UK Convergence Programme

Lord Lea of Crondall Excerpts

Tuesday 9th April 2019 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I want to make a comment and ask a question of my noble friend. The comment—actually, I suppose it too is a question—is: is it not ironic that Britain never wished to join the single currency, yet we are probably the closest aligned to the Maastricht criteria that were set in 1992?

My question for my noble friend is as follows. The Government have been fined substantial sums of money over the years for late payments of the single farm payment and countryside stewardship schemes under the common agricultural policy. Only yesterday, the Rural Payments Agency announced that it is going to make bridging payments for the 2018 basic payment scheme claims and the countryside stewardship claims for 2018 advance payments. As we leave the EU and presumably will no longer face fines for late payments of farm support—in so far as they will continue to exist—what will the mechanism be, if Defra fails to ensure that the RPA makes the payments on time, to ensure that the payments are made in as timely a fashion as possible?

[Lord Lea of Crondall (Lab)]

My Lords, as we look forward, it is increasingly difficult to match our view of the future macro economy with the micro economy. I would like to relate this to freedom of movement. Either it is true that a lot of the economy of the south-east is heavily involved in freedom of movement in Europe or it is not. In so far as it is true, everyone is holding their breath at the moment.

I shall give three or four examples of what happens at the moment. A fitter from Barnsley can work freely in Antwerp. A doctor from Guildford is able to work in Paris, her medical qualifications being automatically recognised. Estonian software coders can work in London. Retired teachers from Bromsgrove are able to live in Brittany and receive a pension. An oil engineer from Bergen can establish a business in Aberdeen. Lorry drivers from Wigan can deliver goods across the continent without the need for international driving permits. Injured in Malta, a holidaymaker from Belfast will have their hospital treatment covered by the NHS. Lastly—a subject close to the heart of the noble Baroness, Lady Bull—a violinist from London or Leipzig can catch a plane at short notice and work in either the next day.

I find it very difficult to know about the next few months, as we postpone the final decision and think about how freedom-of-movement issues relate to the other agenda. This is a problem of uncertainty. I ask the Minister to flag up the fact that we really need to have a cockshy at some of the key questions that have yet to be decided under the heading of freedom of movement. We know something about the social chapter of the Maastricht treaty and workers’ rights. We even know something about the way in which we can redistribute the macro picture from London to Lancashire, as it were—where I come from originally—so that savings on the EU budget might be redistributed more towards the Midlands, the north of England and so on.

I find it important to get some micro, as well as macro, thinking into these sorts of exercises in the Treasury. Otherwise, we might find that people are working on divergent assumptions about how this freedom of movement thing will work out. I cannot believe what some people in my own party say. It is not the leader’s policy, but there are some people who think we can just wave a magic wand and all the examples I have given will disappear and there will be no problem. Surely that cannot be the case. I think every cup of coffee I drink in London is served by somebody from Estonia. All of this relates to the economy. Will the Minister flag up how we will deal with this, as well as looking at the customs union and so on? That is very important, but it is not the only card game in town.

--- Later in debate ---

[Lord Bates]

Noble Lords have asked some very specific questions. I will follow the injunction of the noble Lord, Lord Davies, and seek to address them as best I can. If my noble friend Lady McIntosh and the noble Lord, Lord Vaux, would allow me the courtesy of writing to them in more detail on their specific points, I will certainly do so. I accept what the noble Lord, Lord Davies, said: we can all agree that we are not in normal times. My noble friend Lord Gadhia made an insightful point when he talked about the difference between what is happening in the political realm—which is not normal—and in the economic realm, which is really remarkable given the headwinds and uncertainty which the economy is facing at present. That confirms the great strength of our entrepreneurial businesses and enterprises and the incredible work that the people in them are doing. This gives us real hope for the future.

I was invited to address the Brexit issue head on; a convergence debate about the European Union seems a pretty good place to do that but I do not want to spend too much time on this. From the Government’s point of view, it is clear: if we had had our way, the withdrawal agreement would have been agreed by Parliament in December. We would now be into an implementation period where lots of the issues about free movement, to which the noble Lord, Lord Lea, referred, would have been addressed. We would also be working our way through into a deep and meaningful—

[Lord Lea of Crondall]

The Minister makes a very interesting point. He is confirming that everything is to play for in the discussion in the coming months about the future relationship. By that I mean that nothing is ruled in and nothing is ruled out on all these matters concerning freedom of movement, et cetera. A lot of people are getting concerned that the Government may have lost the plot.

[Lord Bates]

The accusation was made that the Government were somehow not addressing the issue of Brexit. Responding on behalf of the Government—which I am entitled to do—we believe we have negotiated a good withdrawal agreement. We have a good and fair financial settlement and a political framework which holds out the real possibility of a strong, deep relationship with our European friends and neighbours that can enable our world-class businesses and entrepreneurs to continue to work.

The noble Baroness, Lady Kramer, made a point about business investment. She asked whether the falls in business investment were explainable as purely related to Brexit or whether there was something more structural in the economy. She almost pre-empted my response—perhaps because we have had many of these debates in the past—which is that any decline in business investment in the OBR forecast is of course concerning to the Government: business investment is critical to addressing the types of productivity concerns that were raised earlier. Without investment, we cannot hope to address those concerns, and I take on board all her points, but the forecast period seems to confirm that while we have had two years of a relatively small drop in business investment, that is against the background of businesses currently sitting on historically high cash reserves. Therefore, the OBR forecasts that that will pick up to a stronger growth of plus 2.3% in 2020 and continue to grow at this stronger pace in 2021 and onwards. That seems to suggest that business investment is linked to the political issue of the hour and the uncertainty that stems therefrom.