Queen’s Speech

Lord Risby Excerpts

Wednesday 11th June 2014 Lords Chamber

[Lord Risby (Con)]

My Lords, the competence and quality of advice given by Foreign Office officials are fundamental to the judgment calls that Ministers subsequently have to make. Therefore, high morale and a sense of being valued and appreciated are obviously important. It would be fair to say that the accretion of foreign affairs control and activity into Downing Street, which had taken place over the years, did not improve either morale or the quality of judgments on issues abroad.

However, the central importance of our Foreign Office is now felt to have been restored in large measure, to our national benefit. Today, new strategic or commercial opportunities have arisen and have been recognised, and extra staff deployed accordingly. This has happened, for example, in Latin America, China—particularly outside Beijing—Turkey and east Asia. A new language training centre is most welcome, now that it has been established. Similarly, we should note the close co-operation that now exists between UKTI and the FCO. A huge export effort is now underway, and more export finance is available, particularly to smaller and medium-sized businesses. There are 16 trade envoys appointed by the Prime Minister, covering 30 markets. They come from both Houses and are cross-party. I cover Algeria, and I should like your Lordships to know the support that all of us have received from UKTI in our respective roles. I have been superbly guided and encouraged by our diplomatic staff in Algiers, and all of us can provide similar reports.

I should like to mention two countries in particular. Ukraine continues to dominate headlines. For a number of years, I have been chairman of the British Ukrainian Society, met many of the politicians and got to know the country well. Since its independence and subsequently the Orange Revolution, it would be fair to say that the level of governance in Ukraine has been poor, and that prime ministers and presidents have left office extremely rich—at times in a grotesque way. All this has either stunted or bled the exchequer. In November, Ukraine was due to sign an EU association agreement, linked into a deep and comprehensive free-trade accord. However, no money was available from the EU. So, at the last moment, President Yanukovych turned to Russia. The rest, regrettably, is history. No country can divorce itself from its geography, and Ukraine remains heavily dependent on Russia for its exports and energy provision, however unpalatable. It is therefore welcome that contact between President Poroshenko and President Putin has been made. The EU association agreement, however, needs to be signed, and conditionality will then be imposed. That should lead to vital judicial and commercial reform. I very much hope that we will get assurance from the Minister that our Government will encourage the Ukrainians to go down this route, which is so necessary. If nothing else, the actions of Russia in Crimea and the provocations in eastern Ukraine make it crucial that dependence on Russian energy supplies, used as an arm of foreign policy, is reduced.

There is one country, a major energy provider of oil and gas, with which we have quietly developed a remarkable relationship—Algeria. Historically, our links have been minimal but, following the visit of our Prime Minister there in January last year, our bilateral ties have developed at every level, including as a reliable energy supplier, and particularly in the area of security. Given the porous border of that country, this is a huge aspect on which we are giving our encouragement and support. Latterly, we have seen our business with Algeria soaring, not only in respect of energy but in areas such as health, education, satellite technology and agriculture. Considering its geographical location, Algeria’s social and political stability has been remarkable. Algeria’s Government are spending extensively on its physical infrastructure, health and education; and the desire to learn and be trained in the English language is limitless. We are addressing this. Algeria would like to become an associate member of the Commonwealth; it is not a member of the Francophonie. Algeria exemplifies what I am trying to say this evening and what I was referring to earlier—finding fresh business opportunities and political contact, and forming a much closer, multifaceted, overall relationship with a country with which our traditional links have not been great. It is now a partnership that is mutually valued and strong.

There is much greater functional coherence in our often new relationships in many parts of the world, and I should like to take this opportunity to pay tribute to all those who are driving this process on.

Government Spending Review 2013

Lord Risby Excerpts

Wednesday 3rd July 2013 Grand Committee

[Lord Risby]

My Lords, it is a great pleasure to follow my noble friend Lady Kramer, who makes the very important point that unemployment has fallen and that we have seen growth in the private sector and the emphasis on infrastructure that has characterised the Government’s policy. I congratulate my noble friend Lord Deighton, who brings such enormous private sector expertise to the role that he is fulfilling, which adds huge value to what the Government are doing.

I think it is fair to say that all European countries are trying to restrain expenditure and look at how to generate economic growth. We are in the fortunate position whereby there are now signs of some economic growth. Indeed, most organisations believe that in the coming year we will have the highest rate of growth in Europe of all the major economies, albeit that there is still room to go much further. However, the truth of the matter is that we remain vulnerable. We are not tied to major currencies such as the euro and the dollar. We need to continue our policy of restraint to keep mortgage rates and borrowing costs low, as we still have to borrow an enormous amount. While the point of today’s debate is to look to the future, it is worth remembering that key element of the review, as we know that the markets can be fierce in their judgments, as we saw when they made a judgment some years ago about the competence of policy in this area and promptly devalued our currency by 25%. That has meant that inflation has continued at a high level, which we must never see again.

However, I should very much like to consider how we can stimulate growth from external activity and foreign investment, which were alluded to in the spending review. All Governments are of course trying to do this, but last week an interesting statistic from UNCTAD revealed that foreign direct investment into the United Kingdom rose by 22% in 2012 to the highest in Europe, £41 billion, compared with a drop of 18% in the world, 42% in Europe and, extraordinarily enough, 85% in Germany. It is clear that much of this investment arises from the fact that we have an open economy and are very welcoming, but it is also important to note the high level of re-investment that has been made by foreign-owned corporations in this country, which suggests that they have a high level of confidence. China, with which we have had some political difficulties, has continued to make major investments, and I hope that after the resolution of a recent difficulty this investment will increase further.

Nevertheless, our trade and export activities have been inadequate. For example, there was hardly any improvement in 2012 in our manufacturing and service exports when compared with the previous year. Of course, our European markets have been weak and we have tried and been successful in expanding our exports to countries such as Russia, China and India. Nevertheless, we could have done much better. This is now simply a necessity for us. Household budgets are of course being squeezed and European markets look to remain anaemic. Over the next two years, 90% of world demand will be generated outside the EU.

In the spending review, the Government have set a national challenge to double UK exports and to get 100,000 more companies exporting by 2020. In consequence, £140 million was announced in the Autumn Statement last year to help SMEs to export. I am pleased to see in the spending review that despite the pressures, funding certainty has been given to UKTI to continue with this policy, thereby maintaining the support for the next few years. Some £70 million was announced to package overseas export promotion more professionally, and a new unit has been formed—noble Lords will agree that this is important—to look at the attractions of investment in our financial services sector, again with particular emphasis on SMEs. The CBI welcomed all this by declaring:

“It’s right to link increases in UK Trade and Investment’s budget to improved commercial nous, at a time when it must be firing on all cylinders to boost exports and support the drive for growth”.

It is fair to say that all Prime Ministers have been for years trying to advance the promotion of exports from this country, but I should like to talk about an initiative that was brought into being in November last year, the creation of prime ministerial trade envoys. There are eight of us, six of whom are in your Lordships’ House and two of whom are Members of the other place. We were appointed on a cross-party basis. The whole idea is to assist UKTI, our embassies abroad, our export effort and, with the appellation of being called a prime ministerial trade envoy, get the highest possible access. As it happens, I am the trade envoy to Algeria. Perhaps I may touch on this for a few minutes. The role of the trade envoy is to enhance and develop commercial partnerships through the following: identifying commercial opportunities both for trade and investment, bringing together UK and target market business leaders to develop opportunities to secure the high-level access that I mentioned, and working with the export promotion activities of our embassies and UKTI. It is good that this is done entirely on a cross-party basis. Yesterday morning, we had a very good meeting in which we were trying to exchange best practice and to see how we can work together to really drive this element of our national life, exports, which have frankly been inadequate when compared with many other countries, even in Europe.

I should like to talk a little about Algeria because it summarises exactly what I am talking about. We have had no historical links to that country, but it has $190 billion dollars of reserves and a $300 billion infrastructure programme. We start from a very low base, but in the past 18 months there have been an enormous number of ministerial visits, which were very welcome, including that of the Prime Minister in January. We now have a clear partnership with Algeria. So many of the countries that we are talking to and to which we want to export feel, particularly after a post-colonial experience, that there should be a partnership in the fullest sense of the word. We now have, for obvious reasons, a security relationship and a defence relationship with Algeria, which is important. Every week, English-language schools are springing up all over the country, and we hope that during the course of the next month or two, hopefully in September, we will sign some major contracts. This has come about because of a concerted effort led by the Prime Minister and other Ministers. I pay tribute to a very dynamic ambassador in this regard.

This applies to my colleagues who are prime ministerial trade envoys. It is happening everywhere. It is part of a process, on which I hope everybody will agree, of reorienting our exports to more dynamic markets. It will not solve all our problems, but in the past we have seen erratic and feeble export promotion, and that is changing. This is happening at the highest level of government and is reinforced by the commitments made in this spending review. We have so much to offer. I talked about our open economy and the English language. We make a virtue of not paying bribes and not getting involved in anything like that. We have attempted to reinvigorate UKTI and there are trade envoys to support this. That is all under the direction of my noble friend Lord Marland.

This week, as my noble friend commented, the BCC reported a remarkable level of export activity among its members that showed a considerable increase in confidence to a six-year high. That was also reflected in the purchasing managers’ index, which showed an improvement. I hope that the efforts that are now being made will address a key element of our future growth, and I welcome the commitment given to this in the spending review and the Government’s commitment to try to make this happen.

--- Later in debate ---

[Lord Davies of Oldham]

The very tragedy, in my view, of Labour’s watch was that it actually continued too many of the positions adopted by the Conservative Party in the 1980s. As regards manufacturing—the noble Lord, Lord Haskins, also made an important point on that—we should have put much greater emphasis upon the development of skills in our society. We have not equipped any of the next generation for the kind of economy that we seek to sustain.

I understand what the noble Lord, Lord Risby, indicated in terms of the enormous value of foreign investment. Of course we would all welcome that but does he think that foreign investors are enthusiastic about the great uncertainty over Britain’s relationship with Europe? That is the product of discord in the governing coalition. How welcome is that for potential investors? The noble Baroness, Lady Noakes, indicated the areas in which she welcomed what was happening but even she will recognise that the IMF has said that some £10 billion ought to be invested in infrastructure in “shovel-ready” industries, particularly construction. It ought to be put into housebuilding because that is the fastest way in which you could inculcate some element of demand into the economy. However, are the Government pursuing that strategy? If the noble Lord, Lord Deighton, were able to identify schemes that could fulfil that aim, I would be surprised. I give way to the noble Lord.

[Lord Risby]

I am most grateful but a little confused by what the noble Lord is saying. We have just had a record increase, the highest ever, in foreign direct investment in this country, way ahead of anywhere else and the highest in Europe. The point that I was making is that that trend is increasing, so I am afraid that his argument is not sustained by the reality.

[Lord Davies of Oldham]

My Lords, I was making a point that the noble Lord ought surely to take into account. Far from there being an environment in which foreign investors will necessarily find a place to invest in the future, as long as we are extremely uncertain about our relationship with the biggest market that we service, Europe, it is bound to cause anxieties among investors.

I also noted what the noble Lord, Lord Higgins, said—he is also my noble friend when we are on the golf course. He was very concerned to address some real points to the Minister with regard to the future of interest rates and the assumption made about future public expenditure. The Minister must address that point in his reply.

I appreciated the point that the noble Lord, Lord Shipley, made about local authority finance and being able to identify local resources. One product of the debate on Scottish independence and the referendum will be to identify those issues as far as Scotland is concerned. That is bound to give a stimulus to the broad argument that the noble Lord is putting forward about the resources available to the various localities of the United Kingdom and the needs that may be identified. I would have thought that that is bound to take a significant step forward as a result of the debate on next year’s Scottish referendum.

The noble Lord, Lord Flight, entertained us all with the Hayek versus Keynes debate. Although the noble Lord said that growth before the Second World War was considerable, he may have noticed that full employment in this country did not return until we went into wartime defence production. It is quite clear that under the Hayek principles you can certainly run an economy with a considerable level of unemployment. However, that word has not been manifest in this debate at all because the fact that we have significant levels of unemployment is a limited consideration for all those on the Conservative Benches concerned with how to manage the economy. We have people coming out of our colleges and universities who are highly qualified by any standards and who, in the past, would have expected to find a choice of jobs. They are facing a situation where the market is such that there are no jobs available. That is why I was grateful that the noble Lord, Lord Flight, identified the thinking behind the Conservative position and, to a more limited extent, the Liberal Democrat position with regard to what the Government are doing at present.

It took the right reverend Prelate to introduce morality into this debate. Why is it that the only person who is prepared to talk about those people who suffer the real costs of what is being carried out in the name of austerity is the right reverend Prelate? He identified the shock we all felt in the Chamber yesterday when it was suggested by a Conservative Minister that food banks are supply-driven and nothing to do with people’s needs. People’s needs have occasioned the development of food banks, which are necessary, but our great shame. Nor is there any understanding on the Conservative side about what it is to lose one’s job at present. It is quite okay to say, “We will cut public expenditure by making sure that there is a week in which one cannot claim jobseeker’s allowance”, but what do noble Lords think the morale of a family will be when someone loses his job against a background where the chances of getting a fresh job are very limited indeed? Why is it that, within that framework, it is thought that a really effective cut is to make sure that an application for support cannot be made until a week has elapsed?

Taxation: Income Tax

Lord Risby Excerpts

Monday 24th June 2013 Lords Chamber

Asked by

[Lord Risby]

To ask Her Majesty’s Government what assessment they have made of the impact of the reduction in the top rate of income tax from 50 per cent to 45 per cent.

[Lord Newby]

My Lords, the cost of reducing the additional rate of income tax is estimated at around £100 million per year. This takes account of the significant behavioural response associated with changes in personal tax rates. Details were set out in an HMRC report published alongside Budget 2012. The Government believe that it is not efficient to maintain a tax rate that is ineffective at raising revenue from high earners and risks damaging growth.

[Lord Risby]

Does my noble friend agree that, in a difficult economic environment, maximising tax revenues while avoiding the counterproductive in pursuing it is a huge task which is currently facing all European economies? Does he agree that, following the reduction of the highest rate of tax from 50% to 45%, the number of people in the highest tax category is increasing, and that the revenue generated from the highest-rate taxpayers will increase this year by 57% to over £49 billion? What conclusion does he draw from this?

[Lord Newby]

My Lords, I think that the conclusion I draw is that the Government always have a tricky task in maximising tax revenues, particularly at a time of austerity and when people are looking for tax changes to be fair. In that context, at the same time as the Government reduced this tax rate they introduced changes to stamp duty land tax and anti-avoidance measures on residential property which will raise several times the amount of tax lost from reducing the 50p band.

European Union Membership (Economic Implications) Bill [HL]

Lord Risby Excerpts

Friday 25th November 2011 Lords Chamber

[Lord Risby]

My Lords, I add my warm congratulations to the noble Lord, Lord Pearson of Rannoch, on the sheer timeliness of this debate. Whatever one’s view of the European Union is, as we survey it today it is certainly not a happy picture. We have a crisis of legitimacy; the rise of disconnect of the peoples of Europe from the institutions of the European Union; a collapse in economic growth, including now in Germany; a lack of competitiveness, big demographic challenges; high unemployment and high budget deficits and debts right across the European Union. I entirely agree with my noble friend Lord Ryder that it would appear that the euro is now fragmenting. I think that this is inevitable and, ultimately, desirable.

As we look at austerity in our own country, it is fair that any sizeable contribution by the British taxpayer to any external organisation should be looked at carefully. We also need to look at whether burdens on our businesses are generated from elsewhere, such as the European Union, or whether they are domestically generated or a mixture of both. That is certainly true, but it is also fair to say that in any objective assessment of our relationship with the European Union, we have to look at benefits that are difficult to quantify. For example, how do you measure freedom of movement or the mutual recognition of qualifications? Of course we need to co-operate in areas such as environmental protection, criminality, the drugs trade and money-laundering. It is difficult to quantify how the EU impacts on the life of this country in this regard, when also you consider these issues.

At another level, we need occasionally to take collective action. I have a particular interest in Syria. There is no doubt about it—EU-wide sanctions are an important force in trying to deal with the situation that is so tragically happening there. If we were doing that on an isolated basis, of course the impact would be much less. However, the Bill stresses economic implications and I simply point out that any overall assessment needs to look at non-financial aspects too.

Public opinion has quite rightly been enraged by the inability of the Court of Auditors to approve the EU accounts. The error is something like €4.6 billion. Indeed, it is the 17th year that the Court of Auditors has been unable to give an unqualified statement of assurance. Additionally, our net contribution to the European Union has trebled between 2008-09 and 2014-15 in a way that makes it difficult for many people to understand what the advantages of that process have been. A number of organisations have looked at the proportion of the cost of regulation from the EU that has impacted our businesses and they have concluded that it is substantial.

Any relationship between two countries, whether organisational, bilateral or multilateral, has to be based on a whole number of frankly unmeasurable criteria. This will include collective action on a global basis and co-operation in spheres that inevitably directly impact the well-being of individual EU states. However, there is another aspect. Are countries such as Switzerland or Norway, with populations that are smaller than Greater London, free of financial contributions and single market rules? They are not. Whether in consumer or environmental protection there is the internal market. If, for example, we were to seek membership of EFTA—we may not do so if we were to leave the European Union—would it necessarily accept us? The simple truth is that through our very long history and connection with the continent of Europe, this country has quite rightly been reluctant to be involved in European Affairs at different times. However, in the end, we cannot escape our geography and the links that bind us with our neighbours. Frankly, we cannot preclude or exclude ourselves. Of course, this does not stop us from fighting for our national interest in the European context. However, it would be unfortunate to believe that somehow we could wish away our geography and links.

I should like simply to end with two points. As we look at the EU and the turmoil today, it would be madness if we were to divorce ourselves from other major European countries when whatever happens will directly affect us. I am happy to say that that is not the view of the British Government because I believe that we are trying as hard as we can to be involved in trying to unpick the mess that the European Union has fallen into.

It was Willy Brandt who once said that politicians go into politics to resolve a given set of problems, but once those problems are resolved they fail to move on. That is the case with the European Union today. It is frozen in time and failing to adjust to the way that the world now operates. I do not know, as we enter into this very difficult time, whether we are in unknown unknown or known unknown territory, but it is vital that there is a new structure within the European Union; that may emerge out of the crisis that is happening now. It is important that we then try to draw the advantages of EU membership and reconnect the peoples of Europe with the lack of democratic underpinnings that exist. I believe, however, that that will be our role. What the peoples and markets of Europe and our country in particular are now saying is simply this: the European Union as presently constituted is past its sell-by date, but we should be there to influence the future.

Economy: Government Policies

Lord Risby Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord Risby]

My Lords, it is a great pleasure to follow on from my noble friend Lord Lyell. I add to the congratulations already offered to my noble friend Lord Lawson on securing this debate and on being a truly reforming Chancellor. I also congratulate warmly my two noble friends Lord Hussain and Lady Stedman-Scott on their excellent maiden speeches. I know that they will greatly enrich the proceedings of your Lordships' House in the years to come.

We appear today to be in something of a circular situation, with consumers feeling bruised and nervous, their confidence weak and, in consequence, banks being reluctant to lend, especially to smaller and start-up businesses. Yet, ironically, the overall cash position of corporate Britain is very high by historic standards. Unleashing this would undoubtedly spur on economic growth and confidence, and this was at the heart of what the Budget was all about.

A fundamental necessity for any new Government after the general election was to convince the markets that the deficit would be tackled, and this has worked. While the interest-level cost of our massive borrowing has decreased, it has risen in other countries, as we have heard, such as Spain and Portugal. What has happened in the past 24 hours to Portugal absolutely says it all. Given that we have the highest deficit in the industrialised world, we had to respond to the sovereign debt crisis, which was and is pervasive in southern Europe. We avoided that, and had we not done so, the consequences would have been simply cataclysmic. Interest rates would have risen. Even now, with restraint, our total debt will be £1.36 billion.

[Lord Myners]

Trillion.

[Lord Risby]

Trillion. It is simply wrong and absolutely immoral to bequeath to our children and grandchildren a debt burden of this order, which would have been even worse because of the profligacy of this generation in government.

However, at the heart of this most difficult legacy was the behaviour of banks, so disproportionately important to the UK economy. This was due substantially to a failure of proper regulation. I have heard it described as a product of light regulation. The FSA’s bureaucratic procedures and micromanagement meant that it did not focus on the big picture—for example, the borrowing and lending practices of Northern Rock. The tripartite system ensured that neither the Treasury nor the FSA nor the Bank of England took the necessary pre-emptive action to stop what so tragically ensued. It diminished in consequence our credibility and ability to influence the pattern of emerging European financial services regulation.

Nevertheless, given the massive importance of the financial services industry, it is crucial that previous failed arrangements are replaced. No regulatory system is perfect, but at least the Bank of England previously closely monitored financial institutions and will do so again. Without this, overall economic recovery will not happen. While Governments can assist with an appropriate tax and regulatory framework, it is the private sector that will ensure this, with innovation and new enterprise crucial to it.

I declare an interest in this regard because I am deputy chairman of the Small Business Bureau. The renewed emphasis on smaller businesses is extremely important, as the weight of regulatory and tax pressure is for them inevitably disproportionate. Planning laws have been too restrictive and have benefited larger businesses such as supermarkets. They have also had the effect of distorting house prices. Therefore, I greatly welcome George Osborne’s recognition of this, and the reform of Business Link to assist budding entrepreneurs is welcome, too.

Of significant potential is the renewed government-supported export drive, which specifically includes small businesses. It is gratifying that the strategy outlined in your Lordships' House by my noble friend Lord Green includes financial support and advice to SMEs. The structure of export promotion in this country has been ill focused, with regions even competing with each other at international trade fairs. Our trade promotion activities compared with those of our rivals have been inadequate, and the strategy which has been outlined brings fresh coherence to a huge marketing opportunity abroad. The new enterprise finance guarantee scheme, a new working capital scheme, a new bond support arrangement and credit insurance are specifically targeted at SMEs and in that regard are particularly welcome.

This focus on acorn companies is long overdue. They account for half of all private sector output and 60 per cent of private sector jobs. Freeing them from new domestic regulation, limiting audit and reporting burdens, the small business rate relief and fresh access arrangements to increase finance to them, matched with easier planning consents, will help promote entrepreneurial activity. The increase in the SME rate of research and development tax credit is additional good news.

History has shown us that, in politics, defeat often produces a kind of introspection. It has certainly manifested itself since the last general election. It is as if the Opposition were not responsible at all for the economic crisis which engulfed us. In the context of the economy today, to have one policy, which is simply to say that reduction of the deficit should be slower, is frankly no policy at all. If there is a coherent alternative strategy, I hope that we shall hear it today.

Banking

Lord Risby Excerpts

Wednesday 9th February 2011 Lords Chamber

[Lord Sassoon]

My Lords, today is precisely about honest politics. In answer to the first part of the noble Lord’s assertions and questions, there may have been plenty of good ideas floating around—whether it was the Rowlands review, the tax code for banks, the big society bank; I could go on and on and on—but the previous Government were completely unable to deliver on any of them. My right honourable friend has today set out hard delivery on so many of these issues. As for the question of remuneration, I believe that the deal on remuneration that has been done today on behalf of the British taxpayer and the British people is a fair and reasonable one. I certainly do not know, and do not wish to know, the individual bonuses that hypothetically may go to people, and I do not intend now or in the future to comment on individual banker's bonuses. The critical thing is that we now have a fair and reasonable deal between the Government, as the representative of the taxpayers of this country, and the banks, and it is one that will be enforced.

[Lord Risby]

My Lords, would the Minister care to consider the impact of the failure of the tripartite regulatory system in the context of European regulatory arrangements and our credibility not only in the European context but in the domestic context as well? Does he think that after this disastrous failure of policy, a new regulatory framework is urgently needed to put stability back into the system?

[Lord Sassoon]

I completely agree with my noble friend Lord Risby that at the heart failure of the failure and the heart of what needs to be done is the need to get the British regulatory system back on to an even keel. That is why we came forward with ideas in opposition and consulted widely on them even then. We have also moved fast in government. Only last week the appointment of the prospective head of the new consumer body was announced. We will continue urgently to roll out our proposals on the new regulatory structure. I absolutely take my noble friend's point that in the context of the United Kingdom's standing internationally, the leadership that we have shown in getting a new structure in place has been very much understood and respected by our peer group in Europe and more widely.