UK-EU Relationship (European Affairs Committee Report)

Lord Lamont of Lerwick Excerpts

Wednesday 20th September 2023 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, I thank the noble Earl, Lord Kinnoull, and congratulate him on his chairmanship of the Select Committee. His calm, efficient manner and attention to detail made it a very great pleasure and also made it easier for us to reach a unanimous conclusion to our deliberations. I join him in thanking our staff. I know it is customary and a habit always to say that, but it is well meant. We got some very good advice and service.

I was one of two leavers on a committee of 11, but I strongly support its recommendations. I want to explain today why. I also want to concentrate my remarks, almost entirely on the context, the political background, of the report. The report starts by saying that the relationship since Brexit was initially

“characterised by tension and mistrust”.

I think this is true and awkward. Perhaps it was inevitable. Brexit as an act caused hurt and possibly the desire to punish in some parts of the EU, but as my noble friend Lord Frost said when he gave evidence, the fault was on both sides. We had evidence from a wide range of witnesses. It was interesting that when we had my noble friend Lord Frost and the noble Lord, Lord Mandelson, together, their evidence did not diverge very much.

Brexit has happened. It was a seismic event but, having happened, it is in everybody’s interest that we should have as close and co-operative a relationship as possible. It is not a betrayal of Brexit. It was Boris Johnson who said after Brexit that we must concentrate on developing a close and co-operative relationship with Europe. On what basis should that co-operation and collaboration happen? Again, I think my noble friend Lord Frost put it well to the committee when he said that Europe was a port of call, not always the first port of call, but an important port of call. We do not want close alignment, rule taking or the imposition of EU law. We are a third party. We accept that we are a third party, but we can still have a close relationship as third party.

It is important while talking about the need for collaboration to be realistic about its limits and about the relationship. We should not delude ourselves that we can sweet-talk our way into a different sort of trade and co-operation agreement while remaining outside the customs union and the single market. It seems to me—I make this point not as a political point but to illustrate my point—that the leader of the Opposition is in some danger of falling into this error, peddling the idea that he can change the relationship profoundly while remaining, as he claims we will be, outside the single market and the customs union.

During the committee, we had a vigorous argument between—if I may still use the terms—remainers and leavers about alignment and divergence. To my way of thinking, both sides make a fetish of this and it is a mistake. We must have the sovereign right to diverge, but we should not diverge in regulations for the point of diverging. We should diverge when it is necessary to diverge and when there is an interest for this country in doing so.

Similarly, what should be our principles in co-operation with the EU programmes? I think an interesting case was that of Horizon. The decision that the Government made to join the Horizon programme got a lot of applause, but at the same time people criticised the delay in reaching that decision. I think that is wrong. I think it was right for the Government to take their time to consider whether this was the only option and whether it really represented value for money. The EU has much to gain from UK participation in Horizon, and it would have been an act of self-harm by the EU to have excluded Britain from it.

Part of our report, perhaps too much of our report, is about how many meetings this committee or that committee has had and which ones were missed. I note the Government’s reply which I thought was a master- piece. They said that the intensity of contact is not a measurement of effectiveness. Hear, hear to that and brilliantly put by the Government.

The most important recommendation of the committee refers to security and foreign affairs, with a call for a more structured dialogue. That does not mean having the bureaucracy or the law of the CFSP. The Government’s reply was non-committal. I read in newspapers in July that the Government had rejected a call from the European Council for more structured dialogue, and I would be grateful if the Minister could tell us whether that is true. It seems to me that this recommendation is sensible. Ukraine has reminded us, tragically, that the defence of Britain and Europe goes together. Britain is important to the defence of Europe, Europe is our first line of defence and where there is increasing co-operation, after what has happened in this tragic war, that can only be in both our interests. I support that, I support the other recommendations of the committee and I commend the report to the House.

House of Lords: Appointments

Lord Lamont of Lerwick Excerpts

Monday 17th October 2022 Lords Chamber

[Baroness Neville-Rolfe (Con)]

We try our best to represent this side of the House—politely—but the Conservative Party has been the largest party in the 2010, 2015, 2017 and 2019 parliamentary general elections. In the 2019 general election, the Conservatives won 56% of seats, yet, as of August 2022, the Conservative Party still had only 33% of the seats in the Lords. There were 249 Conservatives out of 757 Peers. Noble Lords opposite may not like these numbers, but they are a reality, and they need to understand the position.

[Lord Lamont of Lerwick (Con)]

My Lords, this House rightfully dislikes personal attacks. However, on the question of Tom Watson, I say that he did not just attack a Member of this House under parliamentary privilege; he also destroyed the lives of Harvey Proctor, who lost his house and his job, Lord Bramall, who died under suspicion of a completely false charge, and Lord Brittan, who I saw in his dying days and who was deeply depressed by these completely false accusations against him. While this nomination was from the leader of the Opposition, very surprisingly, I regret that it was not vetoed by the Prime Minister. This appointment is a stain on the House and an absolute disgrace.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for drawing those points to the attention of the House. In respect of today’s Question, I say that the commission’s role was to provide advice, and this was duly provided in the usual way. However, we have heard what my noble friend had to say.

Economy: The Growth Plan 2022

Lord Lamont of Lerwick Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, it is a personal pleasure to follow the noble Lord, Lord Burns, who always gave me very wise advice in the Treasury, just as he has to the House today. I also welcome my noble friend Lady Neville-Rolfe back to her position on the Front Bench. We have lost a doughty Back-Bencher but regained a formidable Minister.

I welcome many of the measures in the Government’s growth plan, particularly the radical deregulatory ones—IR35, the pensions cap and the planning reforms. Provided they can be delivered they are the sorts of measures that will make a real difference to our growth rate. I also welcome the energy price guarantee. It is a major intervention but, as the Minister said, one that, because of the death of the Queen, was not widely recognised and is still not widely known among the public. The package is very important not only for the relief it gives to hard-pressed consumers but economically, because of the 5% it knocks off the rate of inflation. This by itself could help to stave off a deep recession, as high energy prices can be both inflationary and deflationary.

However, it has to be recognised that the energy price guarantee is potentially a massive commitment and adds huge uncertainty to the borrowing figures. The Government’s support to consumers as a percentage of GDP, according to the Goethe Institut and Conservative Central Office, dwarfs that of other countries. It is, potentially, more than double that of Germany, which funded its package out of taxation. It was the hugeness of the money at stake, together with the absence of the OBR assessment of the cost of tax cuts, that produced the market reaction that it did. The Government also made something of a rod for their own back with some of the rhetoric that was carried forward from the leadership election about rejecting orthodoxy and the attacks on “bean counters” and people peddling “abacus economics”. I am sure it was not intended to, but it sounded very like a Conservative belief in the magic money tree. Since then, the Chancellor has emphasised that he believes in fiscal discipline and in a declining debt-to-GDP ratio.

Going for growth is a certainly laudable objective, but it has to be recognised that there can be a conflict between going for growth and getting inflation down. A stimulus to growth from unfunded tax cuts may mean that inflation stays higher for longer, and that could mean higher interest rates holding back growth. If fiscal and monetary policy point in opposite directions, the result is again likely to be higher interest rates and thus slower growth. So the stage is set for something of a battle between the Treasury and the Bank of England as the Government push for growth and the Bank raises interest rates to tame inflation.

This dilemma could of course be resolved if tax cuts always paid for themselves. That would be wonderful—we would never have to discuss taxation again—but as the noble Lord, Lord Burns, said, they do not always pay for themselves. It depends on whether the rates are set at confiscatory levels or, technically put, where precisely the rate is on the Laffer curve. Ronald Reagan’s tax cuts resulted in increased debt, a fact that he later acknowledged and regretted.

Fiscal responsibility is not the enemy of growth. It produces the stability that is essential for it. I welcome the fact that the Chancellor is drawing up a debt reduction plan and plans to bring forward the OBR assessment of that plan. It is very important that the plan set out is credible and does not consist of just easing the present fiscal rules or back-ending all the pain that is going to be necessary. If we do not face reality, reality is going to face us. Fortunately, the Chancellor has, I believe, the resolve and determination to face these challenges, and I wish him well.

Budget Statement

Lord Lamont of Lerwick Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Lamont of Lerwick (Con)]

My Lords, it is an extreme pleasure to follow the right reverend Prelate. I have always believed that the Bishops make a very valuable contribution to this House, which was exemplified in the wonderful speech we heard a few moments ago. She said that she would have a different perspective since she came here from the north-east; I hope she will carry back the message that there are many people here working hard for the ideals she articulated and expressed so well. I am sure she will be missed by not just her colleagues but all of us.

I agree with the noble Lord, Lord Fox, that this debate should have happened in the Chamber. I regret that. Be that as it may, Alistair Darling once observed that nobody could ever foresee the sort of situations that Chancellors of the Exchequer might have to deal with. That applies in spades to the present Chancellor, who could never have envisaged that he would have to deal first with an epidemic, then with its economic consequences—a very deep recession—and now a potential inflationary crisis.

There was some good news to be welcomed in the Chancellor’s speech. We had faster than expected growth, which validated the Bank of England’s forecast—slightly to my surprise. I will concentrate on the fiscal position. The good news there was that borrowing, which had been at 15% of GDP, or £320 billion, came down this year to 7.8% and will be 3.3% next year. These figures, if not normal, are at least getting into the territory of somewhere near normal. Similarly, the stock of debt figures did not max out at 100%, as some had been predicting, but at about 86%. However, I was puzzled—I would appreciate it if my noble friend Lord Agnew could comment on this—as to why the Chancellor quoted figures minus the Bank of England. Why should the stock of debt be quoted minus the Bank of England, when the Government choose to maintain all the time that they are not being financed by the Bank of England?

The Chancellor was helped not just by the £36 billion that he imposed in extra tax increases but by the £35 billion increase in revenues caused by the growth of the economy. He chose to split this between spending and, as was right, strengthening the fiscal position. The noble Lord, Lord Davies, whom we welcome back to his position on the Front Bench today, called this a very Conservative Budget. That was not what everybody thought; that was not the universal reception in the press. Indeed, the noble Lord, Lord Fox, hinted at that; I think one newspaper dubbed it “more Brown than Lawson”.

There seemed to be two Chancellors of the Exchequer speaking in the Budget speech: one who was enjoying trotting out all the spending and describing 800,000 playing fields being financed, and another at the very end of the peroration who was a bit doubtful about all this and expressed a degree of regret about it. At the end of his speech, he said that it was very important to recognise that government has limits. He said it should have limits. The point was very well made. Government expenditure last year reached 53% of GDP—an astonishing figure, well beyond what Roy Jenkins thought was compatible with a civilised and free society. That was 53% of GDP at a time when the tax revenues were only 36% or 37% of GDP, a gap of 17 percentage points. This year, the size of the state, if one wants to call it that, has been reduced back to 42% because of the growth in the economy, so the proportion taken up by public expenditure does not need to be permanent.

As the state grows, so does the tax burden. The noble Lord, Lord Fox, referred to this being the highest tax burden since the 1950s. The Chancellor of the Exchequer made it crystal clear that he was not entirely comfortable with the level of tax and wanted to see the tax burden going down by the end of the Parliament. I share that sentiment, but I think we have to recognise—there has been little recognition of this in some of the speeches we have heard—that we have been through a seismic series of events, which led to a massive fiscal hole. While Conservative MPs cheered the furlough and the bounce-back loans, one wondered where they thought the money would come from and how this would be financed, yet they expressed horror when the Chancellor had to impose taxes amounting to some £36 billion. I kept reading in newspaper accounts of the Budget that the Chancellor’s tax increases were the largest imposed since those of someone called Norman Lamont, so I had some sympathy for him and the situation he found himself in.

We have also to recognise that certain forces are driving up expenditure, whether we like it or not. These are primarily the demands of an ageing population, and of a health service dealing with the demands of an ageing population. The IFS has projected that, in a few years, the NHS could take 44% of programme expenditure. That has led, not for nothing, to people dubbing Britain as the NHS with a state attached to it.

It has to be noted that, while the Chancellor is taking these measures and announcing some big increases in expenditure, the survey period shows that taxes are going up as a proportion of GDP more than expenditure is. Also, our taxes are still below those of other European countries, by quite a long way. I think that only Ireland has tax levels below ours. Taxes and spending are high, perhaps too high as a percentage of GDP, but in the aftermath of a pandemic they can be justified over the short term.

I welcome the fiscal rules that the Government have announced. I hope that the Chancellor will send a copy to his neighbour in No. 10 Downing Street—it is important that he, as First Lord of the Treasury, observes them as well. I think that the Government face two challenges. The first is, as the noble Lord, Lord Fox, said, the rate of growth, which in the later years of the survey period will be below 2%. You cannot finance 3.8% growth in public expenditure on growth of 1.3% or 1.6%. The second is inflation. Many people are predicting that the 4% average inflation forecast by the Bank of England could be an underestimate, both because energy prices might go up and because supply chain interruptions might last into next year. All that will prove a big challenge to the Government. I applaud the fiscal consolidation in the Budget. The Chancellor has risen to one set of problems, but I fear that it is rather like getting to the top of the mountain and discovering that there is another mountain just beyond, which he has yet to climb.

Northern Ireland Protocol

Lord Lamont of Lerwick Excerpts

Wednesday 13th October 2021 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, would the noble Lord confirm that more than 200 GB firms have stopped supplying goods to Northern Ireland and that the Northern Ireland protocol is just not working satisfactorily? Secondly, as regards accusations that we are going against the rules-based international order and the rule of law, is it not a fact that Article 13(8) of the protocol itself envisages that it could be succeeded by other agreements?

[Lord Frost (Con)]

My Lords, my noble friend is absolutely correct that 200 firms have ceased trading with Northern Ireland this year, including some quite significant ones. The existence of this customs process between Great Britain and Northern Ireland is at the heart of some of the problems we are experiencing with the protocol. My noble friend is also right that Article 13(8) of the protocol provides for successor arrangements. This was envisaged and explicitly written into the protocol when we negotiated it. It reflects the fact that it is not unusual in any way to renegotiate or supersede international agreements, which is what we hope to do in this process.

Government Departments: Non-Executive Directors

Lord Lamont of Lerwick Excerpts

Thursday 1st July 2021 Lords Chamber

[Lord True (Con)]

My Lords, as I have said, the number of unregulated appointments in this area is small, but I have told the House that, following the interim report of the noble Lord, Lord Evans, the Government will respond formally and give full consideration to the points that he made, including in relation to the regulation of appointments.

[Lord Lamont of Lerwick (Con)]

My Lords, was not the original concept of non-executive directors in government departments meant to be analogous to NEDs in plcs, to assure good corporate governance and to give completely independent advice? That was why people like the noble Lord, Lord Browne, and the CEOs of Centrica, Kingfisher and British Gas, were all appointed NEDs. Have we not departed somewhat from that original concept, and is it not important that non-executive directors of government departments are independent and not sort of super-spads?

[Lord True (Con)]

My Lords, I agree with my noble friend that it is important that non-executives who provide advice and bring an external perspective to the business of government departments should be qualified to do so.

UK-EU Trade and Co-operation Agreement: Regions and Industrial Sectors

Lord Lamont of Lerwick Excerpts

Thursday 27th May 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, on the Northern Ireland protocol, the issue is that the protocol is a very delicately balanced document designed to support a very delicately balanced agreement—that is, the Belfast/Good Friday agreement. When the protocol is implemented it needs to have regard to that balance and the set of provisions that try to protect this delicately balanced situation. At the moment, in our view, the protocol is not being implemented in a way that reflects that balance. It does not reflect the full dimensions of the Good Friday agreement, east-west and north-south, and that is at the root of the difficulty. That is not what we expected when we agreed it, but we still hope that we can get into that situation in discussions with the EU in the weeks and months to come.

On future impact assessments, when legislation is needed to implement reforms or changes, whether these result from the TCA or from anything else, there will of course be an impact assessment. That is the usual practice.

[Lord Lamont of Lerwick (Con) [V]]

Does my noble friend agree that it is absurd to attempt to measure the impact of Brexit in such a short term, as suggested by the noble Lord, Lord Purvis, and others, and that other factors will be difficult to separate from Brexit? Above all, new policies, whether they be domestic policies or trade agreements, take time to build up, and the impact of Brexit over one year, five years or 15 years will be very different. Do all these questions not sound suspiciously like attempts to rerun the Brexit referendum, and is it not time that we all recognised that the result has to be accepted and we should move on?

[Lord Frost (Con)]

I agree with my noble friend. These questions have been extensively debated over the last five years and the range of views on that subject has possibly not changed significantly over that period. Our view is that the medium-term benefits of being a full democracy, of having control over our own laws and regulations and having the ability to tailor them to our own requirements as a country, will be of huge benefit to us, so we are very confident that those benefits will materialise. However, he is right that five months after the end of the transition period is a bit soon to be 100% clear about that.

Vice-President of the European Commission

Lord Lamont of Lerwick Excerpts

Thursday 29th April 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, these ideas are very much on the agenda in our discussions, although the differences between our position on the subject and that of the European Union remain significant. Nevertheless, we hope to have a constructive dialogue and see whether there is room to explore this further. As I have noted, the EU has been reluctant to move forward to an equivalence-based agreement, but we remain open to that and hope that it will also be in due course.

[Lord Lamont of Lerwick (Con)]

My Lords, does my noble friend the Minister agree that, while it is good news that the TCA was ratified by the European Parliament, parts of Mrs von der Leyen’s speech, with its talk of baring “teeth” and imposing tariffs, was deeply disappointing, not to mention rather unfriendly? By contrast, Monsieur Barnier said Brexit was

“a failure of the European Union and we have to learn lessons from it”.

When my noble friend meets Mr Šefčovič, will he stress that we want partnership and co-operation, and not continuing antagonism? It is time to put hurt behind them.

[Lord Frost (Con)]

My Lords, I very much agree with my noble friend. As I made clear yesterday, I hope that we can now begin to move forward on a new chapter together, as Europeans. We want a relationship based on friendly co-operation between sovereign equals. That is what we have always wanted. I note that, a few days ago, the EU head of mission said:

“We are still in the process of accepting that the UK is no longer a member of the European Union.”


I hope that that process of adjustment can be completed as soon as possible, that the language on the EU side can be toned down and that we can move forward together.

Protocol on Ireland/Northern Ireland

Lord Lamont of Lerwick Excerpts

Thursday 25th March 2021 Lords Chamber

[Lord Frost (Con)]

I too have happy memories of working with the noble Lord in a rather different context a few years ago. Our clear position is that the protocol depends on the consent of all the people of Northern Ireland. As long as that consent is not maintained, it is difficult to see how the protocol can be genuinely durable. We are working to sustain the protocol, but in a pragmatic and proportionate fashion.

[Lord Lamont of Lerwick (Con) [V]]

My Lords, I too welcome the Minister. Is he aware that some of us strongly support his unilateral action in extending the grace periods? Without them there would be shortages of food and no medicines in Northern Ireland. Banning British sausages in Belfast hardly strengthens the Good Friday agreement, but a temporary waiver is not a permanent solution to these problems. Is he confident that there is sufficient flexibility and potential easements in the protocol for a permanent solution, or is it going to require action under Article 16?

[Lord Frost (Con)]

I thank my noble friend for his words of support for the operational measures that we took earlier this month. These measures are lawful and consistent with the progressive and good-faith implementation of the protocol. They are intended to avoid disruption to everyday life in Northern Ireland, which we would otherwise have seen. We are working with the Commission to see if we can find solutions to those problems and many others on a more permanent basis, and we continue to pursue that actively.

Budget Statement

Lord Lamont of Lerwick Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, this is the first time I have ever spoken in a Budget debate in the Lords and I am making my “maiden speech” only because I want to support the Chancellor at a time when there are no easy answers—it is a very difficult situation. I always listen with respect to the noble Lord, Lord Eatwell, but I disagree with him over fiscal resilience and its importance. The central dilemma for the Chancellor in this Budget is how he can start repairing the public finances without endangering the recovery. He resolved that dilemma by delaying the increases in corporation tax and the freezing of personal allowances, again delayed for one year. This staging gives the recovery the chance to get established, and I believe that was the right judgment.

Overall, the Budget increases the tax burden by 1% of GDP, which is uncomfortable for many of my noble friends on this side of the House, but we have been through phases like this before, in the early 1980s and other periods when fiscal tightening, far from killing off growth, ushered in long periods of expansion, which is what enables us to pay for good public services. We should not succumb to the mistaken interpretations of Lafferism or Reaganomics that led America astray in the 1980s. Some will criticise the increase in corporation tax, but once you have ruled out the three main taxes, as was done in the Conservative manifesto, the Chancellor had little choice. The question remains whether such a large increase in corporation tax can be delivered: moving the tax up in one go to 25% may cause prospective investors a bit of hesitation.

The OBR talks of lowering investment in the medium term, and I would appreciate it if my noble friend Lord Agnew would comment on that very obvious reservation that the OBR expresses. I believe that the Chancellor has risen to these unprecedented challenges flexibly and pragmatically, and I support him.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

We welcome the maiden speech of the noble Lord, Lord Khan of Burnley.