Home Group, with Galliford Try, is providing equity and debt, Gateshead is providing public land, and with all sides sharing the risks and the rewards it will allow a whole package of 19 sites to be developed and the creation of around 2,400 much needed new homes.

There is a real danger that long-term regeneration is slipping down the priority list in favour of asset disposals to maintain an authority’s operational budget. We can understand the pressure that local authorities find themselves under yet, through these joint venture models, local authorities can have the vision to deliver long-term regeneration without having to sell off the family silver.

Then there is stock rationalisation. With constrained levels of affordable housing finance, it is not merely a case of achieving the maximum level of development possible from this round of funding. More fundamentally, it is about how housing providers adapt to a future with little or no grant. In looking at this subject over the past few days, I came across a statistic from the Savills affordable housing division. Its research shows that if you were able to alter the stock profile across England by just 5 per cent, you would be able to build an additional 50,000 units on the back of the savings. That involves a transfer of just 125,000 units out of a total stock of more than 2.2 million. That is exactly what innovative housing providers such as Home Group are now actively engaged with. Over a six-year period it plans to dispose of almost 6,000 units and exit in favour of other providers in 71 local authorities. In doing so, it believes that it can concentrate activity in more focused geographical areas, driving up service standards in those areas and generating £150 million of receipts to reinvest in the creation of additional affordable homes. Already, Home Group has disposed of nearly 2,000 units to other housing associations, which may access new ways of financing from new providers. It has reinvested the proceeds to improve the service to its current and potential customers.

Housebuilding makes a crucial contribution to our economy and is particularly crucial for jobs since it accounts for more than 3 per cent of GDP. For every new home built, two jobs are created for one year. Yet over the past four years the workforce in construction has reduced from 2.35 million to 2.1 million today. That is a 10 per cent decline, which is four times higher than the overall workforce reduction.

I have no doubt that housing growth is a prerequisite of economic growth. Housing growth requires barriers to be dismantled, which is what the Government are doing. They have allocated £500 million to the Growing Places Fund and are freeing up public sector land on the “build now, pay later” principle for builders. There is also the build your own home scheme and, as I mentioned earlier, the Get Britain Building investment fund. Crucially, local councils will have greater freedoms in their management of social housing and will play a key role in bringing empty homes back into occupancy, with the £150 million fund to turn empty homes into affordable homes to which I referred.

I wish to mention two overriding principles in the way that I think about housing. First, we should not see a house or a flat as a unit but as a home. In all our thinking about housing—for example, around issues to do with spare rooms—we should keep to an overall principle that if someone is to move from a property which may be perceived by others to be too big, the principle of volunteering to do so should be paramount. Any compulsion should be eliminated from our thinking. I believe that people think of their house or flat as their home. That home will have many memories. When I was leader of Newcastle City Council, one of the things that we tried to do was to get back to building bungalows. If you build bungalows with a little bit of space at the front and back and perhaps a small garden, but on both sides, people are more willing to move from a three-bedroom council dwelling to something that they perceive to be good for them than to be downsized into a block of flats which they do not really want to live in. Bungalow building has been on the back burner for around two decades, but they are now being built and opened in my city and elsewhere. That is extremely helpful.

Homelessness is the second overriding issue that I want briefly to talk about. It has started to increase again. Last year, in 2010-11, just over 100,000 people approached their local authority as homeless. The number of households accepted as being owed the main homelessness duty increased by one-sixth. In addition, there has been an 8 per cent growth in rough sleeping in London during the past year. At the same time, overcrowding has also been rising—reversing a previous, fairly long-term, decline.

Finally, we have heard about housing policy being a challenge. Indeed it is. One can adopt the view of the noble Lord, Lord Whitty, which I interpreted as saying that the glass is half empty. I interpreted the noble Lord, Lord Best, as saying that the glass is half full. I have to say that I subscribe to the latter view because the Government have addressed an issue that for the past four years had not been properly addressed as a consequence of the credit crunch. It has been a major source of concern for many of us since the credit crunch began as we have seen housing waiting lists rise, young people unable to buy and not enough housing units being built. Laying the Foundations has established a clear way forward and a clear set of public investment priorities. I hope and am confident that the Government will keep those priorities under review and be prepared to adjust them if necessary, but we now have a set of investment policies that can be followed to solve some of the underlying housing problems that our country faces.

My Lords, I join all other Members of your Lordships' House who have congratulated the noble Lord, Lord Stoneham, on initiating this debate and on introducing it so fully and admirably. This is the second debate on housing—one was initiated by the noble Baroness, Lady Hollis, some months ago—which is an indication of the importance of this subject, so it is good that the House has had an opportunity to debate it.

A century ago, your Lordships' House was described as “Mr Balfour’s poodle”. I do not know whether Mr Pickles has a poodle, but in the shape of the Housing Minister, Mr Grant Shapps, he certainly has a Jack Russell who is very lively and busy. Mr Shapps announced, shortly after being appointed, that it was,

“easy for a housing minister to catch your eye with a headline, but much harder to deliver more homes”.

He spoke whereof he knew, because there have been 127 announcements on housing since Mr Shapp’s appointment—an average of about six a month. However, in the new-start figures for 2010-11, there was a reduction of 7 per cent. All this has of course been accompanied by, as we heard from my noble friend Lord Whitty, a 60 per cent cut in the provision for affordable homes. There will be more announcements to come, but most of the action plan to which the noble Baroness, Lady Maddock, referred consists of announcements, consultations and reports, rather than any actual building to take place.

The document we are debating is interesting but there are other documents that I also commend to the House, particularly to the noble Baroness the Minister— notably a series from the IPPR dealing with a whole range of housing issues. One of them looks particularly at the demand question. It calculates that the need for new homes will be in the region of 206,000 to 280,000 per annum over the next 15 years. The report also points out that in the past two decades the average has been only 160,000. It emphasises that social housing is already under enormous pressure and that waiting lists now run at between 6 per cent and 12 per cent across housing authorities. The difficulty is compounded by a halving of the capital budget, with the obvious consequences of supply being squeezed. The target of building 150,000 affordable new homes a year, assuming it was going to be met, will simply not bridge the gap—especially in the social rented sector.

The report we are debating has some interesting ideas, but there are some gaps. The noble Baroness, Lady Gardner, referred to one—what are we actually building? What standards are we building to? There was much to be said for Parker Morris standards in the social sector but also more generally. We do not see those standards being applied now. Members of your Lordships' House will recall that last year surveys demonstrated that the size of new-build properties was smaller in this country than occurs anywhere else in Europe. That is also a matter for concern.

The noble Lord, Lord Stoneham, referred to how the needs of the elderly should be reflected. There is a passing mention of that issue in the report, but it needs amplifying and needs to look beyond just the role of the Department for Communities and Local Government. Extra care housing is an initiative that has begun to prove its worth in a number of authorities. It needs to bring together the interests of adult services and the health service in looking at the kind of provision that will allow people to stay in the same place but with a range of different facilities available to them. That is worth developing.

Another singular omission in the report that has an indirect impact on the supply side is the question of student housing. In many places—the noble Lord, Lord Shipley, and I are well aware that this certainly applies to Newcastle, but it will also apply elsewhere—student housing tends to crowd out family accommodation. Just as we would seek to encourage and facilitate elderly people to vacate houses that are too big for them and move to smaller accommodation, it would be desirable to find a way of housing students in accommodation that would otherwise become available to families.

Another interesting IPPR report that I strongly commend to the Minister, who may not have come across it, deals with the extensive criticism of the development industry. The report states:

“The long-term record of UK housebuilders’ levels of output tells a story of consistent underdelivery … The value of land has risen faster than that of almost any other commodity over recent decades, so the development industry has come to prioritise trading land over building homes”.

The industry has,

“bought up large land banks at high prices during the boom”,

but is not sufficiently building. The report continues, stating that the,

“new Housing Strategy does not demand the reform that is needed. Instead, it offers the major housebuilders public land, money and guarantees without articulating a serious quid pro quo”.

These matters are certainly worth exploring, although I would not necessarily jump to any conclusions.

We also have to bear in mind the actions that the Government have taken in addition to their thoughts about what should happen in future. Their first announcement was effectively to scrap the regional spatial strategies, against which there had been a substantial outcry—particularly in the south-east counties, which perhaps had no wish to accommodate people moving out from overdeveloped London. The result of that was that 220,000 planned homes will no longer be built and, far from delighting the development industry, the Government were immediately taken to court by a number of developers who found that their plans and agreements with local authorities were not able to go ahead.

However, there are many other matters. As we have heard from the noble Lord, Lord Best, cuts have been made in grants to registered social landlords. I happened to be in conversation with the chair of a very active housing association that is bringing together three or four associations into one. He was saying that its programme has been substantially reduced as a result of the grant cut. The association was simply not going to be able to build anything like the number of houses that it had wanted and planned to build.

The right to buy has been reintroduced for reasons that escape me. The substantial discount has been described in this debate as a free gift to people who are already adequately housed and makes no economic sense. Your Lordships will recall that during the passage of the Localism Bill, an amendment supported by this side of the House, moved by the noble Lord, Lord Best, to allow 100 per cent of right-to-buy receipts to be reinvested in housing was rejected by the Government and their supporters in this Chamber. Those are serious matters.

There is also the impact of housing benefit and other changes which are likely to generate increased housing demand. In response, we have the new homes bonus, which the noble Lord, Lord Best, implicitly described as an example of nudge theory. I have the greatest respect and admiration for the noble Lord, but on the matter of the new homes bonus I profoundly disagree with him. I am sure that that will not cause him to lose any sleep, but there are serious aspects to this. The new homes bonus involves some government money—money taken from the departmental budget for some years—and other funding which does not come out of the general pot but is a reallocation of money within local government. It is deducted from the formula grant. It is doubtful whether the scheme will achieve its objectives. The Select Committee in the House of Commons stated that it was,

“a bold experiment; but not one which, on the evidence … we can have any confidence will be successful”—

rather short of a warm endorsement of the policy.

In addition to the question about whether the nudge will work—one must be sceptical about that—there is a huge distribution issue. The process will divert resources from the north to the south. It is interesting that the speakers in this debate have been roughly equally divided between those of us who come from the north and those of us who live in the south. The north-east, north-west and Yorkshire and Humberside will lose £104 million, while the south-east, the south-west and the east of England will gain £280 million. Tandridge in Surrey gains £20 a head; Knowsley in Merseyside loses £25 a head, Newcastle loses £5 million and Gateshead loses £4 million. That is money effectively deducted from the grant that those authorities would have received. All that to achieve the princely total of 14,000 new homes.

The scepticism that I refer to is shared not merely by Labour politicians or even the Select Committee but by the national Home Builders Federation. We have this purported remedy at a time when waiting lists are soaring and rents spiralling in the private and public sector. Shelter reports that rents are now unaffordable for working families—working families—in 55 per cent of local authorities.

The Government’s record on other aspects has also been lamentable. The decent homes programme was savagely cut. In my view, the Labour Government did not do enough to secure new building, but they did an enormous amount to improve the condition of existing stock. Those programmes have effectively been uprooted. I have wearied the House in the past with references to Newcastle, so I shall confine my observations to Gateshead today, just across the River Tyne from us. Gateshead has had a significant cut—in fact, it was cut off completely. It lost several million pounds from the decent homes programme and had a 15-year programme for housing renewal halted halfway through, with significant consequences for the local economy and housing needs of that area.

Another policy that the Government have introduced, on which we will see the extent to which it proves deleterious, is flexible tenancies—something which the Conservatives, at least, had pledged in their manifesto not to introduce. They said that they would not interfere with tenure.

The condition of the private rented sector is a matter of concern. There are significant problems in dealing with repair, some of which were touched on in passing in the debate on housing matters under the legal aid Bill last night. Instead of strengthening councils’ powers in relation to empty dwelling managing orders, the Government have made it more difficult. Properties have to be vacant for a longer period and to constitute a nuisance—hardly a term that is readily interpreted—before any action can be taken. We need stronger powers to promote licensing schemes and to intervene to take over the management of poorly managed properties. They are not the majority, but they are present in significant numbers, not just in core urban areas but throughout the country. There is very little in the document about the condition of the private rented sector.

Some interesting observations have been made today about how new forms of financing and new forms of building—self-build and community build—may take place. They should certainly be developed, but we continue to have a significant imbalance between the sectors and geographically. Incidentally, while we are thinking about geography, the growing places fund, which has been referred to, underlines the inequity of the present system. The growing places programme is supposed to provide infrastructure for new housing development and the like. It was striking that Northumberland, Durham and Tyne & Wear received exactly the same funding under that scheme as the Oxford City region and Berkshire—not areas, one might have thought, of pressing social housing need and with a significantly smaller population than that major part of the north-east. The issue of equity is completely omitted from the document.

The foundations may have been laid, but I must conclude that they are fairly shaky. I hope that the Government will listen to the evidence, consider the issues of fairness and respond more constructively to the real needs of the many people who are in poor housing, who are desperate to move into better accommodation and who want communities that are mixed—as several noble Lords have commented—but in which the quality of housing, especially new housing, is better than has been provided, certainly in the private sector, for many years. We must move away from a fixation with owner occupation and look to a multiplicity of forms of tenure which will suit people at different stages in their lives.

I again congratulate the noble Lord on introducing the debate. I have no doubt that we shall be returning to the issues in the months and years ahead.

My Lords, I thank the noble Lord, Lord Stoneham, for initiating this debate and for getting time for it. I also thank those who have contributed to it, because, as usual in debates such as this, within the limited number of speakers, it has brought out those who have a true interest in and experience of housing and housing strategy. I am grateful for the support we have received, by and large—the response of the opposition spokesman was a bit churlish, but there were touches here and there where he might just agree with us. On the whole, the strategy has been accepted.

The noble Lord, Lord Stoneham, has enormous experience of housing associations and the area of housing. We do not underestimate the contribution that such organisations make to housing delivery, or the importance of the affordable housing sector. I immediately agree that housing must be on the top of the Government's agenda. The provision of the strategy demonstrates that it is. I liked the description of my honourable friend Grant Shapps as being akin to a Jack Russell terrier; I think that he will feel complimented by that. He is certainly able to snap away and get things done, and he has inspired and introduced the strategy which has now been launched by the Deputy Prime Minister and my right honourable friend the Secretary of State.

We have covered a lot of ground in this debate and I shall try to go through at least some of the issues that have been raised. The strategy is fully funded through a combination of existing budgets and the Autumn Statement, and it will provide more than £1 billion to help with all the initiatives that have been put forward.

We have debated today, as we have in the past, the need for housing of all types in this country. We know that there is significant underbuild and that we need more housing. I think that the figures quoted have been correct: in 2010, 103,000 new buildings were completed, and the expectation and requirement is that more than 200,000 a year should be built. The housing market and housing construction industry also create jobs, so we are well aware that, where the impetus for housebuilding is lacking, we lose the talents and craftsmanship that the housing industry produces and the economy is not stimulated as it should be. It is vital that we stimulate housing, not only for economic growth but for the social reasons which have been mentioned today. People of all ages need good housing, and it is our desire to ensure that as much as possible is produced.

Every million pounds-worth of new housing supports 12 additional jobs. That is quite a figure and an important one. The housing strategy sets out immediate action to get the housing market moving. The expectation with the action plan is that things will be moved along. I refer here not just to consultation, although if there is no consultation on some of the issues involved, people will say that they have not been consulted and that they do not know what is going to happen. However, consultation does not have to go on for months; it can be relatively swift for the right people, and decisions can then be taken very quickly.

The noble Lord, Lord Stoneham, raised a number of really important points which others picked up. As he said, the Government are laying the foundation for the renewal of housing structures in this country. It is fair to say—I think that the noble Lord, Lord Whitty, made this point—that it is not starting from a standpoint of great heritage, but there are reasons for that: the economy has not been very helpful for a number of years. The previous Government had laid some of the foundation but they could not resolve all the housing issues due to the economy and the ensuing difficulties. However, with regard to the economy and the development and financing of housing, all sorts of aspects can be picked up, many of which are in the strategy. For example, the new homes bonus—I am sorry that the noble Lord put his foot on that—encourages further development. With every home created, a sum of money is capitalised and made available from council tax to ensure that further building is carried out. It is the stimulation of other building that is important. Other areas that stimulate building are very well laid out in the housing strategy.

I was quite surprised at how little attention was given to the mortgage aspect and the Government’s guarantee to underwrite 95 per cent of mortgages for first-time buyers.

A point was made by the noble Baroness, Lady Miller, about self-build and people being encouraged to build. The strategy refers to this not as self-build but as community build, and policies are laid out for helping people to build homes themselves or to set up with other people in order to build. Available public land—which, again, was not touched on very much—is now being identified across government. It will be made available for community housing or self-build housing, and it will also be available for development on a “build now, pay later” basis, which means that housing development will become possible with payment for the land being made subsequently. All this eases the possibility of making housing available to as many people as possible.

The right to buy, which the noble Lord opposite rather sniffed at, went completely out of favour under the previous Government because the discount was reduced so substantially that it did not make it worth while. It is now proposed to increase the discount, and discussions are currently taking place about a percentage of the amount taken from the deposits being available for new homes. The expectation is that for every house sold, a new house or property will be built or made available. That is one way of dealing with the issue.

We are also helping by providing £420 million for the Get Britain Building investment fund because we know that not enough new homes are being built. We estimate that approximately 133,000 housing units with planning permission are available to be built. If we can get the building investment going, we can ensure that those properties are built. We also know that under Section 106 there are already indications of where housing can be built—affordable as well as private housing. Again, this is blocked under current conditions and we need to get it released.

I need to change what I said about the new build indemnity scheme, otherwise everyone will get the facts wrong, as I did. The Government are not underwriting 95 per cent of mortgages for first-time buyers; they are offering low deposit mortgages of up to 95 per cent loan-to-value for new build. I apologise that I got that entirely wrong.

The noble Lord, Lord Stoneham, raised the question of levering in finance for housing associations and bonds. We know that between 2008 and 2010 £2.8 billion-worth of public bonds were issued by social housing providers. Also, the new affordable homes programme is predicated on providers levering in more investment from the private finance markets. The affordable rent programme enables providers to borrow more against the higher income streams.

The noble Baroness, Lady Gardner, returned to a few of the aspects that she raised a couple of days ago. She referred, in particular, to commonhold and rent to buy. Commonhold has always been very difficult, as I think we all realise. Indeed, when the noble Lord, Lord Whitty, took the relevant legislation through the House, it was recognised that there were going to be difficulties with it. I think that the noble Baroness is correct in saying that there had to be a 100 per cent buy-in, particularly in blocks of flats, and that that was almost impossible to achieve.

The Ministry of Justice, which is responsible for the commonhold policies now, does not intend to do anything more about this at the moment, but it is recognised that it is a possible way for people to get their own homes without the problems of management and freehold.

The rent-to-buy situation, raised by the noble Baroness, was a programme funded by the previous Administration. The funding for affordable housing is available under the affordable rent programme. That funding would support innovative programmes similar to the rent-to-buy programme—that is a form of rent programme. We are aware that similar approaches have been taken by registered social landlords. The criminalisation of squatting, which she raised, is also being consulted on at the moment by the Ministry of Justice.

Quite a lot of speakers referred to empty homes. I think we all agree that empty homes are not only undesirable but are a complete waste of resources. We have quite a detailed policy within the strategy for dealing with empty homes and there is a substantial sum of money to support bringing such homes back into use. The £100 million in the empty homes fund has been pursued in the housing strategy. We are also looking at the council tax discount and whether that should be stopped for empty homes. That is being consulted on at the moment, along with the flexibility for councils to do that and to ensure that councils take up the opportunity of dealing with empty homes. Of course, the new homes bonus will also be available for them.

The noble Baroness, Lady Miller, mentioned park homes. We are very aware of the problems with park homes. Some are very well managed but some are not. We are committed to providing a better deal for park home residents by improving their rights. That is being consulted on at the moment. My honourable friend Grant Shapps is very concerned about these issues and is looking to see what can be done to enforce the rights of owners to, for example, challenge unreasonable service charges more easily.

I think I touched on self-build, which is custom building in the housing strategy. We think that is important and the availability of land is coming forward.

The noble Lord, Lord Shipley, supported the mortgage scheme and drew attention to the release of public land. He referred to the Home Group, which is a very good innovative scheme. The more that we can bring the private or voluntary sector into the provision of housing the better.

There was also concern about older people and a vague suggestion that they might be forced out of their houses, if they are overhoused, and be downsized into smaller properties. There is no intention of that. We have never said that anyone will be forced to do anything. If they voluntarily want to downsize, they will be supported to do so. I agree entirely with the noble Lord, Lord Shipley, that it would be good to have housing, such as bungalows, available but that needs land and development. I do not think anyone believes that people should be forced into leaving their homes at any time if they do not want to.

This is a very wide-ranging strategy. The Government are determined to ensure that it is started and seen through. On all the policies that are put forward there is a financial commitment. There is an expectation of innovative investment to help it through. It is a very determined start and I think this is one of the first opportunities that we have had to see a comprehensive view of what is needed in housing in this country. It will boost the provision of housing, it will boost the housing market and it will try to provide housing for all those who need it, including the numbers on waiting lists, the homeless and everyone else who needs a decent home to live in. I thank the noble Lord, Lord Stoneham, and all noble Lords who have taken part.

My Lords, I thank noble Lords for this debate. It has been very valuable in raising this issue and giving it a higher profile. I would like to say a few words in response to the individual speakers. I thank the noble Baroness, Lady Gardner, for emphasising the importance of rent to buy and I shall certainly look at her comments on commonhold leases.

The noble Lord, Lord Whitty, was very brave to admit the inheritance which the Government have received as being far from perfect. I thought that his argument that we need a holistic approach to resolving the crisis was important. He raised the dangers of hierarchy in housing and the need for new ideas to overcome the current divisions that exist between private ownership, rented and social housing.

I am grateful to my noble friend Lady Maddock. I think her emphasis on the importance of the policy on empty homes and on energy efficiency are two key issues going forward in the housing sector and her emphasis on the need to address energy efficiency in the existing housing stock. I accept that her proposals on VAT will need longer examination.

My colleague, the noble Lord, Lord Best, and I have a strong interest in retirement housing. He reminded us that the key issue in our sector is that of borrowing. I thought that his five-point plan to get the housing sector moving was very constructive and useful. I thank him for his remarks.

My noble friend Lady Miller emphasised the self-build sector and the vigour that can be applied by local people particularly in rural areas to such projects. I was particularly amused and convinced by her commitment to turning arms into ploughshares.

My noble friend Lord Shipley gave a northern dimension to the debate, emphasising the need to contribute to the economy and reaffirming our commitment to challenge the situation of the homeless.

The noble Lord, Lord Beecham, raised the significant issue of equity between north and south and the importance of fairness. I thought he was just a little negative in terms of coming forward with how we might fund what he would like to achieve and what we would all like to achieve. I appreciated his commitment to multiplicity of tenure.

I thank the noble Baroness, Lady Hanham, for her very detailed reply and commitment to pursuing the development of the foundation strategy. Housing should be a focus for the coalition. It is important to job recovery and meets a very important social need. As the noble Lord, Lord Best, reminded us, the key is the issue of borrowing and I hope that the ministerial team will take up the challenge of finding and fighting for new vehicles for funding which will enable us to build more affordable housing in this country.

Finally, I hope that the Jack Russell of a housing Minister and the coalition will continue to aspire to the ambition and example of that old bulldog, Harold Macmillan.

Motion agreed.


Motion to Take Note

Moved by

That this House takes note of the case for developing the growth of the United Kingdom’s major cities.

My Lords, it is a great privilege for me to lead on this debate as a former leader of a major city and as someone who has spent all his political career in that major city. Cities, as we know, deliver growth and are places that will drive the future economic performance and productivity of the UK. We must remember that four in five people in the UK live in an urban area and that 62 per cent of jobs are located in them. People are drawn to cities for their cultural vibrancy and the economic opportunities that they offer. Cities drive innovation and have a brand and a status that attract investment to their local and wider areas. For businesses to compete nationally and globally, they need the assets provided by cities: intellectual capital, private sector agglomeration, connectivity and investment in public services. Let us remember that strong and prosperous cities in their regions contribute to their rural surroundings, making them equally prosperous.

The great cities of the UK have seen a renaissance over the past decade or so—particularly the great northern cities, which previously seemed to be in a cycle of decline, with high unemployment, population loss, social deprivation, a lack of investment, confidence and civic pride and, of course, with high levels of crime. My own city of Liverpool is one of the great cities of the world; indeed, it was once regarded as the second city of the then British Empire. The 1970s and 1980s saw a huge decline in the fortune of that city, with massive job losses. Almost every week, a company closed down: Tate & Lyle, Dunlop, Triumph motors—the list went on. It is hard to believe this, but in parts of the city unemployment was running at 28 per cent. This lack of jobs impacted on the social fabric of the city and a militant council came to power. The council regarded the Government and the private sector as the enemy. Liverpudlians felt as though the stuffing had been knocked out of them and that no one cared about them, other than for them to be the butt end of jokes.

Then Liverpool and these other great cities picked themselves up and are now becoming the engines of growth not just for their subregion but for the UK as a whole. Indeed, eight of England's core cities—Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield—and their subregions alone produce 27 per cent of England's wealth. These eight core cities contain 25 per cent of our entire population, and the cities themselves have a higher than average share of employment and growth, highlighting their key economic role. They have a broad sectoral employment base and are home to large, graduate-hungry business and professional services sectors.

How has this come about? How have they turned themselves around? First, their reinvention has been based on sound political leadership and the realisation that councils do not actually create jobs but do create the confidence and conditions for businesses to prosper and to create that wealth, thereby creating employment. They also realised that all stakeholders, including government, have an important part to play. By working together to understand the things that will turn their cities around, they have literally had the single-minded determination to pursue those goals.

However, what of the future? How can cities continue to grow in economic importance and play a bigger part in the economic well-being of the whole country? Many of these cities are hugely dependent on the public sector. They need to move on from being so heavily reliant solely on public sector jobs; they need to develop their business and manufacturing capacity and to ensure that a skilled workforce is available. The companies, businesses and firms that are success stories, both big and small, need to be nurtured and developed further.

After the so-called Toxteth riots in Liverpool in 1981 the then Prime Minister, Margaret Thatcher, dispatched a certain Michael Heseltine to Liverpool and he became the Minister for Merseyside. I am sure his perception of the city and its people changed. He realised the potential and he not only became a champion for Liverpool, which had been written off by many, but by working with stakeholders formulated and introduced the policies that started to turn the city around. Interestingly, the now noble Lord, Lord Heseltine, by working with Sir Terry Leahy—a Liverpool lad done well and a former chief executive of Tesco—and involving local stakeholders, has produced a new report, or blueprint, on Liverpool and its subregion, and how it can further develop.

We need that approach of an individual plan for each of our city regions so that we can build on their strengths, think imaginatively, do what needs to be done and then, as I said, have the determination both at local and government level to carry it through. The same reforming zeal that has radically changed our public services should be unleashed to be pro-business, aspirational and transformational in our cities. Successive Governments have told cities how they can develop and what they should do, and if they do not do it the resources will not be released: a universal top-down, one-size-fits-all policy. Often, those programmes have no recognition of the individual city’s circumstances and needs. The altar of urban regeneration is littered with dozens of government programmes and schemes that had absolutely no real local ownership, no local buy-in and that councils went along with quite frankly because there was no alternative—they would lose their money and lose out.

The Deputy Prime Minister is right when he says that we need our cities to become economic, social and cultural magnets—places where people aspire to live. He is absolutely and equally right to give them powers to help that growth. The Deputy Prime Minister has announced the first wave of cities to be given these extra powers. There is a suggestion that a second wave is being considered and I hope that the Minister will indicate whether this is the case. I also place on record my thanks and appreciation to my noble friend Lord Shipley for his work on this matter and for the way in which he has secured real progress.

Those core cities of England, which, as I have said, have a third of the UK’s population, generate 27 per cent of England’s wealth—more than London—and are home to half the country's leading universities. They also contain 28 per cent of all highly skilled workers. Yet compared with London, they receive considerably less in finance, resources and subsidies, so what needs to be done to release further the potential of our cities? First, there is investment and funding. There is compelling evidence, particularly from Europe, that cities with more decentralised public finance are more competitive. In the UK, central government’s share of public spend is high by international comparisons—it is 72 per cent, compared with 19 per cent in Germany and 35 per cent in France—and limits local control over the levers of growth, so the recent policies announced by the Government on this matter are most welcome.

Secondly, there is devolution. We must allow our cities greater control over the policy areas that can drive growth and skills, housing, transport, planning et cetera. Thirdly, of course, there is good city governance. Democratic legitimacy, when combined with private sector and voluntary leadership and strong governance structures, provides a powerful engine for growth in cities and should be recognised more clearly in the relationship between national and local government. There is more democratic legitimacy to the notion of a city leader being elected by the people than by a party caucus. However, city mayors must be part of strong, democratic and open structures, and will be worthwhile only if they have more decentralised power and responsibilities.

For every successful city that faces up to the challenges of the 21st century there will be those that fall behind. Cities need to be places that people want to live in, and must provide decent housing and good transportation links. The coalition announcement on high-speed rail links was hugely important. In my own area, the Government can be credited with agreeing the second crossing over the Mersey, which looked as though it might drag on for years.

Investing in cities would mean a significant opportunity to increase jobs and growth. The transformational effects would be profound for the local and national economies. Independent forecasts for our core cities predict that, by 2022, the additional economic output by GVA will be an extra £29 billion, there will be 747,000 additional jobs, and 170,000 people will be brought out of economic inactivity. Finally, the net fiscal contribution to the Exchequer will be £20.5 billion. The figures show how important it is to get the policies right for our major cities. I am sure that the policies the coalition Government are pursuing in relation to our major cities will create a real renaissance for urban areas, which will benefit the whole of the UK.

My Lords, I am pleased to contribute to the debate this afternoon, having had the privilege for a number of years of being the leader of a major northern city. I compliment my noble friend Lord Storey on instigating the debate.

Economic analysis shows the dramatic variation in the performance of the UK's cities. Each city has its own economic story. Economic statistics demonstrate that each city's economic performance is complex and nuanced. Once we layer in the city's history and culture on top of the different economic indicators, the picture becomes even more complex. To be effective, economic policy has to respond to local economic complexity. Some parts of government recognise this important point and have moved in this direction. The creation of local enterprise partnerships and city deals are important milestones, but have we moved far enough towards local decision-making to allow the effective targeting of economic policy?

The need for flexibility to develop locally tailored solutions was recognised in an amendment to the Localism Act supported by many in this House. It gave councils the right to ask for powers to be devolved so that they could pursue policies for economic development. The city deals project that the Government are pursuing with cities offers a way to devolve funding pots and give councils and local enterprise partnerships a greater role in skills and investment policy. It is a real opportunity to unlock local growth and increase local accountability. The challenge will be to make sure that city deals offer genuine decentralisation without bureaucracy and red tape, and are available to all local authorities that can make their case. Having been the leader of the fourth-largest metropolitan district in the country, I was somewhat surprised that we were excluded from the special list of eight.

Councils understand and have identified opportunities for local growth, and are working with partners to find investment for infrastructure to unlock ambitious schemes. For example, Kettering has planning permission for 5,000 houses and support for huge investment on renewable energy that will create jobs to stimulate green-growth development. However, it needs funding for road improvements to unlock £2 billion of investment. The Government's focus must be on removing barriers to local decision-making and on how investment is targeted locally. They must champion area-based approaches that enable partners to join up assets and investment locally.

Power should continue to be decentralised to the lowest appropriate level to help local councils tackle their local economic challenges and help them deliver better value-for-money services. In particular, there is a compelling case for further decentralisation of skills and transport services to support economic growth. Many of our major cities and towns underperform on key economic indicators compared to their European equivalents. Part of the reason is the quality of local transport systems that make cities attractive places in which to invest and enable people to get to jobs. I know from experience of my own rural board the problems of young people who cannot access jobs because there is no public transport. We facilitated a wheels-to-work scheme with the voluntary sector that helped many young people access the job market.

UK transport infrastructure problems are estimated to cost every business nearly £20,000 on average each year. Nearly 40 per cent of jobseekers say transport is the key barrier to getting a job. I agree with the Local Government Association, which has long argued that greater local control over decisions about transport investment would improve integrated decision-making to achieve the full economic benefits of public transport investment. London, Merseyside and Scotland demonstrate that local decision-making can lead to improved usage of public transport and higher satisfaction levels, with knock-on effects for the economy.

There is more to town and city centres than shopping, and we should encourage this. City centres can transform into almost anything. They are central and well connected public spaces, and innovative use of them can attract and engage people, creating valuable retail demand in the process. My own city centre is undergoing a major transformation; a new large city park has given the city a new heart.

Councils continue to lead this effort locally, working with local communities and businesses to build on the opportunities for growth and to reshape high streets and shopping centres. Local partnerships are crucial because high streets, unlike shopping centres, represent complex sets of interests. The Government must think about how to further empower local partnerships with the necessary funding and tools, and must shift the policy emphasis away from retail alone.

As my noble friend Lord Storey said, people in cities need decent homes to live in. Councils are playing their part to encourage growth. Through the planning system they are overwhelmingly saying yes to viable and sustainable residential and commercial development. Councils play a key role in facilitating housing supply locally, both through council building schemes and via their leading role in, and facilitation of, partnerships, the de-risking of sites and the provision of land or support in kind.

However, councils could do more if they were provided with genuine self-financing. We welcome recent moves by the Government towards a devolved finance system for council housing, but the system will not be genuinely self-financing unless councils can keep the proceeds from the sale of council housing under the right-to-buy scheme. We need a reversal of the Treasury's position on creaming off the forecast growth in the business rate yield for 2013-14 and 2014-15. The proposals for relocalisation of business rates could be an important step in this direction, provided that councils are able to retain all the proceeds of growth. The presumption that in 2013-14 and 2014-15 the Treasury will cream off a predetermined level of forecast growth will mean that local authorities will only be able to benefit financially from growth over and above the Government’s forecast.

I firmly believe that our major cities will thrive and grow if economic development is devolved to them and if they work with the Government on tailor-made city deals, which I am sure we all thoroughly welcome.

My Lords, I join in thanking my noble friend Lord Storey for initiating this debate. I thank him too for his comments on my role as adviser to the Government on cities policy. I have taken a very close and detailed interest in this over the years. I am pleased that great progress has been made because we need to make progress urgently.

In contributing to this important debate, I want first to make one very simple point: cities drive growth and jobs and they do it best when freed from central constraint. The Core Cities Group in England, of which I was a member when leader of Newcastle City Council, has laboured over this one critical message for more than a decade, building evidence, demonstrating practical examples, and developing new instruments and financial models. Yet the productivity of our greatest cities still lags behind that of their counterparts in Europe and elsewhere.

Let me give two examples. My noble friend Lord Storey referred to GDP figures. The eight English core cities account for some 27 per cent of GDP, while Greater London accounts for 28 per cent. If you compare them with other major European countries, for example, you see the gap. If we compare the GDP figures for the eight largest non-capital cities in England with the eight highest performing non-capital cities in Germany, France, Spain and Italy, the examples of Germany and France, which are closest to us, are particularly revealing. We are simply much lower in any GDP test that we seek to apply.

A simple and practical example is the annual patent applications per million of population. Germany’s top non-capital eight cities have an average of around 400 patent applicants a year, France has around 200 patent applicants a year, and the top eight non-capital English cities have an average of 70 patent applications a year. To me, that sums up the problem. England has been—the United Kingdom less so—hugely overcentralised. One of the things that the Government are trying to do which I am particularly pleased about is to reverse that trend. The economic contribution of our cities has never been more vital to the growth of the United Kingdom.

The government publication Unlocking Growth in Cities, launched in December, comes at a decisive moment for the economy. The document builds on an amendment to the Localism Act, originating from the core cities, which I and other noble Lords present have spoken to and supported in this House. It sets out the goals, opportunities and process for bespoke city deals, giving each place the means to improve their specific circumstances—not to a one-size-fits-all formula. These are called city deals and initially those deals will be with each of the eight core cities—Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield—but with a clear and stated ambition to go much further.

Each of these cities, working with their local enterprise partnerships, is engaged in discussion and negotiation across Whitehall for further decentralisation of the tools and resources to drive up growth and jobs and drive down dependency on public services. As I said, these eight cities already produce 27 per cent of the country’s total economy. However, recent independence forecasts by Oxford Economics demonstrate that the eight core cities local enterprise partnership areas are capable of delivering an additional £61 billion in GVA and 1.3 million jobs beyond those currently predicted up to 2030.

Some contributing growth factors are beyond the control of local or national governments, and we need to recognise that. But others, including a more locally sensitive application of the levers of growth, can and should be devolved.

The eight core cities I mentioned have a particular role, but their work has always been applicable to a much wider constituency of towns, cities and local authorities. What works for them can work in other places, particularly using the bespoke method that the Government have put in place. Unlocking Growth in Cities and the Localism Act set in motion a long-term process of decentralisation for growth, and it is not a one-off initiative. It is my hope that many other places will in due course come forward, jointly with business leaders, to benefit this process—perhaps several times as needs change—and that we will in turn all benefit from the increased growth that they produce.

I listened with interest to what my noble friend Lady Eaton said about Bradford. It has been a common comment, because there has been a misunderstanding that somehow this is only about eight cities. It is about those eight core cities that have for the past decade been planning for how they could use the levers of government to drive growth. It was made absolutely clear by the Deputy Prime Minister in his speech in Leeds in early December to launch the new cities policy that this was the forerunner for other cities. There will be a second round starting later this year, and this should be perceived as a continuum.

Cities will need to be bold, and all those who would like to be in a further round will equally need to be as well. Government departments will also need to be bold following the localist lead set by my right honourable friend the Minister for Cities. This requires nothing short of a complete culture change in the way we all work, moving from a central to a more local model, driven by good city governance, with political and business leaders working more closely together.

This is about rebalancing the economy away from an overreliance on London and on financial services; it is about our need to invest and build in our cities so that they can create more of their own wealth and a rising tax base, without simply being dependent on financial support from London and the south-east.

So what needs to be different? We need to manage cities in a different way. Rather than waiting for the centre—Whitehall—to give out money tied to specific programmes and outputs, we need to use money, which may be limited, wisely, defining the local priorities that are felt to be important, and let them shape the funding to fit that set of local priorities. Local authorities will in future be less development managers and more development facilitators. They will act less on the basis of national targets and work more in collaboration with neighbours to establish growth ambitions and delivery. Crucially, risk and funding, which are currently undertaken at the centre, will be managed by the local authority, the council, the first eight core cities and their city regions. This is quite a significant culture change that the Government are proposing.

However, the context is very important and it relates to governance of the United Kingdom. There has been devolution to Scotland, Wales, Northern Ireland and London, and there will probably be increasing devolution to all those places. Perhaps we do not talk enough about the implication of that for England, which cannot be left out of that process. The Localism Act, which is now in place, focuses mostly on local government and its relationship to Whitehall within a context in which government offices in England have been abolished.

There is a strong centre of government in London and there are strong centres of government in Wales, Northern Ireland and Scotland, but there is no longer a government office in Newcastle upon Tyne, my city, or in any other regional capital in England that hitherto existed. There are some outposts of Whitehall departments, which are very welcome, although I sometimes feel that they could be better co-ordinated. Perhaps at some point they might all be collocated. We will see. As I said a moment ago, we have to address the issue of devolution from Whitehall.

Noble Lords may care to look at the document, Unlocking Growth in Cities, which was published in December. It gives a list of 21 policy areas in which the Government are prepared to enter into negotiation with cities to establish greater freedoms to invest in growth. I cannot go through all of them but some are very important. It refers to one consolidated capital pot for local decision-making and powers for cities to offer business rate discounts to local businesses. There will be a particular role, from 2014, for structural fund—the European RDF and European Social Fund—programmes under which there is a plan across Europe to adopt a special focus on cities and which will be able to play more of a leading role in shaping bespoke and integrated programmes.

There will be the ability to create industry-specific business improvement partnerships and tax increment financing, which is part of the Localism Act and in essence enables a local authority to borrow against future business rate income. At the moment, in England, councils are required to borrow prudentially against guaranteed sources of income. Therefore, there is a greater risk management in tax increment financing but also enormous potential rewards in the form of growth. There could be benefits in local authorities opting to pool business rates across their local enterprise partnership. There is the possibility of devolving local transport major funding and the responsibility for commissioning local or regional rail services, and for developing greater accountability to local communities for local bus services in the context of wider bus service operator grant reform. Public sector assets could be vested locally in a single local property company. As I say, no longer are there government offices to manage some of these things. There is a gap which someone else might have to step into to do these things.

Some of the spending functions of the Homes and Communities Agency—including a whole range of things such as planning, broadband and skills—could be devolved to councils and cities. It is a major concern to me that, despite all the multi-millions of pounds that have been spent in my region and in many others on skills development in the north-east of England, 25 per cent of manufacturing and processing companies are finding it difficult to recruit people to work in them. There is a mismatch between what the private sector needs to create wealth and therefore tax income for this Government, and the investment that is being put in. It seems to be leading people to develop skills, which in one sense is very good but in another sense does not help us drive the growth of the economy that we need.

Areas that should be looked at are city apprenticeship hubs, the creation of a city skills fund, and much closer working with and perhaps leadership of Jobcentre Plus. There certainly should be greater integration in the service of Jobcentre Plus at a local level. I would welcome it working much more closely with the Department for Work and Pensions. The Government can do a whole range of things. Each city will be different. One size will not fit all. I hope, first, that by Easter some cities will have reached agreement with the Government and that others can follow quickly. After that, round 2 can start and it is to be hoped that similar agreements can be reached.

As I said at the start of my speech, I am immensely encouraged by what the Government are doing. There is enormous potential in the policy work that is now being done and I hope very much that this will be grasped by all the cities and urban areas in England in order that we can produce the growth that the country needs.

My Lords, in the past decade we have seen for the first time more than half the world’s population living in cities and city regions. In the United Kingdom, 74 per cent of the population lives in cities and their regions. Therefore we are more urbanised than most. That figure is forecast to rise to more than 90 per cent by 2030.

As my noble friend said, cities are the engines of national economies but it is important that we take note that not all our cities are automatically winners. A recent paper by the Institute for Government and Centre for Cities has an interesting analysis. It contrasts Brighton, which saw a 25 per cent increase in private sector jobs between 1998 and 2008, with Stoke, which was once at the centre of our international pottery industry and has lost getting on for one in five private sector jobs in that same decade. That is why I strongly recommend and welcome the Government’s document, Unlocking Growth in Cities. The picture is not one of even growth and a great deal must be done. Along with Stoke, the other losers in that analysis are Burnley, Birkenhead, Gloucester, Blackburn, Oxford, Birmingham, Nottingham, Swindon and Blackpool. I should like noble Lords to note that these cities are not all in the Midlands and the north of England. In the past decade, for every 10 jobs created in London and the south-east, just one was created elsewhere, which is why our economy desperately needs rebalancing.

Cities compete all the time with each other for talent, investment and funding. That competitiveness is encouraged by even artificial constructs and devices, such as the city of culture. I well remember that my own city of Cardiff lost out to Liverpool, the city of my noble friend Lord Storey, in the city of culture competition a decade or so ago. Although we were really sorry not to have won and although we envied Liverpool its year of culture, we benefited from that competition. It stimulated cultural ideas and cultural planning in Cardiff. We have, for example, the Artes Mundi competition. It is a modern art competition of world status and was established when we were hoping that we might win the city of culture competition.

I make no apologies for drawing on examples from Cardiff. I know that it is not on the magic list of the eight core cities that have been referred to but we are a city of considerable significance. Although Cardiff is a minnow in terms of size compared with Liverpool, Manchester and Birmingham, it is a city of considerable strategic importance because it is the capital city of a small nation.

Looking across the cities of Britain, historically, each of them has a reason for being—a geographical reason, a reason of climate or of raw materials. Manchester, for example, exists because of its climate and the cotton industry. Stoke exists for the potteries. My own city, Cardiff, exists because it was a port and because of the proximity to that port of mines, the iron industry and, later, the steel industry. It was at one point the greatest port in the world. It is an interesting piece of local history that the first £1 million cheque in the world was signed in the Coal Exchange in Cardiff. The port still remains, of course, but is a shadow of its former self, so, like other cities, Cardiff has had to find a modern reason for being. Like other cities, it relies on being a thriving retail centre. In 2009, the largest new shopping centre in the UK was opened there, bringing, at a very difficult time for the economy, more than 400 new jobs. Cardiff now ranks among the top 10 retail cities in the UK. However, you have to have more than shopping and retail, so the city council has important plans for a central business district and has already indentified £40 million of capital finding to take that project forward. Rather belatedly, I am very pleased that the Welsh Assembly Government opted to follow the example of the UK Government by establishing a series of enterprise zones. One has been earmarked for Cardiff, specialising in the financial sector.

I put in an unashamed plug to the Minister. Cardiff would be an ideal location for the green investment bank, especially because of the promised electrification of the train service through to Cardiff, and the almost promised electrification of the valley lines. The central business district will create, as well as a lot of jobs in an important financial sector, a new bus station and will improve the train station. I am talking about transport because transport links are the key to the development of city regions. City regions are the way forward, because they spin out jobs to the rest of the economy in the area around the city.

While many of our great cities can be recognised as city regions, the idea has been resisted in south Wales until now. There has almost been a resentment of the growth of Cardiff. Therefore, I strongly welcome the fact that there is currently a Welsh Government consultation on Cardiff as a city region. It is so important that it is recognised that the future prosperity that we all hope the south Wales valleys will have depends on Cardiff, Newport and Swansea flourishing as cities, because they provide jobs for that region.

City regions can be seen as a sign of co-operation between urban areas rather than competition. The region of Leeds, which I do not think anyone has specifically mentioned so far today, includes Bradford, Kirklees, Barnsley, Wakefield, York, Harrogate and more. It is a massive conurbation which requires a great deal of co-operation across local authority boundaries. It is absolutely essential that that co-operation takes place. It has to be the way forward, because outright competition on all fronts often simply means shifting the jobs around from one area to another. The current crisis in the retail sector might be partly due to the fact that we have decided to shop online instead of in the city centres. It is also partly due to the difficult economic times that we are in. However, it pinpoints that you cannot have a city based entirely on the fact that it has a nice shopping centre. The shoppers move, and the jobs move, to the newest shopping centre which has opened. You always lose shoppers and jobs when a new shopping centre opens within your area.

We have to be careful about initiatives which might move jobs from one area to another. I think back to the 1980s and the enterprise zones. Analysis since then has shown that, to a large extent, they moved jobs around the country. Although I strongly welcome the enterprise zones that the Government have now introduced, I am pleased to see that there are measures to prevent that happening this time.

The Government’s strategy starts with the eight core cities, our largest. As my noble friend said, there will be, we hope, a second tranche. Of the eight that have been announced so far, I note that only one of them, Bristol, is not in the Midlands or the north. That is understandable, but it is important that the balance is redressed in the future. Otherwise there is a danger that the south-west will be excluded from growth because of the empowerment and funding that is going into those eight core cities. I realise, of course, that the core cities have chosen themselves on the basis of size, but a strategic look at the geographical spread of the cities in the second tranche is needed.

My noble friend Lord Shipley has referred to the fact that devolution inevitably means that there is a separate treatment of the cities in the devolved nations. None of the Welsh cities that I referred to earlier is included. That is because of devolution. It is thus important that the two Governments work closely together. To return to Cardiff, there are already concerns that although the UK government initiatives such as enterprise zones, tax increment financing and local enterprise partnerships are being copied in Wales, they are being copied at a slower pace. In the economy, there is often no prize for second place. There is nothing if you have done a very good job but have not managed to be the best. Indeed, Wales has already lost one major development to an enterprise zone in England: the Jaguar Land Rover engine plant. Plans have been announced to establish it in an enterprise zone in Wolverhampton. The hope that it would be located in south Wales was unfulfilled.

Whatever the political differences, it is essential that economic policy in all devolved Administrations works with the grain of the UK’s Government’s macroeconomic policy. Otherwise, the cities of Scotland, Wales and Northern Ireland risk falling into the gap between the two Governments and the two sets of regulations. I am particularly attracted by the “tailored city deals”, as the Government’s strategy refers to them, empowering the leadership of our great cities. For many decades, we have had the drift of power to the centre, away from local government. Indeed, the term “local government” really does not reflect the reality of city regions such as Manchester, with a population of 2.6 million people. That is almost as large as the whole population of Wales and larger than the population of Northern Ireland. It is vital that we think globally. The competitors to our major cities lie not just in other parts of the UK but across the world. That global success is the envy of the UK economic success as a whole. We need to do comparatively better than other global cities if we are to succeed internationally. We are not, as my noble friend explained, doing as well at the moment as they are in many European cities.

I very much support the power of general competence given to local authorities in the Localism Bill and the proposed business rates retention that will enable local authorities to create tax increment financing schemes and allow borrowing for capital investment. I support financial empowerment. It is so important that cities are enabled to look towards the private sector to energise and empower them, rather than, as they have been doing for decades in the past, looking upwards to government for a handout in difficult times. Our cities are the strength of our economy and they need to be empowered in order to fulfil that.

My Lords, I thank my noble friend Lord Storey for initiating this important debate. The White Paper, Unlocking Growth in Cities, which was published in December, received remarkably little publicity for what it had to say, so it is good that we now have a chance to debate it at somewhat greater length.

As has already been mentioned by other speakers, the White Paper had two key themes: first, that,

“Cities are the engines of economic growth and they will be critical to our economic recovery”;

and, secondly, that,

“for too long decisions about the future of these proud cities have been taken in Westminster, constraining local leadership and stopping cities reaching their full potential”.

As the White Paper says,

“We want to help cities exercise their independence and take their economic destiny into their own hands”.

When I announced that I was going to participate in this debate, somebody jokingly asked me, “Are you going to talk about Guildford?”. I said, “Certainly not, the last thing that Guildford wants is talk about the case for any sort of growth”, although it does have aspirations to be a city. No, my reason for wishing to participate in this debate stems from research that I undertook during the 1990s, when I was a research fellow at the science policy research unit down at the University of Sussex—I should perhaps declare an interest as I remain a visiting fellow of that unit—and was looking into innovation in Europe.

In particular, one issue that emerged from that research was the role played by a number of the core cities in Europe. In Germany, a large number of the cities play a vital role within their Land—one thinks of Munich, Stuttgart, Frankfurt and Dortmund. With the increasing prosperity of eastern Germany, cities such as Dresden are now emerging as core cities that lead their local areas. However, we looked not just at what was happening in Germany, which is the most decentralised of the European countries, but at what had happened in Spain, where devolution had encouraged Barcelona. Over the past 20 years since the Olympics, Barcelona has built itself to be a hub of growth within its local region of Catalonia. Again, Helsinki in Finland, which 20 years before had been a dull city, had also taken itself forward—partly on the back of Nokia and the electronics revolution—to become much more important and another hub of growth. I was interested in the role of cities within their sub-regions and regions, and I was interested in the degree to which they became a core for growth.

The other reason I wish to participate in this debate is because, in the course of the past year, I have been chairing a commission for the National Institute of Adult Continuing Education and the AOC that is looking at the role of colleges in their communities. I wanted to flag up the importance of colleges as well as universities within this agenda.

Let me start by taking up the whole issue of European cities, which has already mentioned by my noble friend Lord Shipley. As I said, my interest stems from the work that I did in the 1990s, but that work was carried forward to a considerable degree in the early part of this century with a report published by the then Deputy Prime Minister's Office—in the time of the noble Lord, Lord Prescott—called Competitive European Cities: Where do the Core Cities Stand? That was led by research from Professor Michael Parkinson at Liverpool John Moores University. Among his co-authors was Greg Clark—I rather excitedly thought that this might be the Minister in the Department for Communities and Local Government, but on chasing him up further, I discovered that it was not the same person, although the name is the same.

The Competitive European Cities report picks up some of the points made by my noble friend Lord Storey. It is a rather depressing story. The report was written in 2004 so it does not reflect the continuing growth in our core cities that took place from 2004 to 2008 and their continuing renaissance, which my noble friend Lord Storey talked about. It showed that Britain's core cities in the late 1990s and the early years of this century, while going through something of a renaissance, nevertheless in general lagged behind their European competitors in terms of productivity, GDP per capita, innovation, education levels, connectivity—the transport and communication routes, both electronic and physical —social cohesion, quality of life, political capacity and connections with their broader sub-regions. The only exception to that was Bristol, which in GDP terms was actually above the national average rather than below. With the exception of Bristol, all the major cities in GDP per capita terms fell below the national average.

Equally, the very positive message from the study was that the situation can be turned around, albeit over time. It instanced the very positive stories of cities such as Barcelona and Helsinki, which I have already mentioned, which over the previous 20 to 25 years have transformed themselves and their regions from being backwaters into being leading global players.

The factors that were listed as contributing to success were interesting. One was economic diversity—not being too dependent on a single sector of the economy but having a range of sectors, all of which contributed to their success. Connectivity, the physical and electronic capacity to move goods and services and people quickly and efficiently, was important. In that sense, airports played an important part. Barcelona, for example, has a splendid new airport that was built for the Olympics and it has made a great deal of difference to the city. Again, in Spain, the linking up of all the Spanish cities by the TGV-type fast train has made an enormous difference.

Other important factors included strategic decision-making capacities, the significance of networks and the relationship between key players in public and private sectors to get things done and get them decided. Networks are extraordinarily important—I want to come back to that point because that links up with the work that I was doing on colleges in their communities.

Innovation and investment in knowledge-based industries, combined with research education capacity, are also vital. That is something that one sees so strongly in countries such as the United States. I remember back in the 1970s being very impressed with the degree to which a group of universities in North Carolina had created a hub of growth within what had been a very backward state. One sees this very much in the United States, where the links between university and research have carried many states and regions within states forward.

Decentralisation and access to a skilled workforce are also very important. I want to pick up both of those issues and talk a little bit more about them. Decentralisation is very interesting and was an issue that hit me in my own research. The Competitive European Cities report said:

“Although it is not a straightforward relationship the evidence does suggest that where cities are given more freedom and autonomy they have responded by being more proactive, entrepreneurial and successful. Decentralisation in France has invigorated provincial cities during the past 20 years. The most successful cities in Europe have been German, which is the most decentralised country in Europe. The renaissance of Barcelona in part stems from the move towards regionalisation and the lessening of the grip of … Madrid”.

The question arises as to whether the new powers we are proposing to give to our core cities are sufficient in this respect. My noble friend Lord Storey has been quite optimistic, but others have been much more critical about how much real economic decentralisation is proposed. In looking at the list of new freedoms that were being given, it seemed to me that it was again—one has seen this before—a list of pots for funding for this initiative and that initiative. Such funds are of vital importance, but the only new money seems to be the degree to which these cities are able to control business rates. Indeed, all they seem to be getting is the right to access any money from the growth in business rates—yet I think it was perhaps the noble Baroness, Lady Eaton, who said that this is now being constrained as the Treasury is holding it back.

England remains the most fiscally centralised country in Europe and, probably, in the world. In the week in December in which this announcement was made, the Secretary of State for the Department for Communities and Local Government announced that, after a two-year freeze on council tax, he will intervene if any council raises its council tax by more than 3.5 per cent this coming year. Such intervention would, in most countries, be regarded as quite untenable. Most of these successful cities in Europe have the discretion not only to set their own tax rates but often to develop new forms of tax, such as local sales taxes, local property taxes and so forth. They also have—and this is very important—freedom to go to the market to raise capital. One looks at German cities and the importance of the links they have with the local Landesbanks, with which they are often in partnership in new projects and developments. That seems so important.

However, in this country, if you want to raise money, you go cap in hand to the Treasury and say, “Please sir, can we raise the money for this? Can we have the money for that?”. The Treasury controls absolutely everything. You can devolve political leadership—we have seen that and we have some very fine local leaders—but as long as the Treasury is not prepared to devolve in economic terms, and unless those leaders have the tools to do the things they want to do, I am not confident that we will see this turning around that one has seen in some of these European cities.

I will just spend a little time talking about colleges in their communities. My remit was to look at the role that colleges can and do play within their communities and the value that they might add as potential leaders. That led me to visit a great many colleges. If you are talking about the role and levels of education and so forth, a lot of emphasis is put on universities and the development of graduate education and research, which is absolutely important, but the majority of those at the local level—if one is talking about skill levels—are trained by the colleges rather than by the universities. Where Britain really lacks capabilities is in the intermediate and technician-level skills, where colleges can potentially play a very important part. The skill profile in many of these cities is below the average; they have a disproportionate number of those completely lacking higher-level skills such as Level 2 or 3 and a disproportionate number with very low-level skills.

I was very encouraged by what some colleges are doing in reaching out, for example, to work with local employers. I am thinking of a college such as Birmingham Metropolitan College, which has worked with the BBC to train technicians for the digital switchover and with Samsung to train electronics technicians. The college has also developed a new link with Caterpillar and its supply chain and developed lots of apprenticeships. However, I also think of a college such as Barnsley College, which is facing very different conditions. Most of the local employers are small and medium-sized enterprises, which are loath to take on apprenticeships. Barnsley College has set up a separate company to employ apprentices off their own bat, whom they then hire out to small and medium-sized businesses. Some 99 per cent of these young people fulfil their apprenticeships and there are no problems, but the college acts as a guarantor and will always take them back if it does not work out.

It is so important that colleges link up in partnership, not only with employers but also, for example, with the police and local youth offending teams to bring the NEETs into college and give them experience and that they link up with community groups and ethnic minorities. All of this is happening as best practice in the best of our colleges, but one just needs to see it happen far more widely. This whole issue of upgrading the skill levels of people generally is an absolutely vital one if our cities are to succeed.

My Lords, on behalf of the Opposition, we welcome this debate about cities and thank the noble Lord, Lord Storey, for tabling this Motion. It is a tribute to the Lords that in this short debate we have had very informative contributions from former leaders of three great northern cities—Bradford, Liverpool and Newcastle. We have also had very good contributions from the noble Baroness, Lady Randerson, with her deep experience of circumstances in Wales, and Cardiff in particular; and the noble Baroness, Lady Sharp, with her great knowledge of universities, and of the knowledge economy and its relationship to economic development. We also welcome the government paper published in December, Unlocking Growth in Cities, which I think is a response to cross-party pressure from all sides of this House and elsewhere suggesting that our great urban centres need more power to shape their own destinies.

This has never been more needed. I have welcomed the fact that the Liberal Democrats chose this subject for debate. However, on this side of the House we have to put on record that our big English provincial cities in particular need these powers to facilitate growth and to generate dynamism and momentum because the current austerity programme, which the coalition is pushing through too far and too fast, is hitting disproportionately hard those very English provincial cities that the Liberal Democrats have been speaking of so eloquently today. It hits them hardest in terms of public sector jobs cut, in youth employment and in welfare cuts that will cause real social misery and pain. We are facing this challenge because of that austerity programme.

That has to be said, but there is here a bigger and longer-running issue which has nothing to do with party politics. Given the intense feeling that a lot of people have that we are as a country too centralised and need to be more localist, why has that not happened? I have just a few thoughts on that. I have been a localist all my life—I have spent 10 years in local government—but my thinking on the role of the city in localism was greatly affected when I did an exercise for the president of the European Commission in Brussels, looking at the social challenges facing Europe. I came across the work of a US urban theorist called Richard Florida, who had written a very good book called The Rise of the Creative Class. The core proposition in that book is that metropolitan regions with high concentrations of technology workers, artists, musicians and lesbians and gay men exhibit a higher level of economic development than do other places. You could say that this is a flawed piece of academic punditry, and certainly some of it goes a bit over the top. Professor Florida, for instance, produced an index of what he called “high bohemian” cities. But it does to an extent at least accord with the reality of what is happening on the ground. I saw this when I came back from Brussels in 2007 and became chair of Cumbria Vision and involved in regional development. Our great northern cities were undergoing a remarkable renaissance. They had been devastated by the austerity of the 1980s, although they were rescued in part by the great vision of the noble Lord, Lord Heseltine. But our cities have had to spend the last quarter century finding new drivers of economic activity. To an extent, those have been found. Look at higher education and the contribution made to Tyneside, for example, by the expansion of universities in Newcastle, with the new Northumbria university. Look at how the UCLan, in a much smaller city space, has made a big contribution in Preston. Look at the explosion of sport as a driver of economic activity and how important it is, particularly to Manchester and Liverpool. Look at culture, with the Tate in Liverpool, the Lowry in Salford and the Sage in Gateshead. It is a great flourishing of culture, a celebration of diversity and a triumph of the creative spirit, acting as a magnet for sources of dynamism in our society.

I am really proud of what the Labour Government contributed to the transformation of our cities in the past 15 years. It has become the stock in trade to knock the regional development agencies and what they did. Of course, they had their faults; everything does. They were over-bureaucratic, and the regional political dimension to complement them was never put in place. But what they did and contributed to makes me immensely proud of what my party did in its period of government, including the regeneration of Liverpool Docks, Media City at Salford Quays, the bringing together of the new university at Manchester, which will be world class, and the Daresbury science complex—as well as a new university with a campus even in a place like Burnley. This is the fantastic urban development that took place.

The coalition chose to toss away the achievements of the regional development agencies, which was a wilful destruction of the capacity for economic regeneration at the time when that capacity was never needed more. Therefore, the coalition will have a heavy price to pay for job losses and increasing regional equalities—I say to the noble Lord, Lord Henley—that are occurring in this country under his Government’s stewardship.

What are we to make of the latest initiative to fill this gap? As I have said, we have seen lots of initiatives in the past for greater localism. When I was first a special adviser working for the noble Lord, Lord Rodgers of Quarry Bank, in the Callaghan Government in the 1970s, I remember writing lots of memos for him on the work of the Layfield report and how it was going to introduce more decentralised local government. Well, that did not come to pass.

It is tempting to blame the Civil Service for seeing off localism and local government, and I know from personal experience that there is deep-seated control- freakery in parts of Whitehall departments. I see quite a bit of this lurking in the language of the December paper. But our politics is also responsible for the centralisation of our country. In sections of my own party, people are deeply committed to Fabian centralisation, and in the Conservative Party you have Mr Eric Pickles proclaiming his commitment to localism. As one of the noble Baronesses opposite pointed out, he is introducing the fiercest regime of rate-capping and control of council budgets that has ever been in place. It is not just on the central issue of finance that he is controlling; he deems it proper to decide how often councils should collect their bins. There is no consistency. What you do not have is genuine commitment to local decentralisation. What you have there is commitment, frankly, to populism.

When I look at the latest paper, published in December, my fear is that it is ersatz decentralisation. Anyone who has served government knows the tell-tale signs of these things. The paper is very good on symbols; a Minister for the Communities is being created, the excellent Mr Greg Clark, for whom I have great admiration—he is an excellent Minister. A new unit has been established in the Cabinet Office, the Cities Policy Unit. We have had a lot of Cabinet Office units of various types in the past. There is a new ministerial group under the Deputy Prime Minister to drive the agenda forward—very good, three cheers for that. It is excellent, if I might say so, that the noble Lord, Lord Shipley, has been recruited as an adviser in this latest drive for greater localism.

There are, however, important gaps in the prospectus, and I would be grateful if the Minister could explain how the Government propose to deal with them. If she is not able to do it in her speech, I very much hope that she will be able to send me a detailed reply. First, we are talking not about full-scale decentralisation but about decentralisation by exception to a limited number of cities. That is clear from paragraph 1.12 of the paper, which declares clearly,

“we are not looking to dismantle national policy frameworks”.

I dare say that Whitehall departments were very insistent on getting that sentence in.

Secondly, while I welcome measures such as the introduction of a single capital pot for participating cities, to an extent that was what the RDAs had as well. Some government departments look as if they are not going to play ball with this decentralisation; for instance, the Department for Work and Pensions, where the business of active labour polices to get people into jobs is so important for city development, is keeping its distance, as is BIS on skills. The example of the noble Lord, Lord Shipley, of the experience in the north-east shows how, when you have a nationally run target programme of skills training, it just does not work in terms of regional skill needs.

To me, there is an obscurity about the financing aspects of these proposals. What is the Treasury’s position on business rates and tax increment financing? There also seems to be confusion about governance. There are going to be referenda for elected mayors in a lot of these cities—at least we think there are. At the same time, there is a lot of talk in this paper about the role of the local economic partnerships, which are wider than cities. What is the relationship between the LEPs and the mayor? Where is the idea of the “metro mayor”—the mayor for Newcastle or for Greater Manchester, not just for the city, which is a tiny part of the area? There are real questions about how this is going to work and whether it is real decentralisation.

One of the most revealing bits of the paper is figure 1 on page 12, a graph that shows how cities do according to the national income of their countries. The country that has by far the most prosperous cities is Germany, and second is Italy. Why is that? It is because, particularly in Germany, there is a real political decentralisation of power.

We welcome this initiative but we want to know what it really represents. We wish the noble Lord, Lord Shipley, well, but I think he is going to have a mountain to climb if he is going to succeed in his ambitions.

My Lords, I am delighted to congratulate my noble friend Lord Storey on securing this debate. He started us off with a wonderful picture of his Liverpool—its past, its present and what I know will be its great future. As I read up on his biog, I see that he served that city for many years as lord mayor and as a councillor for 37 years. It was a hugely successful capital of culture, as we have heard from Cardiff, a city that also bid for that role. So who better to speak for Liverpool than the noble Lord?

I hope to answer as many questions as I can. If I am not able to do so, I hope the noble Lord will understand if I have to write. Many people have spoken and, as I go through, I will mention as much as I can. I always have a sharp intake of breath when the noble Baroness, Lady Sharp, stands up to speak because she is so well informed and I learn so much from her. I can never answer all her questions so I know for sure that I will miss out some of hers, but I thank her very much.

England’s cities have always been centres of drive, creativity and initiative. One has to think only of Chamberlain’s pioneering leadership in Birmingham or Brunel’s vision in transforming the landscape of Bristol. As we have heard so often today, England’s cities showcase some of our best talent and innovative thinking. We have made a very good start with centres of expertise such as the new MediaCityUK in Greater Manchester, which will promote the growth of the media sector, and Sheffield’s centre for advanced manufacturing, where such world-leading firms as Boeing and Rolls-Royce are carrying out cutting edge research. I am sure that it is an ambition shared on all sides of the House that we should work together to give our major cities the best possible opportunities to thrive and gain international significance as economic powerhouses in their own right and their own unique way.

My noble friend Lord Shipley spoke of comparisons with the cities of Germany and France. It is always very useful to look at the cities of Europe in particular to see what we can learn from them. The noble Lord spoke of the core cities amendment, which is now part of the Localism Act, and its creation of a historic opportunity.

The Government’s policy towards cities builds on several initiatives already under way to promote local economic growth. Local enterprise partnerships enable civic and private sector leaders to work together to boost local economies, and I acknowledge the excellent work of my colleague in another place, the Minister for Business and Enterprise, Mark Prisk, in driving this agenda forward. Some £765 million has been invested in urban areas through the regional growth fund. Enterprise zones have been created in 24 cities and their wider LEPs, which will generate jobs by reducing barriers to enterprise and providing new fiscal incentives. I am sure we all recognise that the promotion of local economic growth is a fundamental priority at this difficult time.

With 58 per cent of England’s population living in cities—74 per cent if you include the wider commuting area—and 61 per cent of jobs based in cities, or 80 per cent including the wider commuting area, our cities are crucial to driving local growth and have tremendous economic potential. All our cities have their individual strengths, which have enabled them to build strong and proud international reputations over the years. The Minister for Cities and my colleague in another place, the right honourable Greg Clark, has shown his appreciation of local concerns and priorities in the way that he has pursued the cities agenda.

My noble friend Lady Randerson spoke of rebalancing our declining cities and asked what we are doing for them. The Government believe that all cities can improve their local environment for growth. The Government’s approach focuses on three key themes: shifting power to local communities and businesses; promoting efficient and dynamic markets; and focused investment through the regional growth fund and enterprise zones. The Government’s approach to cities will allow local leaders to identify their own priorities and grant them the powers to drive local economic growth in the way that they think best. As my noble friend Lord Storey said, this will be based on unlocking investment and funding, devolving power—yes, certainly that—and good city government.

On business rates, I agree with my noble friends Lady Eaton and Lord Shipley that the Government’s plans to localise business rate revenue create a strong incentive for growth. We are committed to making this incentive as strong as possible, while ensuring fiscal sustainability.

We can expect to see a fundamental shift in the relationship between national government and the cities, starting with a genuine transfer of power. The provisions set out in the Localism Act provide a concrete example of the Government’s commitment to transferring power to the local level.

Let me respond here to my noble friend Lady Randerson on the green investment bank. It was a good try, I thought. As I am sure she will be aware, a clear process has been set out for bidding for the green investment bank location. Cardiff will be able to apply to host it. I am sure other noble Lords will be keen for their local cities to apply, too. However, I commend her for taking the opportunity today to have a go for Cardiff. Someone should open a bottle for her when she gets home tonight.

As my noble friend Lady Sharp noted, evidence suggests that successful decentralisation will be a route towards local economic growth. We share her concern to see a radical change in the power held at local level. My right honourable friend the Minister for Cities and the Deputy Prime Minister launched the document, Unlocking Growth in Cities, on 8 December. The Deputy Prime Minister spoke on this occasion to encourage cities to be as ambitious as possible in engaging with this agenda. City region leaders will negotiate bespoke deals with the Government, which will give them the capability to do the things they want to do in their own way.

As has been referred to by many noble Lords, we are starting with the eight core cities—the largest cities outside London—and their surrounding areas as represented by the local enterprise partnerships because they have great economic potential which has yet to be fully realised. I say in response to the question asked by the noble Lord, Lord Storey, that deals will be made available to further cities in due course. I can say no more than “in due course” at this stage.

I reassure my noble friend Lady Eaton that our work with Leeds city region includes Bradford and, of course, other towns and cities in that region. I say to the noble Baroness, Lady Randerson, that Cardiff’s policy is a devolved matter. As she well knows, it is for the Welsh Assembly to take forward policies to boost growth in Welsh cities, including Cardiff. I strongly support that. I agree that it is important for this Government to ensure that they engage with the devolved Administrations. I know that my right honourable friend in another place, the Secretary of State for Business, met his Welsh counterpart in December to discuss these very issues.

As a result of the deals, cities will have greater freedoms to invest in growth, the power to drive critical infrastructure development and new tools to help people in their area get the skills and jobs that they need. My noble friend Lady Eaton talked about skills and transport in cities. I reassure her that all our discussions with cities include new measures in relation to skills and transport.

After all, a deal is a two-way process. In return for granting cities new powers and freedoms, we expect them to demonstrate strong, visible and accountable leadership and effective decision-making structures. City leaders will need to work across their economic footprint with representatives of the local enterprise partnerships to attract skilled workers, build infrastructure and boost innovation in order to create vibrant urban environments that people want to work and live in. The Government are committed to working closely with cities in the months and years ahead to help them achieve these goals.

The noble Baroness, Lady Sharp, referred to apprenticeships. We share the interest in increasing apprenticeships. As she will have seen, the Government have put city apprenticeship hubs on the menu of options for cities to consider, as set out in the Unlocking Growth in Cities document that we brought out on 8 December.

The noble Lord, Lord Liddle, talked about austerity and the RDAs. I note his concern. The coalition is working to get the entire UK economy back on track. These measures show that the Government are committed to rebalancing the economy and ensuring that all cities and, indeed, the whole country, can fulfil their potential. The noble Lord also asked about the missing bits of the menu. The menu is illustrative, as the Deputy Prime Minister made clear. We are ready to match the ambition of the “asks” that cities put to us, but it is up to them to decide what their priorities are. This is what this is all about—making sure that the cities themselves will be able to do deals which allow them to run themselves as they see fit to help them become more successful.

The noble Lord, Lord Liddle, also asked about mayors, LEPs and metro mayors. The Government have set out their position on elected mayors. They offer an opportunity for stronger localised governance, but it is for local areas to decide on the governance structure that best suits them. That is something I am sure the Opposition will gradually get used to—the amount of times that this coalition Government will devolve power down to the people who we feel are best suited to deal with local issues.

Success in all this will mean empowered local leaders able to drive real change by looking outwards to the private sector rather than upwards to the Government. Success will mean new partnerships between civic leaders, businesses and local communities, creating further opportunities for investment and growth, and enabling cities to shape their own economic destinies. Success will mean more jobs, better services and an improved quality of life for local people.

In the words of my colleague in another place, the right honourable Greg Clark, in the document Unlocking Growth in Cities, we,

“look forward to helping our cities forge a bright future even greater than their proud histories, matching their proud heritage with a busy and prosperous future”.

My Lords, I thank noble Lords. During the course of this debate, I have been struck by how many common themes there have been. We almost put our finger on the issues and problems that need to be addressed. Literally every speaker has raised the same issue.

I should of course have congratulated the noble Baroness, Lady Eaton, on her job as chair of the Local Government Association when there was a real focus on the importance of cities and the shifting of work she was able to do. She rightly said that power should be decentralised to the lowest possible level, and I entirely agree with that.

The noble Lord, Lord Shipley, made an important point about the mismatch of what the private sector needs and how we needed to unlock local skills.

I was shocked at the figure given by the noble Baroness, Lady Randerson—that for every 10 jobs created in London and the south-east, only one is created elsewhere. That is an alarming statistic. I equally agreed with her valid point that it was all very well one city crowing that it has won new inward investment, but that might have been taken from somewhere else. That has often been the story of the past couple of decades. I know that in Liverpool, when we were lucky enough to secure Jaguar, the inward investment moved from the Birmingham area. There have been lots of examples of cities, with government help, having been able to get inward investment but at the expense of other parts of the UK. It was right and important to raise that issue. I am sorry she was disappointed that Liverpool was made the European capital of culture, but I should tell her that we still regard ourselves as the capital of north Wales. We tried to get the Eisteddfod to come to Liverpool but were not successful.

The noble Baroness, Lady Sharp, talked powerfully about the lessons that can be learnt from European cities. Again, we should look closely at that. Those lessons are very plain for us all to see.

I come to the noble Lord, Lord Liddle, and his almost political tour de force. It made me think of when I was first elected as leader of Liverpool City Council and I went to my first core city leaders’ meeting in Birmingham—I was the only non-Labour leader there. As I listened to noble Lords’ speeches, I thought that those Labour leaders would be shocked that it has taken a coalition Government, 12 years later, to introduce most of the policies they were asking for.

When the noble Lord, Lord Liddle, raises those issues, it gives rise to the question: where was he when the Labour Government did not ensure that decisions were devolved locally but had stringent bidding rounds and ensured competition all the time between local authorities? I must say that I thought that some of the points he made were fair and equitable.

Finally, I thank the noble Baroness, Lady Wilcox, for her response. I am delighted that deals will be made for further cities to take part.

A couple of Members made a point about core cities. The core cities used to have the view that they were self-selecting, which I thought was very unfair. They often turned down the likes of Bradford, perhaps because they see them as competition. Perhaps we should have a campaign to stop that self-selection and have a genuine partnership of cities of the United Kingdom.

I thank all Members of the House for their contributions.

Motion agreed.

EUC Report: Internal Security Strategy

Motion to Take Note

Moved by

That this House takes note of the report of the European Union Committee, The EU Internal Security Strategy (17th Report, HL Paper 149).

My Lords, the report of the European Union Committee on the European Union's internal security strategy was published on 24 May 2011. I am therefore glad now, after nearly eight months, to have the opportunity to bring it to your Lordships' House for debate as chairman of the Home Affairs Sub-Committee, which conducted the inquiry. However, in doing so, I cannot simply pass over that remarkable—and, in my view—lamentably long delay. If the House wishes to ensure the topicality and relevance of the debates it holds on subjects such as this and reports such as the one we are considering today, it must improve its record on the scheduling of debates.

Internal security is primarily a matter for member states themselves, but the treaty of Lisbon, although reflecting that, for the first time gave the European Union an explicit responsibility by setting up a committee whose prime aim is,

“to ensure that operational cooperation and internal security is promoted and strengthened within the Union”.

The committee is known as COSI—one of those dreadful acronyms—and I shall have more to say about it in a moment.

The new responsibility of the European Union, although limited, led to the five-year Stockholm programme, which invited both the Council and the Commission,

“to define a comprehensive Union internal security strategy”.

Both institutions took up the challenge. I hope that I am not being disobliging when I say that the Council strategy, which was agreed in March 2010, was an anodyne document of no great weight. However, in November 2010, the Commission published in response to the Council document what was intended to be an implementing communication called, The EU Internal Security Strategy in Action. That document formed the basis of our inquiry.

Security is a complex subject, and we were fortunate to have as our special adviser Stephen Hawker, whose experience and knowledge of counterterrorism and security issues is so wide that I am not permitted to divulge to the House more about his background. I can, however, say that the committee was extraordinarily grateful for his help.

In this Parliament, institutions of the European Union tend to come in for blame rather than praise, and that is particularly true of the Commission. I am glad, therefore, to be able to say that the Commission’s document was, in the view of the committee, pragmatic and realistic, focusing on five areas where the EU could and should have some real influence. These are: the disruption of international criminal networks; prevention of terrorism; security in cyberspace; improved border management; and increased resilience to crises and disasters—natural disasters, in particular. The document is a first rational attempt to articulate a comprehensive approach to the EU’s internal security, and I pay tribute to the impressive work of Commissioner Cecilia Malmström, the Home Affairs Commissioner.

Our inquiry was long and so, I fear, is our report. In this speech I shall concentrate on only a few aspects of it—primarily, not surprisingly, those where we regard the Government’s response to be unsatisfactory. However, the Government agreed with many of our recommendations, and I was very grateful, as was the committee, for that. In particular, I was struck by the fact that they firmly endorsed the committee’s view that Britain’s internal security neither begins nor ends at the water’s edge. That kind of conceptual approach is quite important because it rather gives the lie to the suggestion that we can just do this on our own and that will be fine.

The first of the areas where we are a little at odds with the Government in their response relates to cybercrime. No one nowadays doubts the scale of the damage that can be, and is being, done by cybercrime and by attacks on cybersecurity. Of course, much of the work of defending against them is a national responsibility or is being followed up in a military context in NATO. However, the cybercrime element is a bit different. The Commission recommended the setting up of a new cybercrime centre, through which the member states and institutions would be able to build operational and analytical capacity for investigations and for co-operation with international partners. Our witnesses, including the government witnesses, agreed almost without exception that this would be a worthwhile development, as did the committee. We recommended that it should not be a new free-standing institution, which we thought would be wasteful and duplicative, but that it should be located within Europol, which is increasingly becoming a central part of Europe’s efforts against various forms of crime and which possesses some of the infrastructure needed. The Government, I am glad to say, agreed on both those points. The disagreement between us comes over the funding.

Cybercrime is a huge cost to all our economies and it cannot be fought without resources, yet that is roughly what the Government would like to do. They are prepared—quite rightly, in my view—to allocate £650 million in new funds to the UK’s own national cybersecurity programme but they seem to think that Europol can fund a new EU cybercrime centre out of thin air from its existing budget. The EU’s budget framework for the years 2014 to 2020 is something that the Select Committee and its sub-committees are considering again at this moment, and I shall not stray into that wider territory. We are all realistic enough to appreciate that overall now is not the time for an increase in the EU budget. However, a reallocation of resources within the budget is another matter. The home affairs budget is actually less than 1 per cent of the total EU budget and will reach only about 1 per cent of the total EU budget if the Commission’s proposals for 2013 go through, which they may very possibly not do in the form in which they have been put forward.

I and my committee would argue that it is not really credible for the Government to suggest that the relatively modest cost of setting up the cybercrime centre within Europol cannot be found from other heads of the EU budget. The Government’s position is that it has to be found within the justice and home affairs budget, which is not really credible. I hope that the Minister will be able to undertake to look again at that aspect. I am not expecting him to concede the point here and now—I know where the true decisions on these matters are taken—but I hope that it will be looked at again because the suggestion that this can be found within the JHA budget is not very credible.

Mention of Europol brings me to the question of its parliamentary oversight. The treaty of Lisbon introduced the requirement that national parliaments should join with the European Parliament in overseeing the work of Europol. It had been suggested by the Commission, although not in the strategy document that we are debating today, that that should be done by a new and specially constituted body. My committee thought, and repeated in the report, that this could and should be done not by a new specially constituted body but by the joint interparliamentary meetings which already regularly take place between chairs of the home affairs sub-committees or committees of national parliaments and of the European Parliament.

I went to Brussels last October as chairman of the EU Home Affairs Sub-Committee for a meeting of those chairmen and it was hosted by the equivalent committee, the LIBE committee, of the European Parliament. At a session which I chaired, it was agreed that that oversight should be carried out by such existing annual joint interparliamentary committee meetings. The government response did not deal with the issue but I would like to hear from the Minister whether the Government agree that that is a satisfactory way in which to proceed and whether they will do all that they can to ensure that this approach, and not the more cumbersome approach which the commission proposed, is agreed at EU level.

I mentioned earlier the committee called COSI, which can broadly be rendered into normal English as the committee of senior interior ministry officials. Potentially, that is a high-powered body which could, and should, help to co-ordinate and, where appropriate, direct all the European Union's work on internal security. Currently, that work is distributed among a very large number of committees, working groups and working parties. We actually managed to unearth 14 of them which we listed in our report. I do not doubt that there are some lurking in the undergrowth that we may have missed. Much of their work overlaps. Setting up COSI was an opportunity for some, at least, of these bodies to be merged or abolished, but that opportunity was not taken. Most of them continue. The Government, who supposedly favour the abolition of otiose bodies, seem lukewarm about our recommendation, telling us only that they would be prepared to consider a case for COSI replacing or overseeing such bodies once it has established itself. That was six months ago. I hope that the Minister can now tell the House that he is prepared to press for COSI to have a more significant co-ordinating function and for some of this plethora of committees to be abolished.

The chairmanship of Council working parties usually rotates with the presidency on a biannual basis. Sometimes that does no harm but the committee felt that, in this sector, with a group of experts like COSI, there was a strong case for a more durable, longer-lasting chairmanship. The Government agreed that members of COSI should be senior, operationally focused officials with authority to commit their national operational resources but they could see the benefit of one of the best qualified of these officials chairing the group for, say, two or three years. That is by no means unknown in European Union practice; it was for many years the way in which the European Union’s monetary committee was run, in some years extremely effectively and professionally, by a member of Her Majesty's Treasury. That would be an improvement over the six-month rotation in the chairmanship of that committee. The Government conceded that six-monthly rotation,

“might have a detrimental impact on the Committee”,

but thought this might be mitigated by the adoption of the three-presidency approach, by which three successive presidencies work together. Frankly, mitigation is not quite enough. If a six-monthly rotating chairmanship is detrimental, the Government should seek the agreement of other member states to do away with it and have a more professional approach.

Data protection will shortly be in the news again, when the Commission brings forward its long-awaited proposal for a new directive. This is very relevant to internal security, so much of which depends on the painstaking collection and analysis of personal data. A balance has to be found between the interests of security and those of personal privacy, and this is never easy. It is particularly difficult in the case of the passenger name record data, or PNR: the data on passengers on flights entering or leaving the European Union. Flights from the EU to Australia are already the subject of an agreement which has, in our view, satisfactory data protection provisions. Flights from the EU to the US are the subject of an agreement—the fourth—which has been initialled but is not yet in force. All I can say about that one is that its data protection provisions are marginally better than those in the existing EU-US agreement, which is not saying an awful lot.

Data on flights into the EU are now to be the subject of a directive, not just flights from Australia or from the US. The Government, encouraged by a report which was endorsed by this House, have already opted into the proposal for this directive and I hope that the Minister will confirm that during the course of the negotiations, he will be paying due regard to the importance of the protection of passengers’ data—all the more so if, as the Government hope and the Committee hopes, too, that directive is extended to cover intra-EU flights, not only flights into the EU from outside.

I cannot conclude without mentioning yet again a question which the House has raised time and again in taking evidence from Ministers and officials in this House, and many times in correspondence with Ministers. I refer to the Government’s failure to sign or ratify the Council of Europe convention on money laundering, known as the Warsaw convention. The disruption of international criminal networks is, as I have said, one of the objects of the strategy we were examining and there is no doubt that the tracing and confiscation of the proceeds of crime is one of the most powerful weapons in the armoury of states.

The previous Government undertook to ratify the Warsaw convention early in 2010. For this Government the noble Lord, Lord Henley, who will be replying to this debate, assured the committee only last month that he was pretty sure that the United Kingdom was compliant with the convention, but that the Home Office did not currently have the resources to review this and therefore was not prepared to set a date for signature and ratification. I asked him when the Government would sign the convention, to which he replied,

“I would hope we would do so within the next year or so but I am not going to be any more precise than that”.

I hate to say so but he could not have been any less precise, even if he had tried.

A failure to sign one of the major international instruments for combating serious, organised crime does not give the impression of a Government who take the fight against such crime seriously. If we do not sign and ratify such a convention, how can we expect others to do likewise and how can we hope to play a leadership role in the Council of Europe, over whose intergovernmental activities we currently preside? I know that the Minister has already taken one broadside on this subject in the course of Questions in this House today. I am offering him here a somewhat less difficult matter, which does not raise the issue of extraterritoriality which he referred to earlier. It is frankly a little difficult to believe that the amount of resources needed to be quite sure that we are in conformity with a convention, as he is confident that we are, is such an enormous burden that it cannot be undertaken. It is a shame, frankly, that we are not signed up to and ratifying that convention.

This inquiry was one of great interest to the Committee and our report raised a number of serious questions for the Minister to answer. I look forward to hearing his replies. I beg to move.

My Lords, I am a member of Sub-Committee F. I begin by thanking the noble Lord, Lord Hannay, for his excellent chairmanship of proceedings and for managing to dock our little boat so successfully. I also thank our clerk, Michael Collon, for his indefatigable work in making sure that we stayed on the straight and narrow, and our special adviser, Stephen Hawker. This is a complex and difficult area and without his advice and help we would have floundered.

I am firmly of the view that national security must be the responsibility of each member state, on two grounds. The first is that in a liberal, plural democracy, the ability and readiness of a country to defend its citizens is the fundamental part of the social contract by which we all coexist. Secondly, and no less importantly, the way that policing takes place is a reflection of history: the historical traditions of a country and the way that its society has developed. Traditions will be quite different from country to country. There is no one-size-fits-all approach.

Nevertheless, in that ghastly and hackneyed phrase, we live increasingly in a global community. The Commission's communication on the EU's internal security strategy, with its focus on the five areas that the noble Lord, Lord Hannay, read out, and which I will not repeat, makes it clear that there is a world dimension to these issues, quite apart from the EU dimension, which we have to take into account. I will repeat his quotation from paragraph 17 of our report, which states:

“The security of the United Kingdom does not begin or end at the water's edge, and cannot be defended independently of the security of other States”.

The complexities of trying, for example, to prevent terrorism or disrupt international crime networks are compounded when they are addressed through a multinational organisation such as the EU. Success in the five selected fields will require leadership of the highest quality, providing focus for dedicated and expert resources, deployed consistently over time. This is painstaking work; these are hard yards to gain. My concern is that our report showed that to some extent the EU has so far failed to address the challenges and yardsticks that the approach requires.

I turn first to leadership. As the noble Lord, Lord Hannay, pointed out, we now have the standing committee COSI whose chairmanship rotates every six months, in line with the EU presidency. I urge my noble friend to readdress this point. This is a committee of critical importance, whose chairman has barely got his feet under the table before he is moved on. On that basis we cannot get the consistent and focused leadership of the very expert resources that we need. We need to find a way—I am no expert in the diplomatic niceties of this—to ensure that somebody takes responsibility for a longer period of time. If we heard that one of our largest private companies was rotating its chairmanship every six months, we would think that it had taken leave of its senses.

The membership of COSI seems to be complex and frequently changing. I understand that so far it has not included representatives of FRONTEX or Europol. Given that two of the five objectives of COSI are improved border management and the disruption of international crime networks, not having FRONTEX and Europol representatives on the committee seems at the very least to be counterintuitive. Further down the chain of command, the situation is even more unsatisfactory. As the noble Lord, Lord Hannay, referred to, box 10 on page 51 of our report lists the 14 bodies involved: seven working parties, three working groups, one group, one task force, one committee and one strategic committee. To be candid, this does not give me confidence that we will have a joined-up approach because, to be effective in this area, very close attention to tiny details is essential and good communication is no less so. From my point of view, there is a good deal of work to be done on the strategic shape of the architecture of the EU’s approach to this very important area, which we have highlighted in our report.

This is all at EU level and, as I have already noted, internal security is a matter for each member state, so, as the noble Lord, Lord Hannay, said, there is also a balance to be struck between, on the one hand, the freedom, privacy and prevention of unnecessary intrusion that the citizen is entitled to enjoy and, on the other, the need for the protection of the citizen. As the work on the EU’s internal security strategy develops and gets traction, I hope there will be an important scrutiny role to ensure that this balance is maintained by the European Parliament, national Parliaments and intergovernmental activities and organisations. I hope very much that we will keep our eye firmly on this one, because the creep of intrusion into our individual personal lives on the grounds that national security demands it is very insidious.

The rest of my remarks focus on cyberspace and cybersecurity. On 15 September last year, an article in the Times quoted a Cabinet Office source that last year intellectual property theft cost UK companies £9.2 billion, industrial espionage cost UK plc £7.6 billion, online theft cost business £1.3 billion, blackmail cost business £2.2 billion and identity theft cost consumers £1.7 billion. This is clearly an area that does not respect national boundaries.

However, the way we tackle cybersecurity is made more challenging by three features. First, we all increasingly wish to be in open communication. We wish to do more and more online. We are being encouraged to do more and more online. We believe our prosperity and future growth depend on online communication, so the channels by which the criminal can approach us are widening and broadening all the time.

The second issue is the fear of fraud being published. It is perfectly clear that many firms do not wish the news of a cyberattack to be published. They fear that it may lead to imitative attacks. The knowledge that a firm has had an attack may lead others to try the same approach and, of course, very importantly, it saps public confidence in a firm’s reputation, and nowhere is that more important than in financial services. So the second challenge is: how do we make sure that people, firms and financial institutions bring forward the information without fear of disadvantaging themselves?

Thirdly, and finally, what sort of organisation do we need to tackle these types of crimes? We had some powerful evidence about how conventional structures in government and policing are hierarchical. They are age based, and very often they are arts graduate-training based. In the cyber area, the ideal structure is very different. It is not hierarchical at all. It is completely flat. It consists of very much younger people, and it has a physics and engineering-based orientation. That is going to present a real challenge to COSI and other organisations about how you integrate those two very different approaches.

As far as the EU is concerned there is a further challenge: namely, the variable understanding of the threat and its seriousness. At paragraph 19, we refer to the evidence that we took from William Shapcott, the former director of SitCen. He said:

“You can roughly divide the member states into three groups: those who are threatened and who really understand it. The UK is clearly in that group, and the Germans and the French are as well. Then there is a group that possibly is threatened but maybe doesn’t properly register it, and then maybe some that aren’t terribly threatened”.

He went on to explain that as the threats changed so would the groups, which could learn from one another.

That takes me to the really important point about the establishment of the cybercrime centre as being a means whereby experience, knowledge and information can be shared. I am delighted that the Government have decided that it should not be placed at Heraklion in Crete as part of ENISA. We have kicked poor old ENISA often enough and hard enough. I am delighted that there will not be a new body and I hope very much that it will find its way into Europol because it is, after all, crime that we are talking about.

As part of that, I hope that the Government will give some attention to a sub-theme. In our sub-committee, we have had quite a lot of evidence that in a number of cases bilateral arrangements between individual countries have led to the bypassing of EU institutions. We have heard about it as regards Europol in particular. Therefore, instead of information and intelligence being routed through an EU body, it is done on the basis of relationships between the police forces of individual countries. I do not mind people having bilateral relationships but there should be a discouragement of not making sure that Europol goes into the link. If we have a patchwork quilt of relationships depending on who knows who, who gets on with who and who trusts who, critical issues will get lost and overlooked and their significance will not be understood.

I hope that the Government will make some efforts to encourage, as far as we in this country and other countries are concerned, the use of the valuable resources that will be built up in these EU agencies. It puts a responsibility on the EU agency itself. We had a comment from a Dutchman who said that Europol was like a black box into which you put a comment and nothing came back. There is a responsibility on the agency to respond. It was a fascinating report on a fascinating area.

In my final minute, perhaps I may refer my noble friend to the UK cybersecurity strategy document published in November 2011. It is very interesting and a very good read, and lots of interesting recommendations are listed at the back. It covers nearly all the departments from BIS to DCMS to the Foreign Office to MoD. It has a huge range of responses required from individual government departments. However, there is very little about our relationships with Europe and COSI. There is something but not a lot. I very much hope that the Government will give some weight to developing our European response to these intransigent, intractable and difficult issues. Unless national Governments put some weight behind COSI and bodies like that, there is no hope that we shall be able to attack these extraordinarily challenging crimes and crime networks satisfactorily.

My Lords, I warmly follow the noble Lord, Lord Hodgson of Astley Abbots, in thanking our chairman for his excellent leadership of the committee, for the diligence that he brings to that work and, as I have said before, for the firmness of his guidance. It is very good to have an effective chairman, and one with so much outstanding relevant expertise and experience to bring to bear on the issue with which we are dealing. However, if that word of appreciation is due, so also is one due to our staff, to the clerk and the others who work with the clerk, for helping us to produce useful reports for this House. A word of thanks is also due to the full European Union Select Committee for the support and collaboration that it gives. I know that there is a very good working relationship between the chair of that committee, the noble Lord, Lord Roper, and the chairman of our own Select Committee. That is good, because it helps to take things forward in a constructive way.

The noble Lord referred in his remarks to the interdependent world in which we live. I am absolutely convinced that, from the moment any of us are born, one reality is indisputable: we are born into a totally interdependent world community. This is true of economic and resources realities, and pressingly true of environmental matters, but nowhere is it more true than in the realm of security. There is no way in which we can ensure the security of our people by acting alone. Effective, proven co-operation at the international level is indispensible.

Of course, the European Union provides a very good starting point for that, although—as we say in our report—this co-operation cannot be limited to the European Union. It has to go beyond the European Union into the wider world. It obviously has to be with organisations such as the United Nations, but it also has to be with specific countries such as China, India, Russia and Brazil—all sorts of influential countries on the world scene. However, it is not only with the more influential countries that there must be co-operation. So much of the danger to security comes through, and may originate from, some of the smaller, less significant players in the world, as power politics has come to be seen.

In that context, I am interested and glad that we emphasised early in our report—the chairman of the committee drew attention to this—the importance of there being a good balance between the security measures that are introduced and necessary and an absolute, resolute commitment to preserving those characteristics of our society that make it worth defending. Here I am thinking, of course, of freedom, liberty and the rest. There is a tension here. It is no good pretending that there is not; there is. How we get that right is terribly important.

It is therefore important to see that, if we are going to build a secure world, we have to get as many people as possible feeling directly that they have a vested interest in the stability and security of the society, and the wholesome nature of the society, in which they are living. That is why mistakes, when they occur in member countries of the European Union—absolutely indefensible, sometimes abhorrent mistakes that are a contradiction of everything for which we stand—are unforgivable, because of course they play directly into the hands of the extremists and those who would like to undermine our society by giving them rich ammunition for agitation and the rest. That is why we should expect higher standards all the time from those throughout Europe and the world, and certainly in our own country, who are working in the sphere of security.

Of course it is also the interrelationship in security policy between the more formal direct means of security, as we understand that word, and the importance of effective economic and social policies that gives people a stake in the society in which they are living. All those things come together and it is obvious that if we are to tackle them effectively, we have to build increasingly good co-operation and collaboration with fellow members of the European Union and beyond. Our report is really about that.

There is of course one specific area, and the chairman was exceedingly sensible to emphasise this in his words to us today, that brings that home. It is the issue of cyberspace. I do not believe that among the population as a whole there even begins to be an understanding of the significance and potential for what could happen in this context to liberty, freedom and all that goes with it. From that standpoint, the balance between liberty and security is a particularly pressing issue in the realm of cyberspace, as indeed we are beginning to see through the popular press in more limited spheres.

In commending the report to the House, we ought also to bear in mind the indispensable value of the evidence submitted, both written and oral. I hold up as an example the Minister who will reply to this debate. We had an extremely good session with him and we deeply appreciated the evidence that he provided and the spirit in which he entered into the session. A real word of appreciation is important there, because if he is not following things through with his colleagues we are whistling in the dark. That collaboration is essential.

There is one other specific issue to which we drew attention in the report—the strange absence of any reference to the armed services in the report from Europe with which we were dealing. If we are going to get this right, the relationship between all aspects of security and the armed services is tremendously important. We need to look at that and see how that point can be brought to bear. The armed services are increasingly drawn into co-operation with other dimensions to public service in the way in which they help to uphold our society. I hope that the Government will look at this and see how that could be addressed within the context of deliberations in Europe.

Above all, apart from saying what a pleasure it was to work in this committee under the leadership of our chairman, I want to say that we cannot overemphasise the importance of realising that we are simply not a self-contained, isolated island that can look after itself. When we talk to our public servants, I sometimes detect a reluctant culture that somehow or other these international bodies exist and they are working in the realm in which we are working, so we have to work with them. There is a reluctance about being drawn in further than absolutely necessary because we really like to do things on our own. That is a hopeless attitude and completely outdated. I have no doubt that the Government as a whole, particularly in the sphere of security, shall be judged in history by our success in helping international institutions, starting with Europe, to be effective.

My Lords, I thank the noble Lord, Lord Hannay of Chiswick, for having finally secured this important debate. I congratulate him on an excellent report. Looking around the Chamber today I see that I am the only person speaking in this debate, apart from the Minister, who is not a member of this committee and therefore did not participate in the report. I therefore feel that I can more sincerely congratulate committee members as I am not in any way back-slapping myself. It is another thoroughly thoughtful contribution to this very important issue—of where the international meets the national and where a state’s responsibility to its citizens’ security is juxtaposed alongside their fundamental freedoms. It is intrinsic to where we are in today’s world.

I welcome the early assertion in the report that recognises that security cannot stop at the water’s edge. In the UK’s case, we know from our prolonged experience in Northern Ireland, and more recently from among our own diaspora communities, that much support for terrorism can come from overseas. Both bilateral and multilateral co-operation are therefore fundamental to maintaining security.

The report, as the noble Lord, Lord Hannay, said, is wide-ranging and extremely detailed. I just want to pick out a few of the themes. First, in the section on counterterrorism, the report was most interesting on the continuing role of the counterterrorism co-ordinator. I have great personal admiration for the current incumbent, but given the developments that have taken place since 2001, such as 9/11, the Madrid bombings—after which he was appointed—and particularly the adoption of the European Union counterterrorism strategy after 2005, I, too, share the views of committee members that it is extremely difficult to see how we might justify the role. I note the Government’s response, and particularly their emphasis on the co-ordinator being the interface between the EU’s internal and external policies on terrorism. I noted, too, with some dismay, the report’s bleak assessment of the relationship between the European Union and NATO, and certainly agree that that particular relationship needs strengthening. This was particularly brought out by Professor Paul Cornish of Chatham House. Third-country relations are also significant areas for attention and I would urge Her Majesty’s Government to encourage the co-ordinator’s efforts in this area. These will become ever more important as we come towards the drawdown of the NATO commitment in Afghanistan and, of course, with the increasing rise of extremism in Pakistan.

On radicalisation and the EU strategy, I would go further than the report in suggesting that this area is best left to member states to deal with. The report makes particular reference to the Prime Minister’s Munich speech of February 2011 on muscular liberalism. I should say that I am broadly in the PM’s camp on this one. When I served on Prime Minister Blair’s taskforce on Muslim extremism in 2005, it was increasingly clear to us that the drivers and subsequent triggers for extremism had quite a lot to do with the radicalised individual’s conception of their own identity, as well as the triggers in the external environment to which they responded through their actions. These factors differ across different diaspora communities and are affected by the environment within the country from which those individuals come at the time. One size certainly does not fit all. For example, those of Pakistani origin in the United Kingdom can have a very different take on things, and on their place within society in this country, than those of Pakistani origin in the United States. Likewise, the Baader-Meinhof gang was a rather different entity from the IRA in the 1970s.

I would firmly plump for subsidiarity in this area and suggest that member states are best placed to design their own deradicalisation programmes. However, voluntary networks should be encouraged, as they already exist very well across academia. An EU institutional-level handbook of actions and experiences would not only have little relevance to national-centric radicalisation but would also duplicate existing work.

I turn to the related area of research and its funding. Noble Lords may well remember the establishment—I think in 2006—of a significant ESRC funding stream for research projects at universities. The programme was called, I think, New Security Challenges. It was run by Professor Stuart Croft at Warwick University and had a wide enough remit to allow for a range of different approaches to research programmes and academic collaboration. In my mind, that programme is a model of how the EU should proceed to set up a network. Yes, I agree that it should be wider than this particular model, but it should be sufficiently focused so as to derive practical know-how for practitioners. I note that several submissions to the committee commented on this and also note that the committee welcomes the creation of an internal security fund. What was not clear from the report, probably due to the timing of it, was whether the next framework programme for research and development will cover the issues to do with co-ordination that Sir Richard Mottram raised in his submission at paragraph 196. I was therefore disappointed that the Government's response, while welcoming the creation of the ISF as an important development, ruled out any additional resources to be dedicated to this area. Has the committee since been updated by the Home Office, as it promised to do in its response to conclusions 252 and 253, as to where the resources for this work may be found?

I turn now to the issue of cybersecurity. The report was written before the London conference of last November, as the noble Lord, Lord Hannay, pointed out, and things have moved on a bit, but the analysis of the importance of the issue and of the need for an appropriate architecture to support work in this area still stand. In particular, given that the technology used for cyberwar and terrorism is often in the hands of state actors, the establishment of an EU cybercrime centre is most welcome and I note that its situation within Europol is both the committee's and the Government’s preference. But there is a further important way that the UK can help EU partners; that is where some countries have not build up the requisite capacity with national computer emergency response teams. Can the Minister tell the House whether the UK has offered its expertise through its dedicated public sector capability, to assist those states whose public sector has experienced cyberattacks and are not competent to resist them?

Noble Lords will also be aware of how cybercrime plays out in foreign policy through non-state actors. We have a situation where increasing numbers of private sector firms in the UK are targeted as they are in other countries. The noble Lord, Lord Hodgson of Astley Abbotts, raised the issue of how expensive that is. I am one to agree with those experts who advocate a mandatory licensing system for the private sector to ensure that they have adequate levels of protection. Outside the EU, we now have a cyberwar going on in the Middle East, with pro-Palestine groups claiming to be behind the attack on El Al, the Israeli airline's systems and the Tel Aviv stock exchange, while pro-Israeli groups have attacked the Saudi Arabian and Abu Dhabi stock exchanges. As these escalate they pose an economic and security threat not only to the infrastructure of the counties involved but also to wider business and security interests. While acknowledging the seriousness of this kind of threat, it is important to note that both groups are politically motivated, although the actor on the Israeli side clearly takes its name from the Israeli Defence Force, as it calls itself the Israeli Defence Force Team, and it is therefore unclear what the role of the state may be in this case. What is not helpful is that the lsraeli deputy Foreign Minister in describing the attack as “comparable to terrorism” and threatening to respond forcefully, did not take the opportunity to disassociate the IDF from this so-called Team IDF. Israel’s neighbours will no doubt draw their own conclusions from that.

The need for international action to help counter these kind of politically motivated threats is as urgent as is the need for action at national level to deal with opposing states’ acts, which we are more familiar with. I note that the outcome document for the London conference highlighted:

“The need for governments to act proportionately in cyberspace and in accordance with national and international law”.

I hope that all Governments in the Middle East will bear that obligation in mind as they go forward in the current febrile atmosphere.

The London conference also posed some wider international security challenges, covering such questions as: how can problems between states be prevented and mitigated? What lessons can be learnt from other areas of international security and conflict prevention work? How do we develop and apply appropriate principles of behaviour? What are the most appropriate fora to take this debate forward? What tangible steps are Her Majesty’s Government taking to move this urgent agenda forward? In particular, do they hope to have more concrete outcomes at the Hungary summit later this year?

My concluding remarks shall be about the remit of the Standing Committee on Operational Co-operation on Internal Security, or COSI, as it is more comfortingly known. COSI’s remit is to ensure that operational co-operation is promoted and strengthened and to provide a measure of accountability through the Council to the European Parliament and national parliaments. I share the committee’s views that it would be extremely beneficial to rationalise the alphabet soup of other bodies also charged with responsibilities in this area, in order that COSI can emerge as the lead organisation. I also share its view that there is little justification for the chairmanship to rotate along with the EU presidency for precisely the reasons given by the noble Lords, Lord Hannay of Chiswick and Lord Hodgson of Astley Abbotts. In order to maintain expertise and consistency, it is fundamental that we have an expert chairmanship and expert membership. I am therefore disappointed in the Government’s response, which seems to say that just because we have done it this way with other EU bodies, we will use the same straitjacket this time, too. I argue that the establishment of a new body is precisely when the architecture can and should be improved.

On transparency, the Government’s response to the committee’s recommendation is, if I might say so, equally mealy-mouthed. While the European Parliament might have received its report after an 18-month period, I am not aware whether the UK Parliament has yet had transmittal of this work. Perhaps the Minister or the chairman of the committee might be able to fill in the blank here when winding up.

The work of the committee and its detailed recommendations have been of the usually high calibre that one expects from their Lordships’ European Union scrutiny processes. I do hope that this report continues to inform our thinking around these matters here in the UK and across other EU capitals.

My Lords, I join other noble Lords on the committee in thanking the noble Lord, Lord Hannay, for his excellent chairmanship of the sub-committee. His background and experience made him an ideal chairman to guide the committee through evidence-taking and producing what I believe is a very important report. I am delighted to be speaking as a member of that committee. I also thank the members of the support team, led by Michael Collon, who supported and still support the committee so ably.

Security, unfortunately, is an increasingly important subject touching all our lives, whether at airports, entering government buildings or using public transport. It even touches the parking arrangements in your Lordships’ House. Securing the physical safety of their citizens is surely the most important task of any Government and in this modern age, with the world getting smaller through travel and global communications, as other speakers have said, that cannot be achieved unilaterally. It follows, therefore, whatever your views are of the European Union, that increased co-operation between friendly countries is an essential requisite of reducing security risks from those who would do us harm for political, ideological or extreme and fanatical religious reasons. As a person who has been involved in security issues for most of his life—in the police service, with the FBI and now in the private sector—I welcome the treaty of Lisbon, which allowed the European Council to adopt and implement an internal security strategy. It is that strategy, which was set out in the Commission communication in November 2010, that we are considering in this debate.

Statistically, the risk of any of us being involved in a life-threatening security incident is very small. However, as somebody once said, politicians tend to use statistics rather like a drunk uses a lamp-post—more for support than illumination. I knew a millionaire who was extremely worried about flying because of the increased security threat. He employed a security consultant to research the chances of his getting on aircraft where there was a bomb. The consultant did his work. He looked at all the flights and all the incidents, and he worked out that there was something like a 5 million:1 chance against being on an aircraft on which there was a bomb. However, the millionaire was not happy and wanted further work done. He wanted to know how he could lengthen the odds even further. The advice came back: “What you have to do is carry a bomb on to a plane yourself in insulated hand luggage”. “How will that assist?”, he asked. “Well”, the consultant said, “the chances of two strangers each having a bomb on the same plane are infinitesimal”. That sums up the difficulty with statistics.

The five steps set out in the report are comprehensive, dealing with international crime, the prevention of terrorism, security in cyberspace, improved border management and increased resilience to crises and disasters. Clearly, time will not permit me to cover all five items. I intend to concentrate very briefly on just three: international crime networks, terrorism and cybercrime.

By the nature of the beast, the international criminal knows no boundaries. Anything we can do to disrupt his travel arrangements, his communications or the secreting of his ill gotten gains is a plus. The difficulty at an operational level is that the police and security services have to operate within the law. I have to add that it is proper that they do so. As we have seen in other countries, if state officials are above the law we are all finished. Having said that, for those people who know no rules, we may well have to change our rules.

As my noble friend Lord Judd said, there is a very fine balance to be drawn between the restriction of civil liberties and human rights. After all, one man’s right to do something may well be an infringement of his neighbour’s liberty not to have to tolerate such behaviour. It is a dilemma that policemen have wrestled with throughout the ages. In this regard, we can deal with international crime and terrorism together. We have to co-operate totally with other right-thinking countries, sharing intelligence where possible, and acting together operationally if required so that there are very few hiding places. If the conspirators cannot communicate with or meet each other—or, in the case of terrorists, train and practise their dark arts—we are succeeding. If the price of freedom is to have surveillance cameras in public places, in some cases it is a price we have to pay. We have seen the success that it reaps, with terrorists, rapists and murderers being brought to justice. They never learn; we still see bank robbers on “Crimewatch” smiling at the camera.

Modern technology must be used and shared. We all know the value of DNA in bringing terrorists and murderers to justice many years after they thought that they had escaped the long arm of the law. As has been said, we must share these innovations with our law enforcement partners in other jurisdictions. I welcome the report’s endorsement of the work of joint investigation teams. This is particularly true when seizing criminal assets and establishing a functioning asset recovery office in each member state. This should be given a higher priority.

I appreciate that it is more difficult to deal with terrorists who are prepared to commit suicide. That is where vigilance and community intelligence are so important, again working together at local, national and international level. That is why the comments about reducing the incidence of stop and search made last week by the new commissioner at Scotland Yard, Bernard Hogan-Howe, are so important. He would make that process more intelligence-led. This is important because it should reduce the alienation of the police within the community they serve, thereby increasing the chances of important intelligence concerning serious crime and terrorism being brought to their attention. In this country we police by consent and we need the support and real assistance of the community, which can greatly help us in dealing with internal security.

The new kid on the block is cybercrime, as been mentioned in every speech. As our report states, the Government are to be congratulated on the priority given to cybercrime in the UK security strategy. As with many things, the European Union is only as strong as its weakest link. However, it is not just the cybersecurity of the member states that is at risk. The Commission itself must realise that its own institutions, networks and agencies are vulnerable too and take the necessary precautions; and, where they fall short, we must assist them.

Overall, I believe that we are heading in the right direction. The EU communication sets out the road map and I believe that our report helps to identify the vehicle on which we should all be climbing. I commend the report to the House.

My Lords, in response to the comment of the noble Baroness, Lady Falkner of Margravine, while I cannot say that I am the third man, I am the third person down to speak in this debate who is not a member of the committee. I share the view of the noble Lord, Lord Hannay of Chiswick, on the lengthy delay in discussing the committee’s report, and that that is not a satisfactory situation. Having said that, I doubt that this is the first occasion there has been such a delay.

As has been said, each member state has responsibility for its own national security but the Lisbon treaty enhanced the European role by providing for the creation of a standing committee within the Council whose principal role is to ensure that operational co-operation on internal security is promoted and strengthened within the Union.

As we know, under the 1999 treaty of Amsterdam, work on justice and home affairs matters has been the subject of five-year programmes agreed by the European Council, with the most recent being the Stockholm Programme agreed in 2009, which indicated that both the Council and the Commission should define a comprehensive Union internal security strategy.

In early 2010, the Council agreed an internal security strategy for the European Union which was subsequently adopted by the European Council. Not to be outdone, the Commission formulated its own communication on the internal security strategy towards the end of 2010 entitled, The EU Internal Security Strategy in Action: Five Steps Towards a More Secure Europe.

As the noble Lord, Lord Hannay, said, in the report that we are discussing, the committee described the Council strategy as an anodyne document and hardly a strategy at all. In contrast, the committee described the Commission communication as having a practical and pragmatic focus on the five main objectives. They were referred to by the noble Lord and I shall not repeat them.

Accordingly, as the noble Lord said, the European Union sub-committee took this document—namely the Commission communication—as the main focus of its inquiry into the EU internal security strategy. We welcome the committee’s report and I wish to refer briefly to one or two points and issues in it.

The report indicates that the Commission’s communication will be followed by proposals from the Commission for legislation to implement its objectives. One had already been submitted before the committee’s report appeared, and given that we are now some eight months further on, it would be helpful if the Minister could update us as to where we stand in relation to further proposals emanating from the Commission.

The EU Committee comment favourably on the Commission communication as,

“the first pragmatic attempt to articulate a comprehensive approach to the EU’s internal security”,

and say that they,

“do not believe that these proposals intrude upon or threaten Member States’ primary responsibility for national security”.

That is an important point. The committee was critical of the written evidence received from the Home Office, which the committee regarded as stating that the Government would,

“criticise some Commission proposals solely on the ground that they go beyond what was agreed in the Stockholm Programme or the Strategy itself”.

The committee argued that over a five-year programme actions required to safeguard internal security may well move beyond what was originally envisaged, and that therefore each proposal should be assessed on its merits.

In his response, the Parliamentary Under-Secretary for Crime and Security refers to querying the costs of new proposals and goes on to say that ensuring that those proposals fall within the scope of the Stockholm Programme is key to managing the national and EU justice and home affairs budget. I hope that the Minister can provide assurance that despite that comment the Government will nevertheless assess on their merits any proposals that emerge.

The committee's report also refers to a Commission proposal for a comprehensive data protection framework that was due to be published last year. What is the current position in relation to this Commission proposal?

A further point made by the committee, to which my noble friend Lord Judd referred, was its surprise that there was no reference in the Commission communication to the Armed Forces in relation to civil protection and disaster relief. It is not clear from the written response by the Parliamentary Under-Secretary whether that surprise is shared to any degree by the Government, and perhaps the Minister can provide some clarification on that specific point. It is interesting that one of those giving evidence to the committee expressed the view that this omission was probably due to neurosis within the European Union about military matters.

The committee welcomed the emphasis on cybersecurity in the Commission communication and felt that the EU,

“could play an important part in raising standards and awareness in the Member States”.

In his response, the Parliamentary Under-Secretary welcomes the committee’s view that the EU institutions should take the lead by,

“ensuring the security of their own networks and agencies”,

and said that the UK would,

“support the EU institutions on security matters as appropriate”.

Perhaps the Minister could say whether the Government consider that the EU is doing as much as it should in this field, bearing in mind that what the EU does or does not do could also have implications for our national security as well.

The committee said that the establishment of a cybercrime centre, mentioned by the noble Lords, Lord Hannay of Chiswick and Lord Hodgson of Astley Abbots, would enhance the EU’s ability to contribute in this area and that,

“Europol would be best placed to host such a body”.

The view was also expressed by the committee that,

“finding staff with the necessary expertise may not be easy”,

and that:

“Additional staff and funding will be essential if the Cybercrime Centre … is to achieve its key aims”.

The committee went on to say—and the noble Lord, Lord Hannay, referred to this—that:

“The Government’s view that this can be done within existing resources is unrealistic, and inconsistent with their making additional resources available for the United Kingdom’s programme”.

Is it still the Government's stance that any necessary resources are to be found from within the existing budget? If so, why do they think that that is possible? Have there been any further developments in the creation of the cybercrime centre?

The committee's report contains a large number of conclusions or recommendations. The sub-committee involved, under the chairmanship of the noble Lord, Lord Hannay of Chiswick, has given the issue of the EU internal security strategy the thought that it merits. We should be very grateful for its meticulous and thorough report. Security is an issue of increasing importance and sophistication on the part of those trying to safeguard security and those seeking to breach it. As the committee states, security knows no borders, which is a significant reason why the EU has an important role to play.

However, we should also note the warning in the committee's report, repeated by the noble Lord, Lord Hannay of Chiswick, that the Council has an extraordinary number of committees, working groups and other bodies whose tasks overlap and may conflict. As has been said, there is now a new committee with the duty of co-ordinating all the work on internal security. As the sub-committee rightly states, unless it does so, little will be achieved, but that if it does properly fulfil its mandate—or, perhaps, is allowed properly to fulfil its mandate—the EU may play a valuable role in protecting the security of its citizens. One would have thought that the Government would concur with that view. If so, I hope that the Minister can confirm that the Government have that point in mind and are pursuing it within the EU.

We welcome the committee's report. It is an invaluable document. Like the noble Lord, Lord Hannay of Chiswick, I await with interest to hear the Minister's response to the points and questions put to the Government during the debate.

My Lords, as the noble Lord, Lord Rosser, put it, a large number of questions have been put to me and I hope to be able to answer as many as possible in the course of my speech.

I am grateful that there is a least one question that I do not have to answer: the question posed at the beginning of his speech by the noble Lord, Lord Mackenzie of Framwellgate, when he talked about the security problems in our car park. That, at least, is not a matter for Her Majesty's Government; we can leave that to the House authorities.

I start by offering my congratulations to the noble Lord, Lord Hannay, on bringing forward the report and for all the work done by his committee. I also offer my apologies—if it is appropriate for me to apologise; I never know whether it is—for the delay between the publication of his report and the day on which it is debated. I think that that is a matter for the usual channels, not me. I see the noble Lord, Lord Roper, nod, but I am sure that he, as chairman of the EU Committee has been pressing as hard as he can to get this, along with a whole host of other valuable reports that his committee has produced, debated in a timely fashion.

The noble Lord, Lord Hannay, said that he wanted to concentrate not so much on the Government's response but on where it had been less than adequate. It would be useful if I could start by saying a little about where the Government and the committee were in agreement. There is much that both the Government and the committee found to commend in the internal security strategy. We came to many of the same positive conclusions, not least that the scope of the ISS and the priorities established therein are the right ones. The Government and the committee found points of agreement throughout the strategy, including, but not limited to; support for the establishment of the EU policy cycle; the use of joint investigation teams; the value of the EU passenger name records directive—I note the comments of the noble Lord, Lord Hannay, on that subject; and the role of EUROSUR and FRONTEX in enhancing border security.

Again, like the committee, the Government welcome the priority given to cybersecurity in the strategy. We see that the EU has an important role to play in raising standards in, and awareness around, cybersecurity among member states at both the EU level and—stressing points made by a number of noble Lords—the international level. We know that in security matters of this sort there are no boundaries.

In November, as noble Lords will be aware, my right honourable friend the Foreign Secretary successfully hosted the London conference on cyberspace, and I shall be saying a little more about some of the cybersecurity questions later. Delegates agreed that the immediate next steps must involve taking practical measures to develop a shared understanding of the threats and to agree common approaches and confidence-building measures at an international level.

The Government also find common ground with the committee on a number of cross-cutting issues, such as the safeguarding of fundamental rights. I make it clear that this coalition Government are committed to defending security and defending civil liberties so that the Government infringe less on people’s freedoms, while providing the public with effective protection from terrorism and crime. Given the number of EU data-related dossiers which will impact upon security and the need to tackle threats to security while at the same time protecting civil liberties, we would have liked to have seen those issues addressed more directly in the ISS communication. We believe that the alignment of internal and external security policy is also an area where the Government and the committee take a similar position. The Government support the committee’s call for closer working between the Commissioner for Home Affairs and the High Representative for Foreign Affairs and Security Policy.

I should like to discuss one or two points that noble Lords raised. I start with the whole question of funding the cybercrime centre, which the noble Lord, Lord Hannay, raised. He asked me to look at this area but I think he accepted, although he was sorry, that it was something that I could not help on directly. He is no doubt right. I am sure we all agree that there are other savings within the EU budget that could be looked at. We could look at the budget of the High Representative herself to see whether more money could come out of that to help with such a centre. However, we understand that the Commission will bring forward a communication later this year regarding setting up the cybercentre, and it remains the Government’s view that this should be managed within existing resources. However, the question of where those existing resources come from will obviously have to be discussed at a later stage.

The noble Lord, Lord Hannay, also suggested that oversight of Europol should be carried out by an interparliamentary committee. The Government’s view is that Europol now has fairly robust scrutiny and accountability structures in place. We believe that the Europol Council decision, which came into force in January 2010, means that the European Parliament can require the Europol director, the chair of the management board and the presidency of the Council to go before it to discuss Europol-related issues. Additional mechanisms are in place that ensure the transparency of Europol as an EU agency. They include the submission of the Europol work programme and annual reports to the European Parliament. That provides a useful job for the European Parliament, and we think that it is something it can probably do effectively. I believe that the committee chaired by the noble Lord, Lord Roper, and its various sub-committees can also scrutinise the activities of Europol with some vigour, as they have done in the past.

My noble friend Lord Hodgson hoped that the Government would make use of the various and valuable resources within the EU agencies themselves. Our position remains that member states can and should do more to share information, not just among EU agencies but among themselves, and to put that at the disposal of Europol. Improving our information-sharing strategy with Europol is very important in terms of influencing the EU intelligence picture at a strategic and operational level. It is important to make the most of Europol’s analytical capabilities to ensure that it can identify, for example, key persons of interest and operational opportunities for multilateral co-operation.

I turn to a query raised by the noble Lord, Lord Judd. He expressed some interest in the role of the Armed Forces in EU internal security and the committee’s concern that that was an oversight in the communication. We recognise that military assets can play a very significant role in supporting, for example, disaster relief activities, but we also believe that they should be used only as a last resort where there are no civilian alternatives. Decisions in such matters are, we believe, a matter for national authorities acting on a case-by-case basis.

My noble friend Lady Falkner was somewhat concerned about a lack of co-operation between the EU and NATO. I note that concern. We believe that that can be improved and developed, including in new fields such as cybersecurity, which has been raised a great deal. We have pressed both the high representative and the Secretary-General of NATO to encourage further information sharing and increased co-ordination on the ground in all areas between those two organisations.

I turn to structures and, in particular, to the questions relating to COSI which were raised by the noble Lord, Lord Hannay, by my noble friend Lord Hodgson and by other noble Lords. We do not consider that there is a case for the standing committee on operational co-operation on internal security, or COSI—I forget how the noble Lord, Lord Hannay, interpreted those initials—but there are obviously a number of ways in which we can replace all oversight bodies that have a legislative role, such as the Article 36 committee. I want to make it clear to my noble friend Lord Hodgson, who was worried about a lack of representatives from FRONTEX, Europol and others, that my understanding is that representatives from Europol and FRONTEX attend COSI meetings as a matter of course alongside representatives of the other EU and justice and home affairs agencies—for example, Eurojust. It is important that they are there.

I should also address the question raised by my noble friend Lord Hodgson, the noble Lord, Lord Hannay, and I think by my noble friend Lady Falkner about their concerns about the chairmanship and whether it should rotate. I forget who suggested that they were likely to get a rather mealy-mouthed response from me on this; from her reaction, I suspect it must have been my noble friend Lady Falkner. I understand that it is a working group and subject to the same chairing arrangements as other working groups. It is chaired on the six-monthly rotational basis that works for the Council presidency. That means that we hope we have an incoming, outgoing and current chairman and we hope that they will work together over that 18-month cycle as a troika. I think it was my noble friend who suggested that this might be the opportunity to change those arrangements, but I think for the moment it would probably be best to stick to the arrangements that we have in place for that. I am not sure that the COSI chairmanship would be the right one on which to make such a fundamental change. As regards transparency, again, it operates the same rules as other groups do. In some case-sensitive operational issues these matters can be discussed, which means that certain documents obviously cannot be publicly released. That would have to be handled appropriately, as with all other information.

The last point that I want to deal with is the question of ratifying the Warsaw convention. I appreciate that there might be other points, but time may be beginning to run out. I also appreciate that I came under a certain amount of pressure from the committee when I appeared before it the other day. The noble Lord, Lord Hannay, referred to that and criticised my possibly imprecise remarks on ratification, when I said that I hoped it would happen in a year or so. I think he implied, in Sir Humphrey-speak, that that answer was not really as precise as Ministers ought to give. I have to say that, although one would like to ratify that convention, there are always concerns about ratifying and one has to get these things right.

The noble Lord referred to another convention that I was dealing with at Question Time today. We should always be very careful about any ratification; I do not think that we want to be like those countries which—dare I say it—ratify somewhat lightly, because we should consider the precise implications of ratification. In terms of the convention that I was talking about at Question Time, there are very serious concerns about extraterritorial jurisdiction, which would have a major effect on our own United Kingdom domestic law. We need to consider those carefully before we ratify and the same applies, although it is more a question of resource points, to ratifying the Warsaw convention.

As I said, a number of other issues probably need to be addressed, but time is running on—

I fear that the Minister is coming to his concluding comments and I wanted to get in before he sits down concerning the question that I asked about the forward plan, after the London cybersecurity conference of last November. Hungary is due to host the next summit and while I appreciate that he may not have the information to hand now, might he be able to write to tell us what tangible steps Her Majesty's Government are taking to implement the recommendations of the London conference?

My Lords, I have some details somewhere about Hungary. I am not sure that I will be able to help my noble friend at this stage but, if I may, I will write to her in due course. As I said, I feel that I am beginning to run out of time and I am probably keeping the House up later than it ought to be. What I want to make clear is that I will respond to any points that I have not yet answered in due course by letter, but that we will keep the implementation of the EU internal security strategy under review.

As always, we are eternally grateful for the work of our own scrutiny committees: the EU Committee in this House, and all its sub-committees. They do a valuable job, and probably do a better job of scrutiny of EU matters than those of any other Chamber in any other country throughout the EU. On that, they should be congratulated. I also hope that the usual channels—that strange body which the noble Lord, Lord Roper, and I used to be members of many years ago—will take note of all the comments, particularly those of the noble Lord, Lord Hannay, and ensure that in future these matters are debated in a timely fashion, as appropriate.

My Lords, I thank all noble Lords who contributed to this very useful debate. I am particularly grateful to the three members of the sub-committee that I chair who participated in the debate in a singularly apt and helpful manner, but I am grateful also to all other noble Lords. I hope that I will be forgiven if I do not mention everyone, because brevity is the essence of the contribution that I am called on to make at the end of the debate.

I thank the noble Lord, Lord Hodgson, for what he said about cybercrime. He brought a lot of very pertinent evidence to bear and demonstrated that there is a huge cost to all our economies from the—alas—all too successful cybercrime that exists. Therefore, when we come to look at the resources we devote to combating this form of crime, we should bear in mind those massive sums and think about how, not in strictly budgetary terms, they could benefit not only this country but Europe collectively. I am also most grateful for what the noble Lord said about the follow-up to the Foreign Secretary's initiative last November, which the committee warmly welcomed. Perhaps I dare say that we envisaged such a conference before it was even a gleam in the eye of the Foreign Secretary. We had written a report on cybersecurity some time previously, in which we said that we hoped to see the Government taking an initiative to deal with the global issues that the noble Lord, Lord Judd, so wisely put his finger on.

I will make just two points about the reply of the noble Lord, Lord Henley. I am grateful to both noble Lords on the Front Benches for their offer of thanks and support to the committee; it is of great benefit to us. My first point is on the budgetary issue. I will not go any further because the response given today by the noble Lord, Lord Henley, was helpful. However, I must draw his attention to an Explanatory Memorandum that his department put its name to recently, which was less helpful than the response that he gave across the Floor of the House this afternoon. I think it was in paragraph 26 of the memorandum—I cite from memory—that the department stated that any increase in the resources needed for, let us say, cybercrime or anything in the justice and home affairs area must be found within that chapter of the budget. That is unbelievably restrictive and completely contrary to the policy that has been pursued by successive British Governments for I do not know how long, which is that we should look for transfers and shifts in the priorities of the budget, most obviously away from excessive expenditure on agriculture, and should focus the budget on higher priority areas.

The answer that the noble Lord gave just now was spot on. My committee is not saying that we should increase the overall resources allocated to the European Union; we are saying that we should reprioritise them. The Minister’s answer said precisely that: if savings can be found in other parts of the budget, it will be fine. However, it is not what the Explanatory Memorandum stated. I will not go on any longer because the EU Select Committee that is preparing a further report on the budgetary aspects of the multiannual financial framework will come back to this point in that context, and the Government will have an opportunity to give their considered response. I hope very much that the department for which the noble Lord is responsible will play its modest role in ensuring that it is properly understood that if we say that everything has to be found within individual chapters, it will be a recipe for stasis and for no change at all, and that no other member state will have any incentive to support reductions if resources cannot be moved to higher priority areas.

I turn finally to the noble Lord’s reply on the institutional point. I think that there was a slight misunderstanding. The approach that the EU Select Committee and my sub-committee supported was not to create any new institution. However, we are saddled with the fact that the Lisbon treaty instructs the institutions to provide oversight that brings together national Parliaments and the European Parliament. We are not proposing any shift because these meetings already take place on an annual basis between the chairs of the home affairs committees and the LIBE committee of the Parliament. We are merely suggesting that the Government throw their weight behind somewhat formalising that structure as the basis on which to keep an eye on Frontex, Europol, Eurojust and so on. It is totally cost-effective. It does not cost a penny, and it involves no new institutions. I mention that because I think that the Minister rather implied that we were thinking of something more ambitious. We are not.

I thank all those who participated and thank the Minister for his extremely thoughtful response. I am a little sad about the Warsaw convention, and I still hope that he can find some way to accelerate that. It is quite clearly less difficult than what he was dealing with earlier this afternoon. I previously dealt quite a lot with extraterritorial issues, and I understand that they bristle with difficulties. We are not really talking about that sort of thing in terms of the Warsaw convention, and I hope that he will find some way of moving to ratification of that pretty quickly because I do not think it does our reputation any credit and I do not think it is in the interests of this country that people pick and chose the things that they do or do not ratify.

Motion agreed.

House adjourned at 5.12 pm.