European Union Referendum Bill

Viscount Trenchard Excerpts

Tuesday 13th October 2015 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I, too, am grateful to my noble friend the Minister for introducing this debate. It is a great honour to follow the noble Lord, Lord Davies, who has, unfortunately for me, already attempted to demolish all the arguments I was about to put forward. My experience of having worked as a banker in Japan for 11 years leads me to believe that it is not as simple as he makes out. I am utterly convinced that I was seen primarily as a British person and only secondarily as a European. Although I was privileged to serve as a vice-chairman of the European Business Council in Tokyo, the other Europeans wanted me to do that job because I was British and because, as an Englishman, I would have more influence. The British Chamber of Commerce as a body was probably more influential than the European Business Council. So I have rather a different interpretation of how Europeanness and Britishness mix and complement each other.

Since 1975, the British people have had no opportunity to approve or reject the EU’s relentless march from being the Common Market—principally a free trade area that we joined in 1973—to something approaching a superstate: the European Union of today. In common with most noble Lords who have spoken, I welcome the Prime Minister’s decision to allow the British people a vote on whether they wish to stay in a reformed EU. But we do not yet know how significant the reforms will be. The reforms most British people want involve the restoration of powers to this Parliament and a reduction in the number and reach of EU tentacles, which permeate every area of our national life and every arm of national and local administration.

At the same time, to avoid a further—perhaps fatal—euro crisis, many in Brussels and some of our EU partners, are also seeking to reform the EU, but the reforms they seek involve moving in the opposite direction. They want more fiscal integration and tax harmonisation—basically, the establishment of a single finance ministry for the eurozone. It seems to me that we will therefore become increasingly uncomfortable in remaining a member of the EU on the same basis as the integrating eurozone economies. It is not clear how the interests of the UK and other countries outside the eurozone can be protected. I look forward to the publication of the Chancellor’s document detailing how this can work, as reported in the Sunday Times. This will surely require a new structure for the EU itself, which ideally should recognise the reality of the current situation: that the UK is already a semi-detached member of the EU, as a non-participant in the most important aspect of the European project, the common currency, and also a non-participant in the Schengen agreement.

The Bill before us commits the Government to a referendum on what is still an unknown package of reforms. Is it not customary to publish a White Paper well in advance of a referendum, providing the voters with a clear explanation of what exactly they are voting on? Is it the Government’s intention to publish such a White Paper? Does the Minister agree that it should contain a section explaining in an impartial way the consequences of remaining in the EU and one explaining the consequences of leaving?

While I am still open to the possibility that our European partners will change their minds and allow us to retain our membership but withdraw from the political and judicial structures, it is most unlikely that the commitment to the necessary treaty changes can be obtained in time. Does the Minister agree that, if the leave campaign should prevail, the Government should negotiate a new trading and collaborative relationship with the EU which would preserve the single market and our free trade with the bloc? I am not sure whether this should be defined as a reconstituted EEA or EFTA, or even as a new class of associate trading member of the EU—in which case, does leave really mean leave? It is manifestly in the interests of our European partners to retain our open trade relationship with them even if we can no longer be part of their political project.

It is claimed by those who would advocate remaining a full member of the EU at all costs that our interests would be adversely affected if we no longer had a voice in the institutions of the EU that make the rules. But our voice has not been strong enough to prevent our being outvoted every single time we have objected to a proposal being considered in the European Council. With only 9.7% of the votes in the European Parliament, it is not surprising either that the United Kingdom MEPs, even if they could sometimes agree on anything, are powerless to protect British interests. In these circumstances, fundamental reform of the EU must provide a basis for the UK and other non-eurozone member states to escape the strictures and costs of the political and judicial institutions which are being expanded and developed to bring about ever-closer union, while remaining free trading partners on a basis similar to the current customs union.

There are many other areas where we must and will continue to collaborate with our European partners, but I believe that, in the global world that exists, we will be more successful and retain more influence in the world as a sovereign state. I also believe that our own financial sector regulators—the PRA, part of the Bank of England, and the FCA—should be restored to the position of sovereign regulators, no longer subject to the EBA, ESMA and EIOPA. This is essential in order to prevent further damage to our financial services industry. For example, the alternative asset management industry is already suffering from the application of the harmful and pointless Alternative Investment Fund Managers Directive. It is difficult to see how changes as fundamental as are needed can be obtained without treaty change. If the negotiated changes on which the referendum will be fought involve merely a promise of future treaty change, how can the EU and our European partners be trusted to deliver the promised changes in future?

I welcome the Government’s agreement that the purdah rules will apply during the campaign, but ask the Minister to tell the House what measures the Government are taking to ensure that the European Commission and the European political parties are similarly restricted. I would also like to hear the Minister’s answer to the question asked by my noble friend Lord Lamont in his excellent speech as to why the Government still insist on obtaining a partial exemption from the Section 125 rules. Will she also inform the House when the Government intend to publish the draft regulations?

My noble friend Lord Norton raised the question of a threshold. There was a 40% threshold requirement in the 1979 Scottish devolution referendum, but the problem is that if you have a threshold and only 39% of people vote, it does not settle anything. What happens next? You have to have another referendum, I suppose.

I have to agree with my noble friend Lord Lawson that the EU is a political project rather more than a trade project. I do not think that membership of the EU, or a different kind of trade-based relationship with it, will make much difference to our trade with the EU. However, escaping from the bureaucratic burdens placed on us by full EU membership, will, in my view, help us develop better and closer trading relationships across the world in this global age.

European Union Bill

Viscount Trenchard Excerpts

Monday 13th June 2011 Lords Chamber

[Baroness Falkner of Margravine]

My Lords, I have considerable sympathy with this amendment. In the course of the last three months we have heard from all sides of the House the collective failure of politicians to articulate a vision of why Britain needs to co-operate with members in her region to advance her interests. Putting an obligation on Ministers to spell out positively a vision for the EU seems eminently sensible, given the context of the Bill. This is, as the noble Lord, Lord Risby, said, that once the Government have passed an Act, they would presumably like to win an amendment. It seems odd to resist an amendment such as this when we are clear that the Government would have passed an Act proposing the policy solutions that there would be and, as the noble Lord, Lord Hamilton, said, would wish to maintain their credibility by seeking actively to campaign in a referendum. I cannot see why there is such resistance to this amendment.

I remind noble Lords of some of the things that have been said about the media. Even if the Government of the day were determined to win a referendum, it is entirely conceivable that a sceptical media would choose to ask questions about why the Government were spending money. We have known from the several months of debate over referendums in this House in relation to other matters that large amounts of money have been set at the door of the practicalities of holding a referendum. It would be entirely possible for our media, which did not wish us to promote that measure that was meant to be discussed in the referendum, to say that this was a huge waste of money. The fact that a requirement for promoting that measure would be enshrined in the Bill would allow the Government to say that they were carrying out what statute and legislation required them to. We have had arguments for months on the lack education and the lack of information about the European Union. This would be an opportunity for the Government of the day to move beyond those technical measures to use that process to educate the public about their vision.

I turn to the final point in the amendment that I do not think the noble Lord, Lord Triesman, in moving it, quite brought out to the extent that I would wish to do. It states,

“in participating in a campaign for any referendum held in pursuance of Sections 2, 3 or 6 or in taking other steps required by this Act.”

The discussion we have had so far pertains only to the holding of referendums. There are other measures in this Bill that do not call for the holding of referendums. Sometimes they call simply for an Act of Parliament, or for a Statement to be made to Parliament. In doing these things, an obligation would be put on the Ministers of the day to have regard for the desirability of promoting the United Kingdom’s membership of the EU. This amendment says to us as politicians that we have to step up to the mark and that if we believe that the legislation that we are passing is good legislation, we have to go out and explain why we think that it is good legislation. While I would love to say that I wholeheartedly support the amendment, I will only go so far as to say that I can see a lot of merit in it and I look forward to hearing from the Minister why he does not think that it is extremely useful and long overdue.

[Viscount Trenchard]

My Lords, I am afraid that, although I listened with great interest to my noble friend Lady Falkner, I cannot agree with her that the amendment makes much sense. I listened carefully to the noble Lords, Lord Triesman and Lord Radice, in putting forward the amendment. It is an odd amendment. What does it actually mean? Any referendum that might be held under the Act is not going to be a referendum as to whether our membership of the EU is or is not a good thing. By definition, if the Government want to put a referendum event to the people, it follows that they must already have decided that it is a good thing, so to get the result they want in the referendum, they will obviously explain the benefits as energetically and positively as they can.

There is something strange about the language of the amendment, because the desirability of promoting the United Kingdom's membership of the EU sounds rather as though we are not a member but perhaps should be. We are a member, so obviously Ministers must explain what being a member of the EU means and must honour the obligations of being a member. I fear that that is rather subjective.

Furthermore, under the Bill, a referendum other than one which the Government wanted to win might be triggered. There are many ways in which a referendum can be triggered under the Bill, as noble Lords have said. Ministers of the Crown might be obliged to put a certain point to the country but they might not necessarily want the result to be yes. The noble Lord, Lord Radice, said that Ministers have not positively made the case in public for membership of the EU on a continuing basis. I suggest that that is because many Ministers of the Crown have felt that our membership of the EU is no longer so clearly wholly beneficial as they had thought it was, or as people thought it would be 10 years ago, or longer ago than that.

The amendment does not add anything to the Bill. It is somewhat subjective and I cannot support it.

[Lord Dykes]

My Lords, I agree very much with the earlier utterances and express regret that I cannot agree with what the noble Viscount, Lord Trenchard, said. I do not think that there is any evidence that Ministers have become less enthusiastic about our membership of the European Union. That is irrespective of the colour of the Government. That applies to both parties in power in recent times and, as far as I can detect, definitely applies to the coalition—very positively so in respect of the first part of the coalition statement about their aspirations on Europe.

I am sure that it is because of what the noble Lord, Lord Radice, mentioned and what the noble Lord, Lord Triesman, hinted at less directly: because of what the British press say. It is mainly the tabloids—the comics that masquerade as newspapers in Britain. They are more and more like magazines rather than newspapers. That is affecting the broadsheets as well, particularly those with owners living in tax havens overseas, not normally living in the UK and not paying UK direct taxes themselves, mainly the Murdoch press, but all of them anti-European and attacking our membership of the European Union in a most extraordinary and vicious way, which has not been seen in any other member state that I can think of.

I have to declare an interest as I also live regularly in France at weekends whenever possible. The French press are not at all like that. My colleagues in politics in Paris express astonishment that we allow the overseas-based owners of the press here who do not pay UK direct taxes themselves to attack our fundamental membership of the European Union in such a way. That has been the reason.

The most astonishing contrast that I noticed was just at the moment of the IMAX launch by the new Prime Minister Blair, with his new Government, still very, very popular, not quite walking on water but pretty close to it in those early days and causing a lot of inspiration and enthusiasm among the British public for the new Labour Government. That launch was the beginning of the decline in the new Labour Government's support for Europe in atmospheric and psychological terms. That was tragic. Britain in Europe was destroyed by it. So was the European Movement—although it still exists, it is struggling along as a very truncated body doing noble work but very much at the fringes of British life.

It is a tragedy for this country that we have had this nonsense for so long: politicians refusing to stand up bravely and correctly for the benefits of our membership of the European Union. Therefore, I very much welcome the proposed new clause. It was debated in Committee and therefore we need not go into all the arguments now. We particularly thank the noble Lord, Lord Howell, for repeating that the purpose of the Bill is to oblige Ministers to promote the cause of our membership of Europe in what he would describe as a more correctly balanced sense because the public would have much greater participation through the referendum mechanism. Like the noble Lord, Lord Deben, I do not agree with that because I am against referendumitis and the populism that comes from it, but I can see his arguments. The proposed new clause would be a good thing, as we would return to promoting our membership—not in a propagandistic sense but in the practical sense of reassuring the public, explaining in detail many of the complicated matters and getting away from the dreadful xenophobia that is being allowed to develop because of the insouciance, nervousness, recalcitrance and hesitation of British politicians. There is a danger that that will start to affect the coalition if it continues, and I hope very much that it does not.

I do not want to take up too much of the House’s time but I conclude with an issue that may seem small, although it is very important. I refer to the display of flags—one of my favourite subjects. There is only one European flag within the vicinity of Westminster. It is on the Slovenian embassy building and we thank the Slovenians for their courage in daring to show it. It is the only one, apart from the one displayed on Europe Day in Parliament Square each year. All other major countries, together with some of the new ones, routinely proudly display the European flag alongside their patriotic national flag. Our national flag should be alongside the European flag on government buildings, as is routinely the case in France. When President Sarkozy makes a television broadcast, he always has the European flag alongside the tricolor. Why have all parties in this country been so hesitant and pathetic about this in the past? It is now time for the matter to be corrected. I have been encouraged by the words of the noble Lord, Lord Howell, on previous occasions in these debates and believe that the Government should accept this imaginative new clause.

European Union Bill

Viscount Trenchard Excerpts

Wednesday 8th June 2011 Lords Chamber

[Lord Triesman]

My Lords, given the debates that we had in Committee and the debate which we had shortly before the dinner break, it is possible to speak to this amendment fairly briefly. Its aim is to take account of circumstances where the Government conclude that it is in the interests of the people of the United Kingdom to act with greater dispatch than would occur if the whole of the processes set out in other parts of this Bill were gone through.

Earlier this afternoon the noble Lord, Lord Howell, asked—I understand the point—“What are the circumstances in which events might take place that are difficult to put into words?”. I shall try to put at least one such circumstance into words, but I recognise immediately that it may be difficult to do so in the context of the judgments that Governments have to make about the interests of the country when events precipitate at a rate which is not anticipated in the normal course of events. However, my ministerial experience, and that of many others in your Lordships’ House, tells us that events happen. I think that I am quoting a former Conservative Prime Minister, and he was entirely right—they do. Events happen and Governments have to respond to them. We will be able to deal with many of them using the sovereign processes of our own political system. Some will occur in a wider context and we will deal with them through international organisations, including the European Union and its existing competences—that is not the subject of this Bill—the United Nations, the World Bank and others. Those are not the issues to which I refer. However, it seems to me at least conceptually possible that some things will happen which require an urgent response and where it will be clear to the Government of the day that they need to act in concert with others in ways which are not covered by current arrangements. Before any noble Lord says that he cannot conceive of such circumstances arising, I assure the House that they will do so. They will arise, for example, around an environmental disaster or a financial disaster. The purpose of this amendment is to make provision for the circumstances in which they will arise.

When we talked about the meltdown of the world banking system, noble Lords rightly pointed out that the emergency arrangements that were made took a considerable time to design and to begin to be put in place. Indeed, they are not in place to this day and we have not reached the end of that process. That is rather regrettable because it seems to me that in international terms we are without a number of the levers which we would probably desire to have, in order to have a real impact on some of those events in concert with others. The G20 made a very good effort at least at one meeting, and arguably at two meetings, to try to work out some sort of architecture to deal with those circumstances. Others may disagree but I believe that if Europe had been able to speak with a more coherent voice in the G20 meetings, it would have been much more likely to have arrived at an authoritative consensus with the United States and with China in particular.

It seems to be within the realms of possibility, and perhaps not so fanciful either, that there could be circumstances—particularly in acute financial crises—where the Government might conclude that emergency conditions applied, they needed to be able to act under those conditions, it was desirable for the interests of the country and the people of the country that they did act under those conditions, and that slight variations in the current arrangements would make that more possible. These are inevitably difficult conditions to envisage largely because every time you try to do so you can usually point to a set of arrangements which have already been designed to take account of them. However, we have surely learnt, certainly since late 2007—we have learnt this rather harsh lesson through 2008 and up to the present—that it is not possible to predict all those circumstances, manage them, say that we have the levers for managing them or say that the other institutions, particularly the G20 in which we put such faith, are capable of doing so, partly because Europe is incapable of acting or speaking in a single and coherent way. I beg to move.

[Viscount Trenchard]

My Lords, I am afraid the noble Lord, Lord Triesman, has not persuaded me of the need to include an urgency condition. It seems to me there is absolutely nothing that prevents the UK from co-ordinating with other EU member states in response to any natural disaster. Furthermore, if the amendment were adopted, the ability of the UK to react speedily might even be circumscribed. The amendment does nothing to improve clarity; rather, it confuses the situation, compromises legal certainty and is very subjective. Amendment 10 states:

“The urgency condition is where an amendment under the simplified revision procedure is considered to be urgent”.

“Considered” by whom and in what forum? It is very unclear. I venture to submit that this amendment does nothing to improve the clarity and certainty of the Bill.

[Baroness Falkner of Margravine]

I too oppose the amendment, although I recognise that in tabling it the opposition Benches are very conscious of the leap in the dark that we are making to some extent with this Bill. It is about future eventualities at a time of significant flux in the world, and indeed in the European Union. One would need to be a clairvoyant to imagine what might be coming down the road in terms of emergencies and urgencies that would need rather speedier action than the normal pace of change in the European Union. In fact I think one of the reasons why there is a disconnect between the British electorate and the Union is partly because of the very slow and cumbersome methodology and pace of reacting to events. When there is a deep economic recession or a great financial or banking crisis, people out in the country want their leaders and politicians to act speedily to deal with the issues that led to those events, and perhaps would wish us to move faster than we have been capable of doing in international fora and multilateral institutions.

Despite recognising these things, I nevertheless oppose this amendment because I think what defines urgency is so subjective and so much predicated on what the Government of the day, and the policy-makers on either side of the debate, would imagine to be urgent or not. While I think we all know what is urgent when it hits us in the face, and it is quite right that we should and should then act speedily, enshrining it in law seems to raise a host of problems, not least again with judicial review. It also creates a basis of very subjective analysis as to whether something is urgent or not, and the noble Lord, Lord Triesman, in his very helpful moving of the amendment, accepted that we do take quite a long time—that even the European financial stability mechanism is going to take a leisurely pace. This really goes to the heart of the argument; that it is better for us to look for ways to facilitate speed and urgency when the urgent situation arises, rather than to seek to enshrine it in law at this stage.

European Union Bill

Viscount Trenchard Excerpts

Wednesday 25th May 2011 Lords Chamber

[Viscount Trenchard]

My Lords, I hesitate to intervene at this late stage in the debate, especially as I was unable to participate in the Second Reading and earlier Committee debates. However, I feel that I want very much to intervene in the debate now, and I especially felt that on Monday. The noble Lord, Lord Hannay, pointed out that no support on these Benches had been given to the Bill during the debate. I wanted to say that that was because the people who were moving amendments were those who wanted to change the Bill as it stood, whereas those of us who were silent could well have been silent because we supported the Bill as put before your Lordships’ House.

The Bill is intended to enhance transparency and accountability through greater public and parliamentary control over government decision-making and to increase the trust and engagement of the British people in the EU, which is very necessary.

The noble Lord, Lord Kerr, remarked earlier in his eloquent speech that we are fortunate to have on the Cross Benches of your Lordships’ House people who still live in the real world. I should like to ask the noble Lord where he thinks the real world is, because it seems to me that the real world for any of us is where we happen to be at any particular time. I do not have the same experience as the noble Lord of life in Brussels, but I spent one very enjoyable year there in 2006. I suspect that if I had spent a great many more years there, it is quite possible that my feelings towards the European Union’s institutions would have changed.

I have spent considerably more years in Japan, which is very different. Therefore I have seen the evolution of the European Union, and the United Kingdom’s place within it, from very different circumstances and a different country. That has led me to hold different views on our country’s bilateral relationships with other countries. I do not disagree for one moment that there are matters on which it is right to pool our powers with our European partners in order to exercise more influence. Equally, there is a great need also to draw a line in the sand. When I am in the real world outside this House, in the country or in other countries, I find that people want to know who is making their laws. I think that they feel cheated that there was no referendum on the Lisbon treaty. I am not sure that we should be proud as a Parliament to have provided a referendum only on AV and not on the Lisbon treaty, for it seems to me that the one, the Lisbon treaty, is much more important than the other.

Several noble Lords have suggested that we are changing into a plebiscitary democracy. There is a danger that we could have too many referendums; I am not in favour of having a great number of them. However, in matters which fundamentally change the way in which laws are made in this country, and where this Parliament decides to hand over, to all intents and purposes permanently, powers to the European Union, I think that most people think that they should have a say. So they definitely feel cheated.

I have enormous respect for my noble and learned friend Lord Howe. I listened with great respect to his eloquent speech in which he said that it would be better if we all concentrated on making the European project work rather than argued about this type of legislation. I remember voting in the referendum in 1975 to endorse the decision to join the European Community, as it then was. During many years in Japan, I extolled the virtues of the single market and tried to persuade Japanese companies to list their shares on the London Stock Exchange because of its access to it. I tried to persuade companies to come and invest in this country because it would give them access to a single market of 300 million people or whatever it was. However, at that time it was not envisaged that the European Union would extend itself into so many areas of legislation affecting our national life. A great deal was said about subsidiarity: in other words, where it is necessary to combine at European Union level, we should freely do so, but where it is possible and appropriate that national Parliaments should continue to decide things in the interests of their citizens who have elected representatives to those Parliaments, subsidiarity should apply. We hear very little about subsidiarity today.

The noble Lord, Lord Taverne, made a very eloquent speech in moving his amendment. He said that yesterday he heard that the City was very concerned about European financial regulations, and that therefore we should be very careful because a Bill such as this would reduce our ability to participate properly in formulating appropriate financial regulations. I feel that the noble Lord is seeing this from the wrong angle. It is increasingly difficult for our own regulators, who have far greater experience of financial markets, to make any regulations at all. The chief executive of the FSA told me fully a year ago that he can make no regulation now that is not agreed by the other 27 members, many of whom have very little experience in financial markets. Perhaps many of the other 27 feel that London has too large a share and would like to see some of that share go to other financial markets in the European Union. It is very important that we continue to defend the City and argue for the maximum say in these matters for our national regulators.

[Lord Kerr of Kinlochard]

Has the noble Viscount noticed, as I have with approval, Mr Lidington’s plan to make a speech today at the Mansion House saying that he will be relentless in dispelling the myth of Anglo-Saxon isolationism? This seems to me to be an excellent thing to do. Does he feel that this Bill in any way helps to remove from the continent the myth of Anglo-Saxon isolationism, and will he address the question of sunset clauses?

[Viscount Trenchard]

I thank the noble Lord for his intervention. Like him, I welcome the speech to be made by Mr Lidington. I do not wish the United Kingdom to be isolated in Europe—not for one minute. I believe that the Bill should help the United Kingdom to participate in decision-making in the European Union in matters where it is appropriate that we should do things together. It is necessary that we should make it clear where this country and this Parliament stand. We need this in order to define again the relationship of this country with the European Union. The people do not want to see more powers transferred to Brussels without their agreement.

[Lord Taverne]

Does the noble Viscount not see that if, as a result of the Bill and the difficulties placed on our negotiators, a procedure of enhanced co-operation was introduced for these regulations, it would not be to the City’s advantage?

Viscount Trenchard: My Lords, I have spent some time in Brussels, Paris and the Netherlands, talking to regulators. It is very important that we continue to engage, and that our national regulators continue to engage, with those regulators. However, it is not at all to the City’s advantage to duplicate regulation. It is not to this country’s advantage to duplicate diplomatic representation. We cannot afford to have two sets of regulators—one at the European level and one at the national level—doing the same thing.

We cannot afford two Foreign Offices. When I was in Tokyo for the first time, in the 1980s, I used to visit the office of the European Commission in Japan. It was the precursor to what is now to be called the EU embassy. What was there at that time already seemed fit for purpose; a large number of officials were doing their jobs. The other representatives of various countries used to gather in the office of the EC delegation, as it then was. Now I hear that the European Union, in pursuing the development of the European External Action Service, wishes to have ever larger embassies in major countries. This costs a huge amount of money. In Tokyo it will be very difficult because the British embassy already occupies number one, Ichiban-cho—that is, number one in the number one district. It faces the imperial palace across the moat. I am not sure where the European Union can establish its own embassy, if the only way it could be more grandly located would be to replace the Emperor himself.

On the sunset clause, I agree with my noble friend Lord Hamilton and others that, in the case of the Fixed-Term Parliaments Bill, there is a very good reason to have a sunset clause. Like him, I do not wish to see fixed-term Parliaments become a regular feature of our constitution. I do see that in these circumstances, where we have a coalition Government who have inherited a terrible fiscal situation, there are perfectly good reasons why this Parliament should be given a fair wind to continue for its full five years. However, I should be happy to see a sunset clause because that should not necessarily be the way for all time in the future.

In the case of this Bill, we cannot argue that the circumstances will be different from what they are now in three or five years’ time. What message does it send to the people if we enact a Bill, but say that it will cease to apply in three years, when we or a Minister of the Crown will decide whether to extend it? I see no logic whatever in attaching a sunset clause. Like my noble and learned friend Lord Howe, I believe that either it is a good Bill, in which case Parliament should pass it, or it is a bad Bill, in which case Parliament should not pass it. I would certainly vote against the amendments.

Baroness Garden of Frognal: There seems to be a general will in your Lordships’ House that we should complete this debate by 1.30 pm, rather than come back at 5 pm. Therefore, I suggest that noble Lords try to keep their comments brief and relevant to the sunset clauses.

Queen's Speech

Viscount Trenchard Excerpts

Wednesday 26th May 2010 Lords Chamber

[Viscount Trenchard]

My Lords, I join other noble Lords in congratulating my noble friends Lord Howell of Guildford and Lord Astor of Hever on their very welcome appointments. I also congratulate my noble friend Lord Ferrers and my new noble friend Lady Falkner of Margravine on their excellent speeches yesterday in moving an humble Address.

Not only here but across the developed world, markets are extremely fragile and confidence is shattered. In these circumstances, it is surely a good thing that my right honourable friend David Cameron and my new right honourable friend Nick Clegg have so quickly been able to agree a common programme to tackle the extremely serious structural budget deficit and spiralling national debt that was built up over 13 years of Labour government. I had not realised that my new noble friends on the Liberal Democrat Benches had also recognised that government has become much too large and overarching and must urgently be slimmed down, thereby releasing scarce resources for investment in what we all hope will be a resurgent private sector.

I do not believe that the manifesto of any of the three main political parties adequately recognises the severity of the public sector cuts that will have to be made. Now that the election is behind us, I am confident that our new coalition Government will face up to the Herculean task that they face. I am heartened that the noble Baroness, Lady Royall, said yesterday that the Opposition will, where appropriate, seek to co-operate, help and support. We shall see.

I must declare an interest: I am employed by Mizuho International plc, a subsidiary of the Mizuho Financial Group of Japan. I am thus doubly unpopular, being both a banker and a politician. But I believe that politicians are trying to pin too much of the blame for the financial crisis on the banks. I understand that the taxpayer is already in the money as far as the shareholding in RBS is concerned and that, if investors can recover a modicum of confidence in the stock market, the prospects are that Lloyds Banking Group will also show a healthy profit.

Corporation tax revenues from the City of London alone have in the past covered our defence budget by 150 per cent. Of course, we need to create the conditions where our manufacturing industry can also thrive, but this will not be assisted by the adoption of policies intended to rebalance our economy away from financial services. There is already evidence that the new powers recently given to the FSA are excessive and harmful. I believe that it is essential that the FSA should show more restraint in the use of those powers. I hope that the Government will review them and consider whether they are appropriate or not as they prepare the draft legislation to reform financial services regulation. I am happy that the FSA has been reprieved and that it must submit to oversight by the Bank of England in respect of micro-prudential regulation.

Much more serious than the question of how far the FSA is subordinated to the Bank of England is the shocking realisation of the fact that it no longer has any power to make any new regulation. Our regulators are, or will shortly be, the European Banking Authority and the other two EU-level regulators. It is also shocking to realise that EU Finance Ministers and the European Parliament have both adopted versions of the alternative investment fund managers directive demonstrating that they now have the power to regulate our alternative fund management industry, which includes UK investment trusts and property funds—indeed, everything which is not a UCITS. That has serious negative ramifications for the City’s future prosperity and I trust that the Government will not let matters rest there.

It is my privilege, utterly unmeritorious, to enjoy the appointment of honorary Air Commodore of 600 (City of London) Squadron Royal Auxiliary Air Force. In the past, I served in the Territorial Army for 10 years. The Reserve Forces provide excellent value for money. I hope that the forthcoming Strategic Defence Review will consider the possibility of increasing further the contribution to our defence effort made by the Reserve Forces. They can also make a tremendous contribution to the Government’s intention to create a big society, and to encourage individual and social responsibility.

I was happy to learn that defence programmes have been protected from the £6.2 billion efficiency savings, because the Ministry of Defence has not benefited from the previous Government’s profligacy in the way that some other government departments have. We are very good at defence and universally recognised as such. It is one of the reasons we punch above our weight as a nation and our economic recovery depends on maintaining our position in our areas of excellence. I warmly welcome the Government’s commitment to support fully our excellent Armed Forces—support which they both need and deserve.

I sometimes wonder why so many of our senior FCO mandarins are somewhat deprecating about our ability to continue to exert influence for good around the world through our embassies or acting alone, as well as co-operating with others. I lived in Japan for more than 11 years and have been closely involved in the establishment of financial businesses in China and Korea. In these endeavours I know how greatly I have been helped by the background of the UK’s strong bilateral relations with those countries and the effective presence of our high quality diplomats on the ground. I do not agree with those who think that we can exercise influence around the world today only by combining our diplomatic representation with that of our European partners through the EAS. I regret that the FCO’s budget is to be severely cut back at the same time as spending by the EU on diplomatic representation is being massively increased. This is unhelpful to the perception of the United Kingdom and the promotion of British interests abroad.

The gracious Speech contained a commitment,

“to spend nought point seven per cent of gross national income in development aid from 2013”.

I found this a surprisingly precise commitment compared with other spending cuts. It caused me to wonder why DfID is maintained as a separate department of state. I remember when it was headed by a Minister of State and was operated as a division of the FCO. I notice that it enjoyed an increase of funding in real terms of 12 per cent in 2008-09, whereas the FCO was forced to accept cuts of 11 per cent.

I wholly agree that we should, even in these straitened times, continue to provide development aid to genuinely poor countries, but I would ask Her Majesty’s Government to examine what savings could be achieved from downsizing DfID and merging it into the FCO, which should also ensure that its disbursements are more closely aligned with our national interest. If this were done, perhaps we might find that we could afford even more than,

“nought point seven per cent”,

of GDP for international aid.

Finally, I want to refer to the references to constitutional reform in the gracious Speech. I do not think that the people will thank the Government if much time is spent on debating these matters in contrast to the time that Parliament must commit to solving the acute economic and fiscal problems that the country faces. I welcome the sensible decision to reverse the previous Government’s misguided decision to carve the hearts out of Devon and Norfolk.

I regret the commitment to a referendum on AV and, in particular, the pressure being applied by my new noble friends to bring forward to 2011 the date for such a referendum. I have not liked the AV system since I was not elected to the executive of the Cambridge University Students’ Union in 1972 despite receiving more first preference votes than another one, or perhaps two, candidates who were elected. I believe that most people have only a very superficial understanding of the merits and demerits of various different voting systems. I think that matters such as this should rightly be decided by Parliament. It was so much more appropriate that there should have been a referendum on the Lisbon treaty than that there should be one on AV. It is no surprise that the gracious Speech informed us that proposals will be brought forward for a reformed second House that is wholly or mainly elected on the basis of proportional representation.

Japan replaced its partly appointed and partly hereditary second Chamber with a second directly elected House. I believe that it would be a serious mistake if we were to do the same thing. Another place represents the people and we should never compromise its sole right to do so. We in this House are summoned to advise the monarch—that means the Government. Our role is to scrutinise legislation, to use your Lordships’ undoubted expertise to improve it and to ask another place to reconsider when we believe that is in the national interest. Ultimately, we must defer to those in another place because they are the people’s representatives and we are not.

[Lord Wallace of Saltaire]

My Lords, perhaps I may remind noble Lords that the recommendation from the Chief Whip at the beginning of the debate was that we should keep to seven minutes. Having myself in the past often spoken one or two minutes longer than I should have done, I say this diffidently. But if we want to finish by 10 o’clock, we need to hit seven minutes or certainly no more than eight minutes.