European Communities (Amendment) Act 1993

Lord Lea of Crondall Excerpts

Wednesday 25th April 2012 Lords Chamber

There is nothing to support the Government’s view in theory or in empirical evidence. It really is time to rethink and, I would say, to go back to the elementary textbooks.

[Lord Lea of Crondall]

My Lords, like the noble Lord, Lord Stoddart, I have not failed to notice the empty Benches opposite. I think that the view of members of the Conservative Party is that they do not need to worry about things such as this because they do not support the Maastricht treaty and perhaps do not support the present economic policy of the Government, although they have not been able to produce anybody to say so tonight.

Contrary to what the noble Lord, Lord Stoddart, said, I have no doubt that the Minister will have no difficulty at all in waving aside all the points made from this side with his Etonian insouciance. It is obviously tempting to have a vote, but I think, on balance, the fact is that for many years—10 or 15—we have been committed to this procedure and Labour Governments, as well as Conservative Governments, have thought it right to make a proper contribution to the debate about the EU stability and growth pact. That includes the input of the social partners, the trade unions and employers. That has been to the good.

On this occasion, I think that the future environment of the stability and growth pact is a big question, and I am surprised that the Treasury, with its excellent syntax and arithmetic, has not addressed any of the bigger issues which confront us at what I think is the end of one chapter in Europe and the opening of a new one.

I am referring, among other things, to the fact that we have a presidential election in France. As the Prime Minister said that he supports President Sarkozy, I will take this opportunity to give my maximum support to our comrade over the other side, François Hollande, and wish him well in 12 days’ time, or whatever it is. I shall sketch out a hypothetical scenario to which the Treasury should pay some attention. If and when President Hollande is in place and has his first meeting, as he will, with Chancellor Angela Merkel and they reach some agreements and then, one way or another, our Prime Minister meets him in Paris or London, what is he going to say? Is he going to say, “Bingo, the French and the Germans have reached a good agreement”? Have we nothing to contribute to their implicit complete relook at the stability and growth pact? Of course, there is not a word in this document, but I do not know whether any thinking is going on in the Treasury at all. I do not think that it has had any green light from Mr Osborne to do any such thinking, but it had better start in the next 10 days.

Where do we start from? The position of the incoming President Hollande, to take that hypothesis, would be—as he has said pretty consistently—not to undermine the fiscal pact but to but to add a big dimension of growth to the stability and growth pact. So this is the time to examine how on earth they would, without some highly innovative banking ideas, square the circle of getting out of a general slump. It is different from when the Maastricht treaty was created. We were there at its creation and there was a relatively good level of employment. At that phase of the economic cycle, with the underlying position at that stage, it was not unreasonable to have the figure of 3 per cent. By the way, there was a quite separate debate as to whether Greece should not have been treated much more stringently in inquiring about its position when it joined the euro. Allow me to say that that discussion has got totally mixed up with our discussion now, although in principle it is not central to it.

The circle is impossible to square unless we recognise that the arithmetic entails at least 4 per cent economic growth in Europe per annum for a few years to get the 2 per cent underlying growth of productive potential. That is to do with new technology, productivity, science and so on. I have no reason to believe that in Europe generally, one should put the underlying productive potential at less than 2 per cent growth per annum.

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[Lord De Mauley]

My Lords, I am sure that both noble Lords have a point.

[Lord Lea of Crondall]

Is it not absolutely clear that the funds directly being disbursed in Brussels by the Brussels bureaucracy, as is often said, are the funds that have a clean bill of health in the auditing? It is the funds down to the nation states that are the reason why the auditors cannot sign off all these accounts. It is as simple as that.

[Lord De Mauley]

My Lords, I am not going to enter into this discussion any further.

The noble Lord, Lord Davies of Stamford, talked about the general anti-avoidance rule. I am not sure it is entirely relevant to this debate, but I can say that the Government will consult on the GAAR in summer 2012 with a view to bringing forward legislation in the Finance Bill 2013. A targeted GAAR is the right solution to tackle the persistent problem of artificial and abusive tax-avoidance schemes. I will take the noble Lord’s specific points back to the Treasury and write to him on them.

In an amusing speech, the noble Lord, Lord Myners, referred to, among other things, IMF and OECD support. The IMF and the OECD support the Government’s policy. The IMF’s Madame Christine Lagarde said that under the current circumstances the policy in place is the “right thing to do”, and the OECD Secretary-General said on our Budget 2012:

“The Budget announced today is another important step towards a sound fiscal position for the United Kingdom. The confirmation of the UK’s fiscal consolidation programme should keep bond yields low and support the recovery”.