EU: Budget Report

Lord Harrison Excerpts

Thursday 25th April 2013 Lords Chamber

We need a new strategy for a competitive Britain, and that can be based only on investment. Austerity is the enemy of investment. The way out of the hole that the Government have dug can be led only by a Government with an entirely new approach that halts Britain’s convergence towards a stagnant eurozone.

[Lord Harrison]

My Lords, I welcome the good news this morning that our Chancellor has avoided the epithet of “the triple dipper”—of taking Britain into that sorry state and in that, as a good man of the north-west, rivalling Blackpool’s big dipper in effecting the number of dips in the UK economy. As has already been identified, within those more positive figures, it is sad to see that housing construction decline fails to be addressed and that manufacturing has been identified as another weakness.

First, I want to draw attention to some of the points made by the noble Lord, Lord Newby, which are more positive. I encourage the noble Lord that if he—as his colleagues often do—tries to make the excuse that the eurozone’s trials and tribulations affect the UK economy, please do not accuse the previous Government which won their spurs in the way in which they reacted to the 2008 crisis. When this Government refer to the wider and broader financial crisis, I ask that they do not use the excuse that the United Kingdom is affected by the eurozone. The noble Lord, Lord Newby, did not do that, but I encourage some of his colleagues to turn their attention to that.

Secondly, the noble Lord, Lord Newby, mentioned two vital areas where we could revive the economy if we were to put our minds to it. He evoked the single market—I am a single market fanatic, and am happy to say so—and he identified the single market and digital services. Why are we not in there ensuring that it happens? The message that we are giving out is our potential withdrawal from the European Union, from the world of the single market and from all that it offers. We need to hear from Ministers how they are redoubling their efforts to ensure that we are being effective with the single market, which offers the true route to improving economies and finding jobs. I was very pleased to hear a government Minister talking about the importance of trade, which is the unbidden subject in political circles. He outlined the advantages if we were to complete the Doha round to bring wonderful opportunities for British businesses, European business and industry, and worldwide trade and industry if we made the effort. I declare an interest as the parliamentary representative of the Ministerial Conference in Bali in December. Again, can we hear some more positive notes, not just from the noble Lord, Lord Newby, in this area?

The negativity about the euro really does not help. There is no need to worry colleagues because the Government say that they will not take us into the euro and we are forbidden by the very criteria that we will examine this morning. Let us consider the debt criterion which is 60% of GDP. We stand at 90%, which has gone up from the 79% when Labour left office. The deficit stands at 6.3%, which is more than double the criterion of 3%. Let us make an effort. Incidentally, while I have the Floor, I will say that Latvia will join the euro next year because it satisfies those convergence criteria; Lithuania is making its bid later. Britain, which just tells the rest of the world that we are not interested in these things, cannot do so because we do not satisfy the criteria by which any measure would be a sensible thing to accomplish in terms of running a proper and safe economy.

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The noble Lord asked about the FTT and was very pleased that the Government had started a legal challenge. I am extremely pleased that he is pleased. We note developments with every passing day. Noble Lords will have seen today that the President of the Bundesbank has engaged in this debate. There are a number of inherent flaws in the FTT that are becoming increasingly clear in those countries that have signed up for it.

[Lord Harrison]

I must say that we spotted these inherent flaws in our 2011 report and repeated them. The problem was that the Government were supine in their approach. It was only by our goading, and at the very last moment, that they began to act. The point that I make in so many of these areas is that the UK has to intervene early.

[Lord Newby]

My Lords, I am all in favour of increased early intervention in all matters European, but it is fanciful to believe that anything that the UK could have done or said at a significantly earlier stage would have stopped a very significant move in many European countries that was led by the trade union movement, which is desperately keen to get an FTT going. We have been extremely critical of it, but it is for other countries to decide. We will see how discussions go in the coming months.

The noble Lord asked about a debate to approve the basis of the national reform programme. We do not think that there is a legal obligation to debate the basis for the national reform programme, and we are not aware of any occasion on which it has been submitted for parliamentary clearance, including under the previous Government. Of course, the national reform programme does not include any material that has not previously been published and debated.

I now move to the other end of the spectrum of considerations from high economics to the question from the noble Baroness, Lady Noakes, about why there was no speakers list. I absolutely share her view, and I raised the question myself, because I would have welcomed having some sense of how many people were going to speak. I was told that, because these are Motions, it is not the normal practice of the House to do it. However, I would be very happy to take to the Procedure Committee a suggestion that we have a speakers list for this kind of debate, because I think that it would be helpful to the House.

The noble Baroness also asked why we bothered to have this debate at all, and said that we should repeal Section 5. As any Minister would say, I am sure, I can see some advantage in doing that, but it is highly unlikely that we will. The main thrust of her comments was that it was all a waste of time and why bother, not just with this debate but with getting involved in all this EU stuff. We support the European semester as a means of ensuring that what we consider to be necessary structural reforms take place across Europe, because, simply, we believe that it is in our national interests to see strong economic recovery in Europe.

The noble Baroness and a number of other noble Lords said that we placed too much emphasis on trade with Europe and not enough on trade with the rest of the world. In my view, it is not an either/or. We have about 40% of our trade going to the EU, and we cannot afford to see trade with the EU suffer. What we need to do is to see trade with the rest of the world growing strongly, as we have been doing, while, one hopes, seeing trade with Europe growing strongly as well.

The noble Lord, Lord Layard, queried whether this Government have as their overriding objective a better life for the people. I assure him that this Government do have that as their overriding objective, which is hardly surprising. I cannot agree either with his view that we should be borrowing a lot more or, indeed, with the comment of the noble Lord, Lord McFall, that the markets have turned against the Government. Last Friday, borrowing costs for the UK were 1.69%; for the US, they were 1.71%; for Italy, they were 4.22%; and for Spain they were 4.62%. For Italy and Spain, the proportion of borrowing to national income is very significantly less than it is in the UK. So I do not think that the markets have turned against the UK at all. It is only because we have a very clear deficit reduction policy that that remains the case.

The noble Lord, Lord Hollick, prayed in aid the last Chancellor, and he and other noble Lords referred to the IMF. For me there is a slight irony in this, because for most of my political career Labour politicians have been explaining why the IMF was the worst possible organisation in the world. They said that it had all the wrong priorities and had never once got it right. So it is interesting that they have changed their view. I would say only that their description of the view of the IMF is somewhat less nuanced than the view of the IMF itself. As Christine Lagarde reiterated last week, the IMF supports the UK’s policy of deficit reduction and said that the pace of consolidation was in line with the IMF’s recommendations for advanced economies.

The noble Lord, Lord Marlesford, urged us to put up the tax on petrol. We think that the arguments for freezing petrol tax in terms of its impact on small businesses, rural areas and elsewhere, are very strong, and that is why we have done it. He was also very keen that we switch our efforts to other economies than the eurozone. Of course, the significantly increased funding for UKTI will allow us to put a lot more effort into developing our exports to those new markets.

The noble Lord, Lord McFall, suggested that we should investigate the possibility of a UK digital university. That sounds an extremely sensible idea. The way in which universities are making material available free is a huge potential benefit, and the quicker that that happens the better.

The noble Lord, Lord Davies of Oldham, basically said about job creation, “Well, there may be jobs, but they are not proper jobs”. In my view, the debate about what constitutes a proper job, or a job, is a false one, because for the person who is doing it, it is a job, and they would rather have it than not. Incidentally, it is not true to say that in recent months the bulk of jobs that have been created are part time. Certainly, the latest figures that I saw suggested that there had been a reduction in part-time jobs and a significant increase in full-time jobs. I completely agree with him about skills, and the need to upskill the labour force. I point out that under this Government there has been a massive increase in the number of apprenticeships, which by common consent is the area where for many decades this country has lagged behind the rest of the developing world.

Ultimately, the return to sustainable growth is the only way for EU member states to pay down their debts and improve the way in which the single market works. The UK Government are leading the EU growth agenda and making the case for ambitious EU reform. On that basis, I am pleased to commend the Motions to the House.