EU: UK Net Contributions
Lord Pearson of Rannoch Excerpts(11 years, 7 months ago)
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Lord Sassoon
My Lords, as the House is aware, we are coming up to the negotiations of the multi-year financial perspective. That agreement requires unanimity of member states. My right honourable friend the Prime Minister has made it clear in a statement, jointly with other European colleagues, that the maximum acceptable expenditure increase through that period is a real freeze in payments. That continues to be the Government’s position. As for structural funds, we cannot just opt out of any particular area of EU expenditure, although I agree that in the area of structural and cohesion funds, it is absurd that so much money is recycled from wealthy member states back into other wealthy regions of Europe. That is one of the many issues that need to be addressed.
Lord Pearson of Rannoch
My Lords, to put this question into everyday perspective, do the Government accept that £10 billion per annum equates to the annual salaries of 91,320 nurses being thrown away down the Brussels drain—or policemen, soldiers, or any other public servants at £30,000 per annum? Does this Question not remind us that there is no such thing as EU aid to the United Kingdom? For every pound that Brussels sends us, we have sent them £2.20.
Lord Sassoon
My Lords, the UK benefits from its membership of the EU. The UK should make a proper contribution to the net EU budget, but we have to see that the completely unacceptable proposals from the European Commission for the next multi-year period are reined back. The Commission’s proposals, as opposed to a real freeze, would mean an increased UK contribution of £10 billion, or £1.4 billion a year. That is indeed many nurses, policemen and other front-line public servants.
Eurozone
Lord Pearson of Rannoch Excerpts(11 years, 11 months ago)
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Lord Sassoon
My Lords, I am pleased to say that no encouragement is now needed from the UK. The paper by the four presidents—the presidents of the European Council, the European Commission, the European Central Bank and the Eurogroup—set out what they believed to be appropriate in relation to fiscal and monetary union. That work will continue and the UK is participating in the discussions in and around those reports. We are being fully supportive of those efforts.
Lord Pearson of Rannoch
My Lords, would it not be wise to ask the people of Germany and the other eurozone donor nations whether they agree to be burdened with the debts of Greece, Portugal, Spain, Italy and others, which even the Germans and the other countries cannot afford for long?
Lord Sassoon
My Lords, I thought I might have been asked a question about a UK referendum, instead of which I get a question about whether the German people will be consulted. I think I will leave that to German politicians to answer.
Lord Sassoon
My Lords, the UK is very much involved in the discussions in Brussels. That is why, as I have already said, we secured important parts of the EU patent court coming to London. That is why we recently secured a new British head for the European Bank for Reconstruction and Development. We are at the table and that is where we intend to stay.
Lord Pearson of Rannoch
My Lords, with the leave of the House and as there are some minutes on the clock, instead of going along with this madcap, dangerous scheme of European financial integration, why do the Government not encourage the eurozone countries to abandon the incurable euro and go back to their own currencies, each with their own interest rate and exchange rate? Would that not be less painful and expensive than to go on trying to save the wretched thing?
Lord Sassoon
My Lords, as we have discussed many times, 40% of our exports go to the eurozone. It is our most important trading bloc. The priority has to be to strengthen the eurozone countries. That is what they want to do and that is what we want to see them do and we must help them to achieve that.
Eurozone
Lord Pearson of Rannoch Excerpts(12 years ago)
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Lord Sassoon
My Lords, we do not offer advice to the Germans on how to manage their own economy any more than they would offer advice to us.
Lord Campbell-Savours
My Lords, are Ministers saying that, if the European Union were collapsing all around us, we would stand aside and do nothing at all?
Scotland Bill
Lord Pearson of Rannoch Excerpts(12 years, 2 months ago)
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Lord Pearson of Rannoch
Forgive me, but that does not appear to be exactly what the Bill says. It may be helpful for those who follow our proceedings, but do not go into the detail of the Bill and the Explanatory Notes and all the rest of it, if I read out briefly what the Bill says and then put some questions to the Minister.
The part of the Bill that the noble Lord, Lord Forsyth, is attempting to remove is new Section 80B of the 1998 Act on the power to add new devolved taxes. It states:
“Her Majesty”,
who of course acts under the advice of Ministers, so it is not her fault,
“may by Order in Council amend this Part so as to … specify, as an additional devolved tax, a tax of any description … or … make any other modifications of the provisions relating to devolved taxes which She considers necessary or expedient”.
I repeat a question put to the Minister by the noble Lord, Lord Forsyth. Can he think of anywhere else where a new tax or taxes can be imposed on our people by Order in Council without their informed consent? Have they given that consent and, if not, how will they do so? Are the Government really suggesting that this process will take place without going through your Lordships’ House or the House of Commons? Are we not even to have the affirmative or negative procedure? We need to clarify this matter because, from what I know of it so far, this is going too far for our democracy.
Lord Sassoon
I do not want to keep popping up and down like a jack-in-the-box, but I shall try again.
Lord Browne of Ladyton
My Lords, I have immense respect for the noble Lord, Lord Forsyth of Drumlean. I listen carefully to what he says, and I have heard this argument from him on a number of occasions and respect it entirely. I have listened carefully, too, to the arguments put forward by the noble Lord, Lord Lang of Monkton. I thought that his contribution ranged much wider than the actual provision that we are considering, but he made some very important points, which are worthy of being recorded. The noble Lord, Lord Kerr of Kinlochard, rose to debate some of them and made a helpful contribution. The noble Lord, Lord Pearson of Rannoch, read in short—and with respect to him, slightly misleadingly—a part of the Bill to make another point. I hope noble Lords will forgive me, but we have debated these provisions in some detail in different ways. I had my say both at Second Reading and in Committee, and that is all recorded. If people want to know what my views are for supporting this provision and its maintenance in the Bill, they can read them at length.
However, in response to the point made by the noble Lord, Lord Pearson of Rannoch, it can sometimes be deeply misleading to read in short a piece of legislation. I am not intending to read it at length, but the operational way of this Bill is to amend other legislation. I think that the answer to his point—the Minister will be able to correct me when he comes again to the Dispatch Box if I am wrong—lies in the fact that the active verb in the piece that he read to us is to “specify” a tax, not to impose a tax. The answer lies in the words that the noble Lord, Lord Pearson, chose. That, put another way, is the point that the Minister was making to him.
In any event, whether or not this provision generates deep and interesting constitutional issues, we know that where this constitutional imperative resides—in the other place—they have already approved this devolution. The Bill has come to us with their approval. It may be that we can say, with some merit, that they did not pay a lot of regard to this clause. It was a differently numbered clause at the time. However, they will certainly pay a lot of regard to it when it goes back to them, and it will not become law if they do not approve it. The responsibilities that they hold in terms of our constitution, they hold. If they choose to devolve them and encourage us within this Parliament to support that, I do not think it is our privilege to prevent them doing so.
For clarification, we also need to look at the genesis of this provision. It is not entirely true to say that Calman was silent on this point. The Calman commission recommended:
“The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland”.
The noble Lord, Lord Forsyth of Drumlean, who is comprehensively knowledgeable about Calman and this Bill, and has proven that time and again, will see that this provision goes significantly further than the Calman recommendation. However, it is not true that there is no reference in Calman to the devolution of taxation or the creation of a power of this nature to assist future devolution. There is consideration of it in some detail in the report. The arguments for and against are there, and there was a clear recommendation, but I accept that it has been taken further.
As I said in Committee when this issue was debated at great length, the deletion of this provision would leave the Bill significantly reduced, not only in its constitutional significance but in its significance for the people of Scotland. I am not interested in achieving that objective. Our position is that we support the inclusion of this provision, provided that certain checks are in place. That is why rather than seeking to support the deletion of this provision we have tabled Amendment 16, to which I will speak at greater length in the next group, and which we believe would allay much of the concern over the breadth of this provision, were it to be accepted in some form. This of course all depends on the House’s position in relation to this amendment. I accept that the debate on my amendments is dependent on the decision that the House makes in relation to this amendment. However, I was given a certain assurance by the noble Lord, Lord Forsyth, in his introductory remarks that I need not worry about that, so I will now sit down and prepare to argue the next amendment.
Lord Pearson of Rannoch
Before the noble Lord sits down, and with the leave of the House, neither he nor the Minister has answered my main question on this matter: have the people of Scotland given their informed consent to this provision? If they have not done so, will they be invited to do so, perhaps with the provision being specifically flagged up in any eventual referendum?
Lord Browne of Ladyton
The combination of cheek and flattery is so appealing that I can barely resist it. The noble Lord’s recollection of what I said when we discussed these provisions before is not my recollection, but the Official Report will have recorded it. I think that I said it was not fully appreciated how significant these provisions were—not by me; I thought that I had helped those who had not fully appreciated that, but maybe this was a process of education in which I was a pupil, not the educator.
In any event, I am not suggesting that the significance of this important provision of the Bill is widely known and appreciated by the people of Scotland, whatever that phrase means, but I was asked a different question by the noble Lord, Lord Pearson—where the constitutional democratic support lay for this from the people of Scotland. The noble Lord, Lord Forsyth, will recall that I referred to a representative democracy; I did not suggest that all the people of Scotland understood this.
Lord Pearson of Rannoch
I merely say that the record will confirm that the noble Lord has not answered the question that I asked him.
Baroness Rawlings
My Lords, I remind noble Lords that on Report a Member may speak only once except for a short question of elucidation to the Minister.
Lord Lyell
My Lords, perhaps my noble friend can assist me. I wonder whether the proposals in the amendment owe something to Monty Python. Proposed new subsection (7)(b) refers to,
“the potential the new tax might create for tax avoidance across the UK”.
My jaw dropped when I read that. I will be fascinated to hear what my noble friend says when he directs his attention to it.
Lord Pearson of Rannoch
My Lords, I, too, take the amendment as a small step in the right direction. I merely ask the noble Lord, Lord Browne of Ladyton, whether he agrees that if the Government do not accept the amendment, it will give great force to the previous amendment of the noble Lord, Lord Forsyth. Of course, if the Government do accept the amendment, it will be a small step in the right direction. However, it does not abrogate the point that I and—much more huffily—the noble Lord, Lord Forsyth, attempted to make when we debated the previous amendment, which remains the best one. I do not know whether the noble Lord, Lord Browne, is in a position to answer that before the Minister replies.
Lord Sanderson of Bowden
Perhaps I may come back to what the noble Lord, Lord Browne, said at the end of his speech. Having his amendment in the Bill would bind the Scottish Parliament to its vote for the whole of this exercise. That is the most important part of this whole business. I cannot for the life of me see why the Government cannot accept it.
Lord Pearson of Rannoch
Before the Minister replies, to qualify what the noble and learned Lord, Lord Cameron of Lochbroom, asked, will the Minister be specific and say whether the empty space could include a tax on Sassenachs who own cottages, a window tax or a land tax?
Baroness Rawlings
My Lords, perhaps I may remind the House that:
“Only the mover of an amendment or the Lord in charge of the bill speaks after the minister on report except for short questions of elucidation”—
as I mentioned before—
“to the minister or where the minister speaks early to assist the House in debate”.
Lord Pearson of Rannoch
The Minister was still speaking and I asked a very short question, to which I look forward to the reply.
Economy: Quantitative Easing
Lord Pearson of Rannoch Excerpts(12 years, 2 months ago)
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Lord Sassoon
No, my Lords, even the previous Chancellor, I am happy to say, was not acting illegally in this matter and the current Chancellor certainly is not. As I have already explained to the noble Lord, Lord Barnett, the only reason for the Chancellor having to authorise this is because HM Government indemnify the Bank for any losses that it may suffer by exercising purchases under the asset purchase facility.
Lord Pearson of Rannoch
My Lords, does the noble Lord agree that over history printing money has usually, if not always, led to inflation? If he does agree, can he tell your Lordships why quantitative easing will not do so this time?
Lord Sassoon
No, my Lords, I certainly will not. It has actually led to inflation already. In the estimates made by the Bank of England in the third quarter bulletin in September last year, it was estimated that quantitative easing had raised UK inflation by around 0.75 to 1.5 per cent. I firmly believe that the greater benefit of raising real GDP by around 1.5 to 2 per cent was what really mattered in the economic circumstances in which we find ourselves. Then the question is what happens to the unwinding of QE? The stock will be held and sold back into the market in due course.
EU: Economic and Financial Issues
Lord Pearson of Rannoch Excerpts(12 years, 2 months ago)
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Lord Sassoon
My Lords, I believe that the coalition is driving forward our agenda on Europe with great coherence. As I have explained, the UK is leading the way not just on the single market and competitiveness issues but issues including Iran, Burma and many other areas on which we are very much at the forefront and lined up with many of our European partners.
Lord Pearson of Rannoch
My Lords, when will our estranged political class understand that the euro’s problems are embedded in its construction and cannot be cured by throwing yet more money and sticking plaster at the problems of Greece and others?
Lord Sassoon
My Lords, as I have already said, there is a remorseless logic that has to take monetary union towards closer fiscal co-ordination, if not union. That is what the latest intergovernmental agreement is one step towards.
Eurozone Crisis
Lord Pearson of Rannoch Excerpts(12 years, 4 months ago)
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The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, there is plenty of time. Shall we hear from the noble Lord, Lord Grenfell, and then perhaps from the noble Lord, Lord Pearson?
Lord Sassoon
My Lords, the credit rating agencies have a useful and important part to play in the good working of the financial markets. Your Lordships produced a report in committee on aspects of the regulation of the credit rating agencies on which we had a good debate before Christmas. There are issues about the performance of the credit rating agencies in respect of the financial crisis, but their record generally on sovereign ratings has been perfectly acceptable in most people’s judgment. However, I am not going to comment on their individual judgments in the past couple of weeks.
Lord Pearson of Rannoch
My Lords, is it not now clear that there are really only two ways forward—either full fiscal union, which does not look as though it will be accepted by the peoples of Europe, or a return to national currencies? On the latter alternative, have the Government seen the research from Bank of America Merrill Lynch which suggests that an orderly return to national currencies need not be nearly as traumatic as the political class would have us believe?
Lord Sassoon
My Lords, there is a whole range of views about the effect of the eurozone breaking down in any way. All I can say is that 40 per cent of our trade goes to Europe, and we want to see a strengthened and healthy eurozone. That is fundamentally in the interests of the UK. A crisis in the eurozone presents the most imminent threat to growth in this country.
Taxation: Inheritance Tax
Lord Pearson of Rannoch Excerpts(12 years, 5 months ago)
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Lord Sassoon
My Lords, as I said, we have no plans to review the law, but we are always interested in constructive suggestions, wherever they come from.
Lord Pearson of Rannoch
My Lords, perhaps I may rely on noble Lords' generosity at Christmas and dare ask what the latest position is with the proposal from Brussels to harmonise inheritance tax across the whole European Union. Does that prospect not make this debate somewhat superfluous, and what will the position be under the proposal? Will there be majority voting or will we be able to veto it if we do not like it?
Lord Sassoon
My Lords, tax proposals from the European Commission require unanimity.
EU: Member States’ Budgets
Lord Pearson of Rannoch Excerpts(12 years, 6 months ago)
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Lord Sassoon
I am of course prepared to go a bit further in answer to my noble friend’s question. If such treaty changes are put forward, the Government will look to advance the UK’s national interest at that point, as appropriate. Above all, that means protecting and safeguarding our essential economic interests, and we will seek to do that.
Lord Pearson of Rannoch
My Lords, is it not grotesque that an organisation that has not had its accounts signed off by its own internal auditors for 17 years—there being no external auditor—should be handed these powers, given that if it had been a private company in this country the directors would have been in prison every year for the past 17 years?
Lord Sassoon
My Lords, I certainly agree that it is very unsatisfactory that for the 17th year in a row the Court of Auditors has not been able to give an unqualified statement of assurance.
European Union Membership (Economic Implications) Bill [HL]
Lord Pearson of Rannoch Excerpts(12 years, 6 months ago)
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Lord Pearson of Rannoch
My Lords, I am truly grateful to all noble Lords who are to speak today. This is not the first time that your Lordships have debated this or a similar Bill at Second Reading. We did so last some four and a half years ago, on 8 June 2007, and we had similar debates on 11 February 2004, 27 June 2003 and 17 March 2000. The series would not be complete without mentioning 31 January 1997, when your Lordships’ House voted at Second Reading for a Bill that would have taken us out of the European Union altogether.
For more than 30 years, our political class has done its best not to talk about our membership of the EU. But the wheel of history turns and the question as to whether we should leave the European Union is now firmly back on the national agenda. But this Bill does not deal with that question—it is an altogether milder and more innocent little creature. It merely requires the Chancellor of the Exchequer to set up an impartial inquiry into the economic costs and benefits arising from our membership of the EU.
As presently drafted, the Bill suggests that the committee of inquiry should consist of seven people: two who favour our staying in the EU, two who favour our leaving, two who have no firm view, and an independent chairman. The Bill excludes from the committee anyone who is or has been an MEP or who is or has been an employee of the EU or any of its institutions. The thinking behind those exclusions is that no one who is in the EU's pay or in receipt of an EU pension that they could lose if they went against the EU's interests should sit on the committee. But the wording of the Bill may be at fault here, because I now understand that MEPs do not receive such a pension, so perhaps their experience would be useful to the inquiry. The Bill could be amended in Committee, if your Lordships think fit; it could also be amended to extend the date by which the inquiry must report to the Chancellor beyond July 2012. Noble Lords may feel that that does not give it quite enough time. Be that as it may, the Bill requires the Chancellor to give the inquiry’s report to the Comptroller and Auditor-General and lay it before Parliament with his views attached. The Bill goes no further than that. Of course I hope that the ensuing debates in your Lordships' House and the House of Commons would increase the public pressure for a referendum on our EU membership, but that remains to be seen. It will depend on what the inquiry comes up with. I submit that the cost-benefit analysis proposed by this Bill is long overdue, and that it is made even more urgent by the long-foretold crisis in the eurozone.
I dare to hope that the Government will support the Bill and that the Minister will not repeat the misconceptions that all Governments have steadfastly repeated in all our debates so far. Perhaps I could sum them up now and warn the Minister that I shall press him to justify them if he intones them yet again today.
The first is that a cost-benefit analysis is unnecessary because the advantages of our EU membership are so obvious that it would be a waste of time and money. On the money point, I note that the Stern report on climate change cost a little over £1 million. Surely that is a rather more complicated subject than the simple economic facts of our EU membership. So we are not talking about an expensive inquiry, especially when set against the colossal costs of our membership, to which I shall return.
The second misconception is to suggest that the 40 per cent of our exports that go to clients in the European Union, supporting some 3 million of our jobs, would all somehow be jeopardised if we left the political construct of the European Union. I can only assume that the bureaucrats who invented that one did so because they simply do not know how international business actually works. I repeat that nobody trades with the European Union, except perhaps the Mafia. We have hundreds of businesses exporting to clients who happen to be in EU countries, and there are hundreds of businesses in those countries exporting to us. This two-way traffic benefits from free trade, but none of it needs to be affected if we resile from the treaties of Rome. There are good commercial reasons for this. First, we have some 3 million jobs exporting to customers in EU countries, but there are 4.5 million jobs in those countries exporting to us. So collectively they need us more than we need them. We are, in fact, their largest client. So not even the Martians in Brussels would attempt any retaliation if we left the EU as such, and the Martians would face other realities if they tried anything so silly. The World Trade Organisation has brought the EU’s average external tariff down to below 1 per cent and would also prevent any retaliation. The EU has free trade agreements with 63 countries worldwide and is negotiating a further 63—some 80 per cent of the countries in the world. So we, as its largest client, could have one too, as good or better than the one enjoyed by Switzerland, which is not in either the EU or the European Economic Area.
Switzerland is, of course, smaller than us, but its economy is very similar to ours and it exports three times more per capita to clients in the EU than we do. Looking at it the other way round, would the French stop selling us their wine or the Germans their cars just because we were no longer being bossed around by Brussels? Of course not.
The Government do not have to take my word for it. “Channel 4 News”, in its “FactCheck” programme on 1 November, revealed that economists at Southbank University, who first estimated that 3 million jobs depended on our trade with Europe, never said that any would be lost if we left the EU. The programme ended with the following quote:
“According to the people who did the research, talk of mass redundancies if Mr Cameron goes for a European exit strategy is just scaremongering”.
So please can we hear no more about 40 per cent of our trade and 3 million jobs being a reason to stay in the EU and not to have the inquiry proposed by this Bill?
The third misconception is that if we were no longer in the European Union our exporters to European markets would still have to obey all its rules and our Government would not take part in their making—and that this is somehow a frightening prospect. Those who peddle this one assume that we would stay in the European Economic Area, like Norway, which we would not. Our position would be like that of Switzerland, or better; we would have our own arrangements for free trade, free movement and so on. Our exporters to clients in the EU would of course have to meets its requirements, as do exporters from every other country on the planet which exports to the EU. That is really no big deal. But only 9 per cent of our GDP goes in exports to clients in the EU, while 11 per cent goes in trade with the rest of the world and 80 per cent stays right here in our domestic economy. So the 91 per cent or so of our economy which at the moment does not go in exports to clients to the EU would be set free from the heavy burdens imposed by Brussels. That begins to sound like quite a good deal to me. I will come to what those burdens might be, but conclude the third misconception by saying that I hope that the Minister will not repeat it today.
A fourth misconception was put forward by the noble Lord, Lord Howell, at Questions last Tuesday at col. 942, when he claimed that our influence in international trade bargaining is greater from within the EU than it would be if we had our own seat at the WTO. To answer this, I can do no better than to quote from a brilliant new publication by Civitas of Mr Ian Milne’s Time to Say No. On page 15, he says:
“British influence at the WTO is sometimes claimed to be stronger as part of the EU Single Market than it would be if the UK spoke and negotiated for itself in WTO councils. That claim has validity only in so far as British commercial and geostrategical interests coincide with all or a majority of its EU partners—all 26 of them. When British interests do not so coincide—for example in the regulation of the City, or in agriculture and fishing—it follows that British influence is weaker than it would be if the UK were outside the EU and able to make its own decisions at the WTO. Since the structure and pattern of UK global trade is quite different from that of its EU partners, there is no a priori reason to suppose that, on balance, British interests and those of its EU partners coincide more often than they diverge”.
The proposed inquiry would have to examine what I have called the four fundamental misconceptions about our economic relationship with Brussels and form its own opinion. I hope that it would also look at a number of very short briefing notes by Mr Ian Milne on the www.globalbritain.org website, which I have extolled before to your Lordships. I declare an interest as a founder and supporter of Global Britain. For instance, I hope that it would read briefing note No. 70, which shows how customs unions such as the EU have become redundant in the modern world; No. 68, which analyses The Non-existent “Benefits” of Belonging to the EU Single Market; No. 36, entitled Cherry-Picking, which analyses in two pages the differences between the European Free Trade Association, the European Economic Area and the Swiss-EU trading relationship; and No. 69, The Coming EU Demographic Winter. The last of those is rather like being shown the film “Titanic” before you had got on it, and gives another reason why so many of us want to get off. Dare I ask the Minister whether he or any of his officials have read these and other briefing notes on the Global Britain website; and if not, whether they will do so, and meet with Mr Milne if they disagree with any of them? I am of course happy to offer them lunch.
The inquiry will also have to examine the range of figures put forward by our Eurosceptic movement of the annual cost of our EU membership, mostly from EU overregulation. These, as summarised in Global Britain briefing note No. 65, average around 6 per cent of GDP, or £90 billion per annum—equivalent to £1,500 per person in this country. It is interesting that a similar figure was put forward by the European Commission in 2006 and that the highest estimate came from the Treasury itself in 2005, under the signature of a Mr Gordon Brown, entitled Global Europe: Full-employment Europe. The Treasury estimated the cost of our EU membership as follows: EU protectionism, 7 per cent of GDP; competition gap with the United States of America, 12 per cent of GDP; EU overregulation, 6 per cent of GDP—broadly in line with our Eurosceptic studies—and transatlantic barriers to trade, 3 per cent of GDP. Those four categories add up to 28 per cent of GDP. Mr Brown did not say whether there might be some degree of overlap in that but even if we are generous and divide it by four we still come to about 7 per cent of GDP, or around £100 billion a year today. Anyway, I suppose that the inquiry will want to interview Mr Brown and the officials who wrote this report.
There are other areas which I hope it will examine. What, for instance, is the cost to our economy of the decimation of our fishing industry? Would it not be useful to have an accurate figure for the extra amount that each family in this country pays for the cost of food? That has been widely put at about £1,000 per annum per family, but the world price of sugar is now apparently higher than the EU cost. So there is no doubt that this figure fluctuates, but it would be useful to be clear about it.
By the time the inquiry reports we will have a better idea of whether we are going to get back the £12 billion that we have borrowed to bail out the euro—I fear not, but time will tell. Then there is a big one, and talk about being flogged by a dead horse: by the time the inquiry reports, the damage done to the City of London and our financial services elsewhere by Monsieur Barnier and his cronies in Brussels will be clearer than it is today. Is it not simply grotesque that an organisation which has not had its own accounts signed off by its internal auditors for 17 years, there being no external audit of how our funds are wasted, should now be telling us how to order our financial affairs? I think “grotesque” is accurate.
Finally, there is one area in which there is no room for doubt: the amount of cash that we send to Brussels every year. Please remember that our expenditure cuts last year came to some £6.2 billion. The Pink Book came out this week, revealing that we sent £18.5 billion gross to Brussels last year, of which it was pleased to give us back some £8 billion for projects designed to improve its image, such as agriculture and regional aid. That leaves a net cash contribution of some £10 billion—£10,340,000,000 to be precise—which comes to £28 million net cash every day, never to be seen again, with perhaps none of it spent in our national interest.
To put that figure into perspective, £28 million pays for the salaries of 940 nurses at £30,000 per annum each. So every day we throw away, thanks to our EU membership, 940 nurses—or policemen, or soldiers, or any other public servant you care to mention.
Yesterday in your Lordships' House we had a well-informed and moving debate on the latest report into the future of social care in this country: the care of our elderly, infirm and dying, and of our learning disabled. The report suggests that we should spend another £1.5 billion to meet our obligations to these most vulnerable people in our society, but the Government are not sure that we can afford it. Yet we are sending £10 billion in net cash to Brussels. It is against that sort of background that I suggest the inquiry envisaged by this Bill should be set, and I beg to move that this Bill be read a second time.
Lord Davies of Stamford
My Lords, I congratulate the noble Lord, Lord Pearson, on bringing his Bill forward and on getting his Second Reading today. I disagree with him on European matters almost the whole time—I think that many of his arguments are very unconvincing and his plans for the future of this country would be disastrous—but nevertheless I genuinely admire his persistence and ingenuity in pushing his, to my mind, very misconceived views. That is what democracy is all about, and I hope that he will at least take that tribute. He will not get any more tributes from me in the course of my remarks; I thought that we had a series of unconvincing and indeed sometimes specious remarks from him, so I decided to throw away my originally conceived speech and spend my few minutes trying to set out where I think he has gone very badly wrong.
It was quite fatuous to suggest that the City of London was at threat from our membership of the European Union when the City’s enormous international prosperity has coincided with our EU membership.
On fish, I have to say to the noble Lord that fish have an unfortunate habit of not recognising national frontiers. Therefore, if you share a continental shelf with other coastal states, you have to have agreements about fish, because if one of those states overfishes then everyone else’s fishery is equally destroyed. If we left the European Union’s common fisheries policy, the very next day we should have to set up some international agreement under which we established quotas, and in order to do that we would have to set up the scientific machinery to advise on what the quotas ought to be. In order to ensure that the quotas were effective we would have to set up some enforcement procedure and some penalties—in other words, we would have to recreate the Commission and the European Court of Justice and the whole structure relating to fish. It does not seem to be very intelligent to leave a union one day and the very next day to have to set the thing up again in a new fashion.
The noble Lord seemed to think that we could save a lot of money by leaving the common agricultural policy. He falls into two errors there. The first is the assumption that we ourselves would not wish to support our own agriculture, which is unlikely. If we did support it, we would have to deduct the costs of doing that from his proposed savings.
The second error is something I would like him to reflect on for even longer: if we had left the European Union but remained in the single market in some way, as Switzerland has done—I think that that is what he wants to do—we could not avoid accepting agricultural imports from other EU states. They would never agree, and never have done, to a single market involving purely manufactures and services and not agricultural products. Up to now they have set up commercial agreements with countries such as Switzerland and Norway that have a higher level of agricultural protection, so the problem has not arisen, but with us they insist on a free market in agricultural products. If we did not support our farmers and the continentals and the Irish went on with the CAP, we should find that our farmers were at an enormous competitive disadvantage. They would be completely undercut by competitive products from the EU where a large part of the fixed costs of farmers is being met by various forms of subsidy and payment. The noble Lord’s formula there would lead the devastation of the British countryside.
The noble Lord mentioned a net cash figure of £10 billion. That is less that 1 per cent of GDP, which has always seemed to be to be a pretty small subscription for the enormous benefits of the single market, which I will come on to in a moment, and of our being at the decision-making centre of it. I have to tell the noble Lord that a lot of that money has to go to regions that are net beneficiaries. The country as a whole may pay out cash of £10 billion, but I am not sure that the part of Scotland that he lives in is not a net beneficiary—I suspect it is. Many other parts of the country would have to be compensated for the money that they were losing, so that would be a burden on, for example, the people of the south-east, who may think that at present they get the benefit of the £10 billion that he is talking about but they certainly would not. That, again, is very misconceived.
Even more importantly, some of that £10 billion goes to causes that surely we continue to want to support. Is the noble Lord suggesting that we should not be spending money on the neighbourhood policy and the stability of countries in north Africa and the former Soviet empire—Georgia and so forth? Does he want to cut that? If not, we have to pay that anyway. What about the EU’s overseas aid policy? Presumably, if we pulled out of that budget, we would still want to spend that money on those poor countries, or is he suggesting that we should pull out from supporting starving countries like Ethiopia? It is a thoroughly flawed argument, if I may respectfully say so.
Finally, but very importantly, he misunderstands entirely the important distinction between current business flows, which we might be able to preserve through some trading agreement with the EU, and investment in new capacity and new job creation. For example, if you speak to the three Japanese automotive companies that set up in this country, they should not have dreamt of setting up here if we had not been part of the EU and indeed part of its decision-making structure. We were going to be involved in any discussions about the future of the car industry, health and safety, consumer protection measures, international trade measures, environmental measures or whatever it might be. He would find exactly the same if he were to speak to Tata, which now owns Jaguar Land Rover; it would not have dreamt of moving into this country if that had not been the case. Similarly, no one would dream of setting up in the pharmaceutical industry in this region of the world without being able to benefit from the one-stop registration policy that you get if you are part of the European Union. An enormous number of jobs depend on decisions that would not have been made if we had not been part of the European Union.
On the other side of the coin, it would be at zero. I challenge the noble Lord to cite a single case of someone who would have invested here if we had not been in the European Union but did not invest because we were. If only one job was created, that would be infinitely greater than zero—
Lord Davies of Stamford
I will give way to the noble Lord when I have finished my sentence, if I may. Even one job would be infinitely greater than zero, so if you have a balance on which there is a positive number on one side and zero on the other, the result that the noble Lord gets from his commission inquiry will be quite clear.
Lord Pearson of Rannoch
My Lords, I will come back to at least four of the noble Lord’s points in my summing up. As he has challenged me on the question of investment in this country, is he aware that our UK Trade and Investment agency does not list our membership of the European Union among the eight top reasons for investing in this country? It is not mentioned at all.
Lord Davies of Stamford
If that is the best that the noble Lord can do by way of argument, to find a bureaucracy that does not mention the European Union in some handout, then I am even more confident of my position.
I do not want to take more than my fair share of the time. I have dealt with a number of the noble Lord’s points. As he can see, I disagree with him profoundly on the arguments but he will be pleased that I do not disagree with him about the Bill. I think that it is an excellent idea, and am quite confident that any such inquiry would come to the conclusion that the facts would indicate.
Lord Lea of Crondall
Is it acceptable for the noble Lord to carry on speaking after that very clear advice from the government Whip, and after the position was made clear right at the start of the debate in response to the question from my noble friend, Lord Campbell-Savours?
Lord Willoughby de Broke
I shall finish now. The only club we need to be in is the world club and we are already members of that. The European dream has turned into a dangerous nightmare. We need to wake up.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I start by congratulating the noble Lord, Lord Pearson of Rannoch, on getting this debate today. I disagree with the noble Lord, Lord Davies of Oldham. It is quite right that we should be debating Europe at this very difficult and challenging time. I also thank all noble Lords for what has turned out to be a valuable and thought-provoking debate. Having said that, I make it clear at the beginning that the Government have significant reservations about the Bill that we are debating today.
I am between the rock of noble Lords wanting to move on to complete two other significant Private Member’s Bills’ Second Readings today and the hard place of doing justice to what has been a very stimulating debate. The noble Lord, Lord Davies of Oldham, has already pointed out my problem, and I am grateful to him for not adding to it. I thought that the string of questions was about to come, but it did not and I am grateful for that.
As we are all aware, these are extremely dangerous times for the global economy. The crisis in the euro area continues to undermine markets across the world, the UK included. As my right honourable friend the Chancellor has said, resolving the euro area crisis would be the biggest single boost to the UK economy this autumn.
As well as resolving the immediate crisis, Europe faces significant challenges that go to the very core of its raison d’être. What is the EU’s purpose in an open and competitive global economy? What do we need to change for it to meet that vision? We are right to ask these questions, but we will be heard and make a difference only so long as we are a core member of the EU, and we will make sure under this Government that our voice is heard in Europe, exactly as it has been heard most recently on the negotiations for the EU 2012 budget. I remind my noble friends Lord Liverpool and Lord Stevens of Ludgate of what we have done to peg back the proposed increase successfully, resisting proposals for inflation-busting increases. But of course I agree with my noble friend Lord Stevens that much more needs to be done and that there needs to be real budgetary restraint by the Commission for the next few years. We have saved €12 billion against the ceiling that was there in the 2005 financial perspective, but there is much more.
While we are on this topic, I would say to the noble Lords, Lord Pearson of Rannoch and Lord Willoughby de Broke, that I do not recognise the numbers that they were quoting. The net contribution of the UK to the EU in 2010-11 is estimated at £7.6 billion, up from £4.7 billion in 2009-10, but of course the reason for that increase is because of the give-away that the last Government gave on the UK’s abatement. Having stepped up very significantly to the new level, the OBR’s figures are that the numbers now remain broadly level over the next few years.
As well as financial discipline, it is equally important that Europe pursues an ambitious agenda for growth.
Lord Pearson of Rannoch
For clarity’s sake I should say, following on from what the Minister has just said about our gross and net contributions, that he is talking about the Treasury figures. The figures that we gave are from the pink book and include all our contributions to the European venture, whether they go through the Treasury or not, such as the DfID budget. So I am afraid that our figures are the correct figures.
Lord Sassoon
My Lords, I was quoting the figures of the independent Office for Budget Responsibility, not the Treasury’s own figures, but let us turn to the more important issue: that Europe must pursue an ambitious agenda for growth. In the single market, I believe that we have one of the most powerful tools to ensure strong, sustainable and balanced growth not only across the EU but for the UK. The noble Lord, Lord Watson of Invergowrie, quoted all the figures that Ministers would customarily quote, so I am very grateful to him for helping me out. I will simply emphasise that this is a market worth €12 trillion and home to 500 million consumers.
Despite what the single market has achieved to date, however, so much more can still be done, so in answer to noble Lords, including my noble friend Lady Noakes, who rightly argue that we need assessment for well informed debate, I should say that I agree up to a point. When it comes to the forward-looking challenges as to how we are going to get the most out of the single market, yes, we need the analysis. That is why, for example, in February this year BIS published a significant study into the effects of completing the single market and the 7 per cent increase in UK GDP that could be achieved if we press forward with that project. A truly free and open single market in services and the creation of a digital single market could add as much as €800 billion to EU GDP.
In answer to the second and third so-called misconceptions mentioned by the noble Lord, Lord Pearson of Rannoch—I do not shy away from those but am very happy to address all four of them head on—I believe that it is only by being in the EU that we will drive forward the benefits of the single market and capture the very significant gains that remain out there. There is a lot to be done and it is very frustrating that things do not move forward, but it is easy to say that we can be outside it and somehow get all those benefits. If the market is to be driven forward we need to be there, at the table. We can unlock a further €60 billion of benefits to the EU from world trade through completion of EU free-trade agreements with key markets such as India, Canada and Singapore. Again, I do not agree with the noble Lord about what we could achieve in these areas if we simply had our own seat at the WTO. Just as we are doing here in the UK, we have to drive down the regulatory burdens and costs of doing business across the EU—something that was identified by a number of noble Lords in this debate.
Finally, in response to these questions of whether we could be outside it and have the benefit of the free market, the comparison that the noble Lord, Lord Stoddart of Swindon, made with Norway, for example, is simply wrong. I am grateful to the noble Lord, Lord Lea of Crondall, who has already addressed that point. Norway is a small country blessed with huge oil and gas reserves, which is what makes it principally different from countries such as the UK. We cannot simply therefore step somehow magically into their shoes. I also say to the noble Lord, Lord Stoddart of Swindon, that while overall we have to fight to increase our share of world trade and our exports, a trade deficit, taken narrowly, is not in itself a bad thing. We have to recognise the benefits of trade to both sides, and therefore cannot simply dismiss the benefits that we have from EU trade by saying that we have a deficit.
The question about the benefits of going forward but nevertheless improving the EU market is precisely why my right honourable friend the Prime Minister secured a commitment for an EU growth test: to filter out EU legislation that is harmful to growth and jobs. The Commission’s proposed financial transaction tax is one such example. The European Commission itself expects that such a tax could reduce EU GDP by as much as 3.4 per cent or €422 billion—madness. More than that, as my right honourable friend the Chancellor has said it is “a bullet aimed”, squarely,
“at the heart of London”.
I say to my noble friends Lord Ahmad of Wimbledon and Lord Liverpool that the financial transaction tax requires unanimity to go forward, and that it will not get UK support. However, just as we have done and will do on directives in financial services and on the EU budget, we will continue through the current crisis to defend the full range of Britain’s interests in Europe.
Having picked up some of the important general themes that noble Lords have raised in this debate, I shall turn briefly to one or two questions about the analysis here. I certainly agree with my noble friends Lord Risby and Lady Falkner of Margravine and the self-styled noble and maverick Lord, Lord Desai, that this all goes much wider than some narrow cost-benefit analysis. Once we start this discussion, such an analysis is important but not nearly sufficient. I also agree with my noble friend Lady Falkner that there is plenty of material out there; it is not that the debate cannot be informed by a whole range of credible and indeed less credible commentators. In 2010 the Treasury reviewed that literature, which is available on the Treasury website, so we do not shy away from looking at the issue from time to time. There was also the 2005 study, which again is available on the Treasury website. I hope that it is of some reassurance to the noble Lords, Lord Bilimoria and Lord Empey, that we at the Treasury do not spend our time doing these studies on a daily basis—I hope they would expect us to be getting with doing some more valuable work with our time—but from time to time we look at what the outside experts are coming up with.
We should remind ourselves that, in addition to the costs and benefits of the EU, we as a nation risk downplaying our prospects at every turn. It is important to recognise, for example, that in the World Bank’s ease of business rankings the UK has got back into the top 10 and is now ranked seventh. That is critical. So I believe that Britain is well placed. We have lot to do internally in the UK, of course, and I have no doubt that there will be more discussion about that next week. As I said, the EU has much more to do with our active and positive participation.
I take the points made by the two noble Lord Davieses who have spoken in this debate about the location of manufacturing and the benefits that we get from it. I agree. On other issues of trade and investment, my noble friend Lord Ryder of Wensum referred to recent remarks by the chairman of the Chinese sovereign wealth fund, the CIC, on the eurozone. That gives me an opportunity to remind the House that the same chairman of the CIC was here two weeks ago with a very large delegation of Chinese officials and businesses, looking at the opportunities in UK infrastructure. While others have to go to Beijing begging for bailouts, we are very pleased to receive delegations here to look at opportunities in the UK. That is the context in which we should see this debate.
The noble Lord, Lord Kakkar, referred to another area of great strength for the UK: our world-beating excellence in clinical research. He made some telling points but, on the broad point about working time regulations, I stress that the Government are committed to the view that working people should decide the hours that they work, and we will continue to make that abundantly clear to the European Commission.
I did not get many questions directly, but a point was specifically addressed to me by my noble friend Lord Stevens of Ludgate about the UK’s exposure to losses of the ECB. I can confirm that net losses or profits are allocated to euro-area national banks and that non-euro-area national banks, such as the Bank of England, do not receive profits or losses from the ECB. The UK makes a contribution to the capital of the ECB but that is simply in relation to the bank’s running costs.
Finally, we had two interesting and remarkable contributions at the end from a more historical perspective from the noble Lord, Lord Gilbert, and my noble friend Lord Cormack. I merely say that, of those two contributions, I was rather attracted by and appreciate that of my noble friend and his important reminder of the insights that the late Lord Dahrendorf brought to these discussions and to the country more broadly.
In brief conclusion, let me be absolutely clear that the Government believe that leaving the EU is not remotely in our national interest. Standing on the outside, we would still be subject to the rules made in Brussels on the single market but powerless to influence them. Rest assured that rules written without us will not generally be in the UK’s national interest. We have always been the driving force for open markets and free trade in the EU, and that is a role that we will continue to fulfil to ensure that the UK’s voice is still heard and the UK’s interests are protected.
Lord Pearson of Rannoch
My Lords, I am grateful to all noble Lords who have spoken, I suppose especially to those who were nice about my persistence in this matter. I find that very agreeable, and I assure them that I will do my best to continue in that endeavour.
Briefly, I will pick up on the two speeches that were, perhaps, most critical of the Bill, by the noble Lord, Lord Davies of Stamford, and the noble Baroness, Lady Falkner. To the noble Lord I say that when he talks about fish not respecting national boundaries, it is a fact that before we joined the common fisheries policy, some 70 per cent of all the fish that swim in what are now EU waters did so in waters which were ours, and would be ours were we to leave the common fisheries policy. On the common agricultural policy, of course we are not suggesting that we will not continue to give aid to farmers. At the moment, the £3.4 billion that we give them annually comes out of the gross contribution to the budget of £18.5 billion, and not, as I think he may have suggested, out of the net £10 billion which we send in cash to Brussels.
The noble Baroness, Lady Falkner—the only contributor from the Liberal Democrat Benches, and very welcome for that—criticised the composition of the committee. I am quite open to agreeing with her on that. I do not think that it is impossible to find respectable people with no firm opinion as to whether we should stay in or leave the European Union. One would find quite a few of those on your Lordships’ Cross Benches. As to the views of Scotland, Wales and Ireland, this would be a national study, which would be free to consider the separate positions of those countries. Then, I am afraid, the noble Baroness, made the mistake of confusing our membership of the European Union with our access to the single market. I suggest that we discuss this when she has had time to read what I have said in Hansard.
The noble Lord, Lord Desai, made the very good point that this Bill is perhaps too narrowly drawn, and what we want is not just an economic cost-benefit analysis but something much wider. I agree with him on that. Two of the earlier Bills that we discussed in recent years in fact went wider, and wanted to consider not only our economic costs and benefits but the effect of our EU membership on our constitution, defence and so on. So, I completely agree with that. I do not know whether the Bill is amendable, but, if it is not, no doubt we can try another one fairly soon.
I was grateful to the noble Lord, Lord Watson of Invergowrie, who put many interesting statistics before us. I think they came largely from the trade union movement and showed how positive our EU membership is in economic terms. That would have to be considered by the committee and looked at very closely. I agree with the noble Lord, Lord Lea of Crondall, that if the inquiry produced a report that showed how positive our membership was overall, that would be that and we would have to live with it.
Coming to the Front Bench speeches, there was a unanimity there from the political class against the Bill, which was not to be found in almost any of the other speeches. The noble Lord, Lord Davies of Oldham, said that this is completely the wrong time for this sort of Bill. Europe is in crisis and we must be good, lie down, get on with it and hope for the best, or words to that effect. The noble Lord, Lord Desai, said to me in an aside that may not find its way into Hansard, although I think it should, “Never fix a roof when it’s raining”. The noble Lord, Lord Davies, said that we need international action and cited the environment. He took the line that climate change or, as it used to be called, global warming is man-made. Quite a lot of us disagree with that.
The Minister also agreed that any Bill of this kind should go wider than a pure cost-benefit analysis. He said that it was an important Bill but not sufficient, and I am grateful for that. I think I have already put him straight on the gross and net contributions. We are working from the Pink Book, not the Treasury figures. I refer him in particular to table 9.2 on gross and net contributions in the Pink Book, which came out last Wednesday, some three months late—I do not quite know why.
A number of noble Lords said that we want to be like Norway. The noble Lord, Lord Sassoon, mentioned this. Well, we do not want to be like Norway. We would rather have the position of Switzerland.
I think the Minister agreed with the noble Lord, Lord Kakkar, about the working time directive and other European legislation that is damaging our National Health Service. He said that he would continue to press the Commission on this point. My final question to the Minister is: what is the point of the United Kingdom continuing to press the Commission on these and other burdens that come from Brussels? With 8 per cent of the votes in the Council, there is nothing that we can do to reverse them and we will not do so.
I conclude by thanking all noble Lords who have spoken. I beg to move that the Bill be read a second time.