EU Customs Union

Debate between Jonathan Edwards and Helen Goodman

Wednesday 2nd November 2016 Commons Chamber

[Helen Goodman]

Let me come on to give some of those strong reasons. If we were to leave, we would face tariffs ranging generally between 5% and 10% on our exports. Even more significantly, our exporters would have to comply with the rules of origin. I think this is the biggest problem. I have the last television manufacturer in Britain, Cello Electronics, in my constituency. It imports a lot of components from China, puts the televisions together and sells them into the European market. The OECD estimates that the cost of filling in all the forms and complying with the rules of origin would add 24% to the export costs of selling into the European market. That would wipe out firms such as Cello, which, as I say, is in my constituency.

In Norway, which is outside the customs union, we know that some exporters find the bureaucracy of the rules of origin so burdensome that they prefer to pay the tariffs. This is really what the Nissan problem was. Belonging to the customs union was the first thing the Japanese Government listed in their hopes for what our deal would be, but the Government cannot take a factory-by-factory approach. Let us look at some of the big industries that would be affected: the automotive industry employs 450,000 people; aerospace 110,000 people; pharmaceuticals, such as Glaxo in my constituency, 93,000 people. All those industries have the same complex integrated international supply chains and would be badly hit were we to leave the customs union.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate the hon. Lady on securing the debate and making some very strong and powerful points. Does she agree with me that if we are outside the single market there will be a load of non-tariff barriers that would definitely hit those sectors, and so membership of the single market is just as important as the customs union?

[Helen Goodman]

We need to explore that and think about it in a little more detail.

A leaked document from the Treasury found that were we to leave the customs union, our GDP would fall by some 4.5%. Of course, I am not asking the Minister to comment on a leaked document, but it would be very nice if he could say how many jobs a fall of 4.5% of our GDP would translate into us losing. I think it would be hundreds of thousands.

It is true that staying in the customs union limits our capacity to do new trade deals on the goods it covers with third countries such as India and Australia. Some of the hard Brexiteers, such as the Secretary of State for International Trade and President of the Board of Trade, the right hon. Member for North Somerset (Dr Fox), seem to think that this is a good thing. He made a speech in Manchester in which he hailed the “post-geography trading world”. Well I have heard of the end of history, but I have never before heard of the end of geography. I think he is being wildly over-optimistic. As the Chancellor of the Exchequer pointed out to the Treasury Committee, world growth and growth in trade are both slowing. This is not a good background in which to initiate these deals. The Government’s export target of £1 billion is bumping along at half that level and there would be a time lag. We cannot start the negotiations at least until our relationship with Europe is clear. That is obviously going to take three or four years, so we need to have transitional arrangements.

Finally, there must be a big question mark over whether we can get deals with third countries that are so much better that they more than compensate for what we would lose if we left the customs union. The UK is one tenth of the EU market of 550 million people. The Americans have already told us we would be at the back of the queue. The Swiss have found, in negotiations with the Chinese, that the Chinese get access to the Swiss market seven years before it gets access to the Chinese market. Ministers are at sixes and sevens on this, with the Treasury and the Department for Business, Energy and Industrial Strategy apparently on one side, and the Department for International Trade and the Foreign and Commonwealth Office on the other. Robert Peston has pointed out that the mere fact that the Department for International Trade exists makes it a fiduciary obligation for multinational manufacturers based in Britain to start thinking about moving investment and jobs to the rest of the European Union. I will not talk about the Irish dimension, because I have already taken interventions on it, but it does present a significant political problem.

What I am mainly saying to the Minister this evening is that millions of jobs depend on our staying in the customs union. I am sure that the Secretary of State for International Trade is delighted that his career is flourishing and that he is travelling around the world, meeting all sorts of interesting people and trying to do lots of deals, but those million manufacturing jobs matter more than his grandiloquent ideas. What we want from the Minister is some concrete evidence that decisions will be taken on a proper basis. My message is simple: a bird in the hand is worth two in the bush.

Bank of England and Financial Services Bill [Lords]

Debate between Jonathan Edwards and Helen Goodman

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Helen Goodman]

Obviously, in the new landscape of the City, the head of the Financial Conduct Authority holds an extremely important post, and the question of who fills that post is therefore vital. I am extremely pleased about the change that was agreed this afternoon and announced by the Minister at the Dispatch Box. It opens up the process, it gives the Treasury Committee a proper role, and it will, we hope, reinforce the independence of the person concerned.

Another person with considerable independence is, of course, the Comptroller and Auditor General. I am pleased, too, that we have moved away from the idea that the court should decide which part of the Bank’s homework the Comptroller and Auditor General should be allowed to mark. There is clearly a parallel with the CAG’s role in respect of the BBC. On Second Reading, we asked Treasury Ministers to publish the memorandum of understanding. They have now published it, and it is an extremely useful document, which sets out, in advance, an agreed framework for the CAG’s remit. That will prevent ad hockery, and will also prevent both the reality and the possible perception of political interference, or inappropriate avoidance of scrutiny of certain areas of the Bank’s work.

New clause 13, which stands in my name, would make the Bank of England subject to the Freedom of Information Act 2000. It seems to me that, as the Bank is a public authority which is fulfilling public policy purposes, the case for covering it does not really need to be made; it is the case against its being covered that needs to be made. The Minister made some important points about why she was not minded to accept the new clause, and I want to respond to what she said. She singled out three areas in particular: monetary policy, financial operations, and private banking.

I am not entirely sure of all the details of the 2000 Act, but we all know that local authorities are FOI-able. Equally, we all know that when we submit freedom of information requests to local authorities, we are not able to see the personal reports on individual members of staff in those authorities. The Act does not give access to that kind of personal information, and I should have thought that the same approach would exempt the private banking work of the Bank of England.

As for monetary policy and financial operations, I do not believe that my new clause would run into those parts of the Bank’s work, because they would still be protected by section 29(1) of the Act. That section states:

“Information is exempt information if its disclosure under this Act would, or would be likely to, prejudice…the economic interests of the United Kingdom or any part of the United Kingdom, or…the financial interests of any administration in the United Kingdom, as defined”,

blah blah blah. I should have thought that as long as we were not amending section 29, we would be able to protect the areas about which the Minister was particularly concerned.

I was alerted to this matter by a letter from the Governor, which the Minister herself waved at us in the Chamber last June, about the sale of shares in the Royal Bank of Scotland. I am sure that the Minister remembers the occasion well. In his letter, the Governor said that

“it is in the public interest for the government to begin now to return RBS to private ownership”.

Writing that letter was not part of the Governor’s role on monetary policy, financial policy or prudential policy; it was an intervention in Government policy at the Chancellor’s request on the issue of a share sale.

When the Governor appeared before the Treasury Committee, I asked him whether he would share the analysis that underlay the letter that he had written. He refused point blank to do so. I am not going to read out the full exchange that I had with the Governor on that occasion, because I went into the matter in detail on Second Reading and it has now been placed on the record twice. However, I really feel that in refusing to provide that underlying analysis, the Governor is evading public scrutiny of what is a perfectly proper matter for the public to understand.

The Governor also said in his letter that

“a phased return of RBS to private ownership would promote financial stability, a more competitive banking sector, and the interests of the wider economy.”

In fact, none of that is true. It will not promote a more competitive banking sector. We are hoping that the Comptroller and Auditor General will, in his separate audit of the RBS share sale, secure that analysis. However, there should be a more straightforward way of dealing with this. The share sale is a particular issue and the Comptroller and Auditor General always looks into share sales, so we might get at the truth on this one occasion, but I am sure that there will be other similar loopholes.

The topicality of seeing this analysis was further underlined last week by the interview in the Financial Times given by Sir Nicholas Macpherson on the occasion of his retirement from the Treasury, in which he described the sale of more RBS shares as “tricky”. He went on to say that there was a judgment to be made over whether to sell further shares below the 2008 purchase price. These are not straightforward matters; they do not fall within the normal remit of the Bank of England and they are of public policy significance. They are but one example of why it is appropriate for the Bank of England to be subject to the Freedom of Information Act.

[Jonathan Edwards]

I rise to speak to new clauses 5 to 8 in this group, which are in my name. Madam Deputy Speaker, you will be glad to hear that I will be as brief as possible, because I am desperate to get to the third grouping so that we can have a vote on those amendments.

My new clauses aim to achieve two things: first, to secure justice for my country in the formulation of monetary policy; secondly, to help monetary policy formulation better to reflect the fiscal reality of the evolving UK. They are probing amendments, and I wish to draw the Government’s attention to them again as these are important points that the Government should go away and look at before possibly coming back with their own proposals, given the relatively light legislative programme before the House these days. I was glad to hear that Labour was holding a review into these issues, and I look forward to reading its findings, although it would have been handy if the review had been prepared in advance. We could then have discussed those issues in this debate on the legislation.

The first of my new clauses proposes a change to the name of the central bank. We in Plaid Cymru believe that the Bank of England’s name should be changed. It is the UK’s central bank, and it is time that was reflected to a greater degree, not only in its name but in its structures and practices. It is an undoubtedly contentious issue for me as a proud Welshman that the central bank that decides monetary policy in Wales is named after another country. The Bank of England was created in 1694, before the present British state was constructed. Wales was annexed in 1536, Scotland in 1707 and Ireland in 1801. The central bank was therefore created to serve a political entity that consisted only of Wales and England. I suppose the fact that Wales was omitted from its title reflects the inferior status that my country enjoyed in 1694.

Many of those present will have heard my schoolboy hero Sir Ian Botham on “The Daily Politics” yesterday, saying of the EU referendum:

“England is an island and we should be proud”.

I was going to say “If only”, but I thought I might get into trouble. That dubious geographical knowledge reflects an error continually suffered by the other nations of the UK at the hands of those who use “England” to mean a larger entity. It is an injustice that persists in cricket, Wales being denied a national team in its own right. Similarly, the other nations of the UK are denied recognition when it comes to the central bank. If the British state is a partnership of equals, all its institutions must reflect that reality, including perhaps the most important institution underpinning its financial system: the central bank.

Regional Pay (Public Sector)

Debate between Jonathan Edwards and Helen Goodman

Tuesday 10th January 2012 Westminster Hall

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Diolch, Mr Chope. It is a pleasure to serve under your chairmanship this morning and to have the honour of beginning the first Westminster Hall debate of 2012. I thank right hon. and hon. Friends for making the effort to come here on the first morning of Parliament’s return.

The topic of regional pay will increasingly dominate relations between the UK Government and the public sector over the coming year, perhaps even more than the still unsolved dispute over public sector pensions. Back in November, I labelled the autumn statement a panicked response to worsening economic forecasts, rising unemployment and increasing deficit payments. The statement included many interventionist measures for which my party had been calling, particularly increased capital infrastructure investment. The signature policy of the statement was the capital investment programme, which seems remarkably similar to my party’s proposals at the last Welsh general election. I hope that the £25 billion of funds to be raised from pension funds over the coming years will be shared equitably across the nations and regions of the state.

The fine print of the autumn statement contained a deeply worrying request for pay review bodies to investigate how public sector pay can be made

“more responsive to local…markets”,

with the aim that they should report in July this year. After the flurry of announcements that we heard at the beginning of the autumn statement, it took a while for the significance of that announcement to sink in. What the Chancellor was announcing was a wholesale review of the introduction of regional pay in the public sector to be introduced as early as the 2013-14 pay round. I do not want to accuse the Chancellor of being deliberately antagonistic—

[Helen Goodman (Bishop Auckland) (Lab)]

Oh, why not?

[Jonathan Edwards]

Well, it is the first day back. However, the fact that that announcement was made on the eve of the biggest industrial strike in the UK since 1926 smacks of deliberate bad timing. If the Government think that the proposals for public sector pensions have got state employees and their representatives worked up, they have not seen anything yet. As the debate rages over such proposals, I fear that we are likely to witness increased industrial strife.

After making the announcement in the autumn statement, the Chancellor explained that the review would be a significant step towards the creation of a more balanced economy in the nations and regions of the state that does not squeeze out the private sector. The claim—the theory, at least—is that depressing public sector wages where they are currently higher than those in the private sector will lead to the brightest and best choosing a private sector career over public service and that such an approach will boost the private sector.

What are the Treasury’s intentions? Is it considering a system that extends the London weighting, or is it considering something altogether more far-reaching? In June 2008, the Minister for the Cabinet Office was quoted in the Financial Times as saying that it is the intention of the new UK Government to lower rates of pay in the civil service outside London. That is on top of redundancies and a two-year pay freeze, with the autumn statement freezing public sector pay at 1% for a further two years. May I remind Ministers that a pay freeze at 1% is essentially a further real-terms pay cut for the next two years? My fear is that the Treasury’s proposals are all about saving costs. I therefore cannot see it topping up payments for public sector workers in more affluent areas of the state or reallocating resources. My concern is that the Government’s intention is to reduce pay in the poorest parts of the state across the public sector and to introduce market conditions into public sector workers’ pay and remuneration.

The Institute for Fiscal Studies reported that the public sector pay bill for 2009 was around £182 billion, which represents around 30% of UK Government expenditure and around 13.1% of UK national income. However, based on the 2010 comprehensive spending review, we know that the public wage bill will be significantly reduced by the projected reduction of 400,000 public sector jobs by 2017. In winding up today, it would be helpful if the Minister informed us what the savings will be of the Office for Budget Responsibility’s new projections of more than 710,000 public sector job losses by 2017.

At the risk of offending my friends in the Labour party, based on the policy direction of the previous Government, the Treasury should have the full support of Her Majesty’s official Opposition. What strikes me about politics in this place is that, despite the sporadic changing of the guard at No. 10 Downing street, more things stay the same. The previous Prime Minister had obviously spent too much time in his former post at the Treasury, as he was an avid exponent of regional pay. Indeed, the previous Labour Government introduced regional pay for court workers and the Prison Service.

In the teeth of the trade union movement’s opposition over the coming months to these proposals, the Treasury will justifiably be able to say that the previous Labour Government introduced the principle of differential pay, using the Courts Service as a pathfinder for its wider introduction across the whole public sector. Indeed, the Chancellor made that point repeatedly to the Treasury Committee during the evidence session on the autumn statement last month. To the Public and Commercial Services Union’s credit, it warned exactly of that during the debate surrounding the proposals for the Courts Service in 2007. It said at the time:

“There was a need for a pay and regrading review as workers from the magistrates’ courts have recently been brought into the civil service. But the Department of Constitutional Affairs has gone for the cheapest possible option. If the government brings regional pay in here, it will try to implement it in the rest of the civil service, and then across the public sector.”

I would be grateful to the Minister if she informed hon. Members about the Government’s assessment of the impact on recruitment and quality of service in south-east England of introducing regional pay in the Courts Service. More importantly from my constituents’ perspective, what has been the impact on recruitment, performance and, crucially, morale in those areas where lower rates of pay are offered?

[Helen Goodman]

The hon. Gentleman is in general making an excellent case this morning, and I congratulate him on securing the debate. Does he agree that there is a real problem surrounding the quality of public services as a result of the fact that, for example, doctors might come out of university with five, six or seven years of debt and be paid less in regions such as the north-east or Wales than in London?

[Jonathan Edwards]

The hon. Lady makes an excellent point, and I thank her for that intervention. I will come on to talk about the brain-drain element and the polarisation of wealth across the British state.

I say to the Minister that, with the policy in operation across some parts of the public sector already, the Treasury should have the information about its impact at its disposal. That leads us to ask why the autumn statement pledged to hold an investigation into the issue. There is already a wealth of evidence from trade unions about the problems of the policy in the courts and prison services.

Without having sight of the Minister’s speech, I presume that her counter-argument might include saying that it is the Government’s intention to equalise the standard of living for public sector workers. Such an argument might go along the lines that a teacher working in Carlisle or Carmarthenshire has more disposable income than a colleague working in Reading, because of the difference in the cost of living and that that is morally unjustifiable. Superficially, that seems a seductive and attractive argument, but it is essentially a policy aimed towards a race to the bottom.

I hope that the Government do not embark on a divide-and-rule strategy and play public sector workers off against each other, as they have during the public sector pensions debate. Under the proposals, both public and private sector workers in the regions and locations concerned would be losers. The impact of such a policy would not be a geographical or sectoral rebalancing of the economy; it would be a sobering experience, with public sector workers already in fear of their jobs having their pockets picked for pension payments and suffering a prolonged period of wage freezes and real-term cuts.