House of Lords
Monday, 21 May 2012.
Prayers—read by the Lord Bishop of St Edmundsbury and Ipswich.
Israel and Palestine: West Bank
My Lords, the Government are aware of the recent order by Israeli authorities to Palestinian farmers in the West Bank village of Deir Istiya to uproot 1,400 newly planted olive trees. On 8 May, our embassy in Tel Aviv raised our concerns with the Israeli authorities responsible for the Occupied Palestinian Territories. We encourage and expect Israel to adhere to its obligations under international law.
I thank the Minister for his reply. Given that the Israeli Government seem to be changing the rules about land ownership on the West Bank at whim, what further pressure can the UK Government bring to bear on the Israelis to cease this illegal activity immediately and to allow the farmers to continue the cultivation of their trees, which is also their principal economic activity?
I understand the concerns of my noble friend, who has direct personal experience of the situation in this area. There are difficulties in that there all kinds of different rules governing the ownership of land—layer after layer of them arising from the different status of this area over several decades. This causes confusion and difficulty, and my noble friend is right to identify it. These are the problems. We keep raising them with the Israeli authorities. Obviously, if the trees were mature and established, it would be even worse, as ancient olive trees are of great value, but even with these newly planted trees, there remains a constant dispute about whether the area is a nature reserve, as the authorities suggest, or an area where planting can properly take place. We shall keep monitoring the situation very closely indeed.
Is it not the case that Battir village, one of the villages in which the olive trees are slated to be removed, is the still the subject of a legal battle and no final decision has been taken on it? Is it not also the case that the economy of the West Bank is growing quite markedly—at the rate of 6% to 7% per annum—productivity is going right up, towns that used to be the centres of terrorism are now centres of economic development and large numbers of the barriers and checkpoints have been removed?
The noble Lord is quite right to bring forward the good news to balance the bad news. Unfortunately, there is a slice of both. He is right that in Ramallah and related areas industrial activity has increased and major orders are fulfilled, not least for the British market, thanks to the efforts of the noble Lord, Lord Stone, and others in this House. That is a very encouraging side of the West Bank, but there is a discouraging side, of which I am afraid this constant friction about what the Palestinian farmers may do and—if I may raise an even more controversial point—what the settlers are allowed to do, is the negative aspect of an otherwise potentially good story.
My Lords, in addition to the problem of trees being uprooted, many Palestinian communities on the West Bank are finding their water sources being diverted to illegal settlements. What are the Government doing to persuade the Israeli Government to take action against illegal settlers, especially when essential resources, such as water, are being diverted?
I think my noble friend is well aware, because I have said it many times in your Lordships’ House, that the British Government regard the settlements policy and the expansion of settlements as illegal. We also deplore the recent tendency, which seems to be going against previous trends, of legalising previously illegal settlement outposts. These are again matters that we raise again and again with our opposite numbers in the Israeli Government. We believe that the policy of settlements is one of the barriers to the higher purpose we all want to achieve of reopening negotiations and getting a long and lasting settlement of the Israeli/Palestinian situation.
My Lords, I am sure that the House will fully understand and sympathise with the difficulty that the noble Lord, Lord Howell, has in answering Questions of this sort. It has been the case for many Ministers from both major political parties over the years. Basically, they have to express concern about what is happening, which is the profound and fundamental illegality of one country occupying another country’s land. It seems to everyone who looks closely at these things that all we seem able to do is express our concern and raise the matters with the Israeli authorities. Surely, the question should be: at what point do the Government of Israel face any disadvantage whatever—at the moment, there seems to be none—from continuing with the illegal settlement activities?
I am grateful for the sympathy of a former Chief Whip for a Minister when there are two sides to these questions and an element of balance is essential in assessing the realities and prospects. There is more that this country can do and seeks to do, collectively with our allies such as United Nations colleagues, within the EU and bilaterally. We can press on the various points that may yield some progress towards reconciliation and settlement. Israel’s security has to be considered. The noble Lord says that there is nothing to lose but always at the back of people’s minds are questions of Israel’s security. At the same time, these are occupied territories. We want to see an end to that process and a two-state solution that is not undermined by the settlements. These are all aspirations towards which we can and do work, beyond being concerned day-to-day about specific issues such as the one we are discussing now.
My Lords, I declare an interest as a producer of olive trees. I have only 200 but I assure your Lordships that an olive tree takes a long time to grow. It has much significance, not least because of Gethsemane and the Mount of Olives. There is politics in this as well. Will my noble friend tell me what the economic deficit is here? What cost is being incurred by uprooting these olive trees and what is their value?
As we are dealing with newly planted trees, their value is all in the future. However, I am grateful to my noble friend for his reminder of the significance of the olive tree. I am full of admiration for his growing them because I was told that you could not grow olive trees with decent olives north of Valence in France.
Arms Trade Treaty
My Lords, the United Kingdom is firmly committed to securing a robust and legally binding arms trade treaty to regulate effectively the international trade in conventional arms. The final treaty should have a demonstrable humanitarian, security and development impact, and be capable of implementation in practice to ensure the broadest participation of states, including major arms exporters. This should be achieved without creating an undue additional burden for the legitimate defence industry.
I thank the Minister for that helpful reply. I am sure he agrees with his right honourable friend the Minister for Overseas Development, who, when speaking to the International Institute for Strategic Studies last week, said that the Government’s principal objective between now and the negotiations in July is to “raise the profile” of the arms trade treaty. Does the Minister not agree that the two steps that the Government could best take to do that would be, first, to announce immediately that the Foreign Secretary will attend the opening of negotiations at the UN in July; and, secondly, for the Prime Minister to give his full support in a speech between now and the opening of the conference? Will the Minister lend his support to those two measures?
To be fair, I say to the noble Lord, who obviously has been very much at the centre of these things, that the full support is most certainly there. All along, from the time that this initiative began in 2008, the British Government, under the previous Labour Administration and under this Administration, have given very full support to this and we want it brought to the point where we can get a draft treaty. However, as he knows, it is no use being too starry-eyed about overcoming all the difficulties. As to ministerial attendance or ministerial speeches, we will have to look at that. I know that this is a high priority. Of course, my right honourable friend the Foreign Secretary has many high priorities and this most certainly is one of them, so we will have to take a decision on attendance in due course.
My Lords, does the Minister accept that the Government and civil servants should be warmly congratulated on their hard work and consistent commitment to achieving this treaty? Does he agree that it would be better to have no treaty than an inadequate, weak treaty? In that context, does he further agree that talk of taking into account the criteria, such as human rights, end-use and the rest, is simply not enough? There must be an absolute refusal of permission where these matters are in any kind of doubt.
The noble Lord is on to something, which he has been on to before. He has been second to none in arguing the case for a robust treaty. Indeed, it is the Government’s view that this treaty should be robust and that a weak treaty which would have the effect of legitimising lower standards of arms control, arms export, arms import, arms trade and arms transport would be no addition at all. He is entirely correct that this needs to be a robust treaty. We have aimed for that. We believe that certain things are in reach. Countries which appeared to be extremely negative to start with are now taking a more positive and constructive attitude, and we aim to make substantial progress on a robust treaty.
Perhaps I may say how very welcome the reply of the Minister has been, as was the speech by the Minister for International Development in the past few days. Given that 153 of the 193 member states of the United Nations have strongly supported the arms trade treaty, will the Minister say whether in the last analysis we would be prepared to walk away from an agreement based on a weak consensus?
I am not totally clear of my noble friend’s question. She supports what has been achieved and, as she rightly says, a considerable number of countries have signed up. However, countries which we thought might be much more reluctant have not done so. Certainly, there are key issues yet to be finalised on weapons to be covered and export criteria. These are difficulties. If my noble friend’s question was whether we would walk away if it looked like too weak a treaty, I say that we do not intend that to happen. We intend the treaty to be at least where it is now, with broad agreement discussed on many crucial issues and out of which we can produce a robust treaty.
My Lords, we have long been supportive of a robust attitude to such a treaty. Can the Minister offer any advice as to whether the Government are able to help and support some of those fragile nations which are emerging from conflict or are still in conflict to be able to take part fully in these negotiations? They have so much to gain from a robust treaty.
These fragile nations certainly have much to gain and we want to see their participation. Like all nations, they have a legitimate desire to defend themselves. One must be realistic: if one wants to protect people and nations, some hard-power defence—in other words, weaponry—is needed. There has to be support for sensible, non-repressive arms supplies across international barriers, which can support the proper protection of young nations as they struggle to establish themselves and achieve stability against incursions from outside.
My Lords, in their vision for Britain’s economic future, do coalition Ministers foresee us earning our living to a diminishing extent by contributing to the saturation of unstable areas of the world with weapons? In the process, we tie ourselves into long-term relationships with unsavoury regimes while committing disproportionate amounts of resources that would otherwise be used to construct a more balanced and responsible economy.
The noble Lord paints a bad picture of the international arms trade, and it is bad—largely because of illegal arms trading, with blind eyes being turned by Governments. In our case, we have one of the most rigid supervisions of criteria applications for arms export in the world. We operate on a very close case-by-case basis, and it is generally agreed looking back over the last two tumultuous years in the Arab spring that very rigid controls have broadly operated. Certainly, we have received no evidence to the contrary. But his broader picture of a world awash in arms is precisely the one that must cease and to which this arms trade treaty, if we can get it in the form we want, will make some contribution. It will not cure all the problems but it will make some contribution.
I will have to see whether there is a draft at this stage. The next stage of conferring in July is aimed at creating a draft, upon which thereafter a treaty could be built. If there are documents that can be usefully circulated, I will certainly look and see what can be done.
My Lords, I am not going to have much time for any chillaxing today.
We are concerned about the disappearance of Mr Ilias Ali. On 9 May, our High Commissioner to Bangladesh and ambassadors of eight other European countries called on the Bangladesh authorities to conduct thorough investigations into disappearances, including that of Mr Ali. In meetings with the Prime Minister’s Office and senior officials in the Ministry of Foreign Affairs, we have urged the Government to do all that they can to locate Mr Ali and investigate the circumstances of his disappearance.
I am grateful to the noble Lord for that reply and for the expressions of concern by the British Government, but is he aware that there are a series of similar cases, including that of Mr Nazmul Islam, a local leader of the Bangladesh Nationalist Party, who was abducted and murdered last December, and that according to the BBC 30 people have disappeared in that way in the past year? There are allegations, too, that the police’s Rapid Action Battalion is involved. In those circumstances, do Her Majesty’s Government accept that this reflects very badly on Bangladesh and its obviously fairly fragile democracy? What support can be given to ensure that the individuals concerned are rescued and restored to their families and that this sort of occurrence stops?
The noble Lord is right that this kind of development reflects badly on the political culture of any society in which opposition leaders are arrested or worse. He asked what can be done. The EU had a heads of mission visit in February to Bangladesh and stated its concerns very clearly. We are fully behind that. In addition, our senior Ministers, including my right honourable friend the Foreign Secretary, have been in direct personal contact with senior officials, including the Foreign Minister of Bangladesh, and we take every opportunity to express our worries. It is a concern for us. People may ask why we are worried about Bangladesh. It is an important nation and the destination of one of DfID’s largest programmes, with £1 billion due to go to support Bangladesh development from this country over the next four years. It is a nation that we want to see stable and prosperous and to build on its economic achievements, which are beginning to show dividends. That is the rather encouraging side of an otherwise bad story.
My Lords, I had the opportunity to meet Mr Ilias Ali in Luton when he visited the United Kingdom a few months ago and raised human rights issues in Bangladesh with him, as I have with the Minister concerned. Sadly, we hear that Mr Ali has disappeared, along with his driver. However, this is not an isolated case. The New York-based Human Rights Watch has expressed concern over the disappearance of at least 22 people this year. A Dhaka-based organisation says that more than 50 people have disappeared since 2010. Security agencies, including the—
A whole range of concerns have been expressed by my noble friend. I understand his feelings. This is not a good story at all. He asks whether we will press for impartial and transparent investigations into these disappearances. We do so, have done so, and will continue to do so. In some cases, we will be pressing at an open door and there will be investigations, but in other cases we may not be so successful. However, one has to accept that the drive for ending this dark atmosphere over Bangladeshi politics must come from within that nation. We support Bangladesh in its efforts to stabilise its politics, to move towards the best kind of elections at the next appropriate time and to develop and lift its people out of poverty and the appalling environmental challenges that they also face and with which, sadly, we are all too familiar.
My Lords, will my noble friend ask the Bangladesh Government whether they will issue an invitation to the United Nations working group on disappearances, which is the proper body to investigate not just the recent disappearances mentioned in the Question but those going back a long way, most of which are attributed to the RAB?
My Lords, it is too soon to say if and when general budget support will be restored. However, the UK Government have already agreed to release £10 million in urgent health sector support and a further £20 million in previously agreed funding. The Secretary of State for International Development will discuss Malawi’s further requirements when he visits shortly.
I thank the Minister for that Answer and welcome the support that has already been given by the UK Government to the new Government in Malawi. President Banda has graciously praised the early successes of her predecessor but has taken swift action to rectify some of his mistakes. The new president is very firmly focused on economic management, building better international relations and improving governance in the country. On his forthcoming visit, will the Secretary of State for International Development raise the issue of general budget support from the UK and from the European Union as both sums would make a considerable difference if they were reintroduced before the end of this financial year?
The noble Lord’s involvement in and support for Malawi is well known, as is that of the Scottish Government. We very much welcome the peaceful and constitutional transition following the previous president’s death in April. Early discussions with President Banda, who is the second female head of state in sub-Saharan Africa, have been very encouraging and we look forward to working with her to resolve many of these problems. The noble Lord is absolutely right: she has shown a lot of initiative in moving various areas forward. I am sure that the Government of Malawi will raise with the Secretary of State the issues that the noble Lord has mentioned. The Secretary of State is looking carefully at how best to support Malawi. However, it is one thing to say things; it is another to make sure that certain changes are delivered.
My noble friend will be aware that a step change in economic management and governance standards in Malawi is critical, not just to bring immediate relief to its people through the NGOs on the ground but to secure the release of some $750 million in grant aid, which is currently blocked and is clearly needed in the general budget and elsewhere. Importantly, securing investment to interconnect Malawi and Mozambique’s national grids, for example, which are essential to stabilising Malawi’s industry, must also be considered. What action is DfID taking with resident NGOs, such as World Vision and others, to ramp up financial accountability and good-governance standards in Malawi to ensure that inward investment such as that will start to flow?
My noble friend is quite right to say that these issues need to be addressed, and poor governance is of course the root cause of much poverty. DfID is putting a considerable amount into seeking to address that issue, so that the Government of Malawi can be held to account—not least in the way that they manage their public finances, to which he referred. We are pleased that the new president is now talking to Mozambique about restarting discussions on the energy interconnector, which is encouraging and is important to industry in the area. However, first and foremost, it is important to try to address the economic problems in Malawi. DfID is in constant contact with Malawi, which is also in constant contact with the IMF. An IMF team is there right now.
Is there not common agreement in all quarters of the House that it is essential that our overseas development money is spent efficiently and without corruption? Does the Minister accept that good governance is essential in order for that to be done? Will she therefore make sure that budget support, which is a very important part of good governance, is restored as soon as possible?
The noble Lord is absolutely right that aid money must be used well, and that is why the general budget support was removed. Until we can be certain that the protections are there, it would not make sense to restore budget support. However, money is going in, meanwhile, in terms of development, and the contribution from DfID to Malawi is as great as ever but is channelled through other routes.
Lord West of Spithead: My Lords, I declare an interest as patron of the Chauncy Maples Trust, which is renovating a British-built ship, built in the 19th century, on Lake Malawi to provide healthcare to 120,000 people around the lake who currently receive no healthcare. Malawi is, of course, one of the 10 poorest nations in the world. Half the population earns less than a dollar a day, and this aid is very important. Do we now have a full high commission there to ensure that we are able to monitor things correctly, including money going down the wrong channels, to make sure that money is applied properly to help this country in the way that it needs?
It is indeed extremely important to make sure that that kind of support is in place, and DfID has been supporting healthcare in Malawi very strongly. The noble Lord will be aware that the previous high commissioner was expelled by the former president, but the UK has decided to appoint a new high commissioner—a process that is going through at the moment. Meanwhile, the new president has decided to appoint a new high commissioner to the United Kingdom—and that, we hope, will help.
My Lords, I join the Minister in welcoming the leadership in Malawi of Africa’s second woman president, Her Excellency Joyce Banda. Is it not clear that if economic catastrophe is to be averted in Malawi—a country in which 39% of the population lives on less than a dollar a day—she will need a lot of sustained assistance? In those conditions, will the Government seek not only to encourage donors to release funds for Malawi but to discourage the current IMF mission from any recommendation that would further devalue the currency and therefore inflict potentially ruinous extra inflation on the economy of Malawi?
The noble Baroness is quite right. With these encouraging signs, it is extremely important that President Banda is supported in seeking to deliver these changes. I note that the Bank of England has, for example, sent technical support, as Malawi has just devalued its currency. Therefore, it is in a better situation in some ways but in a very volatile situation in others. International donors and the IMF are acutely aware of the need to provide support in these circumstances and to make sure that the funding is there so that some of the adjustments to the economy can be brought forward and the changes that President Banda has suggested can then be better delivered.
Canterbury City Council Bill
Leeds City Council Bill
Nottingham City Council Bill
Reading Borough Council Bill
City of London (Various Powers) Bill [HL]
City of Westminster Bill [HL]
Transport for London Bill [HL]
Motions to Resolve
Canterbury City Council Bill
That this House resolves that the promoters of the Canterbury City Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
Leeds City Council Bill
That this House resolves that the promoters of the Leeds City Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
Nottingham City Council Bill
That this House resolves that the promoters of the Nottingham City Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
Reading Borough Council Bill
That this House resolves that the promoters of the Reading Borough Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
City of London (Various Powers) Bill [HL]
That this House resolves that the promoters of the City of London (Various Powers) Bill [HL], which was originally introduced in this House in Session 2010-12 on 24 January 2011, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
City of Westminster Bill [HL]
That this House resolves that the promoters of the City of Westminster Bill [HL], which was originally introduced in this House in Session 2008-09 on 22 January 2009, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
Transport for London Bill [HL]
That this House resolves that the promoters of the Transport for London Bill [HL], which was originally introduced in this House in Session 2010-12 on 24 January 2011, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).
Small and Medium-sized Enterprises
Motion to Approve
That it is desirable that a Select Committee be appointed to consider Her Majesty’s Government’s assistance and promotion of the export of products and services by small and medium-sized enterprises, and to make recommendations, and that the committee do report by 28 February 2013.
Public Service Provision
Motion to Approve
Motion to Approve
Olympic and Paralympic Games 2012
Motion to Take Note
My Lords, 2012 is a very special year for Britain with three historic events to look forward to: first, the Diamond Jubilee, bringing the nation together to celebrate the 60-year reign of Her Majesty the Queen, the second-longest-serving monarch in British history; secondly, the London 2012 Festival, the UK’s largest ever festival of arts, culture and creativity, which will run throughout the summer with artists joining us from all over the world; and, thirdly, the Olympic and Paralympic Games. The greatest show on earth is coming to the UK. London is making history by becoming the first city ever to host the modern Games for a third time—1908, 1948 and 2012. With the arrival of the Olympic flame over the weekend, the countdown to an extraordinary period for the country has well and truly begun.
We want London 2012 to be an outstanding Games that enhances our global reputation. We also want it to be a Games for everyone, with opportunities for people to join in the spirit of celebrations wherever they live, whatever their age and whatever their interests. Nowhere is this better reflected than in the torch relay, which will visit more than a thousand cities, towns and villages across all four nations. The Olympic flame will come within 10 miles of 95% of the population, while giving us a chance to showcase the people and places that make Britain great. The coming weeks will provide an extraordinary advertisement for the different regions and nations of the UK, and we want to maximise the tourism benefits as much as possible.
Of course, the arrival of the torch also focuses our minds on how close the Games themselves are. With fewer than 70 days until the opening ceremony of the Olympic Games and with exactly 100 days until the Paralympics begin, I am pleased to say that our preparations for the Games are in a very good place.
I should like to give your Lordships an update on four key areas of preparation. The first is around the construction and planning of the event. Anyone who has visited east London cannot fail to see the transformation of the skyline across the Lee valley. A series of iconic new sporting venues is complete, such as the Olympic stadium, the striking aquatic centre, the velodrome, the Copper Box, Eton Manor and the Lee Valley White Water Canoe Centre which have already successfully hosted world-class test events. The quality and timeliness of our preparations have been recognised by the International Olympic Committee which has praised our efforts on each of a succession of inspection visits. The Olympic and Paralympic programme remains on time and on budget. Of the original £9.3 billion, around £500 million remains as uncommitted contingency. The big build has been finished and the Olympic delivery authority has delivered more than £900 million-worth of savings. These savings have allowed us to meet other essential Games needs without breaking the overall £9.3 billion envelope.
The ODA’s efforts represent a great advertisement for the British construction industry which is now winning other major contracts. It’s excellent health and safety record has set new standards for the industry and its recruitment and training initiatives, such as the Women into Construction project have broken new ground. LOCOG has been very successful in raising the money it needs from the private sector despite the difficult economic conditions. LOCOG has secured in excess of £1 billion from international sponsors, broadcast rights holders and domestic sponsors and has generated unprecedented ticket demand both for the Olympics and Paralympics. More than 7 million tickets have been sold so far, setting the scene for full venues at Games time and a wonderful atmosphere for the competing athletes.
The second area is safety and security. Our priority is to deliver a safe and secure Games for all and we have adopted a no-compromise approach to safety and security. The UK has an excellent record of policing major events, and the Games will be no exception. However, the Olympics and Paralympics are first and foremost a celebration of sport. While the Government will ensure that this celebration is safe and secure for participants and visitors, the security response will be proportionate and in keeping with the culture and spirit of the Games. We are keen to strike the right balance between the celebration of the Games and the need to keep everyone safe.
The third area is transport. The £6.5 billion transport infrastructure improvements leveraged by the Games will be of long-term benefit to everybody. The key elements have been delivered before the Games have begun, including major infrastructure improvements to build capacity across rail and London Underground. Examples are: £125 million upgrade to Stratford regional station which has trebled the station’s capacity. We are expecting some 120,000 people to be using the station at peak times. There is also the extension of the North London Line and improvements to the Docklands Light Railway. There is a new high speed domestic rail service from Kent to Stratford International station, which opened in December 2009 and the enhancement of 75 kilometres of east London’s cycle routes as a result of £10 million investment by the ODA.
Fourthly, I turn to the legacy of Games. This above all, as the IOC has recognised, marks London 2012 as different from previous Games. The physical legacy is impressive. The athletes’ village will provide more than 2,800 homes, 35% of which will be affordable housing. The new £1.43 billion privately funded Westfield shopping centre opened in Stratford in September 2011, providing 10,000 jobs. It had more than 1 million visitors in the first fortnight after opening. Six out of eight permanent venues on the park have had their future secured beyond the Games. No previous host city has come close to this. Legacy operators for the other two permanent venues—the Olympic stadium and the international broadcast centre and main press centre—are being actively sought. Plans for the future of the park, led by the London Legacy Development Corporation under the stewardship of the mayor, are going well, and we look forward to hearing from the noble Baroness, Lady Ford, on these matters.
Five world-class permanent sporting venues—the Olympic stadium, the aquatics centre, the velodrome, the Copper Box, and Eton Manor—will provide community facilities as well as being used for elite sport. There will be a wider economic legacy for the entire UK. The Olympic Delivery Authority alone has awarded £6 billion-worth of contracts to build and supply the Games to over 1,500 suppliers. Over 98% are UK-based companies, half of them based outside London. Many more companies have won work in the supply chains of the ODA.
Hosting the Olympic and Paralympic Games will provide a unique opportunity for the UK to showcase the best of its manufacturing sector, innovation and creativity, and to attract new visitors, investment and export. The British Business Embassy at Lancaster House will showcase the UK as an outstanding global investment destination and a springboard for global growth. The programme of events which they are hosting includes a Global Investment Conference and a series of sector-specific days, aimed at elite overseas businesses, along with UK businesses with innovative products and services to export, on an invitation-only basis. The Embassy includes the “Imagine: Great Ideas Made Real” digital showcase to challenge perceptions of the UK and demonstrate its creative and innovative strengths.
This year also presents a once-in-a-lifetime opportunity for the tourism industry in the UK. The “GREAT” campaign seeks to stress the excellence of our culture, heritage, sport, and shopping and of the holiday experience in Britain. We want to reinvigorate our appeal in important markets where we have seen decline, such as the United States, and to build our brand image in vital emerging markets like Brazil, India and China.
We want to ensure our tourism industry remains one of the largest in the world. In addition to attracting inward tourism, we want to encourage our domestic tourism offer to thrive and to promote the staycation effect. VisitEngland is asking tourism businesses to give visitors another reason to stay in the UK by encouraging them to offer 20.12% off and other great offers. This means 20.12% off accommodation stays, meals, and other experiences. Offers and deals could include three nights for the price of two, or two-for-one entry at attractions. I fear the mathematicians among us will realise that those particular discounts do not entirely reflect a 20.12% discount, but they will understand the spirit of these offers.
My Lords, that may well be the case, but the torches are actually the property of the people running, and I do not think the Government could get directly involved in that.
As part of the 2012 legacy, we also wish to reverse the decline in sports participation. The Government launched a new youth sport strategy on 10 January with £1 billion of lottery and Exchequer funding. This will mean a much greater focus on young people, particularly 14 to 25 year-olds, and this strategy aims to deliver: consistent growth in sports participation in the 14 to 25 age range and across the adult population; an excellent sporting experience to keep people playing sport; high quality talent development to create a better talent pool and help those with real potential to make the grade; and a growth in participation by people who have disabilities, including the most talented.
The School Games is the Government’s new framework for competitive school sport. It is a key strategy for creating a meaningful sporting legacy from the 2012 Olympic and Paralympic Games and to increase the number of pupils participating in competitive sport. More than half the schools in England—around 13,000—have signed up, including primary, secondary, special and independent schools. The UK and Brazil, which will host the next summer Olympic and Paralympic Games in 2016, have jointly written to the IOC and to the International Paralympic Committee to ask them to encourage future bidders for the Olympic and Paralympic Games and Youth Olympic Games to have in place a competition structure similar to that of the School Games.
The International Inspiration initiative is delivering on the promise made by my noble friend Lord Coe in Singapore in 2005 to,
“reach young people all over the world and connect them to the inspirational power of the Games, so they are inspired to choose sport”.
The programme develops a series of activities tailored to each country’s needs, to introduce a more systematic approach to delivering sport in school and community settings for all age groups, based on practices that have been successful in the UK. To date, more than 12 million young people in 20 countries have been reached through the International Inspiration programme. Since 2007, the programme has helped train 100,000 teachers, coaches and young leaders. Thanks to the phenomenal efforts of my noble friend Lord Bates, the Olympic Truce has a much higher profile than in previous Games. We look forward to hearing more from him about support for the Truce.
We are not complacent and recognise that challenges still lie ahead in 2012. For example, during the course of the Games we will be hosting 26 simultaneous world championships; converting for the Paralympics and then hosting another 20 events; and coping with millions of extra journeys on our transport systems. However, the omens are good for us to deliver a safe, successful and memorable Olympic and Paralympic Games, with legacy benefits for the whole country.
Before I close, I should note that the noble Baroness, Lady Grey-Thompson, withdrew her name from the speakers list out of courtesy to the House because, with 100 days to go to the Paralympics, she was unable to stay for the whole debate. On behalf of the House, I thank her for observing that courtesy and express appreciation for all her achievements and for her work on the Paralympics, and assure her that she will always be welcome to raise any matter, either inside or outside the Chamber.
The Government acknowledge the work of the previous Administration in the planning and organisation of the Games. We are grateful for the cross-party support in the work that has still to be done, and for the healthy scrutiny from your Lordships, particularly given the levels of Olympic and Paralympic expertise that we have in the House. I look forward to hearing all contributions in the debate, and to the UK delivering a Games of which we can all be proud.
My Lords, I add my congratulations to the Olympic Delivery Authority on delivering the Olympic park to LOCOG on time and, as the Minister said, on budget. We should congratulate not only the main contractors but the subcontractors—the suppliers of the products and the materials that have gone into creating the Olympic park. It looks wonderful and is a tribute to the companies that have worked so hard.
I agree with Hugh Robertson MP, who wrote in the February Olympic Quarterly Report:
“One of the greatest adverts for the UK from the London 2012 Games is the Olympic Park itself, which showcases the best of British architecture, engineering and construction”.
The Minister repeated this. It is indeed a wonderful showcase for our companies, which supplied not only the innovative products about which the Minister spoke but also the recyclable materials—products that make this a green Olympics. The floor coverings, waste bins and much of the pipework are all recyclable. The new road surfaces use waste material. The energy centre burns waste material. New materials were developed for the roofing membranes, for the 80,000 seats in the main stadium and for the 6,000 seats in the velodrome. The water and sewerage services are most ingenious. As the Minister said, it is a showcase for the best of British industry. What a good story we have to tell—a story that British companies should tell out loud. They can supply these materials and their products to construction companies in all parts of the world.
However, they cannot tell it. Why? In order to get the business, companies had to sign an agreement that they would not publicise their products without permission from LOCOG. Despite many applications, none of the companies that supplied the products and materials that I have mentioned was given permission. A few others have. What is more, companies are not even going to get permission after the Games finish. Why? LOCOG says that it is because, quite rightly, it is protecting the rights of the generous sponsors. However, no one is asking to use the logo, not even the phrase “London Olympics 2012”. They are not allowed to show any association with the Olympic Games. Even using the word “Olympics” or the number “2012” is banned. Permission to publicise this information has been turned down.
The Minister spoke of the torch relay. To give her a flavour of what is going on, I refer noble Lords to a report in this morning’s Guardian. When the Olympic torch started out from Plymouth, LOCOG officials confiscated leaflets advertising an Olympic breakfast at a local café. The officials said—wait for it—that “flaming torch bacon and egg baguettes”, which were on the menu, contravened branding guidelines. Does the Minister really think that firms such as McDonald’s and Coca-Cola are concerned about calling a bacon and egg baguette “flaming torch”? Are the Government really going to defend the ridiculous?
One indignant subcontractor got his trade association to write to the Prime Minister. It asked him to justify his claim that:
“We expect these events to generate at least £1 billion for British businesses and they are vital to secure our long-term return to sustainable growth”.
How much easier it would be to make this happen if companies could tell potential customers about their products and demonstrate how well they work. A tie manufacturer wrote to me last week saying that his company had produced a fabric which showed the three Olympic Games that have taken place in Britain, and they wanted to produce a tie with it. However, LOCOG would not let the company call it an “Olympic tie”, or anything of that name, and so it has had to call it a sporting tie. Yes, we do still produce fabrics and ties in this country. The Minister said that the Olympic park should be a showcase. Should it not also be a shop window?
The response to the letter came from Mark Prisk at BIS. He agrees that the Olympics should be a showcase for British business and points out that some of these products have been included in the Beyond 2012 legacy document and the suppliers directory. He considers this to be proportionate. Proportionate to what? The proportionate fact is that the taxpayers paid 90% of the cost and the sponsors 10%. I will not labour the party political points that can be drawn from this; I just await the Minister’s reply.
This matter was drawn to my attention in my capacity as the honorary president of the Materials Knowledge Transfer Network, a commercial and technological organisation of some 4,500 businesses, universities and research organisations, all working to improve the materials in our lives—and they are angry. Why are they angry? If the Government really cared about this, they would have cleared it up months ago. I am angry because, instead, someone like me has to try to shame Ministers into doing something about it at the last minute.
There are 68 days left until the opening of the Games. Will the Government make good their rhetoric and take steps to allow British businesses to use the Olympics as a shop window for all the wonderful materials and products they have supplied—and also allow cafés to serve celebratory breakfasts?
My Lords, I thought I would hear nothing new about the Olympics during this debate. The noble Lord, Lord Haskel, has surprised me with the idea of flame-grilled breakfasts not complying with the rules. However, I remember when we first discussed the use of the Olympic symbol in this House—it was a good few years ago and I think the noble Lord was part of the Government of the time. Protection of the Olympic symbol is very entrenched in the Olympic movement. I will say no more because the noble Lord, Lord Moynihan, is in the Chamber. We have possibly the greatest expert on this subject on the government Back Benches—or at least a far greater expert than me. Defending the Olympic symbol and gaining the best revenue from it is an interesting subject and there has been a great deal of movement on it.
When we look back at preparations for the Olympics we have to look back at the process we have gone through. Nobody expected us to get the Games or at least nobody admitted that they expected us to get them. When we did we were surprised. I thought we had done something very good in preparing the bid as it made us address planning and structural changes and to look seriously at them. It came on the back of a successful Commonwealth Games and unsuccessful bids. It was the first soft legacy from the unsuccessful bids. The real question is how we carry on the things we gained from this, especially the soft legacy and the planning.
The noble Baroness, Lady Ford, will undoubtedly be able to tell us more about the bricks-and-mortar approach. However, the thing of great interest we can take away from the Games and which will give a long-lasting legacy is the cultural change about how we use big events and learn from them for the smaller events that follow, which are still of world significance. For instance, the Cultural Olympiad, the Olympic festival, will provide months of entertainment and value—how do we learn to piggyback events successfully to get the best out of them? How do we learn to use advertising over and over again to reinforce a message? We must take this into account.
We have been greatly successful in making sure that everybody has bought into the idea that this is an important event—even if you hate it. Even if you cannot stand the idea of the Olympics it will change your life in certain ways. Everybody expects to gain some positives—that is the real thing that has come out of it. As for the process of the bid itself, apparently the noble Lord, Lord Coe, congratulated me on coming out with the most unusual compliment he had ever heard when I said, “Thank you for making the Olympic project dull”. Nothing has gone very badly wrong. The noble Baroness, Lady Ford, has an expression on her face, in which case problems have been kept quiet. We gone through the process of making sure the Games have been delivered on time and on budget. Whatever bumps and bangs there have been, that is how you will ultimately be judged. If we have done that, what else can we do?
We have annoyed a lot of journalists who had doom and gloom stories on budgets ready to be printed or sent to various people, but what else are we going to get out of this in the long term? One of the real benefits we have already taken, and it is very appropriate we raise it today because we are only 100 days away from the start of the Paralympic Games, is that the Paralympics have come to be seen as a partner on even terms, or at least close to it. That is something I did not expect to see in my lifetime. The “Does he take sugar?” attitude towards the Paralympics was certainly there at first. The attitude of, “Isn’t it jolly good we are doing something we are quite good at?” and “You mean people in wheelchairs can do that?”. People now appreciate that these are athletes trained to the peak of their capacity striving on even terms with people from all around the world to achieve something extraordinary. That is taken as read in other forms of sporting activity at the elite level. It has transformed our perception and process. If we can take that and go on, we will have done something very good.
On the subject of sponsors, I spoke to people from Sainsbury’s the other day at a reception and asked them what they get out of this—not what they give. After a little bit of nagging, I got a very honest answer: “Yes, it helps in marketing. Yes, it helps to make people in our stores feel better about themselves, which makes them better employees. Ultimately it is about something that is bigger than us, that makes us part of the community—that is what we get out of it. And it improves sales”. I may get told off by one or two people but I think that is worth a few tickets to the event, so I say thank you to the sponsors and everybody who has been involved throughout the process. They have done something which has benefited us.
Probably the only real grumble about the Olympic process has been about tickets. If you are struggling to make a story out of this, it shows how well things have gone. There was a problem with the ticket allocation because it was not designed for a total sell-out within seconds of it opening: too high a demand crashing systems; the fact that people like myself who thought we had registered in time and would get the tickets we wanted have not got them—I am available for any returns. Now the Olympics organisers are saying if you have not got them or you have only a few in the sports that probably were not your first choice, you are not eligible for the next round. They are spreading it out. There is something good coming from this. Are we going to learn how to manage demand better in future? Maybe there will be never be another demand like the Olympics but learning to manage expectation of demand is something else that has come from this.
The Olympics are now a real thing. The torch relay has started. The planning has stopped; we are now in the delivery phase. The important thing about the Olympics now is that we relax and enjoy it but also remember that we are going to take on these lessons that we have learnt and prove that, over two successive Governments of different political persuasions, as a nation we can carry something through. That is probably the biggest legacy going—that we have that capacity as a nation.
I declare an interest: I was in Singapore as part of the bid team. One of the most important lessons that I learnt from that was in conversation with a senior Minister who was part of the bid team. I asked him how he had managed to persuade the Treasury to give its consent to the bid and he said, “We managed to persuade Gordon that we could not possibly win”.
My Lords, the management of politicians, particularly those in the Treasury, is an art form that everybody else in government tries to embrace. I think that emphasises my point rather than takes away from it.
I look forward to seeing how we learn and carry on with this. Are we going to manage to keep the initiative going? Are we going to keep the interest in sport and sporting activity going? Can the Government give us examples of how they plan to take this on board? How can people who are not in government at the moment guarantee to support this progress? How can we guarantee that we all talk to each other about what we do next? We came together around a good project; we did not think we would but we were going to have a go at it. Can we guarantee to do something else with it? That is the next big challenge.
My Lords, this is a very well timed debate. The torch relay is now well under way and it seems to be received extremely well as it tours the country. A mere take note Motion may sound a little unenthusiastic, but I do not think that can be said of my noble friend the Minister’s opening remarks, which reflect the growing level of excitement as the opening of the Games approaches.
Flying in to London City Airport today, it was very noticeable that there really has been regeneration in the very desolate part of the East End where the Olympic site was very sensibly located. As my noble friend said, the major architectural features—namely, the aquatics stadium, the velodrome and the main stadium—are all very different and have been well received. Will my noble friend update us on the stadium itself? Athletics has been something of a Cinderella sport compared with some others in the country and we desperately need a national athletics stadium. The stadium’s design seems very good, but it is important that, whoever eventually takes it over, it should be used not merely for track but for field events. If we are going to have a football operation there as well—my noble friend encouraged me to say this—putting shot puts and so on in the middle of the football pitch during the weekend may not be a terribly good way of generating a suitable environment.
I certainly look forward to the Games. My noble friend stressed the commercial rather than the sporting aspects. I hope that our team does extremely well and we should give it every possible support, but we must recognise that medals are not easy to get and the degree of competition is perhaps far greater now than ever before. Perhaps I may be nostalgic for a moment and say that the environment is very different from that in 1948, when we had no legislation whatever on the subject and no sponsors. One must stress that the Games were entirely amateur; they did not have the degree of professionalism which they have now. That is a considerable transformation which brings with it some problems. The 1948 Games took place at a time of extreme austerity. I think that the amount of meat provided for one day for a member of the American visiting athletic team was roughly the same as that rationed to a family for a month. In preparing for those Games, I remember not having a proper vest because we had run out of clothing coupons. It was a very different atmosphere and the organisers did a remarkable job in all the circumstances.
One of the effects of the change from amateurism to professionalism is a real problem with drugs. There was no point in taking drugs in 1948 because one saw little value in finding that one had won because one had cheated, whereas once the Games are professionalised, there is a growing danger of people being tempted to take drugs. In that context—my noble friend Lord Moynihan may care to say something about this—the British Olympic Association has been absolutely right to say that we should have a complete ban. If someone is guilty of a serious drug offence, having been properly investigated and so on, the only way to deter to them is to have a complete ban. It is absurd to give them a second chance. All that does is encourage them to have a first chance and hope that they are not found out. I strongly support what the BOA has said, and I hope that we can get international agreement on it. It is quite absurd that we should not seek to ban the use of drugs. If people who have been found to contravene the rules are in the Olympics, I hope that we do not end up with a 100-metres race where half the competitors have been guilty of previous drug offences. We do not know what the long-term effects of taking drugs are, but it is extremely unlikely that the muscles that one has built up with steroids disappear very quickly. I hope that we can take a tougher line on this, and I welcome the line that my noble friend and his colleagues have been taking.
In the course of our previous debates—we have spent a while debating these issues—the question arose of what happens if people arrive at the stadium with tickets which they cannot use. At an earlier stage, my noble friend Lord Coe said that the committee was considering whether it would be possible to hand in tickets officially, rather as one does with Wimbledon tickets if one is leaving after a particular match, so that they could then be resold at face value. I am not clear where we are on that; we have been left rather in the dark.
Our debate in Committee on the Bill was also rather cut short on the question of protesters. Given the problems that we have had in Parliament Square, we do not want to find a whole stack of people camping outside the stadium protesting about issues which may well be entirely irrelevant. Are we satisfied that the rules for dealing with protesters—particularly the establishment of any form of permanent operation for protest during the course of the Games—are under control?
We must certainly hope that the overall effect of the Games—I declare an interest as a patron of my club, Herne Hill Harriers—will be greatly to encourage participation in sport. The Games authorities have been very good in seeking to ensure that people come along, watch and are encouraged to take up sport in various shapes and forms. That should be the best legacy from the Games. It means that we will have to provide the facilities. In that context, the proposals to change planning laws, and so on, should make it clear that if planning permission is given which eliminates a sporting facility it is replaced with something of equal value.
All those are issues for the future. Meanwhile, we must hope that our team does well. We must encourage them in every way possible. Finally, we should congratulate, not least, those in this House who have been actively involved in the whole operation—in the same way that Lord Burghley and others were back in 1948. That is a good tradition. I think that they have done a very good job and I hope that the fruits of their success give us a major national event of which we can all be proud.
My Lords, I thought, when the Minister opened the debate and was talking about the great events of this summer, that she might have mentioned that Chelsea had won the Champions League on Saturday night. This Peer certainly had a very happy husband—icing on the cake of a great sporting summer.
More seriously, this is the last time we will debate the London 2012 Olympic Games in your Lordships’ House before the opening ceremony on 27 July. As we know, many Members of your Lordships’ House have played important roles in securing, planning and delivering the platform for the Games. In the next few weeks, those roles will extend to staging the Games and to delivering Team GB’s performance. We all hope for a fantastic Games and a once-in-a-lifetime experience for so many people across the UK who will be participating in many different ways in this phenomenal event.
For many people, that will be the culmination of their Olympic experience, the end of a great adventure, but for an important group of people it is only the end of the beginning. Those are the people who will carry on, assuring the legacy of the London Olympics. It will be no surprise to your Lordships that it is the legacy that I wish to dwell on this afternoon, and in particular the legacy promised to the people of east London. It is a legacy of homes, jobs, aspirations and improved life chances, for all these things were embodied in the promise made in Singapore in 2005, when the UK bravely asserted that these Games would become completely embedded in the regeneration of east London. That incredibly bold and ambitious claim had never been attempted before.
Seven years later, what progress has been made? No other Olympic city has ever taken on the level of transformation that has occurred in east London. Stratford now arguably has the best connected public transport in London. As the Minister mentioned, the £1.5 billion investment made by Westfield is complete and trading way beyond its wildest expectations. It is a phenomenal success. The 500-acre Olympic park has been utterly transformed from the industrial wasteland that characterised that site, which I knew from way back, long before the bid. I did not even know that there was water on that site; now there are 7.5 kilometres of beautifully reclaimed waterways. The site is a beautiful new park—a royal park, of course, to be named in this great Jubilee year as the Queen Elizabeth Olympic park. That phenomenally well designed green space and those reclaimed waterways and reinstated natural habitats all frame some of the best sporting venues that the world has to offer. In due course, beginning this autumn, they will be surrounded by some of the best family housing that London has to offer. It is quite a phenomenal achievement and has never been done before.
The IOC president, Jacques Rogge—not always an easy man to please, as the noble Lord, Lord Moynihan, would testify—confirmed London’s achievement at the last IOC session when he said:
“London has raised the bar on how to deliver a lasting legacy. We can already see tangible results in the … regeneration of East London. This great historical city has created a legacy blueprint for future Games hosts”.
Praise indeed, and none of this has occurred by accident. London learnt the lessons of other host cities that left the thinking about legacy until after the Games. Generally, that was much too late, so in 2009 the Government and the Mayor of London set up their legacy organisation, which I have had the most enormous privilege to chair from its inception. Our role was simply to focus on delivering on the promises made in respect of the Olympic park. As the noble Lords, Lord Higgins and Lord Addington, have mentioned, there is a much wider legacy—a sporting and participation legacy—but our brief was the legacy from the park.
Those promises were in two parts. First, we had to deal with securing viable futures for the permanent venues designed for the Games, which is not always an easy task. It has been very important that these venues, which in other countries have often had very mixed fortunes after the Games, were viable in a way that made them commercially successful. I do not imagine that the taxpayer would have appreciated having to subsidise these venues after the Games when so much public money had been already spent on them, so securing commercially viable futures, as we have been able to do with six out of the eight venues, has been a great success. Yet this would not be a success if, in so doing, we had priced local people out of these venues.
Here I pay tribute to the noble Baroness, Lady Doocey, whose committee at the London Assembly really challenged and encouraged us. It was especially important to us to secure a pricing structure that pegged entry and participation at these venues to the local market. In other words, the cost of a swim in the Olympic aquatics centre is pegged at the same price as at the surrounding local authority pools, so there is no question that access to these venues will somehow be for visitors or elite groups. They are absolutely affordable for local kids and local families.
The Olympic village, likewise—now completely presold, unbelievably, in the current banking and property market—will have a high proportion of affordable homes, delivering the promise made on housing in 2005. Pulling off this balance has often been challenging but frankly hugely important for the credibility of the promise to local people. Of the 7,500 jobs already created at Westfield, the vast majority have gone to local people, demonstrating again, as the Minister mentioned, that the legacy is bearing fruit even before the Games begin. That was the first part of our job.
It will take longer to know whether the second part of our job—the legacy—has worked because the real success of the Games will not be fully clear for some years to come. That is because it will take some time to see the investment in Stratford fully bear fruit in the wider regeneration of that part of east London. To track progress in a methodical and highly visible way, the Olympic host boroughs and the Mayor of London have adopted the simple concept of convergence: the idea that, if the Games achieve what they set out to do, over a 20-year period all the social indicators that currently lag the rest of London will improve to converge with the London average. Targets such as educational attainment, public health outcomes, employment and income levels have been set to measure progress over that period. Watching Stratford visibly improve, as I have every week for four years, suggests to me that things are on the march, and I have enormous faith that change will happen in the way that we all hope.
An interesting point is that when London was beset by the appalling riots last summer, it was noticeable that one of the few boroughs that experienced virtually no trouble was Newham. I am sure that people in Newham have real pride in and appreciation of the work and investment that has gone into the area, and I do not believe that it was a coincidence that this borough, one of the poorest in London and the most ethnically diverse, did not get caught up in the madness that afflicted other parts of the capital last year. That is a point worth reflecting on.
In this last debate, we should pay sincere tribute, as others, particularly the noble Lord, Lord Haskel, have done, to the work of Sir David Higgins and his successor Dennis Hone and their teams at the ODA. The completion of the park ahead of time and under budget has been the most incredible achievement, as others have said, and a great testimony to the UK construction industry. All professions, especially the chartered surveyors, of which I am an honorary member, have played their part in making this project a world-class success. I am particularly proud that so many of my former colleagues at English Partnerships formed the backbone of the ODA team, bringing all the skills they developed over a number of years on large, complex sites across England. We really understand how to do this kind of transformation in England, and the remediation and regeneration of this site are now regarded as a genuinely world-class exemplar.
My finishing line has hoved into view a little earlier than I had expected. I had planned to step down after the Games as this phase of the legacy finishes and a new phase of construction begins. The park will close for one year to allow significant construction works to take place to remove the Olympic overlay, to build the network of bridges, new roads and pathways in the park, to complete the landscaping of the parkland and to resize the venues for legacy use. This is a sizeable construction project in its own right and will take a year to complete before the north part of the park reopens exactly one year after the Games on 27 July 2013. The south part of the park, with the more complicated reconfiguration of the stadium and the aquatics centre, will open quite quickly thereafter at Easter 2014. I let the Mayor of London know last year that I felt that this phase should be overseen by a new chairman who would be able to devote significant time to this still-considerable task. After the election, the mayor immediately appointed my successor, so I shall hand over after my board meeting tomorrow.
The stadium and the broadcast centre remain to be finalised. As the noble Lord, Lord Higgins, hinted, it was always intended that the stadium would be the new home of UK athletics, the new Crystal Palace. Its future has been cemented by the UK winning the right to host the 2017 world athletics championships. That is a phenomenal legacy from a sporting point of view. My desire from the start was always to see whether there were compatible uses, which the noble Lord, Lord Higgins, hinted at, that could sit alongside athletics to bring life and revenue to the stadium all year round. In the past week, that commercial process has been extended by some eight weeks, but it will come to a close in a couple of months and I look forward to welcoming its very successful outcome.
It has been a pleasure and a privilege to be a part of this great project and to be part of assuring the legacy and of delivering one of the most ambitious promises that any Government and city have ever made. I have had the pleasure of working with an outstanding team of people at the Olympic Park Legacy Company and of working with two amazing Ministers: Hugh Robertson, the Olympics Minister, and, of course, the incomparable force of nature that is the right honourable Tessa Jowell, who everyone on all sides of the House understands has done more than anyone in government over 10 years to ensure that these Games are a truly outstanding success.
As the Games finish, the legacy work continues apace, and we must not forget the promises made to the communities in east London. I know that the host boroughs will keep up that pressure, and I look forward to watching the London Legacy Development Corporation get on and finish the job.
My Lords, it is a privilege to follow the noble Baroness, Lady Ford. I pay tribute to her and all the work that she has done in making the legacy of the London Games something of which we can all be proud, which will live on in the lives of the people of east London for generations to come. She has made an amazing contribution, as have many Members of this House, including my noble friend Lord Coe; the noble Baroness, Lady Grey-Thompson, in the Paralympics; my noble friend Lord Moynihan in the British Olympic Association; and the noble Baroness, Lady Doocey, on the GLA’s Olympic committee. As well as showcasing all that is good about Britain, it also showcases all that is good about this House, which we ought to find encouraging.
Before I encourage my noble friend and the Government to go, in the sporting tradition, further, faster and higher on the Olympic Truce, I place my remarks firmly in the context of my noble friend’s opening speech. She absolutely set out the stall for what has been achieved, which is quite phenomenal. We are all very proud of the way that this has been delivered on the sporting, commercial and construction sides. They are all things in which we can take a great deal of pride.
I first raised the Olympic Truce in your Lordships’ House in another “take note” debate on 14 June 2010. I did so for three reasons. First, the Olympic Truce is not just part of the ancient Olympic Games; it was the entire point of the ancient Olympic Games. They were not about sporting competition and they certainly were not about legacy or commercial activity. They were about putting a brake on the constant fighting in the Peloponnese. That was the purpose of the Games. It was expressed through the Olympic Truce, which at that point was a sacred truce. I want to make sure that we remember what the Games were about and what their inspiration was.
Secondly, the Olympic Truce today is not just some general “motherhood and apple pie” notion that surrounds the Games. It is something more than that. It is a resolution of the United Nations General Assembly. It is a resolution that is proposed by the Government who host the Games. Therefore, as this was the first resolution that the coalition Government presented to the United Nations General Assembly, it should be taken seriously. In ancient times the truce was sacred; in modern times it has become rather symbolic. This is a great opportunity for us to remember what it is about.
Thirdly and finally, particularly since the torch has now arrived in the UK, I take slight issue with our having broken the tradition of allowing it to be carried through different countries on an international relay for the first time. The torch heralds the Olympic Truce. When you are heralding an international truce, it is helpful if you visit other countries on the way. I feel that it was a missed opportunity to run the torch relay up through the Balkans—which have known great pain and sadnesses and still have great tensions—across the battlefields of the First World War and the Second World War, and the front line of the Cold War, and then bring it to London so that we can remember. I realise that these decisions were taken many years ago. None the less, I wanted to say that.
I want to reflect a little on what has happened in the intervening two years. There has been some movement and I pay tribute to people for that. Just 10 days ago, my noble friend Lord Moynihan and I had the great privilege to be in Olympia when the Olympic flame was lit. As it was lit, the president of the International Olympic Committee said:
“We have come to the ancestral home of the Olympic Movement to light a flame that will soon cast its glow over the entire world … It is a beacon for the Olympic values of friendship, excellence and respect. It is a symbol of fellowship and peace. In recognition of those values, the United Nations has unanimously approved a resolution calling on nations to build a peaceful and better world through sport and the Olympic ideal”.
That is what the president of the IOC set out as the purpose of this flame and these Games. I fully understand the reasons why those decisions had to be taken after the disruption of the torch relay for the Beijing Games. However, I do not think that sporting prowess is demonstrated by anything other than courage. Someone setting out to disrupt the proceedings should not cause us to drop the relay—it should cause us to reaffirm its purposes.
This campaign on the Olympic Truce took a little while to get going. However, I was delighted when my right honourable friend the Prime Minister said:
“We wish to make the most of that historic opportunity, we are considering other international initiatives to promote the spirit of the truce … the Foreign and Commonwealth Office is engaging with our embassies worldwide”.—[Official Report, Commons, 29/6/11; col. 953.]
It has been truly fantastic to see that going into operation.
The Foreign and Commonwealth Office and embassies around the world have embraced the ideal of the Olympic Truce for London 2012 in a way which is quite inspirational and absolutely consistent with its values. That is due to the leadership of the Minister, Henry Bellingham, who has responsibility for the matter. We hear a lot about the Minister for the Olympics. The Olympic Truce is an important element of this role and Henry Bellingham has done an outstanding job of promoting it.
The UK mission to the United Nations also managed to pull off one of the all-time records in international relations. Not only did it promote the Olympic Truce resolution, it also managed to get all 193 member states of the United Nations to sign up to it before presenting it on 17 October 2011. The UK mission even went one better and got everyone to cosponsor it, which was a phenomenal achievement. In terms of international relations and the Olympics, it is at least on a par with some of the other wonderful things that we have seen about legacy, construction and sport.
We need to hear more about the Olympic Truce, because it has been achieved in such a fantastic way. Resolution A/66/L.3 represents a mandate and an international consensus. Its long preamble runs on for three pages. Bless the Foreign Office for ensuring that every line is there and every interest is represented. Essentially, however, the preamble comes down to two things. First, it urges the member states which have signed up to the truce to observe it individually and collectively for the period of the 30th Olympic and 14th Paralympic Games. Secondly, it calls on the member states that signed up to it to use sport as a tool to promote peace, dialogue and reconciliation in areas of conflict during and beyond the Olympic Games.
Those statements are unambiguous. No one can say, “We didn’t know what we were signing up to. We don’t know whether we can implement it”. They have signed up to it. What is more, Her Majesty’s Government have proposed it to the United Nations General Assembly. That places on us a particular responsibility to ensure that it is implemented. Not surprisingly, after the news that it had been fully supported by all 193 member states, my noble friend Lord Coe, who was presenting the truce resolution on behalf of Her Majesty's Government, said:
“It has never been more important to support this General Assembly resolution by actions, not just through words”.
That was what my noble friend the Prime Minister was saying when he said that this represented a “historic opportunity”.
There are still two months to go before the Olympic Games actually start. Where do we stand now? Well, we perhaps stand a little bit too much on the words, which have been excellent and encouraging and are coming in every day, with various statements of how much the resolution is welcome and how much people believe in the Olympic Truce and the Olympic ideal. We are just a little short on the actions. Not that there have not been any. A cross-departmental Olympic Truce committee is now operating, which is taking advice from our excellent NGOs working in conflict areas around the world to see what can be done. There is even an Olympic Truce officer in the Foreign and Commonwealth Office—and, as the Foreign Secretary said, have you any idea how difficult it is to get additional headcount into the Foreign Office for an initiative? That is something else to be welcomed.
About 32 countries have registered particular schemes relating to the Olympic Truce, from Sudan to Sarajevo, Costa Rica and the Philippines. However, there is still much more that can be done to build on this extraordinary and unique historic opportunity and international consensus. If we achieve this and for the first time in the modern era the Olympic Truce is taken seriously, that will be a legacy to hand on to Rio. We can say, “Listen, you go further, faster and higher in implementing the ancient ideal that is the entire purpose of the Games”.
My Lords, the noble Lord, Lord Bates, brings a unique contribution to this debate in relation to the Olympic Truce. Most of us just have the expectation that all member countries of the United Nations will actually participate in the Olympic Games. We are all too aware that in the past politics has intruded in a particularly dramatic way upon certain Games. But we seem to be past that problem with regard to these Games. That is why I congratulated the Minister on the bullish way in which she introduced a report on progress regarding the Games.
Something has been missing among the general congratulations on how much has been achieved so far. I hope that this House reflects the optimism that we will do exceptionally well in the London Games. There is no doubt that greater efforts have been made for the preparation of our athletes—I have no doubt that the noble Lord, Lord Moynihan, is going to make a contribution on this later, but I am first in the batting order on this occasion—and we look forward to a performance that will cheer the hearts of all of us who follow British sport and from time to time have to sustain disappointment. We have great expectations with regard to these Games.
I had the great privilege of introducing the legislation in this House on the Olympic Games, and answered innumerable questions on the progress of the preparation for them. There is one question on which I have been challenged. I am glad that the noble Lord, Lord James of Blackheath, is in his place, because he asked me about opportunities for religious worship during the Games. He is uncertain about the answer I gave, which was one of great reassurance that provision will be made for multi-faith observance during the Games. We should recognise how much in certain cultures this is of the greatest importance; after all, we all remember the 1924 Olympic Games when Liddell was not prepared to run on a Sunday. That dimension of those participating in the Games deserves proper recognition. I hope that the Minister will give a reassurance that we have fulfilled the expectations of the International Olympic Committee with regards to this provision.
I congratulate my noble friend Lady Ford on the work that she has done. We look forward to some outstandingly dramatic weeks in the Olympic Games. However, all along—this was true when the bid was first presented—we have all recognised that the Olympic Games, and the vast resources committed to them, must have a lasting legacy. My noble friend Lady Ford chaired the committee that fulfilled the expectation of that legacy. These are not marginal issues: big forces come into play when international, or even national, sport is at stake. The commitment that the Olympic stadium should remain a stadium for our future athletics competitions was threatened by the mighty forces of Premier League clubs, which were eager only to deploy their staggering resources to transform the stadium into one used for football alone. I am delighted that my noble friend and her committee withstood those pressures and safeguarded the interests of athletics.
However, I have one or two anxieties, which I bring to the Minister’s attention simply because they are felt by the whole country, but particularly by Londoners. I hope that she will give reassurance on these matters. The anxieties revolve predominantly round transport. Central London will have a vast influx of people making demands on our transport system. We should remember that the Olympic Park is only a few short miles from the centre of London. What is more, as far as possible all the other centres are concentrated in the immediate environs of London. That is very much to the credit of all those who have organised the Olympic Games but puts the most enormous pressure on our transport system, which at times creaks under present usage. I draw to the Minister’s attention the obvious anxiety that all our Tube lines, with the exception of the Jubilee Line, have shown improved performances this year compared with last. However, the Jubilee Line has a greater number of stoppages and delays than it did last year, and it is one of the crucial lines going through the centre of London straight to the terminus at Stratford. It is important that we are given reassurance on that front.
Secondly, there is anxiety about Heathrow. Any of us who have travelled to other countries where delays occur at airports know that that colours one’s perspective on the experience that one enjoys when visiting the country concerned. We all know that if you enter as an alien at certain airports in the United States you can be subject to the most inordinate delays. During the Games, we cannot afford to face the level of delays that we have had at Heathrow in recent months. This would cast a shadow over our visitors that would detract severely from their experience of the Games. Therefore, I hope that the Minister will clearly identify how we intend to solve those issues at Heathrow consistent, of course, with the need to sustain our security arrangements while ensuring that people and young children do not have too pernicious an experience when entering the country.
Finally, there has been significant investment in transport in recent years, which is paying off magnificently well in certain areas. The fact that the Javelin train will hurtle at high speed from St Pancras to Stratford is an indication of that. However, something about transport worries me: does it put the customer first? Can anyone explain why families travelling with young children on the Jubilee Line, who take between 30 and 35 minutes to arrive at Stratford, will find that that station, in common with nearly all our major termini in London and across the country, no longer provides public lavatories? The last one at Stratford was closed only a matter of months ago. What on earth is going on as regards such a basic requirement for people who are travelling particularly on the Tube, which by definition can have no facilities? The terminus has no facilities at all. That seems to represent a lack of basic concern for the traveller, and I hope that that attitude does not permeate our transport system during the period of the Games, when it must serve the people to the best of its ability.
My Lords, I have been involved in scrutinising the delivery of the Games and their legacy since London won the bid. I have also been the mayor’s representative on the Olympic Security Board, which scrutinises the security of the Games.
There is no question that there is much to celebrate—the fact that venues have been delivered on time and under budget; the fact that the new sporting facilities are a triumph of British design and engineering; and the fact that a large number of British companies have benefited from the £6 billion-worth of contracts. The creation of the Olympic Park, together with the transport upgrades, has given the area all the ingredients to attract visitors, tourists and new businesses for many years to come.
I entirely agree with the comments of my noble friend Lord Addington about the Paralympics, and great credit must go to LOCOG, which was determined that this time the Paralympics would not be the poor relation to the Olympics. LOCOG has done some excellent work to take the needs of disabled people on board, and schemes such as Ticketcare, where disabled people who are unable to attend the Games without a carer can now bring a companion, free of charge, will make a very great difference to the needs of large numbers of disabled people.
Another achievement is the planning for Olympic security. I have been extremely impressed by the calibre of the people from all government departments, the police and the military who serve on the Olympic Security Board. We can never be complacent about security, but I have absolutely no doubt that the safety of London is in the best possible hands.
There remain, however, some areas of concern. The sporting legacy is a mixture of success and failure. The good news is that Kate Hoey, as the mayor’s Commissioner for Sport, has raised £40 million to provide training for coaches and investment in sporting facilities. Some exceptionally good work is being done on the ground by organisations such as the London Youth Games, which has helped 2,000 disabled young people get into sport and enabled other young people to qualify as sports officials. On the other hand, the Government have been forced to abandon their target of using the Games to inspire 1 million people to play more sport—a target that was never realistic.
The promised legacy of jobs and training opportunities for local unemployed people is also questionable. Although the targets have been met, they were set far too low to be meaningful. Likewise, while many of the Olympic buildings have their long-term future use assured—I pay great tribute to the inspirational leadership and vision of the noble Baroness, Lady Ford, in all that she has done in this regard—the future of the main Olympic stadium and media centre nevertheless remains undecided. They must not be allowed to be a drain on taxpayers for many years to come.
There are also concerns about the long-term use of the Olympic park. After the Games, it will become a highly desirable place to live, and thousands of new homes and communities will be built. However, my concern is that no public money is allocated to fund this transformation Without this investment, private developers will be free to determine the fate of a site, and I believe that it runs the risk of becoming another Canary Wharf—a brilliant success commercially that benefits only wealthy newcomers and foreign investors at the expense of long-standing residents and local communities. This outcome would completely negate the original concept and vision, which was to provide mixed communities and facilities, with a substantial proportion of the homes and jobs going to local people.
There are also some lessons that we must learn for the future. The first concerns the allocation of tickets to the public. A ballot was undoubtedly the fairest way to sell them but, given that demand was bound to outstrip supply, there should have been a ceiling on the number of tickets each person was allowed to purchase.
It is also unjustifiable for 14,000 tickets to have been set aside for central and local government officials, while huge numbers of the public failed to get any tickets at all for the Games. If a ballot was the fairest way of selling tickets to the public, the same system should have been used for government officials.
LOCOG promised that a significant number of tickets would be affordable but has so far refused to publish details of the number of tickets sold at each price point for each event. This has resulted in widespread suspicion that too many tickets for key events have been allocated to VIPs at the expense of the public.
The final lesson we must learn concerns the behaviour of the International Olympic Committee. The IOC’s demands increase with each successive Games, yet, given the keen competition to host the Games, no one dares to challenge it. But how can “Zil lanes” for chauffeur-driven limousines, and traffic lights that automatically turn green as they approach, be justified when they result in gridlock for the rest of London? Sooner or later, some host city must have the courage to stand up to the IOC and say, “Enough is enough. We will happily treat you like honoured guests but we are not prepared to treat you like gods”.
The fact that the management of the Games has gone so well is due in no small measure to the exceptionally talented team of people who have been in charge right from the beginning. I have sometimes vehemently disagreed with some of their policies, but I have absolutely no doubt that they will produce the greatest Olympic and Paralympic Games ever staged.
So let us celebrate the extraordinary achievements of the past seven years. Let us rejoice that Britain has demonstrated to the world that it can deliver major construction projects successfully, on time and within budget—a powerful message at any time but especially in the current economic climate—but let us never forget the promised long-term legacy and let us do everything in our power to ensure that the legacy is honoured.
My Lords, I start where my noble friend Lady Doocey finished by recognising London 2012 as a story of great achievement, great British creativity and great British involvement. The fact that the Olympic park was completed on time and on budget is to a great extent thanks to the skill and professionalism of more than 1,000 British businesses. The Olympic Delivery Authority’s contract for the construction of the Olympic stadium resulted in work for 240 UK companies, with many more subcontractors. This included the supply of steel from Bolton, turf grown in Scunthorpe and seats from Luton. More than 40 UK companies won contracts to work on the velodrome, including supplying the timber for the cycling track from Sheffield and seating structures from Barnsley.
The Olympic and Paralympic Games have been a catalyst for delivering this urban regeneration of the East End in six years rather than 26. My noble friend in sport, the noble Baroness, Lady Ford, has been the torch bearer in the project to steer that area of London into a vibrant urban legacy for future generations—I emphasise that to my noble friend Lady Doocey—of the local communities. That has been at the heart of everything she has done, for which she deserves the congratulations and support of us all.
We are now ready for 15,000 athletes from more than 200 countries to come to both the Olympic and Paralympic Games. They will be competing for 4,400 medals. More than 3,000 officials will preside over the world’s fiercest competition and—would you believe it?—20,000 accredited media will carry the action to billions of people around the world. We are holding the equivalent of 26 world championships at the same time over 19 days, transitioning the city and then holding another 20 world championships for the Paralympic Games over 12 days. More than £700-million worth of goods will be procured for the Games, including 900,000 pieces of sports equipment—every one to perfection. For example, there are 8,400 badminton shuttlecocks, 6,000 paper archery target faces and 510 hurdles for the athletes. We expect around 8 million spectators, with 800,000 people expected to use public transport to travel to the Games on the busiest day. I say to my noble friend Lord Davies that, of course, transport is a concern and security has also been expressed as a concern. However, to have an investment because of the Games of some £6.5 billion, not least in upgrading and extending transport links to get people to and from the Games, to ensure that London keeps moving, is surely beneficial both for the Games and as a legacy project.
I shall refer to the comments made by the noble Lord, Lord Haskel; I was going to say my noble friend, as he frequently is on the subject of sport. He raised an important issue. I am not here to defend the definition of a breakfast menu; nor, I am sure he would accept, am I here to argue over the margins of the legal definition of ambush marketing. I hope that I can give him some comfort by saying this from the London organising committee perspective. It raised some £2 billion from the private sector to put into the Games. That has come not least from TV rights and, of course, ticket sales. Above all, it has come from sponsorship rights. Protecting those sponsorship rights is inherently important in retaining the value of that essential contribution to a £2 billion package which has not resorted to government funding.
I think that the noble Lord was focusing more on the future. In that context maybe I can give him some comfort as I have a good degree of sympathy with his point. At the end of this year, the rights will return from the London organising committee to the British Olympic Association. We are in discussion at this time—well in advance of the end of the year—to see how we can showcase British expertise among the contractors and subcontractors who have been involved with the project, to ensure that they get some recognition moving forward, without losing the right of those commercial advantages that the British Olympic Association will have to support the young athletes of the future once the Games have moved on from London 2012. The noble Lord makes a very important point but I give him the assurance that we are already in discussion with those contractors, such as Sir John Armitt—he has been critical in this, as the noble Lord knows—and with the Government to see whether we can find a solution to recognise and showcase the outstanding work that has been done for these Games, and to work with those companies to make sure that not only they succeed but that young athletes in the future are given the support they so richly deserve when it comes to moving on to future Olympic and Paralympic Games.
I have made a distinction, I hope, in trying to assist the noble Lord about what happens when those rights return to the British Olympic Association. He made a very important point about the future benefit to those companies being showcased for the work that they have done and what is happening today. What is happening today is clearly a matter for the legal department and, as I say, I am not here to defend a legal department that is looking in detail at the definition of a breakfast menu. However, I am very concerned as chairman of the British Olympic Association that companies that have done a huge amount of work for these Games should be able to showcase in the future and win further contracts in the future. Sports facilities around the world are a multimillion-pound business, and it does not end with the Games in London. For them, it is the beginning of a long road, and we should be there to support them on that road. We need to get the balance right between ensuring their recognition—which is important to their business—on the one hand, and on the other the return of the rights of the British Olympic Association, which for over one hundred years had to rely purely on private sector funding; there was not a pound from government in those hundred years. The only way to do this is through the sale of the rights through sponsorship. I believe that we can achieve that balance.
I will move on to the work of the Government. The House should have nothing but praise for the Minister for Sport and the Olympics, Hugh Robertson. He fought for our athletes in maintaining funding for our Olympic and Paralympic teams after London 2012, going into the Rio cycle. He has boosted the credentials of this country to make sure that we have a decade of sport, by supporting our successful bids—and I emphasise that all these have been successful—to host the Rugby League World Cup in 2013; the Commonwealth Games, of course, in 2014; the Rugby Union World Cup in 2015; the World Athletics Championships in the Olympic stadium in 2017, and what a magnificent achievement it was to win that bid; and, not least after our great victory today, the Cricket World Cup in 2019. This will be a decade of sport for the United Kingdom.
However, Hugh Robertson will not be short of future challenges when the curtain falls on the Olympic and Paralympic Games. There is a need to restructure British sport. It is still a myriad of too many quangos and of public sector-driven and overlapping bureaucracy. I have always believed that the role of government in sport is to empower, not to micromanage. Where sport is at its best, it is driven from the athletes up, with the support and enthusiasm of their parents, families, friends, clubs and schools. It provides the ideal opportunity to implement the Prime Minister’s earlier objective of “big society, not big government”. The months after the Games will provide the best chance in a generation for fundamental reform. A leader like Hugh Robertson, who has won respect across the sporting world, has the ability to take on the forces of the past and deliver a true sporting legacy for the future. However, delivery of that sporting legacy will be our biggest challenge.
Against this background, the British Olympic Association will continue to perform its role as an independent voice for sport. When the Government, the mayor’s office’s attention and the Olympic movement move on and LOCOG is disbanded, we will still be there for the athletes. It is my view that sport holds a mirror to society. The values of sport reflect the values of society. Many of the principles and ideals inherent in sport have a broader application to our lives as a whole. The standards of probity and integrity in sport should mirror the highest standards of behaviour in society. The corresponding forms of sanction and discipline should apply if that behaviour is flouted. Keenly contested though it is, winning at any cost is inimical to the very essence of sport and to its philosophy of team spirit, honesty and loyalty.
The concept of fair play is one of sport’s most cherished tenets. Cheating, by whatever means, from overt fouling to match fixing to doping, is not fair play and has no place in sport. On 7 November last year, the greatest living Olympian, Sir Steve Redgrave, stated, with reference to the World Anti-Doping Agency:
“A two-year ban for doping is almost saying that it’s acceptable”.
He was speaking for clean athletes across the globe. Yet last month was marked by a deeply disappointing development. The Court of Arbitration of Sport formally declared the British Olympic Association’s lifetime ban for serious drugs cheats unenforceable. That effectively denied the British Olympic Association the autonomy to select Team GB athletes. We held a special meeting of all the governing bodies of sport to consider the effect of the ruling. There was a universal condemnation of the World Anti-Doping Agency’s decision to reduce to two years the bans for first-time offences. Let us hope that it is not tantamount—as postulated by my noble friend Lord Higgins—to giving a green light to the use of drugs in sport. If this proves to be the case, and nothing is done to stem the tide, we will drift inexorably towards a sporting world in which competition between athletes is equally competition between chemists’ laboratories. At the British Olympic Association and in the corridors of the IOC, national Olympic committees and international federations, we may have lost the battle. However, on behalf of the athletes whose interests we represent, we must win the war.
My noble friend Lord Higgins suggested that the benefits of performance-enhancing drugs may pass and go away during a period of two years. That may be a seriously wrong observation. If I had taken growth hormones throughout my teens and had ended up six feet tall like my noble friend Lord Bates, I guarantee that I would not have shrunk back to my present height in my 20s. That was a light-hearted way of making a serious point. If one takes a cocktail of drugs to enhance one’s performance in training and can do eight, nine or 10 times more circuit training in the winter than one would otherwise have done without those drugs, even when one comes off the drugs one can attain high performance levels with the muscular structure one has now acquired illegally by taking the performance-enhancing drugs, sometimes for a very long time. The case of growth hormones is extremely important, especially for people in their teens.
I am delighted that I did mishear—and if I did, I may have done so slightly mischievously in order to make my point. I am more than grateful to my noble friend for raising the subject.
I turn briefly to the Paralympic movement. There is no doubt that the Paralympic Games this summer will be one of the highlights of 2012. When I was Minister for Sport, I went to see my then Secretary of State, Nick Ridley. He was not the greatest fan of sport. I recall a packed House of Commons for the Second Reading of the Football Spectators Bill. I was a nervous Minister for Sport and he, kindly as ever, offered to do the most difficult task, which was to take on the Second Reading speech in a packed House. The former Minister for Sport, Denis Howell, leant across the Dispatch Box. I had been going to football matches regularly for the previous couple of years in order to be able to answer questions. Denis Howell asked: “So, Secretary of State, when was the last time you were at a football match?”—to which Nick Ridley replied, “At Eton, under duress”. It was a classic example that contrasted with how many days I had spent at football matches, watching 18 First Division games and 14 from the rest of the divisions. He was a great Secretary of State.
I went to see him that Wednesday morning. My headline requests were that we should have £1 million to set up the British Paralympic Association; that we should establish a ministerial review of disabled sport; and that we should request support from government to encourage the IOC to make it a requirement that any city bidding to host the Olympic Games also hosted the Paralympic Games thereafter. Nick looked at me and simply said, “Fine”. I did not stay for further discussion, but said thank you and exited to a broad smile from his private office.
True early heroes of the Paralympic association such as Bernard Atha and Dr Adrian Whiteson in particular—the latter has gone on to mastermind the Teenage Cancer Trust—should be celebrated this summer. Since that time, many Paralympians have inspired us, showing a generation that it is the ability of athletes that we should focus on rather than their disabilities. The seeds of this transformation in society were to be found in Headley Court, Stoke Mandeville and the work of Jack Ashley and the others in Parliament who steered through much-needed legislation on behalf of the disabled. This year’s Paralympic Games will be the culmination of all their work.
The British Olympic Association has been transformed over the past four or five years. It has listened to the voice of athletes as never before. The voice of athletes has been heard in the meetings of the advisory board, on which my noble friend Lady Wheatcroft and the noble Lord, Lord Paul, continue to sit and give their guidance and wise advice. When I walk in to meetings of the National Olympic Committee, I am proud to see in front of me one of the most expert boards in British sport, which is why the BOA will continue to play a central role in the centre of sports policy.
However, what we will focus on now, above all, is giving maximum performance support to our athletes, all 550 of them who will be selected for Team GB this summer. One hundred and one have already been selected. Why should we give them that support? One example gives the answer. If you were fortunate enough to watch the Games in Athens, you would have seen the great gold medals that Britain won in the coxless four, Kelly Holmes’s 800 and 1,500 metres, the men’s 4 x 100 and Chris Hoy’s first gold medal in the 1 kilometre time trial. The final times of those five gold medals added together were 12 minutes and six seconds, but the difference between all five being gold and all five being silver was 0.545 of one second. That is why it is so tough to win gold medals at the Olympic Games, and that is why the work of the British Olympic Association should be devoted—every minute, every hour, every day—to supporting every one of our athletes on Team GB to deliver their best performance on the day. If we do that, we have the talent to match the success that we had in Beijing.
Our aspirational target remains fourth place in the medal table. It will be tough, incredibly tough. We will not beat the Chinese, Russians or the Americans, and the Germans and the Australians will be very much on our heels, but if we can continue to support our athletes, along with their families, their coaches and their governing bodies, we will see remarkable feats of sporting success this summer. I have every confidence that our Olympic and Paralympic teams will deliver, and I wish them well.
My Lords, it is a joy and a pleasure for me to follow the noble Lord, as I have done more than once during these debates. It is great that we have this opportunity so near the event to remind ourselves, and those who care to listen, what it is all about.
What it is all about came to me this morning when I went to see my doctor. I spoke to the nurse and said, “Was it not great this weekend?”. She said, “What do you mean this weekend?”. I said, “Chelsea winning the cup”. She said, “Oh!”. I said, “You have got two daughters; surely they are interested”. She said, “Oh, they are mildly interested but they are waiting for the Olympics. They are in their teens and they are keen and excited”.
This reminded me about the theme which ought to be running through this debate. What we are about to enjoy and participate in is a chance in a lifetime; it is something that many of us have thought about and wanted to take part in. One of the joys of being in this House is recognising the quality of people from different spheres of activity. One knows the various people I am talking about. When the noble Lord, Lord Higgins, entertained us with his wisdom, I remembered him when he ran for England or Britain and I was behind him. I was the shadow; I was behind him all the way.
I have jotted down some names—the noble Baroness, Lady Grey-Thompson, the noble Lord, Lord Coe and the noble Lord, Lord Moynihan, and in the other place Kate Hoey and Tessa Jowell, have been towers of strength in getting us to where we are. I can remember the excitement when Tony Blair was able to put to the top of his list of achievements getting and persuading the world that Britain was ready and ripe for what is going to happen in the next three months.
I recall the manner in which people can have their enthusiasm bought. I remember the 1948 Games, when I was working for the Newcastle Co-op. We had a sports field and after the Games the runners McDonald Bailey and Arthur Wint came to us and performed; before that I saw Sidney Woodison there. I saw all of them and remember the names and the people but not the events themselves; I was proud to have seen them perform. They left a deep impression of their capability.
I have been staggered at the extent to which all the mistakes that have been made in other parts of the world seem to have been taken into account by the various bodies responsible for getting us this far. When I went to the Library and asked for something on the Olympic Games they gave me a compendium. It is here next to me. The scope and complexity of the matters and the manner in which they have had to be dealt with is fantastic. I have enjoyed listening to debates in this place and on the radio and elsewhere. The noble Baroness, Lady Ford, has had a major part to play in managing the event. I congratulate her and her committee. It seems to me that all of the lessons that could be learnt from the past have been learnt. We will wait and see.
Some of my friends have asked me what I am going to do during the Olympics. I said that I am going to sit at home and enjoy it. When I asked them what they were doing they said they were going on holiday because they did not want to be here. I am amazed. This is a once-in-a-lifetime event. The sight of the supporters of Chelsea and Manchester City going daft in front of their neighbours and friends was hilarious. As someone who takes an interest in sport I can appreciate it. We want to see the same reaction from the people of this country when a British Olympian takes part. Even if they do not win, if they do well or do not disgrace themselves, we should be proud of the fact that they are there.
I am a prominent member of London Councils, together with the noble Lords, Lord Jenkin and Lord Tope, and others. It has done a fantastic job in co-ordinating the activity of councils. I was the leader of a London borough council, more than 50 years ago now. I know the pressures that are on my colleagues on the council now. Despite that, London Councils has a magnificent record of responding to what is going to happen.
I wish the event well. I can remember the excitement of 1948. My wife Margaret and I would go to dinner parties and inevitably people would say how marvellous the Olympic Games had been and mention all the names, and my wife would sit there and smile. They would finally say, “Come on, Margaret, you remember it”, and she would say, “I was there”, and she was able to tell them what she had seen and heard: Fanny Blankers-Koen and people like that. My wife played netball for Essex and enjoyed it. My claim to fame is that I once had a trial for Newcastle Boys—that is as far as I can go. We lost 5-0, and the fact that I happened to be in goal had nothing to do with it.
You are either with the Olympics or you are not; you are either excited or you are not. The media have done a great job, especially through television, of introducing me to sports that I had heard of but had not seen. Everyone who participates on our behalf should have the feeling that the country is behind them. Never mind politics, never mind north or south, never mind the problems—we are all behind them in this great adventure. I congratulate those who are going to represent us and I wish them well.
My Lords, today’s debate has been truly outstanding, with so many experts sharing their expertise with us. It has been a privilege to be in the Chamber today.
We are on our way. The torch bearers carrying the Olympic flame are the Pied Pipers who will ignite the enthusiasm for everyone around them. Travelling 8,000 miles to more than 1,000 communities, the torch relay will link up the whole nation in preparation for the Olympic Games, the greatest show on earth.
The Games will be a showcase for Britain, a chance to shine in a gloomy world, proving to the world that we can plan and produce the Games and ensure that they will be exciting, successful and, above all, peaceful. The mantra that the Games are on time and on budget is in itself cause for celebration. It is a huge achievement and those involved with the outcome are to be warmly applauded. It is a model for teamwork and dedication.
There are many reasons to welcome the successful bid for the Games, not least the magnificent injection today of additional funds from the legacy budget and Sport England into disabled sport. The Paralympics have achieved unparalleled enthusiasm with our Games; ticket sales, media coverage and sport in the community all reflect that. The Paralympics go from strength to strength and make sport for all the reality that it ought to be.
Regeneration of one of the poorest boroughs in the UK comes high on the list of successes: 75% of every £1 spent on the park has gone into the regeneration project. Without the Games, none of that would have happened. It is a huge boost for the area and will benefit people for generations to come. After the Games, there will be five world-class sporting venues, which are much welcomed and indeed needed. Up to 8,000 new homes will be built and the accommodation of the Olympic village will become part of the housing legacy. Again, none of this would have happened or been possible without the Games.
At the very heart of the Olympic project has been the emphasis, highlighted during the successful bid, on the creation of a genuine sporting legacy. A cornerstone of the bid was to inspire a generation of young people through sport. During the latter years of the Labour Government, investment in school and community sport, which laid the foundation for the sporting legacy, was remarkable. The commitment to make available at least five hours of sport for almost every child was a huge breakthrough. Those of us involved in sport, whether in schools or the community, knew that this was the key to a fitter, happier sporting nation. There appeared to be a political consensus; indeed, we had as tremendous role models political leaders who not only paid lip service to the place of sport in their lives but realised that others could benefit. I know to my personal advantage the enthusiasm with which our Prime Minister plays tennis. We have an excellent record playing together for the Lords and Commons tennis club. His fiery enthusiasm and commitment are a joy to behold. Both being left-handers, we argued only over who should take the left court for the return of serve and, needless to say, he gave way very gracefully.
All appeared positive, with new sporting opportunities and help for schools to provide them. That is why I say today that the greatest threat to the hoped-for sporting legacy has come from Michael Gove’s disastrous plan to demolish the school sport programme in his reorganisation of curricula in state schools. Those schools may become sport-free areas. Heads who are driven by school league tables may decide to transfer funds from sport to their academic programme. It is sporting vandalism. Yet the 7% of students attending fee-paying schools still enjoy two afternoons a week of sport and still achieve good academic results, all within the same school week and with extracurricular activities thrown in for good measure.
Many weasel words have been uttered to justify the scrapping of the school sport programme. “It did not always work” is just one feeble excuse. The reality is that it was a stunning success. Michael Gove has dealt a devastating blow to the fundamental way in the majority of young people get started in sport. Of course, parents, clubs and national governing bodies can and do play an important part, but for the vast majority of young people it is the physical education programme in schools which gives them their first taste and love of sport in many guises.
Everyone who signed up to the sporting legacy notion has a duty to return to the Gove decision. It must be reversed, or all our aspirations as to a sporting legacy for all will come to nothing. Will the Minister undertake today to deliver this message to the Secretary of State for Education and to the Minister for Sport? They bear full responsibility for the future.
Already, Sport England’s Active People survey is producing disappointing results, showing that, of the 30 sports measured, only four have seen an increase and 19 have shown a decrease. The implication that the destruction of sport in state schools will have no impact on the Olympic legacy aspiration seems extraordinary to me and others. Does the right hand of the Government have no idea what the left hand is doing? It will undoubtedly negate all the good work that has been done.
As the Games move nearer, practical problems emerge. People see that they may be affected personally, sometimes negatively. Every day, we see new issues highlighted in the media, creating questions and some unease which have to have to be addressed. In this, I echo some of the points made earlier by my noble friend Lord Davies.
I put to the Minister a series of those issues in the hope that, in her usual highly competent way, she can give us reassurances to allay those fears. Security has become even more high profile; the years between the bid and today make it even more so. Against the background of deep cuts to police funding, can she reassure us that there will be no relaxation of security, to ensure the safety of everyone attending the Games? Allied to that, with the potentially damaging cuts, can she reassure us that access to Britain via our airports will not become a nightmare, with visitors standing in line for hours on end? The world will be watching and making judgments. That experience could deeply damage our tourism trade. Again, can the Minister reassure us that adequate measures are being taken?
What about ticketing, which has already been mentioned? It has been a thorny issue from the outset. Are too many tickets being ring-fenced for sponsors and dignitaries? Is the balance towards the favoured group outweighing the competitors and the general public? More transparency is needed. It appears that large sums of money can still secure tickets on the internet. Is that fair?
Travel around London is a difficult issue. Those who have to travel to work, such as nurses, cleaners, public workers, et cetera, face chaos during the Games. Is the balance between sponsors’ limousines and ordinary people’s lives right? Not everyone can be given the luxury, recently given to civil servants, of staying at home. That does not work for care workers attending patients in a care home, does it?
Much has been made of sustainability. At the time of the bid, it was a huge and important issue, but following economic pressure, the Government have taken a less green approach. Can it be right to weaken our commitment to sustainability, ditched by cuts in expenditure? The very notion of a physical legacy—the stadia, the sporting facilities of all kinds—has been at the heart of the project. Bear in mind that the public purse has provided about 98% of the Olympic budget, but almost all the infrastructure will fall into private hands after the Games. Is that the outcome that the Minister envisaged? It appears that the deal on the major stadium has yet to be clinched. Does that fill the Minister with as much foreboding as it does me? Has the process been botched? Has the eye been taken off the proverbial ball?
Those are just some of the questions swirling around today. Then there are the views being discussed in the Slug and Lettuce, to say nothing of the Cumberland tennis club. I know that the Minister will do her best to answer those questions. She always responds so sensibly and knowledgeably, but I fear that her bat may have been broken by her captain even before she got to the wicket. Where have we heard that before?
Finally, there can be no doubt in anyone’s mind that the outstanding contributions to today’s debate have emphasised that we are all united in our hopes and aspirations for all the British teams’ success. We will celebrate all their successes and look to them to be the role models for the future.
My Lords, I thank noble Lords very much for their contributions to this debate. One of the wonders of a debate such as this in your Lordships’ House is that many, if not all, of the questions that Members have asked seemed to have been answered by those with far more expertise in the various subjects than I have, but I will do my best to pick up the questions as they came up.
The noble Lord, Lord Haskel, asked about suppliers. The answer from my noble friend Lord Moynihan has gone some way to respond to his queries, if not to satisfy him. The contracts for suppliers permit specific mention of their involvement with the Olympic and Paralympic Games in particular cases, but it is for the major sponsors to have exclusivity over rights, because without those we would not be able to put on the Games as we wished. I acknowledge that his story about a flaming torch breakfast seems to be taking these things somewhat to extremes. However, who are we to say what the context is and where you draw the line on these? We feel that sponsors’ rights have to be protected, which is of course an obligation under the terms of the agreement with the International Olympic Committee, both because of that and against ambush marketing. That is quite a comprehensive sector, which we debated when it came through earlier in your Lordships’ House and when we passed the instrument to say that it should go through.
My noble friend Lord Addington talked about the protection of the Olympic brand and the real importance of learning lessons from what has gone right and what has not gone quite so smoothly in these Games, from which we will quite certainly take away a number of lessons. It is not that we are likely to host the Olympics and Paralympics in the UK again for a great many years to come, but all these lessons go back to the Olympic family as a whole to make sure that all Games learn from previous ones.
One or two noble Lords mentioned the matter of tickets. There was an unprecedented demand for tickets, which had never happened in previous Games. The systems that LOCOG set up would have coped if the interest had been as the media predicted in fairly cynical terms. It has obviously been a disappointment for those who did not get tickets, although they have been coming back on sale. I have already heard a number of stories of people who were not successful the first time around but who now have tickets. We hope that that position continues to improve. I enjoyed the intervention by my noble friend Lord Grade. I suppose we can only be grateful that the Prime Minister of the day was convinced that the bid should go ahead.
My noble friend Lord Higgins spoke of his Olympic experiences, and my goodness it seems a different day. I noticed that “Chariots of Fire” is currently on my local theatre and I am about to go for a nostalgic review of that. However, the Olympics of the 1940s were run and competed in a very different mode from the Olympics of today. The big change from amateur to professional has been one key difference. He raised the matter of drugs, a matter which my noble friend Lord Moynihan also took up. We should confirm the very tough line that is being taken on drugs here, because undoubtedly sports and sportspeople suffer tremendously if drugs become permitted, whatever the sport.
My noble friend asked what happens if people arrived with tickets that they cannot use. I do not currently have an answer to that scenario. I know that we have already discussed whether people could use tickets if their names were not on them. The response was that the person who bought the tickets has overall responsibility for them, but obviously they may be used by those who do not appear on the named tickets.
As for protestors, everyone has the right to protest and nothing that is being planned for the Games will curtail the right to legitimate peaceful protest, but that does not extend to disrupting the Games or their preparations. We certainly do not want to undermine years of dedicated training by those competing, or ruin the enjoyment of fans who have paid to see their sporting heroes in action, so we expect that the response to protests will be proportionate.
My noble friend Lord Higgins also mentioned the legacy of the athletics stadium. We are of course encouraged to know that the athletics legacy will certainly continue until 2017, because the stadium will be used when we host the world athletics championships there.
The noble Baroness, Lady Ford, spoke about the legacy. I join other noble Lords in paying warm tribute to the work that she has done to ensure that the Olympic park is indeed a real credit to the country once it has completed its sporting time during the Olympic and Paralympics. She mentioned the importance of not pricing local people out of access or homes. My noble friend Lady Doocey also brought up concerns about local people being excluded from those. Considerable steps are being taken to ensure that the number of affordable homes in the Olympic park remains high. We hope that it will not become the preserve of the rich, because assurances are in place that local people will have their say. We congratulate the noble Baroness on what she has done and are sure that we have not seen the last of her in connection with Olympic matters, but she may act in a more personal capacity in future. We welcome Daniel Moylan, who will be carrying the torch in the post that the noble Baroness has vacated.
My noble friend Lord Bates lived up to expectations by talking warmly about the Olympic Truce being the point of the ancient Games and the torch relay heralding the fellowship and peace of the truce. The Foreign and Commonwealth Office is leading on this and we will certainly seek to work with parliamentarians and bodies such as the Inter-Parliamentary Union, the Westminster Foundation for Democracy, the Commonwealth and others to ensure that through an active public diplomacy programme we have an opportunity to increase international public interest and involvement in conflict prevention and peacebuilding and to raise the level of ambition for future Olympic Truces. My noble friend has done an enormous amount to put the Olympic Truce high on the agenda of the Games.
I compliment the noble Lord, Lord Davies of Oldham, on all the work that he did in the previous Administration to ensure the success of the Olympics and Paralympics, and I was pleased to see him reflecting optimism in his speech. He raised concerns about faith issues, which I know my noble friend Lord James shares. Four years ago, LOCOG set up a faith reference group that includes the nine faiths recognised by the IOC: Muslim, Christian, Jewish, Buddhist, Jain, Sikh, Hindu, Baha’i and Zoroastrian. This group has looked at all aspects of the plans, including the multifaith centres, prayer spaces, food provision, uniform design, quiet areas and accommodation, not only for athletes but for the workforce, volunteers, media and spectators, where appropriate.
We are conscious that with the Games taking place during Ramadan and on the 40th anniversary of the Munich attacks this multifaith approach has been crucial. LOCOG’s faith adviser, the Reverend Canon Duncan Green, who was appointed by the Archbishop of Canterbury, has led this work, but LOCOG has also worked closely with the Muslim Council of Britain and its general-secretary Dr Muhammad Bari, so I hope noble Lords are reassured on this issue. It has been taken extremely seriously, and I assure the noble Lord, Lord Davies, and other noble Lords that considerable efforts have been made by LOCOG to ensure that the needs of faith communities have been addressed appropriately and respectfully.
The noble Lord, Lord Davies, and the noble Baroness, Lady Billingham, mentioned Heathrow, which has been overmuch in the news recently with its possible inability to cope. The UK Border Force, BAA, LOCOG and other partners are working very closely together to ensure that visitors have a good experience at the airport and a warm welcome to the UK. We recognise that there is some way to go in ensuring that that is the case for everyone who comes here. Additional resources will be deployed by the UK Border Force to reduce queues to a minimum. BAA is providing a temporary terminal for the athletes’ departure, which will be one of Heathrow’s busiest days, and putting improved services in place to help Paralympic teams, which should provide a real legacy for disabled visitors afterwards. We are conscious of the need for cross-departmental conversations and discussions on this. The Home Office is quite naturally concerned that levels of security should be high for the period of the Olympic and Paralympic Games but is also conscious that visitors must be given a warm welcome to our country.
My noble friend Lady Doocey has done an enormous amount to contribute to the Games. I think particularly of the work that she has done on carers and on ensuring that people who need someone to come with them to the Games should be accompanied. She paid tribute to the security staff. I agree that we are in the best possible hands. The people working on security for us have worked enormously hard to try to ensure that all goes well.
My noble friend Lady Doocey mentioned transport, as did other noble Lords. We certainly hope that our lanes do not become Zil lanes. We are keeping the lanes that are reserved for the Olympic family to a minimum, and taking every possible care so that London can go about its normal business as far as possible.
My noble friend also raised concerns about tickets for officials. I was interested to hear the noble Lord, Lord Graham, talk about the hard work of local councils around the Games. I am conscious that there are allocated tickets for officials. However, the Government have kept their allocation to fewer tickets than they were entitled to. On affordability, 2.5 million tickets were priced at £20 or less. There were special prices for tickets for more than 220 sessions. Getting the balance right between having the right level of hosting and people to support the Games and making sure that the vast majority of the tickets were on sale to the general public has been striven for. By and large, LOCOG has got the appropriate balance. I think 8.8 million tickets were on sale. It is an enormous number. The proportion going to the Government and officials is relatively small.
My noble friend Lord Moynihan talked about the British businesses that would benefit from the Games. I accept that there is a difference of opinion between him and the noble Lord, Lord Haskel, on this.
There is absolutely no difference between the noble Lord, Lord Moynihan, and me. He spoke about the benefit that those businesses will get in the future, when the rights return to the British Olympic committee. I was asking about allowing British companies to use the Olympic Games as a shop window today. It is not about bread tomorrow; I was talking about bread today.
I hear what the noble Lord says. It is important to the International Olympic Committee and the Olympic family that they should be very protective of the branding of Olympic and Paralympic goods and services. Part of the contract that businesses signed set out in some detail where they could refer to their involvement in the Olympics. However, one of the other aspects is that officials in BIS and businesspeople throughout the country will use the Olympics as a showcase for British business. Therefore, even if they cannot stick an Olympic brand on their goods, there will be plenty of opportunities for them to meet the international community and build their businesses. We will certainly look for results from that.
My noble friend Lord Moynihan referred to doping, which I have already mentioned. We all agree with him about how tough it is to compete. The figures that he gave about the microscopic differences between those who won gold and silver medals just shows us all how intense the competition is for the athletes.
When the noble Lord, Lord Graham, spoke, I could not help thinking that if the trial for Newcastle boys had only gone differently, we might not have had the benefit of his wisdom in this House over the years. Perhaps we should grateful for some things.
The preparation has clearly gone better than anyone could have expected, bit in the round of very well earned bouquets that have been dished out because of what we hope will be an enormous success, there is a slight omission. Through the National Lottery, Camelot has contributed more than £2 billion to the Games—and I declare an interest as a former chairman of Camelot. Even more importantly, the revenue that it has created, which has sustained many British sports men and women between the Games, has been transformational for the medal tables since it came on-stream. Will the Minister join me in congratulating Camelot?
I am most grateful to my noble friend for that jog. I have no hesitation in joining him in thanking Camelot for its enormous contribution to the athletes and the Games. My noble friend Lady Heyhoe Flint was hoping to speak. Family circumstances meant that she was unable to be here for the opening speeches. Conscious of the rules and courtesies of the House, she took her name from the list. We appreciate her compliance in this matter. Her contributions are always most welcome and we look forward to hearing her speak on future occasions.
I was delighted to hear the noble Baroness, Lady Billingham, say what a cause for celebration the Games were and I warmly applaud the positive aspects of her speech. She mentioned her disappointment at the change in school sports policy when the coalition Government came in. I can only assure her that we have been working closely with schools to reverse the decline in sports participation. Under the new sports strategy, as I set out in my opening speech, there will be a particular focus on 14 to 25 year-olds. We are very aware that the interest and participation in sport of most young people severely declines when they leave school. We are working with clubs and schools to ensure continuity when young people move from school to adulthood. A great deal of effort is going on to talk to all parties to ensure that we have sport in all schools and not, as she said, just in independent schools, which would be of grave concern to us.
The noble Baroness, Lady Billingham, also mentioned sustainability. We are committed to setting new standards for sustainability in terms of the building and the staging of these events. The London Games are going further than most major events have ever gone in the commitment to reducing carbon emissions. We are confident that we will be able to deliver on an ambition of sustainability for these Games in modern times.
There are fewer than 70 days until the opening ceremony of the Olympic Games. London is on track for a great Games. The project is on time and on budget. Test events and readiness exercises are taking place. Our wonderful world-ranking athletes are in training and I think that we would all wish to pay tribute to the hours of dedication to their sport which they demonstrate. We may see just the final moments but behind that their effort is truly inspirational. Like my noble friend Lord Addington, the other day I was at a Sainsbury’s reception and I have been at other receptions meeting Paralympic athletes. If we think that our Olympic athletes are inspirational, we have to have the same view of our Paralympic athletes. They are quite unbelievable in their dedication and efforts to achieve world-ranking standards in their sports.
I make no apology for repeating the remark from Jacques Rogge and the IOC at their final inspection in March, already quoted by the noble Baroness, Lady Ford, which hailed London 2012 as “a legacy blueprint” for future host cities. This is a fantastic achievement of which we can rightly be proud. I also pay tribute to all those who have contributed. In your Lordships’ House, we have the noble Baroness, Lady Ford, and my noble friends Lord Coe and Lord Moynihan, who have been very instrumental, and others who have had an enormous impact on the building and delivery of the Games. We owe them all an enormous debt of gratitude.
The official broadcasters will be the BBC for the Olympic Games and Channel 4 for the Paralympic Games. I do not doubt that those of us who cannot be there will be glued to our sets. These Games are a once-in-a-generation opportunity to showcase the UK to a massive international audience. Along with Her Majesty’s Diamond Jubilee celebrations, this summer will show the world what we as a nation can do. The overriding message from what we have heard today is that we can all look forward to a tremendous summer of sport and celebration, and to a wonderful, lasting legacy for London and the rest of the UK. We all wish our athletes every possible success.
My Lords, I would like to repeat the Answer given to an Urgent Question asked in another place today. The Answer is as follows:
“The Beecroft report was commissioned by the Department for Business, Innovation and Skills as part of both the Red Tape Challenge and the employment law review. Mr Beecroft was asked to give his initial thoughts on areas of employment law that could be improved or simplified to help businesses and job creation. The report was intended to feed into the work that the business department is carrying out to review employment laws to ensure they maximise flexibility and reflect modern workplace practices. This is important both to employers and employees and is designed to strengthen our international competitiveness in difficult economic times. It is worth noting that the UK is considered to have the third most flexible labour market in the OECD, and this is an important strength.
Mr Beecroft was asked to take a candid look at a wide range of issues and he submitted his report in October of last year. Over the last few months, Ministers have been working through Red Tape Challenge and the employment law review, and I can tell the House that of the 23 topics he raised we have identified actions in 17 of them. As part of consideration of the Beecroft report, it was clear that further evidence was required, most notably on the issue of no-fault dismissal for micro-businesses. This was published on 15 March, and I can tell the House that it will conclude on 8 June. Given that this date falls when the House is not sitting, the Government decided to bring forward publication of the report to this week, so that it could inform the debate.
Last week, the Home Secretary announced the outcome of the Equalities Red Tape Challenge, which directly impinges on employment and workplace issues. Our intention was therefore to publish the report in time for this week’s business department oral parliamentary Questions. As you know, Mr Speaker, it was our intention to publish the report this week, but I have noticed from the press that an earlier draft of the report is now in circulation. Therefore, in the interests of accuracy, and so that the House has the correct information in front of it, I can confirm that the report will be published this afternoon, and copies will be placed in the Libraries”.
That concludes the Answer to today’s Urgent Question.
My Lords, I have listened carefully to the Minister on Mr Beecroft’s proposals as we saw them last October. Is making millions of workers’ lives more insecure a price worth paying? That is a phrase that I cannot help remembering from a previous Conservative Administration. Beecroft himself said:
“The downside of the proposal is that some people would be dismissed simply because their employer did not like them. While this is sad I believe it is a price worth paying for all the benefits that would result from the change”.
That is Mr Beecroft for you—he clearly believes that it is a price worth paying. He is a major Conservative Party donor as well.
Why have the Government, given the situation that we are in, not put forward proposals to introduce a British investment bank to help get finance to business, but are prioritising making people less secure in work? Why have the Government not put forward a temporary national insurance contribution cut for small businesses to take on extra workers but are prioritising making people less secure in work? Why are they failing to do enough to accelerate infrastructure investment—which, after all, business organisations such as the CBI have called for, and could be threatened by Solvency II—but instead are prioritising making people less secure in work?
When there are 2.63 million unemployed, created by the double-dip recession made in Downing Street, does the Minister feel that making it easier to fire staff at will and causing even more insecurity will give hope to people who are desperately seeking a job? Does he think that firing at will will boost consumer confidence at a time when the economy has entered a recession caused by the policy of this Government? Does he agree with Dr John Philpott, the chief economic adviser at the Chartered Institute of Personnel and Development, who said:
“The vast weight of evidence on the effects of employment protection legislation suggests that … less job protection … results in increased firing during downturns. The overall effect is thus simply to make employment less stable over the economic cycle, with little significant impact one way or the other on structural rates of employment or unemployment”.
Does the Minister agree with Beecroft that small businesses have very limited administration skills and very few academic qualifications? Are not those problems that need to be addressed, rather than accepting the anecdotal evidence as a solution for creating more employment?
According to the OECD, the UK has the third least regulated labour market in the developed economies. That is one thing in the Statement with which I agree. Only in the USA and Canada is employment regulation less strict. As the Chartered Institute of Personnel and Development has said, some of the most severe restrictions on the employer’s right to dismiss staff can be found in countries such as the Netherlands, Norway and Austria, which all have unemployment rates lower than the UK’s. Even the Secretary of State has said:
“We don’t want to dent job security and consumer confidence”;
“Our labour market is already one of the most flexible in the world”.
Why, therefore, are the Government ignoring this evidence? Why do they believe that making people less secure at work will be a positive contribution to creating jobs?
In the Chartered Institute of Personnel and Development’s Labour Market Outlook of summer 2011, far more employers cited access to finance—28%—and candidates lacking the right skills—50%—as obstacles to business growth than cited employment regulation. Those are areas where the Government could give positive assistance, rather than being diverted by the dubious recommendations of the Beecroft report. Is this another example of the Government’s failure to back business and to take the tough choices, such as setting up a British investment bank, and, instead, of their playing to the band of Back-Bench Conservative MPs who promote these job insecurity policies?
In February, David Blanchflower, a former Bank of England Monetary Policy Committee member, said:
“There is zero credible empirical evidence supporting … [the] contention that Britain’s economic problems would be fixed by slashing workers’ rights”.
So, what evidence do the Government have? Would not having a different employment regime for businesses with 10 or fewer employees, and those slightly larger, be a disincentive for growing small businesses to take on extra staff?
The Minister for Employment Relations, Consumer and Postal Affairs is quoted as saying in October last year:
“I think it would be madness to throw away all employment protection in the way that’s proposed, and it could be very damaging to consumer confidence”.
Has he now changed his mind? Interestingly, according to Hansard, the Secretary of State failed to vote on his department’s own legislation on changing the unfair dismissal qualification from one year to two. Today he is reported in the Sun as saying:
“Some people think that if labour rights were stripped down, employers would start hiring and the economy would soar again. This is complete nonsense. British workers are an asset, not just a cost. I am opposed to the ideological zealots who want firms to fire at will”.
Why has he allowed his department to help write and support the Beecroft review if these are the views in which he sincerely believes?
We face many challenges and businesses are giving the Government strong signals about the important things that will help them create more jobs—such as resolving the issue of finance and ensuring that we accelerate infrastructure investment. Those are the positive things that we need to do to inject growth into the economy. I look forward to the Minister’s response to my questions.
I thank the noble Lord for his comments. The context of this is a review of employment law to make it easier to employ people and to improve the growth prospects of our businesses across the country. Surely all of us seek to achieve that. It was in the coalition agreement that employment law would be reviewed over the course of this Parliament. Mr Beecroft was asked to report as part of that review, to provide a candid view of the law from a businessman’s perspective. His recommendations are not formally adopted as government policy. The Government are pursuing a number of elements. Clearly, however, the report includes other proposals and any decision to take them forward will be based on evidence.
The noble Lord, Lord Young, used the expression “firing at will”. I think that he is referring to the element in the report that deals with no-fault dismissal. We currently have an open call for evidence on dealing with dismissal and compensated no-fault dismissal for micro-businesses. It is an exercise to shed light on the issue. It is right that we look at all the evidence before deciding on any change. We are examining existing dismissal processes as a whole, including awareness and understanding of the ACAS code of practice. We are also seeking views on the concept of compensated no-fault dismissal for micro-businesses, whereby the smallest employers would pay compensation as a means of ending a working relationship fairly. It is about getting the balance right. It is about giving business confidence to hire. That is why we have called for evidence, and we want to understand that evidence and make policy on the basis of it.
The noble Lord, Lord Young, raised a number of issues, one of which was the training of business management. We discussed that issue in the debate on the SIs to which he referred. He will know that we are looking carefully at this issue and that we are taking action to make improvements on the basis which the previous Government put in place. He is right to say that it is an issue.
The noble Lord also said that we should be focusing on access to finance for businesses. I agree with that, and, indeed, we are doing so. He will also know that we have a debate on that subject on Thursday, when we will discuss the issue at greater length.
My Lords, I thank the Minister for his Statement. I am glad that the Statement recognises that the UK already has a flexible labour market, and that the Government acknowledge that that is a strength. Indeed, the Government have recently increased parental rights, and that is an important addition. I recognise that the enterprise and regulatory reform Bill already tackles some of the issues raised in the Beecroft report.
Does the Minister agree that any changes to employment law need to support and facilitate the positive and flexible behaviour exhibited recently by, for example, Vauxhall workers and their trade unions? There needs to be recognition that that sort of behaviour—the product of good employer-employee relations—is very important for the development of our industry. It is therefore important to avoid any reforms that might undermine that positive relationship whereby workers are regarded as an asset and not as a cost.
Given that the Government have had this report since 12 October 2011—some seven months—and their response to it is simply to continue the call for evidence and the consultation, they appear to be somewhat lukewarm about it. Perhaps the Minister can enlighten us on the depth of the Government’s enthusiasm for it. Finally, does he share my belief that, at this time of international economic crisis, it is important that all Governments throughout the world should be allowed to think outside the box, and of bold and imaginative ideas for the benefit of the economy and of all employees?
I am extremely grateful to my noble friend for her comments. On the issue of co-operative behaviour between employers and employees and their representatives, I wholeheartedly agree that that must be the gold standard. She suggested that the Government might be somewhat lukewarm on the Beecroft proposals. I will not say that the Government are either enthusiastic or lukewarm. The fact is that they will consider each proposal on its merits. Some are being taken forward and some, no doubt, will not be, but we will do this in a balanced way. She invites the Government to think outside the box and be imaginative, and that is exactly what we seek to do.
Why do the Government not denounce the idea of firing at will at this stage? Is it not a complete affront to everything that the trade unions and responsible employers have fought for? Why has Vince Cable denounced this so emphatically? Do the Government think that he is right or wrong?
My Lords, I explained in my answer to the noble Lord, Lord Young, that we have an open call for evidence, which closes on 8 June. I hear what the noble Lord says but it is important that we listen to all the evidence, and that is what we are doing. I should emphasise that this proposal does not extend beyond micro-businesses, so it will not apply to every single employer in the land. However, the Government are keeping an open mind.
My Lords, I am sure that many on this side would equally deprecate anything that could possibly be said to smack of firing at will, and I very much doubt that the Government’s proposals will involve anything that could be so pejoratively described. This report was perhaps commissioned before the recent downturn in financial circumstances, and many of the proposals will no doubt potentially be very expensive. Can the Minister assist me on the issue of parental leave? I know that the Government were understandably committed to improving that but I understand that the Beecroft report has costed it at approximately £150 million. Can the Minister assist the House on whether the Government have changed their mind or whether, considering that, they remain committed? Is it a matter on which they will generally be taking soundings and listening to representations?
My Lords, the Government remain committed to the coalition commitment to introduce a system of shared parenting by 2015, and we are of the view that it will bring benefits to businesses. We have always said that we would introduce it from 2015 and we will shortly be publishing the government response, outlining the next steps. It is not something that we are rushing into. At the forefront of our minds is getting this right so that it does not impose additional burdens or costs on businesses.
My Lords, I am sure that the Minister will not be surprised to learn that many of us feel that the introduction of what one might call a “hire and fire society” is not likely to help either the economy or future productivity. Many workers, even in small businesses, will lose any sense of security, and that is surely very damaging for any workforce. Therefore, I hope that the Government will seriously reconsider this departure from existing practice. With regard to the Government’s point that it may involve more employment opportunities for people in small firms, one has to recollect that small firms are mostly low-paying employers, which the taxpayer already subsidises. To some extent, the welfare system, including the welfare reforms that the Government are introducing, already subsidises low-paying employers, so why do they need any extra so-called assistance? I do not think that it is assistance at all. It will simply undermine a workforce’s sense of security and that will not help the economy or, indeed, future workplace relations. Therefore, I hope that the Government will seriously reconsider their proposal.
My Lords, the one thing that employers want is stability. I have noted that every time there is a change of Government, there has been a change in the employment laws. That cannot help. It should be borne in mind that in many of our cities, including my native city of Glasgow, unemployment is climbing. The Government are encouraging people who are out of work to move to other parts of the country. They will not do that if they feel insecure and there is a possibility that they will be sacked. It must be borne in mind that it is the small companies which we are depending on to get people into the Labour market. I understand that it is consultation and I hope that he bears that in mind. Apprentices who are taken on as trainees are employees like everyone else. It would be a sad day if a young apprentice were taken on to a job and lost out on not only the job but the apprenticeship. Will the Minister ensure that there are no further leaks from departments? That was a justified complaint when the Conservatives were in opposition. We should not have documents leaked from government departments.
My Lords, in response to the first point made by the noble Lord, Lord Martin, about the importance of stability for employers, I definitely agree with him. The question we are addressing is whether the scales have tipped too far against growth. That is what must matter to all of us, surely. With regard to the noble Lord’s comments on apprenticeships, I share his enthusiasm for them and agree with him on that point.
My Lords, I believe that there is a problem in how the current system works in that SMEs—I am involved with some—do not have their own HR staff. They go to professionals for help and the professional advice is inevitably always very conservative. Even when there is a good case that someone should be fired, which should happen only when they have been given the chance of training and have gone through the right appraisals, advice is often given to pay off employees rather than let the matter go to an industrial tribunal. The result is a psychology in this sector that that has to happen, when in fact it should go through to the end of the process and be resolved properly and equitably. It results in vexatious claims that wrongly scare SMEs when they do not fulfil the rights that they have when an employee should be dismissed. Will the Government consider that area of professional advisory conservatism to avoid the professionals being told, post event, that they were wrong?
I thank my noble friend who is absolutely spot on. A number of measures will be coming forward that will contribute to that. One of those, which is perhaps not so relevant for smaller businesses, but which is indicative of what we are trying to do, is to involve ACAS at an earlier stage.
My Lords, I apologise for leaving shortly after the first two speakers; I nipped out to pick up the report. I agree completely with the noble Baroness on the Liberal Democrat Bench—I am sorry but I cannot remember her name—on the flexibility at Vauxhall that she reminded the House about. It is also important to remind the House not only about Vauxhall, but that over a period of real restraint, apprentices have been going to Jaguar Land Rover and many other organisations on their days off to have training. If that is not flexible, I am not sure what is. Red tape is possibly a good thing to look at, but I am anxious that the Government do so with the overall view of what modern workplaces look like. They are very different from perhaps the view that some noble Lords have of workforces. Flexibility is a way of life. That does not mean exploitation but co-operation and the way in which people work together. It may not be red tape but it certainly is a red ceiling. There is an opportunity to look at why women are not getting on further in their workplaces. I do not know whether it is red tape or how to describe it but it is a fact that women are still restrained in their grades and not allowed to go further. I welcome the opportunity for a comment from the Minister on that as well.
I can find very little to disagree with in what the noble Baroness has said. I absolutely welcome the restraint that I know employees are exercising in this extremely difficult time. We really need and are grateful for their help where this is happening, and I agree with her that it is widespread. People are working beyond the call of duty, and that is a huge accolade for our workforce. We spoke earlier about the need for co-operation between workers and employees, and that must be for the good.
The noble Baroness asked about the Government’s aspirations for women in the workplace. She will know that there is a great deal of work going on and that the Government are very much focused on this as an important issue.
Is my noble friend aware that unemployment in Germany has fallen by a significant margin over the last five years, largely as a result of supply-side measures that have been introduced by the German Government? Will my noble friend please draw these measures to the attention of the Business Secretary and ask him why he has not already followed the German example, if he really is serious about reducing youth unemployment?
Is the Minister aware of the great amount of academic research on the impact of employment protection legislation which has gone on over the last 15 years? The standard finding of this research is that employment protection legislation has no positive or negative effect on the level of employment. The reason is very simple: as is constantly said, of course, if it is easier to fire people, you are more likely to hire them; but you are also, believe it or not, more likely to fire them. The two balance out. Are the Government aware of this research?
My Lords, I am aware of a considerable amount of research. I bow to the noble Lord’s greater knowledge of the academic research, of course. The Government are absolutely committed to flexibility for employers and employees. We have consulted and continue to consult widely on a number of issues and, as I have said before, we will not take action unless it is on the basis of evidence.
Will the Minister explain to the House how the no-fault dismissal idea is compatible with the Government’s declared commitment to well-being? Will the Minister agree that job insecurity and unemployment are the greatest threats to mental well-being, and also that high morale in the workplace is the best assurance of high productivity and therefore growth? Will the Minister agree that any unsuitable member of staff can in fact be moved on by good supervision and management? Will he therefore assure the House that this Government will encourage good supervision and management, rather than heartless employers?
I am sympathetic to what the noble Baroness says. As I have said, we are keeping an open mind on this issue of no-fault dismissal. It is a fact that the smallest businesses are less likely to have access to human resources and legal advice and are therefore less likely to feel confident in applying procedures. I think that is one of the key issues. We want to examine whether a no-fault dismissal system for microbusinesses would be helpful in dealing with this, particularly in increasing their confidence in employing people.
My Lords, in repeating the Statement, the Minister said that,
“the UK is considered to have the third most flexible labour market in the OECD and this is an important strength”.
Will the Minister tell the House which other OECD countries operate a no-fault dismissal policy? In his Statement, the Minister also indicated that there is clear evidence that employers have dismissed people simply on the basis that they are not liked. If that is the case, is he not therefore proposing in this Statement and in the report a gateway for discrimination against a vast range of people in employment: women, people with disability, and others? The Minister indicated that the report was about the confidence to hire. Does he agree that it is also a blank cheque to fire?
My Lords, the noble Lord asked whether any other countries had in effect a micro-exemption. Germany does. He was also concerned about discrimination. Broadening the question, I will say that the Government will not tolerate discrimination in the workplace.
My Lords, will my noble friend confirm that the whole thrust and purpose of the review is to get people hiring again, not to get them firing, and that it is part of a growth assessment? Does he agree that it stands to reason that there must be one set of rules for large employers—the Vauxhalls, the Tescos—with huge HR departments? If one of their workers underperforms, they can provide them with the necessary supervision, training and reskilling. However, where a firm has only two or three employees, if one underperforms then up to 50% of the workforce is underperforming. The firm will not have an HR department or supervisory skills, and did not employ a firm of global headhunters to hire the person in the first place. Therefore, different rules need to be considered.
My Lords, if the Government are interested in the totality of the German system, rather than cherry-picking bits of it, they should look at two-tiered boards and the involvement of the whole workforce through works councils and strong trade union collective bargaining. If the noble Lord is interested in the success of the German model, will he look very carefully at evidence of the whole of the German experience, because it seems that there is no evidence available from the way Mr Beecroft has gone about his business?
My Lords, of course we looked very closely at countries we admire, such as Germany. However, we are a different country, we have a different history and we are in a different position. Therefore, we have to do things our way. I emphasise that we will do this in a careful, measured and flexible way.
Euro Area Crisis: EUC Report
Motion to Take Note
My Lords, I am delighted to have the opportunity to introduce the debate on this report. Sadly, I am rather less delighted by the circumstances that required the report to be written and that make today’s debate so urgent and topical. The report was a joint effort based on work undertaken by the Sub-committee on Economic and Financial Affairs, which I chair, and the main Select Committee, which was chaired by the noble Lord, Lord Roper, to whom I offer a fond farewell, and which is now chaired by the noble Lord, Lord Boswell of Aynho, to whom I extend a warm welcome. The sub-committee focused on the economic and financial aspects of the crisis, while the Select Committee focused on institutional aspects and was responsible in particular for the chapter on the proposed treaty. I thank all the witnesses who contributed to both elements of this complex inquiry.
The committee began its inquiry in October 2011 and the report was published in February 2012. Noble Lords will be well aware that the situation has become even more serious since then. One challenge that we faced, and continue to face, was the sheer speed of developments in the crisis. Even though events have moved on since our report was published, it may be useful if I briefly remind noble Lords of the political context in which the inquiry was undertaken. Many issues that we considered remain to be resolved by the EU’s leaders.
On 26 October, a key EU summit—already twice delayed because of the difficulties in reaching agreement—struck a three-pillar deal that included the exploration by private-sector banks of a haircut of at least 50% to Greece, an increase in the funding available to the EFSF rescue fund to €1 trillion, and a requirement on the European banks to raise €106 billion in new capital by June this year.
However, in November the crisis escalated dramatically. Amid mounting turbulence in the financial markets, both the Greek and Italian Prime Ministers were forced to resign and were replaced by non-party political figures—the former governor of the Bank of Greece, Lucas Papademos, and the former European Commissioner, Mario Monti. After a general election there was also a change of Government in Spain, whose own bond yields were coming under intolerable strain.
So pressure grew on European leaders for a more fundamental response. The ECB complemented its programme of purchasing sovereign debt in the secondary markets with a major operation to provide long-term loans to European banks. Then, at the Brussels summit on 8 and 9 December, euro area nations agreed to a new fiscal compact that moved towards a fiscal stability union, including the adoption by national Governments of a fiscal rule to achieve balanced budgets and stronger Brussels oversight of national budgets. EU leaders agreed that some of these changes should be achieved through a treaty, but the United Kingdom Government, later joined by the Czech Republic, would not agree to amending the EU treaties. This resulted in the adoption of a separate international agreement on stability, co-ordination and governance, which I shall refer to as the fiscal compact treaty.
Our report sought to reflect on each of these serious developments. In the economic and financial context, we expressed deep concern about the extent of uncertainty that remained in the crucial area of bank recapitalisation. How would it be achieved? How would banks be prevented from reducing their debt ratios by deleveraging and hence reducing lending? How much damage would a sustained restriction on credit do to an already struggling European economy?
We also concluded that because of the risk of contagion there was an urgent need to establish a credible and well financed system of rescue funding. We acknowledged that the primary responsibility for this must lie with the euro area countries, but given the global implications we stressed that it was also necessary for the international community, including the United Kingdom, to play its part, in particular through the IMF.
Although we highlighted the need for rapid progress on the Greek debt write-down, bank recapitalisation and the construction of a firewall, we recognised that such steps were unlikely to prove sufficient on their own. We noted the unprecedented steps already taken by the ECB and found that, although we could be cautious about regarding the ECB as a panacea, additional intervention was likely to prove essential. We also urged European leaders to consider the case for the introduction of so-called eurobonds.
We concluded by considering the longer-term issues, although we recognised that long-term planning will be irrelevant if the current crisis is not overcome. We concluded that improved budgetary discipline is necessary in order to make progress in resolving the crisis, but ultimately the resumption of sustainable economic growth holds the key, both in general terms across the European Union and in facilitating attempts to resolve the serious imbalances between different countries in the euro area. The committee argued that it was of great concern that the potential of the single market to enhance economic growth had faded from view during the crisis. We suggested that the focus of policymakers now needed to turn to policies to support economic growth that could be implemented effectively during a time of budgetary austerity.
Subsequent events have shown how relevant this analysis has been as the situation has deteriorated dramatically. Once again, we find ourselves in a phase of escalation and of deep uncertainty. Noble Lords will be only too aware of the significant recent political and economic turbulence in France, Spain, Germany, Ireland, the Netherlands, and above all Greece, where a second election in a month will shortly be held. Moreover, the parties most opposed to the austerity programme are expected to make further gains.
The financial markets are in renewed turmoil, with substantial falls on major stock markets. As recent developments in Spain have demonstrated, the European banking system is coming under severe strain. Economic growth in the euro area remains anaemic and would probably have been non-existent had it not been for Germany’s recent strong performance. Indeed, the contrast in economic outlook between Germany and the euro area members under most pressure, such as Spain, Portugal and Greece, grows ever more acute.
Nor is the United Kingdom immune from all this. Not only has the economy fallen back into recession, but last Wednesday the Bank of England cut its growth forecast for the current year from 1.2% to 0.8% and stressed that the biggest risk to recovery in the United Kingdom stems from the difficulties facing the euro area. The governor, Sir Mervyn King, has said, somewhat intemperately, that Europe is,
“tearing itself apart without any obvious solution”.
Last week, the Prime Minister stressed the importance of the very issues that this report highlighted, saying:
“Either Europe has a committed, stable, successful eurozone with an effective firewall, well-capitalised and regulated banks, a system of fiscal burden-sharing and supportive monetary policy across the eurozone. Or we are in uncharted territory which carries huge risks for everybody”,
including, one must conclude, the United Kingdom. The PM should explain why, if the euro area crisis is crucial to the United Kingdom, we remain so semi-detached in our engagement with our colleagues. In the midst of such a gloomy economic picture, the election of the new French President, François Hollande, on a platform of economic growth, has heightened debate on the fiscal compact treaty and the austerity agenda that it is perceived to entail, even before it has come into force.
On the new treaty itself, the Government said that they went into the December European Council thinking that the optimum outcome would be an agreement by all 27 EU member states, with the interests of the United Kingdom, particularly in relation to the financial services sector and the single market, being protected. As we all know, the Government did not get the safeguards that they say they wanted, so they refused to join the negotiations to draw up the treaty. The committee was strongly critical in its report of the Government’s failure to keep Parliament properly informed about a decision that may have huge long-term ramifications by sidestepping releasing the text of their prior negotiating position.
I hope that the Minister will be able to give the House a full account tonight of the Prime Minister’s intended approach to the informal gathering of EU leaders taking place this Wednesday. I also hope that the UK’s preparatory work, in building alliances with other member states, is rather more effective at this and future meetings than it was in December.
The key measures in the treaty are on budgetary discipline, and they must be translated into national law,
“through provisions of binding force and permanent character, preferably constitutional”.
It should be stressed that only the euro area countries will actually be bound by the key requirements of the treaty, although it appears that other signatory countries are eager to adopt these rules.
The committee considered that the euro area states must be free to take the steps they consider necessary to defend the euro, including the key area of fiscal integration. However, the committee emphasised that matters relating to the internal market must remain the preserve of all 27 EU member states.
The speed with which the treaty was negotiated, and the fact that it is outside the EU treaty framework, has left several important questions unanswered, including its relationship with the EU treaties and the laws made under the EU treaties, and the proper role of EU institutions such as the ECB in relation to the treaties. Some of the difficulties would be resolved if the proposed treaty was integrated into the main European Union treaty framework, once the review of experience with implementation suggested in Article 16 of the fiscal compact treaty has taken place.
I note that the Government’s response to the report, for which we are grateful, states that they are not opposed to the incorporation of the treaty into the main EU treaties in due course, provided that there are safeguards to protect the interests of all 27 member states. We hope that our own analysis of the treaty has been found to be valuable to other Parliaments. I was very pleased to be invited to Dublin in April to give evidence to an Oireachtas committee inquiry into the implications of the treaty in order to inform the decision to be taken by the Irish people on 31 May.
Given the speed of developments since the report was published in February, and the Government’s response in April, the committee looks forward, as I am sure the whole House does, to the Minister’s explanation of the Government’s current position. I ask the Minister to include the following points in his reply. In our report, we noted that national Governments and EU institutions have struggled to keep up with the pace of events. I think the point may have now come when Europe’s leaders have run out of road, and that hard decisions now need to be taken about whether the euro will continue to exist in its present form. I look forward to hearing from the noble Lord, Lord Sassoon, the Government’s assessment of the current situation. What do the Government think is the most likely scenario for Greece?
Shortly after our report was published on 20 February, the Prime Minister and 11 other Heads of State or Government sent a letter to President Barroso and President Van Rompuy setting out an agenda for growth. The European Council at the start of March came up with some sensible conclusions about developing the single market, and at the G8 summit at the weekend there were encouraging messages on growth. My next question is: what specific progress has been made on the implementation of the growth agenda set out by the EU at the start of March? What does the Minister expect to be on the table for the June European Council to agree, and what is his assessment of the impact of the election of President Hollande?
My final question concerns the status of the fiscal compact treaty. Do the Government still think it is likely that the treaty will be ratified by 1 January 2013? What contact have the Government had with the new Government in France, and would they support further discussions about the text of the treaty?
This is a hugely important issue. I am very pleased to have introduced it. I thank Stuart Stoner and Jake Vaughan, as well as Laura Bonacorsi-Macleod, who acted as policy adviser for this important piece of work.
My Lords, the noble Lord, Lord Harrison, and his committee have produced an excellent report on the most critical issue facing the European economy since the start of the EU. They are to be congratulated on it.
Given all that has happened—and indeed has not happened—in the eurozone since the report was published in February, I am sure that the noble Lord, Lord Harrison, is not expecting all speakers to stick rigidly to the report and the Government’s response. I hope I may be forgiven for straying a little outside the narrow confines of the report.
However, I shall start with the report. The committee was rather exercised about the December 2012 European Council and the circumstances surrounding the Prime Minister’s use of the veto—it seems rather a long time ago now. Unlike the committee, I have never been curious about who said what to whom before the veto was deployed. The most important thing was that the UK demonstrated that we can—and will—use the veto to protect our national interests, and I was extremely proud of the Government that day.
I am well aware that some noble Lords have criticised the UK’s veto as an isolationist strategy which will harm our role in Europe. I am quite sure that some in Europe are extremely vexed by our stance on the crisis and the chatter in Brussels may well be negative. The European project has never liked independent thought or action. However, I have seen no evidence of extra harm since last December and would certainly trade some unpopularity within Europe for a clearer understanding that the UK’s own interests are paramount.
The Government’s position on the eurozone, which I completely support, is that it is for the eurozone countries to sort out their own mess. When the euro started life, we could see that our economy was so unlike those on mainland Europe that we were more likely than not to be damaged by being tied into policies not designed around our needs. We could also see that the countries which became eurozone economies were insufficiently convergent for the one-size-fits-all interest rate to be good for the whole euro area.
It is now plain that the low interest rates within the eurozone, which suited Germany’s economic strategy, have done massive harm in terms of inflation and asset price bubbles to other eurozone economies. The euro arrangements lacked any instruments or incentives to require economic reforms, so southern Europe remained unreformed. But entry was voluntary and those volunteers must now find their own solutions.
As noble Lords are well aware, I am a confirmed Eurosceptic—sceptical about the whole project and about the euro—but I take absolutely no pleasure in seeing the current problems in the eurozone. The UK’s economic success is still too closely bound to that of the rest of Europe for problems across the channel to be any source of joy. My great regret is that the UK has tied its economic fortunes so closely to Europe and hence is vulnerable to economic success or failure there. We depend on European markets for roughly 40% of our exports. Our history as great exporters is in the past. Somehow, we have let the emerging markets grow without us, and it is shameful that we export more to Belgium than to India and China combined. Lessening our trading exposure to the eurozone should be a government priority.
I turn to the position of Greece, which dominates the headlines. Greece lied and cheated about its economic affairs and, at one level, there is a certain satisfaction that it is now getting its comeuppance, but the medicine that has been forced down the throats of the Greek people by the German-led eurozone group is more than tough and more than painful for them. The imposition of an unelected Government was a particularly shocking development and it is no surprise that the Greeks now reject austerity and what is demanded of them. Greece needs devaluation, and it simply cannot get that within the euro. It seems to me obvious that Greece cannot survive within the euro and should be encouraged to take an orderly exit. The longer that the European core tries to hold Greece in while imposing impossible economic conditions, the more likely it is that an exit will be disorderly. The signs are not good.
In the past few months, there has been deposit flight from Greece. Corporates routinely sweep any cash out daily. Anecdotal evidence suggests that wealthy Greeks have been transferring large sums of money to other, safer eurozone territories—in particular, Germany—or beyond the eurozone. Now ordinary Greeks seem to think that keeping their money in the banks is not a clever thing to do, and a real bank run could bring the Greek problem to a head.
I am sure that a lot of work has been done throughout Europe to model the consequences of a Greek exit, with best, worst and intermediate cases. I know that my noble friend cannot give market-sensitive information, but I would be interested to hear what he feels that he can say about the impact on the UK of a Greek exit.
Of course, the bigger danger is contagion. Cyprus and Portugal might well be early casualties—the former because it is so intertwined with Greek banks and the latter because it is a weak economy. They, too, could probably exit with few repercussions. The real problems lie elsewhere, as the noble Lord, Lord Harrison, said. We have seen the cost of borrowing in Spain and Italy rise towards levels which could easily be unsustainable. The cost of credit default swaps are also, unsurprisingly, rising for those countries. Those are the judgments of markets. Financial markets have judged that the actions to date have failed to deliver a sustainable solution. For example, last week’s overdue recapitalisation of the Spanish banks was nothing like enough to deal with the underlying problems, which is why Spanish bank yields continue to rise.
Markets want comprehensive solutions. Common issuance eurobonds would probably be a popular solution with markets, because they would involve a common commitment to a long-term economic solution. The committee examined that. Markets need Germany’s financial commitment to the whole eurozone, not just to economic policies, but Germany cannot or will not deliver that at present. If eurozone leaders come up with more half-baked packages which depend on extraordinary feats of austerity or are based on wishful thinking about growth measures, markets will reach their judgments and other weak countries in the eurozone will be exposed.
The G8 summit last weekend failed to do anything to reassure markets that the euro crisis will be dealt with. If the position of Spain or Italy within the euro becomes untenable, the consequences would be severe for Europe as a whole, including the UK. That is why I support the efforts made by my right honourable friend the Chancellor to urge the eurozone countries towards fiscal union.
I certainly would not have started with fiscal union. Indeed, I would not have started with the euro at all, but there is no example of successful currency union without fiscal union, and if that leads eventually to greater political union—the dream of the European federalists—so be it. It is a fact of life that the euro exists, so breaking it up is going to be very painful and it is therefore in the British interest to push the euro to its logical conclusion. The Government’s first priority is to protect Britain’s interests, and Britain’s interests will be protected if the euro does not go into a disorderly break-up.
If there is closer fiscal and political union within the eurozone, that will at least lay to rest the question that seems never quite to go away about whether we should join the euro. It will at the same time throw into sharp relief the whole nature of our relationship with the rest of Europe. I am not optimistic that the distinction between the internal market, which we will want to participate in, and the economic governance of the eurozone, which we will not, will stand the test of time. It seems that the eurozone will be driven more closely together, and that that will drive the UK and the other “euro out” countries away. The EU as we know it almost certainly could not survive a break-up of the euro.
As we have had a trade deficit with the EU for a long time, we should not get paranoid about those problems. The eurozone countries need our markets more than we need theirs, so we should be able to achieve our trading aims without the need to conform to every directive or regulation designed by the eurozone countries.
Of more immediate concern is the direct financial exposure of the UK. I congratulate the Government on bringing to an end our liability to the European financial stability mechanism, which the party opposite committed us to after it had lost the general election but before it conceded defeat. It will be important to avoid any further commitment. My noble friend the Minister was only partly reassuring on this front when he answered a Question from the noble Lord, Lord Empey, last week. He refused to say in unequivocal terms that the Government had no intention of providing further funding for the euro bailout. I hope that he can be clearer today. The question is: will the Government rule out providing any further financing to bail out the eurozone? It is a simple question and requires only a simple yes or no answer.
My Lords, one of the small pleasures of working in Brussels for eight years as general secretary of the European Trade Union Confederation was to be examined periodically by the House of Lords European Union Committee and to talk with others in the waiting room about just how serious and expert those sessions were, and how well respected the committee and this House is among those people on the inside who give evidence to it from across the Commission and the other European institutions. I thank the committee for a typically good piece of work. It is a balanced and sensible report on a very difficult situation. The tone of the report is about right as well; it is worried but friendly. It is constructive and trying to help, in a rather modest way—not in a kind of “Britain knows best” way, which is too often the tone of some of the critics of the euro and the way that it has developed.
As the crisis has been developing in the eurozone, there are more and more opportunities for those such as the noble Baroness, Lady Noakes, and others in this House who tend to say to the other side of the argument the four most annoying words in the English language: “I told you so”. The harsh fact is that this is the most difficult economic crisis in the West since the 1930s. It has probed and prised open the cracks in the design of the euro system—and the cracks, by the way, in the economic system which the UK developed over the past 30 years, with our overemphasis on financial services and our ignoring of the importance of manufacturing, and in some of the old-time truths which underpinned the rise of this country in the past. How do we get by? Let us be frank in this House about it. We get by through the devaluation of sterling, which is still 20% down against the euro, with all its troubles, and by quantitative easing, with our central bank printing money. These two ingredients are one reason—perhaps the main reason—why the UK recession is not a lot worse than it is, but those options are not available to our neighbours in the eurozone.
Perhaps we should think for a moment what would have happened without the euro and suppose that this crisis had happened and that all the national currencies were still in place. Their values would have been moving around as some Governments were forced, or chose, to devalue their currencies. Inevitably, had that happened accusations would be flying that the devaluations were a protectionist measure. That very powerful argument would have been going on in Europe at present. The single market would be under considerable challenge, as others considered taking retaliatory action against those who had devalued their currencies. Indeed, if our exports had been rather more impressive than our imports, and it was the other way round, we would have had a much harder time from our European partners than we have had since the devaluation of the pound took place. If the present situation is very difficult, and I certainly acknowledge that it is, the alternative would be difficult too.
British government policy is in the curious position of emphasising the virtues of austerity at home, in the UK economic and political scene, while loudly proclaiming the growth and expansionary path in the eurozone. That is particularly aimed at Chancellor Merkel. This leaves the UK wide open to a charge of, at best, inconsistency and, at worst, rank hypocrisy. After all, actions—not words—matter, and the shrinkage of the UK economy provides limited help to the economies of our neighbours in the present circumstances. Should we now not be asking ourselves how we can help the eurozone do what it must do if it is to survive? Could we, for instance, publicly and intelligently support the ideas of eurobonds and the mutualisation of some of the debt of the hardest hit economies? Could we not encourage making the European Central Bank a lender of last resort like national banks so that it could stand ready to rescue in the most difficult circumstances? Could we not take a fresh look at taxes on financial transactions both to check reckless speculation, of which we have seen far too much, and to act as a fresh and much needed source of public revenue? Can we support the creative use of the surpluses in the EU regional and social funds and a stronger financial base for the European Investment Bank? Can we take the lead on something? I believe it should be on a scheme on youth unemployment which would impact on those countries where that problem is particularly serious at present. The UK could take these positive initiatives from outside the eurozone. At present it is like a frustrated football fan sitting in the grandstand shouting plenty of advice that nobody takes any notice of.
The steps I suggest are not just gestures of help for the eurozone; they are self-help for the UK as well, just as the Marshall plan was not just American generosity but American self-interest. If the eurozone can resolve its contradictions and do something to deal with the cracks in its architecture, it will benefit itself, but it will benefit the UK as much as anyone.
My Lords, it has been a privilege to serve on the Select Committee and to participate in at least some of its deliberations on this subject. I thank the noble Lords, Lord Harrison and Lord Roper, for presiding over those deliberations at a time of great sensitivity and urgency to deal with these matters. The Select Committee’s report was published in the aftermath of the Prime Minister’s walk-out from the December seminar. Although that diplomatic mistake has had the lingering effect of diminishing Britain’s influence on decision-making by the European Union, I do not wish to rake over the failure to disclose to the committee the interests that the Prime Minister was allegedly seeking to protect. Suffice it to say that the reasons subsequently advanced by the Chancellor of the Exchequer in his letter to the chairman of the Treasury Committee of the House of Commons were wholly unconvincing. As that letter makes clear, significant levies on the financial sector,
“are subject to unanimity under the EU treaty”.
The Prime Minister was playing to a domestic gallery, not seeking to take forward the decisions that had been taken in principle by the October summit. It was a failure of the worst kind.
The Government’s response to the committee’s report has some positive proposals that I commend and welcome. In particular, the Government claim that they are “leading the growth agenda”. I think some of the remarks by the noble Lord, Lord Monks, about how we might lead it rather better should be taken on board by the Government. The answer to the report makes it clear that there are certain longer-term goals in respect of reforming the single market that could have a beneficial impact on our economy and some of those areas most under stress at this time. For example, in services there is huge overregulation in the domestic law of too many European Union countries, notably Germany. Digital union within the trade area is now likely to be achieved by 2015. That is a little way down the track, alas. The agenda also includes energy, which is a noticeably disrupted economy, with member countries taking very different views of it.
It is also good to notice in the Government’s reply support for a European research area and global openness via the EU free trade agreements with trading partners. These are positive. Although the December diversion from the urgent need to particularise and embed the principles agreed at the October meeting caused further delay in coming to grips with the euro area crisis, we are not alone in having been too tardy in responding. Indeed, the German and French attempt to water down the Basel III capital rules as they apply to Europe, even within the past month, must also be regretted. It seems clear that member countries of the Union have not faced up to the seriousness of the crisis in a coherent and constant way, with a direction set by their heads of government.
Major decisions are now required. One is on the Greek debt write-down. A second is on bank recapitalisation and the financing of the European Union rescue funds. These have been too long postponed. As the noble Lord, Lord Harrison, pointed out, the European Central Bank has been inventive in purchasing government bonds of euro area countries in financial distress from the secondary market; in coming together with the central banks from outside the area to help provide liquidity support; and in the long-term refinancing of operations—the LTRO—which provides 500 European banks with nearly €500 billion via three-year loans at very low interest rates. However, it is clear—particularly so because of the current Greek crisis—that this has not been enough.
It is worth noting in passing the evidence given to the committee by the former Prime Minister of Italy, Giuliano Amato, that although fully fledged Eurobonds were not part of Germany’s current thinking, mutually guaranteed project bonds for specific pan-EU projects, such as the development of the European power grid, should be given consideration. I should like to hear from the noble Lord, Lord Sassoon, when he winds up, whether the Government are giving serious consideration to that suggestion, which seems to be one that should be treated favourably.
Most commentators viewing the results of the Greek elections have considered that the Greek Government’s exit from the eurozone is now much more likely. The Greek opinion polls suggest that there is a growing recognition that the consequences for Greece would be disastrous. It is impossible to predict what may happen by 17 June. However, what is to be done now?
I believe it is nearer 80%, which is an indication that the traditional parties might be worthy of greater support than Syriza, but it is not for us to comment on the internal politics that are leading up to the June elections in Greece.
I believe that it is not sensible to lecture Greece and still less sensible to lecture Germany from the sidelines about what they ought to do. Britain cannot take a holier-than-thou attitude. Some time ago, the Chancellor of the Exchequer spoke of the need for fiscal union, which we have heard repeated today even by the noble Baroness, Lady Noakes, to stimulate recovery and to make the eurozone a workable phenomenon. Others, including some German voices, have adumbrated steps towards banking and political union. But these, although sensible medium-term goals, will not be achievable in the amount of time available to set aside the crisis that faces us immediately.
Northern Europe is not ready to be tied to bailing out its southern neighbours, despite the probable adverse consequences, including slashed production in most European and many other countries. Nor could Germany take on the entire debts of the European region without calling into question its own credit worthiness. All EU Governments should be assembled in conference to work out an acceptable solution. Two-day meetings by heads of Government are not enough. Some 74% of the Greek Government debt is now held by Governments and the IMF, which poses a massive threat to taxpayers. There is no point in crying over spilt milk. Earlier restructuring would certainly have required more banks to be bailed out but that could have avoided the confidence-sapping sequence of crisis. Roughly €100 billion was paid to private creditors by the Greek Government before their bailout in February.
The European conference which I am proposing should aim further to write down Greek public sector debt, to fix a longer period in which to hit their fiscal target, to agree to second immediate expert personnel to work with the Greek Government and other Governments in difficulty, and to achieve delivery, including structural reform. There is also a need for liquidity support for solvent banks and Governments. The natural liquidity backstop is the ECB, which has been mentioned by speakers in this debate, including the noble Lord, Lord Monks. Lenders must be properly capitalised but that has been postponed time and again in the eurozone. The IMF considered that €200 billion was required last year but only €100 billion was agreed by the Governments.
The new European security mechanism would be a suitable institutional arrangement to sustain the illiquid Governments. The ESM could find itself short of funds, which might be overcome by allowing it to borrow from the ECB. That idea appears to be favoured by successive French Governments, including President Hollande. But insolvent Governments need to restructure their debts and illiquid Governments need credible plans to reduce theirs. There is also a need to introduce controlled resolution of undercapitalised banks. The stakes of shareholders have massively diminished in value. Bondholders could be bailed in to provide a buffer. Banks should be prepared to move to subscribing to such funds in due course.
It is expected that the EU Commission will produce its own proposals in June; they should be fed into the proposed standing conference of member states. Unless member countries of the European Union come together with appropriate expert support on a continuing basis, there is a grave danger that a Greek exit, leading to their Government’s default; contagious runs on banks in other countries; exchange controls being imposed; the new currency being devalued; and hyper-inflation being experienced in some countries and deflation in others, will be a highly predictable consequence. We know that Argentina and Iceland managed to turn themselves around, but such chaos as I have described in the euro area, the second largest economy in the world, with the largest banking system, needs to be treated as the paramount challenge to western democracies since the 1930s.
My Lords, both the noble Lord, Lord Monks, and my noble friend Lord Maclennan have warned us against advising or criticising other countries in these matters. It always seems to me that one advantage of the privacy of your Lordships’ Chamber is that we can freely give advice to the Government without much danger of it leaking out.
As the only other member of Sub-Committee A speaking today, I congratulate my chairman, the noble Lord, Lord Harrison, on his lucid exposition of our findings. I also tell your Lordships that in the ever-changing kaleidoscope of events in the euro area that we faced during our inquiry, his skill as a chess master enabled him to guide us through and sometimes even interpret the irrational, usually contradictory and often ill conceived moves of the euro area.
I am neither a Eurosceptic nor a Europhile. If I presume to symbolise anything at all, I would try always to use a pragmatic approach and describe myself if anything as a Euro-challenger.
Never has it been clearer that the first commandment for a leader is to identify and then face reality. That applies in politics, economics and business; it applies especially to bankers and, above all, to central bankers. Do not let us forget that one of the main architects of our misery is that shrunken giant Alan Greenspan, with his failure as chairman of the Fed to face—and still less to act on—the reality that he had, in fact, identified in the three years that led up to the summer of 2007, when it became clear that everything would unravel.
The former name for economics was political economy, which underlines the crucial links between economics and politics. Even when the economic realities are revealed, political forces often conspire to frustrate the hope of solutions. I intend to devote my own brief comments to the situation in Greece and suggest a possible way forward for that country.
I should perhaps declare a rather remote interest in that my great-grandmother was Greek and her uncle was Capodistrias, who after he had represented the Russian tsar at the Congress of Vienna was, in 1827, persuaded to be president of Greece—and for his efforts was assassinated in 1831 within five years of taking office. It was ever thus.
It is perhaps relevant to remember that the British Foreign Office argued strongly against the liberation of Greece from the Turk on the grounds that it would undermine the Ottoman empire and thus destabilise the Balkans. The words of the noble Lord, Lord Monks, “I told you so”, may be echoed by diplomats of today. Of course, it was Lord Byron and his friends who ensured that the advice of the Foreign Office was not taken on that occasion.
Noble Lords will remember that it was Plato himself who argued against Athenian democracy of the fourth century BC on the grounds that demagogues could use it to prevent sound decisions. His analogy was a ship controlled by ignorant and quarrelsome sailors who refused to believe that there was any such skill as navigation and would write off a mere helmsman as a useless stargazer. His solution was, of course, the philosopher ruler. Whether either Mr Papademos or Mr Venizelos is up to such a role is not perhaps for me to judge. However, at paragraph 133 of our report we draw attention to the outburst of anger on the part of Greek politicians at the suggestion that there should be a budget overseer for that country. It seems to me that the danger now is that the second round of elections may again result in a preference for the rather destructive demagogues in the extreme right Golden Dawn and the hard-left factions forming the Syriza. There are rather frightening echoes in these economics and politics of how Hitler came to power 80 years ago.
It seems to me most unlikely that Greece can, or should be, bailed out yet again. I think, therefore, that it must leave the euro area, but I certainly hope that it remains inside the EU. Then what? There are two choices. The first is assumed, and that is the re-creation of the drachma as a new Greek currency. I believe that this would be a disaster for Greece. It would be a currency that no one would wish to lend or to borrow. The markets would ensure that it would be rapidly devalued and the Greek central bank would have to resort to the printing press.
I agree with the noble Lord’s analysis entirely up to now. However, does he agree with me that if the drachma collapsed, as it certainly would, everybody would want to borrow in it and have their liabilities in drachmas and their assets in euros, and that that would be part of the problem?
My goodness, the noble Lord is certainly a speculator.
If Germany is prepared to pay not the cost of bailing out Greece but the cost of redeeming the Greek euro debt which already exists, we have to think of something better than going into a Mickey Mouse currency such as the drachma. The solution would be for Greece to leave the euro area but to continue to use the euro. There are plenty of examples from past economic crises, such as Latin America using the dollar and Yugoslavia using the deutschmark after Tito died. The whole point is that using the euro with a new central bank for Greece would impose a discipline on the central bank and on Greece. Like anyone else, it would be possible for it to use only the currency that it could afford. It would not have any relation or connection with the European Central Bank. It would be paddling its own canoe but it might well have to have some help from the IMF. However, it might well produce a remarkable resurgence. Indeed, a noble Lord talked about the possibility of financing certain projects with eurobonds. This might be very possible if people could see sound opportunities in Greece and they knew that the currency being used was a proper international currency. I think that that would be a real help.
The noble Lord has painted a fascinating scenario, but how does he get out from under the problem he referred to whereby, in a sense, the demagogues fail to acknowledge that the real fall in living standards would be a lot greater in the drachma devaluation scenario than in the internal devaluation of taking more medicine in the eurozone?
When Sub-Committee A looked at the bailout, we saw again and again that the figures produced as necessary to prevent a catastrophe became ever greater by magnitudes. There is the old cliché about “A billion here and a billion there—you are talking serious money”; we almost reached the stage where it was “A trillion here and a trillion there”. If the prospects are for bailout, and that just continues, whatever happens and however much worse it gets, it has been fairly conclusively proved that people will take advantage of a bailout. It is human nature. It was the present governor of the Bank who said that if there is a run on the bank, the sensible thing is to join it. Therefore, if the bank is prepared to bail you out, the sensible thing is to accept the money.
My solution is that you impose a requirement to earn the euros—but with some help through the IMF, eurobonds, or eurobond investments—and you are thus able to rebuild your economy. I do not see, from the point of view of people living in Greece, that there is much difference between perhaps starting off with saying, “We are going to recreate the drachma; and the drachma is equal to a euro”, and then finding that the next day it is worth only half a euro, or, as the noble Lord, who likes speculating on these matters, might think, the drachma would soon be worth only a quarter of the euro. It would be a great deal better to recognise that the flexibility of having to have the euros with which to buy and pay for things would itself generate a reality that, I believe, is lacking.
I do not think that they could do so as such, except that, as I say, you might have a euro project in which people would invest. It would perhaps be somewhat similar to the private finance initiatives that have been used by the British Government—not entirely with success, maybe, but on balance they have been a useful source of making things actually happen. If people could see a good return, they would invest in it. That is a perfectly sensible way of doing it and, therefore, Greece would not be able to raise euro debt as such, unless the markets thought that that was viable. That is where the self-discipline is. The self-denial of recourse to the printing press would be a solution. I suppose I am really saying that if we get this form of self-discipline, which reality should require, and if this were to work in the case of Greece, it could be an example to other countries either not to follow suit and to grasp the nettle for themselves, or to recognise that this would be a viable way forward.
My Lords, I add my congratulations to the noble Lord, Lord Harrison, on the work of his committee and on his contribution today. He is a friend and a colleague of many years’ standing—indeed, going all the way back to our years in the European Parliament, where he was especially renowned for his championing of small and medium-sized businesses. I know that he continues with that cause in your Lordships’ House.
This evening, my noble friend Lord Harrison has presented the House with a first-class, thorough and, I think, essentially pragmatic report on the most vital economic issue of the day—the euro area crisis. I had a first read of the report over the weekend. I know that it will repay further study and that it will be a guide to all of us in this time of extreme difficulty and uncertainty throughout Europe.
This is a time, if ever there was one, for stout-hearted men—and, in my case, just stout women—to rally to the European vision while holding our nerve, if both actions can be achieved together. This is certainly not the time for the rather startling questioning of the whole basis of our membership of the European Union, as some in our political parties, especially but not solely in UKIP, are engaging in currently, and this is where the bulk of my short remarks tonight will be concentrated. As the report before us says unequivocally:
“The EU, and the euro area in particular, face massive challenges and there is a need for effective and proactive leadership both from the EU institutions and Member States, in the interests of the wider Union”—
leadership, not carping, questioning and indecision. The importance of maintaining the euro cannot be overstated for our fiscal and economic health internationally.
As we know, these are perilous economic times, as the noble Baroness, Lady Noakes, said. The UK is running a trade deficit of £2.7 billion per month, unemployment is an extremely worrying 8% and our annualised rate of GDP growth is so small that it can be detected only inside the Hadron Collider. Meanwhile, we still sell around £15 billion-worth of exports to the EU27 alone each month. Around 30% of all imports to Ireland, for example, are from the UK.
So I say this to those in the political class who are raising the possibility of referendums: with the turmoil in the eurozone and seriously depleted growth prospects in Spain, Portugal, Greece, Italy and Ireland—although, as the report says, Ireland is giving us some hope for the future—are we seriously suggesting that it is in the best long-term interests of British companies and British workers to start the debate about EU membership all over again, to revitalise the politics of what I would call the very worst of provincial isolationism in Britain and to tolerate the possibility that we could start dismantling every piece of European legislation introduced in the UK since the 1970s? Do we think that it is in the long-term interests of British workers and British companies to send the signal to large global corporations and the Governments of the USA and China alike that, in our troubled but emphatically interdependent world, the British political class would prefer to give the British economy over to a kind of nervous breakdown just because some people, who probably wear Union Jack waistcoats when alone in their homes, want to go back to the days of Commonwealth preference, pounds, shillings and pence, black and white television, jumpers for goalposts and long queues at airports for anyone without that old black passport?
It is not a question of being pro- or anti-European these days; it is a question of pro- or anti-economic sanity. Withdrawing from Europe makes as much sense as the people of Hampstead declaring UDI from London, or trying to divert the flow of the Thames, or shifting the UK’s longitude. No major party represented in your Lordships’ House went into the general election campaign promising a referendum on the European Union and this is certainly not the time to start.
Instead, I respectfully suggest that we should steer our focus to what the report refers to as,
“ultimately the resumption of sustainable economic growth”,
across the European Union. We should also listen to people such as Mario Monti, the Prime Minister of Italy, or President Hollande, who are beginning to construct a serious debate about the bridge between austerity measures and the vital necessity for growth. As my noble friend Lord Monks said in his excellent contribution, this should be our sole focus in these difficult times.
Before resuming my seat, I shall, if I may, congratulate the noble Lord, Lord Boswell of Aynho, and welcome him to his new duties, and thank the noble Lord, Lord Roper, for his excellent work over many years.
My Lords, like other speakers, I thank the noble Lord, Lord Harrison, for producing this useful report. I recognise, as the noble Lord, Lord Marlesford, said, that producing a report of this sort entails a lot of work: a lot of reading, many hours of listening to witnesses and probably a little bit of shut-eye, occasionally.
Having said that, I am slightly disappointed by the narrowness and rather blinkered focus of the report. I am disappointed but not entirely surprised because, as a paid-up anorak, when I knew that there would be an inquiry followed by a report, I wrote to the noble Lord, Lord Roper, who I congratulate on remaining in his place throughout this debate, suggesting that some of the witnesses were one-sided—what I call Europhile heavy. We had the foreign editor of the Economist, which is from the same stable as the FT, which has been wrong on just about everything for the past 20 years. We had Charles Grant of the Centre for European Reform, famously a Europhile think tank. We had Professor Willem Buiter, always pro-Euro, and Giuliano Amato.
They are all distinguished witnesses, but I wonder whether we should have had some more Euro-realistic views, which might have produced a greater balance to the report. Why not economics Professor Tim Congdon, Daniel Hannan MEP, Roger Bootle or Ambrose Evans-Pritchard? If they were too strong meat for the committee, perhaps it could have had Wolfgang Munchau from the FT. He has reinvented himself to what he would call a Euro-realist. We are left with a rather unbalanced and one-sided report, with statements of the blindingly obvious, as in paragraph 143, which states that,
“there remains an urgent need to establish a credible and well-financed system of rescue funding”.
One point that I notice from reading through the report, which is symptomatic of the tone and why I am quoting it, is that right at the beginning in Chapter 2, Professor Buiter says:
“It is a sovereign liquidity crisis ... countries that one hopes and assumes are most likely solvent, as far as the sovereign is concerned … frozen out of the funding markets by markets panicking and refusing”,
credit. It is not the markets that are panicking; they are acting entirely rationally in refusing to lend to borrowers who they feel may not repay their loans. It is the eurozone Ministers, the European Central Bank and the European Commission that are panicking by using every sort of dodgy financial wheeze to keep the euro-zombie staggering along on ever-more expensive forms of life support.
The noble Lord, Lord Marlesford, mentioned the possible cost of this going forward, never mind the cost that has occurred so far. I have discovered a rather shocking fact, which I will share with the House: the bailout funds so far used to rescue the eurozone are larger in real terms than the reparation payments and reconstruction plans of the First and Second World Wars combined. The reference is David Marsh’s book, The Euro: The Politics of the New Global Currency. All that in the name of what? Solidarity, cohesion, European destiny, what the noble Baroness called vision. What a cruel joke that is.
How can anyone pretend any longer that the euro project is anything but a disastrous financial and social failure? Greece is in near revolt, Spain has 25% unemployment and over 50% youth unemployment, Ireland is in a double-dip recession, Italy is in turmoil, 11 Prime Ministers have been booted out since the euro crisis began—all this to keep the EU political bandwagon on the road and the euro delusion going, never mind the social and financial cost of doing so. I say to the noble Lord, Lord Davies, that if he is interested in a bet on the euro or the drachma, the biggest financial exchange dealers in the world—ICAP, at least—are all ready to deal in the drachma. He will be able to indulge his gambling whim with them any time now, I guess.
The best solution would surely be for Greece, and any other country that so wishes, to leave the eurozone. The noble Baroness, Lady Noakes, was absolutely right that that is their only chance of becoming competitive in a global economy. There is absolutely no hope for it at all in the eurozone. The report should have said that there is no hope for Greece and the other peripherals while Germany is master in the eurozone. The Greeks cannot become Germans. It occurred to me while reading the report that we could have had a monetary union of countries beginning with S, it would have been just as effective: Switzerland, Syria, Sweden, and Serbia. There is no reason why that should not have been as ineffective as the eurozone.
I agree with the noble Lord, Lord Monks, that Britain’s interest is in a Europe that is economically strong and vibrant. That is obvious. However, do the Government really believe that this can be achieved by propping up at ever greater expense the weapon of mass financial destruction that the euro has become? It is not the Government’s job and it is not in the country’s interests to encourage the EU elite any longer in its very damaging political illusion. I hope that the Minister and the Government will take with a heavy pinch of salt the blood-curdling threats that are already being issued by the Eurocrats should the eurozone break up. They should be heavily discounted.
After all, we have been here before. Twenty years ago, Britain went through precisely the same experience when it was stuck with an overvalued exchange rate in the exchange rate mechanism. As in Greece now, our leaders, all the main parties, the CBI, the TUC and the Bank of England assured us that leaving the ERM would be disastrous. On 11 September 1992, the Prime Minister John Major solemnly told us that withdrawal was:
“The soft option, the devaluer’s option, the inflationary option … a betrayal of our future”.
Four days later, we left the system. The noble Lord, Lord Lamont, who I am sorry is not here, was apparently singing in his bath at the time. Our recovery began immediately. Inflation, interest rates and unemployment started falling and we enjoyed 15 years of unbroken growth and prosperity.
That is what the Eurocrats really fear: that if Greece gets out it will be a success, and other countries will want to follow and also get out of the eurozone. Then the whole rotten house of cards will crumble. That is what they fear, and that is what will happen.
My Lords, I congratulate all noble Lords involved in writing the report, which is insightful, well reasoned and fairly non-partisan. The eurozone is on the edge of collapse into a precipice, and with it the world economy. However, it is important to recognise that the situation of the EU as a result of this has been completely transformed. There is no way that the EU can stay as it is. There is no way that the traditional cumulative method of building the European Union can be sustained in such circumstances. Federalism in some sense—including fiscal integration, as noted in the report—is the condition of the survival not only of eurozone but, in any essential sense, of the European Union.
The situation is dramatically affecting politics. I do not think that anyone has noted this, mainly because it is so blindingly obvious. Something extraordinary is going on politically across Europe. It is a Europeanisation of politics far beyond anything that has ever happened. This is true both where Governments have been replaced without elections, as in Greece initially and in Italy, and in countries that followed due electoral process, such as Spain and France. The same will certainly be true of Germany. The German election will be fought largely on European terrain. It is hard to overestimate what a massive transformation this is, although of course it occurs as a result of forces that are extremely difficult to manage.
It is possible that we will never go back to national politics in Europe. Of course, the eurozone could collapse, in which case there could be a reversion to the pre-existing system—but I think that that is very unlikely. Probably the whole scope of European politics has changed, and one could say that maybe national politics will never again hold the stage in Europe in the way that it did in the past. This is high drama by any reckoning.
The report rightly stressed that the fiscal compact and other planned budgetary disciplines would not be enough to resolve the crisis. My noble friend quoted the report, which stated that,
“ultimately the resumption of sustainable economic growth will hold the key”.
“Ultimately” at the moment is the wrong word because as we know, and as my noble friend mentioned, to some extent the report has been overtaken by events. The arrival of President Hollande and citizens’ revolts—if I may call them that—in Greece, Spain and elsewhere have already pushed growth back on the agenda, and President Obama nudged the eurozone in this direction at the G8 meeting.
The question of the hour concerns the relationship between austerity and growth—terms that I do not like very much. Rather than austerity we are talking about a version of economic sustainability; austerity is the wrong word. On growth, we have to ask what kind of growth, whom it will be for, who will receive the benefits and how it will be distributed in society. A resumption of growth that goes to only 0.05% of the population will not serve any social benefit.
While we talk about the relationship between these two elements, we should not offer facile solutions. At this juncture we need profound rethinking, mainly because there has been a generalised loss of competitiveness in the West which I would trace back for at least the past 25 years. This decline in competitiveness in relation to the large developing economies has been happening. In spite of everyone lauding the reforms that the Germans have made—I am happy with that because I was, in a marginal way, involved in some of them, especially Agenda 2010 and reform of labour markets—even Germany is not competitive in world markets; it is competitive because of the shelter of the euro. A very good paper has been written on what would happen if Germany withdrew from the euro, which is that large chunks of its industry would become uncompetitive overnight.
In contra-distinction to what the noble Lord, Lord Willoughby de Broke, said, this is not just a crisis of the eurozone. My noble friend Lord Monks put it well when he said that the generalised crisis of competitiveness in western economies has driven apart and revealed the frailties which were there in the euro project from the beginning. So the future of the euro, if I may put it this way, is not only a matter of the euro.
Let me make a few points about the relationship between austerity and growth. Although I said that I have strong reservations about the terms and would like them to be dropped, the Prime Minister was right to say that the two are not inconsistent with one another. The key difficult question economically is what is the relationship in the context of not only a national economy such as this one but in the context of the more generalised European economy.
My main objection to the Government’s programmes in this country is that they do not seem thought through. You cannot even say whether a cut is a cut unless you trace out the knock-on economic implications of whatever reductions have been made. This is quite close to home to me, working in the university sector, because the Government’s reforms of universities could produce a situation where there is less revenue coming in than there would have been if the reforms had been differently structured. This is partly because universities generate a lot of revenue anyway and partly because of the esteem with which they are invested on an international level. In many areas the Government have not thought through the knock-on implications of their programmes of cuts, and if you do not do that you cannot develop a sound plan for the future.
As has now come to the fore with the advent of President Hollande and Mario Monti in Italy, Keynesian-style infrastructure investment can make a difference if it is carried out on a European level, is funded by the European Investment Bank and is invested in sensible projects—not roads but, for example, the building of an integrated pan-European grid, with a fair chunk of renewable energy in it, would be a sensible and systematic project.
It is obvious that the debate at the moment is being carried on between, as it were, the neo-monetarists and the neo-Keynesians and I find it very inadequate. I do not think a Keynesian solution will generate the jobs and style of growth we need any more than a revamped neo-liberal position. We need something more basic and more innovative than that. In general, we have to think much more innovatively.
Even though one can talk about sustainable growth and growth in general and say that one is in favour of it, in current conditions it is extremely hard to achieve in any western economy. The US is finding it as difficult as the core European economies are, although this is disguised by the effects of the euro in the eurozone.
A good example of the difficulty is that one of the main arguments for generating new jobs produced in this country and in the European Union 2020 document is that the EU should be at the cutting edge of technological innovation. It could do this, for example, in the energy industry and keep ahead of competition from the large developing economies. However, this is not possible in any straightforward, facile way. You only have to look at the history of the German solar industry to see this. It is exactly the sort of industry one would expect to keep the German chunk of the European economy ahead of other parts of the world. However, the Chinese started constructing solar panels much more cheaply, with a higher level of technological sophistication than the Germans could manage, more or less undermining the German industry completely. The same thing has happened in the United States.
To me, this shows the scale of the task in front of us. In Europe we have a double task. We have to save the eurozone because, contrary to what has been said by some other speakers, flawed though it is, it is really the condition of some kind of stability, economic and otherwise, in the European Union. Therefore, it is imperative, but the task, if you link it through with a generalised loss of competitiveness, is truly formidable. As an academic, social scientist and economist, I think that we do not actually have the concepts and the ideas we need to break through the situation. Therefore, we are reduced to this rather stale confrontation of traditional economic orthodoxies.
My Lords, I am also tempted to stray a little from the committee’s report this evening, although not before paying tribute to the excellent work of its members and also adding my welcome to my noble friend Lord Boswell of Aynho in his new position.
It has not been a very good week for political classes and elites, and I am told that it is only Monday. Over the weekend, NATO’s strategy on Afghanistan seemed to have been taken over by the Grand Old Duke of York—lost in confusion, trying to remember whether he was supposed to be marching up or down the hill. Then, of course, we had the summit discussions on Europe, where the only consensus seemed to be that Europe is in a terrible crisis. Europe is in chaos, and things will get worse.
I commend the committee for its report. I take to heart its opening lines about the need for leadership. As the noble Lord, Lord Harrison, himself has so ably set out, we have seen so little of that—so many of Europe’s leaders seem blind and bereft of ideas. You can hear the mantra falling from the lips yet again, “One last push and it will all be over,”. We in Europe seem to have learnt nothing for almost 100 years.
I listened in amazement over the weekend to President Barroso. I beg his pardon, because I mean him no personal discourtesy, but his statement was like tugging at the tulips to see if the roots were still intact. Your committee spoke of—I believe the noble Baroness, Lady Crawley, also quoted it, although that is as far as I will be going down the path with her this evening—a need for effective and proactive leadership from the EU institutions and member states. Where has that been?
Over the weekend Mr Barroso’s response to the need for leadership was to say that,
“there is only plan A”.
There is no plan A. It is a meaningless concept. There is nothing but a fog of indecision. Europe’s leaders talk about Greece, the euro and binding undertakings, but they refuse to address the key issue: the increasingly incoherent fiscal and political system that underlies and is undermining—indeed destroying—the euro.
I have always wondered why Europe should need three expensive Presidents—not just Mr Barroso, but two others as well—and of course two even more costly Parliaments. They can only come up with one bankrupt idea: plan A. But perhaps there is a plan A*. We heard it again over the weekend: a strategy for growth. Why did I not think of that? Where have I been? I must have been a stonkingly dull pupil all these years. If platitudes could come to our rescue we would have floated off the rocks long ago and would today be singing from the top of Mount Olympus.
Plan A, plan B—whatever plan has so far been devised—will not do. This cannot do. The people tell us that, which is why in country after country since this crisis began Governments have been swept from office—all of them thrown out, with one exception: Estonia, where a Eurosceptic centre-right Government somehow managed to increase their majority. I draw no general rule from a single example, as much as I am tempted to, but the evidence of every other election is surely compelling. Those who are responsible for the crisis have been called to account.
As I gaze across the battlefield of Europe, littered with corpse after political corpse, I have to wonder about Brussels, about the system and about Mr Barroso and his colleagues. Why is he—and the rest of them—still there? How many of them have been asked to resign or apologise or accept their share of responsibility for the chaos? Not a single one. They seem to inhabit a parallel universe of different rules, while Greece is condemned to paralysis, stagnation—and perhaps salvation, but those in Brussels demand still more, 7% more. Those whom the gods wish to make mad they first seem to send to Brussels.
The stakes are terrifyingly high. I was taken with the warnings of the Deputy Prime Minister, Mr Clegg, the other day. He is not a man whose insights I have regularly praised in the past, but he talked about his fear that economic failure could lead to political extremism and chaos in parts of Europe. That was echoed by my noble friend Lord Maclennan. He is surely right to give voice to those fears. There is so much at stake. Instead of prosperity, Europe will get bankruptcy. Instead of peace, Europe could be filled with burning barricades. Instead of parliamentary democracy, we could all too easily find tolerance being trashed in country after country.
It requires leadership to see a way through this tangle. I welcomed very warmly what the Prime Minister had to say over the weekend. His words were wise—perhaps not welcome in every quarter but sometimes it is necessary to shake the tree to get at the fruit. He said that the people will decide, and in Greece they will do that in the form of an election that will be seen as a referendum. The people must decide—not the political classes, who by and large have offered nothing but arrogance and indecision in heroic measure in recent years. It is the people who will suffer the consequences of failure, see their jobs taken from them, their pensions smashed and their hope and ambition for the future taken from their children. This is not a decision that can be left in the hands of politicians with gold-plated pensions, even gifted philosopher kings such as those praised by my noble friend Lord Marlesford; it is a decision for the people to make.
I therefore take to heart the Prime Minister’s words and the inexorable logic of his argument, which is that what is good for the Greeks must be even better for the British. I look forward to those Greek elections and hope that they will clarify some issues, just as I look forward with even greater anticipation to the referendum that must at some point surely follow in this country.
My Lords, I join those who have thanked the noble Lord, Lord Harrison, and his committee and congratulated them on having had the courage to put their heads above the parapet and produce this report in the midst of all the challenges that face us. I also take the opportunity of joining others, including my noble friend Lady Crawley, in putting on record my admiration for the service given to this House by the noble Lord, Lord Roper, as Deputy Chairman of Committees. I have known him for 59 years and there has been a consistent theme from which he has never deviated in his life: a commitment to making a success of international institutions, which he sees as indispensable to the future of humanity. That conviction of his has enabled him to be such an effective operator.
It was interesting to contrast two trenchant speeches, that of the noble Baroness, Lady Noakes, and that of my noble friend Lady Crawley. The noble Baroness, Lady Noakes, finished by expressing her admiration for the Government and the Prime Minister for having made it absolutely clear that, whatever happens, the British national interest will be central to their considerations. The problem about that thesis is, as my noble friend pointed out, that we live in a totally interdependent world. It is a false analysis to suppose that you can look to the national interest without looking to the international interest, because our long-term well-being, survival and prosperity depend on the stability and well-being of the international community of which we are inseparably a part. That in an immediate sense starts in the European Community, of which we are in so many ways very much a part.
The difficulty is that we face a challenge. The challenge is not just all the financial nightmares with which we have been dealing; it is the dilemma with which people feel confronted. On the one hand, they are utterly dependent on effective solutions in an international context; but, on the other, they find globalisation and regionalisation quite threatening, because a large number of them feel that they are losing their sense of identity and purposeful significance. That was true of what we saw in the Arab spring. The Arab spring was not just about economic and social injustice; it was people asserting that they mattered and wanting that to be recognised. As we have the institutions today, they do not feel that. They see them as remote and impersonal; they see them as the preoccupation of a political elite of which they would regard us a part. That is the point that I make to my noble friend—my good friend—Lady Crawley.
Although of course we could argue that this is the very time not to start a major agonising debate, we can equally argue that it would be sheer obstinacy of the worst kind to pretend that there is not that crisis, to pretend that people are not disillusioned, that there is not a crisis of confidence among them, and that they are not feeling alienated—let us be prepared to use that word—from the processes in which we all participate. I do not separate myself from that. As someone who was fashioned and grew up during the Second World War, I put my commitment to the European project second to no one, but we have to face up to the seriousness of the human challenge, not just the economic challenge, that confronts us.
In a reflective moment, if we are looking for strong international regional institutions, confederalism may well produce them more successfully than federalism. People want to feel that they belong to something with which they can identify. The challenge is to enable people to see that that is not enough. We must reintroduce the whole concept of international co-operation, emphasise it and start giving it muscle.
As we look, more immediately, at the euro issue, there are those who say, “Of course we could not find a solution for our economic affairs in Europe while we had a euro without the fiscal discipline that should go with it”. It is about not simply fiscal disciplines but a cohesive social and economic agreed agenda; I do not see how we can have sustainable stability without one. When I was a Minister of State at the end of the Callaghan Government, we used to consider agonising issues. In my view, it is wrong to suggest that the urgency of the economic crisis means that economic and social priorities must wait. It is in times of economic stringency and hardship that economic and social priorities become more important than ever. If the remedies are to work, they must be in a context in which people feel confident that there is a prevailing ethos of social justice.
I find it very interesting that if you look at either end of the spectrum you get the same conclusion. Adam Smith did not write first, as a young academic, about liberal economics; he wrote first about ethics. He was a highly ethical man. He approached his economic theory in the context of a strong ethical commitment. The late Lord Soper, when the Berlin Wall collapsed, made the profound observation that it is not a matter of socialism having been tried and failed; it is a matter of socialism having demanded an ethic of which humankind has so far proved itself incapable.
Therefore, whether you are looking at it from a capitalist perspective or a more socialist perspective, the indispensability of the ethical priority cannot be overemphasised. We have to reassert in Europe, and in this country, the overriding importance of ethical discipline, not just fiscal discipline. If not, either system is doomed—I put it as strongly as that. What we have is a system in which greed has got out of control and in which, as has been often said of late, risk has been socialised and wealth and profit have been privatised. That is a recipe for tension and instability in society. It is the key issue that has to be tackled.
This is also a moment to pause and consider the issue of democracy itself and how it can work, which of course brings me back—I must be honest about it—to my own political orientation and attitudes. I have never understood how you can have a democracy if you have not got the accountability of economic power. What we are seeing is that we simply have not had the effective accountability of economic power where it matters. The noble Lord, Lord Marlesford, whom I have been fortunate to know as a friend as well, because we came into this House on the same day, was very right to remind us of what happened in Germany in the 1930s: of how the forces of Hitler and fascism gained momentum and what the social realities were around that.
I am sorry if I have said this before in this House—well, I am not sorry, but I recognise that I have said it before—but this is a juncture where I wish that we had more expression of some solidarity with the Greek people, because it was certainly not them who caused the crisis in which they find themselves. The noble Lord was right to say that the Greeks must make the decisions for themselves. We cannot make them for them and it is absolute madness to start lecturing them on their responsibilities. They have suffered enough. They have to weigh it up for themselves and see how they want the issue tackled. That of course has profound implications for us but we brought that on our own head.
It is absolutely clear in the midst of all this that the problem with the principle of unbridled market philosophy is that it emphasises the short term and squeezes out the longer-term perspective. One only has to think of the environmental issues as a good practical example of that. That is why we have to have balance and why an ideology of either left or right is not in itself enough. We have to have more pragmatism and more balance in the way we handle the issue.
I therefore conclude simply that what depresses me most about our predicament is that we are mesmerised by an almost neurotic search for some kind of structural, technical solution. If I have come to a conclusion about life, it is that no structure ever achieved anything of itself. Structures are inanimate; it is the objective against which the use of the structure must be judged that matters. It is the quality and values of the people operating the structures that matter. We have to regain a sense of vision, meaning: what kind of Europe do we want and need in the midst of this overriding reality of interdependence? How are we going to turn what is a massive crisis into an opportunity by asking the profound questions? I hope that my noble friend will forgive me for putting it as bluntly as this but, yes, I am asking profound questions. Where and why has it all gone wrong? Now what has to be done not just to patch it up but to find lasting solutions for the future?
My Lords, that was a very eloquent speech by the noble Lord, Lord Judd. There are real concerns about what has happened to the moral framework underlying the market. For lack of time, I cannot go into that and will follow the noble Lord in only one respect: in paying tribute to the noble Lords, Lord Harrison and Lord Roper, for an insightful, thoughtful and brilliantly written report. I add my congratulations to the noble Lord, Lord Roper, on the way in which he has led the committee, which still produces work of the highest possible quality.
Let me say right away that the committee report calls for leadership. A necessity for leadership is adequate information, and that leads me to ask the Minister a direct question. Is there any prospect of the Prime Minister’s draft protocol and the safeguards that he called for at the December Council of Europe being made public—after all, it is now nearly six months later—so that this House and those who are concerned about the future of Europe can have the profound discussion that they are capable of, but which is made more difficult because they do not have the information they need to pursue that matter?
Signor Amato, the former and very good Prime Minister of Italy, said honestly, “We have made a great mistake”. The great mistake in the creation of the euro was the failure to recognise that not only was a technical outcome required but a profound institutional change as well. In its pursuit of democracy within Europe, the European Commission and the other European institutions specifically required that. Some Members of the House will remember the Copenhagen criteria, a brilliant set of requirements for creating a real democracy. They range from independent courts up to the necessity for free and safe elections. The Copenhagen criteria are still being discussed with Turkey. They create the kind of countries that become part of the kind of Europe for which the noble Lord, Lord Judd, called. In the case of the euro, no such provision was made. There was no period of transition and no requirement that the basic, fundamental institutions of the eurozone had to be laid down by nation states. One of those institutions is an honest and transparent fiscal system. It is not polite to say so, but the truth of the matter is that very few rich people in Greece, Italy or Portugal ever pay taxes. At most, they pay nominal taxes, and that is not a basis on which one can build a sound and lasting eurozone. Institutional reform is crucial.
For lack of time, I shall make only two other points. First, we should ask why the ESM, which is not yet with us, but will be within a few weeks, decided not to require there to be a general mutual agreement by stakeholders alongside taxpayers to share the pain of the changes that are required. That was a very profound mistake because one of the real challenges to democracy is that when there is pain and sacrifice, it must be shared among society. I agree with the noble Lord, Lord Judd, that it cannot be loaded on only a section of society while the other part goes untroubled and untainted by the need to meet the requirements that are laid down.
Finally, the president of the IMF, Christine Lagarde, made a terrifying, chilling remark: “We may be sliding into a 1930s moment”. I very much commend what noble Lords have said about the real dangers to democracy from what is happening now. We must recognise that none of us can bale out of those requirements. They are part of what it is to sustain democracy at a particularly hard time.
My Lords, this has been a fascinating debate. I am sure that when the noble Lord, Lord Harrison, began his work with the committee on this report he scarcely anticipated that we would have quite such a wide-ranging debate. It has ranged from practical solutions for how we might emerge from the difficulties to the cataclysmic perspective that the game is up and we may as well fold up our tents and go home.
There are two dimensions to this debate to which I have the greatest difficulty in responding. I have great difficulty in responding to my noble friend Lord Giddens, not because I do not respect his analysis but because I cannot cope with the situation. He says that we, as politicians, do not have the intellectual machinery or concepts to get ourselves out of these difficulties. That may be so but I assure my noble friend that that will not stop politicians trying.
I was not going to be excessively critical of intellectuals. I accept what my noble friend said but I translated it to the political because that is what this House is here to do. We are not a debating Chamber; we are the second House of a very significant Parliament in a Europe that is faced with the most colossal difficulties. That is why we have to address ourselves to the issues.
I greatly applaud the work of my noble friend Lord Harrison. When the report was being drafted, things were not quite as critical as they have developed to be over the past two to three months. Nevertheless, my noble friend and his report clearly reflect the difficulties and tensions faced by the committee in producing a response to the great challenge of the crisis in the eurozone.
Let us get one thing absolutely clear. The reason we cannot walk away is that Britain has nowhere else to walk. Robert Chote is the chair of the OBR, in the work of which not just the Chancellor but the Minister in this House invest so much credence. What does he say? He says that we face a catastrophic situation if Greece moves out of the euro; we face catastrophe as far as the eurozone is concerned. The recession will go on for several more years. There will be deflation. Unemployment will rise from 8% to 11%. Therefore, we will be in a situation in which our own people will suffer severely because of this development. That is why the one thing that the British people will not accept—nor do I see any reason why other Europeans should accept it either—is politicians throwing up their hands and saying, “This is beyond us”. We may have limited intellectual concepts to get beyond Keynesianism or monetarism as an economic theory for the future, but we must put together some kind of strategy for improvement. Without that, we renege on our obligations to people.
The noble Lord, Lord Dobbs, says that the people will decide. Let me say that people who have lost trust in their politicians can reach some very dramatic decisions. We possibly see it in Greece at present. What if the British political community also began to reflect that we have no means of protecting our people in this crisis? A total calamity would be visited upon us and we would deserve it. Of course, I respect how difficult these issues are. I know that the Minister will be challenged in his response to this report. However, it is essential that we recognise that we must look for some steps forward.
Is it now the policy of the noble Lord’s party to support a referendum at some point on Europe? The other day, I heard an interview with his noble friend Lord Mandelson who said that a referendum might be a good idea, although another of his colleagues said, “I wonder what he meant by that”. At the end of the day, does the noble Lord want the people to decide our fate and the direction of Europe, or should this still be simply a matter for the political elites?
I would say, not at the end of this day. We have so much to do before we could even begin to prepare a referendum and the question that that would represent in realistic and proper terms to the British people. I will not rule it out altogether. We are accustomed to referenda in certain circumstances. You cannot talk to the people in terms of “We are giving all power to you for you to take this decision because we as politicians have not got the faintest idea what the question should be or how it should be answered”. That is what I am arguing against.
I am confident of the fact that European politicians will take important steps to make progress out of this situation. What will they do first? Let me be clear, we should not visit upon the Greeks the well constructed animosity that infects all our right-wing press at the present time. The Greeks are such a small fraction of the European economy that they are not a threat to anyone. Their loss is marginal. It is certainly a marginal aspect as far as our exports are concerned. But the Greek withdrawal from the euro would represent not one country having left the euro, it would be a recasting of the nature of the euro. The euro would come rather more closely to some kind of a currency regime from which some could defect at a time. But as to the consequences, Greece would be just the first of the victims. Then the pressures would inevitably be presented on the next weakest currency. We have already got pretty well a checklist of how that succession of activity would take place. It is certainly the case that the Greeks did not create this situation. We should have some respect for a nation which has such a significance in its past for European society. But the Greek withdrawal from the eurozone would create enormous difficulties for all. The contagion would merely spread.
What is to be done in these circumstances? It is clear that we have to play our small part. Because we are not part of the eurozone, we are on the margins of this exercise. We are even more on the margins because the Prime Minister walks out in a huff or presents a veto whenever things do not go right. We are not quite sure what has gone wrong. As the noble Baroness, Lady Williams, indicated, we never got the facts of the basis of such a decision. But the Prime Minister is good at chiding nations from the sidelines, giving good advice and lecturing others while not being conspicuous by his success at home. If these countries are being told to pursue a strategy in which they have to improve their growth prospects, by heavens, the Prime Minister should examine more closely the growth position of the UK economy in its double-dip recession through his and his Chancellor’s actions since they have been in government.
So it is quite clear that we will look to others in Europe to present some dimension of the solution to this position. Does it mean that the Germans will have to make additional sacrifices, which it is quite clear that their chancellor is not prepared at present? That will happen only if the consequences of doing nothing are far worse. That is exactly how they are beginning to look. When this report was drafted only three months ago, this discussion could be conducted in fairly normal political language, but we are close to talking the language of cataclysm at present—and of course it changes the perspective of the Germans on this, not least because, after all, the Germans also need friends. In fact, they need the French, their direct allies who have helped to build the European project, who under Monsieur Hollande are taking a somewhat different view on the next stages.
It is quite clear that the eurozone has to take actions itself. We cannot play a major part. But it is the case that 40% of our exports go to Europe. It establishes the British economy in a weak position, because we are related to the euro countries in those terms; there is no ready alternative. If you ask any of our major companies or anyone else concerned with export trade, they do not turn round and say, “Because the eurozone’s in such trouble, we’re looking forward to such wonderful opportunities to challenge the Chinese and the Indians and others elsewhere in the world”. They do not say that at all. They say that we should do something about sustaining the most crucial market that we have—the eurozone countries.
I am quite sure that the Minister’s response to this debate will be expressed in very different terms to mine, but I hope that at least what I have done for him is to help to disperse the rhetoric so that we can concentrate on what practical politicians will have to do to get us out of this situation.
My Lords, I welcome this opportunity to discuss the European Union Committee’s report on the euro area crisis. I first thank the noble Lord, Lord Harrison, and the committee for its thought-provoking analysis, and particularly my noble friend Lord Roper for not only this report but all the other truly excellent work that the committee has done in recent years, which I am fully confident will continue at that excellent level under the chairmanship of the noble Lord, Lord Boswell of Aynho.
The House is aware that these are difficult and dangerous times for the European and the global economy. The ongoing crisis in the euro area continues to undermine confidence and growth right around the world. We have kept the UK out of that storm by taking decisive and resolute action to tackle our deficit, but it is in our vital interest that the euro area reaches a lasting and sustainable resolution to the crisis, and it needs to do so quickly—a point firmly emphasised by my noble friend Lord Dobbs.
As the noble Lord, Lord Harrison, reminded us at the outset, the Governor of the Bank of England said only last week, the difficulties in the euro area represent,
“the biggest risk to recovery”,
in the UK. So it is in the UK’s national interests that we work to resolve these difficulties.
Resolution of the euro area crisis requires three things: resolving the ongoing uncertainty about Greece; ring-fencing other vulnerable euro area member states; and properly recapitalising Europe’s banks. We should recognise that some progress has been made. Greece was given a second programme of assistance and the face value of its debt written down. As the committee also notes, banks need to be sufficiently capitalised to withstand the instability. At home we have taken the necessary actions and as a result all UK banks passed the recent European Banking Authority capital adequacy tests. However, recent events remind us that significant risks remain and the IMF rightly warns us all that the global economy remains very fragile. That is why we agreed to increase our contribution to the IMF by £10 billion on condition that the IMF supports countries not currencies, that other IMF members also increase contributions, as they have done, and that the Euro area increases its own firewall, as it, too, has done.
Noble Lords will be aware that the Government are taking forward legislation to ratify the EU treaty change that provides the legal basis for the European stability mechanism, and we will start to debate that on Wednesday. That means that the position will, I trust, be clear to my noble friend Lady Noakes and to others in this House: the UK will not be making further contributions to eurozone bailout funds under the EU budget. Ultimately, high deficit, low competitiveness countries need to confront their own problems head on. They need to continue taking difficult steps to cut their spending, increase their revenues and undergo structural reforms to boost competitiveness. I agree with much of what the noble Lord, Lord Giddens, said. This is about economic sustainability, in his words—or fiscal sustainability, as I would put it. He did not find another word for growth so I will continue to call it growth. His analysis was very interesting, although, of course—
I am grateful to the noble Lord for those comments. I disagree with some of the fundamental aspects of his analysis of the Government’s prescription for the UK economy but I think that goes a bit beyond the narrow topic of today’s debate.
As we have previously said, the euro area must also put in place governance arrangements to deliver the greater collective support and responsibility that the remorseless logic of monetary union demands. We want the fiscal compact to work in stabilising the euro and putting it on a firm foundation. We support the decision of euro area countries in the fiscal compact to commit to clear rules on fiscal discipline which the UK agrees are needed to make the single currency work effectively.
Questions were raised about the ratification of the fiscal compact. Although I will not comment on the likelihood of that happening, I can update the House and report that so far Greece, Portugal and Slovenia have ratified the compact. The compact will come into force once 12 euro area member states have deposited their instruments of ratification. The ratification processes are significantly different in different member states, but that is where things stand.
As the committee report notes, we agree that eurobonds are another issue that deserves further analysis and serious consideration. I agree with the noble Lord, Lord Monks, on that. Of course, any steps that are taken towards closer integration must not be prejudicial to the single market. We agree with the committee that matters relating to the internal market must remain the preserve of all 27 EU member states. This is why last December the Prime Minister did not agree to measures the euro area wanted to pursue on further fiscal integration being part of the EU treaties without adequate treaty-level safeguards for the single market.
I am sure that my noble friend Lady Williams of Crosby will not be surprised—she may be a little disappointed, but I am sure not too disappointed because we have discussed this before—that there is not a lot extra that I can add. My right honourable friend the Chancellor deposited an answer with the Treasury Committee, which is on its website, that goes as far as is appropriate and consistent with the need to keep the details of negotiations confidential. However, I draw noble Lords’ attention, if they have not read it, to that document.
We also agree wholeheartedly with the committee that we all need to address Europe’s low productivity and lack of economic dynamism. The UK has been leading that charge and has formed an alliance with 11 other EU leaders to set out an action plan for jobs and growth in Europe, including completing the single market in services and digital—a point to which my noble friend Lord Maclennan of Rogart drew attention. He was right to do so.
The Prime Minister’s focus at the next informal European Council this month, and at the June European Council, will be on ensuring that the focus in Europe remains on promoting growth. The UK’s specific growth agenda includes the digital single market and the services directive, but also, importantly, completing all the open bilateral EU trade deals, which themselves could add €90 billion to the EU economy. A deal with the US would be bigger than all the others put together, but they are each important. Of course, we want the Commission to commit to a new programme to reduce the overall regulatory burden, following on from the current administrative burden programme that concludes in 2012. The Government will be pursuing that agenda very vigorously with our European partners.
Some other aspects have been referred to in the debate. Again, the noble Lord, Lord Monks, referred to the possibility of an increase in lending capacity by the European Investment Bank. That could indeed have a part to play, although I of course disagree with the noble Lord on his views on a European financial transaction tax. That is not the way to go.
My noble friend Lord Maclennan of Rogart also referred to project bonds, which are another possible funding mechanism, which, if the funding comes out of existing EU resources and is carefully designed to be consistent with the need to minimise EU expenditure, is certainly another option that merits exploration.
I should address one or two of the specific questions that were raised on Greece. I take as my starting point the fact that we must respect the Greek people’s choice in their forthcoming elections. That point was expanded on by the noble Lord, Lord Judd, but I certainly take as a starting point the fact that we have to listen to what they decide they want to do. The important thing for all of us is for Greece to find a way out of economic crisis in co-operation with its creditors and for it to get back to sustainable growth and sustainable wealth generation. This Government hope that Greece can agree a way forward on this as soon as possible.
Notwithstanding the encouragement of the noble Lord, Lord Harrison, I am not going to speculate on what may or may not happen in Greece or in any other EU member state. Various scenarios were painted by some noble Lords—my noble friend Lord Marlesford, the noble Lord, Lord Willoughby de Broke, and others—but I shall not comment on those. All I will say is that the Government are undertaking extensive contingency planning to deal with all potential outcomes of the euro crisis. As the House will recognise, given the sensitivity of this work both to the markets and to international relations we will not deviate from the normal response, which is not to divulge specifics of the Government’s plans.
My noble friend Lady Noakes specifically asked about the exposure of the UK economy to Greece. The numbers relating to the relatively limited direct exposure of the UK banks and the UK economy generally to Greece are published, but clearly there is a need for a convincing firewall, as we all know the step change that there would be if contagion spread. Therefore, although I do not recognise the construction that the noble Lord, Lord Davies of Oldham, put on Robert Chote’s remarks, I think we all recognise the very serious implications if these issues are not dealt with speedily and in all their dimensions.
I was asked about one or two other issues. The noble Lord, Lord Harrison, asked about the impact of the French elections and what changes there will be with the new President. Of course, as he should have been, my right honourable friend the Prime Minister was very quick to congratulate Monsieur Hollande on his election victory. France is an important partner of the UK. We look forward to the close co-operation on foreign and defence policy, as well as on other areas, continuing with the new Government. The Prime Minister and the President had a warm exchange in their initial call and they subsequently met at the G20 meeting at Camp David. They are working together closely and are looking forward to building on the close relationship that exists. Therefore, based on the discussions in recent days, I think that the impact can only be positive.
The last point I raise nervously but I do so for completeness in tackling the issues that came up in the debate. The noble Baroness, Lady Crawley, said that this was not the time to speculate about a possible referendum—words which I am sure her noble friend Lord Mandelson and the shadow Chancellor will very much take to heart if they listen to this debate or read it afterwards. However, I shall not go further than that.
In conclusion, these are indeed dangerous times for the European economy. It is vital that euro area Governments pull together to deliver a sustainable resolution to the crisis, tackling their deficits, forging closer governance arrangements, and boosting competitiveness and growth. On all fronts, the UK will work as a strong and positive partner with our European neighbours to restore prosperity right across the European Union.
My Lords, it may have seemed at times that we were walking through a cloud of unknowing in the debate that we had on the euro area crisis, but I thank all colleagues who have contributed so well and so widely to what I hope and believe will be a beneficial debate. If I were creating an image of cloud computing and tried to find one word that might sum up the tenor of the debate and my own hopes and aspirations, it would be the reference to showing solidarity with others suggested by the noble Lord, Lord Judd. That is imperative and something that should help us to find and forge solutions to this tricky business in the next few months and years. I hope in that solidarity that the United Kingdom will play its proper and vital role. I thank noble Lords very much.
House adjourned at 8.31 pm.