Queen’s Speech

Lord Monks Excerpts

Monday 13th May 2013 Lords Chamber

[Lord Monks]

My Lords, I, too, will address the long-term prospects for the economy, as well as the relationship with the European Union. I am pleased to be able to follow the noble Lord, Lord Tugendhat, who has expressed some very wise words from the Conservative Benches, words that I hope will be heard loudly in that party as the frenzied debate seems to be kicking off again in such a vigorous way.

Before the crash of 2008, only a few of us warned of the excesses of what we termed “casino capitalism” in the financial services industry. These excesses, as we now know, were not even properly understood by many of those in the financial services sector themselves, including many at the top of our greatest banks. We know the consequences: the bank problem became the problem of the nation states, and the consequences of austerity which have resulted need not have been as severe as they have been, as was well spelt out by my noble friend Lord Eatwell. However, the consequences are plain. As Francis O’Grady, the new general secretary of the TUC, said recently:

“The victims continue to be those who did least to cause it”.

Spending cuts are weakening vital services. Austerity rolls back gains in equality, and real pay levels, for most, are falling. Our performance on exports, as the noble Lord, Lord Tugendhat, just spelt out, continues to be unimpressive, and contrasts with our neighbours—not just Germany but our neighbours on the other side of the North Sea.

Apart from the noble Lord, Lord Heseltine, and, on a good day, the Business Secretary, no one on the Government side seems to show the urgency and energy that is necessary to tackle the mess we are in and to rebalance our economy more in the direction of the other side of the North Sea. As the Business Secretary said in the equivalent debate in the other place last Friday, there are no easy answers. However, there are some wrong answers, and these include a slavish belief in deregulation and in scapegoating the European Union for our difficulties. I ask, as my noble friend Lord Glasman did recently in an article in the New Statesman, why Germany is doing comparatively well. It has the highest level of workforce participation in its governance; it has the greatest degree of regulation of labour market entry through insistence on high-class vocational qualifications; and it has the most severe constraints on capital in its banking system. How can that be? The orthodoxy practised on the other side of the House is that you grow by deregulating, reducing workers’ rights and cutting some standards. The Queen’s Speech mentioned extra proposals in that direction. The German example is not being followed. We should go for the high road and not seek some kind of low road to growth. I looked in vain in the gracious Speech for evidence that the noble Lord, Lord Heseltine, or the Business Secretary had had a decisive influence on the Government’s programme, but I found little trace of anything other than the deregulation of employment tribunals and a further weakening of health and safety standards.

If there is a distressing lack of energy and application to the problem of rebalancing the British economy, there is no lack of energy in the debate in the Conservative Party about our relationship with the European Union. I note with great concern that scepticism is rapidly turning to phobia. Our problems are being presented as the EU’s fault—not just by eccentrics but by people who are much respected in the affairs of this nation. The call for divorce from the EU risks becoming a Tory stampede for the exit. I was pleased to see, as the noble Lord, Lord Tugendhat, mentioned, Boris Johnson partially taking on this case in today’s Telegraph and—rather bravely given the current mood—arguing that the UK will have to recognise that most of our problems are not caused by the European Union. For once, I find myself in agreement with him.

It is not the EU’s fault that we do not have a better record of export to the rest of the world, or to the EU itself. They are not alternatives. To compare the single market with a comfort zone akin to pre-war imperial preference is surely wrong. I wish that there had been a fixation among more British businesses on exports to the EU, or indeed to anywhere else. However, too many of our businesses did not have sufficient motivation, expertise or whatever to do the job. We cannot blame others for that; we must look inside ourselves. Neither is it the EU’s fault that much of what remains of the UK’s manufacturing is overseas owned, with the car industry the prime but far from the only example. Many of those owners are here only because of our EU membership. Ignoring this would be a huge national risk that certain metropolitans, or even expatriates, seem to be ignoring at present. Those of us from the weaker regions know exactly what is at stake.

Why would we want to loosen our ties with our neighbours, especially when we rely so much on inward investment and overseas ownership? A very dangerous vision is developing of a Britain that is somehow offshore, with low tax, low regulation, low benefits and low standards, but able with impunity to go around the world undercutting the standards of the best and thinking that we will get access to their markets. If you think that occasionally there are problems with the single market, which there are, and that occasionally there are obstructions to the way trade operates in Europe, as there can be, you should listen to the stories of people who trade with the rest of the world. There, protection is the norm and not the exception. Businesses that export all say that the difficulties of breaking into markets, including the Commonwealth and the United States, are on a pretty large scale.

We on this side of the House, and many elsewhere, will do our utmost to keep us from becoming a sort of Greater Monaco, seeking that low road to the future. Presenting the EU as the enemy, which the noble Lord, Lord Forsyth, seemed to do, is ridiculous and over the top. There are many problems to iron out in future, but that is not the way to do it. It is not in Britain’s interests to follow that route even a little way, and I hope that the Conservative Party will come to its senses as quickly as possible.