Negotiating Objectives for a Free Trade Agreement with India

Lord Hannan of Kingsclere Excerpts

Tuesday 6th September 2022 Grand Committee

[Lord Hannan of Kingsclere (Con)]

My Lords, I begin by declaring an interest as an adviser to the board of JCB. I mention it because it has really become, in practical terms, an Anglo-Indian company. Since my noble friend Lord Bamford made at that time a rather countercyclical decision in the 1970s to invest heavily in India, JCB has become an immense employer there, to the point that many Indians think of it as an Indian company or, at the very least, in the same sense that they think of cricket—it may technically happen to have been invented in the United Kingdom but it is essentially, in all practical senses, a largely Indian institution. That company seems to me a symbol of what I would like to talk about: the opportunities for both our countries and why we need to seize the moment.

The noble Baroness, Lady Hayter, asked whether we are getting the timing right. I put it to the Committee that we are getting the timing right both directly and in a more macro sense. For a long time, India was very slow to open its markets at all. Protectionism cast a very long shadow there. Think of the Indian flag, with the blue wheel—the chakra—in its middle. That was a stylised form, as you see very clearly in the flag of the old Congress Party, of the handloom. It is the kind that Gandhi used to carry around with him because, in his mind, independence and self-sufficiency were aspects of the same concept—swaraj. Because of the moral stature of Gandhi, protectionist and mercantilist thinking lasted in India for decades longer than it would otherwise have done, greatly to the detriment of Indian citizens, particularly those on low incomes.

It was really only in this century that India began properly to open its markets and join the global economy, starting in its own region and then signing deals with ASEAN and, more recently, with Japan. As a result, our share of Indian trade has fallen as those other countries have taken our place. In the years since the turn of the century, as a share of the Indian total our goods exports have fallen from 6% to 1.3% and our services exports from 11% to 2.1%.

This is a remediable problem; there are institutional solutions to it. Indeed, I would argue that there is no country, certainly no western country, better placed than ours to have a comprehensive and mutually beneficial trade deal with India. It has become commonplace in politics, almost a cliché, to talk about every group of migrants as enterprising, but in this case it is difficult to think of any migrant group anywhere in history that has been more enterprising, more business focused, and has added more to the economy of the welcoming country than the 1.5 million Brits of Indian origin, dominating, as they do, our lists of successful entrepreneurs.

There are also plenty of reverse JCBs; British brands have been extremely popular, from Jaguar to Tetley, as targets for Indian investors. That two-way investment rests on the most obvious congruities of language and law, habit and history, culture and kinship. What has not yet followed is the trade, because we have artificial government-imposed barriers to what would otherwise be a very natural commercial flow. If he was still alive, Gandhi would be astonished to discover that on the question of textiles it is now the other way around; it is not Lancashire dominating the handloom industries of India but now Britain imposing tariffs against Indian textiles, or having at least inherited those tariffs from the EU, including a 9.3% tariff on men’s shirts.

There are, of course, tariffs the other way around, as the noble Earl, Lord Sandwich, reminded us, including on whisky, on which there is an extraordinary 150% tariff. We should always remember that tariffs do the most damage to the country that applies them. Yes, they do some incidental damage to the exporters of the other country, but the cost is paid by the citizens whose Government impose them.

Removing these tariffs is an easy and demonstrable game, but that is not where the biggest opportunities lie. We have to think like a 21st-century economy, not a 19th-century economy. The big gains are in tech, engineering and coding, and in the mutual recognition of credentials and professional qualifications, which will mean changes to our visa regime. I cannot believe that there is no deal to be done there. What has tended to slow it up is that Britain has been pushing for more flexibility from the Indian Government on taking back failed, or illegal, entrants into this country, while India has been pressing for more work permits, more tier 3 visas. Surely there is a landing zone there. It must be possible to hammer out a deal whereby it is easier for Indians to come here legally but not so easy for them to come here illegally. Both Governments could easily trumpet that as a victory.

As for doing it by Diwali and whether we are being too hasty, the best answer I heard was from my Board of Trade colleague Tony Abbott, the former Australian Prime Minister. He was Prime Minister of that country fairly briefly—for 18 months or so—yet in those 18 months he managed to sign fairly ambitious trade deals with China, South Korea and Japan. When I asked him the secret, he said that it was imposing an iron deadline because otherwise the trade negotiators on both sides would string it out indefinitely; they like process and being part of the process, and there is no incentive on them. As my noble friend Lord Frost adds, there is then a constant open door to domestic lobbies to push for further additions or accretions to the deal. It is extremely important to have a deadline, even if it is a deadline by which to have concluded the bulk of the talks rather than one for ratification, which of course is a different question.

Finally, a number of noble Lords have raised the wider geopolitical orientation of India and the disappointing refusal of the Indian Government to take sides on the Russia-Ukraine conflict. I share that disappointment—by the way, it is a policy common to every south Asian Government; I think that they have all taken exactly the same position on the Russia-Ukraine war—but it is especially disappointing from a state that tends to self-define as a democracy. Indians take justified pride in the fact that, unlike some of their neighbours, they have remained a law-based democracy since independence. Elections happen without anyone being exiled or shot; the army does not step in and take power. It is therefore somewhat disappointing that India did not take a stronger line on the Ukraine war—not as a favour to the West, but in accordance with its own values. But whereas some noble Lords seem to see that as a reason to hang back or hesitate, I see it as the opposite. The orientation of India is perhaps the key geopolitical question of this century. If India sees itself primarily as an English-speaking democracy rather than just as an Asian superpower, then the world is an altogether brighter and warmer place.

We have been through a great deal together. The two largest volunteer armies in the history of the human race were the Indian armies in the First and Second World Wars, respectively 1.5 million and 2.5 million volunteers. There was no conscription on either occasion. We have a living link made of the extraordinary enterprise brought here and the extraordinary contributions across our national life made by British people of Indian origin. I am certain that, coming together as free and sovereign equals, we can restore what should be the natural traffic in commerce between two countries bound by what my friend, Professor Madhav Das Nalapat, calls the blood of the mind—a shared habit, a shared way of looking at property and at commerce. I am sure that, in that spirit, the best is to come.

Elections Bill

Lord Hannan of Kingsclere Excerpts

2nd reading
Wednesday 23rd February 2022 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

I crave your Lordships’ indulgence on two fronts. First, I was in a Select Committee which removed me from the Chamber for a large part of your Lordships’ deliberations. Secondly, I am going to be the umpteenth speaker to welcome the maiden speech of the noble Lord, Lord Moore of Etchingham. My grounds for being the umpteenth such speaker is that he was my editor nearly 30 years ago at the Daily Telegraph. If that strikes your Lordships as an implausibly long time ago, I can only say that he was something of a Mozartian child protégé in the world of journalism. He edited the Spectator when he was, I think, nine; the Sunday Telegraph when he was 11 or so; and the Daily Telegraph when he was 14. He was an absolutely model editor, fearless in his criticism of those in high places and absolutely impervious to praise from those beneath. Annoyingly, he now writes a column in the Saturday Telegraph. I say annoyingly, because I write one in the Sunday Telegraph and again and again I find that he has said what I was planning to say but much better—and today’s debate is no exception. He has covered most of the points that I had in mind, so I will confine myself to making just one.

I think the noble Lord, Lord Wallace of Saltaire, quoted John Major on the “fragility of the democratic system”. Those words come very easily, but let us ponder for a second how unnatural, how counterintuitive is the system which we have all taken for granted and about which we have become a little blasé. How odd that we elevate process over outcome. How odd that huge human populations care more about the honouring of a set of abstract rules, something that cannot be seen, or touched or heard or smell, rather than about the victory of their candidate—their tribe. Yet it is that counterintuitive and necessarily acculturated, learned notion that has made possible all the freedoms and personal liberties and comforts that we take for granted in modern liberal societies. Because it is unnatural, it is under constant pressure. If we look even at the United States, perhaps the first country founded in the ideal of popular sovereignty, we see how quickly people have moved back to taking a contingent, provisional view of elections. Almost without fail, every election is met by a series of acts of lawfare by whichever party happened to lose. That should not surprise us at all. The surprising thing is that they went for so long without that happening.

That is why I say that the act of voting needs to be enchanted—it needs to be given a little bit of magic and made to feel precious. After all, our vote, statistically, is unlikely to change very much. If noble Lords think back to the last time they cast a vote—not putting themselves in the shoes of a prospective imaginary voter but thinking of the last time they let a ballot drop from their fingers into that big black tin box—did they really think that the consequence of their vote would be more or less parking, or more or less housing or higher or lower council tax? Were they not doing it, at least on some level, out of a sense of civic obligation—a sense of duty?

It is terrifically important, if democracy is to be made to work, that the act of voting be magnified, dignified, almost sanctified, and given a sense of importance beyond the chances of one particular vote in one constituency making a major impact on policy. That is why, when there is a question of balance between potential fraud or devaluation of the vote and extra procedure, however minimal, our instinct should always be towards ensuring that people have absolute confidence in the integrity of the process.

By the way, I do not think it is that big a deal. Personation may not be a big deal, but neither is presenting identification. Most countries in the world do it. Countries with largely illiterate populations manage it. I rather agreed with the noble Lord, Lord Desai, who said that it was particularly patronising to suggest that somehow minorities were not able to vote in the same way as everybody else. In fact, if anything, I would have thought ethnic minorities in this country are more likely to have passports than the general population. It is a bizarre idea that being asked to demonstrate who you are is somehow off-putting. That is not the experience of pretty much anywhere else.

I am glad that the Front Bench opposite agreed on what I think are bigger issues in this Bill: the measures against harassment of candidates and those to crack down on some aspects of postal and proxy fraud. But I come back to saying that if we want people to vote and if we want to get away from the situation in which every recent election has been won by the stay-at-home party—in other words, the group of people who took the trouble to register to vote and then did not bother to vote on the day is always bigger than the single number of votes for any of the other parties—then we have to restore a sense that casting your vote is a thing of importance and dignity.

Of course, that will require some substantive changes. I would like to see a significant shift of power from Whitehall to town halls and from unelected functionaries to elected representatives. But it also involves making people feel that there was something special about that trip and that presenting their ID and casting their ballot was a civic act, one that dignified and elevated the process. If we do not do that, we are giving up on restoring honour, purpose and meaning to the act of casting a ballot.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Lord Hannan of Kingsclere Excerpts

2nd reading
Friday 3rd December 2021 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, this is very exciting for me. Some of your Lordships have sat through these Grocott Bills many times, but this is my first one. I feel as if your first House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill is a milestone, like getting your first pay cheque or having your first kiss—or maybe I should say, in deference to my right honourable friend the Secretary of State for Health, your first safety-conscious and careful snog.

I have to thank the noble Lord, Lord Grocott. He put forward the argument in a very light-touch, witty and courteous way. Of course, it is difficult to disagree with the central thrust of what he is saying. It is ludicrous and absurd that you should be a legislator on the basis of being descended from one of Charles II’s mistresses or whatever it is.

On one hand, what counts is what works. All sorts of things are irrational; we would not invent them today, but we keep them. I was struck that many of the arguments that the noble Baroness, Lady Hayter of Kentish Town, made against the hereditary principle would work equally well against the monarchy, yet as far as I can see there is broad support in the country for keeping a system that works.

More pertinently, if we are being consistent in our application of these rational principles, then, as my noble friend Lord Lilley just said, the whole composition of this Chamber is indefensible, ludicrous, absurd and all the epithets just applied by the noble Lord, Lord Grocott. After all, what is the function of Parliament? What are we here for, in an elemental sense? It is not to debate in this Chamber, sit on committees or go on parliamentary delegations. The fundamental purpose of the legislature is to hold the Executive to account, and it must be debilitated in that role if one of the two legislative Houses is appointed by that Executive.

It seems to me that this fundamental indefensibility is why we are debating this at all. The existence of the 92 hereditary Peers and the by-election process was precisely intended to be the pebble in the shoe—the thing that drew our attention to the indefensibility of concentrating these powers in the hands of one person and thereby ensured that we moved to a completion of stage 2 reform.

By the way, on the idea we have heard in this debate that the real problem is size and that if only we could trim the numbers, that would make a difference—getting rid of the by-elections would be one way of doing this—it is intrinsic in having an upper House appointed by the Prime Minister that it will keep growing. That is the reality. If a new Prime Minister comes in, he or she will want a majority and will therefore make use of the extraordinary patronage powers that he or she has under the existing dispensation.

In fact, I sometimes wonder whether the whole country is not going to end up here sooner or later. People in this Chamber often quote the Gilbert and Sullivan line about the House of Peers doing “nothing in particular” and doing it “very well”, but I wonder whether an apter song might be the one from “The Gondoliers” about everyone becoming a Peer and Dukes being “three a penny”. Perhaps the long-term plan is to put almost the entire country here and then concentrate real oligarchic power in the hands of the last few hundred people who still retain the right to vote for another place.

I do not see how we can get out of that constant growth unless we tackle reform properly. My noble friend Lord Lilley recalled the sequence of events that led to the deal. I was not around, but some of your Lordships were; I think the noble Lord, Lord Grocott, was involved. When Tony Blair came in, this was still a largely hereditary and overwhelmingly Conservative Chamber. He had a perfectly good and justifiable case for wanting change. As I recall, William Hague—my noble friend Lord Hague—was not a big fan of the hereditary principle. He said, “I don’t mind change, but it has to be to something better. We can’t end up in a situation where you, the Prime Minister, can appoint whomever you like.” Blair said, “Well, no, we’ll do stage 1 first, and then we’ll get around to that.” Hague said, “I don’t really trust you”—correctly, as it turned out, because here we still are.

If we want to change the indefensible element of the by-elections, we have to be consistent and change the indefensible element of having a House appointed by the Head of Government of the time. I am very open-minded about how we do it. I would settle for a lengthy non-renewable term, a partly elected element or the selection by lot that my noble friend just proposed. Almost any system is surely better than this huge quango state we already have in which the Head of Government can appoint whom he likes.

The idea that it is delayed and that the deal is therefore defunct is not how contracts work. This contract was deliberately designed to have in it this correction mechanism that would hasten the end. We can often wait for a long time. What was it that our Lord said about his second coming in Mark, chapter 13, verse 30? It was:

“Verily I say unto you, that this generation shall not pass, till all these things be done.”


We are still waiting for these things to come about after two millennia. There can often be a delay, but if we are serious about making this change it must be to something appreciably and demonstrably better.

This always goes down badly on all sides, but I personally favour an elected Chamber—but I am open to almost anything that would be a permanent settlement. I am not open to going back on the deal in order to try to preserve a fundamentally indefensible status quo. Either we believe in keeping our word or we do not. Pacta sunt servanda.

--- Later in debate ---

[Lord Cormack (Con)]

My Lords, the noble Lord, Lord Anderson, began in a rather understated way, by making a very important point that my noble friend Lord Lilley completely missed, as indeed did my noble friend Lord Hannan: no Parliament can bind its successors. My noble friend Lord Lilley, for whom I have great affection and regard, did a wonderful somersault when he suggested in introducing his argument on the Northern Ireland protocol that a Parliament cannot bind itself. That is an argument that we will doubtless come to yet again, but the fact is that no Parliament can bind its successor.

We are dealing with several Parliaments past. The noble Lord, Lord Grocott, is to be thanked for his courageous persistence, and he certainly has my support. As well as thanking him, however, I slightly rebuke him today. I thank him most warmly for accepting the argument of the continuity of the two, the Earl Marshal and the Lord Great Chamberlain, who do not form part of this Bill, although they did form part of an earlier Bill that my friend the noble Lord introduced. However, I have to rebuke him on behalf of poor old King Canute, who went to show that he could not turn back the tide, not that he could. The misreading of history by such a wonderful historian as the noble Lord, Lord Grocott, must be of profound regret to us all. I hope that he will do due obeisance to King Canute—the most realistic of our early monarchs—at an appropriate moment.

We are, as we say, here again. Much as I have a high regard for many of our hereditary Peers—the noble Baroness, Lady Meacher, made this point and I think we would all make it—the fact is that none of them is in danger. This is not a Bill to exclude hereditary Peers, nor one that prevents life Peerages being conferred upon hereditary Peers. All it is saying is that the by-election system has become an absurdity. How anyone with a grasp of logic and the forensic skills of a Lord Hannan cannot accept either that a Parliament cannot bind its successors or the absurdity of this system, I find, frankly, incredible. He is going to intervene —of course he is.

[Lord Hannan of Kingsclere (Con)]

My Lords, the point is that we can pass primary legislation. The deal was enshrined in parliamentary legislation and, if that happens, we can, of course, move to stage two reform but, in the meantime, we should not be nibbling at the edges.

[Lord Cormack (Con)]

What an extraordinary point to make in this week of all weeks—which began with the Bill that repeals the Fixed-term Parliaments Act. You cannot have it both ways. He will try very hard of course, as will my dear and noble friend Lord Mancroft, but the plain, blunt fact of the matter is that when an election, as we had a couple of years ago for the replacement of a hereditary Liberal Democrat, has more candidates than electors, it is made a tad odd, we might say. What we can and should do is respect the will of the majority. It has been quite plain and manifest when we have had votes on some of the ridiculous, convoluted amendments produced to this Bill—it has demonstrated beyond any peradventure that the vast majority in your Lordships’ House are embarrassed by this system.

If those who have put up a superficially clever defence this morning could only reflect on the logic of their own basic arguments, they must surely see that if the majority of your Lordships’ House—Conservative, Labour, Liberal, Cross-Bench, an overwhelming majority —feel that we ought to get rid of this embarrassing absurdity then we should do so. If your Lordships’ House is to show a real respect for democracy, then this Bill should go through its remaining stages quickly and go to the other House.

I believe very strongly in what my noble friend Lord Attlee said about an appointed House; I have always defended an appointed House. We are too large; let us do something about that. We should, for instance, prevent those who attend less than 20% of the time from coming. Those who take leave of absence in consecutive years, unless it is for reasons of illness, should forfeit their membership. We can do all sorts of things to bring down the size. We can and should accept the arguments of the committee of the noble Lord, Lord Burns. The Prime Minister’s profligacy in the distribution of peerages, unlike his predecessor, Theresa May, has done no service at all to parliamentary democracy or our constitution. I hope that he can be persuaded to be a little more circumspect—

Protocol on Ireland/Northern Ireland: EU Negotiations

Lord Hannan of Kingsclere Excerpts

Thursday 18th November 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, the noble Baroness is right that there are a number of conditions referred to in Article 16 for its use—economic and social disruption, trade diversion and so on—and, although they are conceptually separate, they all sort of feed into each other and create the conditions that might require the use of safeguards. I repeat what I said earlier: obviously we will be transparent and clear and set out our approach to Article 16 and the justification, if and when it comes to that point.

[Lord Hannan of Kingsclere (Con)]

My Lords, I very much welcome my noble friend the Minister’s original Statement, and his repetition today that we are prepared to say that the threshold for triggering has been met. It is indisputable that there has been trade diversion and that there is a political crisis if half the population and every unionist party is against the protocol. Will my noble friend the Minister take this opportunity to confirm that, if we go down the route of Article 16, it will not be simply for the purpose of extending waivers, derogations or exemptions but to take the opportunity to tackle the jurisdictional problem that part of our country is governed from abroad? We exported to the world the sublime idea that laws should not be passed nor taxes raised except by accountable representatives. We should extend that principle to our fellow countrymen in Northern Ireland.

[Lord Frost (Con)]

My noble friend is right that the current situation in Northern Ireland, with various grace periods and other easements in the implementation of the protocol, is nevertheless generating tensions and difficulties, and that the full implementation of the protocol, were that ever to be required, would generate even more difficulties. I think it is correct to think that, if we use Article 16 and safeguards, it will be to improve the situation over the one that we have now.

House of Lords: Appointments Process

Lord Hannan of Kingsclere Excerpts

Thursday 18th November 2021 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, I am afraid that what I am about to say is going to be very unpopular on all sides. I console myself with the thought that I am used to this; I was in the European Parliament as a Eurosceptic. I console myself also with the thought that your Lordships are much more decorous, polite, kind and generous than my former colleagues.

None the less, here goes: I do not believe that it is sustainable for us to have a Chamber of the legislature appointed by the Executive. If this were happening in North Korea or South Sudan we would regard it as absolutely intolerable. The primary function of Parliament —if the other place traces its ancestry back to 1265, I think we can trace ours back to the Great Charter itself in 1215—is to hold the Government to account. That task must be enfeebled if the Executive of the day can nominate one of the two Chambers.

I would like there to be not a revolutionary change, as the noble Lord, Lord Dubs, says, but a considered and serious overhaul. I am afraid that I do not believe that nibbling at the edges makes any difference. I do not think that the view of this Chamber outside is affected by the number of people here; in fact, it was not the point he was trying to make but when my noble friend Lord Balfe quoted the numbers in the Division Lobbies he showed that it was about the right size in practice, if not in theory. Nor do I really think it is about the kinds of people coming in. We all have our own ideas about what kinds of people should not be here. Some might say that there are too many donors, quango-crats, white people or ex-MPs, but no two people will agree on those criteria and, unless we are prepared to go all the way and have some kind of more directly representative or elected Chamber, we are never going to get an answer.

I would like us to look at this properly in the form of a royal commission: a trusty if somewhat staid instrument that can take into account a number of other considerations to do with the balance between devolved and central institutions, the voting system and all the rest of it, and then come to a considered and measured conclusion.

Hereditary Peers: By-elections

Lord Hannan of Kingsclere Excerpts

Wednesday 10th November 2021 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, is this not really about good faith? I have not been here very long but some of your Lordships were here when a deal was done, establishing the current system pending stage two reform. At the risk of making myself Billy-no-mates again, as I was in my old job, I favour eventual democratisation but, unless we are prepared to do that, does my noble friend not agree that it is perverse to be targeting what is, despite a limited franchise, the only elected element in this Chamber?

[Lord True (Con)]

My Lords, I will not be tempted too far down that road or some people might resuscitate some of the things that I said 10 years ago about your Lordships’ House and its composition. I now stand at the Dispatch Box as a Minister. My noble friend is absolutely right that we have a system that came out of particular circumstances. It was assented to and, as the noble and learned Lord, Lord Irvine of Lairg, said at the time, will bind and honour all who gave it their assent until we have reform of your Lordships’ House, which, as I hear, a lot of people would favour.

Ministerial Code

Lord Hannan of Kingsclere Excerpts

Tuesday 9th November 2021 Lords Chamber

[Lord True (Con)]

My Lords, I have explained the constitutional position. So far as the Prime Minister’s movements are concerned, I am thankfully not responsible for them, but he was on a prearranged official visit to the north-east. My right honourable friend the Chancellor of the Duchy of Lancaster, who heads up the Cabinet Office and is responsible for this, led in the parliamentary debate. The Speaker was informed that both my right honourable friend and the leader of the Scottish nationalists would be unable to attend.

[Lord Hannan of Kingsclere (Con)]

My Lords, until a generation or so ago there was almost no statutory regulation of Ministers, Members of the other place, or Members of this Chamber. Does my noble friend the Minister see a danger that the proliferation of codes, statutes and commissions skews incentives, encouraging politicians to tick the boxes, rather than asking themselves whether their behaviour is, in the broader sense, moral or edifying? Is there not a danger that we are replacing a culture of conscience with one of compliance?

[Lord True (Con)]

My Lords, my noble friend is absolutely right to say that the background, provisions and guidance have changed and evolved over time, and they will continue to evolve.

Health and Social Care Levy Bill

Lord Hannan of Kingsclere Excerpts

2nd reading & Order of Commitment discharged & 3rd reading
Monday 11th October 2021 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, that is one way of putting it. This Bill has been so hacked about from every Bench, so lacerated, that it seems an act of almost wanton cruelty to take out my own cleaver and join the mob. In the spirit of balance—at least, of karmic balance—let me therefore at least preface my remarks by saying that this is a good problem to have, in one sense, because we are talking about a problem caused by improvements in medical care and increased longevity, and we are looking at ways in which the wealth of an increasingly well-off society can spill over into the social care sector.

In the end, wrote Goethe, in what has always struck me as the single most depressing line in the whole corpus of European literature, we are all King Lear. Of course it was not quite true in his day and it is not true today, but we have a challenge, like every developed country, in ensuring that we are not stretched out upon the rack of this tough life any longer than necessary.

I wanted to agree with what I thought was a devastating takedown of the proposals by the noble Lord, Lord Eatwell, but I am going to disagree with one aspect of his remarks where he spoke about the reduced proportion of GDP going on health and social care. That strikes me as not a great measure. A more useful metric is what is the absolute amount. If you can grow an economy very quickly then a smaller proportion of that economy can be a much larger sum. It therefore seems to me that the question, if we are looking at how to fund this or indeed any other aspect of our welfare system, is where we strike the balance between getting instant revenue now by raising taxes and ensuring that that growth continues, thereby generating future surpluses. If, as in this case, we are looking at the prospect of increasing costs—because I think we can reasonably expect that longevity will continue to increase and that there will continue to be medical advances—how do we ensure that it is funded sustainably and that we do not, in removing money from the productive bit of the economy now, reduce the overall size of the economy and so damage future revenue?

However, I agreed very much with what the noble Lord said about the craziness, as we come out of the worst downturn that we have had—worse than anything we saw in either war or in the recession—of taxing jobs. Of all the ways that we could be raising revenue, this seems to me the most misconceived. On the contrary, we should be finding ways to reduce taxes on employment and investment so that, as furlough ends, we encourage people and firms to be investing and hiring more, thereby of course generating more economic activity and, in the medium term, more government revenue.

I would be very happy to see national insurance scrapped. If we consider the case made against it by the noble Lord, Lord Lipsey, and my noble friend Lord Lansley, it is quite difficult to see why anyone—I agree with what the noble Lord, Lord Lipsey, said—would invent it today. I very much support my noble friend Lord Forsyth of Drumlean’s idea that we should be honest and merge it with income tax and stop the pretence that it is somehow a hypothecated tax paying for social care. Of course, Governments will never do that, because they will never admit the amount they are actually taking in income tax—so they pursue the strategy of having lots of little taxes to add up to one big one as a way of disguising the overall tax burden.

I also agree with the noble Lord on the absurdity of hypothecation. It is not that it is a bad idea, but that it is impractical. It did not work for Gordon Brown and has not worked for any other leader. It is impossible to devise a system where a Chancellor cannot simply substitute a different budget. It has defeated every attempt at doing so.

Finally, I agreed with the noble Lord, Lord Eatwell, when he spoke very truly and said that it is in the nature of taxes to go up. That has been true of almost every tax, going right back to the introduction of income tax as a temporary measure to pay for the Napoleonic Wars. Governments find that they do not have the revenue they need and have to widen and deepen the tax. So let us be clear what we are talking about; it is going to be a ratchet, where there is constant pressure for higher budgets, higher caps and so on.

Why are we doing this? Why have we picked this tax and this method? And why, as every other Bench has asked, are we doing it in such a hurry? I was very struck by how few people in the other place on the Conservative Benches voted against it. My right honourable friend the Minister, with commendable honesty, described it as a

“permanent … increase in the size of the … state”.—[Official Report, Commons, 14/9/21; col. 844.]

That is absolutely right. How many people on Conservative Benches in either House went into politics in order to pursue a permanent increase in the size of the British state? Yet there were only something like five Conservatives in another place who voted against it.

I suspect that that is because, when asked in isolation, this measure polled very well. It always does. If ever you phrase an opinion poll question as “Should we raise taxes to pay for”—insert desirable thing—you always get a very large yes, because people have been conditioned by our political discourse to hear the question as “Are you a nice person? Are you selfless or are you greedy?” They cannot tick a box in that opinion poll that says “Well, only if it is accompanied by efficiency gains”, or “Yes, I will happily fund more clinicians, but I don’t want to fund more NHS diversity officers”, or “What has happened to the £20 billion that has already been spent?”, or “Could it be done with the following priorities?” So they say yes because they do not want to look ungrateful.

My noble friend Lord Tebbit, when he was the Conservative chairman, once said that the only opinion poll on tax that matters, the only question that elicits a valid response, is “Do you feel that the amount of tax you personally are paying is too low, too high, or just about right?” I suspect that, when people see the implications, not least the second-order implications, of there being fewer jobs and therefore less overall revenue and slower growth, there will be a very different attitude.

Of course, your Lordships do not need to worry about opinion polls. The function of this House is precisely that it can take a longer view and bring perspective to these questions. It is clear, if you look at the long view and take a proper perspective, that the way to have growth and an economy that can then more easily accommodate increases in healthcare, social care and all the rest of it, is by pursuing the formula that has always and everywhere increased economic performance: freer trade, lighter regulation and lower, flatter and simpler taxes.

Brexit Opportunities

Lord Hannan of Kingsclere Excerpts

Thursday 16th September 2021 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, I very much welcome the Statement and the fact that my noble friend is here to give it. I very much welcome the report. I was astonished, when I was a new MEP 21 years ago, by how much big corporations lobbied for precisely these kinds of regulations, almost always because they saw an opportunity to disadvantage a rival by getting standards that they happened to follow anyway. Of course, they did not put it in that way— they would call it consumer rights or environmental protection—but that is almost always what it was, and it is wonderful that we are finally doing something about it.

Does my noble friend agree that the same principle should apply to our trade policy? Does he share my concern that the Trade Remedies Authority’s recommendation to remove some of the steel tariffs brought in by the European Union in retaliation against Trump was overturned? Does he see the same possibility of politics overriding economics, and does he believe that a global Britain should be an engaged, free-trading country where imports are cheap, costs are low and people have more money to spend on stimulating the entire economy?

[Lord Frost (Con)]

My Lords, I do believe those things. I have two points in response. On industry support for regulation, one reason that we intend to set up our standing commission is to make sure that we can listen not just to trade associations and big companies, important though they are, but to small and medium-sized enterprises, the people who gain from change and doing things differently, as well as those who gain from things being as they are. On free trade, of course I am a free trader. I believe that this country prospers by free trade; I think the whole Government believe that. On steel, obviously there is a particular situation in the global market in steel which has been discussed elsewhere, but, as a general proposition, we wish to reduce barriers, reduce tariffs, get in place free trade agreements and allow everyone to prosper.

Protocol on Ireland/Northern Ireland (EUC Report)

Lord Hannan of Kingsclere Excerpts

Monday 13th September 2021 Grand Committee

[Lord Hannan of Kingsclere (Con)]

My Lords, the Northern Ireland protocol stands on a palpable absurdity, namely the idea that checks on goods between Northern Ireland and the Republic of Ireland will upset the political equilibrium, possibly even threaten the peace, but that such checks on goods between Northern Ireland and Great Britain are just fine and dandy. It is because we have all been dancing around that anomaly that we are meeting here in this Committee. All the ripples have been caused by trying to come to terms with something that is simply absurd.

I add my voice to all those who have complimented our chairman. Our committee indeed has, to use his phrase, “strong and divergent” views. There speaks nearly 40 years of diplomatic experience. That is one way of putting it. None the less, we have come up with some serious proposals with consensus. I think that we were able to do so for one reason, which is worth bringing out: of all the witnesses we heard from, there was not one that was actively pro-protocol. There was certainly a variety of views. I was very impressed. It was the first time that I had been on a Select Committee and everything that people said about the balance, fairness and thoroughness was absolutely right. We heard from every different quarter of opinion. There were those who thought it was a price worth paying, those who did not, those who put the blame on Brexit and those who put the blame on the protocol, but there was not one voice arguing that the protocol was an improvement on the status quo ante—not one.

I can broadly group under two headings the complaints that I heard from the various witnesses who appeared before us. One lot are what we might call the practical objections. They were uniform, I think, across Northern Ireland. You could not tell which tradition someone was from when they voiced them. They were concerns to do with sausages, pet passports and all the other pragmatic difficulties of overzealous implementation. I think there would, in theory, be quite easy solutions to them if there were a modicum of good will. The second lot, I think it is fair to say, were objections voiced largely from unionist and loyalist sources and had to do with what we might loosely call the democratic deficit—the idea that Northern Ireland will have laws, even taxes, imposed on it by people that it cannot vote for. Those are much harder to deal with, at least within the protocol. We can safely disregard the various ideas that they can be resolved by somehow allowing Northern Ireland to be politically further annexed by the EU. They are a very difficult set of problems to resolve.

If I were an EU negotiator, I would be super-flexible about the first lot, thereby maximising the difficulties of any UK Government wanting to deal with the second lot. It would not really be any skin off my nose. We heard my noble friend Lord Empey quote the figures of the miniscule amount of the EU economy accounted for by Great Britain/Northern Ireland trade—0.008%. However, it seems that the Brussels negotiators do not have the same diplomatic skill that I see arrayed on the Bench opposite, albeit with a little gap now with the noble Lord, Lord Kerr, having absented himself. Instead of showing flexibility on the practical side and digging in on sovereignty—which is what we might expect them to do—they have been difficult and obstreperous about every issue, even requiring rabies shots for pets moving from Great Britain. It is very difficult to avoid the conclusion that they relishes our discomfort and are seeking to use the protocol as a pressure point, a way of exerting pressure on the UK to secure our long-term adherence to EU standards. We heard some of the figures: 20% of EU external checks are applied to 0.5% of its trade, if you count Great Britain-Northern Ireland trade as external trade. Why are they doing this?

It is extraordinary, listening to the debate in this Chamber, another Chamber, more widely in the media and, I have to say, from three speakers so far how often the only answer we get is, “Well, you signed it”. Seriously, is that all you have? How does that take us forward? It is true that it was signed, as what we might call an unequal treaty. History is littered with examples of treaties that ceased to be valid and were then abrogated or annulled. An apt example, given both the subject matter and this being its centenary year, is the Anglo-Irish treaty of 1921. It was repudiated in stages by successive Irish Governments, first breaking their residual constitutional links with the UK, then declaring a republic and leaving the Commonwealth. I note en passant, as we old Brussels hands say, that when that the final break was made in 1949 the UK Government were remarkably affable about it. In fact, King George sent the following message to the Irish President:

“I hold in most grateful memory the services and sacrifices of the men and women of your country who rendered gallant assistance to our cause in the recent war … I pray that every blessing may be with you today and in the future.”


I wonder whether the European Union will be similarly accommodating if a similar repudiation happens. Somehow, I doubt it. Maybe that is something we can all agree on around this Room.

When a treaty is not working, when a treaty is a product, as this one was, of the Benn Act and of a Parliament that was not working to get the best possible terms, it will obviously have to go in one way or another. It seems to me that there are three options. In declining order of drama, there is outright repudiation, the triggering of Article 16 or asking for some changes within the existing structures. The first is the cleanest, and there is precedent, but so far I see little appetite for it.

There is already ample justification for the second. Article 16, just to remind members of this Committee and other noble Lords, contains the following clause:

“If the application of this Protocol leads to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade, the Union or the United Kingdom may unilaterally take appropriate safeguard measures.”


Leaving aside “environmental”, it seems to me that we have already passed that threshold on the others. In terms of economic disruption, Northern Ireland sells more to Great Britain than to the Republic of Ireland, the rest of the EU and the rest of the world put together. We heard from one of our witnesses that Northern Ireland-Great Britain trade is now subject to £10 billion of extra costs, and three-quarters of Northern Ireland businesses said they had been negatively impacted. As for societal difficulties, when, according to the opinion polls, half of Northern Ireland is against it—it is now almost exactly half and half—that is normally taken in the Northern Ireland context as a pretty good argument to desist from your course of action and try something more consensual.

As for trade diversion, that is not in doubt. We heard that north-south trade increased by 50% as businesses in the Province shifted their sourcing and trade, but to portray this as a good thing, to portray the cause of extra cost and bureaucracy forcing trade diversion as somehow an economic step forward, is rather like arguing that it was a great thing that the blockade in the Second World War led to people growing more potatoes in their gardens. The most basic principle of trade is that we should trust businesses to do what is rational and profitable. If they cannot do so because of needless paperwork—applied, to repeat, not in any proportionate spirit but for the sake of making trouble—it seems to me that must be reckoned a net cost.

So one way or another, the current deal is going. The only question is whether it goes in agreement with our European partners or through unilateral action. I have to say—I know this goes against the spirit of the meeting—that my noble friend the Minister has shown heroic restraint so far in asking nicely for changes, rather than making them unilaterally. When we think that the European Union triggered Article 16, albeit briefly, on no grounds beyond pique that the UK vaccine programme was ahead of its own, we have ample cause in terms of the economic and societal impacts that we have already seen.

I hope we can do this consensually. I hope that Northern Ireland becomes a bridge between the UK and the European Union, but there is no veto here: one way or another, the protocol has to go.