Financial Transaction Tax and Economic and Monetary Union

Graham Stringer Excerpts

Tuesday 18th June 2013 Commons Chamber

[Chris Leslie]

It sounds that way. The Government’s reticence to get involved and start engaging is telling. I still hold out some hope for the Liberal Democrats. The Lib Dem manifesto—who could forget that seminal political tract—promised that Lib Dems will

“work with other countries to establish new sources of development financing, including bringing forward urgent proposals for a financial transaction tax”.

I fully expect Liberal Democrat Members shortly to be in our Lobby—they can call it their Lobby, if they wish—in favour of the amendment.

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

My hon. Friend is making a much more moderate speech than I expected. He has made some serious logical points, but can he give an unambiguous answer to the question of whether it is his policy to go ahead with the tax if New York and Tokyo do not?

[Chris Leslie]

I want to do what we can to persuade New York in particular that including London and its financial centre in this would be the best way forward. The Americans already have a very small security exchange commission fee on individual transactions. In terms of the American principle, the foot is already in the door. I was in Washington DC in February to talk not only to Members of Congress, but to others involved in the issue. Far from the impression that those on the Government Benches have, I think we could work on the principle across the Atlantic.

It is true that Jack Lew, the American Treasury Secretary, has concerns about some of the extraterritorial aspects, but let us work on a solution and find a design that might fit, if that is an issue of principle. However we do that, we should not turn our minds away from it. Similarly, the cascade risk issues could be dealt with. There are issues relating to the impact on the repo market and the funding that many companies depend on there, but again, there are exemptions and ways of dealing with that problem and others, such as at what point a levy would be applied, whether the sale and buy-back of a security would be treated as one transaction, whether the charge would be waived on overnight repos and closing repos, and closing any loopholes that might fall open in the treatment of longer-term maturities. There are ways of dealing with these issues, but any Treasury worth its salt would be engaging on the issue, weighing up the pros and cons, dealing with them and making sure that we had a design of a financial transaction tax that offered some hope for the future.

A one-size-fits-all blanket approach will not reflect the complexities of our economy or the unintended impact that an FTT could have if it was poorly designed, but learning and adapting those early experiences of the EU approach should inform us in good time to engage in a proper dialogue on the most sensible joint approach between America in particular and the United Kingdom, ideally before 2015, but presumably after a change of Administration here.

Radical action is needed and a financial transaction tax is an idea whose time has come. For all the aversion to reform emanating from Whitehall and from the Minister, the public and the business community know that we are at risk of a lost decade of economic progress in this country if we do not take bold steps and change the rules of the game. A whole generation has been indelibly affected by that global financial failure, and the twin financial centres of London and New York are at the centre of what was a world-changing phenomenon. There is therefore an urgency for the UK to lead the way forward. We must move on from discussion of banks as part of the problem and start to settle on how they will help to repair our public finances and solve the challenges of our economy and society.

It is not clear what the Government’s policy is. They still claim in part that they are in favour of some sort of financial transaction tax, maybe a stamp duty, but they intend to oppose the amendment. Now is the time for action and leadership on an FTT. The public are sick of the Chancellor’s blind refusal to change course and look at alternatives, and it is now clear that we need serious change and new ideas, not more of the same. I urge the House to support the principle of a financial transaction tax and to support the amendment.

Air Passenger Duty

Graham Stringer Excerpts

Thursday 1st November 2012 Commons Chamber

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

I do not know whether I should thank you for that, Mr Deputy Speaker, but I do thank you for allowing me to catch your eye.

I congratulate the hon. Member for Witham (Priti Patel), who secured the debate and moved the motion. The debate is important; we can see that from the agreement on both sides of the House and from the number of e-mails, letters and postcards that we have all received. For the first time as a Member of Parliament, I have had more correspondence about a serious economic issue than about the welfare of animals—an extraordinary feat.

I have agreed with almost every word of every speech that has been made this afternoon. By and large I am not an angry person and do not lose my temper, but there should be anger about what is happening to aviation in this country, and air passenger duty is part of the problem. Aviation is absolutely vital to this country’s future; it represents about 4% of the economy when we add up the jobs and its overall impact.

However, aviation is much more important than that. Sadly, we have seen the cotton and other industries go and they have been replaced in the best places by newer, more modern industries. That cannot happen with aviation. This country’s economic welfare depends on its ability to get cargo and people in and out on aeroplanes. We are in a competitive situation to get those aeroplanes to land in this country. In many senses, we are losing that race. I know that the number of passengers expected in Manchester airport’s business plan 10 years ago is down. My guess is that that is true of most of the major airports in this country. They are under a double attack. One attack is on capacity in the south-east. Heathrow is our most important asset in this regard and the sooner the Government make a decision about it the better; I do not believe that any more information can be made available on the third runway at Heathrow. All the information is there and the Government need to stop dithering, make a decision and put some certainty into the issue. The lack of capacity at that hub means, of course, that passengers use other hubs in Europe; they are more profitable and invest in more runways while Heathrow gets less competitive.

Air passenger duty has the same impact. I do not want to repeat figures that have been given out previously, but it is worth going through the figures that show the damage being done. The £2.5 billion raised from air passenger duty is about twice as much as that raised in the whole of the rest of the European Union. A single person flying in the European Union pays about €16 in duty from here; they would pay €3 from Ireland, €4 from Italy, €7.5 from Germany, €5.2 from France and €8 from Austria. Our rates are more than double those of other European countries. We can see the impact of that, not only within Europe but outside it.

It is estimated that Stena Line Ferries is taking 20,000 extra passengers into this country who have flown from India alone. That is a loss to our airports and aviation business. Those are people who have bothered to fly on a plane and then get on a boat. Lots of people would not bother to do that. The trade from China has halved; that is not surprising when we consider how much duty a Chinese family must pay to come to the UK—£648, compared with zero in air passenger duty if they flew into the Netherlands or a number of other European countries.

The hon. Member for Crawley (Henry Smith) is not in his place, but he must have hacked into my e-mails, because he made the same points about green taxes that I was going to make. I will not just reproduce what he said. Part of the camouflage for air passenger duty is that it is somehow an environmental tax. It is not—it takes no account of what sort of aeroplane is involved or of the levels of carbon dioxide or other gases coming out of it. It is simply a tax—and an unnecessary one, given that we have introduced the European Union emissions trading scheme. It is doing serious economic damage, and so this very moderate motion asks for an economic impact study. The World Travel and Tourism Council has carried out a study that shows that in 2012 it expects that damage to equate to over £1 billion more than the amount raised. That is an appalling figure, although it may have got its figures wrong. Perhaps we can rely on the Treasury to get the figures right when it undertakes a study.

I do not believe that our economy now, or in future, can afford to maintain this tax. I am happy to support this very moderate motion, but I hope that Members in all parts of the House will be increasingly critical of Government policies that damage one of our most important industries.

Infrastructure (Financial Assistance) Bill

Graham Stringer Excerpts

Monday 15th October 2012 Commons Chamber

[Chris Leslie]

My hon. Friend is totally correct. Ministers seem to think they can come to the Dispatch Box and make a set of announcements, which will then magically happen as they busy themselves in their part-time political advisory roles or whatever they happen to be doing. If we start to walk through the projects one by one, we realise that Ministers are not gripping the issue.

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

My hon. Friend must have noticed during the Conservative party conference that the chaos and shambles goes right to the top. The Prime Minister claimed that work on the A11 was already under way, but any check on the Highways Agency website will show that the first spade will not be put into the ground until January. The Government simply do not know what they are doing, do they?

[Chris Leslie]

A pattern is emerging, but I shall not use the word “omnishambles”, which is probably past its best. There is great concern about these schemes. Thameslink, for example, is a project that is slipping considerably. The contracts for rolling stock were due to be awarded by early 2012; then it was by the summer, and now the Department says that the contract with the preferred bidder will be signed in the autumn. The Transport Select Committee is on top of that issue. It is writing to Secretaries of State asking why there is a delay with the rolling stock procurement, and I am sure that the Minister will be able to reply to that question when he responds to the debate. However, many other significant questions about delay need to be answered.

We need to know about the ongoing programme of work on the north Doncaster chord, a rail link that is greatly needed in that part of Yorkshire. The national infrastructure plan of 2011 promised that a business case would be provided by April 2012, but the proposed development is still awaiting a decision from the Secretary of State, which must be delivered before production can continue and construction can start.

The preferred bidder for the extension of the Northern line to Battersea was announced in June. A Treasury source then told the Evening Standard:

“The entire weight of the Government is being thrown behind the extension of the Northern Line”,

but nearly a year after the Chancellor’s autumn statement, the extension is still subject to the existence of funds. Despite backing from the

“entire weight of the Government”,

Transport for London can only say:

“Subject to funding being in place and permission from the Secretary of State for Transport, the new stations could be open by 2019.”

The construction of the Green Port Hull was due to begin this year, but Siemens now says that it will not sign a contract for the wind turbine factory until 2013. As for carbon capture and storage, the Department for Energy and Climate Change was supposedly

“developing a streamlined selection process”,

and £1 billion of capital was supposedly available to support the project, but construction is not due to begin until 2014.

Planning permission was granted in March for biomass electricity generation at Royal Portbury dock, but E.ON is currently taking time to

“review the prospects for the project in light of the UK Government’s current banding review”.

Again, a Government decision is awaited.

I am sure that I do not need to mention the issue of the 4G mobile spectrum auction and roll-out. Many Members may be checking their not necessarily 4G-compatible handsets as I speak. However, I will say that a very messy approach was taken to the auction of that particular regulatory arrangement, and that anyone who may be thinking of buying an iPhone 5 should be careful, because it will not necessarily be compatible with many possible providers. This is an example of our falling many years behind the United States, Germany, Sweden and parts of Asia. Unlike this country, they already have 4G services which are giving businesses opportunities to benefit customers.

We need only compare the much-vaunted promises of the 2011 national infrastructure plan with the actuality of the infrastructure pipeline that was announced in April. Although 182 new projects had been added, 63 had disappeared without explanation. Of the 357 projects announced in November that were updated in April, nearly two thirds were still in pre-procurement stages, and just 38 had proceeded to procurement or construction. Of the 229 that were still at the pre-procurement stage, three quarters were still at the same stage as had been reported in November 2011, and 36 had moved backwards.

Members may recall the regional growth fund, the supposed successor of the regional development agencies and, supposedly, the Government’s flagship alternative for regional economic development. Although the winners were announced in, I believe, April 2011, fewer than half the final offer agreements in rounds 1 and 2 of the fund have been put in place. Only £60 million of the £1.4 billion fund to spur growth has been released to businesses, and, according to a report by the Public Accounts Committee, the £364 million spent by the fund so far has been held up in intermediaries such as banks and local authorities.

--- Later in debate ---

[Sajid Javid]

I cannot tell the right hon. Gentleman exactly what the budget will be because that depends on the amount of work that the Infrastructure UK team is asked to do. In other words, it depends on the nature of the applications and the complexity of the projects. However, I can say that the income generated from the guarantee, and other sources of income, will be used to pay those expenses. The Government therefore do not believe that there will be a net cost in terms of the management costs of the team.

[Graham Stringer]

With respect to the hon. Gentleman, the term “commercially viable” covers a multitude of sins; it could mean almost anything. One of the reasons that businesses may not be able to raise the cash from banks or in the money market is the length of the payback on the scheme. Will there be any limit on the length of payback on these commercially viable schemes, given that infrastructure investment often does not pay back for decades?

[Sajid Javid]

That is a good point. There will be no limit on the length of the guarantees that the Government can issue to support the schemes because, as the hon. Gentleman rightly points out, many infrastructure projects typically require very long-dated debt which could involve a period of 20 to 30 years. There is a limit on the application time frame whereby all applications under the Bill have to come in by 31 December 2014, but there is no limit on the debt profile that can be guaranteed.

Draft European Union Budget

Graham Stringer Excerpts

Thursday 12th July 2012 Commons Chamber

[Mr Hoban]

Let me make some more progress. My hon. Friend described the EU as a middleman. I suspect that the right hon. Gentleman is asking me to be a middleman between him and my hon. Friend, so I shall press on.

As Members know, the size of the annual budget is guided by the multi-annual financial framework, which is equivalent to a seven-year spending review. This was agreed by the previous Government in 2005, and set a rising trajectory for EU spending to 2013. Under the ceilings negotiated by the previous Government, the 2013 EU budget may increase by 14% in payments compared with the 2012 budget. That has encouraged the Commission to seek even more EU spending. In the current economic climate, the framework negotiated by the previous Government is out of date. We have been seeking to put right the mistakes made in the past by making every effort to rein in EU spending in recent years.

This year, however, the European Commission has again shown that it is hopelessly out of touch with the mood of Europe’s taxpayers. On 25 April, it proposed the largest recent increase in the EU budget: a 6.8% increase in 2013, taking total spending to €137.92 billion. It claims that the increase will support growth and jobs while also allowing the Commission to catch up on payments on programmes announced in previous years. We are acutely aware of the risk a budget increase of this scale poses to the UK’s contribution. At a time when we are tightening our belts in the UK, an increase in the order of 6.8% would cost the UK, taking into account the rebate, roughly €1 billion more than this year. Of course, this is not helped by the previous Government’s abatement giveaway in 2005, a decision that is costing today’s taxpayers an extra £10 billion over this Parliament. The amendment seeks to airbrush that from the record.

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

I agree that a 6.8% increase is unacceptable given the current economic situation, but why are the Government settling for a flat budget, when local government in this country is suffering cuts of 30%? Why is Europe getting a better deal than Manchester or Plymouth?

[Mr Hoban]

That is an important point, and I shall address it shortly.

Our response to the Commission’s inflation-busting proposal has been robust. At a time when Governments across Europe are making difficult decisions on public spending, a 6.8% increase in EU spending in 2013 is completely unacceptable. First, the economic circumstances have changed dramatically, and the Commission cannot ignore the facts. By 2014, the level of public debt across the 27 member states will be over 50% more than it was back in 2007, two years after the last seven-year budget was agreed. Secondly, a larger EU budget will not solve the eurozone crisis. A smaller, leaner and better-targeted budget is the best way to drive growth across the EU.

We have identified many areas of EU spending that are ripe for reform. It is time to cut the quangos, EU staff pay and programmes that offer low added value or are poorly implemented. For example, the Commission set itself the target of reducing its headcount by 1% this year. Although 286 posts have been cut—equivalent to a 0.7% reduction—that has been offset by the creation of 280 posts for Croatia’s accession. There has been no attempt to redeploy staff to meet the needs of Croatia’s accession. As ever, the Commission’s knee-jerk reaction is simply to increase the number of people employed in the EU. As a consequence, this year the Commission has cut just six posts. We estimate that if it had cut the headcount by 1%, it could have saved €45 million.

The total salary bill for the EU institutions’ staff in 2011 was over €3.5 billion, more than 2.8% of the Commission’s budget proposal for the year, and more than double the amount spent on freedom, security, justice and citizenship. Staff at EU institutions, who may have lived in Brussels for more than 30 years, continue to be paid an extra 16% “expat allowance” on top of an already generous salary, and a teacher at the European school is paid twice the average UK teacher pay.

--- Later in debate ---

[Chris Heaton-Harris]

It is not often that I would commend anything to do with a politician from the UK Independence party. However, if we look at the front page of the Financial Times from 1 August 2002, we see sitting beside Marta Andreasen at the press conference one of the MEPs for the East Midlands, who is now the MP for Daventry. She was the first person to hold the role of chief accountant of the European Commission who had an accountancy qualification. I am very keen that her expertise is shared. I have seen the DVD and it is well worth looking at.

The Minister set out some obstacles to the reform of the budget, and they are great. When there are big vested interests, with big countries getting way more money out than they will ever put in, there is no chance of reducing the budget under qualified majority voting. As I have tried to explain, we are one of the biggest net contributors, and we will continue to be so way into the future. However, we will always be outvoted on budgetary matters under qualified majority voting, because more countries gain from our expenditure than pay themselves.

Blocs exist to protect certain things. There is the bloc of net gainers, but France, which is a net contributor, exists in another bloc to protect one of the big areas of spending: the common agricultural policy. It does not want any major changes to the CAP, because that is how it diminishes its net payments to the EU. With such vested interests built in, reform of the European budget is much easier said that done, as the Opposition prove in their amendment.

Another problem with the EU budget is that its own auditors do not sign it off. This is the 17th consecutive year in which the European Court of Auditors, having checked the legality of EU spending, has refused to give it what is called a positive statement of assurance. Essentially, it has refused to sign off the accounts. As the Financial Secretary said, we must consider that alongside the fact that the European Commission constantly asks for much more money to spend but then cannot spend it properly. Until recently, it was running up massive surpluses in its own accounts.

There are also aberrations that people do not like. The latest is that we are told that EU chiefs are splashing out on a new £350 million headquarters, at a time when everybody else is having to cut their budgets. That new headquarters, by the way, is in Luxembourg, where MEPs no longer go because they are based in Brussels and Strasbourg. There is obviously too much money in the system. The case for reform is therefore greater now than it has ever been.

Although the European Council will not formally adopt its position on the European Commission’s proposed EU budget for 2013 until 26 July, member states’ ambassadors to the EU reached a deal on it yesterday, as the Financial Secretary mentioned. The Commission has proposed an overall 6.8% increase in payment appropriations compared with 2012, which amounts to about £7.2 billion—a decent sum. As he said, the member states’ position agreed yesterday means a £2.9 billion increase in payments. That is an increase of 2.79%, which can be compared with the EU inflation rate of 1.9%.

The Financial Secretary and I know that the UK, the Netherlands and Sweden all oppose the deal and will vote against it at the Council on 26 July. However, if we are the only three states to do so, the budget will be adopted by a qualified majority of countries in the blocs that I outlined, which want to receive more than they put in. If the estimated UK gross contribution of 11.3% to the 2012 EU budget were replicated, under yesterday’s deal the UK would pay about £12.2 billion gross into the budget next year.

Essentially, we are just about to increase the EU budget, and our part of that increase is £330 million. That would pay a year’s basic salary to 18,500 Army privates, the average basic salary to 10,500 NHS-qualified nurses, or a year’s basic salary to 12,500 police constables.

[Graham Stringer]

The hon. Gentleman is providing some extraordinarily insightful and useful information about the absurdities of the EU. When the Financial Secretary was asked to be a bit tougher, he made great play of always having to obey the law. We are law makers, so of course we agree, but can the hon. Gentleman think of any organisation in the UK that would hand over £100, let alone £12 billion, to an organisation that cannot get its accounts audited?

Section 5 of the European Communities (Amendment) Act 1993

Graham Stringer Excerpts

Tuesday 24th April 2012 Commons Chamber

[Mr Hoban]

It has been demonstrated time and again in a host of different economies that supply-side reforms are vital, because they reduce some of the costs on businesses and enable them to invest and improve productivity, and in that way they stimulate demand and growth.

Hon. Members are right to focus on events beyond our shores. As the Office for Budget Responsibility said in its March report,

“the situation in the Euro area remains a major risk”

to the UK’s economic forecast. More than 40% of our exports are to the euro area, and recent events in the markets remind us that euro area countries need to make painful adjustments to their public finances and external deficits. It is a difficult path that they have to walk, although new Governments in the likes of Ireland, Portugal, Spain and Italy are walking it. That is the logic of the single currency to which they are all committed, and progress is being made.

The European Central Bank’s monetary loosening has helped to stabilise the banking system, and the trillion dollars pumped in through the long-term refinancing operation has been helpful. There has been progress in stabilising Greece, and—as I have said—a number of countries have announced important economic reforms.

As well as these measures, important longer-term reforms have been made since we last debated the convergence programme. Those reforms include a stronger, more effective stability and growth pact following agreement of the “six pack” in December 2011. A new macroeconomic imbalances procedure will provide an assessment of potential economic risks across Europe, with sanctions for euro area countries that fail to take action. Importantly, the Commission has put forward proposals to improve co-ordination of budgetary processes between euro area countries.

The treaty on stability, co-ordination and governance—the fiscal compact—was signed in March by 25 member states and it also has the potential to embed stronger rules on fiscal discipline. Together, these reforms represent a stronger, reinforced system of economic governance for the EU and the euro area in particular. While many of these stronger measures may not be right for the UK, they can support stability in the single currency area.

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

Will the Minister give way?

[Mr Hoban]

If I may, I will finish my paragraph as it may clear up any misapprehensions that the hon. Gentleman has.

I would like to reassure the House that following these reforms the UK is still not subject to sanctions under the strengthened stability and growth pact—the EU treaty is clear that they apply only to EU area countries. Unlike other countries, the UK will only present its convergence programme to the Commission after the Budget is presented to Parliament—the procedure that we are following today.

[Graham Stringer]

Does the Minister read the newspapers? Has he not noticed that Europe is getting less and less politically stable and that many of the European economies are shrinking? Whatever titles are put on the policies, that is what is really happening. Would it not make sense for the Government and this country to support an as stable as possible break-up of the euro, which would provide growth in Europe and in the United Kingdom?

[Mr Hoban]

It would be inappropriate for the UK Government to dictate the economic policies to be followed by those in the eurozone. Members of the eurozone have made it very clear that they wish to remain part of it, and there are even member states queuing up to join it. Indeed, if we have an independent Scotland, it might consider joining the eurozone. There are challenges, but there is a strong political commitment in the eurozone for the euro to remain in place.

--- Later in debate ---

[Mr Redwood]

I think that the UK economy may be growing. We will know the facts tomorrow, when we see the first quarter figures, but I suspect that the economy will grow this year. I accept the Government’s forecast of a slow and modest rate of growth. Why, though, is the economy not growing more quickly? There are two main reasons.

The first reason is banking. All the cash that the Bank of England is printing is not going into circulation in the private sector. It is very helpful to keep the Government’s rate of interest down, and it is very helpful to make the increase in public spending more affordable because it controls the interest rate cost for the Government; but the money cannot enter the private sector in any real quantity because the banks are under a huge regulatory cosh to hold more cash and capital at what is, in my view, the wrong stage in the cycle, which means that we cannot secure the growth in banking credit that would finance a better recovery.

The second reason is that taxation is now very high overall in the United Kingdom, which—combined with the inflation tax that has resulted from the high inflation rate that we inherited, which has remained persistently high—means that real incomes are being badly squeezed. It is plain to us all that real incomes started the squeeze under Labour, when the recession really hit, and that that squeeze has continued. A progressive squeeze on the scale that we have experienced since 2008 hits demand and makes recovery that much more difficult.

[Graham Stringer]

Is there not a third reason: that we are in the wrong part of the world, next to the eurozone, which has no mechanism for the poorer countries to get rid of their trade imbalances or for Germany to get rid of its trade surplus? Normally that would be done by revaluing or devaluing those currencies, but having one currency makes it impossible.

[Mr Redwood]

I know that you would like me to wind up quickly, Mr Deputy Speaker, because others wish to contribute, but it is such a pity, as this is a crucial issue. I entirely agree with the hon. Gentleman that there is great difficulty in financing the big balance of payments deficits in the eurozone. Now that a mechanism has been found—German surplus deposits in the ECB being routed to weak member states’ banks through the ECB—the Germans are kicking up a fuss, because they suddenly realise that they have €600 billion at risk and they are not very happy. However, as the main surplus country, Germany has to finance the transfers in the union, and until she does so actively and in an encouraging way, there will be all these kinds of problems.

We have problems in Greece, Portugal and Ireland, which we know about. We now have deep problems developing in Spain, and we even have a problem in the Netherlands—which was meant to be one of the good guys—because of a falling out over the rather modest cuts needed to hit the Maastricht criteria. I agree that we need to get to 3% and 60% in due course—I have no problems with the European targets—but I feel strongly that we should do so for our own reasons, in our own time. It is nothing to do with Europe how we run this economy, and the sooner Ministers have the courage to tell Europe that, the better.

Connecting Europe Facility

Graham Stringer Excerpts

Thursday 19th January 2012 Commons Chamber

[Mr Hoban]

The hon. Gentleman makes an important point. There is a debate to be had on where such decisions should be taken and what our priorities should be. That is why it is important for us to impose discipline on the EU budget and try to influence debate on it to ensure that when money is spent, it is spent well and wisely in pursuit of our objectives.

Let me remind the House of three key aspects of the Commission’s proposal for the next financial framework: first, an increase in the budget of more than €14 billion a year compared with a freeze on current levels; secondly, a new financial transactions tax to fund the EU budget; and thirdly, an end to the UK’s permanent rebate. That financial framework proposal and the proposals to increase spending through the connecting Europe facility are unacceptable.

In November, the House agreed that the Commission’s financial framework was

“unacceptable, unrealistic, too large and incompatible with the tough decisions being taken in the UK and in countries across Europe to bring deficits under control and stimulate economic growth”.

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

I am following the Minister’s logic carefully and agree with him, but would it not be more sensible to set an objective of reducing the European budget by around a third, which is the cut that has been imposed on local government?

[Mr Hoban]

I will set out the Government’s position on the financial framework in my own sweet time.

Continuing financial instability in the eurozone owing to unsustainable levels of public debt makes the case for restraint stronger: the EU budget must be part of fiscal consolidation, not immune to it. As the Prime Minister has stated, alongside leaders from France, Germany, the Netherlands and Finland, the maximum acceptable increase in EU budget size until 2020 is a freeze in current payment terms.

Since November’s debate on the financial framework, we have made significant steps towards achieving that goal. In the face of a Commission proposal to increase the 2012 budget by 4.9%, the UK led the European Council in demanding, and achieving, a restriction of the 2012 budget to a real freeze to 2011 payments. In pursuit of a real freeze in payments, the UK’s position must, and will, be consistent and clear in annual budget negotiations, financial framework negotiations and negotiations on the individual spending programmes that make up the framework, of which the connecting Europe facility is one.

--- Later in debate ---

[Chris Leslie]

We are all waiting to see what proposals come forward. The Chancellor has said that he will come to Parliament and let us have a say on many of these things. Indeed, perhaps the Minister can help us out with the timing of those proposals—[Interruption.] If he would care to listen to my questions, perhaps he could also tell us when we will get the Bill to enact the European financial stabilisation mechanism permanent bail-out fund. We are all waiting for that. The eurozone countries are supposed to be rolling together the European financial stability facility and the EFSM into that permanent arrangement, but as I understand it we will have to legislate for that. Will he tell us when that will happen, because it is related to this question about potential IMF funding? We need clarity from the Government—and from the IMF as well.

[Graham Stringer]

I completely follow my hon. Friend’s logic, but surely this is not the largest issue facing the future of the European economy. The largest issue is that the people running Europe are determined to keep a political project going by competitive deflation in the countries of Europe. The best solution for the whole European economy is for an orderly break-up of the euro, particularly for those economies, such as Greece and probably Italy and Portugal, that are, in effect, bankrupt.

[Chris Leslie]

I do not agree with my hon. Friend that the break-up of the euro would be in the UK’s interests, but there are dangers with a permanent deflationary lock in the fiscal policies of the eurozone countries. That is why, both in the UK and across the eurozone, far more must be done to get growth into those economies. They have to grow in order to build their way out of the hole that they are in. In that sense, the ambitions, which many people share, of improving infrastructure across the EU, while laudable, need to be seen in the context of the affordability criteria that must be applied to them. We have to act to unblock the clogged arteries of Europe, connecting the major cities of the continent, making it easier for business and opening new opportunities for growth in the single market. Capital investment in infrastructure is extremely important as a driver for growth.

What progress are Ministers making in shaping the European spending review? That is absolutely at the heart of today’s debate. After December’s phantom veto—the first veto in history that stopped precisely nothing—the UK has to pick up the pieces and try to influence the important EU budget process. The Minister was throwing around history lessons about the common agricultural policy and various other things. However, we need to know what exactly this Government are going to do about the common agricultural policy. What is he going to do about the spending proposals? Rather than walking away before the negotiations even begin and leaving another empty chair, the Minister has to raise his voice, build some alliances and secure a more appropriate level of expenditure that also shifts priorities.

Eurozone Crisis

Graham Stringer Excerpts

Tuesday 15th November 2011 Westminster Hall

[Mr Baron]

rose—

[Graham Stringer]

(Blackley and Broughton) (Lab) rose—

[Mr Hoban]

I would like to make some progress. Let me address UK commitments through the IMF, which is the centrepiece of this debate. In a carefully worded statement, the hon. Member for Nottingham East (Chris Leslie) covered Labour’s retreat on its IMF policy. He was bravely leading his troops through the No Lobby in July without the support of the architects of the G20 London deal. The former Prime Minister and the former Chancellor were not there. What has happened? Last week, his boss, the shadow Chancellor, cut his legs from under him by saying that

“the Labour party supports an increase in the UK’s International Monetary Fund subscription”.

I do not think the hon. Gentleman is in a position to lecture anyone about consistency and principle.

As a founding and permanent member of the IMF, and as one of its largest shareholders, we continue to be a strong supporter of its role as a global backstop to the world economy. Currently, 53 countries are being supported by the IMF, of which only three—Greece, Ireland and Portugal—are in the euro area.

Credit Institutions and Investment Firms

Graham Stringer Excerpts

Tuesday 8th November 2011 Commons Chamber

[Chris Leslie]

Which proves the point that we need to ensure that we negotiate firmly.

The motion before us is worded correctly. It focuses very much on subsidiarity, and on article 443 and the proposals that would give the Commission the right to vary national regulations, even though it would prevent member states from changing their own rules beyond the maximum harmonisation arrangements—a step, I believe, too far. I agree with the draft reasoned opinion and, therefore, with the motion that the Clerk of the House forward this view to the presidents of the European institutions.

Article 443 does indeed go too far, and it would not be appropriate. Paragraph 18 of the European Scrutiny Committee’s report sums that up well, stating there is no evidence to prove that

“the Commission is better placed than the competent authorities of Member States to address national prudential concerns. Indeed, there is a strong argument to say that national authorities are not only better placed, but can react more quickly than the Commission can by means of delegated legislation, thereby enhancing financial stability.”

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

Does my hon. Friend agree that the Commission almost certainly knows that it would not be better at that than the regulatory authorities, and that what is behind this regulation is an attack on the City in order to up the game of Frankfurt and Paris? It must be resisted at all costs. It is much more malevolent than just a bureaucratic mistake.

[Chris Leslie]

It is difficult to ascribe motives to the Commission in all circumstances. My hon. Friend may well be right, but then again I have also talked to some of the City’s large banking institutions, which have in some ways argued in favour of harmonisation, so it is a mixed picture. I agree with the Government on the point before us, however, and it is important that we stand firm and retain the flexibility of higher standards if we possibly can.

--- Later in debate ---

[Mr William Cash (Stone) (Con)]

Before I go into the question of subsidiarity, I want to raise some matters that relate to what the shadow Minister said. He made some extremely important remarks. I am sorry that our own Front Benchers did not address those questions, because they know that they are very much on my mind and have been for a very long time.

The Minister said I would be glad to know that he and Commissioner de Larosière were ad idem as regards the de Larosière report. I have to say that I have been anything but ad idem with Mr de Larosière and his report for three or four years. The moment I saw the report, I wrote a letter to the Financial Times in which I pointed out that it was a very dangerous move and that its consequences would lead to jurisdiction over the City of London being transferred to the European Union. With all due respect to the shadow Minister, his Government were in power at the time this was under discussion. He has been issuing strictures about negotiations, but I am not interested in negotiations when 20% of our GDP is at risk in relation to a legislative system that will completely and totally undermine and annihilate our ability to maintain that strength in the financial services sector. I directly blame the previous Government for their total failure to do anything about this.

I will go further. I also blame those on our side of the equation who allowed this to happen, because it is, at the very least, acquiescence in a system. Before the general election, my hon. Friend the Member for Ludlow (Mr Dunne)—my own Member of Parliament—convened a meeting in the Grand Committee Room relating to these matters. Some very distinguished people were present. There were people from the City of London, the City institutions and the City of London Corporation, as well as the rapporteur, or lady in charge, of the financial services arrangements for the European Commission. It was a very high-powered conference. Despite the fact that I put up a very strong case for ensuring that this nonsense, from our point of view, did not continue, I found—not unusually, I have to say—that I was completely and utterly outvoted. At least, I was out-manoeuvred by a number of people, not on the quality of their arguments but on the sheer force of their attitudes, which amounted to saying, “This is a global marketplace, this is what we have to do, we must engage in a situation where the rest of the world works together.” We now hear the same talk about the dreadful proposal for a financial transactions tax.

The reality is that the City has woken up. The hon. Member for Nottingham East (Chris Leslie) mentioned the British Bankers Association. I have not examined every document that has come from these great and august bodies, but I fear that they did not do the right thing at the right time and that they allowed this situation to happen. The Government and the Opposition of the time went along with the idea that it would somehow be beneficial to the United Kingdom for it to be put in this peril—and peril this is. The House is fairly thinly attended this afternoon, but I venture to suggest that these documents, which are six inches high on just the one issue of European Union prudential requirements, are a dagger pointing at the heart of the City of London.

The Minister rightly said that the proposal severely undermines Basel. He said that we will negotiate firmly. However, as I asked the Prime Minister yesterday, how will the Government be able to do anything about it in the context of the fiscal union that they propose, which must include voting solidarity among the members of the eurozone, who have long wanted to take the City of London away from us, when this issue is governed by a qualified majority vote? I have taken the trouble to look this up and my best recollection is that there are 231 votes for the 17 members of the eurozone compared with 130 votes for the rest. We are in a permanent massive minority. That is what is going on. It is a kind of economic warfare. This is not just about Euroscepticism; this is an issue that goes to the heart of our capacity to deliver revenues and prosperity in this country.

There may well be cases for reform. I have great sympathy for those who think that the City has gone off beam recently in many respects, including on salaries, pay and remuneration. Some of those points are exaggerated, but some are justified. I think that we should go back to a system of regulation that is more along the old Quaker lines, whereby one knew what one’s capital was and how to use it properly, and through self-regulation people who were out of line were put back into line by common consent. That is for another day, but I am deeply worried.

My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) raised the question of repatriation. Why is it that I have argued consistently for the repatriation of powers, not just in social and employment legislation, which again is for another day, but in the kind of powers we are discussing? If the City of London goes down or is severely diminished, it will do nobody any good. Those who vote for the Labour party would also be affected because we need that money. For three and a half centuries, the City of London has been at the heart of our financial system and our revenue base. We cannot afford to have that money redistributed, like so much chaff, among the other member states.

[Graham Stringer]

The hon. Gentleman is making the powerful case, with which I agree, that this is malevolent legislation that is directed at undermining the City of London. I suspect he will agree with me that the Government should use the fundamental crisis at the heart of the European Union to be as brutal and as determined as possible in bringing back as many powers as they can, because the European Union is not a benevolent body when it comes to the UK’s interests.

[Mr Cash]

I very much agree with the hon. Gentleman. The more I have heard from him over the past few years, the more I have admired his determination to speak the truth. That is the position. This is not a party game; this is serious and it is deadly. This move is determined and deliberate. That is what people need to know.

Roland Vaubel, the famous economist from Mannheim university, talks about the use of the qualified majority voting system in the Council of Ministers as a form of “regulatory collusion”, and mentions the strategy of deliberately raising rivals’ costs. Particular groups of countries—there are no prizes for guessing which—enter into arrangements behind the scenes, and vote accordingly. Both France and Germany use that system to their advantage, and as I said in the Financial Times the other day, we are being outmanoeuvred.

Despite all the time, money and effort being put into the Vickers report, there are, as the shadow Minister made clear, serious worries that Vickers may yet be undermined by the very proposals that we are discussing. The problem goes much further, but I do not need to enlarge upon all that any more.

Some people tend to sneer at the idea, which I occasionally put forward, that our sovereignty is the most important issue of all. I say that for one reason and one reason alone—it is only by exercising the sovereignty of this House on behalf of the British people that we have any chance of being able to return and repatriate powers if the other member states are not prepared to negotiate.

I am prepared to listen to the Prime Minister telling me that he will fight hard, or whatever answer he gave me yesterday, but I remain totally unconvinced. We are at risk as a result of proposals such as these, so it is absolutely essential that we get things right. When I wrote a pamphlet for him—in fact, for the general public—called “It’s the EU, Stupid”, I set all that out, so I do not need to enlarge on it any further.

I have got out of the way the general points that I believe are necessary to put the whole matter in context. I see the Foreign Secretary laughing a little. I do not hold that against him, but I have to say that this is no laughing matter; it is a very serious question. We are reduced to having to argue about reasoned opinions and subsidiarity. Important though those are, as I have said, there is a dagger pointing at the City of London. Not just this particular draft regulation but an accumulated vast array of weaponry is being aimed at the heart of our economic system.

Eurozone

Graham Stringer Excerpts

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

My hon. Friend is right to remind us that the G20 summit in Cannes is the last of a string of international meetings that have involved the G7, ECOFIN, which the Treasury Secretary attended, the International Monetary Fund, G20 Finance Ministers later this week and the European Council next week. It all culminates in the G20 meeting of world leaders at Cannes. That really is the moment when the world needs to be in no doubt that there is a solution to the eurozone problems and that we have the firepower and strength in the banking system to deal with them. If we do not deal with them, the situation will go from bad to even worse. However, as I say, it would not be sensible to advocate to our European colleagues the break-up of the euro. That would greatly diminish what we had to say in these meetings, as it would not be seen as practical—[Interruption.] Well, I also think it would be wrong, as it is not in Britain’s national interest to see the euro break up.

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

The Chancellor of the Exchequer says that he wants to make the euro work, although he also says that it is the epicentre and the cause of instability in the world economy, and he talks about co-ordination of fiscal policy and cash transfers. Is that not just a euphemism for taking central control away from many of the peripheral democracies in Europe, and does not the loss of democracy in countries many of which were recently fascist pose a greater danger than an orderly break-up of the euro?

[Mr Osborne]

The eurozone was also described as the epicentre by the president of the European Central Bank, Jean-Claude Trichet.

The hon. Gentleman is right: we are talking about the exercise of greater control over the finances of other nations by the eurozone authorities, which is one of the reasons we should be very grateful that Britain is not part of those arrangements. The hon. Gentleman mentioned some of the social and political strains that that might lead to. As I have said, those who follow the remorseless logic of monetary union end up with greater fiscal union, which involves all sorts of sovereignty issues for all the countries in the euro; but I must add that I do not recognise the image of the green pastures of a break-up of the euro and what might happen after that event in Greece. I think that political and social tensions could be considerably higher in countries such as Greece if they left the euro, and that such action could bring about the situation to which the hon. Gentleman referred and which none of us wants to see.

European Union Fiscal Union

Graham Stringer Excerpts

Wednesday 14th September 2011 Westminster Hall

[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.