Economic Situation and the Department for Business, Enterprise and Regulatory Reform
Speech

House of Commons

Peter Luff (Mid-Worcestershire) (Con): I am grateful for the opportunity to debate this important subject. My speech will fall into three main sections: first, an assessment of the structure of the Department for Business, Enterprise and Regulatory Reform and of the need for a business Department at all; secondly, an assessment of how well BERR is coping with the consequences of the recession; and finally, drawing on the Select Committee on Business and Enterprise’s 14th report and the Government’s response to it, an assessment of the accountability of the Department to this House.

It is somewhat ironic that a Department that the Prime Minister was apparently once set on abolishing is now at the eye of the biggest economic storm to hit this country for at least a generation. It is a much-shrunken Department; as these estimates remind us, it has lost responsibility for energy to the new Department of Energy and Climate Change and before that it lost responsibility for science to the new Department for Innovation, Universities and Skills. However, it is still the business Department—the Department for commerce— and it faces some of the most important questions that our nation faces.

As a Select Committee Chairman, it would be quite wrong of me to apportion blame for the crisis that we face, so I am not going to do so. I am very glad that we still have a business Department to address those problems. My own party once toyed with the idea of abolishing it and the Liberal Democrats may still have that as official policy—I hope that that is not the case, because we need to have a new consensus based around the need for such a Department, so that the voice of business can be heard loudly and clearly in Whitehall. After all, most of what the Department does has to be done by someone, so it is better for it to be done by someone with a rough understanding of the needs of business.

I know that opinions differ on how well the Department does that job; last week’s custard thrower thinks that it sweeps all before it in the argument about Heathrow, whereas others, in the business world, think that it has sometimes been slow and inadequate in its response to the current crisis. This debate provides an opportunity to see who is right.

Debates on the economy are all too rare in this House, and I have mixed feelings about this half-day debate; I am pleased that my Select Committee and the Liaison Committee are providing this opportunity for a debate on the economy, but I am sorry that the Government have not done so before now, and although I understand the reasons for the two statements made today, it is regrettable that, once again, an estimates day debate is being truncated by very important statements.

Mr. John Redwood (Wokingham) (Con): My hon. Friend rightly says that we need to probe these estimates in the Department of his choice, but is he aware that the biggest single item in these estimates is a massive £20 billion increase in the estimates for the Treasury, yet we have been given no explanation and no opportunity to debate it?

Peter Luff: My right hon. Friend makes an extremely important point. If we are being honest, we must say that this House is not always very good at scrutinising the expenditure of government generally.

Mr. Hugo Swire (East Devon) (Con): My hon. Friend is being most indulgent in giving way at the outset of his speech. Does he agree that at a time when we need to hold the Executive to account far more thoroughly on a day-to-day basis, our task would be far easier if the Secretary of State were in this House and not in the other place?

Peter Luff: I shall be exploring that theme at some length towards the end of my remarks, but for now it suffices to say that I agree with my hon. Friend.
Although we have a Budget debate starting on 22 April, that is still six weeks away. We should be having regular debates on the economy—on the central issue of our time—and not relying on estimates days and Opposition supply days. We are talking about the Budget, so I should point out that one of the three Commons Ministers to whom I wish to refer is in his place—the Economic Secretary, who is also a business Minister. I am intrigued by the suggestion that his very presence in two Departments—again, that is one of the issues that I wish to address later—may inhibit his ability to stand up for business. I am told by business that it sometimes wants tax cuts—the last thing that the Treasury wants—and sometimes its interest in issues such as the VAT reduction may not be being properly represented because the economic and business Minister has to defend Treasury decisions.

That interesting situation leads to a rather important point about the current structure of BERR. I do not think that sharing Ministers is a very clever idea on the whole, and BERR has far more than its fair share of shared Ministers. My view of Whitehall is that it works on constructive tension between Departments, and although internalising too much tension may look like joined-up government, it makes for bad government. There has even been criticism—I see that the hon. Member for Ellesmere Port and Neston (Andrew Miller), my friend who is Chair of the Select Committee on Regulatory Reform, is in his place—of the fact that responsibility for regulatory reform has been taken away from the Cabinet Office and given to BERR, because that has internalised a very important conflict.

I was pleased to hear Lord Mandelson express concerns in public about the level of planned future business regulation. I have a lot of sympathy with the view of the British Chambers of Commerce that there should be a three-year moratorium on non-essential Government regulation that imposes a cost on business. Although business has been talking about this for a long time, when preparing for this debate I was struck by the new urgency from the business community about the need to curb the growth in regulation.

Bob Spink (Castle Point) (Ind): Does the hon. Gentleman accept that, as part of that debate, we should look at business rate reform, because small businesses in our constituencies, particularly small retail outlets in our shopping centres, are suffering terribly in the current economic crisis? We should be doing something specifically about that particular problem.

Peter Luff: I agree with the hon. Gentleman, but it would have been nice to have seen him in the Chamber on Friday when we debated this issue. He would have had the opportunity to speak up for his constituents then and it is a shame that he was not here to make that point, with which I agree.

There are conflicting views about the status and activities of BERR. One leading business organisation member said:

“BERR needs to clarify its authority on the business agenda and should require ultimate sign-off on business issues.”

He means across Whitehall. He added:

“The risk is that other government departments are using businesses for more and more outcomes that benefit” their own “department’s core stakeholders—councils, schools etc—and leaving BERR with the role of managing the fallout amongst the business community.”

The construction sector has continuing concerns about the Department, and the constant merry-go-round of Ministers who are responsible for construction does not help. The current Minister responsible for that issue is in his place, but if I am right, there has been quite a lot of change in who has worn that hat over the past few years. A representative of the construction industry said to me:

“One of the difficulties that BERR found fairly quickly, however, was demonstrating that it was actually ‘fighting the corner’ for business. Decisions on a number of tax issues”—tax issues again—“in the autumn of 2007 which went in favour of Treasury despite strong protestations from business harmed its credibility, as it seemed to industry that the department had rolled over with little or no fight on behalf of those it represented.”

Perhaps more worryingly, that representative also said:

“Proposals earlier this year to develop a strategy for the recovery seem to have been put in abeyance and the focus is more and more on fire fighting. Strategic thinking seems to have gone out of the window.”

I am delighted that the Department has accepted the key recommendation of our Committee, which was the recommendation for a chief construction officer. I think that that will do a lot to address the inevitable flux in Ministers, but it would be nice to have that person in post soon. I know that the consultation has begun and I welcome that, but there are big issues. For example, there is tension between the Department for Children, Schools and Families, which has unspent capital in its budget, and the Department for Innovation, Universities and Skills, which cannot find the money to fund the essential further education college building programme. A modest transfer from one to the other would help the nation’s skills agenda and the construction sector. The chief construction officer could and should be knocking heads together to achieve that.

The good news is that BERR seems to be doing better than its predecessors. That is the judgment, it seems, of a number of organisations. The CBI said that it saw an improvement from the old Department of Trade and Industry, a positive change and transition and greater emphasis on shaping policy across government. However, the CBI also said:

“BERR still has some way to go to achieve its mission. BERR should continue to strive to influence critical business issues across Government, including tax competitiveness, labour market flexibility, infrastructure, skills, and energy prices and security.”

The Engineering Employers Federation, Ministers will be pleased to hear, is quite kind too. It states:

“BERR appears to have developed a greater sense of purpose and a more confident relationship with other government departments. In part this is down to personalities and there is no doubt that the Department has a forceful and often impressive Ministerial team. It is arguable that the economic downturn has helped give BERR a clearer sense of purpose.”

So, there are mixed views outside, but the general sense is that the Department could and should be doing better.

Mr. William Cash (Stone) (Con): One matter that does not seem to have been mentioned by the CBI is over-regulation and the role of my hon. Friend’s Committee and the Department in the context of billions of pounds-worth of over-regulation. Commissioner Verheugen has already identified a cost of £100 billion a year for the whole of Europe, Boyfield and Ambler and others have calculated a figure of £23 billion for the City and, as my hon. Friend mentioned earlier, according to the British Chambers of Commerce, cost increases to business amount to £20 billion a year. In that context, is it not absolutely essential in weighing up the cost-benefit of the Department to start digging deeply into that over-regulation and to take all necessary steps in this House and in Europe to ensure that the whole thing is dealt with properly?

Peter Luff: I am very pleased to agree with my hon. Friend. To be fair to the Department, many of the regulations that impact on business come from other Departments. We need to get a handle on other Departments’ behaviour, too, and not just on BERR’s.

I had hoped to discuss at some length the distraction of Sir Fred Goodwin’s pension scheme and the real issues that we face but given the time available, I will not do so. Sometimes I think that the Government are throwing up a smokescreen in front of our eyes and promoting some issues over some of the more fundamental issues. I shall not talk about that today, but shall simply say that the banks and the Government got us where we are by allowing indiscriminate lending and over-borrowing, both public and private. My friends in business find it somewhat confusing to be told by business Ministers that the Government are suggesting that banks must restore lending, especially lending on property, to the very levels that helped to create the problem. I hope that it is uncontroversial now to say that we believe that the Government and the Bank of England should have acted sooner to correct the huge asset price bubble that we knew was an unsustainable boom that was bound to end in bust.

Mr. Swire: We have just heard from the Financial Secretary to the Treasury that the new deal with Lloyds will release an extra £3 billion for home loans. Does not my hon. Friend share my concern that that extra lending will be without any direction from the UK taxpayer, who is the majority shareholder, on what income or assets that lending should be based?

Peter Luff: I hope that we will again move towards a world where more prudent guidance about lending is offered to individuals who are making the most important purchase of their lives. One of the great failures of the past few years has been the failure to provide that guidance, so I am very sympathetic to what my hon. Friend says.

The trouble is that the indebtedness in our economy— the indebtedness of individuals, companies and the Government—poses huge challenges to business. There is an overwhelming need to refinance corporate debt this year, a lot of it held by foreign banks that are now desperately short of liquidity and unprepared to offer that refinancing. Intriguingly, one senior banker said to me that in the great scheme of things, given the scale of the tidal wave of corporate debt requiring refinancing this year, the schemes that we are debating in our consideration of the estimates today, such as the enterprise finance guarantee scheme, amounted to little more than “a rounding error”. That is a salutary thought. When I think of the hundreds of billions of pounds that we have been talking about, I see what he means.

It would have been nice to have had a statement in the House on the implications of quantitative easing; that would have been good, and I am surprised and disappointed that we have not had such a statement. Quantitative easing may make the refinancing of corporate debt more achievable, but its scale does not match up to the level of corporate debt that needs refinancing. Anyhow, the smaller businesses that are rightly of concern to the Government and the House will not be selling bonds to the old lady of Threadneedle street for a while yet; that is for sure. What businesses, and small businesses in particular, need is working capital; it is often overdrafts that they need, not loans—a point that my hon. Friend the Member for Northampton, South (Mr. Binley) made in a very fine speech on Friday in the debate on my private Member’s Bill on small business rate relief.

I am sorry that the Government could not bring themselves to back my Bill. Small schemes of that kind add up and form a big picture; they would make a world of difference to small and medium-sized businesses. I will not repeat all that my hon. Friend and I said about the importance of small businesses to the economy. Members of the House who are interested can read the debate in Friday’s Hansard. The fact remains that small businesses are still finding it desperately difficult to access the finance that they need.

The Business and Enterprise Committee had a session with the banks before Christmas. Their evidence appears in the tagged bundle of papers provided for today’s debate. Intriguingly, we heard clear evidence from them that the political pressure that they were under had led them to make improvements, as regards base rates and overdraft rates, particularly for small businesses. It is important that the House keeps up the pressure, and reminds banks of the need to address the issue. However, the CBI’s chief economic adviser has said:

“Significant government measures aimed at restoring credit flows are gradually being put into place, but the pace of delivery is slow. As can be seen in this survey”—that is, the CBI’s February survey—“businesses’ access to credit is just as difficult as it was a month ago.

The cost of borrowing, the credit freeze and the lack of a solution on trade credit insurance”— I shall come to that issue in a minute—“are having a growing impact on business activity.”

The CBI’s director general, Richard Lambert, has called for the Government to use a clearer, louder voice to explain the recovery plans, as there is confusion in business about what those plans cover and how they fit together. That follows what the CBI said in January about the need for a clearer timetable. The Federation of Small Businesses told me that it really appreciates what the Government are trying to do, but it adds that “feedback from our members suggests that generally, small businesses are not satisfied with the speed with which measures to help small businesses are being passed on.”

The Engineering Employers Federation told me:

“The government has announced a number of support measures for business, with BERR in particular leading on measures to free up the flow of credit. There has been some criticism of the piecemeal nature of these initiatives and the lack of an overall discernible strategy.”

The enterprise finance guarantee scheme is aimed at viable businesses that have a history of borrowing from banks, but the EEF gave an example of a shortcoming in the detail of the scheme. It says:

“The Enterprise Finance Guarantee (EFG) Scheme, announced in January, has been slow to get off the ground. In January, EEF’s steel division, UK Steel, also pointed to the incorrect exclusion of steel from the scheme and this has only recently been reversed.”

I have had to write to Lord Mandelson to seek clarification on whether the scheme fully applies in Northern Ireland; that is apparently still not clear. On 16 February, the Financial Times reported that only £12 million had been lent under the scheme a month after it was launched.

The FSB has carried out a survey, which is available today. It says that a third of all small businesses are expecting to close down, or to lay off staff, if they do
not have more help, but fewer than half of them had even heard of the enterprise finance guarantee scheme. In another FSB survey, no respondents said that branch bank managers were promoting the Government funds at all. The FSB says:
“Generally, it is apparent from responses that while some businesses have benefited from Government measures, for the most part, high street banks are either not aware of the detail or Government schemes, do not know how they would operate, and/or are concerned about the risk they would carry (25 per cent.).”

I saw a long story about that issue in The Sunday Times yesterday, and there are serious concerns about the level of personal security still being sought from companies under the enterprise finance guarantee scheme. There are big questions there.

If I had more time—if it were not for the statements—I would cite some case histories that prove that these are not anonymous concerns. They have specific roots in reality. I can show business after business that is not getting the help that it thought it would get as a result of issues with the way in which the schemes work, but I will not do that, to save time. I shall also not expand at length on the delay to the much bigger working capital scheme—a £10 billion scheme, which was revealed in the Financial Times last week as being “weeks behind schedule”. It is another example of a scheme winning headlines, but still lacking tangible reality.

What about the promise of 10-day payment from the public sector? All members of the Federation of Small Businesses who responded to the survey cited waiting more than 30 days to be paid by central Government Departments, local authorities and primary care trusts, so the 10-day deal is not working.

The Government have said that they are looking at trade credit insurance. The importance of that cannot be overstated. All business organisations are concerned about the withdrawal of trade credit insurance. It is affecting a growing number of businesses, particularly in the construction, retail and electronic sectors. I know that manufacturing businesses in my constituency are suffering from the lack of trade credit insurance. We need to know soon—very soon indeed—whether the Government intend to act on trade credit insurance or not.

Let me give one example. Focus DIY, one of the largest DIY retailers in the UK, owns 183 stores and employs almost 5,000 people. I am told, and I have no reason to disbelieve it, that it is in healthy economic shape and has just opened two new stores. It has had all its trade credit insurance withdrawn. The consequences do not need to be spelled out. That is happening across the retail sector, leaving otherwise completely healthy businesses facing an inevitable funding crisis. If those retailers collapse, jobs will be lost not only in those businesses, but in the manufacturing industries that supply those retailers. Sorting out trade credit insurance must be a very high priority for BERR. I look for reassurance from the Minister when he replies to the debate that that is indeed the case.

Another issue that we have not heard much about, but that ought to go on to the Minister’s agenda is leasing. Despite Government’s initiatives and support for UK banks, there continues to be a sharp decline in the liquidity needed to enable small and medium-sized enterprises to lease essential business assets, such as telecoms and data services equipment. Demand from the SMEs continues at last year’s levels, but the almost complete withdrawal of UK banks from funding smaller businesses on normal terms, if at all, means that specialist leasing companies have to rely on foreign banks and to take more risk on their own books, and they cannot afford to do that for much longer. That reduces the number of SMEs able to access affordable leasing arrangements. There will be serious consequences for SMEs if we cannot give them the quality systems and technology that they need to develop their businesses. Leasing, sometimes of quite small items of kit, is hugely important in the SME sector, but the money is not available to finance it. I hope the Minister will be prepared to look into that with representatives of the leasing sector.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): The hon. Gentleman is the Chairman of the Select Committee on which I sit and I have listened to his list of issues affecting small businesses. As a representative of a constituency with an enormous number of small manufacturing businesses, I recognise some of the problems that he has outlined. Does he agree that where there are problems with the schemes that the Government have introduced and that do not seem to be getting through to the businesses, the local chambers of commerce and the regional development agencies will have a crucial role to play in bringing the finance sector and the local manufacturing companies together to ensure that those schemes get through?

Peter Luff: Some schemes have been put in place, but people are not being told accurately and in detail what is involved. Other schemes are not yet in place and ought to be. Yet other schemes are hinted at but are not yet offered, even in broad terms. Those are three separate problems, but I agree that the RDAs have an important role to play.

I regret the moving of Business Link from my Hereford and Worcester chamber of commerce to the regional development agency. It was a very well run Business Link which had strong links with the local community. It is now more remote, so communication is sometimes a more difficult challenge in my area. That situation differs in different parts of the country and even in our shared region. I am grateful for the hon. Gentleman’s thoughtful contribution.

Leasing is important to the automotive sector. That leads me on quickly to a discussion of one of the topics in the estimates—the package of loan guarantees to automotive manufacturers. I am worried about the lack of attention to the supply chain and small suppliers. We know how important that is. I have at least one automotive supplier—I am not prepared to name him in the House—in desperate difficulty with his bank, for no good reason. He desperately needs access to finance and cannot get it. We need to look much more than we have at the supply chain in the automotive sector.

I welcome, I think, what the Government have done for the automotive sector, as does the Society of Motor Manufacturers and Traders. However, we still have to be clear in our own minds about the basis for supporting the automotive sector as opposed to any other sector. We must not allow dangerous precedents to be set; the Government cannot support every sector.

Andrew Miller (Ellesmere Port and Neston) (Lab) rose—

Peter Luff (Mid-Worcestershire) (Con): I see that the hon. Gentleman wants to intervene; I think that he will have particular views about the automotive sector.

Andrew Miller: I am surprised at the lack of consistency among those on the Conservative Benches. I welcome the comments that the Chairman of the Select Committee has just made; it is a pity, however, that the right hon. and learned Member for Rushcliffe (Mr. Clarke), who went uninvited to Vauxhall last week, did not say the same thing. He was still trying to talk down the business.

Peter Luff: If my right hon. and learned Friend were here, he would be able to answer for himself; I think that he will be here a little later. I do not know what he said, but I had a discussion with him last week about the merits of scrappage allowances, for example. The Government have been slow to move on that issue, and that concerns the SMMT. There may be a case for scrappage allowances, although it may be weaker here than in Germany or France. The Government are talking about the issue, but nothing has happened.

The SMMT shares my concern about the failure to develop a proper package of support for the automotive finance houses. That is crucial. I know people—perfectly sound risks—who want to buy cars, but cannot get the finance to do so. Again, the Government have been promising action on finance, but it has not been taken. That is another example of an idea being talked about that needs to be brought forward.
The SMMT would also like Government support for short-time working, which might help in the constituency of the hon. Member for Ellesmere Port and Neston; I do not know. Lord Jones of Birmingham has put that interesting idea forward, and it involves a shared package of employees taking less money, employers making a contribution and the Government helping to subsidise part-time working, so that the companies do not lose the skills that they will need again when the recession ends.

The chambers of commerce share that view and such a scheme was in place from April 1979 to March 1984; there is a precedent. Other European countries are introducing such schemes, and I hope that the Minister will say that the issue is being considered with some urgency—and, if it is not a runner, that it is being dismissed. We need clarity about the Government’s intentions.
The Government will have to move more swiftly than they have until now, and pick the big issues to address. They need to promise to do less, but do it better and more quickly. I am not talking about doing nothing; we all agree that action is needed. However, the Government must make sure that what they do is done with care and speed, and that they then explain themselves clearly to the House of Commons.

That leads me to my final points, which are about the accountability of the Department to the House. I am still proud to be a Member of the House and I want to reinforce its position in society. We should be debating great issues not only in television studios and on the “Today” programme, but here in the House. Today’s debate is an estimates day debate, one of the most important things that the House of Commons does.

By the way, it is worth pointing out that only the decision of the Liaison Committee to hold this debate fleshed out the fact that the Department had failed to provide the customary written statement on the estimates. That was a regrettable oversight. For reasons that I shall explain a little later, it is really important that the Department for Business, Enterprise and Regulatory Reform, above all others, fulfils all its obligations to the Commons to the letter—that includes replying to letters more speedily than it sometimes does and not transferring to other Departments letters to which it should reply. The Department has to treat the House of Commons with the utmost care at present because of the relative paucity of its representatives on House of Commons Benches.

I am still surprised by the introduction of the Industry and Exports (Financial Support) Bill, a hugely important Bill, without any explanation or statement. I have had no letter about it and have seen no written statement about it—it was just suddenly published. I am likely to support it, although I have not seen a detailed debate on it yet. It is a really important measure, and it would be good to see the Government explaining themselves rather more clearly about such important steps.
We have the power to grant money. That is what we are doing today; later this evening, we are voting on millions of pounds. The Government rely on the Commons to approve the estimates. Today, we are debating requests for money, including potentially significant liabilities for business and the automotive sector. But the Secretary of State cannot come here to explain his policies and the Minister with responsibility for small businesses cannot come here to explain hers.

Furthermore, neither the Minister for Trade and Investment nor the Under-Secretary of State responsible for communications, technology and broadcasting can come here and explain their policies. They are all in the Lords, although I know that the hon. Member for Dudley, South (Ian Pearson) has a lot of sectoral responsibility, which is welcome.

I do not know what this Government would have done without the ability to create life peers in the House of Lords. We have had five life peers at the Department in my short time chairing the Select Committee. One roared briefly and gloriously across the parliamentary sky—Digby, Lord Jones of Birmingham—but he was not a real Minister. He was never a member of the Labour party, and he had no policy responsibility and not much collective responsibility, but he was a very good salesman for UK plc: an important job well done, all too briefly, but not a ministerial one. However, he gave the Prime Minister some help in his early days, and I suppose we must thank Digby for that. To be fair, Digby, Lord Jones, has a quality shared with the other four life peers now serving in the Department—real ability.
Why alone among Government Departments is this Department unable to find enough talent from this House to take the most important decisions that we face as a nation? We have just three Ministers in the Commons, two of whom are here today. They are the two—I do not say this pejoratively—part-time Ministers, one shared, in the case of the Minister for Trade, Development and Consumer Affairs, with the Department for International Development, and the other with the Treasury. Only the Minister for Employment Relations and Postal Affairs dedicates himself full time to the Department and this place. They are all able and decent Ministers; I can say that genuinely. I like them, get on very well with them personally, and respect them—but they do not have Cabinet rank, and they do not have enough time to do justice to their portfolios or to make themselves properly responsible to this House. This is not an arcane constitutional issue. Our constituents must have confidence that we can raise on their behalf the most pressing issues of the time with the Ministers who are taking the decisions on those issues.

BERR now even has a YouTube presence—I went on it at the weekend. People can ask Lord Mandelson a question, and the most popular one will get a video response. I have asked a question, although I do not know if it is popular. There are some very good questions on it. When last I looked, there were 38 questions and no responses. However, in the House of Commons itself only members of the Select Committee—there are many here today—have the privilege of being able to ask Lord Mandelson questions on the record. We read about the consequences in last week’s edition of The Sunday Times, where we were told, of the controversial proposals to part-privatise Royal Mail Group:

“Several government aides have joined the Labour rebellion, piqued by the role played by the divisive Mandelson. ‘Because Peter Mandelson is in the Lords, I have to make do with asking him questions in corridors’, said Geraldine Smith, the Labour MP leading the rebels. ‘I asked him, ‘How much do you expect to get?’ and he said, ‘I haven’t got a figure.’ No one has any money right now.’”

That is a rather important question for this House to ask, but we cannot do so. Lord Mandelson’s speeches are always reported. They are very well written, although I am not sure that they are always as radically new as he thinks—“industrial activism” sounds remarkably like the policy of successive Governments since the war. They are always worth asking about, but we cannot ask him on the record. I can, and the other members of the Committee can, but none of the rest of us can, and we should be able to.

This is not just about scrutiny but legislation. The Commons will be asked to legislate without access to the head of the Department. Will junior Ministers really have the power during those debates to make the concessions that this House needs? When the Postal Services Bill comes here after Easter, that will become a very important question. Indeed, we have the curious spectacle of a major Bill that will spend large amounts of money to address a massive pension deficit and breaks the spirit, if not the letter, of a manifesto commitment, beginning its life in the Lords—its Second Reading is tomorrow—simply because the Minister with prime responsibility for it is a Member of the House of Lords. There should be a Commons Cabinet Minister in this House and the Bill should begin here.

Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): The hon. Gentleman does a fine job chairing his Committee. Does he recall that Lord Home was Secretary of State for Foreign Affairs in Harold Macmillan’s Government, and that even more recently Baroness Chalker headed the International Development Department from the House of Lords, and we had 10 minutes for a junior Minister, Lennox-Boyd, to deal with all the big issues here? I share the hon. Gentleman’s confidence in my hon. Friend the Minister for Trade, Development and Consumer Affairs. When Ted Heath stood in for Lord Home, he was clearly on the ladder to becoming Prime Minister, so I am expecting great things.

Peter Luff: The right hon. Gentleman tempts me to recite the Committee’s 14th report, which I recommend to him. There is a particularly good footnote about Lord Wellington appearing before the Bar of the House of Commons. I think that there was only one occasion of substance in recent history when there was a Minister in the Lords without a Cabinet Minister to match him here in the Commons—Lord Cockfield, from 1982 to 1983. As far as I recall, Baroness Chalker was not in the Cabinet at the time and was only a Minister of State; her post did not involve a separate Government Department. That was a mistake then, and it is a mistake now.

In our 14th report, we said that “it would be possible to follow earlier precedents and ensure that a Cabinet Minister in the Commons is able to answer on behalf of the Department”.

We discussed accountability with Lord Mandelson and he suggested “you alter the Standing Orders of the House of Commons to allow Lords heads of department to come and answer questions in the Commons”, although he admitted he was
“way beyond my comfort zone”.

We thought that that was an idea worth exploring and we looked at some ways of doing it. In view of the time, I will not labour the point, but we said that detailed discussion about a mechanism was probably best left to the Procedure Committee. We were “convinced such a mechanism is needed, particularly at a time of such economic turmoil”, but we were comprehensively rebuffed by the Government in their response, Command Paper 7559:

“The Government is content that the current arrangements provide for rigorous scrutiny in both Houses of the work of the Department. The Secretary of State has indicated that he is keen for the Business and Enterprise Committee to act as the principal conduit of his accountability to the Commons and he is happy to discuss further with the Committee how that role might be developed.”

The Government observed that

“the Secretary of State has already appeared twice in front of the Committee”.

Yes, he has, and we welcome his preparedness to come before us. It is always entertaining, and often illuminating when he does, and we are grateful for that, but we have not got the time to spend our entire lives asking House of Lords Ministers to come before us to be accountable to Parliament, when they should do so in this House. We cannot do that, and to do so is not an adequate replacement for making them accountable here.

The Government said:

“Ministers have a duty to Parliament to account, and to be held to account, for the policies, decisions and actions of their departments and agencies. They do this in a number of ways. In the House in which they sit, Ministers answer questions, make statements and participate in debates.”

I apologise to the Ministers on the Front Bench, but the four most important Ministers in the Department do not sit here. They sit in the other place, and that is the problem. I am sorry if that hurts, but they are the four most important Ministers taking the most important decisions and we cannot question them.

One of the most extraordinary claims in the Government’s response was this:
“A Minister who is a Member of the House of Lords may make a statement to a grand committee of the House of Commons and answer questions on it.”
There are only three Grand Committees—for Scotland, Wales and Northern Ireland—and I am advised by the Journal Office that so far during this Parliament, only the Welsh Grand Committee has met, and it has only met twice. The Scottish Grand Committee has not met since 2003. This idea of Grand Committees as a mechanism, even if we got the English regional Grand Committees, is not a good one because we want the whole House to be involved in this process. Allowing regional Grand Committees to call Ministers is not a substitute for the democracy of this House.

Another point raised by the Government, which we were just discussing, was this:
“There have always been Cabinet Ministers in the House of Lords...The Government does not believe that the current situation is any different in principle from any of these other recent examples.”

I just do not accept that; it is factually wrong. This situation is different by an order of magnitude. For a start, this is a time of economic crisis, and the decisions being taken by these Ministers are hugely important. When I was a special adviser at the old Department of Trade and Industry and Lord Young of Graffham was Secretary of State, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was a Cabinet Minister, sitting here and answering questions. We should have something similar now. Actually, it would be good to have my right hon. and learned Friend in the Department again, and sitting round the Cabinet table, not just the shadow Cabinet table. But that is a partisan point, and Select Committee Chairmen must not make those. It would be good to have a Cabinet-ranking Minister in this House at this important time.

The Government finally said:

“There is also a risk that the burden on Ministers of having additional duties in the other House might compromise their ability to participate fully in the work of the House in which they sit.”

Almost all Ministers in the Department do not have other responsibilities in other Departments—only two out of a team of seven do not fall into this category. That is all right, then: those Ministers can have conflicting responsibilities, but they cannot make themselves accountable to this House. That is a great shame.

I have spoken for far longer than I meant to. It is an unusual opportunity, and this is a series of important questions that the Department needs to answer. It is doing better, but it needs to up its game. It must deliver on what it promises, and promise the right things, and it must improve its accountability to this House. I do not regard the Government’s response to our 14th report as anything other than a severe disappointment.


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