Queen’s Speech

Baroness Smith of Newnham Excerpts

Thursday 4th June 2015 Lords Chamber

[Baroness Smith of Newnham (LD)]

My Lords, I welcome the Government’s commitment to a long-term economic plan and to reduce the deficit, but I have to agree with the excellent speech of the noble Lord, Lord Low of Dalston, suggesting that there is a long-term economic plan because the short-term economic plan did not get very far in the last Parliament. As a Liberal Democrat, I obviously welcome the fact that the deficit was halved as a percentage of GDP in the last Parliament, along with the commitment to getting rid of the deficit and beginning to reduce public debt. However, the Lib Dems were also committed to doing that fairly, as my noble friend Lady Kramer noted earlier. It is to be hoped that the Conservative Government will indeed reduce the deficit fairly, although, as the noble Lord, Lord Fowler, pointed out yesterday, to announce £12 billion of cuts without saying where they will fall is a perilous venture, so we are in perilous waters.

There is a further pledge to legislate to cap tax rates. As the noble Lord, Lord Desai, said a few moments ago, that is a mad promise. Suddenly, alongside unfunded manifesto commitments, here is something that will put pressure on many government departments, particularly those that are not ring-fenced. The two I want to mention today are the Ministry of Defence and the Foreign Office. As my noble friend Lady Harris noted on Tuesday, cuts have consequences, and so, too, do unfunded spending commitments. As the noble Lord, Lord Fowler, rightly warned in his contribution, protecting the NHS in the manifesto, without clear funding, means that public spending in other areas will be reduced. The Treasury will have to look at reducing spending,

“on the police and on defence”.—[Official Report, 3/6/15; col. 430.]

This is also a problem for the Foreign and Commonwealth Office, despite the Government’s avowed commitment to continue to play a leading role in global affairs. There is a real danger to Britain’s place in the world if the salami-slicing of the FCO’s funding commitments continues.

The commitment, or lack thereof, to defence is, if anything, even more serious. The Prime Minister pressed others to commit 2% of GDP to defence at last year’s NATO Wales summit. That is a minimum and is not intended merely as an aspiration; nor is it a maximum figure. It is the minimum requirement and one that the Prime Minister argued for. At a time of global insecurity, credible defence commitments are crucial now more than ever. Will the Minister take back to the Chancellor the importance of ensuring that the welcome, albeit vague, commitment in the gracious Speech to,

“do whatever is necessary to ensure that our courageous Armed Forces can keep Britain safe”,

is delivered on? It is essential that this commitment is met, ideally with a firm 2% commitment on 8 July in the emergency Budget.

Of course, some may say that the economy is growing and therefore a 2% commitment is not as important as people have said, but I beg to differ. If this country genuinely seeks to be at the forefront of the NATO alliance, it must step up to the plate and deliver on its own commitments. After all, the time of a growing economy is surely the time when we should be delivering on them. As the Chancellor used to say to the Labour Party, you should fix the roof while the sun is shining. Now is the time to make that commitment.

The UK’s place as a key and engaged member of the European Union is also crucial to our place in the world and to our economy. The pledge to hold an in/out referendum and the prior renegotiation pose a threat to the UK economy by raising uncertainty. The noble Lord, Lord King of Lothbury, warned in his excellent maiden speech against having a laundry list of suggestions in the renegotiation. I am sure that that is right. We need a swift renegotiation and a clear commitment to staying in the EU. Brexit would be an even greater problem for the UK economy. Membership of the EU is clearly in the national interest in terms of our economic stability as well as our place in the world more generally.

The free movement of people is also vital to our economy, yet it is a freedom that is often seen as a cost to the British economy rather than as a benefit. In his excellent and powerful maiden speech, the Minister, the noble Lord, Lord O’Neill of Gatley, pointed out that economic growth depends on two things: productivity, which has been much mentioned already in the House, and the size of the labour force. The free movement of people and the fact that we are a magnet for those who want to come and work here is very significant to the British economy. We do not talk sufficiently about the merits of immigration or of free movement, both of which are important to our economic prosperity. These issues should be considered rather more fully than appears to be the case in the gracious Speech or in the nature of the debate today.

I hope that the Minister will accept that our economy is stronger for being an integral part of the European Union, just as the United Kingdom is better together, as almost everyone in this House and many Members of the other place—although not the newly elected 56 members of the SNP—would agree. If Britain is better together, the UK is better as part of the European Union. We are better when we work with our EU partners and allies. This country has prevaricated for too long about making a wholehearted contribution and commitment to the European Union. The time has come for us to do that. We need to be in the EU for our own economic prosperity. We have been talking about a growing economy. If that is to continue, it needs to be as a full part of the European Union. We need to hear “yes” and we need to hear it said loud and clear, and I hope that the Minister and her team recognise that, along with those in the Foreign and Commonwealth Office who accept that Britain is better off in the European Union.