United Nations High Commissioner for Human Rights

Lord Flight Excerpts

Monday 16th December 2013 Lords Chamber

[Baroness Warsi]

As it stands, the timetable is that the public consultation will be held around February and March next year. That will be followed by some targeted sector-specific engagement with groups that need familiarisation with the new legislation, including certain employers, public authorities and the judiciary. It is anticipated that the legislation will come into force in October 2015, but I am quite happy to take back the noble Baroness’s comments to the Minister who deals with equality issues.

[Lord Flight (Con)]

My Lords, freedom of religious belief is becoming a bigger issue, sadly, around the world. What are the UK Government doing in terms of working, particularly with the Human Rights Commission, to promote freedom of religious belief?

[Baroness Warsi]

My noble friend will of course be aware that freedom of religion and belief is one of the six priorities for the Foreign and Commonwealth Office. Indeed, it is a personal priority of mine and something into which we have put additional resources and energy since my appointment at the Foreign Office. We are dealing with this matter on a number of levels through both the Human Rights Commission and our support for Resolution 16/18, which determined, among other things, tolerance towards minority religions. We have also instigated and chair a political track to this process. The first meeting was held at the beginning of this year and the second at the UN General Assembly in New York in September. We are proposing that a conference on freedom of religion and belief should be held in the United Kingdom next year.

Russian Federation: Council of Europe

Lord Flight Excerpts

Tuesday 30th October 2012 Lords Chamber

[Baroness Warsi]

I do not know whether I can comment on that particular matter, but the noble Lord will be aware that we have a number of delegates who form part of the Parliamentary Assembly of the Council of Europe. They are not an extension of the Government; indeed, they have quite independent views. It is a matter for the Government to lay out their position, but that is not something that we can force upon those members.

[Lord Flight]

My Lords, I understand that this lengthy report, covering a period of seven years, has findings positive and negative, but in particular expresses concerns about changes in law this year that will inhibit democratic development in Russia. Do the Government take the view that the recommendation should have been adopted—the reason for it not being adopted still seems somewhat unclear—and, in the absence of an adopted recommendation, is Russia left free to avoid responsibility for its obligations as a Council of Europe member state?

[Baroness Warsi]

My Lords, we believe that the recommendation should have been passed, not to chastise Russia for its human rights record but to help to improve human rights protections within that country, as we would do for any Council of Europe member state. It is unfortunate that in this particular matter the procedural points became the focus of the debate rather than the real substance that was in the report. It is essential that every member of the Council of Europe, including Russia, respects the obligations and commitments that it signed up to on joining the organisation, whether or not there is a recommendation.

UK Industry: International Competitiveness

Lord Flight Excerpts

Thursday 5th July 2012 Lords Chamber

[Lord Flight]

My Lords, I congratulate the noble Lord, Lord Jenkin, on introducing this debate and on raising a mixture of extremely important issues. I am particularly pleased that the noble Lord, Lord Green, will respond and I look forward to hearing what he has to say on the excellent work that he has been doing globetrotting and promoting Britain. His was a very important appointment by the coalition Government.

My interests are those declared in the register. Some of those companies are significant exporters of services. To me, services and manufactured goods are all the same pot. Quite where the division lies, I am not quite sure. Is software a manufactured item or a service?

It is clear that we are doing okay and have more to offer in the life sciences—as the noble Lord, Lord Kakkar, pointed out—in the software industries, in business services, in quality goods and services, and in education both in this country and about the world.

We have not done too badly in continuing to attract inward investment. It is particularly interesting that we are one of the most successful car manufacturers in the EU—I believe that car exports have risen to their highest ever level quite recently. We can make good cars here at competitive prices if the management is up to managing it properly.

It is true that sterling was overvalued for too long and that devaluation has made it more competitive, but it has arguably not made it competitive enough. Unlike Germany, I think that, broadly, the exchange rate should be used to adjust for differences in competitiveness rather to than to put countries through the agony of internal devaluations that wreck their economies.

The noble Lord, Lord Jenkin, mentioned one of the Bank of England’s usual understatements. To me, the economic facts of life are very simple: if this economy is going to pick up and grow, it can do it only through rising exports and capital investment. There is little or no scope for growth to continue to come from rising consumption. We had nearly 20 years of living above our means and of growth based on rising consumption and financed by debt and selling the family silver. We had a massive cumulative balance of payments deficit—to use old-fashioned language. That has come to an end. If we are going to grow, we have to export more. No range of government measures will achieve higher growth unless they achieve higher exports. While I remain a strong supporter of the Anglo-Saxon model, its one weakness is that it leads to the savings rate being far too low, with investment being far too low as a result. It is clear that Germany’s success, apart from its organisational brilliance, has been the amount of its capital investment in modern industry.

However, there is huge opportunity, as I and others have variously described it. The fast-growing economies, the BRICs, are the ones that have the potential to import more. As others have mentioned, we have the blessing of our own particular club in the form of the Commonwealth, which is now, collectively, a fast-growing part of the world and one that has language, culture and businesses practices in common with us. In my experience, it is only too happy to do business with us as far as there is scope. It has been a mistake to concentrate on the EU as our main export market. Our exports to the EU are shrinking as a percentage of our overall exports and, sadly, it is clear that EU is going to be a very flat, depressed economic area for several years to come as it sorts out the currency problem one way or the other. It is crucial, therefore, that we go for the new economies.

I met an individual who runs the Azerbaijan society in the UK. He mentioned that it was unfortunate that Germany had sent its President there but that we had not sent anyone. I needless to say wrote to the noble Lord, Lord Green. Even in Azerbaijan, there is considerable scope to add to our involvement in the oil industry. There is also interest in our education institutions and in our quality goods. What Azerbaijan really wants is a lift in its relationships with the UK.

I shall focus briefly on what I will call our quality goods and services. I am very interested to see that Hamleys is going to go international. It is a fantastic brand name; it is the best toy shop in the country. There are masses of scope for internationalising that. Even Fortnum and Mason is going to do the same thing. I sat back and thought, “Well, Burberry started it. Think of all the fantastic British brands for which there is much greater potential now that there are parts of the world that can afford these things, potentially more than we can ourselves”.

I broadly praise the Government’s efforts. I was very pleased that the Prime Minister shot off to India. India is my pet project. The scope to export to it and to do a great deal more business with it is huge. India, as the Prime Minister of India keeps saying whenever he comes back to Cambridge, would like a special relationship with this country. Well, I would like a special relationship with India.

However you call it, “City” is now a bad word—even worse than “politicians”. I use the phrase “business services”. Our overall business service exports run at £60 billion to £70 billion a year. They are not just financial products and services; they are lawyers and consultants. There is substantial scope about the world, as the rest of the world grows faster and advances, for our business services.

Some negative issues were raised by the noble Baroness, Lady Nicholson. The London Chamber of Commerce has raised the problems of visas and passports. I have had letters from friends in Hong Kong and Sri Lanka complaining that they now have to send their applications back to London. As a result of a rather foolish economy being made by the Foreign Office, the places where they had them processed locally are being closed down, which is causing them a nightmare—others have referred to that. We have to make it easy for businessmen around the world who want to come here to do some business to get their visas or, if they are Hong Kong passport-holders, to get their passports renewed. We simply have to sort out the ridiculous situation of the excessive queues that people have to face after landing at our airports. I am not going to cast blame, but it seems ridiculous that that should have been allowed to happen. It is depressing to note that the destinations served out of Heathrow have reduced by about 50 over the past decade. We clearly need to have the best European hub available as fast as possible. UK passenger duty is far too high. It makes it uncompetitive from a holiday perspective.

There are issues to be addressed, but we should look to British history. We were the first great exporters. What was the East India Company about? It was about trading with the whole of Asia. What did it do? It stimulated manufacturing here. Britons went about the world when it was often highly dangerous and the ship they were on might have found itself embarking on warfare with the Portuguese, but we went about and built a commercial empire that became a physical empire. We have it in our history and in our national character to be about the world doing things. I see a lot of that now reviving. At least half of my son’s generation is somewhere else in the world—maybe in Shanghai or America—busily doing things that ultimately involve British exports increasing.

Towards that end I am very keen on the new technical colleges. A friend of mine has a business that has a unique niche in producing aircraft safety devices down in the depths of Hereford. With 95% exports, it is a hugely successful business. It has grown because Hereford has always had a good technical college and he could get the people he needed trained there in a way that was required for the business. I greatly welcome the expansion of all that.

I congratulate the Foreign Office, as others have, on its much improved services on the ground. However, 18 months ago I went to the Expo in Shanghai. There was a fantastic Italian exhibition of goods and services. You wanted to buy the lot. And what did we have? We had some clever cut-glass work of art and no mention of our goods and services. I wrote to the Foreign Secretary William Hague after he had just arrived to say that this seemed daft and I got a letter back saying that it had won some award as a work of modern art. I thought it was a classic example of how not to be promoting this country’s exports.

We have a great history and we have great potential. We want more young people to get into their planes and to go about the world and do things. I have always thought that in today’s world JCB is a wonderful model of what this country can be about successfully. Let us have many more of those.

European Union (Approval of Treaty Amendment Decision) Bill [HL]

Lord Flight Excerpts

Wednesday 23rd May 2012 Lords Chamber

[Lord Flight]

My Lords, the Bill looks to me to be essentially a no-brainer that commands the support of those on all sides. It is necessary to understand what it is all about and what the European institutions do. I am particularly concerned about what Britain’s liabilities, and potential liabilities, might be.

It seems to me that we are facilitating a quid pro quo deal. Germany needs the amendment to Article 136 for its participation in the February intergovernmental treaty obligation to be considered legitimate by Germany’s Federal Constitutional Court. The Prime Minister believes that once Article 136 is amended, any further liability that we have under the initial financial stability mechanism will cease. The issue arises whether this matter would invoke a referendum under the terms of last year’s European Union Bill. However, the Foreign Secretary has confirmed that no powers are transferred, so that is not the case.

As I understand it, this issue arose during the interregnum period after Labour lost the 2010 general election and Chancellor Darling was still the interregnum Chancellor, as it were, when he committed the UK to supporting the initial European financial stability mechanism fund. I say candidly that this was a mistake and that the establishment of the fund was highly questionable. It was set up under Article 122, which provides relief in the event of natural disasters occurring, not relief for Governments who are having problems raising money. The fund was able to provide support worth €60 billion, of which €48.5 billion was committed to Ireland and Portugal. Some €11.5 billion remains unused, of which Britain’s liability is 15%—a total of €1.34 billion. That liability is supposed to end once the formalities of amending Article 136 are completed, and all 28 EU members are signed up to that.

The mechanism of facilities under this fund has been that the European Commission borrows from the capital markets against the contingent liabilities of EU members to provide the finances. I ask the Minister whether members have actually paid up, or whether the Commission has paid but has not yet collected the money owed by the various members. I ask that in particular because my understanding of the arrangements is that the liabilities of members are joint and several. That is to say that if, by the time they have to pay, some members are unable to pay or are insolvent, their liabilities are transferred to members that remain solvent. That is somewhat like the last-man-standing rule applying to pension funds. There is therefore a question as to whether the UK has a material contingent liability relating to the initial fund.

Somewhat like the noble Lord, Lord Lamont, my first question on investigating this territory was to ask: what are the catches and the potential weaknesses in what seemed like a win-win proposal? The second point is that it is not at all clear when or if Britain’s legal liability in relation to the outstanding balance of €11.5 billion comes to an end. It was a political deal that there would be no further drawings under the initial fund, and I think there is agreement that the fund is capped once Article 136 is duly implemented. It is not clear when that is going to happen. It is supposed to happen in July, but it may not be until January, by which time it is entirely possible that further developments will overtake the situation.

Subsequently, as noble Lords will be aware, the 17 eurozone members set up the European finance and stability facility in May 2010, but Britain is not part of it. The facility borrows capital from the markets, again backed by eurozone member guarantees, and pulls together total commitments of €400 billion, of which some €188 billion is already committed—€144 billion to Greece, with the balance going to Ireland and Portugal. I am clear that Britain has no direct liability relating to this fund, which is then to be rolled over into the new European stability mechanism, the establishment of which the Bill relates to, because amendments to Article 136 are required.

The amount to be rolled over from the second fund is therefore of the order of €220 billion, which is part of the €700 billion that the new ESM is providing as its firewall. This, again, is to be funded, I understand, by a mixture of paid-in and callable capital. I would be interested to hear from the Minister whether liabilities in relation to that mechanism are also joint and several, as I presume they are. I make the point alluded to by other noble Lords that if you continue on the joint and several liabilities front, the potential bill building up for Germany gets larger every day.

Considering all that, it looks as though the UK’s position on potential liabilities is reasonable, but I am interested to know what other potential hidden catches there are. I have already made the point about whether our liabilities under the first fund can increase if other members are unable to honour their commitments. Given the history of the EU, I am also cautious about dealing with the potential reinterpretation of treaties that are signed. We have the immediate example of Article 122, which was used to establish the first fund when it was actually intended to relieve natural disasters.

I have already referred to liabilities in relation to the first fund but, as I understand it, there are two other major areas of potential liability. I believe that the ECB can call on up to €50 billion of foreign reserves held by the Bank of England, and, more fundamentally, I believe that the EIB can call on members for financial support, should it, for example, sustain significant losses on loans made to Governments in trouble. I believe that the maximum UK commitment here is €35.7 billion. Strangely, this is 39.6% of the total that all members would need to contribute, but we are shareholders to the tune of only 16%, so I am not quite clear why we have that greater liability. In short, I ask the Minister what the UK’s total contingent liabilities are in relation to the eurozone. I think it is important that the House has the accurate figures.

I close by commenting that I agreed with virtually every word that the noble Lord, Lord Lawson, said. I think that his analysis was absolutely accurate and correct. It also seemed to illustrate that this situation is just like that of the gold standard in the early 1930s. Then, everyone was terrified, believing that you could not come off the gold standard or the whole world would come to an end. The gold standard did the same as the euro; it stopped countries in real trouble being able to devalue and get their economies going again on a competitive basis. When everyone had given up the gold standard, people said, “Why did we regard it as a religion for so long? We have been afforded relief at last”. Although I appreciate that the break-up of the euro, which is inevitable, will bring pain—and the pain may be worse because of the EU’s failure to organise an orderly break-up—within a given period, once it has happened, people will again say, “Why on earth did we stick with this currency, which prevented us from devaluing and has driven our economy into the dirt?”. It is absolutely clear that the economies of southern Europe need major currency devaluation.

--- Later in debate ---

[Lord Liddle]

I apologise to the noble Lord, but the point is surely valid. Growth last year in the eurozone was twice that in the UK. Therefore, to blame the eurozone for the present double dip is nonsense.

The big point that the Eurosceptics fail to understand is that we cannot avoid the consequences of the euro by being out of it. In or out, our future is deeply affected because of our exports and the interlinking of our financial system. As Robert Chote said, if Greece exits, who knows what will happen? We may never in the foreseeable future recover the level of output that we had in 2008. A policy of splendid isolation from the continent was never realistic for Britain, but in the world of globalisation and economic integration it does not work at all.

Nor is our isolation very splendid. We are losing influence and clout in Europe to a dangerous degree. I will give one telling illustration. The Prime Minister claimed that the reason he used the veto and walked out of the December European meeting was that his partners would not accept a set of proposals that he tabled at 2 am in order to protect the City of London. A couple of weeks ago, on the capital requirements directive, the Chancellor, George Osborne, and the British for the first time found themselves outvoted by 26 to one at ECOFIN on a key question of financial regulation. The Chancellor has now recognised that he has to go along with the majority. That is not an effective use of the British veto. It just shows how influence is draining away from us at the moment.

[Lord Flight]

I was under the impression that the Chancellor had eventually obtained agreement to his point, which was that there could be some flexibility in the capital ratio of banks, with a view to the UK being rather more demanding than the rest of the EU.

Queen’s Speech

Lord Flight Excerpts

Thursday 17th May 2012 Lords Chamber

[Lord Flight]

My Lords, towards the end of the gracious Speech there are the somewhat opaque words:

“My Government will build strategic partnerships with the emerging powers”.

I would have liked that to refer specifically to our friends in the Commonwealth, but I was very heartened by what the noble Lord, Lord Howell, had to say in his excellent opening speech. To me it is particularly relevant in the face of the likely impending break-up of the eurozone and the impact that that is likely to have on European economies and our relations. The immediate and most important foreign affairs issue is what is happening on the continent. There is the obvious fight to the death between economic and market forces and political commitment, where the lessons of history tell us that major economic forces tend to prevail. There is the obvious point that many have made before—that for disparate economies to share a currency is extremely difficult at the best of times. Indeed, I was surprised to see an article arguing that the Commonwealth was likely to be a more successful group of economies to share a currency than the EU countries.

Everyone knows that if you are going to share a currency you have to have transfer payments from the more successful to the less successful. It boils down to whether Germany is willing to make the necessary transfer payments on a regular basis to the uncompetitive economies, which would amount to some 35% per annum of German GDP. That seems pretty unlikely. We live at present with the likely impending default and exit from the euro of Greece. I expect that a firewall will probably prevail in the near term to protect Spain, Portugal and Italy, but that does not address the fundamental problem of lack of competitiveness. These economies cannot recover and grow, and they cannot put their public finances right, if they are 35% uncompetitive against the successful parts of Europe. The issue is whether the break-up will be chaotic or orderly. We all hope that it will be orderly but, whatever, there would be economic pain in the short term, although once the necessary devaluations have occurred and these currencies are competitive again, do not understate their ability to bounce back within two or three years.

What British foreign policy needs to focus on right now is what our attitude is towards the EU in the wake of these likely events. What will be happening is centrifugal forces. The nation states of Europe with their own currencies and central banks returned will need to follow economic policies appropriate to their circumstances. Some may even need to impose capital controls. The EU, which has been centralising for 40 years and trying to move towards a single political unit, is suddenly going to be pulled in the other direction. What is our view towards this? What would be our view if there were an attempt to leap towards political union? I very much doubt it, but that obviously could be one reaction.

What the UK has always wanted to see is an area of free trade and co-operation, achieving consensus, not enforcing policies but moulding more and more European co-operation together over time—but naturally and not coming by command from the centre. It will also need a much cheaper EU. I checked with the Treasury, because I could not believe a report in the newspapers that in 2013-14 Britain’s net contributions to the EU would be £31.3 billion. The Treasury confirmed that figure to me. I thought that it was still only £12 billion or £13 billion. It is not a sum of money that this country can afford. But, more than that, I cannot see that Italy and Spain, the countries that are going to be experiencing problems with the euro, will be willing to make large financial contributions to a massive EU structure. We may not necessarily say it in public, but this country needs to think about the political implications of the euro imploding and what policies it will adopt in that event.

For some time the EU clearly has not been the engine of growth that people thought it would be when we first applied to join it way back in the 1960s and 1970s. It has turned out to be a relatively failed economic region. I go back to where I started. We need quickly to develop effective commercial and investment relations with the emerging BRIC economies, in particular with the Commonwealth economies. As I have pointed out before, my particular plea is for a much closer relationship between this country and India—politically, economically and potentially even defence-wise. The University of Cambridge will tell you that the only two countries that matter in terms of our universities and their quality of students are America and India. The Prime Minister of India has virtually indicated that he would like to see a special relationship being established for top postgraduate students coming to this country, which would enable a lot of the hassle of the visa process to be handled in a friendlier fashion.

I can think of other areas where there is considerable scope for special relationships between this country and India. We are all aware that certain problems need to be resolved but I do not think that they are insoluble. The Indian community is a successful and dynamic part of this country and there is a great deal of sympathy between the people of India and the people of Britain. It is time to galvanise that while not ignoring the other members of the Commonwealth. Important things are going on in Africa and in the older members of the Commonwealth, particularly Canada, where there is much scope for this country to find commercial partners.

There is a nice commitment in the gracious Speech. I know that the noble Lord, Lord Green, is travelling the world doing his best to generate trade deals on the ground, but more needs to be done in terms of political initiatives. We need to face up to the fact that the Europe that will emerge on the back of what is likely to happen to the euro will not be a great economic engine for this country.

EU: Recent Developments

Lord Flight Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Flight]

My Lords, a noble Lord in this debate and yesterday referred to Britain’s exports to the EU representing approximately 50 per cent of our exports. As many noble Lords may be aware, subsequent research on this figure finds that some 10 per cent of those are merely in transit, largely through Holland, to other parts of the world, and that the more accurate figure is some 40 per cent of our exports.

Perhaps I may appear rather aggressive in saying that the Prime Minister should at least have criticised, if not opposed, the December fiscal compact essentially because it was not about fiscal integration; it was about a framework and enforcement machinery for brutal and self-defeating internal devaluation measures, where the economies in trouble need growth and not to be ground into the dirt.

The key features of fiscal integration, as evidenced by the United States of America, are a single borrower, a central bank that can if necessary print money and buy government bonds, and, above all, transfer payments from the more prosperous to the less prosperous, keeping the less prosperous afloat. Within America, they amount to some 30 per cent of federal tax revenues to this day.

Germany, not surprisingly, has opposed all three key aspects of fiscal integration, largely because the estimates are that the transfer payments would need to be as large as some 35 per cent of German GDP, which is clearly impossible. But the failure is to face up to the conclusion of that: that is, there is really only one way of addressing the problems without imposing enormous hardship on millions of people, which is a currency reorganisation within the eurozone. I perceive what is being proposed and demanded of Greece as smacking of President Hoover in the 1930s, leading to the depression in America, and smacking of those Gold Standard bigots in Europe in the early 1930s having a similar effect on European economies then. The fact is that Greece has been in major recession for four years; its economy is downward-spiralling; and, very clearly, it is going to be vulnerable to political revolt, we hope through the ballot box. The words of Keynes, applied to the German reparation agreement at the end of the First World War, are appropriate: what is being looked for is,

“insincere acceptance of impossible conditions”.

This approach is not only economically mistaken but, in reality, unlikely to work, not just as regards Greece but other countries—it will be like the growth and stability pact. Back in 1953, when the then West was required to bail out Germany, which could not afford to service its debts, a very generous deal was provided—a 50 per cent debt cancellation and a five-year interest moratorium—and it was well understood that it was necessary to give the German economy the oxygen to rebuild and grow. As the noble Lord, Lord Radice, pointed out, these problems are not soluble unless countries can grow their tax revenues. I would have thought that if poor old Adenauer was still around today, he would not make the disastrous mistakes made by the present German Administration, which in effect repeat the very reparations-type of approach that caused so much trouble in Germany after the Great War. Let us look at what is happening: the whole claim of the European Union was that it would get rid of nasty nationalism. Well, many countries in Europe are coming to take a very critical view towards Germany bossing them around and, not surprisingly, many Germans are pretty critical of having to pay up and bail everybody out. So the flames of nationalism are being stirred rather unpleasantly, as others have pointed out.

I am surprised that many whom I would describe as less capitalist than me in my economic views seem entirely happy to see thousands of people thrown out of work and thousands beggared purely in the name of having to maintain the euro unchanged rather than follow the sensible remedy of currency reorganisation. It will clearly be Portugal next and Spain, potentially, after that—Spain already has 23 per cent unemployment and 48.7 per cent youth unemployment.

Germany has subtly “done a China”. She has made herself super competitive within Europe when, if you like, the more pleasure-loving south was getting on with its usual practices and unit labour costs were rising. Germany since 2003 has cut unit labour costs by some 12 per cent. So there is about a 30 per cent competitiveness gap between Germany and its affiliated economies and the south. That is just too large to be able to be addressed by an internal devaluation programme. It is not surprising that we see Germany having had the best figures for years for job growth while southern Europe now has spiralling unemployment.

It is odds-on that Greece and Portugal will exit from the euro relatively soon. I would make the point made by others that, although there will be immediate pain, the process needs to be well planned and organised. Beyond immediate pain, there is the prospect of strong economic recovery, as Argentina has experienced as a result of going through a similar mechanism.

The ECB is financing banks to give them a large interest margin when they buy the debt particularly of southern European economies, which should keep the debt issue afloat in Italy and Spain for some time, but there remains a competitiveness problem with both economies. Unless the ECB’s action is used to buy time in which a sensible European currency reorganisation is planned, it will simply worsen the banking problems when things eventually blow up. I have suggested on previous occasions that there is an obvious case for a strong currency for northern Europe and a weak currency bloc for southern Europe. We do not necessarily have to go back to historic currencies.

This needs planning now. Indeed, it should have been planned a year ago when it was blindingly obvious that the inherent problems of the euro were coming to light. But there is a bigger issue to which many noble Lords have referred, including the noble Lord, Lord Howell, and indeed the noble Lord, Lord Mandelson, which is that the world is a hugely changed place. We have huge success and competition from what are widely known as the BRICs and it is very clear that most of Europe and the UK are no longer attractive places in which to do business. The public sectors are way too big, regulation is wildly excessive and tax rates are far too high.

The diagnosis of that has to be that radical reform is needed across Europe and in the UK if we are to compete effectively with the new economies going forward. We are not going to get anywhere merely remaining uncompetitive and unattractive. A major ingredient preventing those reforms is of course the EU itself and its excessive detailed regulation. We heard today an interesting comment that the success in this country of the life science industries is being threatened by EU regulation. It is not just in that area that, I am afraid, EU regulation imported and often enhanced here makes this country uncompetitive.

The task of any responsible Government of the UK, whatever their political hue, over the next few years will be either to change and reform the EU enormously to make it into a vital economic unit and not a stagnant one or to find measures to extract the UK from the various aspects of its regulatory and other regimes which are damaging our economy. In particular, they are a major threat to our biggest industry; the financial services industry.

Commonwealth Parliamentary Association

Lord Flight Excerpts

Thursday 8th September 2011 Lords Chamber

[Lord Flight]

My Lords, first, I would like to add my own tribute to Her Majesty the Queen who, it seems to me, has done more than anybody else over the last 50 years to keep the Commonwealth together and to provide a wonderful focus of leadership. I also congratulate the noble Baroness, Lady Hooper, on her excellent speech and for bringing this debate, which I think is particularly important at this time.

The Commonwealth is clearly the most international association in the world. On the one hand, it reflects 400 years of British history, engaging with the other parts of the world, but I think it should also be a much more important force in the future. I have always regretted the fact that 100 years ago Britain lost the opportunity that was sought by quite a lot of politicians to create a federal structure.

Britain is privileged to be at the centre of the Commonwealth but, as has been alluded to, should be careful not to be patronising in its attitude. I remember and was extremely embarrassed by the shoddy treatment that particularly Australia and New Zealand received in the 1970s in the wake of unrealistic expectations of EU membership. I remind the House that last time round, in the early 1930s, when Governments and central banks in Europe and America messed up their economies, the UK was able to recover very strongly in the second half of the decade, with the highest growth rates of the 20th century, on the back of a great strengthening of Commonwealth trade and indeed domestically of housebuilding.

I am very pleased that the Government have upgraded the importance of the relationship with the Commonwealth—indeed, it should have been upgraded long ago—and have commissioned a new Commonwealth strategy paper. I understand that the FCO has trebled the size of its Commonwealth Unit. To me, the Commonwealth’s economic and political co-operation and influence are still extremely underdeveloped, and a much greater development would actually be appropriate to the global world we are now in, where the relationships—trading, commercial and even political— between mature economies and new, fast-growing economies is ever more important.

My great interest—indeed, I made my maiden speech on the subject—is India, where I worked in the 1970s, a country for which I have huge love and affection. I have long taken the view that the UK and India in particular represent virtually the perfect relationship between mature and new, growing economies. I also lived in Hong Kong. Noble Lords have referred to Ireland, but I have always hoped that a way could be found for Hong Kong to become some kind of member of the Commonwealth. There is of course the sovereignty issue, but all things are possible and Hong Kong has been perhaps the greatest economic success of all the economies that grew and arose from British connections in the past.

The Commonwealth is not just about the amazing ties of history and culture and personal and family relationships but about what can be achieved with much more important political and economic co-operation in the future. I believe Commonwealth trade could grow from $3 trillion to $10 trillion within five years without that much difficulty. Reference has been made to the fact that the combined GDP has doubled in the last 20 years and could well double again in the next 10 or 15 years. The share of world GDP that the Commonwealth represents is in the course of growing by 15 per cent through to 2015. There has been a massive increase in what one might call middle-class consumers, and not just in India. There are some 1 billion in the Commonwealth as a whole, and, as mentioned, the Commonwealth represents over 30 per cent of the world’s population. This is a huge club that I think is being underexploited politically and economically. I would like to see completely free trade within the Commonwealth, as within the EU. It is potentially just as important to the British economy as is the EU.

Finally—reference has been made to this—it is important that the Commonwealth addresses some of the problems. We have heard the story of the Methodist Church in Fiji. We all know about the problems of Zimbabwe. There should be a mechanism for the enforcement of law and, with reference to the comments made by the noble Baroness, Lady Flather, there should be some machinery to address corruption. Britain has just passed its anti-bribery legislation. It would be inappropriate and meaningless if that influence did not go international. I hope that the Government’s commitment is very much in earnest, and in the difficult times in which we live I believe that the UK is extremely fortunate in having its Commonwealth relationship, which could be of enormous economic help over the next few years.

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Wednesday 13th July 2011 Lords Chamber

[Lord Deben]

My Lords, my problem with this amendment is that it seems to me to meet precisely what the Government want. The Government have been arguing that this clause would apply only to matters of constitutional value and that those who have worried about various aspects of it are worrying unnecessarily. We now have an amendment which specifically says that the Minister must say publicly that the referendum concerns a matter of constitutional or economic importance. That seems to me not an unreasonable thing to do when it is precisely what the Government say this clause is meant to do. Although I do not believe in referenda in any circumstances, I am not approaching this from that point of view. Frankly, I am trying to help the Government because it seems to me that they have not convinced all of us that their explanation of this clause is precisely right.

My noble friend Lord Blackwell is entirely wrong: this is not a wrecking amendment—unless the Government’s proposal is a wrecking amendment—in fact, it enhances what the Government have asked for. Your Lordships should say to yourselves, “Whether we are Eurosceptics or enthusiasts for Europe”—as I am—“whatever our view may be, it is not unreasonable to say that referenda should be held on matters of considerable importance, not ones which are not of considerable importance”. It is not unreasonable to put that in the Bill.

As regards the way in which we have approached this, I believe that there are real issues for our stance in the European Union. Those who are Eurosceptic ought to be just as concerned as those of us who are of a different opinion, because unless we are able to argue about minor matters with the freedom which a representative Government have, we will do ourselves down on many of the issues that have been raised. If this amendment merely allows for that freedom, it is important and valuable and certainly does not in any way wreck the proposal.

There is truth in the argument that says that we should watch any constitutional change of this magnitude with great care. I say to the noble Baroness behind me who spoke on the Liberal Democrat position that the more she read what the Constitution Committee of this House said, the more she made the case for the amendment, because the Constitution Committee said that if you are going to have referenda, you should make sure that they are on serious matters. Sometimes it is difficult to decide what are serious matters. We have produced an amendment which says to the Minister, “You have to make up your mind, you have to agree to it and you have to say that publicly”. After all, most of our Bills have a statement on the front that the relevant Minister knows that it accords with human rights. It is not unreasonable to ask Ministers to make that choice. I think that is what the Government want. Why, therefore, have they not accepted this amendment, or something like it?

I end with a plea to my noble friend. He knows that many of us are not entirely happy with the logic of saying that we have to have all this in order to reconnect with the public. Could he not move towards us just a little and be prepared to put in the Bill what he has told us is actually there? That would make us feel that the Government had listened to us and that there was a two-way discussion on this. If he does not do that, I am afraid that I cannot even begin to reach out to the concept that this Bill enhances our relationships and I shall begin to recede into a position of wondering whether it is not intended to make people like my noble friend happier. I am not sure that that is what we should be debating.

[Lord Flight]

My Lords, does the Minister agree that certain noble Lords are perhaps a bit out of touch with British public opinion? It is clear that the British public are against Governments surrendering any further sovereignty to the EU without the consent of the people. That was very much reflected in the attitude taken to the previous Government’s signing up to Lisbon, having promised a referendum and then having ratted on it. The whole point of the Bill, clumsy though it may be, is to provide a deterrent to stop Governments of any political hue giving away yet more sovereignty, and the British people not having a say in that. The noble Lord, Lord Hannay, gave the game away. He was arguing that he wanted a situation where Governments could fudge it and give away a bit more sovereignty and was very unhappy that they might be deterred from doing that through fear of losing a referendum. The whole point of the Bill is to provide an effective deterrent to Governments giving away sovereignty. This amendment would weaken that principle.

[Lord Stoddart of Swindon]

I took part in virtually all the debates that we have had so far on this Bill, and it seems to me that the amendment would be a wrecking amendment. I understand that the Government and the coalition brought forward the Bill after long consideration and to provide assurance to the British people before they surrendered any powers—powers of the people and powers of this Parliament, if we are talking about parliamentary democracy—to the institutions of the European Union. Indeed, we had long discussions about these provisions, and after hearing all the debates I believe that the Government were right to try to get it through this House. Unfortunately, they did not do so.

The Bill went to the House of Commons and I have read the debates. The Labour Party did not oppose these clauses in any reasonable way and did not support Amendments 6 to 13. There was very little discussion on them, as a matter of fact. If it was Labour Party policy, as the noble Lord, Lord Liddle, assured us and as is contained in his amendment, why was it not moved in the House of Commons? That is where it should have been done, but it was not done. What is the gain? If the Labour Party believes in restricting the effect of Clause 6, why did it not try to do that in the elected House? In the circumstances, this House ought to take note of what the other place has done.

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Monday 13th June 2011 Lords Chamber

[Lord Goodhart]

My Lords, my noble friend Lord Waddington said early in his speech that some Members of your Lordships’ House are opponents of this Bill, and no doubt he includes me among the opponents. I am not an opponent of the Bill and nor are others of any significance in the House. What we want to do is make sure that matters which until now have not had to be decided by Parliament will be decided by Act of Parliament, and we are entirely in favour of giving the right to a referendum in matters of importance, which the noble Lord, Lord Hannay, has already described. We are looking for a different Bill, but we have no wish to destroy this one.

Referendums to be voted on by an entire country involve a lot of work on the part of those arranging them and cost a great deal of money. I understand that the referendum voted on a couple of months ago cost something in the order of £120 million. That is why referendums should be used only for matters of real national importance. Another reason, which is perhaps even more important, is that we must recognise that people will vote in a referendum only on issues of real interest to them. So far, the principle of the way referendums should be used has been recognised and observed. Only one referendum, of course, has been voted on across the whole of the United Kingdom; the 1975 referendum on our continued membership of the European Union. Since then, there have been referendums in Scotland, Wales and Northern Ireland on the important subject of devolution.

Those of us who support Amendments 14 to 21 accept that three of those issues, as the noble Lord, Lord Hannay, has said, are now covered by Clause 6. In all probability, they would justify a referendum. They are the creation of a single integrated military force in Amendment 15, making the euro the currency of the United Kingdom in Amendment 18, and bringing the United Kingdom into the Schengen protocol in Amendment 19. But extending referendums to other matters now covered by Clause 6 and its subsidiary, Schedule 1, wastes time and money and is completely unjustified.

In Committee, I spent some time demonstrating this, particularly in relation to matters affecting the legal system. I take, for example, the possibility that the United Kingdom Government might wish to participate in the European public prosecutor’s office. This is an organisation that does not now and may well never exist, and it is perhaps unlikely that the United Kingdom would participate in it if it did, although it is a possibility. But the point about this is that the EPPO, to shorten the name, is far from being a potentially serious change to the United Kingdom legal system. If your Lordships look at the terms of the TEU or the TFEU that deal with this issue, it becomes obvious that the EPPO would apply only to offences against the EU’s financial interests or to serious crime that has a cross-border dimension. Those would represent a tiny proportion of prosecutions in the United Kingdom and would affect hardly any of the ordinary citizens of this country. So if an EPPO is created and the British Government want to join it, what will happen? Most citizens will surely say, “This does not affect me so I am not going to waste my time by going out to vote on it”. Of course, the dinosaurs of UKIP will thunder down to the polling station to cast their votes. No doubt they would win in those circumstances, but that does not represent the real view of the people of this country.

There are also several cases in the Bill where the existing provisions of treaties require unanimity, but there is a possibility that member states might get together in the future to agree to QMV. Since the United Kingdom Parliament would have to give its consent to that change, it is likely that it would occur only if moving to QMV was of benefit to the United Kingdom, which it often is. It is more often than not to our benefit because it avoids the blocking of QMV, and therefore of legislation, by small member states that have a limited interest.

Matters made subject to QMV may be important or relatively trivial. It is totally inappropriate to insist on the referendum when we do not know how important or controversial the issue for that referendum will be. It is unlikely that ordinary citizens would take an interest unless it was clear to them that the referendum was a matter of importance, and one that would affect them personally.

We have never seen anything like this piece of draft legislation before. In cases where legislation has called for a referendum, that referendum comes first. It comes before any talk of an Act of Parliament. If the result is negative, there is no Act of Parliament to give effect to it. What we have here is an Act of Parliament first, followed by a referendum that might overrule it. If Parliament makes a decision, surely that decision should be binding. If Parliament wants to leave it to a referendum, so be it. What we have here is a ridiculous system that is contrary to the constitutional practice of this country.

[Lord Flight]

My Lords, the noble Lords proposing these amendments seem not to understand yet, notwithstanding the amount of time we spent in Committee, the whole point of the Bill. Put very simply, the point is that, whether by intent or by being beguiled, over the past 20 years British Governments have continued to give away sovereignty to the EU, notwithstanding that they have frequently pledged not to do so. Agreeing to the Lisbon treaty, clearly in opposition to the majority view of this country, was a huge example of just that.

This rather strange Bill and the arrangements for referenda are, I concede, a constitutional novelty. How it will work, assuming it becomes law, we shall have to see. However, it is clear that the referendum locks are there as a deterrent to prevent Governments repeating the behaviour of the past. It is fine to talk about letting the decision be made by Parliament, but we all know perfectly well that if one party has a substantial majority, Parliament is, alas, in practice an elected tyranny. There is absolutely no guarantee that even the wisest heads of this noble House will vote against the Government of the day if that Government have a substantial majority of Members in both Houses.

The issues that these amendments cover are among those that have been red line issues for Governments of both sides for some time. They are not issues that have been plucked out of the air. As was apparent from debates in Committee, there are several other issues that could have been picked up in both Schedule 1 and Clause 6, where there are clearly some aspects of transferring of power but where, for better or worse, the Government have decided not to make them subject to a referendum. It is not a case of issues being protected by the referendum lock—this is not something new that has been pulled out of the air—but about issues which have been seen as important red lines that should not be crossed by, I repeat, Governments of both persuasions.

--- Later in debate ---

[Lord Davies of Stamford]

My Lords, I rise to do two things. One is to address the contention made by the noble Lord, Lord Waddington, that I have heard before from him and other noble Lords during our debates on the Bill. His contention is wrong—that the British people have been systematically deceived about the nature or purposes of the European Union, or the European Community as it previously was, and that therefore they were unable to take informed decisions at election time or, indeed, at the time of the 1975 referendum.

It was always clear from the beginning that the European Union, or the European Community, was not a dead institution that was fixed once and for all. It was a dynamic institution, even a teleological institution which had a final purpose or end; all that was stated in the preamble of the treaty of Rome. The phrase about the ever closer union of peoples was always there. Right at the beginning, even when Macmillan first suggested that we might join the Common Market, or the European Community, I remember that speeches were made by members of my own party. I was a schoolboy at the time but I was already taking an interest in these matters. I remember Hugh Gaitskell’s famous speech. My noble friend Lord Radice, who has written books on this subject, will correct me if I have the date wrong. I think that it was in 1962 that Hugh Gaitskell made a famous speech saying that the effect of our joining the European Community ,or the Common Market, would be that we would become like Texas in the United States. If I am right and that speech was made in 1962, that means that literally for the past half century this discussion about the constitutional significance, and the significance for national sovereignty, of our being members of this institution have been clearly, expressly, openly, overtly and thoroughly transparently discussed in public.

[Lord Flight]

I thank the noble Lord for giving way. It may be that he was more involved at the time than I was, although we are roughly the same age. However, I remember being organised by the Conservative Party at the time to go out and preach on voting in the referendum for the Common Market—indeed, I voted for it—specifically on the grounds that it would be a good economic prospect for this country. We had lost an empire and we needed to belong to something where we could trade. I was not even aware of the idea that I was trying to market something about political unification—fool though I may have been at the time.

[Lord Lea of Crondall]

I am sorry—I do not know who is speaking and who is intervening here.

--- Later in debate ---

[Lord Kerr of Kinlochard]

I could repeat my Burke quotation with which I thought I had skewered the noble Lord, Lord Waddington, in an earlier debate but I will not. It is of the essence of Burke’s theory of parliamentary democracy, in which the Conservative Party used to believe strongly, that the people were consulted about who should sit in Parliament. The decisions of Parliament reflected the judgment of the people whom they had chosen. That seems to me to be quite a good rule and the point made by the noble Lord, Lord Goodhart, is a strong one. I support these amendments with the exception of the wording of the amendment on the euro, on which I have a separate amendment to which we will come later.

[Lord Flight]

I thank the noble Lord for giving way. I spent eight or nine years as a Member of the House of Commons when one particular side had a large majority. I felt that I was simply going through the motions and that there was no prospect of the Opposition members being able to stop that which the Government of the day wished to do. It was an elected tyranny by a large majority.

[Lord Kerr of Kinlochard]

I look forward to hearing the noble Lord express that view in the debate on the reform of the House of Lords.

--- Later in debate ---

[Baroness Symons of Vernham Dean]

My Lords, the noble Lord, Lord Lamont, has gone to the heart of the issue in many ways and I applaud him for what he has said. I do not agree with a lot of what he said, but at least he was dealing with the issues and not with the bland assertion that has come from some on the Benches opposite that this side, or those who are putting forward this amendment, the noble Lord, Lord Hannay, and his supporters, have somehow not got the point of the Bill, either out of deliberate perversity or just plain ignorance. The fact is that we simply disagree. We have to argue through that disagreement and Parliament is the right place to have the argument. In so far as that was the point that the noble Lord, Lord Lamont, was making, I agree with him wholeheartedly.

I say to the noble Lord, Lord Flight, that putting forward amendments in this way is not a tactic. It is part of a reasoned argument. Much of it has come not from the political side of these Benches, but from noble Lords on the Cross Benches, who have put forward well-reasoned amendments, although, of course, he may disagree with them. The noble Lord, Lord Flight, says that he sat through what he called “an elected tyranny” in the other House. Well, that “tyranny” was elected in 1997 and the British people, in whom he places so much faith over referendums, re-elected that “tyranny” in 2001 and again in 2005, so perhaps not so jolly tyrannical after all.

[Lord Flight]

Does the noble Baroness agree that there is a difference between how people vote at elections and what happens in the House of Commons? I was simply making the point that when any party has a large majority in the House of Commons, under the British system since it was changed by Walpole from the originally intended system in the Act of Rights, I am afraid that when there is a large majority it does function as an elected tyranny on either side.

[Baroness Symons of Vernham Dean]

The fact that there is a difference in Parliament from what happens at elections is precisely what we are discussing. The fact is that after the passing of the Amsterdam treaty the British people re-elected a Labour Government and after the passing of the Nice treaty the British people re-elected a Labour Government. They had the opportunity to get rid of the Government on those occasions and they chose not to do so.

The noble Lord, Lord Dobbs, made a very interesting argument. He said, with passionate conviction, that the British people know best. Do we therefore extend that argument to a referendum on the current health proposals that are dominating our headlines and are probably far closer to the hearts of the British people than a lot of what we are discussing here? Did it occur to the Benches opposite to have a referendum on the increases in university fees?

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Wednesday 8th June 2011 Lords Chamber

[Lord Risby]

My Lords, it is worth pointing out that the referendum is now part of our political culture. Indeed, it is not only part of our political culture, but right across the European Union referendums are deployed to get people’s views. It is now a fundamental part of the whole democratic process. However, the potential effect of this amendment is to make the referendum advisory. That is the point because if it is below 40 per cent the decision is referred back to Parliament. The essence of that argument is that the result ceases to be mandatory and effectively becomes advisory. That destroys the whole point of the reconnection process.

We are trying through the Bill to reconnect the people of this country with the European Union. It is a big challenge. If we are going to re-engage people in that process we must recognise that, if there is going to be constitutional change, the vast majority of people will want to feel that their voice is represented in the process. We owe that to them. I very much agree with the noble Lord, Lord Stoddart, that the 40 per cent figure is arbitrary. It would be absurd in a local or European election, when sometimes the figure drops below 40 per cent, to reject the result. That is not the way we do things. We must remind ourselves that the vast majority of people will want a referendum if there is going to be an important transfer of powers to the European Union.

The AV referendum showed us that on an important constitutional issue, the people of this country will be fully engaged. They took it seriously and voted in great numbers. I have the greatest confidence that in a matter such as the one before us, the potential transfer of additional powers to the European Union, they will of course be very interested. Therefore, I feel that turnout would be quite high.

We must make sure that people feel that when they vote, their vote counts and is decisive. Otherwise, it will destroy the point of the referendum. The referendum lock should be given without qualification; it is in the spirit of what the Bill is about. The fullest acceptance of the referendum result voted by the people is something that we should recognise. It is our duty as parliamentarians to do so.

[Lord Flight]

My Lords, I voted on two occasions for the Rooker amendment on AV. It is tempting to join the noble Lord, Lord Lamont, in taking the position that there may be a similar argument for supporting here an amendment that requires a 40 per cent turnout. However, the position is not at all analogous. In this situation, the aim is to protect the people of this country from having the powers of their Parliament and Government further diluted and given away, as has sadly happened in the recent past, with Parliaments breaking their word to citizens and acting in a way contrary to that which they promised—I refer, for example, to the recent Lisbon treaty.

It is very clear that the Bill is there as a protection for the British people, and it would be made meaningless if we said to them, “We are going to give you this lock and protection, but if less than 40 per cent of people vote, we will give power back to the Government of the day who command a majority in the House of Commons”. It is not an analogous situation to changing the voting system, where there were powerful arguments requiring an adequate turnout. It is not a situation that Burke would have supported in the slightest; he would have been absolutely against giving away the powers of the British Government and Parliament to another organisation. Either we give citizens a meaningful lock or we do not. Therefore, I feel no discomfort in opposing these amendments, having supported the Rooker amendment on AV; it is the whole point of the Bill.

[Lord Deben]

My Lords, I find myself in disagreement with both my noble friend Lord Lamont and the noble Lord behind him. I am opposed to referenda in any case and do not think that we should judge referenda, even if we are in favour of them, by the particular amendment that is before us. We should judge referenda as referenda. Therefore, to vote for a 40 per cent division between compulsory and advisory on one subject and not to vote for it on another seems not to hang together. The issue is not about the European Union. Everyone knows where I stand on that. It is about an issue which comes from before that. Long before there were these debates on the European Union, there were debates about referenda. I enjoyed debating them and I have not changed my view on them.

The parliamentary democracy which we have is the greatest gift which we have been able to give to the world as a whole. Irrespective of the comments of my noble friend Lord Risby, parliamentary democracy and referenda do not go together, as a matter of fact. The one comes from a different tradition and I am not going to be one of those who besmirches the tradition by referring to the use of referenda by such people as Louis-Napoleon. That would be wrong. But referenda do come from that tradition and not from our parliamentary tradition.

Therefore, I was much enlightened by the reminder which the noble Lord, Lord Kerr, gave us of the great conservative thinker, Edmund Burke. He said that the embarrassing fact of being a parliamentarian is that you do have, in the end, to make up your own mind, even though the popular press, the women’s advisory committee of your association, the local doctors’ alliance and a whole range of other people tell you that you have got it wrong. I remind noble Lords of what happens if you take that away. It means that nobody with a strong view on abortion, for example, would be able to uphold his or her view in those circumstances. If he or she were to follow the views of the electorate, he or she would not be able to uphold what he or she thought was a moral position. The same would be true about capital punishment. No one would have voted against capital punishment if they had listened to the average elector over the past 30 or 40 years.

Let us not be too easily lulled into that simple concept of the referendum now being part of our democratic heritage. Referenda have always been used—I say this as a committed Conservative—in a way which has tended to favour those who take a very conservative attitude. My noble friend takes a very conservative attitude, so I am happy to give way to him.