Autumn Statement

Lord Stevens of Ludgate Excerpts

Thursday 4th December 2014 Lords Chamber

[Lord Stevens of Ludgate (UKIP)]

My Lords, I congratulate the noble Lord, Lord Rose, on his excellent speech. The noble Lord, Lord Palumbo, has hit the nail exactly on the head. The figures that he mentioned are completely ignored in most debates on economics and yet, in my view, they will come to haunt future generations.

We all know that the Government inherited an economic disaster caused by a previous Government who consistently, in their later years, ran a budget deficit when a surplus was appropriate, and boasted about economic growth that was partly financed by debt—the same trap that this Government are in. The last Government increased the money supply and oversaw—or did not—poor regulation. The bankers—or, should I say, gamblers?—took over the casino. They should have known better, bearing in mind the absurd salaries and bonuses they received. Sadly as we know, some of their illegal practices have continued for far too long. This must be cleaned up.

However, after four and a half years, we cannot go on blaming the last lot. Where are we now? The Government tell us that we have the fastest growth rate of any of the 28 countries in the EU. Well done for that. However, we also have the second largest budget deficit as a percentage of GDP of any country apart from Greece. We have, therefore, one of the fastest growing rates of national debt of any country in the EU, nearly doubling under this Government. How often do we hear that from the Government? If you spend £110 for every £100 you take in tax, you would expect the economy to grow. If it did not, you would really have a problem.

The Government, in my view, should have cut spending when they came to power. Instead, even on their own forecast, spending increases year on year. Spending is up this year by more than 2%. In Ireland, it is down 30% since its peak, and in Spain, Portugal and Greece by 7%, 8% and 16%. Admittedly, their debt-to-GDP ratios have increased because their economies have contracted. I am not advocating cuts on that scale but it shows that cuts, although very painful, can be achieved.

What did the Government do? They raised VAT and slashed government infrastructure spending. Surely a more effective approach would have been to cut current spending—welfare, for example, where benefits were initially linked to relatively high rates of inflation. Interest on the national debt costs £55 billion a year. The Chancellor congratulates himself on low interest rates, helped perhaps by quantitative easing; the unravelling of that is another story. What happens when rates rise, as they surely must?

However, at least we are not getting the talk of the “end of boom and bust”. There is good news—a large increase in small business start-ups and a big rise in self-employment—but only now are the Government starting to get a grip on benefits, which is not helped by vast and uncontrolled immigration, imposing huge strains on health, education and social services, holding down wages and, therefore, income tax receipts. It is a failure of this Government to control expenditure, immigration and many basic items of housekeeping, which is concerning. Costs can always be cut. Only now do we have proposals to stop those receiving redundancy payments being re-employed with no redress. This is basic housekeeping. I wrote about this to the Prime Minister four years ago; where is the implementation? Then we had the proposal to pass a law on balanced budgets—presumably to embarrass the Opposition. It is just a gimmick, as we all know; one Government cannot bind the hands of another. We cut our Regular Forces when world conflicts and terrorism are on the rise. Surely the saving of just over £2 billion would be better achieved by a cut in overseas aid.

However, much has been achieved—but sadly still not enough—to simplify the tax system. Noble Lords should look at the book I have here on claiming benefits. Written by the Child Poverty Action Group, it contains nearly 2,000 pages. Where is the simplification there? Disappointing as it is incurring debt to finance growth, the Government’s Statement is better than the Labour Party’s alternative, which is spend, tax and spend.

EU: UK Membership

Lord Stevens of Ludgate Excerpts

Thursday 24th October 2013 Lords Chamber

[Lord Stevens of Ludgate (Con Ind)]

My Lords, we are here today, thanks to the noble Lord, Lord Shipley, to debate the economic impact of being a member of the EU. I also congratulate the noble Lord, Lord Wrigglesworth, on an excellent maiden speech. In addition, contrary to some comments that have been made, I agree with practically everything that the noble Baroness, Lady Noakes, said. She summed the situation up brilliantly, which is why my speech will be somewhat shorter than usual.

No one could doubt that the impact has been of major importance. The European treaties are the UK’s supreme constitution, over and above our laws, as per the European Communities Act 1972. The UK’s cash contribution to the EU is second only to that of Germany. Since 1973, the UK has paid to the EU some £370 billion and received in return £180 billion—this to an organisation whose own auditors say that 90% of the EU’s entire budget has been materially affected in some way by fraud or unaccounted spending. If sending to the EU some £12 billion net in 2013 is perhaps not of major impact in relation to the total UK budget, the economic cost of regulation is. The European Commission itself puts the EU costs of regulation at £600 billion a year for all the members. Business for Britain, supported by more than 500 business leaders, has told us that since the 2010 general election, Brussels has handed down 3,600 new pieces of regulation or directives—some 13 million words—ranging from banning the union jack on packs of meat to changing the generic name of the tomato.

Let us pause for a moment and look at Open Europe’s report on EU regulations that came out last Monday. It says that the top 100 EU regulations cost the UK economy some £27 billion a year and that the costs of regulation outweigh the benefits in impact assessments of a quarter of the 100 cases. Of course, as has been stated, were the UK to leave the EU, some of these regulations would need to be retained.

The EU was sold to the British public as a free trade area. It has indeed brought trade barriers down, as has the WTO. Some 40% of our trade is with the EU—a declining proportion, partly because EU trade has slowed down since the 2008 collapse, but also because the share of the EU in global trade and outputs has been declining and will continue to do so, if for no other reason than the demographic problems of its ageing and declining population.

As has been stated, we have a trade deficit with the EU of more than £80 billion a year, larger than our surplus with the rest of the world. It needs us more than we need it. As far as economic influence is concerned, the euro members can outvote us in any matter not requiring a unanimous vote. As we all know, EU regulations apply to 100% of the UK economy, but our trade with the EU is less than 10% of the UK economy. Our trade with the rest of the world, in spite of these regulations, is growing much more rapidly than with the EU. How much more rapidly would it grow without EU regulation?

I have not commented on unlimited immigration, handouts to illegal immigrants, inflated agricultural prices and many other matters, because time inhibits it.

The original subject of this debate was “economic benefit”. That has changed to “economic impact”. It seems almost to have developed into a debate over “in” or “out”. We heard in Oral Questions today that the majority of the British public support some control of the press. I declare an interest as a former chairman of Express Newspapers. On this basis, the majority want a referendum on the UK’s membership of the EU: in or out. Is it not time that we had one?

European Union Membership (Economic Implications) Bill [HL]

Lord Stevens of Ludgate Excerpts

Friday 25th November 2011 Lords Chamber

[Lord Stevens of Ludgate]

My Lords, I, too, congratulate the noble Lord, Lord Pearson, on instigating today’s debate. He is very persistent and continues to fight earnestly for what he truly believes in despite much opposition. I also agree with most of what the noble Lord, Lord Desai, and other speakers, said in that I think that we need to have a serious discussion about the broader aspects of the membership of the EU, apart from just cost-benefit analysis. The noble Lord, Lord Howell, said in a debate on the European Union (Implications of Withdrawal) Bill:

“The whole process of incorporating EU regulations and other burdens into our lives is sloppy, full of holes and should long since have been tightened up”.—[Official Report, 8/6/07; col. 1359.]

I agree with these sentiments, but sadly we have not been able to make much progress.

Calls in the past for a cost-benefit analysis have always been brushed aside on the grounds that the net gains from our membership were so obvious that there was no need to quantify them. Recent developments must make even those so committed to the project feel uneasy. The reality is that Britain’s membership of the EU is very costly and the benefits are becoming harder to see. The most transparent cost is our net budget contribution. Following the December 2005 Brussels summit at which the UK’s rebate was significantly reduced, this has risen sharply. In addition, there are off-budget contributions; for example, projects such as the Galileo, which is now expected to cost the EU taxpayer up to €22 billion in the next 20 years. The net costs to Britain of the common agricultural policy and the common fisheries policy are estimated at £16 billion and £3 billion per annum respectively. More difficult to quantify are the costs of excessive regulation. But here perhaps the estimate produced in October 2005 by our previous Prime Minister when Chancellor, in a Treasury paper under his own signature, and as mentioned by the noble Lord, Lord Pearson, is well worth thinking about. I shall not repeat the figures.

The flood of new regulations from Brussels continues despite everything which the new coalition Government say they would like to stop. Now Brussels wants to tackle the big four auditing firms and suggests that large companies should have two firms of auditors. Would it not be better for its members to get their own accounts signed off with a clean audit first?

As we all know, the UK has serious budgetary problems and is seeking to cut expenditure. Indeed, all the countries in the EU have similar problems. It might be expected, therefore, that Brussels would share the pain experienced by its member states by cutting its expenditure and not increasing it. Its recent proposal to increase its budget by approximately 5.9 per cent is out of touch with all reality. Even though the increase had been reduced by Ministers, it just goes to show that they have no budgetary control.

I do not propose to spend much time on discussing where all the EU money goes; suffice it to say that a prime example of what appears to me as a lay man to be gross duplication and waste is the new foreign service. Its budget is 20 times the cost of the UK’s Foreign Office and includes among other items £33 million for 150 bomb-proof limousines for all EU ambassadors. The number of staff employed by its quangos and committees alone has tripled during the past five years, amounting to a total cost of more than £2 billion in 2011. It has just opened a new £25 million office in London, and our Foreign Secretary has claimed that the UK Government have brought the EU budget under control. Perhaps the noble Lord, Lord Sassoon, could confirm in his reply that the UK has no liability for any losses incurred by the ECB, another potential burden on this country.

It is a shame that our Deputy Prime Minister has chosen to describe those who want treaty change as “populists, chauvinists and demagogues”. I am afraid that I fit into that category. Surely those who do not want treaty change can raise the level of debate higher than this. However, we must be grateful to our Deputy Prime Minister for supplying us with the information that an extra £1 billion of government expenditure in the UK would create 200,000 to 300,000 jobs. By extrapolation—and perhaps this is unfair—expenditure of £15 billion, which is our gross contribution to the EU would create 3 million to 4 million jobs, matches both our annual contribution to Brussels and the mystical, unsubstantiated and inaccurate figure from the Government that 3 million jobs would be lost if the UK left the EU.

The UK exports less than 10 per cent of GDP in goods and services to the EU each year, yet, as has been said, the EU influences 100 per cent of the UK economy. British exports worldwide, outside the EU, are substantially more than those within it and are growing much faster.

If one turns to the longer term, one sees that the EU has a declining population whereas most of the countries in the rest of the world have rising populations, particularly the US, out largest country export market. The EU is forecast to lose 16 per cent of its current working population by 2050, more than the current working-age population of Germany. The US is to gain 17 per cent. Let us not forget that the Lisbon treaty obliges the EU to negotiate free trade agreements with a member state that wishes to withdraw. It already has free trade agreements with more 80 per cent of all member countries. Our Chancellor says that he is worried that if we do not fully participate in the bail-out negotiations, we could become a “second-tier … state”. Good. Then we can join the USA and the other 165 countries that are not members—China, India, Brazil to mention but three—and be free of the thousands of regulations that come from Brussels.

I am confident that a cost-benefit analysis will show —after all, we have it for other legislation—that the costs far outweigh the benefits. In addition, there is only one way to restore our nation status and sovereignty, and that is to renegotiate our relationship with the EU to achieve what many of us were led to believe; namely, that we entered into a free trade area and not a federal Union. I therefore support the excellent Bill of the noble Lord, Lord Pearson, as a major step in this direction.