Tax Increases

Lord Wallace of Saltaire Excerpts
Thursday 10th July 2025

(4 days, 14 hours ago)

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Lord Livermore Portrait Lord Livermore (Lab)
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Why does the noble Baroness think the UK has such a high stock of debt? Is it because her Government doubled the national debt? Yes, it is.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, I was very struck by the article in the Times the other day by Paul Johnson, former leader of the Institute for Fiscal Studies, in which he said that we have an entirely illusory debate about tax and spend. There are calls from a substantial number of newspapers and at least one political party for tax cuts, but nobody ever says where they will fall or what our spending parameters are. This Government have made a commitment to raise our defence spending by over 1% of GDP, which I assume that all the major parties support. That means that tax rises are likelier than tax cuts, unless there are severe cuts elsewhere—for example, in pensions. Could the Government not make some attempt to reach an agreement among the parties such that, when discussing taxes rising and falling, we also discuss what the spending priorities are and what cuts may necessarily be possible?

Lord Livermore Portrait Lord Livermore (Lab)
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In the spending review, the Government set out our spending plans and a fully funded path to spending 2.6% of GDP on defence. We have an ambition to increase it to 3% in the next Parliament, as the noble Lord knows. I will not speculate on the next Budget now. As I have said, there will be an OBR forecast in the autumn before the annual Budget and we will make decisions based on it, in the usual way.

Unpaid Tax

Lord Wallace of Saltaire Excerpts
Monday 7th July 2025

(1 week ago)

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Lord Livermore Portrait Lord Livermore (Lab)
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It is not for me to comment on individual tax affairs, but of course HMRC will treat every taxpayer fairly.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, in pursuing tax evasion, the question of information from our dependent territories is key. There was an agreement between the Treasury and the dependent territories on the provision of fuller information about ownership of assets there as they relate to tax evasion here. We are well aware that a number of dependent territories— particularly the British Virgin Islands—have not yet implemented that agreement. Are the British Government pushing them to do so?

Lord Livermore Portrait Lord Livermore (Lab)
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Yes, those discussions are ongoing.

Regional Growth

Lord Wallace of Saltaire Excerpts
Thursday 5th June 2025

(1 month, 1 week ago)

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Lord Livermore Portrait Lord Livermore (Lab)
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I agree with the noble Lord’s points. He asks about the Green Book. He has much more experience in this matter than I do. We have set out—and I hope that he agrees—that for too long the guidance in the Green Book has been biased against certain parts of the country. We want to address that. On whether we will prioritise the spending on where it has the greatest return, yes, this is key to the methodology that the Green Book sets out. The Green Book reinforced investment in areas that were already successful. It did not necessarily enable investment in areas where there was a high degree of potential. That is what we want to do. By investing in areas of high potential, there will be huge returns. We have already set this out. There could be a potential increase of about 3% of GVA if we can get the city regions up to the average productivity of the country, as the noble Baroness, Lady Neville-Rolfe, said. That is the intention and why we are doing what we are doing.

The noble Lord talked about the importance of fiscal responsibility. He will know that this Government inherited a £22 billion black hole in the public finances. Restoring fiscal responsibility is the central driving purpose of the stability pillar of our growth mission. We have set out very clear fiscal rules that require no borrowing for day-to-day spending, unlike the previous Government, who had that £22 billion black hole in their day-to-day spending. We have repaired that. At the first opportunity, when the fiscal rules were tested at the Spring Statement, we repaired the headroom against the fiscal rules in full to what it was before. We have set out very clear fiscal rules. We will stick to them, and everything that we set out in the spending review next week will be shown to be fully funded and fully in line with the fiscal rules.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, I welcome the proposals. I remind the Minister that the Leeds tram scheme was cancelled by the last Labour Government in 2009, so it is very good to see it coming back 26 years later.

I note that the Statement says that modern growth

“relies on dynamic, interconnected city regions”.

I live on the outskirts of Bradford, the largest city in Britain without a mainline station. I am conscious that the lack of a decent trans-Pennine link and the overcrowding of the existing rail links between Leeds and Manchester is a huge problem for interconnection between three potentially vital regions of Britain—West Yorkshire, South Yorkshire and Greater Manchester. I remind the Minister that a new trans-Pennine rail link, Northern Powerhouse Rail, was talked about, planned and proposed, on and off, throughout the last Government. We need to make something which will be transformative for the entire north of England.

Lord Livermore Portrait Lord Livermore (Lab)
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I am grateful to the noble Lord for his support and for what he says. He knows much more about that region than I do. He will know that in the previous Budget, we funded the trans-Pennine upgrade for the work that was under way. We gave a further £2.1 billion investment for West Yorkshire yesterday, which will deliver for the West Yorkshire mass transit system, linking up Bradford, Kirklees, Calderdale, Wakefield, Pudsey and Leeds. I hope that goes some way towards what he is asking for. There will be further transport announcements in the spending review next week. I look forward to debating those then.

Tax: Changes

Lord Wallace of Saltaire Excerpts
Tuesday 29th April 2025

(2 months, 2 weeks ago)

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Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, do the Government remember the distinction made by the previous Conservative Government between people who were from somewhere and people who might be from anywhere? It was made with the clear intention of saying that people who liked going abroad were somehow not fully loyal to England; they were more European or something else. Given that distinction, which the previous Conservative Government and their Prime Minister made, is it not now a little hypocritical to say we need to defend those who might easily move away to Dubai, Thailand or Monaco, rather than the interests of people who are committed to this country?

Lord Livermore Portrait Lord Livermore (Lab)
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I remember the “citizens of nowhere” comment that the noble Lord refers to. I think that, like much of what the previous Government did, it was not an encouraging thing to say. But let us remember that it is not for me to justify what the previous Government did. This Government are committed to addressing unfairness in the tax system so that everyone who makes their home in the UK pays their taxes here. I think that is absolutely the right principle from which we should proceed. Both the previous Government and this Government increased taxes on non-doms because it is necessary to raise revenue to repair the public finances and fund our public services. That is the fairest way of raising the necessary revenue while ensuring the UK remains an attractive place to live and invest.

Budget: Taxes and Borrowing

Lord Wallace of Saltaire Excerpts
Monday 4th November 2024

(8 months, 1 week ago)

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Lord Livermore Portrait Lord Livermore (Lab)
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On inheritance tax, currently the largest estates pay a lower effective tax rate than the smaller estates. I do not think that that can be right. Agricultural property relief is given on top of the normal inheritance tax thresholds. Individuals can pass up to £500,000 to a direct descendant, and then agricultural property relief would provide a further £1 million tax-free allowance. This means a couple can pass on up to £3 million tax free. Above that, there is a 50% discount on inheritance tax, so a rate of only 20% applies, and any liability can be paid in 10 yearly instalments. This seems to me to be pretty fair in the context of the decisions we have taken and in the context of what everyone else in society gets.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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This Budget provided only a limited increase in defence spending, under circumstances in which the Ukraine war is depleting British stocks and our Armed Forces are under very considerable strain. If the Government were to consider that they needed to increase defence spending further, and to raise tax for that, would they be confident that the Conservative Party would support that, or do they think they would oppose it?

Working From Home: Public Sector Productivity

Lord Wallace of Saltaire Excerpts
Wednesday 23rd October 2024

(8 months, 3 weeks ago)

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Lord Livermore Portrait Lord Livermore (Lab)
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The noble Lord makes an interesting point. The Government inherited a situation where public service productivity remained 6.4 % below pre-pandemic levels, and the ballooning size of the Civil Service—as he described it—under the previous Government may have contributed to that. I do not know the answer to that, but the Chancellor has been very clear that the Government will establish a programme of public sector reform to drive much greater productivity, improving the quality of public services and the value for money that we receive.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, the Government have inherited a rather shrunken Whitehall estate from their Conservative predecessors, where hot-desking had become the norm in a number of departments. Are the Government confident that, if all civil servants turned up five days a week, there would be enough desks for them to sit at?

Lord Livermore Portrait Lord Livermore (Lab)
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No, there would not. One of the benefits of working from home is a much more efficient use of office space. It has a beneficial impact on capital in terms of releasing office space for more productive use, and that is currently what is under way.

Defence Funding

Lord Wallace of Saltaire Excerpts
Thursday 16th May 2024

(1 year, 1 month ago)

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Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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The Government have published figures in accordance with the OBR forecasting period, which sets out exactly how this uplift will be met. The OBR forecast goes out to 2028-29, and obviously the uplift goes out further than that. For example, in 2028-29 there will be an extra £4.5 billion, which will be met through an increase of £1.6 billion in R&D spending and £2.9 billion from reducing headcount in the Civil Service to the pre-pandemic levels of 2019.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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Can the Minister reassure us that it is the Treasury’s view that an increase in defence expenditure to 2.5% of GDP is compatible with the promise of further tax cuts, without further cuts in other public spending areas?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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I can assure the noble Lord that this has no impact on our ambition to further cut taxes in future. We want to end the unfairness of double taxation of work—we have cut employees’ national insurance contributions by a third—so we do not see that this is incompatible.

Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2023

Lord Wallace of Saltaire Excerpts
Wednesday 19th July 2023

(1 year, 11 months ago)

Grand Committee
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Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, we come to this with several of us having been involved in the economic crime Bill and the National Security Bill, in which we touched on a number of related issues. Some of us, indeed, complained when the economic crime Bill was before us that there was a tendency in that Bill to treat economic crime as if it was entirely domestic, when anyone who knows a small amount about the subject knows that all serious economic crime is transnational and that one has to co-operate actively with other countries to combat it.

There was no reference to the FATF in the discussions on the economic crime Bill, but I thank the Treasury very much for the extensive briefing that my noble friend Lord Fox and I were given the other week on the FATF. It was extremely helpful and detailed, and showed how actively some parts of the Treasury are engaged in—one has to say this in the light of the comment by the noble Lord, Lord Vaux—trying to make the FATF work, or work better.

The FATF is a large, multinational organisation. I used to teach a course in international relations when I was an academic at the London School of Economics. I had to explain that it is a miracle that any international organisation works, because the difficulties are so intense. One has to recognise that there are limits to how far you can get agreement when you have as many member states as the FATF has, many of which are autocracies and systemically corrupt themselves. This creates considerable difficulties.

I was struck, as was my colleague and noble friend Lord Purvis, by the oddity that we have of course regained our sovereignty by leaving the dreadful European Union, which produced regulations that we had to adopt, only to align ourselves entirely with a much larger, looser and more opaque organisation, the FATF, in which we apparently follow what the noble Lord, Lord Vaux, described as its idiosyncratic listings. As I understand it, this is the grey list rather than the blacklist. I will talk a little about who is on the list.

There are two UK overseas territories on the list, which are listed as third countries. I point out to start with that the idea that an overseas territory is a third country is incompatible with the definition of a British Overseas Territory. That corresponds to the deep ambiguity with which the relationship between His Majesty’s Government and the overseas territories is carried on in so many different areas. It is, one would have thought, a scandal of British governance that there are overseas territories on the grey list. When I mentioned some issues to do with Gibraltar on the economic crime Bill, I rapidly received a communication from the Gibraltar Government. I am sure that the noble Lord, Lord Vaux, will shortly receive one in his turn. I understand that the fact that Gibraltar is still on the list relates more to delays in carrying a number of things through the Gibraltar Government than to the depths of the problem. The Cayman Islands, I suspect, is a more serious problem.

The Gibraltar Government said to me, “You have to understand that it is very much part of our position that we are entirely independent in how we carry through our adoption of these various new proposals”. As far as international illicit finance is concerned, the Treasury should be concerned that several British Overseas Territories—not just these two—have some things to answer on this area. They benefit from UK sovereignty and the UK system of law. In turn, that puts obligations on them to follow much more closely than some do, some of the time, British standards in this respect.

I hope that the Treasury has an active dialogue with the FCDO, which is responsible for the overseas territories, and that it pushes the Foreign Office to ensure that the overseas territories do not, as they have in a number of other areas, say that they will meet British standards— I am talking about transparency in beneficial ownership —then spend much longer than we had anticipated bringing their domestic practices in line with what the UK Government recommend.

I follow my noble friend Lord Purvis in asking some questions about the UAE, which is a major financial centre and has close links with the UK. There are 100,000 British citizens living there, some of them wealthy expats. The fact that the UAE is also on the grey list is a matter of real concern. I am sure that the Minister is aware that the largest donation given to the Conservative Party in the first three months of this year came from someone whose financial interests are centred in Dubai; I understand that the donor is also the treasurer of the Conservative Party and a former Minister in an Egyptian Government. This is just one illustration of how we perhaps ought to pay more attention to the delicacy of our financial and political relations with the UAE. On the importance of Dubai and Abu Dhabi as financial centres, as well as the worries and proper concerns that one has about them, I, alongside my noble friend Lord Purvis, note that the Wagner Group has managed its various transactions and financial arrangements through Dubai; this is not something that we should be happy about at all.

There are a number of questions to answer here. I am grateful for the briefing on the FATF that the Treasury provided for us, but Parliament deserves to be told more about this murky area of finance in which not just the overseas territories but, dare one say it, sometimes our Crown dependencies are caught up and which we ought to be more actively engaged in cleaning up as far as we can.

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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My Lords, I am aware that we always follow the FATF’s recommendations but, given what we have just heard, it is just as well that we have this procedure as an opportunity to ask the Minister about some issues of concern that arise from the recommendations we are considering. I will not repeat everything that has already been said, because immediately following this we have another SI that took three and a half hours to consider in the Commons and, looking around the Room, I anticipate that it may take a little while this afternoon as well.

This instrument is perhaps relatively straightforward, but I will highlight a couple of the points that have been made in which we are especially interested. On the issue of reputation and our overseas territories, the fact is that Gibraltar and the Cayman Islands are on this list. Do the Government think that this has any reputational impact on the UK? What is the Government’s assessment of that? When this issue was considered in the Commons, providing some kind of support or input from the UK to Gibraltar to move things along was discussed. I do not think that the Minister there gave a particularly expansive response at that point so it might be helpful, if there is an opportunity, to hear from the Minister here today whether a request has been made by Gibraltar and whether any input has been forthcoming from the UK.

I will leave it there for today, given the next SI that we will consider and the fulsome contributions that have already been made by others, which I know the Minister will answer fully.

Cross-Government Cost Cutting

Lord Wallace of Saltaire Excerpts
Tuesday 6th December 2022

(2 years, 7 months ago)

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Baroness Penn Portrait Baroness Penn (Con)
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I put it to the noble Lord that there is a cost to not having efficiency and value for money in our services. That means we can deliver less for people for the money that we are putting into them. We want to see it the other way around, and that is the aim of this review.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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Does the Treasury consider capacity when enforcing efficiency cuts on other departments? Later this afternoon we shall discuss the National Security Bill, which has several clauses imposing a new foreign influence registration scheme, which will lead to a great surge in new submissions to the Home Office, which I suspect it does not currently have the capacity to cope with, so it will need to recruit additional civil servants. The Retained EU Law (Revocation and Reform) Bill will also impose new tasks as they are repatriated from tasks we used to share with our European allies. We know what happened when the Home Office cut police numbers and when the criminal justice system’s budget was cut: capacity decreased and the Government are now having to recruit additional police officers. Does the Treasury think about this or is it simply budget-cutting?

Baroness Penn Portrait Baroness Penn (Con)
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Can I reassure the noble Lord that these questions are considered in spending reviews? They are also considered as part of the process of collective agreement when new policy is made between the periods of spending reviews. The noble Lord mentioned the MoJ and the Home Office; they will grow by, respectively, 3.6% and 3.1% a year over this Parliament.

Queen’s Speech

Lord Wallace of Saltaire Excerpts
Monday 13th May 2013

(12 years, 2 months ago)

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Lord Lea of Crondall Portrait Lord Lea of Crondall
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There is an advisory limit of eight minutes. I inquired and that was stated. I do not know whether anyone would like to confirm that that is the case.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire
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My Lords, as the question has been raised, the Chief Whip gave the advice that if Members were to keep their remarks to eight minutes we would finish at 10 o’clock. I am advised that it is traditional in debates on the Queen’s Speech not to enforce the advisory rule, so it is entirely open to noble Lords still to be here at one o’clock in the morning if they so wish. However, if anyone were to go on for a very long period, I dare say that noble Lords would have ways of making their feelings on this known.

Lord Lea of Crondall Portrait Lord Lea of Crondall
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My Lords, I have no wish to produce the result whereby people are here at one o’clock in the morning. I simply say that I hope no one thinks that there is any discourtesy if, in the light of what has been said, one does not stick to eight minutes.

As my noble friend Lord Eatwell pointed out in his magisterial analysis of the short term, austerity will not improve our tax revenues, nor will it reduce our tax expenditures. There are perhaps three timescales over which one can analyse economic prospects: short, medium and long, by which I mean for the short term possibly three to four years, for the medium term 10 to 15 years, and for the longer term perhaps 20 to 30 years. The post-war architecture of the world economy—Bretton Woods and so on—goes back no less than 70 years. The IMF and the World Bank were the main institutions created at that time. Surprisingly—it is hard to think that it is true—the European Union in all its manifestations now goes back for the best part of 50 years. It is partly in view of the extraordinarily peremptory and dismissive speeches made by the noble Lords, Lord Forsyth and Lord Lawson, in recent days that I will concentrate on the second and third of those timescales.

Their recipe for leaving the European Union and indeed for the future of the nation as a whole is, in my view, catastrophic. It is going down an ideological road and is far from an objective analysis of our economy and our place in the world. It is also as far removed from pragmatism and empiricism as something that went on in the Labour Party in the 1980s, and that is where the Conservative Party will wind up if they follow that line. In the short term, it will be, as I said, catastrophic. Figures published today by the TUC, which has done some analysis of the statistics of the International Monetary Fund, suggest that by 2017 our per capita income in Britain will have increased by precisely 0.0%. I know it sounds extraordinary that a figure should be as precise as that but it works out that our living standards, our per capita income, in Britain will have risen by precisely 0.0% since 2008. Given the vast increase in the quantum of the top 1% and, indeed, 10%, that explains the deep cut in living standards for the median and the vast majority of the British people who, not surprisingly, are angry and disorientated as a result, and are prepared more readily to listen to sophists such as Mr Farage and others nearer to home.

I acknowledge that the EU as a whole has not had a very much better record, although perhaps I may draw attention to the fact that per capita incomes in the same series in Germany and Sweden—two examples of northern Europe—will both be projected to have risen by 10% in this period, a point to which I will return. In passing, I will also mention that on a couple of occasions I have asked my noble friend Lord Eatwell a rhetorical question about how we will pay for this, that and the other without increasing the deficit. The noble Lord, Lord Forsyth, says that we have to get on urgently with filling up the potholes. Perhaps he will pay for it himself but I assume that it will come out of public expenditure.

What is the bigger economic picture that we face in this country? Just to put the numbers another way, the loss of output in these 10 years below our earlier potential of roughly 2% growth per annum comes out at some extraordinary numbers. If you look at the cumulative loss against that trend, by the year 2017 it will work out at some £3 trillion—£3,000 billion. It will not be £30 billion or £300 billion but £3,000 billion. People can work it out for themselves. The noble Lord, Lord Forsyth, is looking puzzled but if he does a bit of mental arithmetic he will find that that is in the right ball park. I know he does not have time to work all that out in the time of my speech but perhaps later he will realise that my figures are accurate. We are talking about figures that are worse than the slump in the 1930s after the parallel banking crisis of 1929, from which we only recovered the full scale of our potential during the late 1930s and the Second World War, as, of course, did Germany and the United States.

As to my own prescription or views regarding these matters, I do not begin by wanting to be orthodox in terms of Labour Party policy. I do not think that that is the role that one is necessarily here to play. I am generally orthodox but I just should like to draw attention to one or two features of the trade deficit. It is not that we cannot grow our economy in the European Union. If the EU per se is the reason for some incompatibility because of so-called red tape, how is it that Germany, despite absorbing a very weak East German economy over the past 20 years, has a GDP per head of 121—if we put EU equals 100—while ours is 109?

Germany, of course, which relies much more than we do on something as old fashioned as manufacturing, is rarely mentioned by the new ideologues. They seem to think that there is something magic about the City of London. For every £2-worth of goods or services—in the statistics they come to the same thing—we now export, we import £5-worth. This is, in part, to do with our exchange rate. Of course we cannot go on devaluing the pound without our living standards falling. However, if we want to regain our competitiveness, I could argue at the same level of abstraction as the noble Lords, Lord Forsyth and Lord Lawson, who think they are brilliant economists—I do not think that I am a brilliant economist but at least I can see the fallacies in what they are saying—but what is wrong with saying that although we are now stable at 85p to a euro we would be more competitive at parity with the euro? That is a devaluation of 15%. With the growth of our educational system and our whole industrial policy, perhaps that would ensure that we stay, for once, at parity with the euro.

I do not anticipate great enthusiasm for what I have just said but is it not a fact that our trade deficit is a fundamental issue both within the European Union and outside it? Simply asserting that we have got to trade with the rest of the world in no way addresses that fundamental question. As for the European side of growth, that, too, goes back to Lehman Brothers five years ago. It is not as if the whole of the European slow growth was created within the European Union.

The other point which needs to be put to these new iconoclasts is whether they would stay in the European Economic Area along with Switzerland, Norway and Iceland. There is plenty of red tape in the European Economic Area. We signed the EFTA treaty in Stockholm leading up to its creation in 1960 and there have been rules on state aid and so on. The noble Lord who referred to the acquis, the noble Lord, Lord Spicer, who is not in his place, is correct in that if we were a member only of EFTA we would be following all of the acquis without having a seat or a vote at the decision-making table. Would he be happy to be in that position? He has given no clue as to the scenario we would be expected to vote for if he had his way.

The third and final fallacy—I am still three minutes off my 16 minutes—concerns relying on the City of London. The noble Lord seems to want to have it both ways. Either it is the centre of Europe’s financial system and dependent on our being part of the EU for its strength, or it will somehow have a comparative advantage in its own right without our being part of the European Union. The noble Lord must have missed the speeches by leading officials in China, the United States and elsewhere, who have said that of course our share of world investment would be considerably at risk if we were to leave the European Union.

In conclusion, “Stop the world, I want to get off” is a policy which I am sure the British people, when they are told the truth—we are told that we have to get them to understand the truth, but that is a bit difficult when the Murdochs, the Daily Telegraph, Daily Mail and so on do not allow them to know it because for the most part they censor it—will reject. On the state of British public opinion, I shall read out three or four statistics taken from a new survey produced by YouGov/The Fabian Society looking at the attitudes of the younger generation, those aged between 18 and 34. They were asked:

“How convincing or unconvincing do you find the following statements in favour of the European Union? … It has given people the freedom to travel, work and live in other EU countries”.

Some 60% found it “fairly convincing”. Perhaps I should send an e-mail to the noble Lord, Lord Lawson, in France saying that I hope he is happy that that has enabled him to live there.

“The EU has agreed common standards of workers’ rights, consumer protection and played an important role in guaranteeing the social rights of individual citizens”.

The response showed that 48% found that statement “fairly” or “very” convincing against 15% who did not.

“Co-operation between EU countries is the best way to tackle the big issues of our time, like climate change, the global financial crisis and international terrorism”.

Some 49% said yes, while 18% said no.

“The EU has helped keep peace in western Europe since the second world war”.

Some 47% agreed and 17% did not.

Perhaps I may say in my final sentence that, so far as peace in the world is concerned, it is essential that Germany, France and ourselves are in the same Europe with a common defence approach vis-à-vis the rest of the world. That point will become clearer and clearer as this debate continues.