UK-EU Relations
Lord Hannan of Kingsclere Excerpts(2 weeks, 4 days ago)
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Baroness Twycross (Lab)
We can split hairs around particular wording, but I am absolutely clear that the UK Government advocates for and supports UK fishing communities, while ensuring that we meet our shared international obligations. I stand by those words. That is the Government’s position.
Lord Hannan of Kingsclere (Con)
My Lords, I commend the noble Baroness for what she said both on the pan-Euro-Mediterranean customs deal and on the youth mobility scheme. She essentially said, “It’s not something we’re asking for but, if the other side wants it badly enough, we might be prepared to discuss things”. This seems a very sensible line to take in any negotiations. If they want to put something valuable on the table, such as lifting the checks in Northern Ireland, we should be open to discussions. Why does the Minister not take the same line on the defence agreement? As one of two nuclear powers, we are by far the largest contributor to the defence of Europe. When it comes to putting stuff on the table, I can see why the EU wants us involved, but how on earth have we got ourselves into the position of being the demandeurs here?
Baroness Twycross (Lab)
I am quite proud of the position we are taking on defence in Europe. I am unclear why I should apologise for it. I refer noble Lords to the very clear message from the Defence Secretary, John Healey—including to our ally Ukraine—on our firm determination to ensure that our country is safe and also that we stand with our allies elsewhere in Europe.
Economic Growth
Lord Hannan of Kingsclere Excerpts(1 month, 1 week ago)
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Lord Hannan of Kingsclere (Con)
My Lords, there is a group of Melanesian islands where supplies were dropped during the Second World War. When the war ended and the soldiers departed, a cult grew up on these islands. People thought that if they mimicked the behaviour of the soldiers who had been stationed there before 1945, the gods would start raining goods from the sky again, so they would light brands to show where the runways were and try and act like American soldiers, but, of course, the goodies did not come. That is what we literally mean by the phrase “cargo cult”.
A number of people, on all sides in politics and the media, seem to think that, if you keep going around saying “growth” and “investment”, and you wear pinstripe suits and spend time in City boardrooms, somehow growth will magically follow. But, of course, that is not how the world operates. Stimulating economic growth requires taking some difficult decisions. It is simple. It is not easy, but it is simple. The same formula works every time: you need free trade, light regulation and low spending.
But delivering those things is not so simple. Free trade should have been the easiest of the lot. When we reassumed control of our trade policy almost exactly five years ago to the day, we had the opportunity to raise our eyes to more distant horizons and rediscover our vocation as a global trading country. But, as became clear, not least in debates in this House, there was a terrific resistance even to doing trade deals with countries as friendly, as aligned to us and as similar to us in GDP as Australia and New Zealand. Although all sides use “trade”, like those Melanesian islanders, actually getting there when it means opening up our markets is altogether more challenging. Although I wish them every success, the Government will find that they have that same dynamic as they approach doing a trade deal with the United States. On paper it is easily done: USMCA standards are very similar to our CPTPP ones. In practice, doing a deal with Trump may be politically more challenging.
It is the same with deregulation. Everyone is in favour of deregulation; everyone talks about it. The Government have written to all the regulators and said, “What are you going to do?” Of course, the one answer that the regulators are not going to volunteer is, “We intend to do less”, “We intend to wind ourselves back”, or “We intend to dissolve ourselves altogether”. Warren Buffett used to say, “Don’t ask the barber whether you need a haircut”—I am not entirely sure what barbers and haircuts are, but I hear people talking about them. By the same token, it seems a strange thing to ask the regulators how to stimulate growth. What stimulates growth is having fewer regulators and less regulation. Again, that is easy to say, hard to deliver.
The toughest one, of course, is cuts in spending. My noble friend Lord Moynihan just last week published volume 2 of his book on how to achieve growth, where he shows with clear and pitiless statistical analysis that the key to growth is to get a larger private sector and a smaller state sector, and that the magic figure is around about a third. If you can get state-controlled spending to less than 33% of GDP, you are in a strong and growing economy. Of course, everyone will nod along again with that and, like the cargo cultists, they will say, “Yes, you know, we need a smaller, more efficient state, doing less but doing it better”. In practice, it is very difficult to get any meaningful cuts.
Both sides play games on this. On the right, people pretend that all manner of money can be got from foreign aid—which is this tiny sum in reality that is overspent again and again—and on the left there is something similar with wealth taxes. Both sides talk about waste and “cracking down on waste”, as though no one has ever thought of it or ever tried it before. The reality is that the vast increases in public spending have come in healthcare and in social security. Unless we are prepared to talk about restraining those budgets, we do not really mean it when we talk about cutting spending. In particular, if you drill down and ask, “Which bit of social security?”, it is pensions. I saw that even Vladimir Putin was not able to raise the pension age—it was the closest he ever came to falling from power—so I sympathise with any democratic Government trying to do it.
I will finish with a cheerful thought. Before we give up in horror and say, “It just can’t be done in a democracy”, or at least, “It can’t be done without a terrible 1976-style crisis”, almost all our problems in terms of the size of the state would be solved if we returned to the levels of state spending that we had in the early Blair years. I think there were a few Members opposite who were part of the Government then, and they will remember that it was perfectly comfortable—we were not living in some kind of Dickensian workshop. So, if we could just return to Blair spending levels, how difficult could that be?
Public Sector Productivity
Lord Hannan of Kingsclere Excerpts(4 months, 3 weeks ago)
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Lord Hannan of Kingsclere (Con)
My Lords, I am very grateful to my noble friend Lady Neville-Rolfe for introducing the debate and I am acutely conscious of the expertise and experience that others have brought to bear.
I will begin with a point raised by the noble Lord, Lord Patel, and the noble Baroness, Lady Wheatcroft, about the difficulty of measuring productivity. Of course, that is absolutely true, but as a rough guide for a ballpark figure I looked at what the OBR had to say. It produced a report in 2022, which found that in the private sector productivity was back to 1.6% above where it had been on the eve of the pandemic, but in the public sector it was still down by 7.4%. If we carry on losing productivity in the public sector at this rate, we will suffer a further 20% decline within a decade, which the Centre for Economics and Business Research says would be the equivalent of £73 billion per year of extra spending. Think for a second about that: £73 billion per year. Think of the rows we have in this Chamber about the relatively trivial sums involved in the winter fuel payments or VAT on school fees.
Why is that happening? There are structural reasons why there is greater productivity when there is a profit motive; I think we all accept that. But why is the gap widening? What has changed recently? I think my noble friend Lord Patten was exactly on the button. About a year after the pandemic, when everything was supposed to have got back to normal and when my right honourable friend Jacob Rees-Mogg was a Minister, he was presented with a fait accompli by his officials. They said that he absolutely had to sign the lease on a building for a government agency or an arm’s-length agency in central London. He said, “Why do they need to be in this expensive place?” and they said, “Oh it is absolutely vital, Minister. It is actually walking distance from here: let’s go and have a look”. Of course, he found that there was nobody there. Hence, he began the campaign of dropping his—I thought rather polite—calling cards saying, “Sorry you weren’t at work”, which of course created a furious backlash from the Civil Service trade unions. But there are jobs that require you to be there.
Like the noble Baroness, Lady Wheatcroft, I used to work in newspapers. In fact, for a while I worked for the noble Baroness. I am sure she will agree that there were jobs, even then, long before the pandemic, that obviously could have been done from home. If you are doing the sudoku or writing the pets column or something, there is absolutely no reason to come into the office. It struck me even 20 years ago as slightly wasteful that people were doing that. But, equally, there were an awful lot of jobs, particularly the editorial jobs, where you really had to be there talking to people. How many of the civil servants absent from their desks are in the second category? I think there are rather a lot.
I think we can all see the impact on productivity. I was certainly struck by it when I walked around the cavernous, echoing and rather beautiful corridors of the Old Admiralty Building when I was involved with the Department for Business and Trade. It is extraordinary how immediately the impact is felt of people not being there for meetings, not talking about things and not sparking ideas off each other in the fallow times.
The point I really want to make—I will make it very briefly in deference to the Minister’s throat—is that this is a choice. There are problems the Government cannot avoid, such as the ageing population and the changing ratio of workers to pensioners, but this is a choice. You can give large pay rises to public sector workers, but you are then left with less money to grow the rest of the economy. What you cannot do is keep giving these pay rises at the same time as increasing their numbers.
There were two very large increases in the Civil Service that both had a temporary and contingent cause. One was the repatriations of powers after Brexit, which required people to do them at home because they were no longer being done in Brussels. The other was the pandemic, which required more people to be brought in for testing and for vaccination and so on. Both of those bumps are now in the rear-view mirror. Under the plans of the previous Government, numbers were supposed to fall back towards where they had been and there was a scheduled loss of 66,000 personnel. That was quietly reversed as almost the first thing the new Government did.
There was a time when the arguments were about economics and taking from the haves to give to the have-nots. What we cannot have is simply an argument about taking from the private sector to give to the public. Private sector workers already have worse pension deals. They are already required to be in the office more and they already work longer hours. We cannot keep squeezing the revenue-generating bits of the economy to fund increases in the revenue-consuming bit.