European Union Referendum Bill
Debate between Lord Davies of Stamford and Lord Flight(9 years ago)
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Lord Davies of Stamford
That is an extraordinary question to ask me. I am the living embodiment of the fact that one can change one’s mind. I believe that Mr Corbyn has, in the light of events, learned wisdom which he did not possess 10 or 20 years ago. I assure the noble Lord that that wisdom consists in supporting—I repeat, supporting—our membership of the European Union. That is the official position of the Labour Party and will, of course, remain so.
Lord Flight (Con)
The noble Lord must be aware that a large number of members of the Labour Party—among those who are left—happen to have views about EU membership which are not that supportive. Although the Labour politicians at Westminster may or may not have strong views, they control the spend and the members of the Labour Party are not going to be very happy if the party spends all their money campaigning in a direction which they may not support.
Lord Davies of Stamford
I do not think that the noble Lord is a great expert on the views of the Labour Party. I would be delighted to take him to some party meetings in Lincolnshire where he would find enormous support for our membership of the European Union from people in all walks of life. The fact remains that the Labour Party supports our Members of Parliament in the other place who, by an overwhelming majority, have voted, and will continue to vote for our policy of believing that it is fundamentally in this country’s interests to remain part of the European Union.
I must move on to speak to Amendment 58. If there is a discordant element in my sudden change of subject, I say, in anticipation of someone rising to complain, that I am not responsible for the grouping of amendments.
European Union Referendum Bill
Debate between Lord Davies of Stamford and Lord Flight(9 years ago)
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The Earl of Courtown (Con)
Could we hear from the noble Lord, Lord Davies of Stamford? I know that he has been trying to get up for some time.
Lord Davies of Stamford
I come now to my second point, which relates to what was said by the noble Lord, Lord Wigley. A citizen of this country is entitled to think that the politicians who he or she pays for will do an honest job in a case like this, by not merely providing an opportunity for a referendum to take place but providing what we can by way of elements to enable that individual elector to take a decision.
I want to re-emphasise the point made by the noble Lord, Lord Wigley. Any Government who are half competent—or even a quarter competent—will, in circumstances like this, produce their own study of the cases for joining or leaving, along with the costs of leaving or not leaving and so forth. Any Government who were 10% competent would be going through those exercises and, as he said, given that those studies will have been undertaken, they must not be kept under lock and key in Whitehall. The public in a democracy have a right to know to what conclusions the Government have come in their own studies. They have a right to have disclosed to them material information of that kind, which may be available in Whitehall or elsewhere in the interstices of government. On those two counts, it is absolutely essential that we do what we can to ensure that such reports are identified, undertaken and, above all, made available to the British public.
Lord Flight
I wrote to the Treasury about the reduction in the guarantee to £75,000 to have the reason confirmed. I have had a letter back from the Treasury saying that it is doing its best to negotiate that it cannot go any lower than £75,000, so I wish it luck.
I very much agree with my noble friend Lord Higgins but, to be candid, for even wider reasons the exercise is unlikely to be of huge use. First, if you are to have papers about staying in, you have got to have papers about coming out. Secondly, and fundamentally, the issues that are so important are matters of judgment. We do not yet know what the agricultural arrangements may be or what trade agreements there may be with America and India, and so forth. You could take an educated guess but a factual paper must not have educated guesses in it. A whole lot of historic dead data about the EU one way or the other will, candidly, not excite anyone in the slightest, but it is not the job of the Government to publish opinions. It is the job of the campaigning entities to express those expectations and opinions.
Lord Davies of Stamford
The whole point is that the individual campaigns will not have access to the material which the Government will have produced. It is essential that the public have access to that; if they cannot have access to it through the campaigns, the campaigns themselves will not know what material the Government have on the subject.
Lord Flight
Most of the factual information is already there in various forms, so it would not have to be reprinted by a government department. The crucial point is that the campaigners will set out their expectations and judgment as to what will happen one way or the other. As the noble Lord pointed out, leadership in this situation one way or tother is likely to win the referendum campaign.
The proposals seemed to start by suggesting that there should be a whole set of papers on either the advantages of staying in or the problems and risks of staying out. If we ended up with a fair and balanced covering of both sides, I think it would be pretty much a waste of time.
Euro Area Crisis Update (EUC Report)
Debate between Lord Davies of Stamford and Lord Flight(10 years, 4 months ago)
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Lord Flight (Con)
My Lords, I pay tribute to the noble Lord, Lord Harrison, for chairing our committee and for the production of this report, which, given the spread of views on the committee, is very fair and accurate. I think that the noble Lord, Lord Kerr, began to get slightly worried that he found himself agreeing with me on too many issues.
The report is, as the noble Lord, Lord Harrison, has suggested, slightly optimistic in that recovery in southern Europe is pretty weak, the public finances are still worsening, the threat of deflation remains and the unemployment position is terrible. The real problem is that the euro locked Europe into a gold standard. Italy, Portugal, Spain and so forth had happily devalued 2% or 3% every two or three years, but when they could no longer do that and Germany put great effort into becoming super-competitive by holding wage rates down, it ended up with about 30% uncompetitiveness among the countries of southern Europe as against Germanic Europe, and they are stuck with it. They have taken measures to address that. The only scope is internal devaluation, but that is extremely painful and, candidly, I am quite surprised that predominantly socialist politicians, in the cause of sustaining the euro, have been apparently happy to see the lives of a whole generation of young people in southern Europe wrecked with a massively high level of unemployment, so there is a slight problem there.
Lord Flight
No, I shall not give way because I do not have long to speak.
The prospect of real political and economic union is for the time being not particularly promising. The big issue is that if you are going to share a currency, you have to have transfer payments. Britain has £70 billion or £80 billion of transfer payments from the prosperous south-east to other parts; in America, some 30% of federal spending goes on transfer payments. When we went to visit every element of Germany and asked them about transfer payments, the answer we got was “Not a pfennig”. Nobody in Germany was willing to face up to the fact that, if they wanted a united Europe and if they wanted to sustain the euro, they would have to be willing to make transfer payments to the less prosperous parts of Europe.
As the noble Lord, Lord Harrison, mentioned, we have yet to see how robust the banking system is with the stress test coming in October. I hope that the test will be genuine and robust, but if it reveals serious undercapitalisation of the banking system, that presents its own problem, because, in essence, it will have to be the relevant Governments who bail out the banking system. Thus the link between government debt and banking problems is not removed but, if anything, worsens.
I cannot help but comment that we have been here before in that in the 1860s, the French established a common European currency, the silver franc. We spent most of the 1870s debating whether to join it, and indeed in the British Museum there are notes and coins which were produced showing what they would be like if we did join. Walter Bagehot, the great economist, was wholly in favour of doing so. It lasted for 30 years until eventually the author, France, became so uncompetitive with something like 35% unemployment that it ditched the silver franc and ended the first attempt at a common European currency. I should add that everyone participated, including Switzerland, other than the German states because Germany had not yet united.
As the noble Lord, Lord Harrison, and others have pointed out, the report makes the point that the crisis has created the eurozone versus the peripherals. Although it is slow, I think that from now onwards there will be a gradual process towards political, economic and financial integration. Noble Lords will know the story of when Kohl and Mitterrand were discussing the euro. Kohl said, “We can’t start the euro because there isn’t much political integration”, and Mitterrand responded by saying, “We’ll never get political integration unless we put the euro into effect, which will force it”. I think that may be true. However, the UK is obviously not part of the eurozone and, as the report states, it is already a semi-detached member of the European project. In particular the loss of sovereignty over financial regulations has damaged the City of London. I describe it by saying that the City enjoyed a boom for around 40 years. It then plateaued and now it is on the way down in terms of earnings, activity and the number of people employed. The AIFMD has been particularly damaging and has moved a lot of business to New York and Singapore, and the biggest threat is the financial transaction tax. If noble Lords have not read it, I particularly recommend the report of EU Sub-Committee A on that.
The point is that although the report exhorts everyone to be friendly and co-operative—indeed the representative and lobbying bits of the City in Brussels never cease to grow, with around seven different institutions that are all there to be friendly and lush up their colleagues—there is a difference of interest. I am afraid that London is at the mercy of what suits Europe, along with its particular jealousies of London’s dominant position. The City has put up with that and got on with it, but beneath the surface there is mounting resentment. If the financial transaction tax were to go ahead, I think that it would be the straw that breaks the camel’s back.
I end by making the point that there is the irony of the British Government being the first to recommend that Europe should get its act together and get a move on with financial, political and economic unification, and yet that is the very thing which has led to Britain being a semi-detached member. The view is becoming clearer and more widely held that the right relationship for the UK is as a member of the EU customs union and the single market, but not of the EU political union. I detect that, one way or another, this is now the direction in which we are heading.
Royal Bank of Scotland: LIBOR
Debate between Lord Davies of Stamford and Lord Flight(12 years, 4 months ago)
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Lord Flight
My Lords, will the Minister advise the House how many banks from how many countries provide regular LIBOR information in order to produce the average LIBOR rate?
European Union Bill
Debate between Lord Davies of Stamford and Lord Flight(13 years, 5 months ago)
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Lord Davies of Stamford
My Lords, I rise to do two things. One is to address the contention made by the noble Lord, Lord Waddington, that I have heard before from him and other noble Lords during our debates on the Bill. His contention is wrong—that the British people have been systematically deceived about the nature or purposes of the European Union, or the European Community as it previously was, and that therefore they were unable to take informed decisions at election time or, indeed, at the time of the 1975 referendum.
It was always clear from the beginning that the European Union, or the European Community, was not a dead institution that was fixed once and for all. It was a dynamic institution, even a teleological institution which had a final purpose or end; all that was stated in the preamble of the treaty of Rome. The phrase about the ever closer union of peoples was always there. Right at the beginning, even when Macmillan first suggested that we might join the Common Market, or the European Community, I remember that speeches were made by members of my own party. I was a schoolboy at the time but I was already taking an interest in these matters. I remember Hugh Gaitskell’s famous speech. My noble friend Lord Radice, who has written books on this subject, will correct me if I have the date wrong. I think that it was in 1962 that Hugh Gaitskell made a famous speech saying that the effect of our joining the European Community ,or the Common Market, would be that we would become like Texas in the United States. If I am right and that speech was made in 1962, that means that literally for the past half century this discussion about the constitutional significance, and the significance for national sovereignty, of our being members of this institution have been clearly, expressly, openly, overtly and thoroughly transparently discussed in public.
Lord Flight
I thank the noble Lord for giving way. It may be that he was more involved at the time than I was, although we are roughly the same age. However, I remember being organised by the Conservative Party at the time to go out and preach on voting in the referendum for the Common Market—indeed, I voted for it—specifically on the grounds that it would be a good economic prospect for this country. We had lost an empire and we needed to belong to something where we could trade. I was not even aware of the idea that I was trying to market something about political unification—fool though I may have been at the time.
Lord Lea of Crondall
I am sorry—I do not know who is speaking and who is intervening here.
European Union Bill
Debate between Lord Davies of Stamford and Lord Flight(13 years, 5 months ago)
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Lord Flight
Would the noble Lord give even just a little bit of credibility to the argument that the problem of different economies sharing the same currency is that the costs of some in the southern part of Europe have gone up 35 per cent while Germany’s costs have only gone up 10 per cent, so they have a big competitiveness problem, which is part of their fiscal problem? In the case of Spain and Ireland, the problem is that they have had a low rate of interest that is unsuitable for their own domestic rate of inflation, causing real interest rates to be negative. That caused everyone to borrow too much and the banks to lend too much, so they have had an overlending problem, in part caused by the fact that they are sharing an inappropriate currency. If they had their own currency, they could devalue when they had such a crisis.
Lord Davies of Stamford
I am getting signals, quite rightly so, from my Front Bench so I really must not respond to the substance of that because I shall be turning this into a debate—which we ought to have in this House on these important matters—on fiscal and monetary issues in the European Union at present. I hope that the Government take note of the obvious interest on their own Benches in having the opportunity to discuss this matter and exchange our various perspectives on it. I wanted to intervene really just to support my noble friend’s excellent amendment. If it is accepted by the House, it will get rid of a large amount—80 or possibly 90 per cent of the damage—that could be done by this Bill. If this amendment goes through, Clause 3(4) would then read:
“The significance condition is that the Act providing for the approval of the decision states that … the decision falls within section 4 only because of provision of the kind mentioned in subsection (1) of that section, and … the effect of that provision in relation to the United Kingdom is not significant”.
In other words, the only exemption from the need to have a referendum would be in relation to matters that were not significant for the United Kingdom. Surely, to accept this particular amendment is a cost-free concession on the part of the Government. I cannot believe that the Government actually want to provide for having a referendum on something that is not significant for the United Kingdom. Am I perhaps wrong about this?
We need to probe the Government’s logic a little here, because what an extraordinary thing it would be if the Government want to take through Parliament a Bill providing for the possibility of having referenda on issues that are not significant for the United Kingdom. The Government cannot turn around and use the argument that what is significant or not might be a subjective and difficult matter to determine at any one point, because they have already accepted in this Bill, as it stands, the need to make a distinction between significant and non-significant. That argument cannot be made. The only argument that can be made is that we need to provide for having referenda on something that is not significant, which does not make the slightest sense. I ask noble Lords to envisage a scenario in which we have a referendum in this country on something that everybody accepts is not significant for the United Kingdom. We ask the electorate to focus their mind on a difficult, technical and perhaps rather abstruse matter—maybe a whole package of such matters, which is what the Government have been suggesting recently; to take the time to master the relevant briefs or at least make up their minds on this matter; and to take time off from their work or from their leisure activities and go to the polls on something that they are told in advance is not significant for the United Kingdom.
European Union Bill
Debate between Lord Davies of Stamford and Lord Flight
Lord Davies of Stamford
My Lords, I support my noble friend’s amendment but let me first deal with the point that the noble Lord, Lord Waddington, has made. It is clear that any powers can be abused, and it is clear that any suggestion that powers should be changed or extended in any way should be the subject of lively debate among member states in the Council of Ministers, as has always been the case. Only when we are satisfied that something is in our national interest should we consent to any proposal from the Commission or anybody else. That is how the European Union has always been conducted and, I trust, always will be conducted. I do not think the fact that a power can always be abused is a reason for not providing for the possibility that we might need to adopt it or to grant it to the European Union.
As my noble friend said in introducing the amendment, the inspiration for this amendment is similar to that which led to the previous one. I rise to speak particularly on this amendment because it deals with the single market. That is an area where I always thought that there existed an all-party consensus—this was true until very recently—that a positive, what you might call forward, policy on the single market was in the interests of this country. Indeed, I remember a time when the Tory party took enormous pride in having created the single market under Lord Cockfield and Jacques Delors who, with the strong support of Margaret Thatcher, brought through those 300 directives and created a single market. When I entered the House of Commons as a Conservative, as the House knows, we all felt—I felt this, as did most of my Conservative colleagues—a great sense of pride that this was a great Conservative achievement. Now we have a situation in which the Tory-dominated coalition Government are trying to bring an end to this forward policy. When I say “forward policy” what I mean is an acceptance in principle that the best way we are likely to be able to achieve our national purposes in the single market area is by according strong regulation-making and enforcement powers to an objective central authority—in this case the European Commission but also the European Court of Justice.
The noble Lord, Lord Kerr, reminded us a few moments ago that in the 1980s among the Conservative achievements in this area was to successfully override the opposition of other member states to, and then to implement, new enforcement powers for the European Court of Justice, including the very memorable historic move forward at that time of introducing the concept of fines on member states. It is extraordinary that in the course of 20 years—this has been part of the agony of my political life—the Conservative Party has done a complete somersault on this.
In referring to the Conservative Party, I can anticipate the remarks that the noble Lord, Lord Wallace, might make when he sums up, following what he said on the previous amendment. I recognise that the Lib Dems are very uncomfortable with this process. As I know him well, I recognise that the noble Lord, Lord Wallace, will have played the most positive part he could in trying to prevent complete extremists and head-bangers setting out the agenda that was to be adopted by the coalition Government. Indeed, the Lib Dems saw off the threat of repatriation of powers, which has been a very strong demand by a great majority in the Conservative Party for far too many years. Of course, that is splendid. I understand what the noble Lord, Lord Wallace, is really saying to us: namely, that they tried their best and could not do any better and therefore they ended up with a compromise, a kind of stalemate, between Conservative Eurosceptic extremism and Lib Dem pragmatism, if you like. That is where we are.
I say to the noble Lord, Lord Wallace, that we all understand the dramas in his party and in the coalition but that is not a good basis for legislation. We should be trying to legislate as far as we possibly can on the basis of a dispassionate analysis of the country’s interests. I do not believe that the country’s interests have changed in the area of the single market at all since the 1980s when, as I say, the Conservative Party took the lead in creating what we now call the single market, and a fine achievement it was. Should we say that we have certain powers which should be used—that is correct and I quite agree with that—and that we should exclude the idea that any new powers may be needed? However, life is not like that. Life always presents you with new challenges, difficulties and unexpected problems that you cannot possibly anticipate.
I am not brilliant enough to anticipate what might happen but of course there could be financial scams and major problems requiring new legislation or regulation. Big threats could arise to competition in some areas which may show up the inadequacy of our present competition powers. Problems could arise in implementing the single market. It may be shown that the one reason why we have so far failed to implement the single market in the energy area is because our powers are inadequate and therefore it might be necessary to take more powers. I am not suggesting that we should take more powers and I am certainly not clever enough to anticipate in what hypothetical circumstances we might need them. I am simply saying that—I think that we are saying this on this side of the House generally—it would be very stupid to exclude ab initio the possibility that we might need to develop the portfolio of powers that we currently have to try to build up and nurture a successful single market and to assume that all the problems that we face exist now and have revealed themselves once and for all and that there will be no surprises in the future. That is not a realistic way of conducting the nation’s business; it is certainly not a way one would ever conduct a private business, of course not. One would know that what was needed, to use my noble friend’s term, was the flexibility to respond to the unexpected. That will never cease; as long as human history continues we shall always need to do that. And here we are depriving ourselves of that flexibility, let there be no doubt about it.
Of course the Eurosceptics on both sides of the Chamber will say that the Government will not have a referendum because it might be lost. Well, a referendum may be lost or gained but it is quite clear to me—I made this argument at Second Reading and I believe it firmly—that in most cases a Minister will be deterred from getting into the position where there might be even some legal doubt about whether an action or decision by him could trigger one. It would be the end of a Minister’s career to come back from Brussels to be told by his legal advisers a few days later that what he had agreed to would require a referendum. The Prime Minister would sack him on the spot. No Prime Minister wants a referendum suddenly landed on him.
Irrespective of what the British nation might feel or whether the great public expect to be asked by us to do all the homework, to read the documents, to come to a substantive decision on technical issues, the very fact that a referendum could be triggered under the regime the Government propose with this Bill will act as a total deterrent and a total freeze on any flexibility at all. So, from having led the way on the single market with an imaginative, forward-looking and enterprising approach, sadly after a generation we are now, substantially under the leadership of the party that more than any other in Europe should be given credit for the single market, producing a situation in which, by definition, we cannot be part of any change however sensible because, irrationally and substantively, a referendum is clearly a political impossibility. It is certainly an impossibility if it is on a technical matter which might be considered to be rather minor by the British electorate. As politicians in this House, we all know that is the truth.
That is what we are letting ourselves into if we pass this Bill, unless we do so with the kind of amendments which my noble friend has introduced to bring a little bit more reality and realism and a sense of the way the world is into its operation. I therefore wholeheartedly support my noble friend. I hope that, if this amendment is not pressed now, we shall get into serious business at Report stage and that we manage to change the Bill into a more sensible direction along the lines he has proposed.
Lord Flight
My Lords, it seems perhaps surprising but state aid is yet another area where powers granted to the EU have exceeded themselves. Noble Lords will have been aware that, in the recent Budget, the Government quite rightly wished to provide additional support for small companies and to widen the EIS to do that because the equity funding gap is up to £10 million. This has been limited because the state aid rules, which were rightly intended to stop unfair massive state subsidy of uncompetitive industries, have been used to decree that you fall foul if there are any sort of tax incentives to companies with more than 50 employees or those raising more than £2 million per annum. This ridiculous intrusion into the economic life of this country has been put in under the guise of state aid, so the Government have rightly said “We are going to go back and renegotiate this”. However, instead of being able to put in the financial support when it is needed—when the economy is on its back as a result of the last Government’s failures—we have to wait another year to try to negotiate to widen these issues.
I have some sympathy with what the noble Lord has said in principle but, when it comes to experience, the last thing I want to see is any more state aid powers.
Lord Davies of Stamford
I had thought to myself, “Dear oh dear”; when the noble Lord and I were colleagues in the Conservative Party a generation ago, we would have both been arguing against state aids on the basis that they were always distortionary, and the European Union was a wonderful way of getting away from the completely self-destructive bidding war that all nations are inclined to get into, in terms of providing some sort of subsidy or other for their industries on whatever political or other grounds or the fashionable economic doctrines that might be in vogue at the time.
However, I repeat my main point that we do not need to get into a discussion on the theory of state aids or their substantive costs or risks, because the assumption has always been—and the way that the issue has always worked has been—that European Union member states have held robust discussions between them on these matters. We have never signed up to anything that we did not agree to. All that I and Members on this side of the House want to achieve is for us to continue to be able, when we think that it is in the national interest, to go along with some agreement for new, extended or slightly modified powers. That is all. There is no suggestion that in advance we would necessarily agree to anything of that kind—that would be utterly unrealistic—but we need to maintain flexibility. The noble Lord is a very considerable and successful businessman, and in the conduct of his own business he would not adopt the policy he is now suggesting for the nation. You must never exclude the need to be able to respond to new problems as they arise. That is all we are asking for.
Lord Flight
I am sure that all noble Lords would agree with the basic reason for opposing state aid, as the noble Lord and I did some time ago. My point is simply that the state aid rules have already ended up being interpreted in a fashion that is manifestly not economically sensible. They are damaging the economic interests of this country and, not surprisingly, I would very much like there to be a check on the ability of state aid rules to be yet further misapplied.