Queen’s Speech

Lord Higgins Excerpts

Monday 13th May 2013 Lords Chamber

[Lord Higgins]

My Lords, I certainly agree with the noble Lord who has just spoken—we have heard an outstanding maiden speech from the noble Baroness, Lady Lane-Fox of Soho. However, I should also add a word of warning: competition is increasing from the younger generation. I discovered last weekend that my eight year-old grandson has created his own fully operational website. An interesting section at the end states that no harm has been caused to animals in the creation of the website, which indicates a correct order of priorities.

I welcome various aspects of the gracious Speech, particularly the action that is proposed to be taken on asbestos-related cancer. That matter has been raised previously in your Lordships’ House but without success. I am glad that proposals are now in place to deal with it. Other than that, I think that the gracious Speech is regarded as being somewhat thin, and there is a tendency to concentrate on what has been left out rather than what has been put in, particularly at the other end of the building. None the less, there is no doubt that the central part, as far as economic management is concerned, is embodied in the paragraph that states:

“My Ministers will continue to prioritise measures that reduce the deficit, ensuring interest rates are kept low for home owners and businesses”.

I strongly support the line that the Chancellor of the Exchequer has taken on this. However, I am somewhat concerned by the assertion, which was repeated by my noble friend on the Front Bench this afternoon, that we have reduced the deficit by a third. I do not think that that is the right way to put it. One should say that we are still increasing borrowing at two-thirds the appalling rate set by the previous Government. I do not believe that this can go on. It is crucial that we find a means of reducing that deficit, as stated in the gracious Speech. I said right at the beginning of the formation of the coalition how difficult that would be. We are still not the least bit clear where the Opposition stand. Mr Balls still seems to be saying that the deficit has been cut too soon and too much. I do not believe that either of those assertions is valid.

However, the policy is now being reappraised. An IMF team is making its usual annual visit to the UK. The press seems to be indicating that the IMF’s support for the Chancellor’s policy is weakening. I believe that that is wrong. I very much hope that the IMF will continue to sustain his efforts to reduce the deficit and ensure that our position is sustained internationally. Various people have argued against the stance adopted by the Chancellor, as we have heard from the opposition Front Bench today. However, one thing is absolutely clear: the rating agencies are not reducing our rating because we are cutting the deficit too much but because we are not cutting it enough. That is an important point to take into account.

At the same time, we have to relate this overall problem to economic management. Demand management seems to have disappeared totally from discussion. It is very important, however, because if we find ourselves in a situation—as we are—where fiscal stimulus is not possible, we must rely on monetary measures. To that extent, I very much welcome the action that has been taken on quantitative easing. It is, of course, true that this is having a serious effect on pension funds, as was pointed out by the opposition Front Bench. The time has probably come to reappraise whether achieving quantitative easing by working through the gilts market is the right way to do it—that is, the rather ludicrous situation whereby the Bank of England purchases the gilts and then pays interest to the Chancellor. That is rather silly. We should consider other ways of doing this as we will never want to reissue the debt which has been purchased. If we need to do that to control inflationary pressures later on, that can be done by issuing new gilts, which are likely to be of a better form and duration than those which have been purchased. I suggest to my noble friend on the Front Bench that we need to do some serious work on that matter.

The article by my noble friend Lord Lawson was very helpful in as much as it made one think afresh about Europe. I have to confess that for many years I have said to people that there is no question whatever of our withdrawing from Europe. I believe that the time has come when we need to reassess that. Indeed, the Prime Minister has indicated that that is the case. The timetable that he has set out is right. In television interviews he is asked whether he would vote to stay in or to go out of Europe if there were a referendum tomorrow. However, that is a totally false question. People come down on one side or the other but usually state their reservations, which are then totally disregarded in subsequent headlines. That is the situation we happen to be in but, as I say, the Prime Minister’s proposed timetable is right and we should follow it.

My noble friend Lord Lawson and others are too pessimistic about negotiations. At all events, we should take the opportunity to negotiate. It would be absurd simply to say that we will pull out without any negotiation whatever. That would not be the right way to approach the problem. However, irrespective of whether the negotiations are likely to be successful, the touchstone is the financial transaction tax. If we fail to resist that being applied to the City of London, the possibility of successfully negotiating other issues may be less than one would hope. None the less, overall, it is worth entering into negotiations and it is worth while to have a referendum in due course, as is proposed.

Meanwhile, those who are in my party need to be very careful. There is not to be a referendum, as I understand it, unless the Conservative Party wins the next general election. If there is one thing that I learnt from some 18 years on the executive of the 1922 Committee in another place it is that the electorate are far more concerned about whether a party standing for election is united than they are about any individual policy. I lived through that in 1997. My only consolation was that the people on the 1922 executive who were being such a pain were the ones who lost their seats. We really must deal with this issue with a little more sensitivity. The press is bound to blow up enormously the matter of a referendum as a great event, which it may be, but we have to keep a sense of perspective on this issue.