Jobs and Growth

William Cash Excerpts

Wednesday 12th October 2011 Commons Chamber

[Ed Balls]

In a minute.

Yes, the deepening euro crisis and the weaker US recovery have made things harder for British exporters in the past three months, but one cannot blame the eurozone or the world economy for the collapse of economic recovery here in Britain when, since last autumn, our economy has grown more slowly than that of any EU country except Greece and Portugal, when we have the highest level of inflation of any EU country except Estonia and Latvia, and when, over the past year, we have seen a bigger rise in unemployment than the EU average, when most EU countries have seen unemployment not rising, but falling. I know the Chancellor does not like it, but those are the facts. The Prime Minister said today, “I accept responsibility for everything that happens in our economy”. I hope the Chancellor will do the same today.

[Mr William Cash (Stone) (Con)]

Does the right hon. Gentleman accept that the trade deficit between ourselves and the 17 countries in the eurozone has gone up from minus £4 billion to minus £38 billion in the past year alone, and that one of the main reasons, both as respects the whole of Europe and as respects the United Kingdom, is that employment and social regulations are strangling small businesses, for which the Labour party was also responsible in Government? I am critical of the present Government, but am I not also critical of the right hon. Gentleman’s party’s performance in the past 10 years?

[Ed Balls]

The Chancellor’s big boast over the past six months, which we were told regularly, was that between 400,000 and 500,000 more jobs had been created in the British economy, but today’s figures months show that employment has not gone up at all in the past 12 months; it has actually gone down. We were also told that public sector job cuts would be more than outweighed by the rise in private sector jobs, but I am afraid that employment is falling because the private sector has been unable to deliver the recovery we were promised. It has been a complete fantasy.

Eurozone

William Cash Excerpts

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

The debate on how that fiscal union should take shape is just starting in the eurozone, and we can contribute to that debate while ensuring that Britain is not part of it and that Britain’s important national interests are protected in regard to the single market, competition policy and financial services. Key components of the measures will include some transfer of resources: in effect, the European financial stability fund is becoming a sort of central resourcing fund. The measures will also mean greater surveillance and mutual vetoes and the like over each other’s budget policies. I have raised the issue of eurobonds, as have the Italian Finance Minister and the chair of ECOFIN. I think there will be a number of components. In the end, it has to be, in part, a decision for the eurozone itself to take the lead, provided that our interests are protected.

I cannot help but make the observation that one of the things we are learning about the eurozone is that if we have a single currency, we need much greater co-ordination of economic policy. That is rather contrary to the Scottish National party’s approach, which is to maintain a single currency but to have a dis-integration of fiscal co-ordination.

[Mr William Cash (Stone) (Con)]

On the issue of growth, will the Chancellor accept that, last year, our trade deficit with the eurozone went up from minus £4 billion to minus £38 billion in one year alone? Does he recognise that this has a great deal to do with the problem of over-regulation and that we need to repatriate social and employment legislation so as to create growth in small and medium-sized businesses? Will he also face down the Deputy Prime Minister, as the Home Secretary did the other day?

[Mr Osborne]

Speaking as a member of the Conservative party, I would make it clear, as the Prime Minister has done, that if a future treaty should arise, as it may well do, we will argue the case for bringing back certain powers to this country. I am sure that we will have a very active debate about what those powers should be—

European Union Fiscal Union

William Cash Excerpts

Wednesday 14th September 2011 Westminster Hall

[Mr William Cash (Stone) (Con)]

In the light of developments not only today but over the past several decades, not to mention more immediate events since the Lisbon treaty and the general election, I am glad to have the opportunity to deal with the question that has been embedded in the history of the European Community and the European Union over a long period. It relates to the creation of a two-tier Europe, which the fiscal union appears to represent. I cross-examined the Prime Minister on the issue in the Liaison Committee about a week ago, and I cannot say that his answers were satisfactory. I therefore take this opportunity to reply, vicariously through the Minister, to the Prime Minister on a number of the matters that remain outstanding.

Mr Barroso, the unelected President of the European Commission, gave a speech this morning, lecturing the whole European Union, and the world for that matter—not to mention the United Kingdom—on what is to be done about the mess that has been created over the past 20-odd years. In fact, it is much more than that, but I shall draw a line at the Maastricht treaty for present purposes; otherwise, we will be here all night.

Curiously, Mr Barroso takes the view that, in the short term, there has to be—surprise, surprise—reinforced economic governance. He also argues that all this can be done only by way of the Community method; in other words, nothing changes. In his speech, he had the temerity, despite the failure of the Lisbon agenda and the 2020 agenda, to say:

“Growth is key and we must use all instruments available to promote growth”.

He went on to talk about using the Single Market Act to promote sustainable growth. Then, somewhat ominously, he referred to his promise—this is not just a floated idea—that

“the European Commission will very soon propose a Financial Transaction Tax.”

The clear implication is that that will apply to the European Union as a whole. It would be interesting to hear what the Minister has to say about that.

Mr Barroso went on to talk about the governance of the euro area, saying:

“A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future. After all, this is why the Community method and the European Union institutions were created by the member states in the first place.”

He continued:

“The Economic and Monetary Union cannot function properly only on the basis of decisions taken by unanimity,”

So there goes that veto. He went on:

“Because if a eurosceptic fringe”—

I suspect that that refers to the likes of me and, I hope, other Members of the Government, and certainly to the majority of hon. Members who have turned up to this debate—

“can determine the position of one Member State and one Member State can block decisions, the result is that we are not credible.”

That raises the question, of course, of whether the policies are credible in the first place.

[Kelvin Hopkins (Luton North) (Lab)]

On the Eurosceptic fringe, the fact is that, on many occasions when referendums have been held, the majority have voted in a Eurosceptic way, so it is possible that there is a Eurosceptic majority in the European Union.

[Mr Cash]

Opinion polls in this country have regularly indicated that 70% want a referendum and, moreover, would vote yes against the idea of the continuation of our present relationship with the European Union. People want renegotiation and if they do not get it, they want to leave. That is the position.

We are confronted with an incredibly serious situation that is getting worse. There will be a telephone conference this afternoon—it might already be in progress, at the very moment when we are debating this question—between Monsieur Sarkozy, Angela Merkel and Papandreou, because the system has failed. If, however, we raise the question of its failure, the response is, “We don’t want less Europe; we want more,” so they want more integration, not less.

[Jake Berry (Rossendale and Darwen) (Con)]

Will my hon. Friend concede that the system was set up to fail by the fiddling of figures when it was established?

[Mr Cash]

Yes, I certainly will. In the case of Greece, it is perfectly clear that, to put it bluntly, misrepresentations —and even lies—were contained in the statistical base on which it was brought in. Indeed, even the present German Chancellor has criticised the way in which it was allowed to come in when it did.

In his speech, Mr Barroso said:

“The conclusion I draw is crystal clear—The only right way to stop the negative cycle and to strengthen the euro is to deepen integration, namely within the Euro area, based on the Community method.”

He went on to say:

“What we need now is a new, unifying impulse—‘un nouveau moment fédérateur’”.

Let us get this clear—he means a new moment of federal fervour, although that is my translation. He continued by saying,

“let’s not be afraid of the word, moment fédérateur is indispensable.”

He went on:

“It has become clear that we need an even greater integration of our economic and budgetary policies.”

Do not get the impression that he is referring exclusively to the proposed fiscal union. His ambitions extend to the whole European Union. This is a call to arms by the Eurofanatics—let us be in no doubt about that.

On eurobonds, Mr Barroso, having said that we need even greater integration of our economic and budgetary policies, confirms that the Commission, again, on behalf of the European Union,

“will soon present options for the introduction of Eurobonds”,

on which, as it happens, the German constitutional court has cast grave aspersions. Indeed, I understand that the President of the German Republic has also said that he regards them as illegal. I could spend a lot of time going into that, but I do not need to for the moment. Mr Barroso said:

“Some of these options could be implemented within the terms of the current Treaty”—

that is the abominable Lisbon treaty, which we accepted after we had opposed it as a party, united together, and called for a referendum that we never got—

“and others would require Treaty change.”

I wanted to draw all those matters to the attention of my colleagues, because they are the latest emanations from the European Commission. This is what it is about and, as we speak, none of it is being reported.

[Graham Stringer (Blackley and Broughton) (Lab)]

The hon. Gentleman is describing something that is not surprising; we are getting milk from the milkman in terms of the statements that he has read. Does he, like me, find it depressing that the Front-Bench representatives of both main parties argue for less democracy, rather than more, in the eurozone?

[Mr Cash]

That is absolutely the case, and it is very depressing. The whole objective of the treaty arrangement, from its inception and the days of Jean Monnet onwards—and as evidenced by recent treaties, including the Lisbon treaty—is essentially undemocratic.

Implementing the measure would create a situation in which people in this country, who in general elections have voted through their own free choice at the ballot box for policies, were denied those policies because the proposals brought forward by majority voting in the European Union are inimical to growth and deficit reduction.

I shall explain why it is so fundamentally wrong for the Prime Minister, the Chancellor of the Exchequer and the coalition Government as a whole—under the baleful influence of the Liberal Democrats—to advocate the idea of a fiscal union. For reasons that I will explain, fiscal union is immensely damaging to the national interest and our economy.

[Mrs Anne Main (St Albans) (Con)]

Does my hon. Friend share my concern that it is the language surrounding these new moves that is deeply worrying? I believe that those people who had a chance to vote on whether they wanted to join what they thought was the common market would never have done so at any time if the rhetoric that we are now hearing had been used then. The language being used relates to deeper fiscal integration, eurobonds and basically subsuming what the British people want. That is why we need to ask the people again whether they wish to embark on this experimental project.

[Mr Cash]

I am grateful for that intervention. Indeed, when the Chancellor of the Exchequer made his statement—which he slipped in, as it were, in the middle of the emergency debate on the riots—he said that he was going to promote the idea, and that the Prime Minister had already spoken to Mrs Angela Merkel and Mr Sarkozy and had encouraged them to go ahead with fiscal union.

In addition, he said that he, as Chancellor, had already made overtures to other Chancellors in other member states advocating the idea of fiscal union. When he said that, he was ignoring the fact that the consequences of going down that route would, as I said at the time, have been such that even Edward Heath would not have proposed it back in 1971-2. Indeed, if hon. Members look at the White Paper produced at that time, they will see that it says that we would retain the veto in our national interest and that to fail to do so would not only be immensely damaging to the United Kingdom, but would even endanger

“the fabric of the European community itself.”

Since then, we have had an accumulation and aggregation of policies in defiance of the democratic issues and principles to which the hon. Member for Blackley and Broughton (Graham Stringer) referred—and, indeed, in defiance of the wishes of the people of this country and, as the hon. Member for Luton North (Kelvin Hopkins) said, of other member states such as Ireland, Denmark, Holland and France. Every single time a referendum, which shows the democratic wishes of the people in question, has been overriden, we are being taken down a route that, above all else, does not work. That is the problem.

Apart from the matters of principle, the real problem is that such an approach does not work and is now causing immense damage. For example, there are incredibly high levels of youth unemployment in places such as Spain, where 47% of young people are unemployed. There are similar levels of unemployment in Greece and Italy, although the figures are not quite as high as 47%.

I do not need to read all the figures out, but the official statistics for unemployment among youths under 25 are 46.2% for Spain, over 23% for eight countries and 32% for one country. This is not a working system; this is a system that is destroying people’s aspirations and prosperity.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I commend the hon. Gentleman for securing the debate. I agree with what he is saying, particularly his comments about the system simply not working. However, does he agree that part of the problem that the United Kingdom is faced with is that we need to have a cohesive alternative to the total integration policy that he is outlining, which I am sure is completely different from the approach that he will discuss shortly? A practical coherent alternative needs to be laid out by our Government to try to lead ourselves out of the mess into which we have got over the past 20 years.

[Mr Cash]

I am extremely grateful to the hon. Gentleman. He may recall that I raised the matter in Prime Minister’s questions, when I asked when the Prime Minister would lead us out of the mess that had been created by the existing treaties. This morning on the “Today” programme, we heard Lord Lawson of Blaby echoing that call and saying that he had always had grave reservations about the political union. I can only say that when the Maastricht treaty came and went, a lot of those arguments developed at the same time. The hon. Gentleman is completely right in saying that we must have a constructive alternative.

I have always advocated the idea of our working effectively with a European system capable of producing the right results. In fact, I hope that no one will mind my holding up a copy of a book that I wrote in 1990 called “Against a Federal Europe: the Battle for Britain.” I think I can confidently say that there is not very much in there that I would change and that most of it appears to have come true. To answer the question asked by the hon. Member for East Londonderry (Mr Campbell), I should say that it is very alarming to note that the first chapter is entitled “Britain for Europe”; it is not only a case of “Britain for Britain” but of “Britain for Europe,” because it is certainly true that we are affected by what goes on in the other member states.

As I have said many times before, the answer to the question is to go down the route of having an association of nation states, whereby we would return the right and proper power to this Parliament to make judgments on behalf of the people who have chosen us in a ballot box, to follow through policies, and to try to work in a form of understanding made on the basis of trade and political co-operation.

That was the situation anticipated by the 1975 debate when we had the referendum, which people understood. However since then, there has been onward and continuous progress towards ever further integration in an ever more undemocratic and ever more dictatorial manner. The time has come when we have to draw a line. It should have been drawn a long time ago. We drew it as a party over Lisbon. We said that we would not accept that treaty, but now here we are implementing it like there was no tomorrow.

A rather intriguing article by Camilla Cavendish was published on 8 September—only a few days ago—in The Times, which also had rather a good leader, either on the same day or the day before. It is rather amusing that she says:

“It’s no longer cuckoo to take the Swiss road; Britain and the EU are no longer going in the same direction. We should grab the chance for an amicable divorce”.

She then explains how that would be done. Essentially, she is arguing for an association of nation states, as many of us have. We are at a dangerous crossroads. A particular reason for this debate is the fact that the idea of fiscal union is being promoted. In our opinion—or in my opinion, anyway—that is entirely the wrong direction to take in the context of the broad landscape that I have been seeking to identify.

[Henry Smith (Crawley) (Con)]

My hon. Friend is making a persuasive argument. On the point of European nations not being members of the EU but being very successful, the article that he mentions refers to Switzerland, but there have recently also been articles about how the Norwegian krone is attracting a lot of investment. That is another example of a successful European nation outside the EU, which reinforces the point that an association of nation states rather than a political union is the best way forward.

[Mr Cash]

I endorse entirely what my hon. Friend has said. We are at a crossroads and it is a very dangerous crossroads. We have to get it right. It simply is not good enough to appease the European institutions by going along with their ideas when we have our own national interest to stand by, support and protect. We are not just talking about institutional arguments; we are talking about real people, their real daily lives, the unemployed and the people who cannot increase the enterprise of their businesses.

I was deeply concerned in my exchanges with the Prime Minister. I put a question to him on the question of the single market. In reply, he made it clear that he was conscious of a fact, which I had put in a pamphlet that I had published the day before. The pamphlet, by the way, is called “It’s the EU stupid”, because we have got to a stage where it is obvious that the EU is at the root of so many of these problems.

On the question of the single market, I pointed out to the Prime Minister that if there is a fiscal union of certain member states it is inevitable, as a matter of solidarity, that they will use the treaties to transfer their own wishes, through majority voting and a block vote, in a way that will be contrary to our own domestic economic interests. What would be the point of a fiscal union if, when it came to questions of legislation relating to the economy, the member states were not prepared to vote together? They will. When they do, and they outvote us, that will gravely undermine our competitiveness and our ability to grow small and medium-sized businesses. It will affect our growth. It will damage and destroy our prospects of reducing the deficit, because it will lead to a reduction in growth, which is already stagnant.

[Mr John Redwood (Wokingham) (Con)]

Does my hon. Friend think that we should allow the fiscal union to go ahead, for those who wish to join it, if our Government negotiated for us independent democratic control over everything here that mattered to us as the price for making that sacrifice?

[Mr Cash]

The short answer is that it would depend on how the renegotiation went. If the renegotiation was entirely in line with protecting fully our own interests, if it were guaranteed that we were not tied to the existing arrangements by a treaty that drew us in to all the adverse consequences of being part of this overall European Union in the shape and form that it has at the moment and if we could manage to achieve the perfect answer, then that would be a good idea. However, I do not think that that is the way it is going to go. I think that we will put forward positions, if we ever get to the point of renegotiating the treaties. A meeting took place a couple of days ago in which it was clear that a very large number of MPs in the Conservative party want renegotiation. Some of us have been arguing for that for 20 years. However, the fact is that that is the position in the party as a whole. The question is not only whether we want to renegotiate, but how that would be done.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

My hon. Friend makes an important distinction. The Chancellor of the Exchequer seems to be suggesting that we would consent to a fiscal union provided that we were insulated in some way from the direct effects of that fiscal union. My right hon. Friend the Member for Wokingham (Mr Redwood) is saying something much more profound, which is that we should use this opportunity to recover control over a whole lot of policies that are already damaging the British economy, and continue to damage the British economy, whether there is a fiscal union or not. It is that latter position that has to be, ultimately, subject to a referendum, or the danger is that we will sell the pass on fiscal union and we will not recover very much.

[Mr Cash]

I agree with that entirely. My hon. Friend is very much in line with the views of many us on this side of the Chamber, which is that if this is going to be done, let it be done properly. Let us not nibble away at some of the minor matters. Let us get down to the real nub of the issue and say that this kind of Europe is not a Europe with which we are prepared to continue. The status quo is completely untenable, and so a referendum question that dealt with those matters—including the question of fiscal union, because it will be so damaging, and I will give further examples of where I think it would be damaging in a moment—should be: do we want to leave the European Union all together; or, given that the status quo is untenable, do we want to renegotiate the treaties?

We now know that the bulk of the Conservative party, which, after all, is the bulk of the Government, wants renegotiation. The next question is, are we just going to nibble away and pretend that it is renegotiation, or are we going to get down to the structural questions and really do it? I believe very strongly that the Prime Minister has an obligation to go the next summit and to put forward proposals for renegotiating those treaties in a way that would actually change the entire system. If the other member states say, “No, we are not prepared to put up with that,” then we will deal with that situation at that point in time. The case for a referendum in either event, to my mind, is completely unanswerable.

On the question of fiscal union itself and damage to the United Kingdom, I have already mentioned the problems that will arise in relation to the single market bloc voting arrangements. We are always being told that our trading relationship with the EU is vital to us, and that it represents approximately 50% of our trade. Some dispute that, but the reality is that it is a substantial proportion of our trade. However, if one actually looks at the net results of the so-called benefits of that trading relationship, I am bound to say that in the past year alone, between 2009 and 2010, our trade deficit with the European Union, the other 26 member states, has gone from minus £14 billion to minus £53 billion. The deficit has leapt up by £40 billion in one year.

Those figures are taken from the House of Commons Library and the Office for National Statistics, so I am not going to dispute them—others may wish to do so, but they are official figures. I have repeated them several times and no one has challenged me on them. That demonstrates that our trade with the rest of the European Union is not working. The reasons for that are over-regulation and a system of economic constraints that prevent us from allowing our small businesses to grow. After all, small businesses make up the greatest percentage, by a massive amount, of the prosperity of this country. The downside of our failure to grow is increasing unemployment. We heard the figures today. The truth is that we are not growing because we are trading with a Europe that is bankrupt, except for Germany.

There is also the question of the position vis-à-vis the City of London. The Minister and I have crossed swords on this from the very outset. When the de Larosière report came out—it was about four years ago, I think—I wrote letters to the Financial Times, several of which it published. I argued that we had to keep the City of London within the framework of our own legislation and not appease those in the European Union, such as those in France and elsewhere, who would like to take control over our City of London. The Government caved in, and now the whole City of London is within the jurisdiction of the European institutions and the rules and regulations that will be made there. Every single time there is a new problem in the City of London, we will have to ask ourselves to what extent it is the consequence of that fatal mistake.

[Mr Redwood]

Does my hon. Friend agree that the situation causes the electorate to believe that we have a dishonest political debate in this country? We are having a big argument over the Vickers report and how and when it should be implemented, whereas it will all be settled under the capital requirements directive, CRD IV. I do not see the point of the Vickers report.

[Mr Cash]

That is all part of the problem. I have been on the European Scrutiny Committee for 26 years now, and over and over again I have found that legislation brought to this House is based on European legislation, but that is never disclosed. People do not say, “Oh, by the way, we have got to do this, therefore we are going to,” so we go through a charade of passing legislation as if we have control over it. The Whips move in like the clappers, saying, “You can’t possibly vote against this, because it’s all based on European legislation that we have already agreed to under the European Communities Act.” In reality, we are being governed by Europe, and that is my greatest objection—plus the democratic question, which the hon. Member for Blackley and Broughton has mentioned—and why I got so exercised about the Maastricht treaty. We have gone beyond that now, and what we are faced with is much more critical, but we can remedy it if we renegotiate the treaties.

[Mr Jenkin]

Before my hon. Friend leaves those shocking trade figures too far behind him, do they not demonstrate another factor? Our European partners, notably Germany, have far more to lose by disrupting the trading relationships between us and the rest of the EU than us. I do not diminish the point that we want to maintain the free movement of goods within a customs union, if we can, but the idea that they simply will not talk to us or chuck us out is absolutely ludicrous.

[Mr Cash]

Given the growth the rates elsewhere in Europe and the complete mess that the eurocrats and other Governments—including our own—have created, allowing us to get into this parlous state, it is inconceivable that they would dare to argue that somehow or other they could operate without us. That suggestion is simply child’s play and a joke, although it has got beyond a joke because it is so serious. That seriousness might come out this afternoon, but it will certainly come out—as night follows day—over the next few months.

I have been looking into the £53 billion trade deficit. I made some further inquiries, because I wanted a breakdown, and I was given the figures yesterday. In the trade balance of £53 billion against us, £17 billion is in vehicles—cars and lorries. In other words, we have destroyed or have had destroyed our manufacturing base in car making—my hon. Friend the Member for Luton North knows that better than me—and yet our trade in commercial and other vehicles is now on a monumentally adverse basis.

Another point that I am bound to make, which is deeply concerning, concerns the consequences of the departure of one or more states from the European Union, which some advocate. Some will have read Hans-Olaf Henkel in the Financial Times the other day. He is the former head of German industry, the equivalent of the director-general of the CBI, and he said that the “biggest professional mistake” of his life was to have supported the euro process, which is an important statement from someone of his standing. He is completely against the idea of the European Union as it now is. Germany has some very important voices, because it is effectively the paymaster for the rest of Europe.

Our negative trade balance with Germany is devastating. I was in Poland the other day, and I looked at its trade figures. I suspect that a lot of people in Poland desperately want to remain within the framework of some protective system but are deeply worried about the imbalance between Germany and Poland. And so it goes on—if we look at the Greek or Spanish situations and at the bottom line, what is happening with fiscal union is also, to use an expression, the creation of a greater Germany. For practical purposes, if we examine what is said at the various meetings, no one can be in any doubt that the Germans call the shots. The Germans are benefiting enormously from the European Union for one reason, which is that they are benefiting from their investment in other countries.

In that context, I have the figures for unit labour costs, if anyone is interested. In the past 10 years, German unit labour costs have gone up by only 2%. The average of all the other member states put together has unit labour costs increasing by no less than 25%. That is worth thinking about. Not only do we have the most monumental trade balance against us with Germany, but its trade balance with the rest of Europe is monumentally in its favour, and the Germans have done that largely through what we might call their skill or commercial nous. None the less, they have managed to do it and so they make huge profits from other parts of the European Union. Let us not be taken in by the argument that, somehow or other, Germany will suddenly go walkabout. The Germans get so much out of the European Union, and Angela Merkel is making it clear that they will continue to do so, and that is one of the reasons why Germany is so committed to political union. That does not mean, however, that it is in our interest.

[George Eustice (Camborne and Redruth) (Con)]

My hon. Friend gets to the nub of the issue—whether it is realistic to expect the Germans to accept mutual liability with countries such as Greece, Spain and Portugal. It was different when they wanted to reunite Germany, and when West Germany was prepared to accept some of the liabilities of East Germany. Does he accept the difference, and that that is why going to full fiscal integration to prop up the euro is a very big decision for the Germans?

[Mr Cash]

I very much agree with that. I put that same point to the Prime Minister in the Liaison Committee last week. I asked him whether he seriously believed that Germany was going to be able to bail out the other member states. The money is simply not there. To imagine that Germany could carry the weight of the Spanish debt is, as Camilla Cavendish has said, complete cloud cuckoo land. We can see the Italian position getting increasingly out of control, while the Greek situation is beyond critical. Greece should exit the euro—that is perfectly clear—but there are desperate attempts to prevent it happening, although that is literally trying to do something impossible. One might as well believe, as Alice said in Wonderland,

“six impossible things before breakfast”,

and the truth is that one of them is the idea that Germany will be able to sustain the whole of the European Union or, indeed, that its own people will allow that. All the evidence is that there is a very serious concern that they simply cannot afford to do it and that they do not want to do it. I will not give all the instances, because they are so well reported in the newspapers and other media.

[Mr Richard Shepherd (Aldridge-Brownhills) (Con)]

One of the reasons that things have worked quite well for Germany is that, without the southern countries, the exchange rate of the euro would have been even higher. They therefore helped suppress the exchange rate in the free markets, to some extent, which has been of benefit to Germany.

[Mr Cash]

Absolutely right. Germany has gained much, but now the chickens are coming home to roost. The system is not working because the Germans have made investments in other countries. If we look at the Greek sovereign debt situation, an enormous amount of investment—by far the greatest amount—is from Germany, followed by France. So the sovereign debt question is now part of the overall problem of Europe as a whole, and the mess created, which many of us predicted, is now with us. Any sovereign debt default will become all the more serious the longer that the European Union attempts to sustain the euro. Economists such as Tim Congdon and others have made that case, but it is absolutely clear that the situation will get worse the longer that the European Union tries to put sticking plaster over what is a clear case for complete renegotiation of the treaties to get some sanity back into the situation.

The idea that those of us who are eurorealists and who have argued this case for so long would take any satisfaction from the fact that the situation might implode is complete rubbish. Of course we do not want it to implode; we want to get stability back, to reduce our deficit and to increase growth, but none of those things can happen if we have over-regulation, too much integration and too much governance from European institutions, which prevent oxygen reaching our small and medium-sized businesses. That is an issue not only for this country, but for other countries, which all face greater and greater unemployment. I therefore strongly urge the Prime Minister to sort this out at the next summit.

We cannot create growth unless the money to pay for the public sector comes from reasonable taxation on private enterprise. It must be reasonable taxation, because growth must come from the development of small and medium-sized businesses. There is no way we will reduce the deficit if we continue trading as we are with a Europe that is bankrupt, with the exception of Germany. Incidentally, while we had a £53 billion trade deficit with the EU in 2010—that went up by £40 billion in one year—we had a trade surplus with the rest of the world of £7 billion, and it could be much more if we made the big strategic change that I am proposing. That, too, underpins my resistance to the idea of fiscal union.

Fiscal union will lead to greater implosion, greater sovereign debt, more defaults and more trouble. It might also—I say this cautiously—lead to the rise of the far right, because that is the consequence of implosion in democracies and of their being forced into situations where their people start saying, “We’re not going to put up with this any more.” One has to be careful about what is done. That is the dangerous crossroads we are at, and the Prime Minister must make the right call.

[Mr Denis MacShane (Rotherham) (Lab)]

As I understand it, the Chancellor is rather keen on fiscal union. Does that mean that the hon. Gentleman opposes the Chancellor’s point of view?

[Mr Cash]

The answer is yes. I did not say it so emphatically, but I said so when the Chancellor made his announcement in the House. I said that even Edward Heath would not have done what we were seeing now, so that probably sums the situation up quite well.

In my exchanges with the Prime Minister about fiscal union—I understand that these things can come out of the blue, but I wonder about the extent to which that was the case—he said:

“Of course, it will have an effect on us, but the clear rule for a referendum…is whether we are transferring power from Britain to Brussels.”

I do not agree that that is the basis for a referendum. It would be under the European Union Act 2011, but where a European decision, treaty or other legal instrument —in this case, there will be a mixture of those—applied on the face of it only to the eurozone, there would, under section 4, be no referendum.

That is why I have introduced a Bill saying we should have a referendum, and that Bill is supported by no less than six Select Committee Chairs, plus some distinguished Members, such as my right hon. Friend the Member for Wokingham (Mr Redwood), and members of the new intake who have taken a great interest in these matters. As I have said, the Bill has been presented, and the good news is that there will be a ten-minute rule Bill debate in October—the Leader of the House is here, and he knows that already. The Bill is intended to advance the case for a referendum on fiscal union.

In the Liaison Committee, the Prime Minister seemed pretty confident that there would not be a treaty. When I said that

“you are implying that there might not be a treaty” ,

he said—this was on 6 September—

“There is an important point on the issue of the treaty…Let us be clear: no one in Europe at the moment is currently talking about a new major treaty to put in place deeper fiscal union or changes in the eurozone. That may well happen in future…and if it were to happen, there would be consequences for Britain. Britain should think carefully about how to maximise our national interest”.

My answer to that is, first, that we now know that there will be a treaty, because the Chancellor of the Exchequer announced it from Marseilles. Secondly, I do not see how Britain can maximise its national interests when the new treaty, by its very nature, will erode the heart of those vital national interests.

There will be consequences for Britain, which raises another issue. We know there will be a treaty. As Mr Barroso said this morning—the Prime Minister has said this, too—it will be dealt with through a mixed bag of measures. Part of the process will no doubt be dealt with through enhanced co-operation, although the legality of that is very questionable indeed, and the European Scrutiny Committee will certainly look at that. Part of the process may also be dealt with through European Council decisions and intergovernmentalism, if those involved can get away with it. However, the bottom line is that the policy and the judgment are wrong, and we should not promote them. The best thing that I can suggest, therefore, is that we go to the next summit, put down a clear marker and insist that we will refuse to accept the treaty for fiscal union.

[Henry Smith]

Would our position as a country not be further strengthened in the negotiations if other EU members knew that any decision would be subject to a referendum in this country? The worst time to make irreversible treaty changes is during a crisis.

[Mr Cash]

I could not agree more. That is why I am making the plea that we get ahead of the curve now, although it is almost too late. We should get ahead of the curve now, get things right now and make sure that the crisis that we are in is remedied in good time. We will then be able to make sure that we get things right. However, that will involve turning the current treaty arrangements into an association of nation states. It will mean abandoning the current concept of the institutions, directly in opposition to Mr Barroso’s proposals today. The crisis is very great, but our ability to grow our economy and reduce the deficit—the very raison d’être of the coalition agreement, which said that that was the way to proceed—will be totally undermined unless the proposals that I have set out are pursued with vigour now.

Mrs Brooke, I am glad to have been able to make some of the arguments, and I hope that you will listen to the rest of the debate with pleasure.

[Several hon. Members]

rose—

--- Later in debate ---

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

First, I congratulate my hon. Friend the Member for Stone (Mr Cash) on securing the debate. I do not think that anything he said came as a surprise to any of us who have taken part in discussions on this issue in this Chamber, in the main Chamber or in European Standing Committees—he has the merit of consistency.

There were helpful contributions from the hon. Member for Luton North (Kelvin Hopkins), from my hon. Friends the Members for Northampton South (Mr Binley), for Witham (Priti Patel) and for Harwich and North Essex (Mr Jenkin) and from the right hon. Member for Delyn (Mr Hanson). Let me deal with a couple of specific points that were raised. My hon. Friend the Member for Stone raised the question of a financial transactions tax. He is aware that President Sarkozy and Chancellor Merkel discussed that at their summit in August. Let me be clear about the UK Government’s view on a transactions tax. It would work only if applied globally. If it were applied any less completely than that, the transactions would simply move away. Business that was previously booked in, say, France would move to the UK, Singapore or New York.

[Mr Cash]

Will the Minister give way?

[Mr Hoban]

No. My hon. Friend—[Interruption.] May I continue? My hon. Friend spoke for nearly an hour; I have 10 minutes and want to cover a wide range of topics.

The UK would not agree to the introduction of any financial transaction tax that damaged competitiveness and growth and, in the absence of a global agreement, the UK sees no evidence that a transaction tax would maintain EU competitiveness. Of course, that does not prevent other countries from introducing a transaction tax if they wish to do so.

My hon. Friend is quite keen to ensure, given his legal background, that words are used carefully. I think that he said that my right hon. Friend the Chancellor of the Exchequer had said that there would be a new treaty. Let me give the quote, so that we do not set any hares running. The Chancellor said in Marseilles this weekend:

“I think it is on the cards that a treaty change may be proposed.”

That is a very conditional statement. It is not saying that there will be a treaty. Before we let the argument run away with itself, I point out that there is no proposal at the moment for a treaty.

My hon. Friend the Member for Northampton South asked whether the Treasury was monitoring the situation in the eurozone. Yes, it is. We are working closely with the Financial Services Authority and the Bank of England to monitor what is happening in the eurozone and to understand its potential impact on the UK economy and banking system. We take that particularly seriously because of the interconnection between financial markets and our economy.

Let me be clear: the responsibility for sorting out the problems of the euro area ultimately rests with the euro area Governments. We are not members of the euro and will not join it in the lifetime of this Parliament. Being outside the euro area has clearly given us the flexibility to adapt our fiscal and economic policy to manage the crisis. It is not our responsibility to deal with their problems.

However, no one should be under any misapprehension about the importance of the euro area to the UK economy—a point that my hon. Friend the Member for Northampton South made very powerfully. A strong euro area means a growing market for our goods and services; a weak euro area puts at risk jobs and businesses in our constituencies. We should not lose sight of that. A weak euro area is not in our interest: it puts jobs and businesses at risk. More than 40% of our exports go to the euro area. Hon. Members will know that we export more goods and services to Ireland than we do to Brazil, Russia, India and China combined. No one should be under any illusions about the importance of the euro area to our continued success. Britain wants a successful euro area that can deliver growth and stability, so we want the euro area to have the rules that it needs to prevent future crises.

Global Economy

William Cash Excerpts

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

Both the hon. Gentleman and I represent constituencies in the north-west of England, and the striking fact about the RDAs is that during their period of existence regional disparities grew. They did not work in the way that they were supposed to work. Because local enterprise partnerships involve businesses and are on much more practical boundaries, they will help to deliver that local growth. However, if he thinks that all the world’s problems are caused by the fact that we got rid of the RDAs, he is exaggerating his case.

[Mr William Cash (Stone) (Con)]

The Chancellor will know that our trade balance between 2002 and 2009-10 with the other 26 member states has gone up from minus £14 billion to minus £53 billion in one year? Does he not agree that even Edward Heath would have repudiated and vetoed a fiscal union with a hard-core Europe with such an incredible trade deficit against us? The coalition agreement, according to the latest answer I got from the Prime Minister, determines our relationship with the European Union. Does the Chancellor disagree with the Deputy Prime Minister, because we must have radical renegotiation of the treaties and the repatriation of powers so that we can achieve growth for all our businesses?

[Mr Speaker]

I enjoy listening to the hon. Gentleman’s words so much that it is in my interest, Parliament’s interest and the national interest that they should be suitably rationed.

Summer Adjournment

William Cash Excerpts

Tuesday 19th July 2011 Commons Chamber

Motion lapsed (Standing Order No. 9(3).

[Mr William Cash (Stone) (Con)]

On a point of order, Mr Speaker. In the rather unusual circumstances of the debate tomorrow, we have not yet had notice of the motion or the terms of the debate. However, the 17 Select Committee Chairmen, plus the chairman of the parliamentary Labour party and the chairman of the 1922 committee, and representatives of the four leaders of the devolved Administrations, have all expressed their concerns about the terms of the inquiry. I simply ask you whether it will be possible for us to table a manuscript amendment tomorrow, in the event that the motion requires amendment to satisfy the terms of early-day motion 2088.

[Mr Speaker]

I thank the hon. Gentleman for his point of order. He is even further ahead of the game than usual. As he has acknowledged, there is, as yet, no formal recall tomorrow, as the Standing Order does not operate until this sitting is adjourned. I can assure him and the House, however, that shortly thereafter, I shall sign the necessary order. Only after that will we know the form of the motion for tomorrow. So his point is hypothetical at the moment, but I have noted his words, as I invariably do. I hope that that is helpful to the hon. Gentleman and to the House.

Sovereign Grant Bill

William Cash Excerpts

Thursday 14th July 2011 Commons Chamber

[Jacob Rees-Mogg]

The shadow Chancellor concluded his remarks by saying that he had looked up the Commons Journal for 1760. He is, of course, a very modern man. I went a little earlier and looked up the Commons Journal for 1575. I thank the Library for its assistance in helping me to find what I was looking for. I was looking for the behaviour of the House towards a Mr Peter Wentworth, a man who represented a Cornish seat and had the temerity to criticise the then sovereign, Elizabeth I. He said that

“none is without fault, no, not our noble Queen”.

For this “prepared speech” and

“divers offensive matters touching Her Majesty”

he was taken prisoner to the Tower and held there for a month at the insistence of the House of Commons. I must say that I think they knew how to behave in 1575, and it is a model for us today.

I want to come on to who really owns the Crown Estate, because that is important in this discussion. That is why I intervened on the Chancellor, and I am grateful to him for taking my intervention. It is important to remember that the Crown Estate is the property of the sovereign in an ultimate sense, though gifted for a reign. The importance of that is that the sovereign therefore has a right to ask for money. One might think that they would get the money anyway, but sovereigns have been promised money by Parliament that has been stopped. One just needs to go back to Charles II, who handed over all his feudal dues to the Government for £100,000 a year in perpetuity for all his heirs and successors. I am not sure that that £100,000 has been paid once in the last three hundred and some odd years. The Crown, by virtue of owning the Crown Estate, can guarantee that it is entitled to a revenue. The fact that at the beginning of each reign it could theoretically demand the Crown Estate back is important reassurance and a reassertion of that right.

[Mr William Cash (Stone) (Con)]

Is my hon. Friend conscious of the fact that at the time of the secret treaty of Dover in 1670, the Crown would not recall Parliament because Louis XIV insisted that we should do what the French and the rest of the Europeans wanted, in return for which he would give enough money to Charles II to keep him in with his mistresses and the royal household in the manner to which he felt he should be accustomed?

[Jacob Rees-Mogg]

I remember the secret treaty of Dover well, although I was not an active participant. However, it is not particularly relevant to this debate. It has to be borne in mind that Louis XIV did not deliver the cash, which is always a slight problem in such negotiations.

The Crown Estate belongs to the sovereign. Any other great landowner who has inherited land owns that property outright and is free to pass it from generation to generation. The Crown Estate is in that position. We have discussed before whether, because it is exempt from death duties or because it used to be used to pay for Government expenditure, it is in some sense different and the nation’s. I would argue that that reasoning is not accurate. In the same way that the feudal duties that fell upon other landowners were abolished as time went on, so the Crown Estate would in all normal circumstances have become the Queen’s outright.

I therefore go back to my point, which the hon. Member for Newport West (Paul Flynn) dislikes, that the Queen pays an 85% tax rate. There would be £200 million or more in income for the Queen every year, but in fact there will be only about £30 million. So Her Majesty is the highest-paying taxpayer in this country. Members of Parliament might like to think that we could do a deal with the Government, hand over our salary and be given £9,000 a year back.

--- Later in debate ---

[Mr George Osborne]

I shall deal briefly—because time is short—with the points raised. I should say first, however, that I am grateful to the Committee and the Opposition Front-Bench team for the general support they have given to clause 1 and indeed the whole Bill.

My hon. Friend the Member for Gainsborough (Mr Leigh) raised the key question: how do we create a mechanism that preserves the dignity of the monarchy while ensuring that the House is accountable for the expenditure of public money? As I said in my opening remarks, there is the question of whether the money provided is enough or too much. I said that we do not want a cut-price monarch or a lavish monarchy. As a general guide, I have looked at how much the monarchy has spent over the past five years. On average, £34 million of public money has been given per year through various forms of grant and money drawn from a reserve built up using public money. I have said that that is not a bad guide for the future and that 15% of Crown Estate revenue will provide that amount over the rest of the Parliament. In 2016, we will review whether that is the right amount.

[Mr Cash]

The Chancellor referred just now to something that I found difficult to accept. He distinguished between a cut-price monarchy and a lavish monarchy. Given Her Majesty’s incredibly distinguished performance over the past nearly 60 years, to which my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) referred, does he appreciate that this is not about being lavish, but about effectiveness and dignity?

[Mr Osborne]

I agree that it is all about effectiveness and dignity, and I think that the Bill strikes the right balance between those who say that the monarchy is spending too much and those who say that it is not getting enough money for its official duties. The Bill has been discussed with the royal household, and it is content with it, which is why the whole process began with a Gracious message.

I want to clear up a misunderstanding. There will be a real-terms increase in the annual sums that Parliament provides, but that is because the royal household has been relying on a reserve of public money that has built up over time. That reserve has come to an end, and as I said a couple of weeks ago, the previous Chancellor of the Exchequer, perfectly reasonably when confronted with this issue before the general election, said, “I think we’ll wait until after the general election and let whoever are the Government then deal with it.” We are here because we have been relying on a reserve of public money that has run out. However, with the mechanism we are putting in place there will be a real-terms reduction of up to 9%—on our estimates—in public support for the royal household.

The shadow Chancellor and others, including the hon. Member for Glasgow South West (Mr Davidson), asked what would happen if there was a windfall from, for example, the offshore marine estate. At the moment, that constitutes a very small part of the revenues of the Crown Estate—about 1%, as I understand it. It is perfectly possible that, in the latter part of the decade or in the next decade, there will be a big increase, but, because I have accepted the spirit of the Opposition amendment, we will now have a review in 2016 and will be in a much better place to assess whether there will be such a windfall. However, I think that it is highly unlikely. No one is predicting a massive windfall in the next three or four years leading up to that review.

The reserve provides a check. The expenditure of the royal household is audited by the National Audit Office and if the money is not being spent for purposes for which it is provided by Parliament, it will come out in the audit. If there is an excess—in other words, if the sovereign grant is more than it needs—it goes into a reserve. That is a long-established principle. There is now a check on that reserve so that it cannot rise above 50% or thereabouts of the money from the sovereign grant, which was not the case before the Bill was presented to the House. The trustees—the Prime Minister, the Chancellor and the Keeper of the Privy Purse—have to provide an annual report to the Treasury, and through the Treasury to Parliament, on that reserve.

A couple of specific points were made about Marlborough house. The hon. Member for North Durham (Mr Jones) raised this point a couple of times. Marlborough house will remain the Government’s responsibility and is currently used by the Commonwealth Secretariat, as I am sure he knows. It will be up to the royal household to decide what premises it needs. It would, for example, be able to rent premises if it needed to, but I do not think that that is relevant to the support that we are providing.

The hon. Member for Bristol West (Stephen Williams), who is no longer in his place, asked about the mausoleum. It will stay on the English Heritage buildings at risk register until it is repaired in five to eight years’ time. My hon. Friend the Member for Gainsborough asked about the governance of the Duchies of Lancaster and Cornwall. I did not think it appropriate to open up that issue in this Bill, which is more narrowly focused on the official support that Parliament provides to Her Majesty.

I hope that I have now answered all the questions that have been raised, and that clause 1 can now proceed to stand part of the Bill.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Accounts of the Royal Household

The Economy

William Cash Excerpts

Wednesday 22nd June 2011 Commons Chamber

[Mr William Cash (Stone) (Con)]

The Chancellor’s analysis of what went wrong under the Labour Government is completely right. However, does he agree that our current strategy must be about growth as well as reducing the deficit through making cuts? I know he understands that and would like to achieve growth, but we cannot achieve it, either in our own economy or in Europe, if 4% of our GDP is taken up with the costs of over-regulation, as has recently been suggested. The bottom line is that we have to deregulate, but we cannot deregulate European legislation without overriding it, and negotiation is not working.

[Mr Osborne]

My hon. Friend is absolutely right that a crucial element of our strategy must be to undertake structural reform of the British economy in order to reduce regulation and the burdens on business and make our economy more competitive. We would have to do that in any case, even without the recovery from recession we are having to undertake, but the truth is that it has been made more difficult by the accumulation of all the red tape over the past few years. It is remarkable that when we propose important changes—although not changes that go as far as we would like—to employment tribunal law, Labour opposes them. Those are basic changes that would enable more people to be hired and to be in work, but they are opposed by the Opposition. [Interruption.] We can tell by Opposition Members’ reactions that they simply do not understand what it takes to create jobs in the private sector.

Scotland Bill

William Cash Excerpts

Tuesday 21st June 2011 Commons Chamber

[Michael Moore]

First, I confirm what my right hon. and learned Friend suggests. New clause 13 is now part of the Bill that will go to the House of Lords for scrutiny. Like him, I regret the tone of some of the remarks made against judges in the Supreme Court in recent weeks. I welcome the broad support for the idea that people in all parts of the United Kingdom should enjoy the same rights under the courts.

[Mr William Cash (Stone) (Con)]

On the application of the Human Rights Act 1998 in this context, and conceding that the Supreme Court has a special role to play, does the Secretary of State accept that some Government Members, and an increasing number of people throughout the country, feel that the Human Rights Act should be repealed, and furthermore that the whole basis on which it operates and the European convention on human rights should be reviewed?

[Michael Moore]

I welcome the hon. Gentleman to the proceedings on the Scotland Bill, albeit belatedly, and commend him for his ever sharp eye, looking for opportunities to raise matters European in the Chamber. Perhaps with some disappointment, we will have to agree to disagree on the fundamentals, but I point out that we are indeed considering human rights legislation in this country. I am sure that we will have a proper debate about that over many days and weeks.

Let me outline the key changes that we introduced on Report. First, we will bring forward to this financial year access to finance to allow work on projects, such as the Forth replacement crossing, to begin. We are removing the requirement for Scottish Ministers to absorb the first £125 million of tax forecasting variation within their budget. That will give Scottish Ministers more flexibility to decide how best to respond to any variations in tax receipts compared with forecasts. We will also allow Scottish Ministers to make discretionary payments into the Scottish cash reserve for the next five years, up to an overall total of £125 million. That will help manage any variation in Scottish income tax receipts, compared with forecasts in the initial phase of the new system.

As debated on Report, we have included a provision in the Bill to enable the Government to amend the way in which Scottish Ministers can borrow to include bond issuance. Without that power, further primary legislation would have been necessary to allow bonds to be issued by Scottish Ministers. Before that power is transferred, the Government will conduct a review of the costs and benefits of bond issuance over other forms of borrowing.

We have also strengthened the non-financial sections of the package to enable Scottish Ministers to approve the appointments of MG Alba board members, and to provide for reciprocal consultation between UK and Scottish Ministers when either make changes to electoral administration that impact on their respective responsibilities. We are devolving the power to make an order to disqualify persons from membership of the Scottish Parliament, and we intend to strengthen intergovernmental dialogue in areas of mutual interest in welfare.

Importantly, as my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) indicated, we are implementing the findings of the expert group appointed by the Advocate-General. There is a consensus that there is a problem with the role of the Lord Advocate under existing legislation. The Scotland Act 1998 did not properly recognise that the Lord Advocate fulfils two separate roles: one as chief prosecutor in Scotland, and the second as a Scottish Minister. Our amendment separates those two roles while retaining the consistent application of the protection of fundamental rights for those in Scotland, as exists for those in the rest of the United Kingdom. We believe that it strikes the correct balance.

We believe that the package of the Bill as amended and the supporting non-legislative measures provides the right balance of powers and responsibility for Scotland within the United Kingdom. Today’s debate marks the end of the first stage of debate on, and scrutiny of, the Bill in the House of Commons, but it is by no means the end of the process. There will be further opportunities to consider, debate and amend the Bill in their lordships’ House.

However, as hon. Members will be aware, the Scottish Government have asked for further amendments to the Bill. We have made it clear that we will listen and that we are willing to consider further amendments if they satisfy some key tests. First, any further amendments must be based on detailed proposals. We must be convinced, by evidence and detailed analysis, to support any amendments to a package that we believe provides Scotland with the right balance of responsibility and accountability. Secondly, any further amendments must demonstrate that they will deliver clear benefits to Scotland, without prejudice to the rest of the United Kingdom. Thirdly, any further amendments must generate cross-party consensus, which the measures set out in the Bill have achieved.

--- Later in debate ---

[Ann McKechin]

I am grateful to the hon. Lady, a fellow lawyer. I do not want to turn this into a lawyers’ conference, however, lest anyone should suspect that we have vested interests. More seriously, this is about the tone of the debate and about the relationship between the Executive and the judiciary, which forms the foundation of our democracy.

I noted in this week’s Sunday Herald that some of the First Minister’s own Ministers and MSPs apparently refer to him in private as the “Dear Leader”. References to any similarity with North Korea might seem comical, but this display fits in better with a paranoid one-party state than with a modern, progressive, advanced 21st-century democracy. I certainly do not believe that everyone who supports the SNP or wishes for independence follows that creed—Jim Sillars is a good example of someone who believes in independence but also believes in listening to other people’s arguments—but it certainly has a home within the SNP “cybernat” sphere.

[Mr Cash]

Does the hon. Lady acknowledge that the real problem is that this dispute is not so much about the Supreme Court as about the application of the Human Rights Act 1998 to the Supreme Court? For practical purposes, the Scots are entitled to their criminal law, and that has been the case since the inception of the Union.

[Ann McKechin]

The hon. Gentleman has very particular views about European human rights legislation, but I support it 100%. I believe that the Human Rights Act enhances our legal system, and it is important that people in Scotland should receive the same level of protection as everyone else. The Act is a UK-wide piece of legislation, and it is important that judgments should be made consistently. Accordingly, it is right that there should be one ultimate Court of Appeal that makes important decisions on key points of principle. The Cadder decision, which the right hon. and learned Member for North East Fife (Sir Menzies Campbell) mentioned, was one such decision. It is important to have consistency of judgment, which is one of the parts of our judicial process.

Like most people in Scotland, my domicile arises from birth and not from choice, but I believe that I am exceptionally fortunate to have been born in Scotland at this time in history and I am proud to be a Scot. However, I totally renounce any attempt to mould the politics and culture of the country that I love into one that is marked by a constant placing of the “good Scot versus bad Scot” concept into the dialogue of our public life. That is both dangerous and destructive, and represents a threat to genuine debate. The tactics of the playground bully should form no part of a modern, open Scotland.

Scotland’s legal systems, like any other area of our public life, need to be open to ideas from the outside, and not just from its own legislature. In fact, many of our oldest precepts and concepts are borrowed from a wide combination of other European systems—French, Dutch and Roman as well as English. We have also learned from cases that have occurred in England. It was because we are part of the United Kingdom that one of the most famous cases of tort and delict in civil law, Donoghue v. Stevenson, which took place in my own home town of Paisley, spread across the world. When we genuinely look outwards, we perform at our best; when we revert to inward, defensive complacency, we let our nation down.

This has been an important debate on the future that we see for Scotland. As the Secretary of State has said, the debate will continue over the weeks and months to come, but I want to ensure that it takes place in the context of the hard, reasoned evidence that the Scots demand of us, and that it can be clearly shown to be for their benefit.

Eurozone (Contingency Plans)

William Cash Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Hoban]

The hon. Lady poses a series of very good questions, to which I will respond.

The hon. Lady asked whether the authorities are working together. I said in response to her initial question that the Treasury, the Bank of England and the FSA are working closely on this matter and monitoring the situation. We are keen to ensure that the UK banking system is resilient. The additional capital that the banks hold now, compared with at the start of the crisis, will help with that. As I said, UK banks have not had difficulty in sourcing funding in the market. There is a concern about liquidity risk, but UK banks are continuing to source funding.

I mentioned in my statement the exposure of UK banks to the Greek Government. It is $4 billion, which is less than our exposure to, for example, the Irish banks. The hon. Lady should bear it in mind that French banks’ exposure is about four times that amount and that German banks’ exposure is about five times that amount. We are taking the matter seriously and considering it carefully, and the Chancellor is currently at the ECOFIN meeting in Luxembourg, where I am sure it will be discussed.

The hon. Lady talked about reversing the VAT increase. The shadow Chancellor proposed last week a cut in VAT that would cost £51 billion, which would put at risk our credibility in international markets. We have taken the difficult decisions to ensure that UK market rates are in line with those of Germany. The proposal that she put forward, and which her right hon. Friend put forward last week, would mean interest rates rising for families and businesses across this country, putting the recovery at risk. I do not think that is a gamble that we can afford to take.

[Mr William Cash (Stone) (Con)]

Will the Minister concede that it is crystal clear that the Greek situation, like those of Ireland and Portugal, does affect us? Does he also accept that the idea that is being put forward in the European Union Bill of not having a referendum on treaties that relate to the eurozone would mean that, although we are affected by the situation, we would not be allowed to have a referendum on it? Will he ensure that when the Bill returns to the House of Commons, there are amendments to ensure that there is a referendum on this matter, which affects us, so that the British people can vote on it?

Eurozone Financial Assistance

William Cash Excerpts

Tuesday 24th May 2011 Commons Chamber

[Mr William Cash (Stone) (Con)]

The Government amendment—they have not tabled it in their own name, but that is what it is, to a great extent—reflects badly on the integrity of the coalition. It has nothing whatever to do with the national interest. It also says a great deal about a commitment to Liberal Democrat ideology, and it is primarily about numbers. The Liberal Democrats, and certain elements in the Conservative party at a very high level, are quite prepared to allow further European integration. There are alternatives that would allow us to renegotiate the treaties and/or to say no, but they are simply not doing so.

Indeed, only a few days ago, the Prime Minister made it abundantly clear that the object of the coalition was to stabilise the economy. We understand that. The problem is that this is about numbers, not about principles or policy. There are many people in the Conservative party, outside and inside the House, who know that the arguments we are seeking to address in a reasonable fashion are in the interests of the country. There is no question about that; the press outside believe it as well. The bottom line is that those of us who have relentlessly pursued the issue of the eurozone bail-out and have tabled many questions have invariably received what could reasonably be described as somewhat evasive answers.

Why should the British taxpayer or British hospitals and schools in our constituencies in any way underwrite what goes on in Portugal, or indeed any other country in the eurozone, particularly in times of austerity? It is nothing to do with the question, as suggested on a number of occasions, of qualified majority voting. This is completely contrary to the assertion made in reply to me today by the Financial Secretary. Article 122 is not compatible with the treaty and cannot possibly be used to support the European financial stability mechanism. Indeed, in their acquiescence, as shown in the amendment, the Government accept that the position is legally unsound. By saying that, they completely undermine their position. The Government know it and everyone knows it: it is not compatible with the treaty, and the Minister is wrong.

[Mr John Redwood (Wokingham) (Con)]

My hon. Friend makes a powerful legal point. Does he agree that what these states in trouble need is a work-out, not a bail-out? We do not give alcoholics more drink; we cure the alcoholism. We should not give the over-borrower more borrowing.

[Mr Cash]

I could not agree more, and a course of Alcoholics Anonymous would not be out of place.

It is not just the European Scrutiny Committee that said the position was legally unsound or unlawful. Madame Lagarde herself, the prospective head of the IMF, said on this issue on 17 December:

“We violated all the rules because we wanted to close ranks and really rescue the eurozone.”

This is a stitch-up of the British people to maintain the so-called solidarity for further integration of a failing European project. That is what lies at the heart of the matter.

Why are people protesting and rioting all over Europe —in Madrid, Greece, Italy and the list is growing? What is not growing is the European economy and the reason is that the sort of policies needed—here and in all the other countries—to engender growth to deal with the deficit that the Government rightly say we have to address are impossible to achieve without generating the growth that is needed by repealing legislative burdens and generating policies that the integrationists in Europe simply refuse to allow. I would go further and say that the coalition in this country cannot achieve growth simply because the Liberal Democrats, as part of the coalition, have silenced the Prime Minister’s promise to repatriate burdens on business. It is called 56 votes and the keys to No. 10.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

The hon. Gentleman might have heard, as I did, the Liberal part of the coalition talking clearly about what might happen “if” these loans are repaid, which suggests some ambiguity and concern within the coalition Government about whether the loans will be repaid. He will also recall that when the Conservatives were in opposition, they opposed the bail-out of Northern Rock. What has changed between then and now?

[Mr Cash]

Very simply, we now have a new coalition Government who have been seeking to achieve a reduction in the deficit, but they are not doing the accompanying things that are required in respect of the failing European project. That is the key problem. There are young people throughout Europe—and, for that matter, in this country—who simply cannot get jobs because companies will not take them on as a result of European employment regulations and because the deficit in the public sector cannot be stabilised without reasonable tax revenues from the small business community, which is being deliberately destroyed by the refusal to repeal the burdens that strangle it.

In the meantime, Germany has had unit labour costs of a mere 2% on average over the last 10 years, whereas the average for the rest of the European member states is between 25% and 30%. It is an impossible situation, making it impossible for Europe—this entity that the integrationists believe in—to be able to compete with the BRIC countries. Germany invests in cheaper labour markets in Europe, with 67% of all its trade being with Europe, while 45% of all European trade with China is German.

The reality is that what we are debating today is symptomatic of a failure in the coalition Government’s strategy. We are not going to get out of this problem—I say this in all sincerity and in the great hope that people will listen at last—as long as we go on with this failing project. We will not get out of the mess. Today’s debate is an opportunity to get the issue straight. As Michael Stürmer, the chief correspondent of Die Welt argued, the dream is over and the Maastricht treaty has to be revised, but the coalition has no will to do so. The European bail-out of Portugal is a symptom of this deeper problem.

[Claire Perry (Devizes) (Con)]

Given my hon. Friend’s very pessimistic view of the outlook for the eurozone, which many of us share, does he not feel like giving just a tiny cheer that, thanks to the Chancellor’s efforts last December, we will take no further part in a permanent bail-out mechanism for Europe?

[Mr Cash]

I did not say anything adverse about it at the time other than that the opportunity was not taken, despite advice I tried to give, to use the treaty opportunity to say to other member states that we would not agree to the treaty and would veto it unless we were taken out of the EFSM; we could then have brought forward the arrangements currently proposed for 2013. That proposition was eminently reasonable, eminently possible and €440 billion was available under the facility, which is in operation until 2013. In other words, the whole EFSM issue pivots on vanity and a determination not to unravel something that cries out for unravelling. It is not just; it is not right; it is completely irrational.

There are going to be further and deeper riots and protests. Worse still, I believe that the Government are contributing towards instability throughout Europe while claiming that within the time frame extending to 2013, bailing out the German and French banks—we should remember that that is what lies at the root of the problem—as well as Portugal and Greece will achieve stability. It will not. The argument is not only wrong, but totally—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

--- Later in debate ---

[Margot James (Stourbridge) (Con)]

I wish to preface my remarks by acknowledging the hard work and bitter battles engaged in by so many members of my party, several of whom are in the Chamber today, that resulted in the freedom that our country enjoys in not being part of the euro. That the euro has proved such a disastrous policy for members of the eurozone is evident to all. The improvements to our trade balances and the growth in our exports this year would not have been possible without the devaluation of sterling. The recovery of our manufacturing sector and the stabilisation of employment figures have been facilitated by the low interest rates that the UK, unconstrained by membership of the euro, has been free to pursue.

I share the view, in principle, that as we are not part of the eurozone we should not be bound by its bail-out commitments. That principle has, I believe, been upheld by our Government, but our Government cannot undo the commitments set in stone by the previous Government. The die was cast at the ECOFIN meeting last May when the UK agreed to the creation of the €60 billion European financial stability mechanism. That placed an obligation on the UK to underwrite emergency loans to crisis-hit member states.

[Mr Cash]

I do not want to interrupt my hon. Friend’s flow, but it was open to the Government to challenge the issue before the European Court and they did not do so. It was open to them to say that they would veto the treaty unless we had an unravelling of the EFSM, but they chose not to do so. They went for integration, not for dealing with the situation.

[Margot James]

I thank my hon. Friend for his intervention, but I shall proceed to make the point that it is no good dwelling on what our Government should or should not have done and whether the former Chancellor should have committed the UK to the EFSM. The point is that the Labour Government signed up to the Nice treaty way back and gave away our veto on the costly European bail-out funds. The decision to establish the EFSM was therefore subject to qualified majority voting and would have been passed. I am not convinced that there is any basis in law to challenge that decision.

The other question raised by the motion concerns whether the loans granted under the EFSM are being granted correctly given the requirement that they should be made in conjunction with the IMF and the other much larger European financial stability facility, in which Britain, thanks to our Government, has no obligation. Under the terms of the proposed loan to Portugal, those three sources of finance share the commitment equally. If there is evidence that the EFSM is bearing a disproportionate load compared with the other two sources of finance, the Government should raise that at the next meeting of the Council of Ministers or the European Council. I cannot see any argument with that.

I contend that the situation facing Europe is so dire and potentially calamitous that we might well look back at this time and conclude that being up for a proportion of the loans distributed by just the EFSM, commensurate with our share of the European budget, was the least of our problems. The Government are to be congratulated on securing a complete withdrawal from Britain’s liability from 2013 and a very tight cap on anything we might have to underwrite between now and then—something akin to just 1% or 2% of the potential total bail-out loan facilities that might be called on by the eurozone countries. I will therefore support the amendment to the motion proposed by my hon. Friend the Member for Daventry (Chris Heaton-Harris).

--- Later in debate ---

[Chris Leslie (Nottingham East) (Lab/Co-op)]

May I pay tribute to the hon. Member for Rochester and Strood (Mark Reckless) for securing this important debate? This is one of those occasions that make me think that there are not just two parties in the coalition.

We need to clarify some of the history to this issue because I get the impression that certain hon. Members are labouring under a false set of impressions about the European financial stabilisation mechanism. Of course there were the ECOFIN meetings of 9 and 10 May at which the EFSM was agreed to as part of the package of measures to maintain financial stability across Europe. It was against that backdrop that my right hon. Friend the Member for Edinburgh South West (Mr Darling), the former Chancellor of the Exchequer, consulted both the current Chancellor and the Business Secretary, and cross-party consensus had been gained. Those are not my words but those of the Economic Secretary to the Treasury. The explanatory memorandum that she signed on 15 July 2010 in her own fair hand—Justine Greening, Economic Secretary—says those words:

“cross-party consensus had been gained.”

I know it is convenient for Ministers and some hon. Members to rewrite history and to give a partial account of what happened and about these important facts, but there it is in writing. [Interruption.] If hon. Members want to dispute the words of their honourable colleague on the Front Bench I am happy to give way to them.

[Mr Cash]

rose—

[Chris Leslie]

In a moment. In a letter of 18 July 2010 to the Chairman of the European Scrutiny Committee, to whom I shall give way in a moment, the Economic Secretary also said, very helpfully, that

“this Government judges”

the EFSM

“to be an appropriate response to the crisis.”

So the official voice of the Government, according to what the Economic Secretary has written in her own fair hand, was that there was a consensus approach during the transitional period following the general election and that the current Government judged the EFSM to be an appropriate response to the crisis.

[Mr Cash]

Does the shadow Minister accept that the date on which that particular statement was made, 15 July 2010, was four days after the expiry of the date on which a challenge to the European Court could have been made? Furthermore, does he accept that since then the Government have insisted that they oppose the proposal of the former Chancellor of the Exchequer?

[Chris Leslie]

That is an extremely illuminating fact and it would be perfectly legitimate for Members on the Government side, perhaps in private meetings elsewhere, to ask a few more searching questions about what exactly their Front Benchers have been doing in their name. Either the Minister who signed the memorandum was wrong—perhaps she was misled in her understanding or she and her officials were ignorant of the facts—or perhaps she was actually speaking the truth but was subsequently slapped down by the Chancellor.

--- Later in debate ---

[Mr Hoban]

No. As I said earlier, I want to make some progress on the matter.

My right hon. Friend was also clear that, in the days prior to the formation of the coalition, the right hon. Member for Edinburgh South West was still the Chancellor of the Exchequer, representing the UK in a dynamic negotiating environment, and it was for him to reach that decision.

The hon. Member for Nottingham East (Chris Leslie) quoted an extract from an explanatory memorandum, and yes there was consensus between the parties about the process, but not about the outcome—as the former Chancellor of the Exchequer made clear in his statement to the House in December. It was a matter for the previous Chancellor to decide, and he was the man occupying the office at the time.

Some of my hon. Friends have today articulated concerns about the use of article 122. The EFSM was created following agreement by a qualified majority of member states at the ECOFIN meeting on 9 May 2010, and the terms of the mechanism are set out in an EU Council regulation. It is based on article 122 and states:

“Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional circumstances beyond its control, the Council, acting by a qualified majority on a proposal from the Commission, may grant, under certain conditions, Community financial assistance to the Member State concerned.”

The Council decided that in those circumstances those criteria applied.

Several hon. Members have raised the issue of article 125 of the treaty, the so-called “no bail-out” clause, but article 125 does not preclude member states from providing loans to one another, and, as evidence of that, the EU’s balance of payments facility has already provided medium-term financial assistance to a number of member states.

Over the past year, we have had to deal with the legacy that we inherited from the previous Government and the previous Chancellor of the Exchequer, but we have made sure that the permanent arrangements to sort out the euro area are the ultimate responsibility of euro area member states.

My right hon. Friend the Prime Minister made that his goal at last December’s European Council, where he secured two significant victories for the UK. First, he made sure that article 122 could not be used for euro area bail-outs in the future. Secondly, he ensured that the UK would not have to contribute to the European stabilisation mechanism, the permanent mechanism that will replace the EFSM and the EFSF. As the Prime Minister said, we have a good “belt and braces” approach—a no need, no use approach.

[Mr Cash]

Will my hon. Friend give way?

[Mr Hoban]

If my hon. Friend allows me to continue for a few minutes longer, I may be able to take some interventions.

We ensured that the recitals—the preamble—to the decision by Heads of State and of Government at the March European Council stated that article 122

“will no longer be needed”

and “should not be used” to ensure financial stability for the whole euro area once the permanent mechanism is in place.

In shaping the debate about the ESM, we had clear priorities. First, we had to ensure that there was no transfer of powers from the UK to the EU. We would never have accepted such a transfer, so the treaty change applies only to euro area member states, and only euro area member countries have to contribute to the rescue of other euro area countries. There is no transfer of power, competence or, indeed, funds from the UK to Brussels under that treaty change, but that judgment will not be for Ministers alone.

[Mr Cash]

Will my hon. Friend give way?

[Mr Hoban]

I have two minutes left to conclude my remarks and to respond to the very detailed questions that hon. Members on both sides have raised, so I should like to continue to do that.

The treaty change was agreed at the Council in March and will have to be ratified according to the process set out in the European Union Bill. Ministers will need to make a statement explaining why the treaty change does not transfer power or competence from the UK to Brussels, and Parliament will need to pass primary legislation before the UK can ratify that change.

[Mr Cash]

One last time?

[Mr Hoban]

I will give way to my hon. Friend—briefly.

[Mr Cash]

On the Minister’s own terms, it is absolutely clear that the Chancellor of the Exchequer was against those arrangements, so why in that two-month period did the Government not challenge them in the European Court of Justice?

[Mr Hoban]

My hon. Friend and his Committee have a particular view on the legality of the arrangements, but as I have said there was a clear view that article 122 could be used in those circumstances.

Although we have had to live with the decisions of the past and the EFSM, we have fought to free our nation from the constraints of those decisions in the future. We will not have to contribute towards a European rescue of another euro area member state once the permanent ESM comes into force.

I believe that the amendment tabled by my hon. Friend the Member for Daventry (Chris Heaton-Harris) captures the essence of our position. As a consequence of the action taken by the previous Government, we are part of the EFSM. This Government have had to ensure that we are outside the scope of the permanent mechanism. My right hon. Friend the Prime Minister has already delivered that commitment at the European Council in December. I hope that my hon. Friends recognise that the action we have taken has freed the UK from the obligation to take part in future bail-outs of euro area member states.