Economic Growth

Stephen Williams Excerpts

Wednesday 15th May 2013 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

The Tory party is obviously going through one of its regular hissy fits over the EU. My experience is that it is best not to intrude in toxic family feuds, so I will confine my remarks to the economy.

Support for the Chancellor’s policy has totally evaporated. His intellectual ballast, provided by Reinhart and Rogoff—namely, that growth rapidly declined once a threshold of debt of 90% had been reached—has been blown out of the water. The International Monetary Fund, the citadel of neo-liberal capitalism, has deserted the Chancellor. The British Chambers of Commerce, the Federation of Small Businesses and even the CBI are now openly criticising from the sidelines. The only austerians who are still full square behind the Chancellor are those in the eurozone. I hope he takes comfort from the fact that that paragon of economic virtue is now his last remaining ally. Contractionary fiscal expansion—his policy—is, to use the words he used today, a totally busted flush. It is an absurd oxymoron, as it always was. Once the rate of growth has slowed below the expansion of debt, the policy is doomed, and that is exactly where we are. Given that, it is so counter-productive now to continue with a policy of semi-permanent stagnation that one has to wonder what the Chancellor’s real motives are—apart, of course, from his own personal survival.

The US has put in place demand-creating measures and is steadily coming out of recession. The UK and the eurozone have not put such measures in place and they are slowly sinking deeper into recession. So why is the Chancellor so obstinately refusing to accept what the evidence is telling him? Why is he refusing to accept what even the IMF is telling him to do? The only plausible explanation is that this is not, in the last analysis, a deficit reduction policy at all; it is ultimately driven by the obsession to shrink the state and squeeze the public sector into the farthest recesses of a fully privatised regime. If that is so, crucifying the UK economy on a cross of ideology is hardly a proper way to proceed.

Of course, the Chancellor likes to defend himself, as he did again today, by saying that any stimulus to the economy will only increase the debt and thus make matters worse, but that is simply not true. First, instead of being kitted out for privatisation, the Royal Bank of Scotland and Lloyds—which taxpayers and the Government own 82% and 39% of respectively—could be instructed to prioritise lending for industry, infrastructure, low-carbon technology and key manufacturing niches in which the UK has a natural advantage.

A second option is the taxation of the hyper-rich, who have so far contributed almost nothing to tackling the recession that they largely caused. The latest rich list published in The Sunday Times a month ago showed that the richest 1,000 people—that is, 0.003% of the adult population—have increased their wealth over the past four years since the crash by a staggering £190 billion. That is considerably more than the total budget deficit, and if it were taxed at the current capital gains tax rate of 28%, it could theoretically raise £53 billion.

[Stephen Williams (Bristol West) (LD)]

I note that the right hon. Gentleman talks about the “current” capital gains tax rate of 28%. Would he like to remind us what the rate was for the last five years of the Government in whom he served?

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[Mr Bone]

That is exactly what I am saying.

The published Bill is short and to the point. The question is clear—

[Stephen Williams]

Will the hon. Gentleman give way?

[Mr Bone]

May I make a little progress, as I am about to quote the question?

The question is clear:

“Do you think that the United Kingdom should remain a member of the European Union?”

If the Bill is passed, the Prime Minister could try to negotiate a European free trade area or, in other words, a common market, without all the regulations, red tape, and cost, without the EU laws, the European Court, the European Parliament, the Commission and the bureaucracy, without the £19 billion a year it costs just to be a member of the EU, and without the £30 billion-plus trade deficit with the EU each year. However, ultimately I do not believe that these negotiations will succeed, not because of the efforts of the Prime Minister, but because of the attitude of the EU elite.

--- Later in debate ---

[Stephen Williams]

I thank the hon. Gentleman for giving way. I sometimes think there are three parties in the coalition: my party, the Liberal Democrats; the sensible wing of the Conservative party, whose Members serve on the Government Front Bench; and the hon. Gentleman’s wing of the Conservative party. However, my information is that the Conservative party did not ask for this referendum to be in the Queen’s Speech, so I think he ought to have a word with his colleagues.

[Mr Bone]

It is very good news that the Liberal Democrats have had a change of heart and will now allow the European referendum Bill to come forward in Government time. I appreciate that useful intervention.

In any case, once these negotiations have finished, there will, for the first time in 30 years, be a vote by the people of this country on whether we should remain in the European Union. That will happen no later than the end of 2017, but of course it may be much earlier.

Anyone who votes against the amendment in the name of my hon. Friend the Member for Basildon and Billericay (Mr Baron) is clearly opposed to a referendum on our relationship with the EU. However, if Members vote for the amendment, they are clearly supporting the prospect of an in/out referendum. If the amendment is carried, the House will, in effect, have said that the Government should bring in an EU referendum Bill. It will say to the Prime Minister that the House of Commons supports his position. It will say to the Liberal Democrats, “How dare you block the will of this House and the will of the nation?”

The Liberal Democrats went into the 2010 general election claiming that they would offer an in/out referendum on Europe. On page 67 of their extraordinary manifesto “Change that Works for You”, the Liberal Democrats said:

“The European Union has evolved significantly since the last public vote on membership over thirty years ago. Liberal Democrats therefore remain committed to an in/out referendum”.

That works for me. This change of heart is, even by Liberal Democrats standards, totally absurd.

Now I shall turn to the position of the Labour party. The Labour Opposition promised a referendum on the EU constitution before they were elected, yet as soon as they came to power, they dropped the referendum. On Europe, they are the poodles of Brussels—they roll over and do everything the EU wants, including giving away Mrs Thatcher’s hard-won rebate. They simply cannot be trusted on Europe.

The shadow Chancellor sort of indicated that Labour Members would vote against the amendment today—it was impossible to know what he thought about an EU referendum—but every Member will have to make their mind up. Members who vote against the amendment are voting against an EU referendum—[Interruption.] Colleagues from the Scottish National party will do so, and their position is clear. Labour Members who do so will also make their position clear—they are against giving the people the chance of a say on the relationship with Europe.

A vote for the amendment today would give the Prime Minister the moral authority to bring in his EU referendum Bill as a Government measure. Members of the House should vote for the amendment because it is in the national interest. It is right that after 30 years the British public should have their say on Europe. When Members cast their vote tonight, they should not decide on the basis of party politics. That is not why we are in this mother of Parliaments; we are here to represent our constituents and to put the country first. I know that some principled Opposition Members will support the amendment, and many principled Opposition Members will oppose it, because they do not support having a referendum. One thing is for sure: every Member of this House must vote according to their conscience, and when it comes to the vote, their constituents will know whether they are in favour of an EU referendum or against it.

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[Margot James]

rose—

[Stephen Williams]

rose—

[Richard Drax]

I will not give way, because I have only a short time left.

France is a basket case. Outside the EU, the economies of the BRIC nations—Brazil, Russia, India and China—and Asia are growing. In the past few days, President Obama has been encouraging our Prime Minister to fix the relationship with the EU. We have been trying to do that for years and years, but we have not succeeded. We joined the common market to trade with Europe and that is the relationship that we need and must have. Finally, this is not about nostalgia, as I think an Opposition Member has said, but about reality.