European Union (Withdrawal) Bill

Lord Adonis Excerpts

Committee: 3rd sitting (Hansard - continued): House of Lords
Wednesday 28th February 2018 Lords Chamber

[Lord Adonis (Lab)]

My Lords, we are still formally on Clause 3, and I had the benefit over the short dinner break of speaking to the noble and learned Lord, Lord Keen, about the issue we were debating before the break in relation to Schedule 8. May I put a specific request to the Minister, to which I hope the noble and learned Lord will be able to respond? It will be crucial to our discussing this matter further on Report. Will he write to us to clarify a specific point that arises from what the noble Lord, Lord Pannick, said earlier? Does Schedule 8 give the Government the power to use subordinate legislation to modify primary legislation whose primary purpose is to implement EU directives? I wonder whether the Minister might write to Members of the Committee on that specific point.

[Lord Pannick (CB)]

I can tell the noble Lord and, indeed, the Minister that there will be a probing amendment on paragraphs 3 and 5 of Schedule 8. It has been tabled today and will be on the next Marshalled List.

--- Later in debate ---

[Lord Adonis]

I am very grateful for that response; I think that might help us in our further discussions.

In response to the amendment of the noble Lord, Lord Wigley, I will make two points. First, in the debate about regional assistance, one of the arguments is that we are simply getting our money back. The crucial point about the European Regional Development Fund and the other cohesion funds of the European Union, however, is that they are long-term development funds. The reason that they are so valued in the regions is not just because of the investment, but because they enable long-term planning to take place in the regions, which does not happen in response to Treasury funds because our own funding for these projects is so short-term. One of the big struggles that we have had in government—and this spans all three parties that have been in government in the last 20 years —is that we have had a huge difficulty in fixing and delivering long-term investment priorities because of the short-term attitude of the Treasury, which is not prepared to make those commitments.

When I became Secretary of State for Transport in 2009, the forward investment strategy for the railways in the United Kingdom was for five years, until 2014; so—surprise, surprise—there were no plans for high- speed rail at all and no electrification programme. It is not just that it did not go to Swansea: it did not go anywhere. Wales is the only country in the entire continent of Europe besides Albania that does not have one mile of electrified railway. This is because of a consistent absence of long-term infrastructure planning over the last generation. Thanks to decisions that we took in 2009, electrification is at long last going to reach Wales, but the plans that were in place for it to go to Swansea have been cut back to Cardiff; it was supposed to go to Bristol but it is now going only to Bristol Parkway, not to Bristol Temple Meads.

I do not wish to bore the Committee with the details, but the fundamental underlying point here is the absence of long-term infrastructure planning. We look to the Government for a commitment not just to have significant funds for regional assistance—because clearly funds are going to be required unless we are going to see the divides between different parts of the country becoming even wider over the coming years—but we need a long-term approach. The current European Regional Development Fund has a six-year planning horizon and we need to see at least that length of planning in respect of new funds and policies that the Government put in place. Otherwise, we will see a short-term scramble for short-term projects that do not begin to be able to deliver huge benefits such as new railway lines—HS2 and HS3 that we need linking the northern cities—and significant investment in Wales. The noble Lord, Lord Wigley, referred to tidal lagoons and the investment that could be made there. That, again, is an investment that would deliver economic and energy benefits over the next 80 years, and it needs to be long-term.

My second point, which is linked to the points made by my noble friend Lord Foulkes, is about the European Investment Bank. One of the most worrying things in relation to the funding of infrastructure projects, particularly in less developed regions of the country, over the period since the Brexit decision has been the collapse in lending to the United Kingdom for projects supported by the European Investment Bank. An article in the Financial Times last month gave quite scary statistics: new contracts in the UK financed by the EIB are down from £5.5 billion in 2016 to just £1.9 billion last year in 2017. Of that £1.9 billion, only £377 million was spent in the nine months after Article 50 was triggered. The president of the European Investment Bank, Werner Hoyer, was very clear that a key factor in this was,

“extra legal work the bank now had to do to ensure its assets in Britain would be protected after the UK left the EU”,

and uncertainty on the part of investors. This is leading to a significant problem in investment in infrastructure projects, in particular. Speaking as a former chairman of the National Infrastructure Commission, I can tell the Government that they will not get a commitment to long-term infrastructure projects unless they can put together the funding packages that are required. They need to span the public and private sectors, and for many of these projects which span a 10, 15 or 20-year horizon, the public sector is looking for guarantees, and if those guarantees have to come exclusively from the Treasury in future, we will see significantly less infrastructure investment than we have in the past.

Although the European Union is not the be all and end all—

[Lord Wigley]

Before the noble Lord leaves the issue of the European Investment Bank, I raised a question in the debate on Monday evening about the ongoing eligibility of higher education institutions, such as Swansea University, which has had £60 million out of the EIB. Will the noble Lord confirm my understanding that the UK will have an ongoing entitlement to help from the EIB? As he says, it is a question of the level of help and the confidence that is there and not that we will not be eligible.

[Lord Adonis]

My Lords, I am afraid we again get into the Alice in Wonderland world here, as we were in the debates on Erasmus and Euratom. My understanding from discussions with the European Investment Bank when I was chair of the National Infrastructure Commission is that if the Government were to wish to stay a member of the European Investment Bank, that might be possible. There are lots of legal issues which would need to be addressed, but it might be possible. However, it is the Government’s policy, as a matter of principle, that we will withdraw from the European Investment Bank because it is seen as a European institution and apparently the instruction from the British people two years ago was that we must withdraw from it for exactly the same reason that we must withdraw from Euratom: it is seen as a European institution and we are supposed be withdrawing from all of them or else Brexit does not mean Brexit.

We are engaging in self-inflicted harm purely for an ideological purpose by choosing not to be part of an institution which has “Europe” in the title. What has concerned the Committee so much in our debates is that sector by sector, area by area, we are committing to policies that are going to make the country worse off bit by bit. The cumulative effect of all this is going to be immensely serious. Where it is possible to not engage in that self-inflicted harm, it seems to me to be just a matter of common sense not to do so. I would be very grateful if the Minister could tell the Committee the Government’s policy in respect of lending currently made by the European Investment Bank and whether it might still be open.

I am constantly encouraging, and we have the more emollient face of the Government responding to the debate in the noble Baroness. I always have very high hopes of her because she sounds so reasonable when she replies. It may just be that she is so practised at doing these things, but I very much hope that she might give us a commitment that the Government will consider remaining a part of the European Investment Bank and not putting this essential investment in the future infrastructure of the country at risk, as appears to be happening at the moment.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I do not like to start by contradicting my noble friend, but I have not heard the Government ask that we leave the Eurovision Song Contest, so there is one thing they are content with despite the name containing “Euro”.

This amendment is important not simply for the amount of money being spoken about but what it is used for. I think I heard the noble Lord, Lord Callanan, say from a sedentary position “It is our money”, somewhat missing the point of the amendment, which is about having regard to the principles of social and economic cohesion which we signed up to, welcomed and have benefited from. In fact, it is particularly important given the drive to equality whether in this country, Europe or both. The noble Lord, Lord Wallace of Saltaire, reminded us that England has the deepest regional disparities of any country in Europe. That is why it is not just the money, although I will come on to that, but what we want to use it for and how, and the need for a long-term aspect, as my noble friend Lord Adonis said.

This article enables funds to be used in a way that particularly led to our disadvantaged regions benefiting enormously from the Cohesion Fund, the European Regional Development Fund and the European Social Fund. In the period 2014 to 2020, they will have brought £12 billion our way, and it is not simply the money but the way it is aimed to reduce disparities and concentrates on what the EU calls less developed, transition or other regions. These are significant amounts, but it is the aims and objective that are important. They help create jobs, with start-up businesses, and with research and development. They have had a particular impact in Cornwall, west Wales and the valleys—some of us have to declare an interest there. We have heard of particular cases which have already benefited from this sort of money, including through the environmental impact of some of them, as mentioned by my noble friend Lady Young.

The important thing now is to look forward. As we have heard, the Government, in preparing for our departure from the EU, committed themselves to what they call a,

“UK Shared Prosperity Fund … using money returning to the UK from European structural fund”—

if it has not already gone to the NHS or anywhere else. The idea, as laid out in the Conservative manifesto, is to use that same amount of money. The Exchequer Secretary, Robert Jenrick, promised,

“to consult widely ahead of its launch”.

However, he did not commit to matching ERDF funding after Brexit, so the consultation would presumably be about its use. We have been told:

“The design … is currently being considered, including its funding arrangements, and further details will be set out in due course”.


Although he is not replying to this amendment, the Minister often reminds me that in a year and a month today, we are due to leave. That is not much time for getting these details, even in draft form, let alone for consultation or beginning to think about how people might use these funds. There is undoubtedly some urgency.

I hope that we could maybe have that detail from the noble Baroness as well as the basis on which the Government are planning to allocate the money. Will it be, as we heard suggested, under the Barnett formula, which is on a per head rather than per need basis? Will it be long term? What will the other attributes be? Will it be whoever wants matching funding or something else? Will it be concentrated in the same sort of areas as before? These are important questions, as I am sure she appreciates. It is a matter of funding, otherwise we might lose £8.4 billion from the sort of work that has been done to reduce inequalities. We need to know not just the amount but that it will be targeted towards achieving the same sort of ends as Article 174.