European Communities (Amendment) Act 1993

Lord Layard Excerpts

Wednesday 25th April 2012 Lords Chamber

[Lord Stoddart of Swindon]

I hope the noble Lord will be able to answer that question. They could not send troops over here to enforce their will. I do not want to keep the House for much longer, although there have been some long speeches tonight, but people in this country are getting quite disillusioned with politics. The Hansard Society published its latest figures today, which show that only 42 per cent of the electorate are interested in politics—a 16 per cent drop since the 2011 figures. Their disillusionment is understandable because they have realised that the United Kingdom is increasingly governed not by its own elected Parliament but by the EU and other international institutions. No wonder percentage turnouts at elections are now so low because people see no point in voting for a Parliament in which EU treaties hand decisions and governance to the EU and its institutions.

[Lord Layard]

My Lords, I agree with every criticism that has been made, and I note that this is not wisdom in hindsight, because all these criticisms were made before the policy was embarked on after the election.

The basic problem, which is making the policy not work, is that it is based on a misdiagnosis of the underlying issue. This is exactly the same situation as we have in Europe. The policies which are not working there are based on the same misdiagnosis. That misdiagnosis is that Governments have been behaving irresponsibly and that is why we have a problem. That is not why we have a problem. One or two Governments have—Greece, certainly—but most countries have not had irresponsible behaviour by their Governments. The irresponsible behaviour was by the private banks. That produced the economic collapse, and the economic collapse is what produced the government deficits. The government deficits were not produced by the Governments; they were produced by the misbehaviour of the private sector.

These deficits sprung up because tax receipts had collapsed. Corresponding to that there was the increase in the surpluses of the private sector as private households and companies were trying to retrench. As for how the public deficits could be financed, they would be financed by private savings. That is how it works, and it could work perfectly well provided that private savers had some assurance that they were putting their money in a safe place. What did that require? It required only two things. First, it required some guarantee by the Governments of our own country and other European countries that there would be no increase in government expenditure until tax receipts had come back up as a result of the return of growth. That was a perfectly reasonable requirement from investors. The other thing which was required was some underwriting of the public debt by the central banks.