Remuneration of EU Staff
Stephen Phillips Excerpts(12 years, 9 months ago)
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Jacob Rees-Mogg (North East Somerset) (Con)
The exemption clause states:
“If there is a serious and sudden deterioration in the economic and social situation within the Community, assessed in the light of objective data supplied for this purpose by the Commission, the latter shall submit appropriate proposals on which the Council shall act in accordance with the procedure laid down in Article 283 of the EC Treaty”,
which has subsequently changed. The EU has decided that there has never been such an exception, even though we have been through the most extraordinary economic crisis in the past few years.
Yesterday, European Committee B discussed a Commission document that states:
“EU economic growth is faltering. In the euro area, this is exacerbated by the sovereign debt crisis and fragilities in the banking sector. These have created a dangerous feedback loop.”
The Commission says that the economy faces a crisis and that it is in a “dangerous feedback loop” but that there is no reason on earth why it should consider the salaries that it and others who work within EU institutions are paid.
The Minister has said that the economic situation in this country is serious enough for a freeze in public pay, and we know that the EU prescription for Greece and other countries that face economic crisis is austerity and pay cuts, but when it comes to the EU institutions, the situation is different—they say there is no real crisis or problem, and no exceptional circumstances, and that they must therefore carry on regardless. Can that possibly be a proper, moral or respectable way for an international body to proceed?
What can the Government do about it? So far, they have rightly pointed out to the Commission that they think the circumstances are exceptional and have tried to persuade it to change the basis for raising salaries, but the Commission has refused, with the backing of the European Court of Justice, which I shall come to in a moment.
The Government could, however, take another action. Under article 336 of the treaty on the functioning of the European Union, Governments are entitled to change the employment terms of people employed by EU institutions. If those terms are changed, the exceptional circumstances clause could be removed or changed—the whole basis for pay increases could be changed. That is where the Government ought to start. They should say to other member states that the employment terms and conditions no longer apply and are no longer relevant for the circumstances that we face. They can do so even if the Commission objects—that is in the treaty.
On the Court, in 2009 the Council instructed the Commission to use the exceptional circumstances clause. The Commission took the council to court and won the judgment of the EU in case C-40/10. The Court held that exceptional circumstances did not exist, and therefore overrode what the Council had done and reinstated the Commission’s proposals, which was interesting. When I raised the point with a lawyer, and said, “Well, what about the judges themselves? How are they paid?” the lawyer said, “It is inconceivable—inconceivable!—that the judges themselves could be beneficiaries of the scheme on which they had ruled.” I said, “It may be inconceivable, but is it possible to find out?”
A parliamentary answer from Lord Malloch-Brown, the then Foreign Office Minister, to a question from Lord Lester of Herne Hill, was helpful in that regard. Lord Malloch-Brown states:
“The terms and conditions for judges and advocates-general of the European Court of Justice…are set out in European Communities staff regulations.”—[Official Report, House of Lords, 18 June 2008; Vol. 702, c. WA166.]
The staff regulations are subject to the system whereby the terms and conditions may be changed in exceptional circumstances. I therefore looked at the regulations, thinking once again that it surely cannot be true that the EU—an institution that might not be liked and loved by many, but that is thought to understand basic principles of justice—has a situation in which judges decide on their own pay rise.
I therefore looked through “Title 1: General provisions”, article 1(21)(73)(96), which sounds very scientific. The provision states:
“These Staff Regulations shall apply to officials of the Communities.”
The document goes on to state:
“For the purposes of these Staff Regulations, ‘official of the Communities’ means any person who has been appointed, as provided for in these Staff Regulations, to an established post on the staff of one of the institutions of the Communities”.
The next step was to check what exactly are the institutions of the EU, because I still could not believe that there was such an affront to justice within the EU. I would have been very surprised had the European Court of Justice turned out to be such an institution, but when I looked at article 13 of the treaty on the functioning of the European Union, I found that the Court of Justice of the European Union, as it is properly called, is indeed one of the institutions of the EU. And yet according to the Commission, the Court’s judges had ruled so clearly that exceptional circumstances did not exist.
Stephen Phillips
I may or may not be the lawyer who described the idea that judges could be beneficiaries of a scheme on which they had ruled idea as “inconceivable”, but does my hon. Friend agree that if true, far from being inconceivable, it is utterly disgraceful?
Jacob Rees-Mogg
I am grateful to my hon. and learned Friend, because he gave me time to find the right quotation in my papers, which shows that he is even wiser and more helpful than I had thought. The Commission says that the Court found, in paragraph 74 of its judgment, that an extraordinary situation did not exist, and that it must enable
“account to be taken of the consequences of a deterioration in the economic and social situation which is both serious and sudden…under the normal method”.
The decision was that the economic and social situation was not serious and sudden enough.
Sammy Wilson
That is quite right. Any objective observer is bound to be angry about the fact that there seems to be one set of rules for those cosseted within the structures of the EU, and another for the millions ruled by them and on whom it imposes its wishes. Social disorder is now appearing on the streets of Greece, Italy and other European countries. One can understand why people are angry at the imposition of rules by people who seem totally out of touch and by institutions that, as the hon. Member for North East Somerset clearly explained, are so incestuous in their decision making—they collaborate with each other, supporting one layer of the institution with another layer—so we are bound to get the kind of reaction we have seen.
Stephen Phillips
The hon. Gentleman says that the institutions of the EU are out of touch, but of course, in the case of judges, they are also unelected and, it would seem, unanswerable to anybody. Does he agree?
Sammy Wilson
That is one reason why we get the kind of decisions we get from EU judges—whether they are about whom we can deport from the UK or about pay structures for EU civil servants.
Some will say that those who take my stance simply want to have a go at Europe. I have absolutely no hesitation in saying that I am a member of the Better Off Out group. I believe that we ought to loosen our ties with the EU so that it is what was originally intended—a free trade area, not a political entity. But I want to leave my political views aside for a moment. I am pleased that the Prime Minister has taken the stance that he has in recent days on Europe, and I hope that he does not weaken it. I hope that he keeps the strong backbone that he has shown. However, one way of hurting the EU is for us to say, “We’re not prepared to finance this grotesque behaviour in the face of the austerity affecting all the EU nations.”
Financial Services Bill
Stephen Phillips Excerpts(12 years, 9 months ago)
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Matthew Hancock (West Suffolk) (Con)
It is a pleasure to follow the hon. Member for Walthamstow (Stella Creasy). She speaks with passion and determination about consumer credit issues.
We have heard much about consumer credit and accountability, and, indeed, about culpability for what went wrong. Those are important questions, but I want to concentrate on the substance of the Bill and its impact on financial and economic stability. We did not hear much from the Opposition Front-Bench spokesperson about the question of substance, but I think this Bill is one of the Government’s most important pieces of legislation so far. It is an attempt to draw the right lessons from the economic crisis, and to set out a regulatory structure that will last for years to come. I am therefore very pleased that the debate has taken place almost entirely—almost, I repeat—in a spirit of constructive criticism.
It is said that the next financial crisis occurs when the last person to witness the previous crash retires. I hope that that will be a long time from now—and I also hope that that last person may be sitting here in the Chamber today. It is important that there is a long time frame, because the Bill must be right not only when memory of the recent crash is vivid, but when the boom is booming again and once more people are saying, “This time it’s different.” Our aim must be to embed a culture of responsibility into the big balance-sheet banks, while also encouraging and supporting the broad multitude of smaller, energetic, innovating, enterprising, exporting, wealth-producing, vitality-bringing, tax-paying City firms and companies that are not underwritten by the taxpayer and that make up the vast majority of firms in the City—and that ensure that our financial services industry leads the world.
Before turning to the substance of the Bill, however, I want to deal with the two questions that have dominated the media debate: accountability and culpability. To those concerned about accountability, I add only the following few comments to the long exchanges that have already taken place. The Bill represents an important step forward. At present, the Governor of the Bank of England reigns imperial on questions of financial stability. Executive action is vested in him and him alone. By creating the Financial Policy Committee, the Bill ensures that the Governor will be the chairman of a powerful committee, but instead of his being imperial, a committee decision will carry the day.
On the question of culpability, I do not know whether the Opposition admitted that they got things wrong, but it falls to us to learn the lessons from the failures, as well as the successes, of the past. My central argument on this question is as follows. Our financial system is complex, ever-changing and interconnected. We must therefore treat it as a system and understand the human behaviour of the people in it, rather than treat it like a textbook.
First, instead of segregating the regulation of the banks from the management of the economy as a whole, as the tripartite system tried to do, we must treat them as one part of the whole system. The attempt to turn the Bank of England into a monetary authority and to leave the FSA as a micro-regulator was bound to fail because no one was in charge of the size of bank balance sheets not only in the bust—as we well know—but in the boom, too. Monetary policy works through the banking system. Banks create money and transmit interest rates to the wider economy. As finance and money are deeply intertwined, their regulation must also be intertwined. That is the first lesson to be learned from the crisis, and this Bill addresses that point.
The second lesson is not about who regulates; it is about how they regulate. The debate about whether there was too much or too little regulation is sterile and defies the facts. Instead, we should be seeking the right regulation. Between 2001 and 2008 the number of pages in the Financial Services Authority rulebook increased from 2,700 to 9,300, yet, as we know from the report into the failure of RBS, not a single FSA rule was broken at RBS. There are some vivid examples of the FSA’s box-ticking mentality. In 2006 the FSA noticed that certain financial institutions were conducting biased stress tests on their balance sheet strength. In 2004 the FSA identified Fred Goodwin’s management style as a risk for RBS, yet nothing was done. No one was held to account. The FSA also failed to regulate balance sheets or check that business models were sustainable. There were 9,000 pages of rules, therefore, but there was no view on the sustainability of the business models of banks. In fact, FSA chiefs hardly ever met senior management. The FSA had meetings with Northern Rock’s senior management eight times in the two years before the crash. Two of those interviews were conducted by phone, while five of them took place on the same day. In 2007 when Northern Rock went bust, it was on the at-risk register but the next set of meetings between its senior management and the FSA was scheduled for two years later, in 2009. The pendulum between sticking to the rulebook and allowing the authorities to exercise discretion had swung to the extreme end of using the rulebook and leaving no room for judgment.
Stephen Phillips (Sleaford and North Hykeham) (Con)
My hon. Friend is making a powerful case. Does he agree that a key point is that flexibility is required for effective regulation of the financial services sector, and that one of the problems with the previous regulatory system was that the monolith that was the FSA simply imposed more and more rules without there being the flexibility to be able to tailor the rules to the circumstances?
Matthew Hancock
That is absolutely right, and I should also pay tribute to my hon. and learned Friend’s profession outside this House, because, as in the common law, every successful system of oversight that has stood the test of time allows room for both rules and judgment. The common law is an example of a system that has built up over time and that understands the complexities of human behaviour. It has strict rules in some regards, but it also allows the exercise of judgment in order to be able to adapt to modernity and circumstances. If we move entirely towards rules and away from the exercise of any judgment, we take away that ability to adapt.
Sovereign Grant Bill
Stephen Phillips Excerpts(13 years, 4 months ago)
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The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
Is the hon. Member for Gainsborough (Mr Leigh) giving way, or has he sat down?
Stephen Phillips
I am not sure that I have ever been desperate to get into anything. I think it was in 2005, when my hon. Friend was the Chairman of the Public Accounts Committee, that the Committee published a report, which he will probably remember, that drew attention to a potential conflict of interest between the Duke of Cornwall and future Dukes of Cornwall. That is not addressed at all in the Bill. Does he share my hope that my right hon. Friend the Chancellor of the Exchequer will deal with that point in his wind-up, and that the Government will look at the issue in future?
Mr Leigh
That is a serious and important point. We have had mention of the Duchy of Cornwall; I should say that we did some trailblazing work in our hearing about the duchy. The hon. Member for Glasgow South West will remember that we ranged widely over all aspects of its management. One of the issues that we raised was whether we should maximise resources—income and capital—for the present Duke of Cornwall, or for future generations. I hope that the Chancellor can also reply to that point when he winds up.
Oral Answers to Questions
Stephen Phillips Excerpts(13 years, 8 months ago)
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Danny Alexander
We are sticking to the spending plans that we set out in the spending review, and that is the right thing to do. Of course I understand that inflation has an effect on people’s living standards, which is why it is particularly important to emphasise the increase in the personal income tax threshold—£1,000 extra on the threshold—that comes into force this April, which will put £200 back into the pockets of hard-working people in this country. That is the action this Government are taking to help people through these difficult times.
Stephen Phillips (Sleaford and North Hykeham) (Con)
10. By what date he expects revenue to the Exchequer to match levels of public expenditure.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Excluding capital expenditure, the Office for Budget Responsibility forecasts revenue to exceed current expenditure by 2015-16. This is further evidence that this Government believe that the country should live within its means.
Stephen Phillips
I am grateful to my hon. Friend for that answer. The shadow Chancellor was reported as saying in Saturday’s The Daily Telegraph:
“The idea that Labour profligacy caused the crisis is utter tosh.”
Does my hon. Friend agree that the only tosh to be seen in that statement is the suggestion that Labour had not created the mess we are in? Is it not the case, as the CBI has said, that the previous Government’s target of balancing the budget by 2018 was set too far off to—
Mr Speaker
Order. We are asking about current policy, and some of these questions are simply—[Interruption.] Order. We have got the gist.
Fuel Costs
Stephen Phillips Excerpts(13 years, 9 months ago)
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Stephen Phillips (Sleaford and North Hykeham) (Con)
This has been an interesting debate for a number of reasons. However, I begin by apologising to the hon. Member for Dundee East (Stewart Hosie) for missing the opening part of his remarks in introducing the debate.
The issue of fuel costs touches not only those living in regions that the devolved Administrations are largely responsible for governing, but many rural constituencies across the country, and certainly my constituents and members of the public across Lincolnshire. The reason is that it costs—and has done for a long time—a great deal of money to run a car, given the current fuel prices. However, a car is not a luxury to my constituents and people living not only in Wales, Scotland and Northern Ireland but in rural parts of England. In those places, a car is a necessity. Owing to the state of public transport, people cannot live their lives without at least one car—certainly, they could not do so without great difficulty.
Much of my constituency is made up of rural areas dotted with small villages and farms, which means that I live in a beautiful part of the country. However, it also means that it takes a great deal of time to get to the doctor’s, the supermarket or anywhere else that one needs to get to in order to live one’s ordinary life. Public transport has got worse over the past few years, and will continue to get worse owing to the state of the deficit left by the previous Government and the need for this Government to deal with it. That will not be conducive to better public transport over the next few years, and will exacerbate the problems caused by high fuel prices.
I would like to echo a point made by the Economic Secretary. The Labour Government left us with the worst possible fiscal position. The simple fact is that we are paying debt interest of £120 million a day in circumstances where 1p on fuel raises only £500 million. It does not take a very good mathematician to work out that were we not paying that debt, we would not need the level of fuel duty or VAT that we do—with all that that has meant for the current fuel crisis. I heard no apology in the remarks of the hon. Member for Bristol East (Kerry McCarthy) or explanation of why we have been left with this debt legacy and of what it means, in the context of this debate, for my constituents and others all over rural Britain who are paying the price for the previous Government’s failure, inter alia, through the cost of fuel.
Guy Opperman (Hexham) (Con)
Does my hon. and learned Friend think that it was right for the leader of the Labour party to indicate that he would not have implemented the previous two fuel rises in the current circumstances?
Stephen Phillips
I have not seen the comments made by the right hon. Member for Doncaster North (Edward Miliband). However, he was at the heart of the previous Administration, with all that that meant for the legacy inherited by this Government. Whatever opportunism Labour Members pursued—we saw it last week during the forestry debate from a party that sold off 25,000 acres of forest without any guarantees of rights of public access—we understand that it is the duty of the Opposition to oppose. However, I do not understand many of his policies, and I do not expect that I understand this one any better than any of the others.
We have heard about two mechanisms that might serve to address some of the difficulties associated with current high fuel prices. The first is the derogation. The Government have done more to take that forward during the few short months they have been in office than the previous Government did during the entire time they were in office. I congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and his predecessor who have done so much work on this matter. It is gratifying that we at last have a Government who are beginning to take this issue seriously and to negotiate on it in Europe. I hope that in due course we will see this derogation.
On behalf of my constituents, I would like to hear from the Exchequer Secretary that the pilot, whatever that might be, is rolled out not just in the remote rural areas referred to in the amendment—the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly—but in areas of England affected by high fuel prices.
Heather Wheeler (South Derbyshire) (Con)
Could my hon. and learned Friend expand on the rural areas in England suffering with high fuel prices? It would be helpful for the Exchequer Secretary. Certainly in South Derbyshire we are seeing prices as high as £1.36 a litre. We are suffering too, and if that could be borne in mind when he sums up, it would be superb.
Stephen Phillips
I am sure that my hon. Friend the Minister will take into account the views from Derbyshire. I do not want to take up too much time dealing with that, however, because there are a number of other people who want to contribute to the debate.
What I want to hear from the Government Front Bench is that the pilot will be rolled out not just in island communities in Scotland or elsewhere, but in England. There are areas, such as the constituency that I represent, where it costs people an enormous amount just to live their ordinary lives, which is effectively a piece of discrimination via the tax system. We deserve the piloting of such a break, in just the same way as those areas of the United Kingdom where the pilot will take place deserve it.
This is not the subject of today’s debate, but a lot of my postbag is taken up with correspondence from constituents expressing concern about the Barnett formula and the way it effectively sends a subsidy—they would say at their expense—to Wales, Scotland and Northern Ireland. That is one of the issues that this Government will have to grapple with, at the same time as explaining to my constituents why the derogation will mean that there may be lower prices in other parts of the United Kingdom.
I have not yet dealt with the other limb to what is proposed—it is something that I understand the Government are looking at, and they must consider it carefully—namely, the fuel duty stabiliser. The fuel duty stabiliser, which we talked about in the election, is designed to smooth out, as the hon. Member for Banff and Buchan (Dr Whiteford) said, the spikes in prices that harm our constituents so much. To those who have read it, it is clear that the Office for Budget Responsibility report indicated that, although difficult, introducing the fuel duty stabiliser would not make that much difference to the revenue going to the Exchequer.
I did not understand the position of the hon. Member for Bristol East on that issue, as on so many other things. I am sure that in due course there will be some intolerant tweets about what I am saying about her across the Chamber, as that is her general way of dealing with me. I did not understand her or her party’s position on the fuel duty stabiliser, because she was unable properly to tell the House what it was, and I certainly did not understand her party’s position on the derogation from Europe. If the Opposition are to oppose in a responsible way, as the Leader of the Opposition has said, it would help if the Government and Members in all parts of the House knew what the Opposition’s position was, because at the moment, on this issue as on so many others, we do not.
Let me say a word about the question before the House. The difficulty with the motion, as the Government’s proposed amendment recognises, is that it does not take into account the concerns of constituencies other than those in the devolved Administrations. The motion is focused, no doubt for perfectly good political and tactical reasons, on those constituencies, not ours. It is for that reason, among many others, that I will not be supporting it, although I will of course support the amendment that my hon. Friend the Economic Secretary moved.