International Trade

Lord Davies of Stamford Excerpts

Thursday 23rd January 2014 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I add my congratulations and my gratitude to the noble Lord, Lord Harrison, for this debate, which enables the House to focus on this very important issue today. Standard economic theory tells one that economic growth is a positive function of two variables: increases in factors of production and increases in productivity. Increases in productivity arise from the application of technology, changes in work practices and specialisation. The three things go very much hand in hand. Specialisation is what requires trade: trade within the local community, within one nation and internationally.

We can all take pride in the fact that the central economic theory breakthroughs in this area are all achievements of the great British political economists. Smith first identified the importance of specialisation with his memorable analogy in The Wealth of Nations about the makers of pins, who suddenly became more productive when one man ceased to make the whole pin and another man added the head. Fifty years later Ricardo formulated the much more counterintuitive theory of comparative advantage. This demonstrated that a country with an absolute advantage in everything still has an interest in trading with its neighbours, because if it concentrates all its resources on those areas where its absolute advantage is greatest, it will so increase its output as to be able to purchase anything else it needs from the world on very favourable terms. Global output and global welfare will then be maximised. Those theories are now just as embedded and well established in economic science as Maxwell’s equations are in physics, Mendeleev’s periodic table is in chemistry, or Darwin’s theory of natural selection is in biology.

Over the past 50 or 60 years and the lifetime of most of us in this House, there has been a remarkable phase of economic growth. This has been cyclical, as one expects, but nevertheless it is extraordinary. I often wonder whether it can be continued over the next 50 or 60 years. There have been four very special, remarkable and unusual features to the last 60 or 70 years, which have made possible that great growth in output. All of those four developments can and should go further. They should be pushed further, which I will come to in a moment. However, it is not clear to me that they can be effectively replicated or replaced in their totality. We should be quite worried about that, and should not be complacent in simply extrapolating the growth rates of the last 50 years—which in this country have averaged about 2.5% per annum—into the indefinite future.

The first of those great developments and changes was the introduction of the female half of the human population into the labour force of developed countries. Obviously, that was an event of enormous social consequences, but also enormous economic importance. That is a classic example of an increase in a factor of production, of the major factor of labour.

The second great development of the last 50 or 60 years has been what I call the economic emancipation—unfortunately not always accompanied by political emancipation—on free market models of countries in the Far East. The first of these was Japan, followed by Korea, Taiwan and the ASEAN countries, and then over the last 20 years by China and India. China and India alone account for more than 2 billion of the world’s 6 billion population. That is an enormously important development for the future of everybody on the globe. Can it be reproduced? Can an equivalent dramatic event occur in the future? That is a classic case of the rise in productivity which happens when people move from very low productivity activities such as agriculture—sometimes at subsistence or near-subsistence level—into manufacturing and into the cities. That has been the history of Asia over the last two generations.

The third factor, which I do not need to dwell on as everybody knows about it, is the introduction of IT into the economy. Again, I do not doubt that we have much further to go on this, but is it possible to envisage that over the next 50 or 60 years there will be an equally dramatic impetus to growth from new technology? I do not know, but I sometimes worry about that.

The fourth factor, which comes down to the subject introduced today by the noble Lord, Lord Harrison, is the growth in free trade. Since the Kennedy round in the 1960s right through to the latest chapter—I hope it is not the end—in the Doha process, there has been a steady reduction in tariff barriers. This has been a great achievement, and a great boost to growth. The establishment of regional free trade areas or economic areas of co-operation is, in a way, the greatest success. The European Union has been a model for the whole world. It has done something which none of the others has succeeded in doing: addressing the non-tariff barriers to trade just as effectively as the tariff barriers. We all know that the non-tariff barriers are the most difficult to deal with.

It is very unfortunate that the Doha round seems to have run into the sand. Perhaps it can be pulled out, as we all hope. In the mean time we must concentrate on doing what we can. The Government and the European Union in partnership have been very sensible in putting the emphasis on doing trade deals, particularly with other economic groupings around the world. Quite the most important of those is the potential EU-US trade agreement.

I will spend the rest of my time asking the Minister about that agreement, because it is so important that the House of Lords—and, indeed, the House of Commons—are kept up to date. We all know that the negotiations are taking place, and of course practically they can only take place at the level of the European Union. Clearly, this is one of the great things which the European Union can do much more effectively than 28 different countries could do separately. They could not even begin to think about it. I know that mechanisms are in place for national Governments to keep abreast of the developments. It is very important that they in turn keep us abreast of developments, so perhaps I can ask one or two questions.

We should bear in mind that this is an enormous challenge and that the United States does not have a good record as a free trader. On two occasions in the 20th century, or, at least, in the past 130 years—first, with the McKinley tariff in 1890 and, secondly, with the Smoot-Hawley tariffs in the interwar period—the United States led the way in starting a world tariff war, with disastrous results for everybody concerned. We also have to remember that the two Democrat Administrations—the Woodrow Wilson and Kennedy Administrations—reduced tariffs. Thank goodness, both Republican and Democrat Administrations in the United States have been committed to freer trade over the past two generations. However, we are going forward into this negotiation, which I think is going to be enormously complicated and take a very long time. Some of the great challenges are very unclear, so perhaps I may ask the Minister some very precise questions. If he does not know the answers to them, I should like him to write to me, if he would be so kind, and to place a copy of his letter in the Library so that the whole House can be informed.

First, at the behest of the French, as we know, a whole area of cultural products was taken out of the negotiating mandate by the Commission. I should like to know what the American response to that has been. Have the Americans accepted it or are they asking for a difficult, or any, quid pro quo?

Secondly, what scope is there for getting joint recognition of geographical descriptions of products—for example, the preservation of the concept of Scotch whisky or champagne—in the United States? That would mean that no one was allowed to produce New York or Californian champagne. This is an important issue. Is it in the negotiating brief? Is it something that the Minister is confident we can achieve?

Thirdly, what about the ownership rules? The United States, unlike the European Union, has ownership rules in certain sectors. I think I am right in saying that foreigners can own only 25% of an airline or 25% of a broadcasting corporation. Those are important sectors and there may be others as well. Are those issues on the table? Is it practicable and possible that the Americans will change those rules?

Fourthly, the Jones Act always struck me as being one of the most extraordinary pieces of protectionism. It prevents vessels which are not American-owned and American-crewed handling merchandise from one American port to another. It is rather like the navigation Acts that we had in this country and in Europe in the 17th century, but it is still alive and kicking in the United States. Is that on the table and is it going to continue?

Fifthly, I understand that the European Commission has given an assurance that the negotiating mandate will exclude health and environmental protection measures. For example, the European Union would not have to accept the import of American beef produced with the use of growth hormones. That is potentially an important public health issue, so I am told. Equally, in the EU we control GM products for environmental reasons; the Americans do not. Are we going to have to give up our controls on GM plants and crops? What is the American position on this?

Finally, I have a question on the whole area of insurance. This seems to be an extraordinarily difficult area in which to make progress because it is managed and controlled by the states and not by the union of the United States. Each state has its own insurance commissioner. In many states, no foreign insurers are allowed at all in the insurance market. Other states let them in for what they call “surplus lines”, where the local insurance companies do not want or do not have the capacity to handle the business. Obviously in relation to certain things, such as wind storms on the east coast and earthquakes in California, they do not want their insurance companies to bear the whole potential risk burden. What is happening on insurance? Is it going to be opened up and are we going to be able to sell insurance directly, either through binding authorities or on the internet, to retail customers in Eau Claire, Wisconsin, or Kansas City, Missouri?

Those are some of the essential questions on which I think it would be very useful to have an update, and I should be very grateful if the Government could give it to us.

--- Later in debate ---

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)]

My Lords, I thank the noble Lord, Lord Harrison, for initiating this important debate. I am very much aware of the noble Lord’s contribution in this area, and his expertise has been shown by his thoughtful comments. I will seek to outline our Government’s approach to trade, as requested by the noble Lord, Lord Liddle, and other noble Lords.

International trade is, of course, essential to the world economy. It creates growth and employment, and enhances consumer choice and value. It is not just something for “rich” countries or big business. Trade is the greatest single tool to bring hundreds of millions of people out of poverty and set countries on the path of development. Trade is vital to the UK’s economy. We have an open economy and seek to champion that; we have a global outlook and a strong and proud history of commerce. Exports are equivalent to over 30% of UK GDP and, in the last financial year alone, FDI into the UK supported in excess of 100,000 jobs.

The noble Lords, Lord Giddens and Lord Davies of Stamford, outlined their support for free trade agreements, which I very much welcome. It is important that the whole global community can benefit from trade, and to do that we require a functioning global trade regime. It should reduce or, ideally, remove the barriers to imports and exports and provide convergence of standards so customers around the world can choose the best of what the world has to offer. I hope that they will choose “Made in the UK”, and it is part of my role to make sure that they do that more regularly.

This Government are proud of their position at the forefront of European and global efforts to facilitate free-trade growth. My predecessor, the noble Lord, Lord Green, whose outstanding work in his two and a half years as Trade Minister I commend, was a vice-chair at the World Trade Organisation Conference in Bali in December, where the important trade facilitation package was agreed. This agreement will cut red tape and unnecessary processes and streamline customs procedures at borders. It will benefit the UK by around £1 billion per annum. However, crucially, most of the gain is global, with around $100 billion accruing particularly to emerging nations such as those in Africa.

My noble friend Lord Sharkey asked how we balance reducing barriers with supply-chain issues. Both are important, but I would also mention convergence: in many areas we have already reduced or removed trade barriers in terms of tariffs, but we also have to have convergence of standards so that manufacturers can produce global products and customers can enjoy them. Each and every one has its place and perhaps a different emphasis, depending on which area and which country we are negotiating with.

The UK has used its influence with both our EU colleagues and a wide range of other countries to help create a global consensus—we most definitely have such influence while in the EU. However, it has to be recognised that this was the first multilateral agreement in 20 years. It is appropriate, in the mean time, that the EU and other economies around the world have also pursued plurilateral and bilateral deals as well as regional routes to trade liberalisation. As the noble Lord, Lord Harrison, pointed out, those do not contradict each other; they can be mutually reinforcing and help build overall a system of improved trade, with higher volumes and prosperity.

Again, the UK has been at the forefront of efforts here. We were influential in shaping the EU-South Korea Free Trade Agreement, which was mentioned. This came into force in the summer of 2011 and was widely considered the first of a new generation of EU free trade agreements, in that it is genuinely deep and significantly more comprehensive than previous agreements. It has eliminated 97% of tariffs and addressed many of the non-tariff barriers. It makes doing business with South Korea much more straightforward. The results and successes of this agreement are clear, with trade between the UK and South Korea doubling over the course of the year following the agreement compared to the years before. Part of that is oil, but even excluding oil we saw a 40% increase in trade with South Korea. It may surprise many noble Lords that the UK now runs a £2.6 billion surplus in trade with South Korea. Before the agreement, it was broadly neutral.

Negotiations are also under way with a wide range of markets—east and west, large and small, developed and emerging. The largest of these is of course TTIP, which was mentioned by a number of noble Lords. This agreement was described by the US ambassador to the UK as,

“an important trade deal with a lousy acronym”.

He has a point, but what is more important is that it could be worth up to £10 billion to the UK. It is correct, as the noble Lord, Lord Harrison, mentioned, that we helped to sponsor a study to show the positive impact of the agreement in various US states. Why did we do that? Because it is very easy to spot the losers, but it is important that it is understood, on both sides of the Atlantic, where the winners are. Within the UK we have a clear view of the winners: for example, if we conduct a comprehensive TTIP, we expect the car industry to increase by 4.1% and financial services by 1.1%. There are real benefits for UK industry. However, critically, the point has been made previously in this House, including in Questions I have answered, that it will also benefit consumers, giving them better choice and lower prices.

The noble Lord, Lord Davies, raised a number of questions regarding TTIP, which I will do my best to try to answer. First, audio-visual services are initially excluded from negotiations at the behest of the French Government. The negotiation mandate was, unfortunately, leaked, so the US is of course already aware of it. However, we are just starting negotiations and setting out initial positions, and we will have to see how that is reflected and any interrelationship. The Jones Act might well be one of the quid pro quos but discussions will almost definitely continue and the UK will make its points. UK business is of course keen to see the removal of the Jones Act. We are raising this with the US Administration directly and through negotiations.

GIs are in scope, and the US and EU are taking different approaches to protecting geographical items. As the EU has done in other agreements, such as with Canada, it will seek protection of a list of geographical indications. However, to give comfort to the Scottish contingent, of which I am one, Scotch whisky is already protected in the US.

The US wants the EU to adopt a more science-based approach to treatments of food and the approval, for instance, of GM items. Her Majesty’s Government agree that the EU could improve its currently slow approval system but it is early days for all of these matters and, we should stress, there is a lot to be done on TTIP.

The EU has also launched other negotiations, including with Japan and India. It has also, as I mentioned earlier, reached—

[Lord Davies of Stamford]

Before the Minister leaves the topic of EU-US negotiations, will he perhaps address the questions I asked about insurance?

[Lord Livingston of Parkhead]

I will write separately regarding the matter of insurance. I have tried to pick up the various issues that have been raised and if I have missed any other detailed questions put by noble Lords I will be more than happy to discuss them or write separately on them. I will also come back to the role of Parliament in approving such agreements.

As I was saying, the EU has launched negotiations with Japan and India and reached an agreement with Canada. We believe that is worth over £1 billion and could be a good model for the start of discussions on TTIP. Our role in and membership of the EU is important to that, along with, as the noble Lord, Lord Harrison, said, our role in the Commonwealth. Canada is of course a member of the Commonwealth, and discussions are ongoing with India. We also want the EU to use trade policies to support development by putting in place economic partnership agreements with African and Caribbean countries. I hope to see good progress on EPAs this year at the same time as making progress on FTAs.

The role of Parliament is very important and I was interested in comments from noble Lords that they do not feel they discuss trade very much. I have been in this role for about four weeks and have had three Questions here in the House and a debate. It does feel, as a Minister, that we are discussing this issue on quite a regular basis. However, I shall also make an appearance in front of a Select Committee to discuss TTIP. TTIP and any other agreement will go through the appropriate scrutiny process, while it is recognised, of course, that the EU has competence in many of the areas involved here.

We are discussing these matters also with many other lobbying groups; for instance, small businesses and consumer groups. We meet regularly with Which? to hear its views, because it is important that we represent large businesses, small businesses and, of course, consumers in these discussions.

While these trade deals provide real benefit to the UK, the EU remains a cornerstone of our prosperity. The single market remains the most important trading area: 45% of our exports are to the EU and seven of the UK’s top 10 trading partners are EU member states. The UK is a passionate believer in the single market, and a key part of the reforms that we are seeking is to support and extend that. In the negotiations that we seek with the EU, free trade, prosperity and growth will be a cornerstone.

I fully agree with the noble Lord, Lord O’Neill, regarding the risk posed to Scotland by a departure from the UK and consequent departure from the EU and the free trade agreements. I have made this point passionately already—if your Lordships read the Herald and the Scotsman, you will see me quoted—and will continue to do so, as will government and, I hope, noble Lords.

I should also mention Africa, which is one of the fastest-growing regions and will be an increasingly important market for the UK. Many UK-based firms have already spotted the opportunities for business in Africa. Total UK exports to Africa in 2012 were worth £20 billion, which was more than to Russia and Turkey combined. But that is only a starting point. Many more UK-based firms could be doing business in Africa. There are opportunities in all sectors, particularly in energy, infrastructure, healthcare, ICT, professional services, and education and skills. We will work across government, particularly with DfID and the FCO, to maximise our efforts in Africa, and help in the implementation of the agreements reached in Bali on free trade and reducing barriers. Africa will be the big beneficiary; it is important that the UK uses its knowledge, influence and relationships to help achieve this.

Another area that is often raised in regard to trade is human rights. The Government strongly believe that the promotion of business should go hand in hand with respect for human rights. It is now more important than ever for us to help British companies succeed but to do so in a way that is consistent with our values. I believe strongly that personal freedoms contribute to economic development and vice versa. The thread of safeguards running through society that are good for human rights—good governance, the rule of law and property rights—usually go hand in hand with economic growth and trade.

We also recognise the issues raised by my noble friend Lady Miller regarding the impact of trade on food. One of the most basic human rights is the right to eat. Trade and economic development are the most effective ways of raising people out of starvation and poverty. The World Bank estimates that developing countries that have opened up their economies to trade grow three times faster than those which have not. The opening-up of trade particularly in agricultural products will be an important next stage in many of the trade negotiations, particularly between the EU and African countries. I note the comments on food production made by my noble friend and they are well taken.

I note also the points made by the noble Baroness, Lady Symons, and thank her for her very hard and productive work in the Arab world promoting British trade and development. We note the points made about jobs. We will want to raise more trade with the Arab countries. Progress there on various trade negotiations and FTAs falls behind what we are doing in other areas of the world and should be looked at.

I have so far focused on the impact of trade at the global level. A key priority of this Government is to deliver economic growth and jobs in the UK. Business success in international markets is central to our economy. This is as true today as it was in May 2011 when UKTI launched its five-year strategy. That strategy set out how we were going to improve our trade position. We are targeting high-growth companies to encourage more exports and help existing exporters penetrate high-growth and emerging markets. We are winning business contracts for high-value opportunity. These are often in excess of £250 million each. We are delivering high-quality foreign direct investment to the UK, which I shall say more about shortly. Finally, we are building high-level relationships with inward investors and exporters. The Government are committed to build on this strategy and the many good initiatives that we have started.

Having taken up my new role just a month ago, this speech allows me to outline some of our priorities further to strengthen our trade efforts. We will support medium-sized businesses. I made an announcement yesterday that we will commit to contact all 9,000 medium-sized businesses to help them with trade. More than a third of them do not export today and, in an even greater number, exports account for less than 10% of their trade. Only 17% of them export outside the EU. If we are successful with them, the CBI believes that this forgotten sector of our economy could raise UK GDP by up to £50 billion by 2020.

We will enhance our support for small companies through better marketing. UKTI does a great job, but I have to recognise that it is not as well known as it might be. We will conduct targeted marketing exercises and improve our web capability. I note the comments made by the noble Baroness, Lady Thornton, about social enterprises. We will think about how we include them. Small companies, large companies and social enterprises all have their role in the UK’s overall trade efforts.

We will continue to focus on China, India and other high-growth markets. I am told that I am running out of time, so we must conclude. We will do a number of things to improve our overall position. We recognise so many of the opportunities. The UK has had many successes in exporting and we have some great companies. We are exporting cheese to France and spices to India. We will build on that. We will grow exports and we will continue to champion free trade as a Government and move it forward.

EU: Free Trade Agreements

Lord Davies of Stamford Excerpts

Monday 13th January 2014 Lords Chamber

[Lord Livingston of Parkhead]

Indeed, the Indian agreement would be of great benefit. Of course, India is one of the major powers and is growing fast. However, as we know from our debates in this House, there are challenges with internal Indian beliefs on trade and there are elections in India in, I believe, April this year. Discussions are ongoing, and I believe there will be discussions in Davos with the Indian trade Minister regarding progress on this agreement. We will certainly be pushing the Indian Government for a wide-ranging agreement, but whether that will be feasible this side of the Indian election is extremely doubtful.

[Lord Davies of Stamford (Lab)]

Will the EU-US prospective trade agreement as currently envisaged continue to allow the United States to ban the export of crude oil or natural gas, as they do at the present time?

[Lord Livingston of Parkhead]

The discussions are still ongoing. Clearly, we would like to see free trade of all descriptions, but the TTIP agreement will be largely focused on reducing import tariffs and particularly on the convergence of rules, which will help all countries. We would certainly like to see its energy exports being made available all around the world, as is the case with UK exports from the North Sea.

European Union (Referendum) Bill

Lord Davies of Stamford Excerpts

Friday 10th January 2014 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Dobbs, made an excellent speech in introducing this Bill, as he invariably does. He is a very respected and popular Member of this House and I quite understand why the Prime Minister asked him to be his standard bearer in bringing this difficult piece of legislation before us. I hope, therefore, that he will not think it in any way a personal attack on him if I say that the Bill he has brought before us is a very bad Bill. It is not a good Bill at all. It is a very dubious Bill that, in at least three respects, purports to be something that it is not. There is an English word for that but it is not a parliamentary word so I will not use it. It is, at the very least, a cynical Bill, which we should treat with considerable scepticism.

The first example of the Bill purporting to be something that it is not has not escaped the attention of many colleagues in the House on both sides. We have already discussed it at length today. It is the fact that it is a Private Member’s Bill that is really a Prime Minister’s Bill. Prime Minister’s Bills that are whipped through the House of Commons and will be whipped through the House of Lords—and are said by the Prime Minister of the day, to his supporters, to be essential for the credibility of the Government, as has been said in this case—are not Private Members’ Bills. If the Government have chosen to bring the Bill forward in this camouflage, two things follow.

First, they must accept the rules of the game—the rules that apply to Private Members’ Bills. They have chosen that route; it is their fault. Under no circumstances should we allow ourselves to be blackmailed by being told that there are difficulties with Private Members’ Bills but the Government need to get this one through by 28 February, otherwise there will be difficulties. It was the Government’s decision to bring forward this Bill as a Private Member’s Bill and they must take the consequences. Under no circumstances should we be blackmailed along those lines. Indeed, if I am still speaking at 3 pm, which I probably will be, I hope someone will interrupt me. If they do not interrupt me at 3 pm, I hope that will be established as a precedent for future Private Members’ Bills going through this House, which should equally be allowed additional time if there is particular interest in speaking on them on the part of the House as a whole.

The second thing that follows from the Government’s voluntary decision to bring this forward as a Private Member’s Bill is that, clearly, we should not treat it with the respect and regard with which, normally and naturally, the second, unelected House treats government initiatives. Normally, we operate on the basis that we can hold up legislation—we can put forward proposals for amendment to the House of Commons—but, at the end of the day, the Government of the day tend to get their business through. This is not, by the Government’s own choice, a government Bill. We therefore do not need to regard it with quite the same respect and consideration that we would give a government Bill. We should, of course, be sceptical and we should do our duty. If we come to the conclusion that the Bill needs to be amended, we should be even more confident of our duty to amend it than we would be if it were a government Bill.

The second aspect of the lack of straightforwardness to which I referred—of the Bill being presented as something that it is not—is again a matter that has, unsurprisingly, received quite a lot of attention in this debate. This is a Bill that purports to be a democratic, altruistic initiative designed to give the public their say. That is a phrase that we have heard several times. In fact, it is nothing of the kind. Only 18 months ago, both the Prime Minister and the Foreign Secretary, William Hague, were bringing forward arguments for not having a referendum in this Parliament. They were powerful arguments, which have already been referred to—some of them have been quoted today. I had it in mind to bring in a whole sheaf of quotations, but I thought I would not burden the House with them because it is very familiar with the words concerned. Only 18 months ago the Prime Minister, the Foreign Secretary and other members of the Tory party in the Cabinet said that we should not have a referendum in this Parliament, giving all those reasons—uncertainty of the economy, and so on and so forth—why we should not do that. They were absolutely right about that.

Why did they suddenly switch? We all know why—there has been a purely party politically orientated initiative to try to buy off the Eurosceptics in the Tory party and keep them quiet until after the election and to prevent Conservative voters slipping over to UKIP because UKIP is offering a referendum, so the Government thought that they had to offer one too. Of course, no sane or sensible person would ever go to the public and ask them to decide on something and say, “It’s important that the public have their say—but you can’t do it for the next four years”. Nobody knows what will happen in the intervening four years; in fact, there is quite a large probability that there will be a new treaty under negotiation—not concluded—by 2017. It cannot possibly be concluded in practice before the French and German elections in that year, which have already been referred to. How absurd it would be if we had a legal obligation to hold a referendum before the end of 2017, but there was another treaty in gestation and we were part of that negotiation, so we would have to have another referendum on that in 2018 or 2019. That would be absolutely absurd.

From a practical point of view the whole idea is ridiculous and any sensible person would have been able to see that it was ridiculous. Indeed, I have no doubt that the Prime Minister and the Foreign Secretary know that it is ridiculous, and that that is what they would have said a year and a half ago in public. However, they have decided on this slightly squalid party political ploy, which is why we have the Bill before us today.

There is a third aspect to this lack of frankness about the Government’s legislative proposal this afternoon, which has not been referred to at all. That is, although the Government purport to wish to give the public a free choice, to consult the British public about our future in the European Union, there is one obvious choice—not just a coherent or a theoretically possible choice, and not even a practically possible one. It is an obvious choice that has been the default choice, the consensus choice and the automatic choice of 17 out of the 28 members of the European Union. That choice is to be a full member of all aspects of the Union: to be a member of the core, if you like, of the Union—which, of course, means being a party to Schengen and to the euro and so forth.

[Noble Lords]

Oh!

[Lord Davies of Stamford]

Noble Lords opposite may well think that that is an appalling prospect, and they are entitled to feel that. However, they cannot deny that that is a possible choice. They also cannot deny that that is a choice that many of our partners in the Union—the majority of them—have taken. They cannot fairly deny that there are good theoretical arguments for all those proposals. It might very well be argued that now would be a very good time to join the euro, before interest rates and the parity go up, but we are not having that discussion today. However, that choice is being denied to the British people. Other people have had the choice of doing that, but we have not—our electorate have not.

Clearly, both parties in this rather squalid transaction between the extremist Eurosceptics in the Tory party and the Prime Minister have been at one, I am sure, in wishing to exclude any possibility of going down that road, which they would call the federalist road. So democracy has not reached that far, and democracy will not include giving the opportunity for that particular choice to be expressed in the referendum. There may be practical reasons: people would say, “Well, you can’t have more than two questions in a referendum”—but that is nonsense. If there was an aggregate majority of those who were in favour of our joining the core of the European Union on the one side and those who were in favour of joining the Union with the various derogations negotiated by the Prime Minister on the other, and if those two votes together came to a majority of the vote, clearly you could not argue that there was a majority in favour of our leaving the European Union. So in practical terms this is a very real possibility.

I notice that I have gone beyond 3 pm. Quite disgracefully, no one from the Front Bench and none of the Whips sitting there has interrupted me, which of course they should have done. Therefore, I have no bad conscience at all in delaying the House a little longer. That is their fault, not mine. They are in breach of the rules. What is more, this precedent is something that we should not forget, and one that should be applied in all fairness and in all honesty to all future Private Members’ Bills. Otherwise, this will just be seen as a very underhand procedural trick by the Government. Of course, it also blows the cover completely about this being a Private Member’s Bill. It is nothing of the kind.

[Lord Trefgarne]

My Lords—

[Lord Davies of Stamford]

No, I am not going to give way. I know perfectly well what the noble Lord is going to say, and I am not going to give way. I am going to finish my remarks, and I am not going to give way. I make that absolutely plain. There has been scandalous conduct in this House this afternoon, not by me or anyone on my side but on the part of the Members of the government Front Bench sitting opposite, and I am certainly not going to allow them or any of their minions to interrupt me.

What do we do in the squalid circumstances that I have described? We do our duty, and look at this Bill thoroughly, sceptically and responsibly. If we can improve it, we improve it. There are one or two particularly scandalous aspects of the Bill, notably where the Government try to override the decisions of the Electoral Commission on the formulation of the question. That amounts to appointing an umpire and then rejecting the umpire’s decisions. It is a scandalous thing to propose and, obviously, something that this House needs to look at very sceptically, along with many other things. We will not do our duty if we do not do that.

EU: Reform

Lord Davies of Stamford Excerpts

Thursday 9th January 2014 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I thank the noble Lord, Lord Dykes, and I am sure that the whole House is grateful to him for giving us the opportunity this afternoon to debate this important matter.

There has been a striking change, at least in the tactics and rhetoric of the Government on this issue over the past year or so; that is of course very welcome. I am sure that noble friends of mine will accuse me of being very naive if I place too much reliance on this, but I speak this afternoon on the basis that that change is genuine, that the Government are acting in good faith and to encourage them along that path. It is not impossible that there is a large element of genuineness about the government rethink. A year or two ago, the Government were adopting an extremely confrontational stance towards our partners in the European Union, vociferously demanding all sorts of concessions, exemptions, derogations and repatriations, and occasionally laying on some histrionics, such as walk-outs and so forth, in order to appease pressure from the Cashites in the Tory party and UKIP. It was a deplorable spectacle.

I have heard the noble Baroness, Lady Warsi, say on several occasions that the Government now take the line that they are committed to our membership of the European Union and simply want to be a member of a reformed European Union in the future. Of course, I welcome that very significant change. The change may be a genuine one for two very good reasons. One is that the Government—and the world—have clearly seen that the tactics they were adopting previously were pretty counterproductive and unintelligent, and they have drawn the sensible conclusion from that. The second thing is that they were forced to look into the abyss: into what would actually happen if we left the European Union. I know that they have had some very frank advice on that—franker in private than in public, of course—from bodies such as the CBI, the Corporation of the City of London, the Engineering Employers Federation, and from a number of Japanese and American multinationals and others as well. Therefore they have had to confront the alternative, which has been a salutary process.

In that spirit, therefore, I will not attack the Government this afternoon but will try to be helpful and suggest ways in which we can make a success of those discussions. We on this side of the House, and I think the whole country, want to see reform in a positive sense. Any human institution can always be improved and reformed, and the more important that institution, the more important it is that it is improved and reformed by each generation. Therefore we should be committed to that process in principle. I will suggest one or two bases on which the Government might decide what are the sensible initiatives to take and what the less productive course to take might be in the months and years ahead, as discussions continue with our partners.

The first thing I urge on the Government is always to focus on the substance, not on the symbolism. Always go for the content, not the colour of the wrapping on the package. We should have absolutely no more farces such as those we had with the Justice and Home Affairs opt-out, where the Government opted out of a whole series of measures and then wanted to opt right back into them, because on the substance they were very necessary and in the national interest. That was a deplorable and ludicrous exercise, and it was quite obvious that the Government were pirouetting around in order to appease their own extremists and to head off pressure from UKIP. That was not a very edifying episode at all. I hope that the Government will learn the right lessons from that in future and that they will always focus on the reality and the substance, and be pragmatic.

Being pragmatic, my second point is that it would be sensible to take up issues where we have a particular credibility and, obviously, where our national interest is directly engaged. The obvious selection is the single market. We have a natural credibility on the single market as after all, we took the decisive initiatives to push it through in the 1992 programme and so forth, which we should not allow our partners to forget. We have not completed the single market—there is some important work to be done. I hope that as a result of this discussion on the reform of the EU we will be able to make some concrete progress there.

One thing that cries out to be resolved is the services issue—we must have a proper services directive. Of course, we have a services directive, but we all know that that is inadequate. It was much better than what we had before and was a considerable achievement in itself, and we all know that you can only move human institutions along at a certain pace. However, now is the time to try to achieve a real services directive so that we have a single market in services that is comparable to the one that we have had successfully for a long time in goods.

Last time round we found that the French and the Germans were the greatest obstacle to that, but it is possible that the Germans will now be less opposed. That is partially because their economy is doing so well and unemployment is falling in Germany, so they are less frightened perhaps by the prospect of Polish plumbers coming across the frontier to work in Berlin—that was one of the many issues that arose last time—and also because the Germans have got into the habit of lecturing everybody else about deregulation, so they may be more open to deregulatory arguments themselves. Therefore I put it to the Government that a good proposal would be to invest a certain amount of capital in services and to develop, I hope, a certain amount of momentum for that.

Secondly, on energy, I am never quite sure whether I agree with the noble Lord, Lord Howell, or not, because he says one thing at one moment, and something that sounds slightly contradictory in the next sentence. However I agree with some of what he said about energy policy. Energy policy is an area where we need to complete the single market—there is no question about that at all. We do not have a single market in the retail sector in energy, and that, after 20 years of the single market, is quite disgraceful. We should do something about that. We have had partially state-owned monopolies in France—they are not entirely nationalised, of course—and “monopolies” is the word. In the terms of the domestic market, they are holding up progress on this, very much to the detriment of the interests of French consumers, as much as anyone else. We should deal with that, and now is the time to do it. I think that we would have a lot of support in taking up that issue.

My third piece of advice to the Government is the kind of advice that I would give to anyone who felt that they wanted to slightly change their image in a particular context—that is, to surprise people positively, and come up with something that results in the continentals saying, “Good Lord, the British really have changed”, which would establish a certain credibility for what we say about being pragmatic. If we are genuinely pragmatic and open-minded and believe in European reform, clearly there will be cases when the competences of the Union should be extended to resolve a particular problem, because that is the right way in which to do it. There may be other cases, of course, which I would recognise, whereby under the subsidiarity rule it would make pragmatic sense to repatriate certain functions.

[Lord Vinson (Con)]

What powers have ever been repatriated under the subsidiarity rules?

[Lord Davies of Stamford]

I have yet to be convinced, to be honest, that any powers need to be repatriated—and I have looked at the suggestions that have been made on fish and overseas aid, and so forth. It has always seemed to me that there was a very good argument for not repatriating; in fact, in many cases, we might want to go further into integration. But we can have that discussion another time. I am certainly open-minded and could be persuaded that there are situations in which we should repatriate powers, and I hope that the Government and the noble Lord are open-minded and could be persuaded that there are cases when, in fact, the European Union is in the best position in the interests of all its members to have the necessary jurisdiction to resolve the problem.

One area where that is certainly true is with banking union. I have heard no good reason at all why we should not be members of the banking union, and it is extremely dangerous that we are not. We think that we are being very clever in negotiating the double lock, but that works only if there are four member states remaining outside the banking union. If you look at the matter purely objectively, you can see that there is every interest in our being a part of it, and it is extremely dangerous to fragment a supervisory regime or bank resolution regime. It is not something that can possibly be in the country’s interest.

Since time is short, I shall make a final suggestion, which is one that I made before to the noble Lord, Lord Newby. The Government—and I congratulate them on this—have come round to the arguments of many of us over quite a long time that we need to do something about the scandal of payday loans and loan sharks. I see that the Minister is nodding to me, and I understand that the Government have instructed the FCA to come up with an interest rate or cost limit on those payday loans. I congratulate them on doing that. When that has been done in the United States and individual states of the Union—and the Minister will be familiar with this argument, because those opposed to it have always come up with it—it has always been ineffective, because lenders have come in from other states. This is an obvious area in which, if we are to have effective regulation, we need to have it on an EU-wide basis. I put it to the Minister a few weeks ago that it would be worth taking the matter up with Brussels to see if the Commission might be minded to produce a regulation or directive, and whether our partners would agree that this would be a sensible move to take. Now that I have put the issue in public to both the Treasury and the Foreign Office, I would be grateful to the Minister when she responds to this debate, or subsequently in writing, leaving a copy in the Library of the House, if she would let me know whether my arguments have been considered and what the Government’s conclusions are.

[Lord Kakkar (CB)]

My Lords, I join in thanking the noble Lord, Lord Dykes, for having secured this important debate, and, in so doing, declare my own interests as professor of surgery at University College London and a member of the General Medical Council.

The area of health and delivery of healthcare was not an area originally anticipated as having any competence at European Union level, specifically in the treaties. The delivery of healthcare and the allocation of healthcare resources along with the development of health policy were described as an area in which member states and national governments maintained absolute competence. The Department of Health balance of competence review, necessitated by the fact that, inadvertently, much European legislation and many directives have impacted on the delivery of healthcare, determined broadly that, in those areas where European regulation and directives have impacted on the delivery, it was positive. However, it identified a number of important areas where there were unintended detrimental consequences resulting from European regulation.

I shall concentrate on two areas that were highlighted in that competence review and in the third report of Session 2013-14 of the Science and Technology Committee of the other place. The first is the question of the European working time directive, which has been debated extensively in your Lordships’ House. I return to that because the directive continues to have a very important impact on the way that we are able to organise and deliver healthcare in our country and because the unintended consequences of its impact have been substantial.

The working time regulations have affected the quality of care. Although initially it was anticipated that restricting working time to 48 hours per week for trainees would promote patient safety and improve quality, regrettably that has not been the case in this country. Indeed, where the question of the duration of working hours for junior doctors has been studied carefully, particularly in the United States, it is clear from prospective evaluations that have been undertaken over a period of time that such a restricted period of working each week has a detrimental impact on patient safety.

There has clearly also been a detrimental impact on our ability to train junior doctors.

[Lord Davies of Stamford]

I am most grateful to the noble Lord for giving way. I greatly recognise and admire his expertise and experience in this area, but can he perhaps tell the House why our continental partners, in France and Germany and so on, do not seem to have had the same problem with the delivery of healthcare that he suggests we have had as a result of the directive?

[Lord Kakkar]

I thank the noble Lord for his intervention. That is because the application of the working time directive in those countries has been different from our rather fastidious application of the directive here in the United Kingdom. It is also due to the fact that the organisational structure for the delivery of healthcare is very different in France and Germany from the way that we deliver healthcare in our country.

Particularly in the craft specialties, such as my own specialty of surgery, trainees have found it increasingly difficult, within the restriction of 48 hours and the restricted period of time now available for specialist training, to develop the skills necessary to deliver independent consulting practice, which is very much a feature of the delivery of healthcare in our NHS but is rather different from countries such as France and Germany, where they tend to have larger departments with a much more hierarchical structure.

There has also been a substantial cost impact from the adoption of the working time regulations. In the first full year after their application across the National Health Service, an extra £200 million was spent on the provision of locums to fill rotas necessary to cover the provision of out-of-hours care within the NHS. Indeed, just for surgical specialties, the Royal College of Surgeons has assessed that an additional £60 million was spent to provide locums to cover surgical rotas. The Royal College of Surgeons estimates that, because of the application of the working time regulations, some 40,000 surgical hours are lost per month. Again, that has had a detrimental impact on ensuring that access to services can be adequately delivered to meet workload demands. Most worrying is the fact that, on a number of occasions, coroners have included in their narrative verdicts reference to the working time regulations as having had a detrimental impact on the care of individual patients.

Her Majesty’s Government recognise that this is an important challenge. Indeed, in 2010, the then Health Secretary and the Business Secretary announced that they were to initiate negotiations with our European partners not on withdrawing from the working time directive as it applies to healthcare but on ensuring greater flexibility, which would allow us to develop training schemes to meet the specific needs of the NHS in England in the training of our trainees. That resulted in the process being pursued through the mechanism of the social partners, but regrettably that negotiation has failed and the question has now been returned to the European Commission.

Clearly, this is an important area where action is required. As I have said, we need not to withdraw from the working time directive but to allow the necessary flexibility to allow working hours to increase from the current level of 48 hours to 56 or 65 hours, depending on what point trainees are at in their training and on what specialty or discipline they are training in. Can the Minister confirm that this might be a priority area in any further negotiations with our European partners?

The second area is the question of clinical research. Our country has a very distinguished heritage in terms of its contribution to biomedical research globally. The citations for research undertaken in our country are substantial. Some 12% of global citations for biomedical research are derived from research conducted in our country, a substantially greater proportion than in any other country in the world. Much of this is based on our distinguished history in delivering important clinical research. In 2001 6% of all patients entering clinical trials in the world came from the United Kingdom. By 2006, after application of the clinical trials directive, that had fallen to 1.4% and in the period 2007-11 there was a further 22% decline in the number of patients entered into clinical trials from our country.

The clinical trials directive has not only impacted on clinical research in our own country, it has affected all other European member states in terms of their competitiveness globally to deliver clinical research. The Medicines and Healthcare Products Regulatory Agency, which registers new clinical trials, identified in 2007 some 1,207 new trials registered. By 2011 it was down to 943. Clearly, the clinical trials directive is having a detrimental impact. It has, indeed, been renegotiated and a clinical trials regulation was agreed in 2012 by the European Parliament, due for application in 2016. The third report of the Science and Technology Committee of the other place identified ongoing concerns even about the newly drafted clinical trials regulation, concerns that were raised in evidence the committee received from the Academy of Medical Sciences and from the Wellcome Trust, a major funder of clinical research in our country.

In the area of clinical research, I suggest not that we withdraw from the clinical trials directive or the future clinical trials regulation, because there are important benefits to having a certain standard across the European Union, but that we should be able to ensure that flexibility provides for the specific environment in which we undertake and deliver clinical research in our country, with the strong national clinical governance mechanisms that we have in place, rather than find that the directive and the future regulation have had a detrimental impact on our ability to remain competitive in the life sciences area. The life sciences are an important feature of national activity, both in terms of ensuring excellence in our health service and in terms of the economic impact that life science industries have for our country.

--- Later in debate ---

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, I thank and congratulate my noble friend Lord Dykes on securing this debate on an issue of such significance to the United Kingdom. It has been a great starter for the main meal of a debate which I sincerely look forward to tomorrow. I am sure that many of the issues that have been raised today will be raised again tomorrow.

This Government are clear that membership of the EU is in the UK’s interest. We are also clear that the EU urgently needs to reform. As the Prime Minister and Deputy Prime Minister set out in speeches last year, the EU needs to become more competitive, more flexible and more democratically accountable, with powers flowing both ways and fairness between eurozone and non-eurozone members. I am delighted to hear the noble Lord, Lord Liddle, say that he agrees with almost 80% of the Prime Minister’s speech from last January. He also agrees with the need for reform, and it would be interesting to hear specifically the areas that he does not agree with. I certainly look forward to hearing from the Benches opposite in relation to how they feel the British people could also have their say in relation to these matters.

It is the Government’s priority to engage with all member states and the European Union institutions to make these reforms, which we feel are essential, a reality. Some have suggested that the UK is seeking special treatment in Europe. I want to be very clear on this. The reforms that we seek are for the benefit of all member states, and we are working with them to achieve this. My noble friend Lord Howell of Guildford said exactly that.

It is not as the noble Lord, Lord Giddens, described. I am pleased to say that we are already making significant progress, and I do not accept what my noble friend Lord Dykes said in his analysis. Let me give him a few examples of what I think our approach is already doing in terms of making a difference. We worked closely with countries such as Sweden to achieve a double majority voting rule, which provides a safeguard for non-eurozone members in banking union decisions and makes sure that our voice is heard.

We worked with other member states, including Denmark, Germany, Sweden and the Netherlands, to abolish the policy of—

[Lord Davies of Stamford]

Will the noble Baroness tell the House the reasons which make it not in the national interest to be part of the banking union?

[Baroness Warsi]

To be part of the banking union we would have to be part of the euro, and I am certainly not going to spend this debate debating the benefits of membership of the euro.

[Lord Davies of Stamford]

The noble Baroness is, with respect, wrong about that. A number of countries are joining the banking union who are not members of the euro, though they may join the euro of course. The banking union involves a common supervisory, common bank resolution and a common retail deposit insurance system which can be applied to countries which are not currently in the euro.

[Baroness Warsi]

I will look into this matter again. My understanding was that the banking union flows from the single currency and not from the single market, and therefore I will look at this question again and write to the noble Lord once I have considered it.

I was talking about work that we had done with the Danes, the Germans, the Swedes and the Dutch to abolish the policy of “discarding” caught fish as part of a wholesale reform of the common fisheries policy. We have secured the first ever exemption of micro-businesses from new EU proposals from 1 January of last year. We have worked with a coalition of countries to secure the first ever cut to the EU’s budget. We could have done none of this alone. Our engagement with other member states has been, and will continue to be, key. We will continue to work closely with our partners to further the good work on international trade agreements and cutting red tape to make Europe more competitive. We will work with others to ensure that the rights of eurozone-“outs” are protected as the eurozone puts in place the necessary governance arrangements to secure its long-term stability and safeguard the position of the single market.

We will continue to seek greater democratic accountability within the EU, particularly through strengthening the role of national Parliaments, and ensuring that the principles of subsidiarity and proportionality are respected. We will continue to position ourselves at the heart of the debate on the interests that matter most to the United Kingdom.

I think that the reading of the Government’s position on the part of the noble Lord, Lord Davies of Stamford, is simply wrong. We have been clear that membership of the EU is in the UK’s interest. On many occasions, the noble Lord has heard me detail at this Dispatch Box what I feel those interests are.

My noble friend Lord Howell also spoke about the respect for more subsidiarity and national Parliaments needing a red card. I fully agree with that. The Foreign Secretary has, indeed, called for a red card for national Parliaments, and others, such as the Dutch Foreign Minister, have made it clear that they, too, agree. We support the principle set out by the Dutch—namely:

“Europe where necessary, national where possible”.

My noble friend Lord Howell is absolutely right to say that follow-up is now needed. The noble Lord, Lord Davies, also said that we should focus on substance, not rhetoric. I wholeheartedly agree with that. Progress is being made. For example, the Prime Minister worked with Germany, the Netherlands, Sweden and Denmark to secure the cut in the EU budget. The PM and Commission President Barroso co-chaired the meeting of leaders from Germany, Italy, the Netherlands and others in the Business Taskforce, which presented a report on cutting red tape. These are but a few examples.

The noble Lord, Lord Kakkar, has raised the working time directive before. This Government are committed to limit the application of the working time directive in the United Kingdom. The noble Lord made some incredibly important points in relation to specific professions where this has had a disproportionate impact. The evidence suggests that a one-size-fits-all approach in the working time directive limits the time available for training and reduces operational flexibility in relation to particular professions and, of course, in relation to medicine and surgery. The Government will continue to prioritise this important issue which came up in the first set of balance of competences review reports. I do not have details of the clinical trials directive in my brief but I will certainly write to the noble Lord.

My noble friend Lord Dykes asked why the European Union Act 2011 excludes enlargement treaties from the referendum lock. The referendum condition is focused on treaties that expand EU competences or change the voting rules. Extending the geographical scope of the EU does not currently fall within the relevant section because it does not curtail the competence of existing member states such as the United Kingdom.

The noble Lord, Lord Giddens, asked me four questions. I will try to answer some of them. He spoke about the first set of reports from the balance of competences review. I dealt with some of this in an Oral Question earlier today. Although the first set of those reports mainly concern non-contentious areas, even where they lay out the benefits of EU membership they go on to say that further improvements could be made. Therefore, there is a real need for reform outlined in those reports. The noble Lord asked about the restrictions on EU migrants. I do not think I could put it better than my noble friend Lord Howell who commented on that point. I wholeheartedly endorse his comments. The noble Lord has asked me before about the PM campaigning for an exit. I can tell him that my right honourable friend the Prime Minister is campaigning for a referendum. We need to get back behind the idea of giving people the right to decide. We can then campaign in whatever camp we want to as to what we feel the outcome of that referendum should be, but we should at least give people the choice.

The noble Lord, Lord Liddle, suggested that treaty change would not happen or that there would not be the possibility of treaty change. A number of ideas have been considered in European capitals and in Brussels that we feel would require treaty change. Europe is changing because of the eurozone crisis, among other reasons, and we expect that process to include treaty change.

I conclude by thanking the noble Lord, Lord Dykes, again for giving us the opportunity to examine this interesting issue. We have covered some ground and I am sure we will cover more ground tomorrow. The noble Lord, Lord Dykes, in setting out the debate, asked specifically about the vision for reform. I will simply repeat what I said at the beginning about a Europe that is more competitive, more flexible and takes account of the diversity of its different EU member states and the differences between those which belong to the single currency and those which do not; a Europe that is more democratically accountable, so that the connection between citizens and the EU can be strengthened; a Europe where powers flow both ways; and a Europe that ensures fairness between those that are in the eurozone and those that are not.

Many European leaders welcomed the Prime Minister’s January speech and the debate that it has provoked. Many voices across Europe—in the Netherlands, Germany, Sweden, Italy, Austria, the Czech Republic and elsewhere—have spoken out in support of European reform. The Government will continue to prioritise this issue, working closely with our partners across Europe to deliver a Europe that works for all its member states and that works better.

Referendum: European Union

Lord Davies of Stamford Excerpts

Monday 29th July 2013 Lords Chamber

[Baroness Warsi]

I agree completely with my noble friend.

[Lord Davies of Stamford]

My Lords, last week the Government faced deserved criticism and indeed derision on the farce of opting out of the justice and home affairs measures and then opting back in. Is it not equally absurd to decide now on a referendum in 2017 or on any other fixed date years ahead? An awful lot can happen between now and then. There might even be a new treaty—the Germans are already talking along those lines—that might be under negotiation in 2017, so we would not know what we were voting on. Is it not time for the Government to stop taking decisions on European policy that are illogical and do not make the slightest practical sense, but are simply based on attempts to pander to the eurosceptics in the Tory party and desperate attempts to try to retrieve the UKIP vote?

[Baroness Warsi]

I am glad the noble Lord has got that off his chest. He will recollect that the amount of support the Government had in relation to that particular opt-out was clear in relation to the majorities in both Houses.

Iran

Lord Davies of Stamford Excerpts

Wednesday 10th July 2013 Lords Chamber

[Lord Anderson of Swansea]

My Lords—

[Lord Davies of Stamford]

My Lords—

[Lord Hylton]

My Lords—

--- Later in debate ---

[Baroness Warsi]

I think that we are proposing official-to-official contact, possibly even in a third country, beforehand. That would be the normal course of events, not just in the case of Iran.

[Lord Davies of Stamford]

My Lords, all of us hope that Rouhani will prove to be more reasonable and rational than Ahmadinejad. Is it not important that nobody should have any illusions; that we should make it absolutely clear that sanctions cannot be relaxed until there is real evidence, through inspections or otherwise, that Iran is not proceeding with a nuclear weapons programme; and that, in view of the lamentable record on human rights and other matters that the noble Baroness has just set out, we should reserve even symbolic concessions on our side until the Iranian regime makes some positive move forward?

[Baroness Warsi]

Sanctions are there for a purpose. They are targeted. They are for a specific issue and we have been careful to note that humanitarian goods are protected. However, the noble Lord is right. We have to make progress on substantive issues, and nuclear is one of them.

Gaza

Lord Davies of Stamford Excerpts

Tuesday 18th June 2013 Lords Chamber

[Baroness Warsi]

The simple answer to my noble friend’s question is no. I am aware of the statistics that she quotes and, indeed, have responded to the many Written Questions that she has submitted on this issue. The UK is deeply concerned by the humanitarian situation in Gaza, which is both a tragedy and unsustainable. It is for that reason that the Foreign Secretary has made it clear that the Middle East peace process is a priority for 2013. Noble Lords are aware that I have previously said from this Dispatch Box that this is an important—a decisive—year. That is why we continue to support Senator Kerry in his efforts—he has made five visits, I think, in the past two months—to move this forward.

[Lord Davies of Stamford]

My Lords, is it not the case that, any day that it wished, the Hamas regime in Gaza could lift the blockade and bring to an end the terrible purgatory under which the people of Gaza have been living for so long, simply by following the example of the Fatah Administration in the West Bank and accepting the quartet principles, including abjuring violence? Should we not be urging the Hamas regime to do just that?

[Baroness Warsi]

I hear what the noble Lord says but I think that he would agree that nothing in the Middle East peace process can be resolved by one group alone or by addressing only one issue, and that nothing there is simple.

EU: UK Isolation

Lord Davies of Stamford Excerpts

Monday 22nd April 2013 Grand Committee

[Lord Davies of Stamford]

My Lords, I congratulate the noble Lord, Lord Dykes, on securing this debate. He has been committed to this cause in all the long years that I have known him. He has shown great energy, commitment and often great courage in pursuing that cause. I have great pleasure in paying tribute to him today.

The most interesting thing about this afternoon’s debate is the people who are taking part. Where are all the leading Eurosceptics? Not one of them has turned up. We had a debate in this Chamber about a year ago and all of them turned up. I distinctly remember the noble Lords, Lord Lawson, Lord Lamont and Lord Flight, telling us how the euro was about to collapse and that they had been right all along because they had been saying for years that it was bound to collapse. I remember replying that they slightly reminded me of the Marxists of the earlier 20th century who, every time there was a recession said, “We were right all along; this is the final crisis of capitalism”. I am not sure they appreciated that analogy. They are not here this afternoon, which must be a very good sign as to progress in the European Union.

Of course, there is no disaster to gloat over. The latest news is actually rather encouraging. I am quite convinced that both the EU and the eurozone are emerging strengthened from the crisis. It has been very positive to get the growth and stability pact and to achieve the banking union. The handling of the Cyprus banking crisis has been extremely successful. We have established the principle now that there should be no bailout without a bail-in. We have established the principle that anybody who has more than €100,000 and wants to keep it all in one bank has some responsibility to take a view on the creditworthiness of that bank and, equally, that people who have less than €100,000 in deposits should be protected by public guarantees. All that has been very positive.

Of course, some of these things could and should have been determined well in advance, calmly, because rationally they were the sensible thing to do. But we all know that in human affairs people often only take the right decisions in a crisis. It is difficult to get people to make difficult decisions when things seem to be going well. These structural changes are a permanent legacy and a positive outcome of this crisis.

None of us has very much time to speak, but I do not think that there is an alternative to the EU for achieving what we need to achieve in this country on so many fronts—the environmental, economic, foreign policy and defence fronts. This is an area at which we desperately need to look very carefully now, because budgets are so constrained throughout the European Union: how can we best save money through greater degrees of co-operation, including defence specialisation? That is a very complicated matter and we must return to it on another occasion.

All parties like to say that they are taking a cool, calm, objective view of the national interest. But we must do so without prejudice. We must not reject a particular solution if it is actually in the national interest simply because it has the word “European” or “EU” attached to it. There is too much of that emotional counterreaction on the part of the Government at the present time.

I leave the noble Lord with one thought this afternoon. It is time for us to look pragmatically, coolly and calmly, without hysteria, at the possible advantages to us of joining the Schengen agreement. It would not merely remove a lot of the existing burden on the UK Border Agency, which we have seen so much of in the past few months, but it would address a much more serious problem. This country is losing hundreds of thousands of pounds, perhaps even millions of pounds a year, in tourism particularly from visitors from the Far East who tend to travel in groups. Their travel agents arrange a Schengen visa for them. They come to Europe and visit Amsterdam, they go down the Rhine and visit Paris, Rome and Madrid. They have a lovely time, but they never come here because we are not part of the Schengen system. It would involve additional delays and costs to get visas.

This is a major economic problem. The Government have always excluded even looking at Schengen simply because it is European. But if it happens to be the right pragmatic solution on the basis of the national interest, we should go along with it.

EU: Prime Minister’s Speech

Lord Davies of Stamford Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Davies of Stamford]

My Lords, in all my political experience I do not think I have come across a more absurd notion than a referendum that will only take place some four, five or six years after it is announced. But, of course, this is not a serious political idea. It is, as we know, a short-term and cynical party-political ploy designed simply to push the European issue beyond the horizon of the next election and to keep the Eurosceptics off the Prime Minister’s back until then. If there are costs in terms of investment and jobs and other costs to our national interest, then to hell with the national interest. That is what we are actually confronted with.

If we need further evidence of the superficiality of this exercise, it is in the fact that the Prime Minister hardly mentioned what the objectives of this negotiation or renegotiation are going to be. In all that elaborate speech only one sentence deals with them by mentioning three things: the environment, social affairs and crime. We have only to look at those three in order to realise that either we are faced with what is essentially a hypocritical exercise that is not intended to be taken seriously or else something that would be disastrous if pursued. Are we going to pull out of the European environmental policy? Are we going to get rid of the commitment to reduce emissions by 20% from their 1990 levels by 2020? Are we going to try to do it unilaterally? Does the Prime Minister mean the non-climate change aspects of environmental obligations such as water pollution? Are British factories going to be allowed to release any kinds of effluent into our rivers? If we believe in having environmental controls, is it not in our interests to make sure that our competitors on the continent of Europe bear the same level of costs? It is quite clear that this has not been thought through at all. It is an entirely cynical, short-term exercise.

The same applies to social policy. I would love to see the Prime Minister fight the next election on the basis that he is going to get rid of the working time directive or the parental leave directive. Is that to be taken seriously? And what about crime, which comes under justice and home affairs? We are told that the Government are already intending to opt out of the justice and home affairs chapter. In that case, what is the point of renegotiating something that we are going to opt out of? None of this makes sense.

There are many aspects of this which worry me. Obviously I am anxious about the costs of the uncertainty and even more anxious about the costs attached to our leaving the European Union, if that is the ultimate aim of this exercise; it could easily lead to that bad accident. However, my worst anxiety is that our continental partners will say—they may be far too diplomatic and astute to do so, but it is what more and more of them will think—“For heaven’s sake, the British are hopeless. They cannot make up their minds. They have been humming and hawing and coming and going for 30 years. They always oppose everything and they are very difficult. For God’s sake, if they want to leave, let them leave. Let’s conduct this negotiation in such a way that they end up having to go”.

When that happens, what is the prospect for this country? The prospect is the one that we have been trying to avoid for 500 years. It is why we fought Philip II, Louis XIV, Napoleon, Nicholas I and the Kaiser. We will find ourselves with a superpower on the European continent with whose policies we have in practice to align ourselves although we will have no influence whatever on their formulation. That is the position we shall be in, and under the shadow of that superpower we shall live for the rest of time—regretting the appalling decisions that we came to in a fit of absence of mind.

European Union: Recent Developments

Lord Davies of Stamford Excerpts

Monday 17th December 2012 Lords Chamber

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)]

My Lords, I am looking forward to a very long afternoon and evening. We are here to discuss recent developments in the EU, a topic which is never far from the headlines and is of significant interest to Members of this House.

My right honourable friend the Prime Minister and my noble friend Lord Strathclyde have just provided a full and informative report, to this House and the other place, of some of the most recent developments in last week’s European Council. I am also pleased to bring two Bills before the House this afternoon. The provisions in both Bills are technical in nature but will, in their own way, play an important role in the future shape of the EU.

The first is the European Union (Croatian Accession and Irish Protocol) Bill which provides for the necessary parliamentary approval to allow the UK to ratify Croatia’s accession to the EU and the transitional immigration controls to be applied post accession. The Bill also provides for approval of a protocol on the concerns of the Irish people which is to be added to the EU treaties. I introduce the second on behalf of my noble friend Lord McNally: the European Union (Approvals) Bill simply provides for parliamentary approval of three draft EU decisions. I will return to the two Bills in some detail later. Members of this House will no doubt wish to discuss areas of their own particular interest during the debate. If noble Lords will permit me, I will use the two EU Bills, which represent just a few of the recent developments in the EU, as a starting point for the debate.

Membership of the EU has brought, and continues to bring, real benefits to the UK. Enlargement and the establishment of the single market are two of the EU’s greatest achievements. The single market is the largest market in the world with more than 500 million consumers and 21 million companies. It has opened up prosperity and opportunity to hundreds of millions of people. The challenge we face now is to maintain those benefits in the face of global financial challenges.

The European Union, alongside NATO, is an instrument of peace and reconciliation that has helped to spread and entrench democracy and the rule of law across Europe, and has helped to make armed conflict between its members unthinkable. This has recently been recognised with the award of the Nobel Peace Prize. That is why we support further conditions-based enlargement. Croatia’s accession will further demonstrate the transformative power of enlargement, marking a historical moment, with the joining of the first of the western Balkan countries involved in the wars of the 1990s.

We recognise that the EU needs to do better in much of what it does and that people across Europe want more of a say in how the EU does its business. The House of Lords EU Select Committee has done a great deal in examining the work of the EU. I am grateful to the committee for its ongoing scrutiny of EU decision-making. Most notably in the context of the accession Bill, I welcome its current inquiry on EU enlargement.

When they came into office, this Government committed to give Parliament a greater say in the EU decision-making process. In order to do that, we introduced the European Union Act 2011, which puts Parliament at the heart of the process. That is why we have these two Bills before the House today, both of which have been introduced under the provisions of the European Union Act 2011.

The European Union (Croatian Accession and Irish Protocol) Bill provides for parliamentary approval of the Croatian accession treaty and of the Irish protocol, which is to be added to the EU treaties. The Bill also provides an enabling power to allow transitional immigration controls to be applied on Croatian workers exercising their right to free movement.

Croatia is expected to join the EU on 1 July 2013. Meanwhile, we expect Croatia to sustain the momentum of six years of significant reform, particularly on judiciary and fundamental rights issues, so that it meets fully all EU requirements by the time of accession. Croatia’s accession will represent the achievement of a historic goal, not only for Croatia but for the EU. Croatia’s accession will set the bar for other countries of the region in pursuing their own European future and demonstrate clearly what can be achieved in the region.

The enlargement process continues to evolve with each accession and Croatia has faced the toughest negotiations yet. It was the first to negotiate under the new Chapter 23 that deals with the judiciary and fundamental rights, rightly putting the emphasis of the accession negotiations on the rule of law. It is the first to make full use of opening and closing benchmarks within the negotiations of each chapter to ensure results before chapters were closed. It is the first to experience pre-accession monitoring, a process designed to ensure that it is ready in full before it accedes. Croatia will join the EU better prepared than any previous candidate has been.

Croatia has already largely met the strict pre-accession criteria. It has made significant progress in tackling corruption and organised crime and in protecting fundamental rights, as recognised in the two most recent Commission monitoring reports. It has also made considerable progress in dealing with the legacy of the Balkans wars in areas such as war-crimes trials and refugee returns, and it continues to tackle these challenges.

Croatia’s full co-operation with the International Criminal Tribunal for the former Yugoslavia was a requirement for closure of Chapter 23. This will continue to be assessed as part of the Commission’s monitoring up until the date of accession. However, let me be clear: while the Commission’s monitoring helpfully identifies these outstanding issues, it also states clearly that it expects Croatia to be ready on time. This is an assessment that we share.

With its modest population of some 4.4 million people, the potential impact of Croatian migration is relatively small, but the UK remains vigilant to that impact. Furthermore, we have not identified any victims of trafficking from Croatia in the UK. In the US State Department Trafficking in Persons Report 2011, which ranks countries in terms of their capacity to tackle trafficking and protect victims, Croatia was designated as a tier 1 country alongside the UK. As a safeguard, the Government will be putting measures in place to minimise any possible impact of opening the British labour market to workers from Croatia. I can assure noble Lords that the Government are committed to applying appropriate controls on the free movement of Croatian workers in order to safeguard the UK labour market.

The accession treaty sets out the framework within which member states may apply transitional immigration controls to Croatian nationals who wish to work in their country. This Bill transposes the legal framework for transitional immigration controls in the accession treaty into UK law. The Home Office will bring secondary legislation before this House in order to apply those controls under UK law. The intention is to retain the current immigration controls applied to Croatian nationals for a transitional period following accession. The Home Office has published details of the proposed transitional controls in a statement of intent. All the necessary legislation will be in place when Croatia joins the EU.

[Lord Davies of Stamford]

My Lords, can the noble Baroness tell the House what the transitional period is proposed to be?

--- Later in debate ---

[Lord Davies of Stamford]

My Lords, this is not the first occasion when I have had the pleasure of following the noble Lord, Lord Dobbs, in a European debate. As he rightly anticipated, I did not agree with him this time any more than I have done on previous occasions, though he said his piece with his usual charm.

It has been a stimulating and worthwhile debate, but it is essential that we have another debate when the Prime Minister has made his long-awaited speech. Can I urge the Government that when that happens we have the whole day for the debate, and that the Government do not reduce the time by introducing Statements or debates on matters that, however fascinating they may be to some people, do not have quite the same potential historical significance as this one.

I may be a bit old-fashioned but I still have the idea that a debate should try to make progress, so I want to take advantage of being put rather low in the batting order this afternoon, not to make a prepared speech but to comment on some of the remarks that have already been made, particularly those that appear to be most memorable.

I am delighted to see the noble Lord, Lord Taverne, come in at this very moment, because the first speech that I want to refer to is his. He made a masterly analysis of the justice and home affairs issue. He demonstrated clearly and conclusively that there are no pragmatics about the Government’s attitude to this; the national interest is completely irrelevant. The Government are simply playing politics with the national interest. A bone—a very important bone, sadly—is being thrown to the Eurosceptics for purely party political reasons. This is a disgraceful state of affairs.

I also to pay tribute to my noble friend Lord Monks, who made an excellent speech about the Social Chapter, based on a unique degree of experience in these matters. I would like to add something about that issue. I am not known to be timid about attacking the modern Tory party or for being particularly indulgent to it. However, I wonder whether even the modern Tory party would seriously go about repealing the limited government measures that have gone through under the Social Chapter, to which my noble friend referred: the parental leave directive, part-time or agency workers’ directive and the four weeks’ paid leave directive. The one thing that Mr Cameron cares about is votes, and I do not think that he would get any if he legislated along those lines. No doubt the Institute of Directors, some right-wing think tanks and a lot of Eurosceptics would be delirious with pleasure; but I do not think that that would help him at the next election. So I anticipate that the Tory party is much more likely to say, “We want to pull out of the Social Chapter for ideological reasons, but we won’t actually repeal the measures that have gone through”.

If you think about it, though, that is the worst of all possible worlds. If we are going to have these measures—which are costly, of course, but essential in a humane society, to which we all want to be committed, and which are supported by all reasonable employers—it must be in our interests to ensure that they are part of the Social Chapter, and that there is no one else within the single market who can conduct their business without these kind of costs. Otherwise we would be damaging our own competitiveness within the single market, which would be a self-destructive thing to do. The Government pretend to care about the national interest, but an important aspect of the issue has not been taken into account at all.

Now I turn to the Government and to the noble Baroness, Lady Warsi. In a most excellent speech, my noble friend, Lord Liddle, quoted the Prime Minister as saying that, for him, Europe and referenda went together. I cannot think of another sentence that a Prime Minister could have pronounced which more obviously, immediately and dramatically would create uncertainty about our position and future in the European Union. Yet we had the noble Baroness, Lady Warsi—and, before her earlier today, the noble Lord the Leader of the House—saying, “Oh no, there’s no uncertainty at all; the Government are quite committed to our membership of the European Union and we haven’t created any uncertainty”. That is really quite a fatuous remark. The Government have gratuitously created a lot of uncertainty; as the noble Lord, Lord Pearson, said, a large number of people in this country believe that we are set on a course that will lead us to leaving the European Union in the next Parliament. Not only a lot of people in this country believe that and work on that basis, but a lot of our partners, sadly, believe that and will be working on that basis, which will mean a reduction in our bargaining power with them on many issues. Worst of all, many investors believe that, are working on that basis and therefore will not invest in this country. Whether they are British-domiciled or foreign-domiciled, they will invest somewhere else in the single market if they want their operation to be certain to continue to be in the single market and in a country that has a full weight in the decision-making process of that market so it can protect their interest.

I turn to the noble Lord, Lord Pearson of Rannoch. I do not want him to think that this is a personal attack. In fact, I have a high personal regard for him; I admire his courage and persistence in continuing to voice views that I think are completely misconceived but he does so very lucidly. Since he has set out so lucidly today what is the standard narrative of Eurosceptics, both in UKIP and the Tory party, I hope that he will not mind if I make him the object of my final remarks.

The problem that all Eurosceptics, whether UKIP or Tory, have in this country is that you just cannot make a credible economic case for leaving the European Union. There is no way that anyone can argue—I have not seen anyone even pretend to do so—that the mere fact of leaving the European Union will add one job to our national economy or one basis point to our GDP. Of course it will not; the argument is entirely the other way. The argument is about how many jobs it will destroy and how many basis points, or, indeed, percentage points of GDP, it will remove and over how long. That is how the argument is conducted—on whether it is hundreds of thousands of jobs we will lose, or millions. Generally, people recognise that if we were left with no access to the single market altogether, it would be more in the millions than in the hundreds of thousands.

Faced with that fact, what do you do if you are a Eurosceptic? I am afraid that you go in for some pretty evasive and disingenuous arguments, which we hear the whole time, and I am sorry to have to say to the noble Lord that we heard them from him this evening. We hear people say in the same speech, “We can negotiate continuing access to the single market”, and, almost in the same breath or sentence, that what is all wrong with this thing is the regulatory burden that we face, which is why we must leave the European Union. Yet if you continue to have access to the single market you continue to have the same regulatory framework, to which you are committed. That is the case with Switzerland and Norway, and it would be the case under all circumstances if we negotiated continuing access to the single market.

The difference, and it is a very important one, is that you are no longer part of the decision-making structure. You have no influence on the evolution of that regulatory regime, on the new regulations or on changes to them. You have no opportunity to propose a reduction of regulations, if you think that is the right thing to do. You are out of the dialogue—

[Lord Pearson of Rannoch]

Would the noble Lord give way?

[Lord Davies of Stamford]

I do not want to speak for too long. I am afraid I cannot give way because we have had imposed on us an unofficial time limitation, because the Government have preferred to do other things.

[Lord Pearson of Rannoch]

My Lords—

[Lord Davies of Stamford]

I am afraid I must insist. I am very sorry. I would love to give way to the noble Lord. I believe in debate in that sense, but we cannot do it consistent with having a time limit imposed on us.

[Lord Wallace of Saltaire]

My Lords, if I may read from the Companion:

“A member of the House who is speaking may be interrupted with a brief question for clarification … Lengthy or frequent interventions should not be made, even with the consent of the member speaking”.

That suggests that we should allow the noble Lord to finish his speech.

[Lord Davies of Stamford]

I am grateful. The noble Lord, Lord Pearson, made another classic error in his speech; it was about our bargaining power. He said that a certain amount of our trade—50%, or whatever it is—is with the rest of the EU but that nevertheless we buy more from them than they buy from us, and that therefore we have greater bargaining power. I am afraid that that is a logical fallacy. Bargaining power depends not upon the size of the stake but upon the importance to each party respectively of doing the deal. I hope that the noble Lord recognises this because he would be in terrible trouble in any negotiation he is involved in if he does not.

In other words, what is important is how important the particular deal under negotiation is in relation to the total of a party’s interest. As the noble Lord recognises, we have 50% of our trade with the rest of the EU. That is pretty much a life-or-death stake to have but from the point of view of the rest of the EU, which has 17% of its trade with the United Kingdom, it is much less of a life-or-death stake—so we have much less bargaining power, as they have much less need to do a deal than we have. On that basis, one can be a great deal less sanguine about any such negotiation that might take place than Eurosceptics are inclined to reassure the British public that we might be.

[Lord Pearson of Rannoch]

Before the noble Lord sits down, will he therefore tell us how every other country in the world manages to trade perfectly satisfactorily with the single market without having its ridiculous rules?

[Lord Davies of Stamford]

We have much greater penetration into the single market than other industrialised countries such as the United States or Japan, and we have that by virtue of being part of the single market. A great many businesses have been set up in this country, both by British-domiciled investors and by foreign investors—including, importantly, by Japanese and American investors—in order to have access to the single market. That is where we have gained enormously; we are part of the market itself. That is a priceless advantage and I think that the noble Lord implicitly accepted it when earlier on, slightly in contradiction to the question he has just asked me, he recognised that we must negotiate some continuing access to the single market or we shall face the most appalling economic losses.