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Address in Reply to Her Majesty's Most Gracious Speech

My Lords, it is often said that all the best things come in threes, so perhaps I may start by welcoming a trio of things: first, the gracious Speech, which I warmly welcome; secondly, the appointment of my noble friend Lord McKenzie to the government Front Bench, where I am sure he will serve with great distinction; and, thirdly, the reappointment of my noble friend Lord Sainsbury, who already has served with great distinction and I am sure will continue to do so. It is no coincidence that the gracious Speech started with these two sentences: "My Government will continue to pursue economic policies which entrench stability and promote long-term growth and prosperity. To this end, my Government will continue to secure low inflation and sound public finances". Of course, no Member of this House could seriously challenge those objectives. The post-1997 record is good and even continued that which had begun in the latter days of the previous government. It would be churlish not to acknowledge that. But the positive changes that have started and the record of the eight years of the Labour Government should now bear the warning that past progress is no guarantee of future achievements. 18 May 2005 : Column 84 The Government have done many extremely good things. The Chancellor has clearly entrenched a sound monetary policy framework, a sound fiscal policy framework, a financial stability framework and a long-term public spending framework, all of which are in place and valuable. It is, of course, right and proper that, in order to ensure efficiency in public spending, such programmes are not regularly sacrificed as short-term expedients every time there is an expenditure crisis. However, the sine qua non of that statement is that the economy must continue to grow at the forecast rate and that the economic dynamic produces the revenue necessary without threatening the golden rules. The record is good and deserves praise. But today is not the day to praise; today is the day to worry slightly about the things that have to change, that have to improve and that have to at least continue. As I have said, past performance is no guarantee of future performance and I want to concentrate on three specific issues of concern where action is necessary if our enviable economic performance is to be sustained. First, productivity must be improved from our historically low levels of productivity growth. I am one of the people who welcomed the change to the new Department for Productivity, Energy and Industry, but, my God, what a disappointment it was to find that this new broom had disappeared within 48 hours. The emphasis on productivity and energy as well as on industry was symbolically very important. But it will be the policies on which the Government are judged and I am prepared to wait. I therefore welcome the statement in the gracious Speech that promises a reduction in regulatory burdens. But experience at the present time prevents me cheering and dancing in the streets because the gracious Speech merely promises: "My Government are committed to promoting efficiency, productivity and value for money". Surely, no one, apart from the Luddites, has ever opposed this. We now have to see the specific programme of action that will lead to the implementation of the promise. I should like to see my Government—the Government I loyally support—producing the check list against which they want their performance to be judged. We have been promised that, "Legislation will be introduced to streamline regulatory structures and make it simpler to remove outdated or unnecessary legislation". Again, it will be in the specific detail rather than the general statement in the gracious Speech on which the Government will be judged. But have no doubt that the performance is necessary and that the consequences of not doing it will be severe indeed. To meet the productivity challenge the changes to regulatory burdens must be such as to move us away from generalised complaints about level playing fields towards the creation of a capacity to compete in and respond to the opportunities of the rapidly changing global market. As I say, words on regulatory reform are easy; only actions will produce results. Those results must simultaneously deal with a number of very important issues, such as improving our competitivity and improving science and innovation, and the application then to manufacturing of the benefits of those processes while at the same time encouraging investment and seriously upgrading the skills of our workforce. When I look back over a long life in elected public office, continued now by the process of unelected privilege in your Lordships' House, the constant factors at every time in my life have been the complaints about skills shortages and the number of efforts, schemes and endeavours that we have had to create a better match between the demands of industry and the skill of our work force. Forty years later, the agenda is still exactly the same. I turn secondly to that which we must be able to have to fuel the increasingly productive, dynamic and competitive economy that I want. Here I have a regret about the gracious Speech, which is mute about energy policy. All the leaks and rumours since the general election have suggested that the Government were about to get to grips with the conundrum which passes as or poses for—I am not sure which—an energy policy. But conundrum it is. About a third of our electricity is generated from coal, producing carbon emissions which threaten our Kyoto obligations. About a third of our energy is gas-fuelled generation, but our current supplies are running out, and the alternative supplies are nearly all potentially politically volatile. The remaining third is a combination of nuclear, oil and renewables. It will come as no surprise that I say to my noble friend Lord Sainsbury what I have already said to him on a number of occasions—renewables are optimistically targeted to provide 20 per cent by 2020. Any shortfall there will be—and I believe that such a shortfall will be significant—plus the demands of the necessary economic growth to finance the public spending programme that I want to see protected and defended will either come from nuclear energy or will breach our Kyoto obligations when Sir David King, the Government's chief scientific adviser, has warned that global warming is a bigger threat to the world than international terrorism. Our economic prosperity demands continuous energy supplies. Our climate change obligations demand non-carbon emission-producing electricity generation. Grasp the nuclear nettle, and grasp it sooner rather than later. Vacillation is dangerous to our national economic interest. The third issue fundamental to our economic success is the European agenda, which has already been referred to. I have strong European credentials; I am, and remain, a strong supporter of British membership of the European Union. But the single market, for which we remember the work of the noble Lord, Lord Cockfield, back in 1992, is still not completed. Despite good words and the good progress that we are hoping might be made on the services directive, we have still seen vacillation to far too great an extent. That must cease, and progress must follow. The Lisbon agenda, so right in concept, is in tatters, and mocks its own ambitions. And yet every report from the presidency of a European Council meeting refers to the progress being made on the Lisbon agenda. It means that they never got round even to discussing the Lisbon agenda; it was stuck into the conclusions by civil servants who had written the report days before the summit took place. The only time they got round to discussing it was when Wim Kok forced them to, with his report. We must make progress on the Lisbon agenda, otherwise our claims towards global competitiveness mock ourselves. Something has to be done about the question addressed by the Chancellor of the Exchequer—the sluggish economic growth in Europe. It is not just something about which we can gloat and say, "We are doing better than them". Sluggish economic growth in Germany is denying our companies the opportunity of the great home market to which we so frequently boast that 60 per cent of our exports go. We must have a strong home market; that is something that the European Union was supposed to be a part of, and must be a part of. We therefore need a European agenda which is outward-looking and dynamic, and which recognises that EU tariffs, quotas and restrictive standards have been estimated as costing European Union consumers up to 7 per cent of the EU gross domestic product. The European Union agenda must cover multilateral trade reform and, as part of that process, CAP reform. I am tempted to say to the noble Lord, Lord Inglewood—he is no longer with us but I shall say it in any case so that he can read it—that if he is really worried about the bureaucracy of filling in forms for the single farm payment, he should join us in getting rid of so much of the unnecessary artificial subsidy in the common agricultural policy. By doing that, mathematically we will get rid of the threat to the UK rebate, which arises only because of the maldistribution of resources. Three successive Labour Governments have a good record, but there are always clouds on the horizon. It is axiomatic that I praise the Government and their achievements. They are significant, and of great benefit to the people of this country. But I merely warn that productivity, energy supply and the EU agenda all deserve consideration for that progress to be sustained.