International Banking: Payments
Lord Hannay of Chiswick Excerpts(3 weeks, 3 days ago)
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Lord Livermore (Lab)
I am grateful to the noble Lord for the points that he raises, and I agree that, of course, we should take these developments seriously. I will not comment on the specific proposals announced by the BRICS countries that he refers to; I would not want to speculate as to what systems may or may not come into common usage. The Government believe very much that the current international model for the financial system works effectively, and we will continue to work with our international partners to maintain an interconnected financial and economic system. On the noble Lord’s question on the effectiveness of sanctions, we continue to believe that economic sanctions are an important and effective tool, and we will continue to utilise those sanctions where necessary. On the potential to undermine them, we will pursue any necessary steps with our allies to maintain the interconnected system and reduce opportunities for the circumvention or evasion of international sanctions.
Lord Hannay of Chiswick (CB)
My Lords, does the Minister agree that if the President-elect of the United States goes ahead with some of the more extreme versions of his tariff ideas, it is likely to add a momentum and an impetus to the attempts by the BRICS to break away from the financial system that currently exists?
Lord Livermore (Lab)
I am grateful to the noble Lord for his question. On the potential move by the forthcoming Trump Administration, the UK will continue to work closely with the US on a range of security issues, including sanctions, to advance our shared priorities. I do not think it would be appropriate for me to comment on the Trump Administration’s future policies. In terms of actions by the BRICS, we obviously respect each country’s right to choose its own path and partners, but we will continue to collaborate with our international colleagues around the globe, including BRICS members, in forums such as the UN and G20, to build an open, stable and prosperous world.
Home Office: ODA-funded Support
Lord Hannay of Chiswick Excerpts(1 year, 3 months ago)
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Baroness Penn (Con)
I reassure the noble Lord that all spending is done in line with DAC rules, and I can report back to him on the specific point about that spending. However, when it comes to looking at accommodation solutions for asylum seekers, we are driven by looking at what represents good value for money for the taxpayer. Accommodating asylum seekers in hotels is absolutely not good value for money, and we will continue to look at different solutions to help to accommodate those to whom we have an obligation.
Lord Hannay of Chiswick (CB)
My Lords, could the Minister perhaps confirm whether, under the international rules about using ODA for asylum seekers and, above all, Ukrainians—to whom the Government’s welcome was very good—that runs for only one year? Are the Government now cutting off the mulcting of the aid budget for this purpose for those Ukrainians who have been here for more than a year?
Baroness Penn (Con)
The noble Lord is right that ODA-eligible spending runs for the first year in country. Of course, the programmes have been designed to deliver support that is appropriate to those moving to this country and where there are costs beyond that year, they are met from elsewhere in government departments’ budgets.
EU Budget Surcharge
Lord Hannay of Chiswick Excerpts(10 years, 1 month ago)
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Lord Deighton
My Lords, I am afraid that I can only repeat the position. It was far from clear that the rebate would be applied. That is the point at issue between us. We can continue to have that discussion, but it was far from clear that the rebate would be applied. That is what was accomplished in the last two weeks. The other things that have been accomplished are a deferment of the payment and that there will be no interest on those payments. We have also changed the rules so that we cannot get ambushed like this again.
Lord Hannay of Chiswick (CB)
My Lords, would the Minister accept a welcome for the elegant and timely decisions reached in the Council last Friday, while recognising that the clarifications relate to the timing of payments, not to their scale? Will he also recognise that such technical adjustments, as I think the Chancellor said in his Statement, are an endemic part of the EU budget process, from which the UK sometimes benefits and sometimes loses? In future, it might be better to handle it all a little more calmly.
Lord Deighton
I thank the noble Lord for pointing out that these are, in practice, technical adjustments. Of course, it was a very large technical adjustment delivered with very short notice, which is why the Prime Minister reacted in the way that he did, and why, as part of the negotiations over the past couple of weeks, we have determined that the process will not work quite that way again. In summary, I agree with the noble Lord that there is a better way to handle these things.
EU: UK Contribution
Lord Hannay of Chiswick Excerpts(11 years, 1 month ago)
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Lord Newby
My Lords, the first thing that we sought to do on the European budget was to ensure that it was not increasing in real terms. As the noble Lord knows, the agreement made by the Prime Minister at the European Council in February will result in €80 billion less expenditure over the next budgetary period than the Commission proposed. The first step in getting the budget dealt with appropriately was to cap it.
Lord Hannay of Chiswick (CB)
Could the Minister say how many nuclear power stations the Government could have built with the rebates that we have received since 1975 under Mrs Thatcher’s arrangements?
EU: UK Membership
Lord Hannay of Chiswick Excerpts(11 years, 1 month ago)
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Lord Hannay of Chiswick (CB)
My Lords, at a time when many are expressing doubts about or are ignorant of the benefits to Britain resulting from its membership of the EU, and others are campaigning with zeal and hyperbole for us to withdraw, it obviously makes good sense for this House to debate the economic impact of our membership even if the economic arguments can never be the whole story—as, indeed, they were not when the British people voted in an “in or out” referendum in 1975. In that context, I warmly welcome the initiative by the noble Lord, Lord Shipley—and, indeed, his introductory speech—to hold this debate and pay tribute to the way in which the Liberal Democrat party has consistently promoted and supported our membership.
Debates in your Lordships’ House provide neither the time nor the appropriate occasion to marshal the whole econometric case relating to the economic impact of our membership. Those in search of that could do worse than study the Regent’s University report on the costs, benefits and options for the UK in Europe, to which the noble Lord, Lord Shipley, also referred and which was launched earlier this week by Mr Peter Sutherland. Even that sort of detailed study of the subject matter of our debate today suffers from one major weakness: it is not actually possible to calculate with precision where Britain’s economy would stand today if we had not joined the European Community in 1973, and where it would be likely to stand were we to withdraw at some point in the future. That is why, personally, I treat with some scepticism the precisely quantified predictions of both supporters and opponents of membership as to its impact. These have to be qualitative judgment calls if they are not to be easily refuted.
Clearly, one has to start with trade. We saw the removal of myriad barriers that used to impede trade between this country and the rest of Europe before we joined the customs union, and then we took the lead in shaping the single market. Imperfect though that market may be, what we now have has led to a huge expansion in mutual trade to the benefit of our economic actors, in both the goods and services sectors, and of our consumers. Outside the European Union, many of those benefits would not have occurred or would be at risk if we were to leave, as we ceased to have any control over the shaping of the regulations governing our trade—the position in which Norway, which has a smaller and much less diversified economy than ours, now finds itself.
The impact on our trade outside Europe has also been important. As a member of the largest trading bloc in the world, which negotiates as a single unit on trade policy matters, we have benefited both from the protection that that provides against discriminatory treatment by third countries and the leverage that it gives in prising open the markets of others. If noble Lords doubt that, they should talk to the Scotch Whisky Association. Those who say that we would be better placed if we promoted our exports outside the European Union need to explain why the Germans, who have been in the Union for longer than us, have fared so much better in their trade with China than we have. The Mayor of London, trailing his Eurosceptic robe through Beijing, should provide some specifics about why he thinks we would do better if we had to negotiate trade policy with the Chinese on our own. Why is it that Canada, Japan, the US and India are all negotiating freer trade deals with the European Union? That is where the benefit lies for them, and where it lies for the members of the Union.
On investment, this country has often lagged behind, and still does, in the investment league tables among developed countries. However, where would we be if we had not consistently been either first or second among the economies that attract overseas investment into Europe? How much of that investment would come here—and would come in the future, if we were unwise enough to leave—if we were not able to provide a base within the European Union and a strong voice in its councils? A lot of British jobs rely on the answers to those questions, even if they cannot be precisely quantified.
In this country, the European budget is usually regarded as a clear minus in any calculation of economic impact. That is understandable, as we are and will remain a net contributor to the budget, albeit mitigated by the substantial rebate won by Lady Thatcher. However, the programmes funded by that budget in agriculture, in regional and sectional support, and in scientific and industrial research are of real value to important parts of our economy, and could not be easily or straightforwardly replaced by national spending. Try asking any of Britain’s leading research-based universities how they would fare if European budget-funded research was not available to them, and you would get a pretty clear answer.
Almost invariably, policymakers overlook the unintended consequences of their policy decisions. Occasionally those unintended consequences are benign, but more often they are negative, often seriously so. Given the degree of integration of the British economy with those of our European partners that has resulted from 40 years of membership, I suspect that any active withdrawal would fall fair and square into that latter category. Let us hope that debates such as the current one will at least put us on our guard as to the risks we would run if we were ever so foolish as to venture down that road.
Lord Newby
I took it as a compliment.
I first met my noble friend 32 years ago, when I went to work in the Whips Office of the SDP. Like my noble friend Lady Falkner, I was one of the workers and he was a grandee. Therefore, it gives me particular pleasure now to be his Whip and to make sure that he is in every respect a model Member of your Lordships’ House—as I am sure he will be.
The Government are clear that membership of the EU is in the UK’s interest. The EU helps to advance UK national interests, influence and values. It provides freedom for British people to live, work, study and retire in Europe, and supports UK jobs, prosperity and growth through increased trade, both inside the single market and through free trade agreements.
The principal economic benefits of our membership of the European Union can be categorised under the headings of trade through our access to the single market, encouraging investment and promoting competition, thus driving down prices for British consumers. I shall deal with each of those three principal areas in turn.
The UK’s EU membership supports jobs, prosperity and growth in this country through increased trade. Our membership gives UK companies access to the world’s largest single market, with a GDP of about £11 trillion and 500 million consumers, without customs or tariffs. Free trade agreements through the EU lower trade barriers and increase access to markets. If the EU completed all trade deals currently under negotiation, EU GDP could be increased by about £275 billion. In particular, independent analysis commissioned by the Government has found that the net benefits to the UK of the EU-US free trade agreement currently under negotiation could add up to 0.35% to the UK’s economy. I absolutely agree with my noble friend Lord Watson that our ability to conclude such free trade agreements in a world where the WTO is a declining influence is immeasurably enhanced by being part of the EU. The idea that you can go into such negotiations with the same strength as a single country is surely completely mistaken.
Europe remains the main destination for UK exporters, with just over 50% of our goods exports destined for Europe in 2012. That has real benefits for UK businesses: 80% of businesses believe that the single market delivers concrete benefits to them and the Department for Business, Innovation and Skills forecasts that the EU will remain the UK’s most important market for at least the next 10 to 20 years. That strong trade relationship due to our membership delivers clear employment benefits, with one in 10 UK jobs to some degree dependent on trade with the EU.
The CBI study and others which have been quoted show truly remarkable levels of support for continuing EU membership. Underneath the fact that 80% of companies, broadly speaking, say that they wish us to remain in the EU, it is interesting that 47%—almost half—said that without EU membership, they believe that it would be more difficult to hire skilled workers. It is not just access to the market but access to workers.
I say two things about trading elsewhere to the noble Baroness, Lady Noakes. First, as several noble Lords have said, there is no trade-off between trading to the EU and to the rest of the world. The more a company trades in one part of the world, the more likely it is to be good at trading somewhere else. Secondly, we want many more companies to start trading, and the logical place for them to start, particularly if they are small, is with the EU. For a small company thinking about foreign trade, the prospect of doing it in Brazil, China and India is almost a bankrupting prospect. You do not have the time. You do not have the money. You do not have the knowledge to do it. The only logical place to start is the EU. That will continue to be the case.
Secondly, being part of the single market helps UK businesses to attract inward investment from both inside and outside Europe, enabling them to operate on a more efficient and global scale. The UK is the top destination in Europe for inward investment, attracting 21% of all foreign direct investment projects in Europe last year.
Our access to the single market is a key motivation for foreign investment in the UK economy, with half of all foreign investors in 2010 citing access to the single market, among other factors, as a key reason for investing in the UK. A number of noble Lords have dwelt on this point. The noble Lord, Lord Shipley, made the point that Nissan, which provides 6,000 jobs in his region, is there because of our EU membership. If we were to leave, the number of jobs would shrink.
The City of London Corporation, in the representation made to us which the noble Lord quoted from, said that many EU European banks locate in London to access the markets in which London has accrued specialities. Many non-UK EU firms choose to list on the London Stock Exchange in order to access the capital on offer there, directly channelling capital to European businesses from London. If we were not members of the EU, the idea that the City would be able to continue sailing serenely along with no threat from competitor centres in the EU seems implausible.
The single market also encourages competition and innovation across the EU, bringing down prices for consumers and increasing productivity in the UK. We are clear, however, that the EU could do better to become more competitive to deliver further economic benefits. That is in the interests not just of the UK but of all member states. The EU must become more competitive if we are to continue to improve the standard of living which Europeans currently enjoy, firstly by completing the single market in services, particularly in the digital and energy sectors. I give the noble Lord, Lord Liddle, an absolute assurance that the Government are committed to promoting the single market. It has been a centrepiece of our engagement with the EU. When my colleague in another place, Ed Davey, was at BIS he set up a group of like-minded countries, which eventually involved a majority of EU member states, to promote the single market in an effective way. It shows, incidentally, how the UK can take a lead in the EU even though we are not in the eurozone area. The completion of the single market is a central goal of the Government.
The second important role in making the EU more competitive revolves around agreeing the international trade agreements to which I have already referred. Finally, we are committed to cutting red tape to allow the engines of growth in the eurozone and across the EU the space that they need to flourish.
Completing the single market by removing all barriers to trade is estimated to increase UK GDP by about 7% and prices would fall by approximately 5% due to increased competition. In this tough economic climate, this would obviously provide a real boost if we could achieve it for UK businesses and consumers.
On the international free trade agreements with both advanced and emerging economies, progress continues to be made. The landmark deal reached between the EU and Canada, to which my noble friends Lord Maclennan and Lord Watson of Richmond referred, will benefit the UK economy and businesses by over £1.3 billion a year. As I have already said, the potential deal with the US would dwarf that.
Cutting red tape from the EU is crucial to allow small businesses to start up and then expand. Last week, six senior business leaders presented a report to the Prime Minister on reducing the burden of EU regulation; the noble Lord, Lord Liddle, referred to this. Their findings are based on research carried out across Europe. They have found that there is potential to save EU businesses billions of pounds by improving the regulatory environment. Their aim is not to abandon all regulation; they want to reduce the burden on small and medium-sized firms who create the vast majority of new jobs in Europe, and employ two-thirds of the workforce. The Government support their views, and are committed to ensuring that EU regulation does not hold UK businesses back.
The noble Lord, Lord Liddle, referred to a number of proposals in this report. The one which seems to be a classic of the kind of change we need, and which should be achievable, is the proposal to press for an urgent increase in the public procurement thresholds which significantly hold back small businesses in bidding for public sector work.
As the noble Lord, Lord Shipley, pointed out, these views are increasingly being accepted across the EU. The days when greater harmonisation was almost seen as an article of faith by member states are now over. We are in a strong position to take a lead in making EU regulation proportionate and growth promoting.
The noble Lord, Lord Liddle, asked whether the Government were speaking with one voice in terms of the single market and in terms of the report to which he and I have both referred. I can assure the noble Lord that the Government are speaking with one voice. He described the Government’s attitude as an assault on social Europe. This is a grotesque caricature of both the Government’s position and the proposals in the report. It does not reflect the Government’s attitude in any respect.
One question that is commonly asked or implied is whether the UK, given its semi-detached nature, is able to make progress with the kind of reform agenda to which I have been referring. We believe that we are and that we can. For example, we have secured the first ever exemption of micro-businesses from new EU proposals from the start of this year. We have also secured agreement on a single European patent after 23 years of EU negotiation, with the new patent court based in London for key pharmaceutical and life sciences sectors. This will be an important engine of growth for the UK’s R&D sector.
We have persuaded the European Commission to review the body of EU legislation to identify existing obligations from which micro-businesses could be exempted. Finally, we have delivered the first ever real-terms cut in the EU’s seven-year budget while protecting the UK’s rebate.
We had an interesting discussion, principally between the noble Baroness, Baroness Noakes, and the noble Lord, Lord Desai, about—
Lord Hannay of Chiswick
I know that time is short, but would the noble Lord not agree that the word “semi-detached” is an extremely unfortunate one to apply to the Government’s policy? We are talking about instances of variable geometry which have existed in the European Union since the 1980s and which are still continuing to develop. Would it not be better to expunge the word “semi-detached”?
Lord Newby
My Lords, I use the word “semi-detached” because that is in the common parlance. I do not believe that it is an accurate reflection of the approach that the Government are taking. It is only reasonable to deal with the criticism of the Government head on, by explaining that our current position enables us to exert influence and to make significant positive progress.
I was referring to the interchange between the noble Baroness, Lady Noakes, and the noble Lord, Lord Desai, about the quantitative costs of EU membership. The noble Lord, Lord Desai, sensibly in my view, suggested that this was an extremely difficult area, not least because it is impossible to state a compelling counterfactual. Many of the rules and regulations against which costs are attached would almost certainly be required in some form or another were we not members of the EU. To count potential costs of such regulations on the assumption that they would not exist if we were out seems, again, to be pretty implausible. Equally, as other noble Lords have said, the suggestion that we could get a better deal from Norway and Switzerland if we were out seems not to be borne out by any logic. Given the circumstances of a divorce, which would be almost certainly politically pretty unpleasant, it is difficult to see how we would find ourselves in such a better position.
The noble Baroness, Lady Donaghy, talked about the role of national parliaments and the importance of increasing that role. The Government strongly agree with that. We are working with EU partners to increase the role of national parliaments. We welcome moves by both Houses to use the tools that they currently have to hold EU decision-makers to account more effectively. We want to consider possibly extending the scope of the “yellow card” system by introducing a red card. We absolutely agree that getting greater national engagement with this Parliament is strongly to be recommended. In saying that, I of course commend the work that your Lordships’ House already does through its European Union Committee and its sub-committee.
The noble Lord, Lord Giddens, asked me a specific question about the debate on the EU and how to promote it within the UK. Apart from the normal business, as it were, of making major speeches on the subject, which both the Prime Minister and Deputy Prime Minister have done in recent months, the Government have initiated a balance of competences review that seeks to engage with a wide range of people—not just think tanks, academics, businesses and Parliament but also the public—to produce as far as we can an analysis of the effect and effectiveness of the current powers and competences of the EU, with a view to deepening the public understanding of the nature of EU membership and reform. This is a difficult business, as the noble Lord will be aware, because we are doing it against the background of a media that find it literally impossible to treat a story about the EU on its merits. Still, the balance of competences review is a significant process and I encourage all noble Lords with interests in some of these areas to engage with it.
A number of noble Lords, such as the noble Lord, Lord Haskel, mentioned the European Space Agency. This is, as it were, a classic example of where working together within the EU serves our interest, and where trying to do it on our own would almost certainly have ceased because we simply do not have the resources to do so. As we look across the piece, we find many similar examples, as many noble Lords have exemplified in their speeches today.
To conclude, the Government believe that membership of the European Union is in our national interest and that there are significant economic benefits of our membership, from the single market through to trade, investment and competition. We are advancing and protecting the UK’s national interest in the European Union and will continue to do so, ensuring that our voice is heard and our interests are protected in order to promote growth and prosperity, which is the Government’s central purpose.
Tobacco: Smuggling
Lord Hannay of Chiswick Excerpts(11 years, 7 months ago)
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Lord Newby
My Lords, some of the additional effort that I have been talking about is being deployed in that area. The Irish tax rate on tobacco has increased recently, so the differential is less. But there is also an issue that is currently being looked at by the Northern Ireland Affairs Committee, which is relevant here, namely that the penalties for tobacco smuggling are significantly less than those for drug smuggling. There is a discussion about whether the sentencing guidelines for tobacco smuggling should now be tightened to move them more closely into line with drug smuggling.
Lord Hannay of Chiswick
My Lords, does the Minister recognise that this crime is, almost by definition, an international one, handled very often by international networks? Is he satisfied, and are the Government satisfied, that they are making full use of the machinery of Europol and OLAF in the European Union, and all the other structures that exist, for getting a genuine international effort to bear down on this crime?
Lord Newby
Yes, my Lords, I am. The co-operation on Customs and Excise matters is long developed, and a lot of effort has gone into it over the years. Noble Lords may be as surprised as I was to know that we have deployed staff covering between 60 and 70 countries and looking specifically at tobacco smuggling. They are working very closely with their opposite numbers in the countries in which they work.
European Union Committee: Multiannual Financial Framework
Lord Hannay of Chiswick Excerpts(12 years, 6 months ago)
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Lord Hannay of Chiswick
My Lords, so far the negotiations over the European Union’s multiannual financial framework for the period after 2013 have been pursued in what can described only as a pretty desultory manner. However, that period of treading water is now necessarily coming to an end as the deadline to complete negotiations gets nearer. That means that the report that we are debating today and the Government’s response to it are particularly timely. The challenges ahead are formidable and the timing of the denouement of these negotiations could hardly be worse, as the eurozone crisis comes to a head.
The new framework will need to be fully consistent with the objectives of fiscal consolidation to which the member states have collectively subscribed, while seeking to shift EU spending towards value-added programmes that will contribute to an overall European growth strategy such as is likely to be endorsed at next week’s meeting of the European Council. The tensions between these two sets of objectives are pretty obvious and we already see them being played out in the much larger context of individual member states’ spending plans and priorities. Total concentration on one of these objectives at the expense of the other will lead only to deadlock at the EU level and will be neither politically nor economically viable.
Following the very welcome introduction given by our chairman, the noble Lord, Lord Boswell, I will concentrate the main body of my remarks on the proposals for the EU’s future expenditure in the fields of justice and home affairs—it is dealt with in a section of our report that was contributed by the sub-committee that I chaired—before making a few more general comments. On JHA spending, two salient points stand out. Here, the noble Lord, Lord Bowness, and I speak across a divide that is not a real divide. The first is that it is a small proportion of overall EU spending, some 0.9% of the total, if one takes the figures from the 2012 budget, the same 0.9% if one uses the figures in the Commission’s 2013 budget, which we all agree are excessive, and yet again some 0.9% if one follows the Commission’s proposals for the next framework period. It is not even faintly comparable in any way with the much larger blocks of spending on agriculture, which the noble Lord, Lord Carter, has spoken about, and the structural funds.
The second salient point is that JHA spending has nevertheless been rising pretty rapidly in recent years—from €354 million in 2007 to €1.4 billion in the 2012 budget. However, at least in the view of my committee, this rise is attributable in large part not to slack control but rather to decisions by member states faced by international challenges—such as drug trafficking, serious organised crime, cybercrime and illegal immigration—to do much more collectively than in the past through EU instruments and institutions to combat these challenges. This has led to the establishment of such bodies as Europol and FRONTEX. The strengthening of the latter was identified in the Government’s 2010 national security strategy as one of our national priorities. Any reduction in real terms to JHA spending post 2013 would cut into activities that relate to our national security. For that reason, we support the application to the JHA chapter of the overall guideline that the Government have agreed with a number of like-minded member states; namely, that the whole of post-2013 spending remains steady in real terms. However, we would not support a freeze in nominal terms—in effect, a quite sharp reduction—which has, at times, appeared to be the Government’s objective. It would be helpful if the Minister could confirm that it is the overall guideline of a post-2013 freeze in real terms that will be our national objective both generally and so far as JHA spending is concerned.
There are also some more detailed concerns, on one of which we have conducted several rounds of correspondence with the Home Office. It relates to the Commission’s intention to propose the establishment of a cybercrime centre at Europol. The committee and the Government are at one in supporting this proposal, which represents a welcome shift in the Commission’s thinking away from any idea of setting up a new and separate agency, but we believe that the Home Office’s position that a new cybercrime centre at Europol should be financed within Europol’s existing budget is neither viable nor negotiable. Will the Minister say which part of Europol’s existing workload, all of which appears to be of real value to this country, we propose should be cut? In any case, it surely does not make sense to take such a Procrustean approach to individual budget lines. Should we not be working to get more resources for a high priority, such as Europol and a cybercrime centre, from other parts of the budget? That has, after all, been the approach of successive Governments over many years. Going away from it now is only too likely to alienate the other like-minded member states with which we need to work in harmony if we are to get a good outcome. Perhaps the Minister could have another look at this matter. I do not ask for a response on such a detailed matter, but I would be grateful if he would take another look at it.
Turning back to more general views, I shall mention three: the need to work closely with a group of like-minded states that support a freeze in real terms; the duration of the new framework; and the rebate. No doubt there will be tensions within the group of like-minded states about the detailed application of the real-terms freeze. Some will want more of this and less of that than we do. The attitude of the new French Government will also be important and could be problematic, particularly on matters relating to agriculture, but it is important that we approach our dealings with these member states with which we have agreed a broad guideline in a spirit of give and take and with a willingness to compromise, otherwise we will soon enough find that the unity of the group will dissolve, and if that happens we will be a good deal less likely to secure our negotiating objectives.
On the question of the duration of the post-2013 framework, I merely echo the points made by the noble Lords, Lord Boswell and Lord Maclennan. The Select Committee has consistently opposed a seven-year period or even—as the Commission suggested one year—a 10-year period and expressed a clear preference for a five-year period, which is the actual treaty obligation. We took that view when the last framework was negotiated. If we had been heeded then, we might be in a better position now. However, we were not. The arguments for a five-year period seem to us even stronger now than before. No member state would dream at this stage and conjuncture of settling expenditure trends so far ahead as seven years; after all, our own Government do not go beyond three years. Nor would it be likely to fix a duration of the mandate to be so different from that of the codecider, which, in the EU’s case, is the European Parliament. I hope the Government would see the logic of a five-year settlement and move in that direction if others favour it.
Finally, there is the rebate. No doubt we shall find ourselves on our own on this issue, as we always do. This is, unfortunately, a zero-sum game and there is nothing we can do to change that. However, in defending the continuance of the rebate as a residual, to be based on actual budget outcomes—on which the committee’s report gives the Government full support—we need to put forward as persuasive a case as we can. There are not many signs of that being so at present. The fact that the Commission has put forward a lump-sum rebate approach would seem to demonstrate that it has forgotten the lessons of the period between 1980 and 1984, when such an approach was tried, with results that can only be described as aberrant. The fact that the Commission’s director-general for the budget could trot out to our committee the old chestnut about the rebate representing a “juste retour” approach, and argue that it does not reflect the greater relative prosperity of the UK and the EU of today compared with that of 1984, would indicate that he is lamentably ignorant of the extent to which the UK’s net contribution after the rebate has increased in recent years.
All this points to an urgent need to explain to all concerned the realities of the situation and the deficiencies of any ex-ante, lump-sum approach. The Minister knows very well that we are giving him full support on this issue. However, we have to be a bit more persuasive and take these arguments seriously rather than simply say: “It needs unanimity to change it, so get lost”. That may be the underlying reality of the situation, but if we wish to keep our alliance together, we need to be a bit fuller in our explanations of why we believe it to be justified.
As a final point, no Government have an easy hand to play in these complex but important negotiations, least of all our own Government. The unanimity requirement for deciding on a multiannual financial framework provides us with considerable leverage but is also a temptation to an unreasonably rigid approach. If we are to hold together the strong alliance the Prime Minister has constructed around a fiscally responsible outcome, and avoid undermining the EU budget’s contribution to any EU-wide growth strategy that is agreed next week, we will need to negotiate with flexibility as well as determination.
EU: Economic and Financial Issues
Lord Hannay of Chiswick Excerpts(12 years, 9 months ago)
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Lord Sassoon
I believe that the effect of UK stamp duty on jobs and growth is negligible. The European Commission conducted its own assessment of the effect of the financial transaction tax, which is what I think is relevant, and the numbers that have been produced by others indicate the range of negative impacts. We think that it makes no sense to introduce a financial transaction tax on the basis of Europe going it alone without the rest of the world being there.
Lord Hannay of Chiswick
My Lords, I am delighted that the Minister has tired of the Kabuki play in which he and I have been indulging for some weeks, and I will not continue that now—
Lord Hannay of Chiswick
That seems to be popular in an unusual quarter of the House. Can the Minister perhaps tell us how, the previous strategy having failed on 9 December, the Government will set about protecting Britain’s national interests in the area of financial regulation in the current situation in which those proposals are as dead as a dodo?
Lord Sassoon
My Lords, the strategy did not fail on 8 and 9 December. We did not sign up to a treaty which it would have been wholly wrong for the UK to sign up to on the terms that were offered. What is happening now and is very positive is that we are working with a significant number of like-minded countries to drive forward the growth agenda. My right honourable friend the Prime Minister was one of 12 Heads of Government who signed up to a letter very much led by us. We have regular meetings with 16 like-minded countries to define and drive forward the pro-growth agenda.
EU: Fiscal Compact Treaty
Lord Hannay of Chiswick Excerpts(12 years, 10 months ago)
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Lord Sassoon
My Lords, it continues to be the Government’s wish that the eurozone holds together and makes the arrangements, some of which I outlined in my previous answer. As I have said in answer to previous questions from the noble Lord, Lord Barnett, the Government take all precautionary measures and look at all scenarios that there may be as this still very severe situation continues to unfold.
Lord Hannay of Chiswick
Will the Minister have a shot at the question that I have given to two of his colleagues, which they have failed to answer so far, and state what objections the British Government have for the text of the intergovernmental agreement that will be signed at the end of this month?
Lord Sassoon
My Lords, I think that my noble friends Lord Howell and Lord Strathclyde have given very good answers to that question in the past and there is nothing I need to add.
Euro
Lord Hannay of Chiswick Excerpts(13 years, 1 month ago)
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Lord Hannay of Chiswick
My Lords, would the Minister be so good as to give the noble Lord, Lord Liddle, a reply to the question about the euro-plus pact? It may be that the name of this pact is unfortunate, but it is supported by a number of countries which are not in the eurozone, and its objectives relate very closely to our most important objective, which is to further the single market. Would he not agree that the priority now is not drawing up long wish lists for repatriation but working out how we are going to keep our position and keep the integrity of the single market?
Lord Sassoon
As the noble Lord, Lord Hannay, says, there are many things up for consideration and we need to consider the future architecture in the round and decide where it is in the best interests of the UK to move forward on all those issues. It would be too early to pick out one item this morning.