Queen’s Speech

Lord Empey Excerpts

Monday 13th May 2013 Lords Chamber

[Lord Empey]

My Lords, every time the economy and public spending are mentioned, the word “growth” usually accompanies them. Today is no exception. People say that what we need are policies for growth, as this is the only way to close the deficit and reduce our borrowing. It is easy to see why this is a popular idea. When one looks at the graph of spending to borrowing, a rise in tax revenues brought about by an increase in economic activity would, over time, solve our problems—or would it? When we were enjoying economic growth, we increased our spending. We did not use the increased tax revenues to pay down our debt, so when the crisis of 2007-08 occurred, we were caught in a trap from which we have not escaped. Who said we are entitled to expect ongoing growth in our economy? Growth will occur only if we remain competitive. We no longer provide sufficient goods and services at prices that the world wants to pay. This is not surprising, for a number of reasons.

There is a deep-seated culture in this country that has not given a parity of esteem to those in business who have led the way in innovation and exports. In competitor countries such as Germany, those who decide to become engineers, for example, are highly regarded and respected. Vocational education in Germany is also regarded with higher esteem than it is in this country and not seen as what a student does if they have failed in the academic pathway, as is often the case here. This is unfortunate, because it permeates our education and governmental apparatus from top to bottom. There is a form of snobbery which perversely values those professions and skill sets that spend taxpayers’ money over those professions and skill sets that create it.

I had the privilege of being a member of the ad hoc Select Committee of your Lordships’ House which looked at SMEs and exports. We found a large number of potentially highly successful small businesses out there which are really trying—some are succeeding—to grow the export potential of this country. There is no lack of potential but there are failings which frustrated those of us on the committee and which we want to air when the report is debated later in this Session.

However, it is clear that businesses in this country are having to pass on to customers the overwhelming cost burden of a welfare state that we simply cannot sustain at present levels unless we have a larger economy. I come from a region which benefits greatly from the welfare state and the financial transfers from Westminster. As an elected representative there for more than 25 years, I know something of the plight and the dependence of many constituents who rely on having access to various benefits. To be blunt, this situation cannot go on as it is. When we were discussing the Welfare Reform Bill and the health legislation, many of your Lordships pointed to the hardship some of these changes would cause for individuals in the community. There is no doubt that this is true. What was lacking from these sincere expressions of concern was any apparent grasp of the dire long-term consequences of the UK’s continuing economic weakness for the future of the welfare state. Little emphasis was placed on how the wealth is to be created to produce the revenues to spend on so many deserving cases.

I will suggest a few steps we might take, to which the Minister, in winding up, will perhaps respond. I feel that the time has come to place a general duty on all departments to have regard to the economic well-being of this country. I also feel that all civil servants, irrespective of which department they currently serve in, should, as part of their terms and conditions, be required to have a general duty to look at the consequences of their actions on the economy. We need to review the priority given to wealth creation in our education system, which needs to run right through from primary to tertiary education. It is simply not happening on a large enough scale.

Turning to the Treasury estimates, there seems to be a muddled message in some of these decisions. In recent years, Governments of all parties have recognised the valuable role of our foreign service in promoting exports and trade abroad. With a meagre budget of £2 billion, the FCO is expected to promote our diplomatic and commercial interests around the world, yet the Department for International Development will have £10.7 billion to spend next year. Given recent diplomatic fallout from the decision to cut £19 million of aid to South Africa and a similar row last year over aid to India, who looks at the downstream commercial consequences of these decisions? Is there no way of handling things to avoid such bad publicity and possible damage to our long-term commercial interests?

This is one reason why I repeat my call for all departments to have to look at the economic fallout of their decisions. Perhaps there needs to be a form of economic proofing of departmental decisions. It will not be lost on many that with the international development budget growing while the defence budget is falling, there is a need for a review of how best to ensure that priority is given to the UK’s long-term national interests in these spending areas.

Since I came to your Lordships’ House, I have been struck by the division that still exists between those of your Lordships who can be regarded as Europhiles and many who are seen as Eurosceptics. Perhaps I will add another category: Eurorealists. The arguments of the 1970s are over. The UK took a decision to join the then EEC and we have seen that economic community change into a rival to nation states. I have no doubt that this was always the intention of the EU founding fathers, but it was most certainly not the intention of the British people. Ironically, many of those who are now sounding alarm bells about the growing appetite of Brussels for its own statehood supported the necessary legislative and treaty changes that have brought about the present situation.

As we are talking about the g-word—growth—today, it is obvious that significant business growth is currently available outside the EU. Indeed, parts of the EU face years of contraction and not a small risk of political instability as a result of the politics—rather than the economics—of Europe. The euro has been a disaster for southern Europe: there is 64% youth unemployment in Greece and 57% in Spain. For how long can this go on?

The EU is still a huge consumer market, to which the UK sends 40% of its exports, but it is not sufficient to generate the growth that we need. While there is no incompatibility between trading with the EU and with the rest of the world—including, I hope, a growth in our trade with the Commonwealth—the fact remains that Europe is making itself progressively less competitive with the rest of the world and we are powerless to stop this on our own.

I do not relish another four years—or maybe more—of these pro- and anti-European arguments. While at all times acting in our own interests, we must strive to shorten this period of uncertainty. I am not sure that a referendum or referenda can wait until 2017. I support the concept of a last-ditch attempt to renegotiate the terms of our membership of the EU. But we must remember that Brussels has only done and is only doing what we, as an independent nation state, through this Parliament, agreed that it should do. There is no point is blaming Brussels or the Commission for their actions; the blame lies in this House and the other place. We agreed to the free movement of labour within and between member states; that means that we agreed that the workforce in a country such as Bulgaria, with a minimum wage of 83p per hour, was free to seek work in this country. While it was never envisaged that the diversity of economies in Europe would be so wide, we had the opportunity to negotiate at the time of the various treaties, but we failed to do so.

We are in a pickle of our own making and it is in the interests of our future economic well-being to ensure as speedy a resolution to the Europe question as possible. No good will come of endless delay and procrastination.