UK Economy

Stephen Gethins Excerpts

Wednesday 29th June 2016 Commons Chamber

[James Cartlidge]

I am not an expert on “Erskine May”, but I understand that this slot was allocated for an Opposition day debate—[Interruption]—and there was a statement on the European summit.

I campaigned passionately for a remain vote, and I argued positively. I always set out what I thought was the positive case, but I have to say that in my view the negative case was made too often. We created a “cry wolf” situation: if we warn about some things too often, people eventually ignore us even when we are right. We must be honest and say that some of those predictions are coming true.

I believe that the country can come through this, come together and be stronger eventually, but if we are to do so, we initially have to recognise what we have lost and the strength that we have given up. The best way to look at this is to think of a very good Gwyneth Paltrow film—I do not know whether you have seen it, Madam Deputy Speaker—called “Sliding Doors”. We know what has happened: we have had the resignation of a great one nation Conservative Prime Minister; we once again, having reopened Pandora’s box, have the issue of Scotland; we undoubtedly, whatever the indices are showing, have turbulence in the financial markets; and we have profound uncertainty. The very best we can say is that we have a crisis of uncertainty. We hope that that will not be manifested as real pain in the economy, but it is quite obvious that there is a genuine risk of that and we must deal with it. As I said when I intervened on the shadow Chancellor, Fitch has issued a very serious warning of a 5% reduction in investment this year. The biggest threat is what might happen to inward investment. We must remember the current account deficit issue and the fact that the country is completely dependent on inward investment. If the big foreign firms look at this country less positively, we will pay a high price.

I mention “Sliding Doors” because if we had boarded the other tube train going to “Remainia” in the referendum —oh, how I wish that had been the case—

[Stephen Gethins (North East Fife) (SNP)]

It’s the way he tells them.

[James Cartlidge]

The hon. Gentleman has a fantastic sense of humour himself, as does his party.

If we had boarded that tube train and gone down that route, our Prime Minister would have been in post for years to come, and our stock market, our economic confidence and our currency would have strengthened. We would not have put permanently to bed but would have very strongly put to one side the two big constitutional issues of Europe and Scotland that have bedevilled our politics for so long. Instead, we have instability again.

We have to recognise that if we had remained, we would have had a very strong position, rather than all this uncertainty and weakness. For me, whatever arrangements are negotiated for the future, they must compensate for that and restore the strengths and assets that we had, not least the fact that British has historically been seen as a beacon of trust. It has been seen as a country into which people would put their life savings, and there is a profound sense around the world that we have respect for the rule of law, and that we are stable, sound and all the rest of it. At the moment, one could forgive the world for thinking that that was not the case, as certainly seems to be true in other European countries.

How do we restore those strengths? First and foremost, when we enter into negotiations, we have to decide on the principles—just as with a Bill, we have a Second Reading debate about its principles—and we need to decide on the principles of the negotiations we will have with our European partners and on the fundamentals about how we go forwards. I want to focus on three key points.

The first point is openness, to which I referred earlier. To me, one of the most extraordinary comments during the referendum was when, after concerns were raised about steel, a key figure in the leave campaign said that if we left the EU, we could unilaterally impose tariffs on Chinese steel. There may be a strong case for doing so, but that betrayed the fact that when the argument becomes nationalistic, particularly economically nationalistic, there is inevitably a threat of protectionism. We have heard many times about how Britain would negotiate good trade arrangements, and about how, since we have deficits with the EU, its members will want to trade with us—after all, look at how many cars we buy from them. Implicitly, the point was therefore that if they did not want to trade with us, we would consider protectionism.

--- Later in debate ---

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I welcome today’s debate and the tone that we have heard this afternoon. After what has been all too often a foul-mouthed debate over the past couple of months, the tone of constructive engagement and working together is very important. It is down to the leaders in this House to put the decency back into our democracy and, like many others, I was shocked to hear the statements, tweets, messages and incidents that hon. Members read out during our proceedings on the statement earlier today. We just cannot have that in this country; we are not going to have that in this country. It is a responsibility on all our shoulders to ensure that in the communities we serve we stamp it out, and we stamp it out fast.

Part of a decent democracy is that people honour their promises. Let us be honest that we have already seen promises that were made in the campaign being broken into shreds, tatters and little pieces. It is a job for all of us to hold to account the leaders of the leave campaign who made promises that now appear not to be honoured. We need to hang those promises around their necks in the months ahead because, frankly, our democracy cannot withstand too many more broken promises. The guilty men and women who made those promises must be held to account in this House.

I wanted to speak in the debate because I want to say that we need to honour the people’s decision. They have given us a stark lesson. We know how to globalise, but we do not know how to make globalisation work for the majority of voters. What I think most voters told us in the referendum is that we have become a world of very rich elites and very remote elites. People have had enough of it; they want a different settlement.

We need to move with speed in this House to set out the principles for a new special relationship with our closest neighbours. The sooner we agree those principles across the House, the better. I am glad the Chancellor set out a couple of principles, but I hope that he agrees, and that when the Chief Secretary to the Treasury winds up the debate he will agree, that we ought to have been better prepared. We were told yesterday by the Prime Minister that there is a new EU unit, yet somehow the Government have forgotten to include the Home Office in it, as if somehow immigration was not an important feature of this debate. Quite frankly, that beggars belief.

We are blessed in this House with the European Scrutiny Committee, which does a good job. It is charged with scrutinising individual instruments of EU legislation that come before us. It is, of course, chaired by that neutral and commanding figure the hon. Member for Stone (Sir William Cash). However, it is not equipped to look at the big picture nor to look at the principles that we need to agree. I therefore hope the Prime Minister will take seriously the call from Opposition Members for a new Joint Committee of both Houses to try to get to the bottom of the 6,500 instruments we might need to incorporate into UK domestic law, give or take those aspects we do not like.

Parliamentary sovereignty has just been voted on, but Parliament cannot be sovereign if Parliament is blind. We need to ensure that we are equipped in this House with a method of coming to agreement and making sure that the right plan for a new relationship is on the table.

[Stephen Gethins]

On the question of democracy and sovereignty, does the right hon. Gentleman agree that the Government, in terms of setting out their timetable for Brexit, should also set out a timetable for scrapping the House of Lords so that we do not have any more unelected bureaucrats deciding day-to-day business?

[Liam Byrne]

I am grateful to the hon. Gentleman for that intervention. I am on his side when it comes to the House of Lords. This Government’s idea of democracy is to bring forward proposals to cut the number of people in this House while increasing the number in the other place, I think by more than 200 at the last count. It makes one wonder what they are scared of when it comes to democratic decisions.

I want to touch very briefly on some of the principles that have to define the new special relationship with Europe, and we have to start with national security. Since we put in place co-operation on justice and home affairs, we have made important progress. We have good ideas, such as the European arrest warrant, and we have concerted action on sharing information relating to crime, terrorism and watch lists. Terrorists do not respect international borders and nor must the fight against terrorism. It is therefore essential that we agree to collaborate and co-operate to the maximum possible extent with our neighbours when it comes to the fight against crime and the fight against terror.

Secondly, it is clear from this vote—the hon. Member for South Suffolk (James Cartlidge) made this point well—that we will have to update the principle of free movement and replace it with a new principle of fair movement. I was the Minister for Borders and Immigration who introduced the points system for non-EU immigration into this country. During the French presidency, it became clear to me that there was an appetite across Europe for reforming the free movement directive. I said at the time that it would be a long struggle to get such reform, but the sooner we started, the sooner we would finish. Surely we now have to take that lesson and begin putting on the table serious proposals for the reform of free movement.

There are a million and one choices to make. We have to start by honouring the rights of those who are already here. We cannot retrospectively tamper with the rights of people who have already made the life-changing decision to move home. There are then questions about restrictions on low skill or high skill, how long visas should last, whether visa rights should lead to rights of settlement and citizenship, and what access to benefits should be enjoyed for taxes paid in. Of course, there is the huge question of how, as part of a new agreement on fair movement, this country steps up to its international obligations to help refugees struggling due to war in the middle east. We should be doing far more to help Europe with the burden of giving safe haven to refugees fleeing war zones and make that part and parcel of our proposals for fair movement.

Within all that, we have to be careful that we do not damage the free movement of ideas, which is why I always argue that students and scientists should be exempt. Alongside that, we must ensure that co-operation on ideas, intellectual capital and intellectual property protection are part of the new arrangements.

Thirdly, we must ensure that there is no race to the bottom on workers’ rights and human rights. It was this country, and one of our greatest Prime Ministers, that helped to found the Council of Europe. Over the decades that followed, we were among the most important authors of the European convention on human rights, and we are the proud co-authors of the European Court of Human Rights. We must ensure that there is no race to the bottom on workers’ rights, and that we do not enjoy second-class human rights in this country.

Fourthly, we obviously have to try to maximise free trade, free movement of goods and free movement of capital throughout the single market. We will need to be honest that we will pay a price for introducing restrictions on migration. We need to think carefully about what price we are prepared to pay. That is why I believe we need to introduce the minimal possible restrictions on free movement and the fewest fetters possible.

When it comes to the free movement of trade and of capital, we must ensure that our rights to tax revenue are protected. We have made progress over the past few years in ensuring that multinationals pay their fair share of tax, but heaven knows we have an awful long way to go. We know that hundreds of billions are sheltered by European companies in tax havens. We have to deepen collaboration and co-operation with Europe to ensure that people pay their fair share.

Finally, we need a big debate about sharing the burdens of our neighbourhood. Good neighbours do not shirk their duties, whether on climate change or common border protection. There will be countless other burdens regarding which Britain has to step up and say, “Yes. We are going to take on the obligations that come with sharing this part of the world.” The Prime Minister was right to say that we will not turn our back on Europe. We have to send a very clear signal that we will be not just good neighbours, but the best of neighbours.

In the debates that come, there will be an iron relationship between reform of free movement, access to the single market and the integrity of the United Kingdom. If we are to maximise the integrity of the UK and to keep our trade balance good, we have to keep changes to free movement to an absolute minimum. It would be an error to slam the door to this country closed and lose our place in the world as a great trading nation, which would inevitably lead to the unravelling of the United Kingdom.

We need great British moderation now more than ever. We must have no more pie in the sky from politicians with no intention of honouring their promises, which is why I hope this place continues to lead such debates.

--- Later in debate ---

[Stephen Gethins]

My hon. Friend makes an excellent point about the impact on EU nationals. May I remind him that it was not just vote leave campaigners who denied the vote to EU nationals and 16 and 17 year olds, but the Government who were backing remain?

[Roger Mullin]

Absolutely. I thank my hon. Friend for reminding me of that.

--- Later in debate ---

[Stephen Gethins (North East Fife) (SNP)]

May I, too, thank the Labour party for giving us the opportunity to debate this matter? The European referendum result has been debated by the European Parliament, the Welsh Assembly and the Scottish Parliament, so it was high time we had the opportunity to do so, notwithstanding the time the Prime Minister has given us in his statement. As always, it is a privilege to follow my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford), as well as my hon. Friend—and neighbour—the Member for Kirkcaldy and Cowdenbeath (Roger Mullin).

The decision that has been made will have a huge impact on Scotland. My hon. Friend the Member for Kirkcaldy and Cowdenbeath mentioned research. In my constituency, I have the University of St Andrews, which has argued that for every £1 of Scottish Funding Council grant it receives, it returns £12 pounds to our economy. To turn that on its head, for every £1 that St Andrews loses, Scotland will lose £12. That has a significant impact on the economy locally.

I speak from personal experience, as somebody who benefited from the right to live and work in the European Union, and as somebody who benefited from Erasmus. I know the opportunities that that gave me and the opportunities that young people are now missing out on, and I wonder whether the Government will reflect on the training and educational opportunities that will be lost to not only individuals but the broader economy.

It is worth remembering, on a question of democracy, that Scotland voted overwhelmingly to remain part of the European Union. If we take the electoral regions throughout the United Kingdom, we find that the highest proportion for any side—remain or leave—was the 62% gained in Scotland, with every single local authority area voting remain, including the two that voted not to join back in 1975. That was a phenomenal mark of support for European Union membership, and one that it would be ill-advised to ignore.

On the point about democracy—I made this point to the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) earlier, but it is important—this place will gain powers and responsibilities, and it will have more say over the day-to-day lives of our citizens. So why—I would be delighted if anybody can tell me this—do we maintain the unelected affront to democracy that is the House of Lords when Vote Leave argues on a point of democracy? It is a disgrace.

Given the issue of stability, which is so important for the economy, and the huge uncertainty around Scotland remaining part of the United Kingdom, I am delighted that over the past few days the Scottish Government have shown a huge amount of leadership. I pay tribute to the Scottish Government, who, it would appear, represent the only functioning party of Government left in the United Kingdom. The vacuum that has been left by the Conservative party and the Labour party, which is reflected in this Chamber right now, is doing no credit to this place whatsoever. What is more, just as the people of Scotland are being well served by the Scottish Government, the people of England are being ill served by their two biggest parties. The people of England—who have made their decision, and we respect that—deserve much more than they are receiving at the moment.

Let me say more broadly—my hon. Friend the Member for Kirkcaldy and Cowdenbeath has worked very hard on this—that we have a rich heritage of European citizens who have made their lives and their homes in the United Kingdom. European citizens have made, and continue to make, a huge contribution in my constituency. They enrich our economy, and they enrich our society more broadly as well. I wish that more leading politicians had said what the First Minister of Scotland said:

“I want to take the opportunity this morning”—

the morning after the referendum—

“to speak directly to citizens of other European countries living in Scotland—you remain welcome here, Scotland is your home and your contribution is valued.”

We all need to repeat that over the coming weeks and months.

[Callum McCaig]

As other hon. Members have said, there is no impediment against this Government—indeed, this House—making a positive statement about the rights of those EU citizens, whom we value and who make an unbelievable contribution to our communities. That can and should be done. We need to press all those seeking the Tory leadership on this. If they all unite on it before going through the rigmarole of electing a new leader, we can end this uncertainty, which must be unbearable for these people.

[Stephen Gethins]

My hon. Friend, as usual, makes an excellent point. We should have some commonality of purpose, and a few more people should repeat that, because of the richness that these people bring to our society—the Scots Germans, the Scots Irish, who would include my family many, many years ago—[Interruption.] And the Scots Australians as well. We are a richer country for it. If the leadership contenders, in no matter which part of the House, could make that commitment, it would be valuable to these people, and to us.

Things have changed, and changed utterly. Over the past few days in Scotland, a number of people who voted no in the independence referendum are coming round to the idea of independence—or certainly coming round to the idea of working together to maintain Scotland’s place in the European Union. I give credit to members of the Labour party, the Liberal Democrats and the Green party who are working with the SNP in the Scottish Parliament to maintain Scotland’s place in the European Union. It is interesting that the Scottish Liberal Democrats have now been reported as urging their party to support independence and drop their opposition to it. Henry McLeish, the former Labour First Minister, has said that he is “very, very attracted” to independence and it is a “game changer”.

Outwith domestic politics, internationally and from a European perspective, we are seeing welcome support from people such as Guy Verhofstadt, the former Belgian Prime Minister, who has said:

“it’s wrong that Scotland might be taken out of the EU”

against its will. Manfred Weber, the leader of the European People’s party, has said:

“Europe is open to new member states…Those who want to stay”—

and we are staying—

“are welcome”.

I pay credit to Micheál Martin, who thinks that, as an issue of fairness,

“Ireland ought to be”

our

“friend and demand fair play”.

I welcome all those comments from our European friends and allies.

Historically, and as a matter of fact, Scotland may be on the geographical periphery of Europe, but we sit at Europe’s heart politically, and that is where we want to stay and will stay.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

It is a pleasure to be debating with the Chief Secretary to the Treasury in the first of what I hope will be many such debates. I thank the Chancellor, who is no longer in the Chamber, for his kind words.

There have been some fantastic speeches in this debate, and I want to run through some of the main issues that have been raised. The hon. Member for Dundee East (Stewart Hosie) highlighted concerns about the leave campaign’s lack of a plan. The hon. Member for South Suffolk (James Cartlidge) stated that, sadly, some of the remain campaign’s predictions were coming true. I welcome the fact that he echoed the sentiments about a cross-party approach. He said that this is bigger than any leader, and it certainly is.

My right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), whose comments I welcome, stated that he wanted to put decency back into democracy. The hon. Member for Thirsk and Malton (Kevin Hollinrake) feared for the international house of cards that Britain’s exit could cause to collapse. My hon. Friend the Member for Ilford North (Wes Streeting), who made a fantastic speech, echoed the risks that jobs would be moved, that communities in deprived areas would struggle to obtain investment, and that “Project Fear” would prove to be “Project Fact”. The hon. Member for Bexhill and Battle (Huw Merriman) said:

“We are where we are and…we…have to lead from the front”.

I could not agree more.

The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) told us the terrible and harrowing story of his constituents who have left to go to France following the result of the European referendum—we hope that we can coax them back again—and he highlighted the problems faced by SMEs in trade. The hon. Member for Ross, Skye and Lochaber (Ian Blackford) made a very passionate speech. He stated that we should not kick the legs from under stability and highlighted the fact that falling markets affect the pensions of everyone. Finally, the hon. Member for North East Fife (Stephen Gethins) echoed the comments about how people from the EU have enriched his local economy. He wanted to state that their contribution was valued, a sentiment that is certainly shared by Members on both sides of the House.

As my hon. Friend the shadow Chancellor outlined in opening the debate, the decision to leave the EU poses considerable risks to the UK economy. The financial markets are in turmoil, sterling remains volatile, the UK’s triple A credit rating has been lost, and employers in some sectors have already started to discuss moving jobs out of Britain. This is very worrying, but we can turn it around. To do so, we need political and economic stability. We now need all parties to put their political interests aside and work together in the interest of their nation’s economy. I have enjoyed the tone of today’s debate, which has been broadly in agreement with that sentiment.

[Stephen Gethins]

I thank the hon. Lady for her comments. Will she join me in welcoming the fact that the Labour party, the Liberal Democrats and the Green party in Scotland have given the Scottish Government a mandate to negotiate with the European Union about Scotland’s continued membership of the EU, given the overwhelming vote?

[Rebecca Long Bailey]

I think that is really an issue for the Scottish Government. I am sure it will be the subject of many debates in the coming weeks, and I hope we will debate it further in this House.

On where we are now, I do not share the Chancellor’s assurances that our economy is now shockproof. He did not fix the roof while the sun was shining—quite the opposite: he sold it off. The growth we have heard about is largely built on a swelling bubble of household borrowing and an increase in poorly paid, insecure jobs. I was pleased to hear that his emergency Budget has been shelved for the time being. However, there remains a high probability that austerity measures will be introduced later in the year, imposed by a new Conservative Prime Minister who could be even more ideologically to the right than his or her predecessor. Such an approach, based on cuts and under-investment, has taken hold despite the fact that economists the world over agree that it is economic nonsense to cut Government spending when the economy may be heading towards recession. The most vulnerable will suffer, and our communities will snap under the strain of further public sector cuts. Quite frankly, people cannot take any more.

It is not hard to understand some of the reasons why vast swathes of people in this country voted so passionately in last week’s referendum—it is no wonder that people were angry with the political elite when their financial situations have worsened rather than improved. On doorsteps in my constituency, which has suffered from decades of industrial decline, I could feel the anger from those who have been left behind. They were right to be angry—angry that our hospitals and schools are in a state of crisis and starved of funding; angry that many people cannot get a home; and angry that our public services are being cut so that the safety net on which they rely is eroded. People rightly wanted something or someone to blame for that, but sadly that was confused in the rhetoric of some of the referendum campaigns. A hornets nest was stirred up with scaremongering about migration, rather than a debate on the core issue of why our economy was not working and how the EU affected that.

We must ensure that migrants living in Britain know that they are welcome, especially in the light of the racist attacks and abuse that have been reported since the referendum. I wholeheartedly echo the Chancellor’s comments that such behaviour is not British—that is not what makes Britain the great nation it is. Such disillusionment with the political establishment took root long before the EU referendum, and 1979—the year I was born—heralded the biggest change in economic thought that the country has ever seen. British manufacturing, and the secure well-paid jobs that came with it, was the envy of the world, but it had its heart and soul ripped out. In many cases manufacturing was moved overseas to cheaper labour markets, and the jobs lost were never really replaced. Communities around the country were destroyed, leaving future generations to pick up the pieces.

Following such decline there has been a failure to restructure our economy, to develop an industrial strategy to support key industries, and to make our country great. However, we are where we are, and whether people voted leave or remain, it falls on us in this House to build a country of which the British people can be proud and in which they feel safe. We need a plan to rebalance our economy and support our key industries—a proper industrial strategy to provide the secure jobs that we so desperately need, and Government investment in our economy so we can become the innovators of the world, with priority investment in those communities that have been economically neglected for years.

All Members of the House must fight for and support our economy and the people in it. The economic outlook for the UK is uncertain, and we are facing turbulent political times. As my hon. Friend the shadow Chancellor emphasised earlier, there are strengths in our economy, but we must nurture and support them at this vital time. If we do not, the future looks bleak. Labour is willing to work across the House to ensure that the people of this country are protected from whatever is to come, and we are committed to delivering an economic agenda that promotes Britain and British industry. Let us be the envy of the world once again.

[The Chief Secretary to the Treasury (Greg Hands)]

I thank the Opposition for tabling this motion and giving the House the opportunity to reflect on the momentous events of the past week. I also congratulate the hon. Member for Salford and Eccles (Rebecca Long Bailey) on her meteoric promotion to the shadow Cabinet. My right hon. Friend the Chancellor has already congratulated her, but I thought it worth repeating in case there have been any further changes in the past three hours. In all seriousness, I welcome her to her role, and I wish her good fortune in what could be a difficult time in the Labour party.

It is two weeks to the day since we last gathered in the Chamber to debate whether it was in our best interest to stay in the EU, or whether to plot our own course ahead—indeed, I had the last word for the Government in that debate, but we have seen what can happen in two weeks. I said that although I believed the EU needed reform we were better off in. Many hon. Members on both sides of the House spoke in support of that view, just as others—again, on both sides of the House—put the case to leave. That is the mark of a good democracy. With such a big decision about our future, it was right that the ultimate choice was for the people who make this country what it is. In the past few months and years, this has not been a question confined to the halls of Westminster. It is one that has been debated in homes and streets, on the way to school and on the way to work.

Last Thursday, we braved a typical British summer in large numbers to each have our own say on the question. That is the mark of a healthy democracy. Now we have made the collective choice to leave the European Union, countries around the world will see at least that Britain has a Government who listen to the direction its people set and plot their course accordingly. I am sure my hon. Friends will agree that that is the mark of a true democracy.

[Stephen Gethins]

On the mark of a true democracy—I made this point earlier—does the Minister agree that we should have a timetable to scrap the House of Lords, given the vote about democracy?

[Greg Hands]

This may come as news to the hon. Gentleman—he was not here in the previous Parliament, although some of his SNP colleagues were—but we had a very extensive set of debates, including a number of votes, on the future of the House of Lords. I do not think that, at this time of great interest in the nation’s constitutional affairs, another debate about the future of the House of Lords would be sensible.

We heard some very good speeches, including from my hon. Friend the Member for South Suffolk (James Cartlidge). I agree with him that it is no use going back to what might have happened. We need to move forward in reasserting our strengths as a nation and as an economy. I could not agree with him more that we need to continue with a fiscally prudent regime and build a surplus before the end of this Parliament.