Home Affairs and Justice

Liam Fox Excerpts

Thursday 28th May 2015 Commons Chamber

[Dr Liam Fox (North Somerset) (Con)]

The Gracious Speech sets out a programme with both vision and ambition. The Government have three historic tasks in this term: balancing the budget; doing so in a way that does not diminish our national security; and, of course, giving the British people a say on our future relationship with the European Union. The great dividing line at the general election was between those who believed in living within our means and those who believed there was a different way. The myth peddled by the left—that there is an easy and painless alternative to what they call “austerity”—was seen through by the British public.

Dealing with the deficit is the great unfinished business from the last Parliament. Let me remind the House of the actual figures. Government debt is almost £1.6 trillion, or 81% of GDP. Debt interest is £43 billion this year, which is more than 3% of GDP and more than 8% of Government tax income. Almost a tenth of what people pay in their taxes goes towards debt interest. This is a profoundly immoral policy, because it says that the generation coming after us should pay for our spending today. It is a wholly unacceptable way for the country to proceed economically.

I do not believe that overspending by more than £87 billion, as we are this year, fits anyone’s definition of austerity. It will not be easy to reduce our deficit, given the plans we have set out, quite understandably, on such things as the pension lock and the NHS. However, it is not just about shrinking the size of the state; it is about which state we are shrinking. In my book, we should not reduce the security of the state to pay for the welfare state.

[Mr MacNeil]

The right hon. Gentleman is painting an accurate picture of the disastrous state of UK finances and the mismanagement of them over the years. Will he tell us when the UK last did not have a black hole in its annual current account?

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[Dr Fox]

I take issue with the hon. Gentleman’s assessment, because we are seeing a rapid improvement in the state of Britain’s finances. He and his colleagues say that we should spend more money and do so for longer. The consequence of that would be to run up even more debt interest, which would be a further burden on taxpayers and a further brake on the economic growth that the country requires.

There are a number of risks to the security of the state: failing states, and transnational terrorism and fundamentalism, which is manifested at the moment most appallingly by ISIS. Our security services need not only appropriate funding but appropriate powers to do their job properly, which is why I welcome the Home Secretary’s proposals. To those who say that our security services are too great, and that their powers are too widespread, I should mention that in this country we spend more in a year on the elderly heating allowance than we spend on the budgets for all three of our security services combined. I welcome measures to help the security services do their job, but I reiterate that strong powers for the security services must be matched with strong oversight powers for this House of Commons.

Of all the threats we face, I believe that the single greatest threat facing both this country and our allies comes from Putin’s Russia. The actions that we have seen in Ukraine should make us realise that we are only one miscalculation away from a potential article 5 conflict on the European continent. We have seen the redrawing of Europe’s borders by force, which we thought we would never see in the years after world war two.

We have two simultaneous problems: the weakness of the west, and Putin’s aggressive stance. We in the west, collectively, watched a cyber-attack on Estonia, one of our NATO allies, and we did nothing. We saw Ukraine’s gas being cut off in breach of a treaty, and we did nothing. We saw the invasion of Georgia, where Russia still has troops, and we did not even call it an occupation. We have now seen Crimea torn away by Putin’s expansionist actions.

Putin’s attitudes themselves cause a problem. He still believes in the old Soviet idea of a near abroad—that Russia should be able to control the actions and policies of its geographical neighbours. That is unacceptable in the modern world. He also believes that the protection of ethnic Russians lies not with the constitutions or laws of the Governments under which they live, but with an external power, meaning Russia. When he hands out Russian passports to ethnic Russians in more and more countries on the periphery of Europe, we should be extremely worried.

We see the creation of an arc of instability as a matter of policy by Putin, involving Kaliningrad in the Baltic, the Republic of Srpska in the Balkans, and Georgia and the client state in Armenia. They add up to a very great risk facing European security. Russia is testing new weapons systems in Ukraine, and the Ukrainians need more secure communications, unmanned aerial vehicles and anti-artillery capabilities.

We need to face down the Russian threat as a matter of urgency, even if it is not at the top of what most people regard as their immediate political agenda. If we are to do so, we need a united NATO—united, properly funded and rebalanced. In the cold war, we understood that we needed military strength underpinned by economic power and based on a clear values agenda. Today, only four NATO members meet the 2% GDP target that is supposedly the floor of their contribution to NATO. As a consequence, NATO is too dependent on the United States. We would not have been able to go through the conflict in Libya without the United States. For all Europe’s pretensions to global influence, it is unable to deliver because it is unwilling to spend what it needs to spend to provide the capabilities that are necessary to underpin that.

We will have a full defence review. I simply say this to my right hon. Friends in the Government: defence is the first duty of Government. It is non-negotiable. We need to spend what we need to spend to keep us safe. We cannot begin with a number and work out how much defence we can get for it.

We need to maintain the primacy of NATO in the face of growing European Union pretensions in the field of security. I have watched as the European Union has tried to get further into the realms of a common defence policy. That will result in duplication and the diversion of scarce resources. It will weaken NATO and drive a wedge between us and the United States.

That brings me to the third of the Government’s challenges—the EU itself. It is worth reminding ourselves of what Chancellor Merkel has so eloquently said: Europe represents 7% of the global population, 25% of global GDP and 50% of global social spending. That is an utterly unsustainable position to maintain. In the European Union, eurozone unemployment is 11.4%, compared with 5.5% in the UK. That figure is hugely flattered by Germany’s 4.8% unemployment rate. Take Germany out of the equation and we can see how badly the rest of the eurozone is faring.

It is not that there is a crisis in the eurozone—the eurozone is the crisis, and it always has been since the creation of the flawed and fundamentally unstable and unsound single currency. The euro could have followed one of two models. It could have followed a purely economic model, only available to those who met the entrance criteria, or a political model, with ever closer union an indispensable tool in that. Of course, neither model was chosen. Instead, a hybrid was created and the wrong countries were allowed to join without ever meeting the convergence criteria. Having joined, those countries were allowed to follow fiscal policies that saw an even greater divergence from where they were supposed to be.

The price for all that is being paid especially by young Europeans. Some 4.85 million young Europeans are unemployed, 3.25 million of whom are in the eurozone. How many young Europeans will be sacrificed on the altar of the single currency before European leaders wake up to the truth and the impact of their folly? The euro is flawed, and de-risking the euro is the single most important task facing European leaders at present.

How different Europe looks now from how it was perceived at the time of the last referendum. In 1975, Europe was at the centre of the global economy and global political influence. We now see a backward-looking, introspective Europe, diminishing in both global economic importance and global political reach.

At some point in the next two years we will have a once-in-a-generation opportunity to reset our relations with the European Union. We need to have a full and transparent renegotiation process, and we need to be right, not quick. The temptation is always to go for the renegotiation that can be achieved, for the sake of political expediency, rather than a more difficult one that might be less successful. That would be a great mistake, and I am heartened by what the Prime Minister has said in recent days. It is not just about migrants’ benefits or the City of London; it is about the creep towards ever closer union, which we have seen happening in a ratchet mechanism over the last couple of decades, and the core issue of sovereignty.

The European Union is increasingly taking on the trappings of statehood—a diplomatic service, a foreign policy and now even the suggestion of a European intelligence service, although I regard that as something of an oxymoron. Too many of our laws are being made beyond our borders, and that is the crux of the argument that we need to address and change in the renegotiations and the referendum that will follow.

On the timing, some people want to have a quick referendum and I have already heard others saying that we must be willing to say yes to a reformed EU without knowing what that will look like. We must resist any attempt to bounce the British people into an early referendum. We can wait until we are ready. We must give our people a full explanation of the choices, and the inevitable pluses and minuses on both sides of the ledger, because we have to have a clear resolution of this issue, not simply begin a repeating chapter.

As well as all those great national and international issues, we will want to champion some important regional issues. In the south-west, where we saw a blue tide sweep right up the peninsula with some phenomenal gains, we have some real problems with fair funding. In North Somerset, we have real problems with fair funding in rural areas for education, health and local government. We also face an environmental problem at the hands of the National Grid, whose electricity transmission plans would be a sore scar on our beautiful environment. If the Government believe in green energy generation, they should also believe in green energy transmission, which should be an equal partner in the Government’s policy.

The Government’s programme is ambitious and its aims give great cause for optimism. We are not the continuation of the coalition: we were elected as Conservatives and I look forward to our governing as such.