EU: UK Membership

Lord Soley Excerpts

Thursday 24th October 2013 Lords Chamber

[Lord Soley (Lab)]

My Lords, I welcome the noble Lord, Lord Wrigglesworth, whom I well remember as a Member of Parliament and his struggle as to whether he should stay in the Labour Party or leave. He chose to leave and I chose to stay, although, like a number of us at that time, we toyed with the idea of murder or suicide instead. However, we got through that phase, which I think was beneficial to everyone.

I particularly welcome the full, considered and convincing introduction to this debate made by the noble Lord, Lord Shipley. I shall not repeat all the arguments he made along economic lines but I should like to emphasise one that was picked up by the noble Lords, Lord Hannay and Lord Watson of Richmond, and my noble friend Lord Haskel. The amount of expenditure on science and technology beneficially made to us through the European Union is enormous, particularly in the university sector. We benefit far more than any other country in the European Union from that expenditure.

Science, research and development will drive growth. We will not achieve growth with a low-income economy. We cannot go down that road. If you are to maintain that level of research and development expenditure, and come out of the European Union, you have to answer the question that I think was asked by the noble Lord, Lord Stoddart, and the noble Baroness, Lady Noakes: where does that money come from? It will not be replaced by the private sector or the public sector in Britain. Inevitably, that would impact on us. My noble friend Lord Haskel gave the classic example of the space industry. Although I have said it on a number of occasions in the House, it is not well known that Britain still has the second-largest and second most-advanced aerospace industry in the world. There is hardly a satellite going around this planet that does not have British instruments on it. Often, they are of major importance. A lot of that expenditure on research and development has come from the money that we have received from the European Union. People have a responsibility to answer that point.

I also want to put this in a political context. I am very conscious that when people making economic decisions do not take into account the political circumstances, they often make mistakes. Politicians who make decisions without taking into account the economic world in which they operate can make very big mistakes. If you look back on Britain’s relationship with the evolving European Union, many people would say that we made very big mistakes in our political calculations. You can go back to the famous headline in the Daily Mail around 1908—I cannot remember exactly when—which said, “Fog in the Channel: Europe isolated”, or perhaps it was “Fog in the Channel: Continent isolated”. Either way, it said everything about a mindset.

I often ask the question: Why are the British so diffident about Europe? One of the reasons is that we are an island nation. Another reason, which was alluded to a few moments ago, is that we have never been defeated and occupied. We are almost alone among the European states and certainly alone among the major states. We have always been the victor. If you ask continental Europeans about the importance of the European Union, often they will put first that it has maintained the peace. The majority of British people do not see it in that way; it does not have the same weight here. That is a very important factor in people’s attitudes to Europe.

In the context of the balance between politics and economics, having had a view of ourselves as being separate and having won the two world wars, in the period after the Second World War we looked at where our market was going to be while the European Union was developing as the European Economic Community. Initially, we had the Commonwealth Party, which argued for the Commonwealth as the market, for which I had great support at the time. As an internationalist in that sense, I rather liked the idea. Having failed on that front, we turned to the European Free Trade Area, which we set up. Again, it did not work. People who are saying that we should come out of the European Union now should look at the long history of this issue and ask why we made those political judgments in the face of such dramatic political change.

Enormous political change is again taking place in the world now. The United States will no longer be the dominant world power as it was after the Second World War. That does not mean that it will decline in importance, fail economically or whatever. I do not think that that is happening but the US will not have the same dominance that it had previously. In many respects, it is rather like Britain in the early 20th century when we had lost our total dominance of the world. People used to say that 95% of goods travelling around the world were in British ships. Now we say that about 88% of the advanced technology of the internet is driven by the United States. However, that is changing rapidly. India, China, Brazil and the newly emerging countries—perhaps to a lesser extent, Russia—are eating away at this, which means that we must change too.

Finally, it is time for Britain to stop the half-in, half-out dance. We are doing ourselves enormous damage. My fear about the referendum—I do not support it and I am not a great fan of referendums at the best of times—is not that it will not be won. I am sure that it will be won, but my fear is that there will be a relatively low turnout. Those people who want to take Britain out will continue to fight on that front. There will be the same problem as there will be if we do not win the referendum convincingly in Scotland, although I hope that we will. People take heart, although often it is because people are not voting in the way that one hopes. I hope that the British people have the wit to see that the politics has changed dramatically and, along with it, the economics of the world. We had better face up to that and become a bit more wholehearted and less half-hearted. We are doing ourselves a lot of damage within the European community and in the wider world by appearing to be so negative.

Economy: GDP Forecast

Lord Soley Excerpts

Monday 29th July 2013 Lords Chamber

Asked by

[Lord Soley]

To ask Her Majesty’s Government what is their forecast of the maximum public debt–gross domestic product ratio in 2016–17.

[Lord Newby]

My Lords, the Office for Budget Responsibility forecast public sector net debt to be 85.6% of GDP in 2016-17.

[Lord Soley]

In 2010, the Chancellor of the Exchequer promised to eliminate the structural deficit and to reduce the percentage of national debt to GDP. Both of those will now fail to materialise—I would argue, through low growth. When do the Government think that they will achieve them and why do they think that they have failed to achieve them?

[Lord Newby]

My Lords, the figure I gave was for the peak level of net debt. After that, the level will fall. Of course, if growth proves to be higher than forecast, as seems likely, for this calendar year, net debt will be less over the period ahead than has been forecast.

Economy: Growth

Lord Soley Excerpts

Thursday 16th May 2013 Lords Chamber

Moved By

[Lord Soley]

To move that this House takes note of the current level of growth in the United Kingdom economy.

[Lord Soley]

My Lords, the international financial collapse in this country and many other countries around the world produced a situation which in many ways was very similar to that of the 1930s and had a devastating effect on the economics of family life here and elsewhere. It is not something that was born and bred in the United Kingdom, as some people say. If anybody has doubts about the seriousness of the problem, they should look at the excellent BBC money programme on the subject—the second part of which was on last night, and there is a third part coming soon. One of the things that slightly troubled me about the speech of the noble Lord, Lord Deighton, in the debate on the Queen’s Speech, was his comment that,

“we need to complete our work in fixing the financial system so that it is able to sustain growth in the economy”.—[Official Report, 13/5/13; col. 143.]

He was absolutely right to say that. However, if we wait until we have fixed the financial and banking problems we will, frankly, have to wait at least four years before we can expect growth.

Although I, like everyone, hope that the outgoing chairman of the Bank of England is right, I cannot be sure. I have not argued much about whether we are in a second-dip or third-dip recession, but few people in this country or elsewhere would disagree that we have been bouncing along the bottom. Events in the euro area will be a further challenge to us, as I am sure the Minister will be the first to agree. Although I accept that there is a need to reduce the deficit, the key problem is growth. If we do not get growth into the economy we cannot deal with the deficit quickly enough. We will be constantly chasing our tail, trying to cut the deficit without getting back to growth.

Contrary to popular opinion, the United Kingdom has on many occasions had far worse debt-to-GDP ratios—sometimes up to 225%. Britain has never defaulted and has had one of the best reputations in the world for financial management, and we still have it. Interestingly, the Government were concerned enough to say that if we were not careful we would lose our triple-star rating, but when we lost it they said, “It doesn’t matter so much anyway”. It does not matter that much. If we can get growth to go back into the economy, we will deal with the deficit.

I remember a Minister—I cannot remember who—saying that future generations would never forgive us because we would be burdened with this debt for generations to come. This might be a good time to remember that we finally paid off the debt for the Napoleonic wars in the late 1990s. My worries when I was at school did not include the debt which had been dumped on us during the Napoleonic wars. Britain has always borrowed and done what most other advanced economies do; they grow themselves out of the debt problem. That is why growth is so important and what we should focus on.

As a politician I know the temptation among all political parties to blame the Government whom you are trying to replace for just about everything which has happened anywhere in the world including the weather—in fact, particularly the weather. At the last general election it was clear to me that the outgoing Labour Government had already lost the argument on this subject. The then Conservative Opposition and the Liberal Democrats were going round saying that this was the most desperate situation that we in this country had ever been in, but that was not true. It was not true that the deficit was the key problem. The international financial collapse caused the problem.

We talked ourselves down in that election. Once you do that, people will naturally pull back. They will not spend money—they tend either to save it or to wait to see what will happen, and that adds to the problem. The debt-to-GDP ratio showed only small changes between 1970 and 2010, and a number of economists are now stating that much more clearly. They say that history suggests that the current radio of debt to GDP is not alarming. If my views on that do not satisfy noble Lords, let me quote the IMF’s World Economic Outlook of October 2012. It states:

“Throughout the past century, numerous advanced economies have faced public debt burdens as high, or higher, than those prevailing today”.

That was the view of people such as Robert Neild, the Cambridge economist, and others who have said that the debt-to-GDP ratio is not alarming. That does not mean that it is desirable or that we should not reduce it, but it suggests that we have had the argument the wrong way round for the past few years, and that is what troubles me. I suppose that I am a natural Keynesian, and I felt that although we had to give the Government space in their deficit-reduction programme, the position should have been reversed and we should have been saying that growth comes first. If you do not get growth, your debt problems will be far worse.

I should like to provide another quote from the IMF’s World Economic Outlook. It states:

“First, support for growth is essential to cope with the contractionary effects of fiscal consolidation. Policies must emphasise the resolution of underlying structural problems within the economy, and monetary policy must be as supportive as possible”.

Again, I am not arguing that getting the right public sector and public debt relationship is unimportant. I am saying that you should use your fiscal policies to underpin policies for growth. The coalition’s focus on cuts in expenditure is a repetition of the 1930s, and only recently has it begun seriously to address growth. That is what I should like us to do a little more, and I hope that the debate will focus on it.

The key question is, “How do we get growth?”. Recently, the Government have rightly been saying that we need to do more on infrastructure, and they have mentioned a range of issues. I should like to deal with a couple of those issues.

It is beginning to be recognised—certainly by many economists—that you need to have a more balanced approach to how much you borrow in order to invest. It is no good borrowing simply to pay off debt. We all know that and no one has any doubts about it. Borrowing to invest, as long as that investment is leading to growth, is not a bad thing. That balance is right.

I agree that infrastructure is a crucial element that gives us opportunities. The United Kingdom’s infrastructure is not as good as it ought to be. I refer to the remarks of the noble Lord, Lord Deighton, who said:

“We are committed to creating a single local growth fund for the key areas of skills, housing and transport. The final size of the fund will be set out at the spending round next month”.—[Official Report, 13/5/10; cols. 140-41.]

I look forward to that. Quite rightly, he focused on two of the big issues that are always good for generating growth: transport and housing.

What has troubled me not just about the current Government but for a considerable time is that when they talk about transport, they are referring to rail and road and do not mention aviation. The Minister knows my strong views on Heathrow. Before he gets worried, I should tell him that I am not about to embark on a debate on Heathrow; this issue goes much wider. I have always argued that growth in aviation is crucial, and is important for the regions. The Government have placed great emphasis on high-speed rail. I agree with that and do not have a problem with it. However, high-speed rail deals with the transport of people, not of goods, whereas every aircraft that flies out of this country with passengers also usually has in its belly large quantities of high-value export goods. I shall mention Heathrow once and try not to mention it again. Only 0.001% of flights in or out of Heathrow are cargo aircraft. All the cargo comes and goes in passenger aircraft. The same is true for all our local regional airports. If you want to encourage exports, we must allow aviation to grow.

Therefore, my first question to the Minister is: are the Government taking seriously enough the contribution that aviation can make to growth? There is enormous potential there. It is no good telling people in Exeter that the high-speed rail line will help them because it will not. However, flights from Exeter airport to other airports around the world will help them. Birmingham Airport, which is currently trying to expand, needs to have permission to go ahead—again, because Birmingham can export more if it has growth. Therefore, the growth factor is very important.

There are two other points that I want to make in relation to aviation. First—again, the Minister will have heard this before—air passenger duty is a disaster for the aviation industry. It is massively outpricing us in competition with other countries and other airlines. We need to reduce air passenger duty. I know that we cannot do that quickly—it cannot be done overnight—but the duty is a major hindrance to the expansion of growth for the British aviation industry and that presents it with very real challenges at the moment.

The second thing that I have to say about aviation also applies to other areas of transport. One reason that aviation has not been focused on by successive Governments in the way that it should have been is the fear of climate change. I yield to no one in my concern about climate change. I first wrote about it back in the early 1980s and I still have the same views about it. However, I do not believe that you deal with it by closing down aviation. There is a terrible warning here from the way we conceded to the green movement the argument about nuclear power. Only now are we catching up with the green movement and saying, “Yes, we must have nuclear power”, when the whole argument against it was what held us back early on. The same is happening with aviation and we have to be very alert to that. All sorts of efforts are now being made—frankly, they should have been made earlier and I have been very critical of the aviation and aerospace industry on this—to deal with climate change issues through, among other things, fuel research, which is showing real possibilities.

The other area that I want to touch on is housing, which every political party is saying is important. We now have the Green Investment Bank and a business investment bank. It may interest the noble Lord, Lord Newby, that many years ago in the 1980s, when I was dealing with housing in the House of Commons, we put forward a proposal for a housing investment bank. The proceeds from the sale of council houses, which were very high at the time, would be placed into a housing investment bank, which would then receive matched money from the building societies and big building companies. They were very positive about that process and they wanted to do it. Unfortunately, the receipts from council house sales were simply used to cut taxes, whereas if they had gone into the investment programme, that would have been far more effective. I ask the Minister to look again at this possibility.

I am in favour of selling public housing up to a point. However, that housing must then be replaced, and you do that by having sufficient income from the sales to fund a replacement programme. That would enable us to have a steady housebuilding programme, instead of what tends to happen in this country, which is a lurching from excessive building to none at all. We have gone backwards and forwards with some pretty disastrous consequences, as we saw in the 1950s and 1960s.

My final point concerns the other area on which we need to be much more focused—the emerging countries. We have tended to talk about just the Brazil, Russia, India and China group but we really must not forget Africa. I have seen some very interesting articles. The other week, Chuka Umunna in the House of Commons made a very good point about this. Nigeria has a dramatically growing economy, as have many other countries in Africa with which we have good relationships. There is an expanding market there, particularly in high-tech goods. It is high-technology that can drive our expansion.

In conclusion, I hope that today we will look at how we can achieve growth. Over the past year or two, I have heard the Government shift their position away from simple deficit reduction to growth. Very recently, I have heard some of their suggestions on infrastructure, transport and housing in particular, and I should like the Government to say a bit more today about how they are going to deliver that growth. That is the key question. We could bounce along the bottom for a long time yet but, if we get growth going in the economy, frankly we will do what Britain did very successfully in the 19th and 20th centuries, which was to grow itself out of its economic problems. That is what most advanced countries do. I have the IMF on my side on this, as well as a large number of economists, so I think that I have quite a strong argument.

--- Later in debate ---

[Lord Soley]

My Lords, I am very grateful to everyone who took part in this debate. In his opening comments the noble Lord, Lord Marland, described vividly the work he is doing around the world to encourage British exports. I very much support that. Indeed, I was quite excited, so maybe we ought to have a word outside afterwards. I must declare an interest as the chairman of the Good Governance Foundation. He mentioned corruption and the rule of law, which is precisely what we are trying to do through the company. The amount of work available for British universities on promoting the rule of law is considerable.

The noble Lord, Lord Bhattacharyya, gave a very good speech on a wide range of things. I simply say to him that science and technology deserves a debate on its own when it comes to growth. The high-tech part, which I work with, deserves so much to be put forward. The noble Lord, Lord Bates, also mentioned the importance of confidence in the economy, and I entirely agree with that.

I was slightly disappointed by the Minister’s response because I feel that he slipped back a bit. Yes, Keynes did say to take interest rates into account, but in view of the fact that the noble Lord referred to the long term and the short term he should also remember that Keynes said, “In the long term, we are all dead”. That is perhaps worth remembering, but the important point was really what the IMF and various economists are saying. I simply remind the Minister of the quotation I gave from the IMF report: that many advanced countries had debt to GDP ratios much higher than we have now, and they have dealt with them through growth. It is the alarmist approach, which I thought the Government were moving away from, that undermines confidence, because it says to people, “Oh, we are like Greece”. Well, we are not. That was a silly argument in the first place. Britain is in a much stronger position and we should not talk ourselves down in that way.

Finally, because a number of people chided me again for my interest in aviation, let me say one thing about why this is so important. This is not about hub airports but about airports generally. It is not about the Davies report. I gave evidence to that and will do so again. It is that Britain invented the Industrial Revolution. The second stage of that revolution resulted in railways, which produced the first country in recorded history where manufactured goods could be delivered from one part of the country to the other in large quantities. In other words, we had the world’s first integrated manufacturing economy.

This is such an important point because what aviation is doing for the global economy today is what railways did for the British economy in the 19th century. We lost our lead on railways after the end of the 19th century. We still have the second most advanced aerospace industry in the world. Do not let us lose our lead in this as we did on railways, otherwise we will regret it deeply. Aviation delivers goods, and people, all over the world, and it does not require public money. Most of it can be done with private money, so your Lordships can relax a little more about debt. I thank everyone for this debate.

Motion agreed.

Infrastructure: Expenditure

Lord Soley Excerpts

Monday 25th March 2013 Lords Chamber

[Lord Deighton]

I thank my noble friend for that question, which focuses us on the issues to do with accelerating the delivery of this very important programme. With respect to the proportion that will be under way within this Parliament, this Government have focused activity on the top 40 programmes and projects, which accounts for about £200 billion of the £400 billion my noble friend refers to. Approximately 20% of those projects are currently in construction, and we would expect that proportion, by 2015-16 and the end of this Parliament, to be approximately 50%. There is no question but that the gate that most constrains our ability to accelerate the stream of projects is to do with the variety of planning regulations that surround any major public infrastructure investment.

[Lord Soley]

Do I take it from the Minister’s enthusiasm for private sector investment in infrastructure, with which I wholly agree, that he supports the expansion of Heathrow Airport?

[Lord Deighton]

If I may say, my Lords, those are two quite separate questions. I am very enthusiastic about private sector investment. Infrastructure investments lend themselves to financing in the private markets because they generate a cash flow that can repay those investments. The question about Heathrow Airport is an entirely separate one, although I accept that airports are a particularly attractive investment proposition for the private markets.

Government: Economic Policies

Lord Soley Excerpts

Wednesday 30th January 2013 Lords Chamber

[Lord Deighton]

I thank the noble Lord for that question. I confirm that we are facing extraordinarily challenging economic conditions, but the economy is recovering from the most damaging financial crisis in generations after a decade of growth built on unsustainable levels of debt. This Government inherited the largest deficit since the Second World War and the largest in the G20, and we experienced one of the deepest recessions of any major economy. This Government’s strategy is designed to protect the economy through this period of global uncertainty, to maintain market confidence and keep those interest rates low, and to lay the foundations for a stronger, more balanced economy.

[Lord Soley]

Where is the evidence of growth? Without growth, you will not get out of this deficit. We had larger deficits than this several times in the 19th and 20th centuries, but we got out of them through growth. It is growth that is lacking.

United States Budget: Economic Impact

Lord Soley Excerpts

Monday 10th December 2012 Lords Chamber

[Lord Newby]

I absolutely agree. The challenge now is for exporters to continue exporting in markets where they already do that. For example, our exports to the US this year have increased by 4% and are therefore still exploiting existing markets. However, in addition, the key is getting more companies exporting to the newer markets. That is why the increases in exports to China, Brazil and India over the past two years have been so significant.

[Lord Soley]

The Minister referred to the decisive action in 2010. Surely what the Government were doing at that time was talking us into a deeper recession than the one we were already going into. Secondly, does he not recognise that without growth we will not get out of the problems we are in? Historically, cutting deficits does not really work unless you have high growth as well. We do not have that and it does not look as though we will get it under the current policies.

[Lord Newby]

My Lords, if the Government had not adopted a credible fiscal policy in 2010, it is almost certain that interest rates in the UK would now be significantly higher than they are, as they are in much of the eurozone. Bear in mind that every 1% increase in interest rates means £12 billion extra in mortgage payments. This would have been have been a huge gamble that would almost certainly have failed had we not taken decisive action in 2010.

Banking: Offshore Accounts

Lord Soley Excerpts

Tuesday 20th November 2012 Lords Chamber

[Lord Newby]

My Lords, when it comes to tax avoidance, it is important that we begin to tilt the balance towards what is considered acceptable behaviour. That is one of the reasons why we will be introducing in next year’s Budget, or Finance Bill, a general anti-abuse rule. Those, including accountants, who undertake tax schemes, the principle purpose of which is to avoid tax, will find themselves subject to the rigour of that rule.

[Lord Soley]

The noble Lord mentioned talks with Germany. Is he able to tell us how many companies of European origin, or individuals of European origin, are also involved in the Channel Islands as, if you like, tax exiles? Bearing in mind the disgraceful evidence we saw in the House of Commons the other week from Google, Amazon and Starbucks, should this be addressed at a European level? If that is happening—one of the countries involved was Holland and I would guess that the Channel Islands are probably involved as well—we really should address this issue at a European level because what has been happening is absolutely unacceptable.

[Lord Newby]

I obviously agree with the noble Lord’s latter statement. Many recent examples clearly are unacceptable, which is why we have taken a great interest in, and are looking forward to hearing more about, the initiative that the EU Commission has taken this week in terms of reformulating what constitutes a tax haven. He is right that we can do a certain amount ourselves but we are going to deal with this international issue only through international co-operation.

EU: Euro Area Crisis

Lord Soley Excerpts

Thursday 24th May 2012 Lords Chamber

[Lord Sassoon]

My Lords, many people have been painting scenarios of which my noble friend sketches out one. This is not the time to talk about different scenarios. We want to see an early resolution of the Greek uncertainty, the ring-fencing of other vulnerable economies, the recapitalisation of the banks and work on European growth. That has to be the priority for the moment.

[Lord Soley]

The Government say that the eurozone countries must take decisive action. What decisive action do the Government have in mind?

[Lord Sassoon]

Again, my Lords, I will not speculate on the range of scenarios. Plenty of advice has been given to the UK Government, to each of the individual Governments in the eurozone and to the eurozone collectively. The important thing is to get on with it. The next major milestone will be what the Greek people decide at their forthcoming election.

Budget Deficit

Lord Soley Excerpts

Wednesday 15th February 2012 Lords Chamber

[Lord Sassoon]

My Lords, it is indeed the case. If my noble friend had such a short cut, I am sure he would have told the House what it was.

[Lord Soley]

Is the Minister not missing the key answer, which he keeps ducking? The Chancellor has frequently said that the debt burden must be reduced and the Government will reduce it quickly. It is actually increasing. The economy contracted by 0.2 per cent in the previous quarter and will go on reducing for the foreseeable future. What has gone wrong? Never mind what other people say, what has gone wrong with the Government’s plans?

[Lord Sassoon]

My Lords, economic growth has been weaker for reasons that include, particularly at the moment, the ongoing eurozone crisis. Inflation has been high but is now coming down significantly from its peak last September. In those circumstances, the automatic stabilisers apply and expenditure goes up. However, we are getting two very different messages from the party opposite, one implicitly urging faster consolidation and the other asking for more expenditure. Which is it to be? This Government will get borrowing down by £147 billion a year by 2016-17. That is what is important.

Economy: Growth

Lord Soley Excerpts

Thursday 31st March 2011 Lords Chamber

[Lord Soley]

My Lords, I echo the congratulations to the noble Lord, Lord Hollick, on securing this wide-ranging debate, and welcome the excellent maiden speeches, which are a good indication for the future of this House.

I want to focus my very limited time on the importance of aerospace and aviation policy. I have a straight request to the Government: please get an aviation policy. I do not accept what the Secretary of State said in his letter published in the Times yesterday, in response to wide-ranging comments in the Times from many businessmen and from the City of London that if we do not attempt to protect our premier hub airport we will diminish in importance.

I should say at this stage that I no longer have an interest to declare, because I am no longer campaign director of Future Heathrow. Believe me, everyone in this country has an interest in preserving a premier hub airport for Britain. We are the only country in continental Europe and among the emerging nations of Brazil, India, China and others which has not either already expanded or is expanding its airports, particularly hub airports. Hub airports are the way the global economy interconnects. It is the way that the European economy is connected. It is the way that investment decisions are made about where you can meet.

In the limited time available, let me give one or two simple facts to the House. A few years back, Heathrow could fly you to 240 destinations worldwide. Now it is 180, and the airport is full. Frankfurt can fly you to 307. Frankfurt sits in the middle of the largest, richest market in the world and can fly you to 307 destinations. What is its pitch in China, India, Brazil and everywhere else? Come to Frankfurt for your investment decisions and we can fly you on to wherever else you need to go. This Minister, more than any other, will know that Frankfurt has a burgeoning financial sector. London does not have to have the only and premier financial sector in Europe, and we will not do if we continue to hand the business over to Frankfurt. When the chief executive of Schiphol Airport in Amsterdam heard about the British Government’s recent decision not to have any expansion of airports anywhere in the south-east, the response was the same as before: “Good news for Schiphol; bad news for London”. Schiphol will fly you to 21 British regional cities; Heathrow will fly you to seven.

This is not an argument about the environment. I yield to no one in my concern about climate change—I wrote my first article about it back in 1981—but I do not believe and never have believed that you can solve the problem of climate change by hairshirt policies such as telling people, as the Government recently did, that they want to decrease the demand for flying. We have to be cleverer about it. I have been telling the aviation industry for a considerable time that it needs to sharpen up its act in conveying the message. Frankfurt has reduced its CO₂ emissions below its level in 2004, although it has doubled its expansion. If the Germans can do it, we can.

When Dubai’s hub, rather immodestly called the world hub, comes on stream, it will also bypass Heathrow for many from the Middle East and the Indian subcontinent. Many big companies located around Heathrow have already moved. Where have they moved to? To Amsterdam, to Frankfurt—less so to Paris—but increasingly to Madrid. BA's tie-up with the Spanish airline means that many of the flights now coming in from Brazil and the rest of South America go not to Heathrow but to Madrid. I say to the Government: if you do not get an aviation policy, this country will marginalise itself in the global and European economy. We will pay an awfully high price for that and will not do anything to improve the climate.