Brexit: European Investment Bank (European Union Committee Report)

Lord Giddens Excerpts

Tuesday 16th July 2019 Lords Chamber

[Lord Giddens (Lab)]

My Lords, I also begin by congratulating the noble Baroness, Lady Falkner, on having chaired our committee so effectively and introduced this debate so tellingly. I also thank everyone else involved in the production of this excellent report.

I hope noble Lords will forgive me if I take a lateral approach to these issues. Today is a very notable day: the 50th anniversary of the launch of the Apollo mission to the moon. The moon landing was an evolutionary moment for the human species—more than just a giant step. After thousands of years, we were no longer earthbound. Much more recently, in January 2019, again for the first time ever, a robotic lander and rover touched down on the far side of the moon. Like Apollo, the mission was named after one of the gods, or rather goddesses, Chang’e—I hope noble Lords will forgive my Mandarin pronunciation—the moon goddess. Its objectives were largely economic. The space economy is seen by states and entrepreneurs across the world as the next big thing—the next huge thing in the case of China, which has massive plans.

In case noble Lords are wondering, the EU has by no means been left behind. The European Space Agency has 22 member states, one of which is the United Kingdom. It is an intergovernmental organisation but deeply integrated with the EU. These connections include the Galileo and Copernicus programmes and much else besides. Crucial to the success of the ESA has been the role of the European Investment Bank. Since the year 2000 it has invested €5.4 billion in the space and aerospace sector. The returns in terms of commercial applications alone have been huge. The space economy has grown five times faster than the overall EU economies since 2000.

The UK Space Agency has been allocated a central role in the Government’s industrial strategy and I would say quite rightly so. The country has in some ways been a pioneer. Yet as it leaves the EU, the UK is likely to lose access to EIB investment in this, as in all other areas. A no-deal situation, as everyone knows, is now a distinct possibility. Will the Minister confirm that, if the UK leaves the EU without a deal, British businesses will be unable to bid for any future work in the development of Galileo or other geostationary navigation systems? The Government have spoken of investing £92 million in a UK satellite navigation system, but that funding is trivial when compared to the sums the EIB is able to provide. Moreover, in July 2018 the EIB signed a new agreement—a formal arrangement—with the ESA for further large-scale funding of the space economy. In case this sounds oblique and marginal, it is in many people’s eyes the most significant future area of economic development globally.

I do not want to get lost in space. Back on dry land, as the report makes clear, the EIB and the EIF have been of core importance to a whole range of projects in the UK, especially those concerned with infrastructure, including in this category huge levels of investment in my main area of concern, higher education—many billions, in fact. As is noted in the report, EIB funding in the UK has fallen by not far short of 90% since 2016. The Government seem to have said very little about their plans for a future relationship with the EIB. Maybe the Minister will elucidate the Government’s position on this.

One main area of support where the role of the EIB has been particularly crucial is renewable energy. Green bonds have been deployed to help fund ecological development projects. Very substantial investment will be needed to radicalise some of these projects if the Government’s stated goal of reducing greenhouse gas emissions by 2050 is to be realised. What plans are in place to progress towards this goal in the likely absence of EIB support? Without them, this is just an empty commitment.

The report makes quite a few important points in its concluding summary and I hope the Minister will respond to most or all of these. I draw attention to just one or two. First, one of the great strengths of the EIB is its capacity to think long-term and provide stable funding to do so, so that, as I just said, there is no empty posturing. What mechanisms are the Government proposing to achieve such investment, which certainly cannot be funded from taxation alone but involves a massive influx of other forms of capital? Secondly, what could we learn from the example of KfW in Germany, testimony from which impressed some of us on the committee? It certainly impressed me. As the report observes, KfW has been called “the world’s safest bank”. Would the Government seek to set up some kind of analogue to this in the UK as a way forward?

Finally, will the Government acknowledge the crucial importance of an impartial Civil Service in working with financial institutions to think long-term? Bureaucracy gets itself a bad name, especially at a time when populist politicians peddle snake oil recipes for the future. Yet it is the condition of not only a stable democracy but effective forward-thinking and planning. I hope the Minister will agree.