EUC Report: Economic Governance

Baroness Hooper Excerpts

Thursday 16th June 2011 Lords Chamber

[Baroness Hooper]

My Lords, this is an important report and I take this opportunity to congratulate the noble Lord, Lord Harrison, on the way in which he has both shepherded his sub-committee into preparing it and set the scene in opening the debate today. Although he covered the ground thoroughly, I will emphasise two points.

First, standing outside the euro area, as the United Kingdom does, gave the sub-committee an interesting opportunity to view the issues raised in the Commission’s proposals in a rather objective way, while realising and acknowledging that we are not an island alone unto ourselves. That the UK’s financial investment sector had and has substantial investments in the euro area means that we are directly affected by whatever goes on there—that is apart from the fact that some 60 per cent of UK trade is within the European Union. The state of the economies of those trading partners has a direct impact. We need to be fully aware of and involved in all European Union policy developments in the area. In all fairness, this and the United Kingdom’s undoubted expertise in the financial sector have been acknowledged and welcomed. Not one witness who gave evidence to us suggested that we were in any way interfering in eurozone business.

Secondly, the report refers to the deepening problems and evolving policy responses. In the few short months since its publication, it is quite clear that things have moved on. The contagion theory has been proved. Ireland and Portugal have joined Greece in asking for help. We are looking at a moving target at the same time as trying to find ways to prevent any of this happening again in the future. Those who believe in the inevitability of the business cycle may well be proved right. This is unlikely to be the last report on the subject.

The main question I wish to ask the Minister relates to institutional reform. The sub-committee’s recommendation and the Government’s response indicate that, whatever happens in terms of strengthening and reinforcing institutions, we do not want any new institutions. I understand that there are some quite tricky negotiations going on between the Council and the European Parliament before next week’s 20 June meeting. This results from the European Parliament’s wish for a greater role in fiscal and macroeconomic surveillance, the right to call Governments to account and its support for the use of reverse-majority voting. Can the Minister confirm what, if any, objections the Government have to the European Parliament’s proposals? Is he concerned that the United Kingdom Government could be more sidelined as a result?

As has been said, in general our report broadly supports the six main proposals before us from the European Union. There can be no doubt that things will continue to change, that there will be more use of financial regulation in a more proactive way in future, or that there needs to be more co-ordination between monetary and financial policy. Although our report was published in March, today has turned out to be appropriate for our debate. Not only do we just precede the ECOFIN meeting next week but also we follow the Chancellor’s Mansion House speech last night. Today also sees the first meetings of the Bank of England’s new committee charged with spotting signs of danger in advance—just the sort of thing that we are talking about. I trust that the evidence collected for our report as well as the conclusions that we have drawn will make a useful contribution to their tasks.

Economy: Government Policies

Baroness Hooper Excerpts

Thursday 24th March 2011 Lords Chamber

[Baroness Hooper]

My Lords, it is a great privilege and pleasure to be the first to congratulate my noble friend Lady Stedman-Scott on her first-class and heart-warming maiden speech. Given her family’s political involvement in the past, which we now learn about, and her own background in volunteering, especially in relation to work with young people and employment services, most notably, as she has said, as chief executive of the Tomorrow’s People Trust, my noble friend speaks with authority and has underlined the human element in a debate that up till now has concentrated rather on the dry economic facts. She brings a wealth of hands-on experience to enrich our debate today, and I feel sure that she will continue to do so on many occasions.

I turn to my own short contribution. I have listened with great interest to the well informed contributions from the many eminent speakers so far and accept that the main objective for the Government, as my noble friend Lord Lawson said at the outset, must be to eliminate the fiscal deficit. My own focus, however, will be on government policies to promote enterprise and growth in relation to trade. The CBI has emphasised the need to galvanise our export performance. My right honourable friend the Secretary of State for Trade, Innovation and Skills has explained how the Government intend to help small and medium-sized businesses to engage more in trade, and has pledged strongly to support efforts at both national and EU level to remove barriers to trade, particularly for SMEs. The recent White Paper, Trade and Investment for Growth, published a month ago, sets out the steps that the Government will use to achieve that. All this is good news so far as it goes.

However, I draw attention to a part of the world where these efforts will be well received. Latin America—I am glad that my noble friend Lord King of Bridgwater made reference to its importance—provides a huge market of over 500 million people, from Mexico in the north, through the tropical countries of Central America and South America to Cape Horn on the rim of Antarctica. The combined GDP of Latin America is equal to China’s. It is a region rich in resources—oil, gas, gold, silver, copper and, not least, agricultural products.

The noble Viscount, Lord Montgomery of Alamein, called attention to all that potential in the debate that he introduced last June. Happily, the Government accepted the message. My right honourable friend William Hague acknowledged in his Canning lecture last November that not only does our country have a legacy of good will from the support given to the various independence movements 200 years ago in the days of George Canning but, over the centuries and years, British know-how, expertise and investment have gone into building railways, roads and banks, so there is a solid base on which to build.

The Foreign Secretary pointed out that at present UK exports to Latin America make up barely 1 per cent of all international exports to the region. He illustrated this by saying that we export more to Ireland than we do to the whole of Latin America. When I think of the efforts made over the years by a number of individuals and organisations to redress this balance, I am appalled. The Foreign Secretary, however, went on to say that in the past three years UK Trade and Investment has seen a 500 per cent increase in the number of British companies looking for help with the Brazilian market. Brazil, after all, is a leading BRIC, with a population of over 200 million.

What steps have been taken by the Government to promote this interest in Latin America, to make efforts to increase our trade with those countries and to meet the needs of SMEs? Furthermore, since trade and investment are not only bilateral but need a multilateral approach, what are the Government doing to press forward with the negotiations between the European Union and Mercosur, which comprises the southern-cone countries of Argentina, Brazil, Paraguay and Uruguay, and with the negotiations between the EU and the Andean region, which comprises Colombia, Ecuador, Peru and Bolivia? Those are countries with growth rates that most European countries must envy. What about the flourishing SICA countries of Central America? I look forward to hearing the Minister’s reply and to listening to the remaining speakers on a considerable and prestigious list.