European Union: Negotiations (European Union Committee Report)

Debate between Lord Lea of Crondall and Baroness Noakes

Monday 16th March 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, it will not surprise the House to find that I will not be echoing the sentiments of the noble Baronesses, Lady Hayter and Lady Ludford. I welcome the Government’s plans for a future relationship with the EU, as set out in their White Paper, and I particularly welcome my noble friend Lord True as the Minister in this debate; it is in very capable hands.

I could not be more proud of the approach that the Government are taking to our relationship with the EU. We have left behind us the servile acquiescence that characterised the first three years of negotiations with the EU after the referendum. In its place, we now have a confident Government who really believe in our future outside the EU and have the strong backing of the British people from last year’s general election.

In the Command Paper, the Government have set out their vision of

“friendly co-operation between sovereign equals”.

Those of us who strongly supported the UK’s exit from the EU are much heartened by both the content and the spirit of the Government’s position, and I look forward to my noble friend’s summary of the key elements of our policy when he winds up.

For me, the most important aspect is that we are seeking a comprehensive free trade agreement with the EU. We are one of the world’s largest economies, and we expect to be able to negotiate trade agreements with our trading partners on a basis of mutual respect on both sides. The EU is no different from any other trade counterparty in this respect. It is the same basis on which we should approach negotiations with other important trading partners, such as the USA.

Of course, that means that we do not want an association agreement and will not bind ourselves to the rules and mechanisms of the EU, whether for a level playing field or any other purpose. Our country did not vote to leave the EU in order to recreate the past relationship all over again. We especially did not vote to leave the EU to be bound to mirror any part of its regulatory environment in perpetuity. Dynamic alignment is a million miles from any reasonable interpretation of what the British people voted for in 2016.

[Lord Lea of Crondall (Non-Afl)]

Is the noble Baroness saying that she is advocating no deal?

Brexit: Competition and State Aid (EUC Report)

Debate between Lord Lea of Crondall and Baroness Noakes

Thursday 24th May 2018 Lords Chamber

[Baroness Noakes (Con)]

My Lords, when the UK took the momentous decision to leave the EU nearly two years ago, the underlying rationale for the EU committee structure in your Lordships’ House was largely destroyed. This was set up to scrutinise EU proposals that would impact the UK. According to my countdown app, just before I rose to speak, there are only 311 days and 11 hours before we leave the EU. Much of what we are now scrutinising is unlikely to be implemented in the UK, and so scrutiny, at the moment, has little or no meaning. I had expected that the EU Select Committee and its six sub-committees—absorbing the energies of 70 or 80 noble Lords—would, by now, have been reduced and streamlined. But the committees have been busily converting their purpose to scrutinising Brexit. Since the referendum, over 30 reports entitled “Brexit this” or “Brexit that” have been issued. There is a clear role for your Lordships’ House in holding the Government to account in this hugely important policy area, but I query whether we have got the balance right, either in the use of our own resources or—more importantly—in the burden we impose on the Government, given the scale of their task in preparing for Brexit. That both Ministers and officials have dealt with your Lordships’ scrutiny in good heart is a tribute to them. But the question that I pose to the House is whether we should be acting in this way and whether we are being reasonable and proportionate.

The report that we are considering today is from the sub-committee that has the internal market in its title—though it does not deal with goods or financial services and might better be called the “odds and ends” EU sub-committee. I am a member of this odds-and-ends sub-committee and, despite my views on the utility of the EU committee work at the moment, I pay warm tribute to the noble Lord, Lord Whitty, for being an excellent chairman.

[Lord Lea of Crondall (Lab)]

I am grateful to the noble Baroness for giving way. Does she not agree that, on this question of how Brexit would affect state aid, my noble friend Lord Whitty, in his role as chairman, has made a number of observations that show how important and topical it is? I do not understand why the noble Baroness is taking this opportunity to criticise the role of the network of sub-committees. This is a good example of it doing its job very well.

[Baroness Noakes]

My Lords, I was only trying to say that I thought the amount of effort being devoted to this particular aspect of government policy could be regarded as disproportionate, given that the fundamental rationale for the EU Select Committee and sub-committees was to scrutinise the proposals emerging from the EU which would affect the UK. It has stretched its current terms of reference to deal with Brexit matters but, since there is a large number of sub-committees with a large number of noble Lords involved, we tend to produce reports on a very large number of issues, many of which overlap and cover the same underlying issues; for example, mobility of labour. I am merely challenging the proportion; I am not challenging whether any particular aspect of any particular report is or is not interesting or useful.

Perhaps I may continue. I will not deal with the report overall, because the noble Lord, Lord Whitty, has already ably summarised that. The Government have provided a very speedy reply which is comprehensive within the constraints of the current state of negotiations with the EU, which is entirely understandable. The response indicates—although it is too polite to say so in terms—that our report did not identify any new issues beyond those already on the Government’s own list of Brexit things to do. I think that that supports my critique about how well your Lordships’ House is spending its time.

I shall focus on two areas: mergers and state aid. On mergers, one important implication of our leaving the EU is that we will no longer be subject to the decisions of the Commission and the jurisdiction of the European Court of Justice in relation to mergers which affect solely the UK. At the moment, the Commission can and does claim exclusive jurisdiction over mergers which engage no issues whatever outside the UK. These are inevitably the larger transactions affecting the UK. It is right and proper that these cases should return to the exclusive competence of the Competition and Markets Authority.

Of course, mergers that cross the border between the EU and the UK may become a little more complex in future in that both the Commission and the CMA could be involved. The one-stop shop is currently a convenient mechanism for businesses involved in cross-border EU-only mergers. But many mergers engage interests that go beyond the EU and thus may well inevitably involve more than one global competition authority, and the loss of the overall one-stop shop will barely affect those. In my view, the loss of the one-stop shop is therefore a marginal issue.

The report rightly emphasises the desirability of strong co-operation mechanisms going forward, and there need to be mechanisms to allow the sharing of data. But in practice this is unlikely to affect merger cases, because the parties should be happy to agree to data sharing in order to speed up clearance processes. None of our witnesses thought that data sharing and co-operation will in practice be a showstopper.

There was also general agreement that our overall competition policy, for mergers in particular, would not change markedly post Brexit. That is partly because there is a broadly converged global approach to competition and mergers. However, Brexit will allow the UK to develop incrementally; for example, in faster and more responsive processes and in more innovative solutions. We will be free to develop in ways that our own Parliament determines. Our courts can develop their own jurisprudence and, in particular, will not be constrained by the ECJ’s overarching principle of developing the EU internal market. So the general view was that not much is likely to change for now but that we will in future be able to change our policy in ways that suit our economy. That, in my view, is the one big message from this report.

I will turn briefly to state aid. The report is clear, as the noble Lord, Lord Whitty, has already pointed out, that state aid rules are not a major issue for the UK economy at the moment; indeed, the UK is one of the smaller countries in the EU in terms of spend on state aid per head of population. The UK managed perfectly well without a state aid authority before we joined the EU, but it seems that we will not be able to leave without one. There seem to be two reasons for this. First, it is likely that any future free trade agreement will need something to guard against unfair competition due to state aid. Secondly, a bizarre consequence of devolution is that we will apparently need an authority to determine whether there are state aid distortions within what we now have to call the UK’s own internal market.

Since our report was issued, the Government have confirmed what was widely suspected, namely that the CMA will take over the state aid authority role. In that connection, it was good to see that the CMA has received nearly £24 million this year in connection with Brexit preparations and an additional £3 million for additional staffing for the additional caseload. The CMA, in evidence to our committee, was itself relaxed about the adequacy of resources for the task given to it, and I see that one of its executive directors, Dr Michael Grenfell, reiterated that in a speech this week.

I have a couple of questions for my noble friend the Minister about the Government’s role in relation to the CMA, and these touch on the CMA’s independence. First, at present the Government appoint the board of the CMA. In future, the CMA, as the state aid authority, will be sitting in judgment on the Government’s actions from a state aid perspective. This is quite unlike other public sector bodies. Does my noble friend agree that the independence of the CMA, which I know the Government value, needs to be underpinned by appointment processes which are demonstrably independent of the Government? The judicial appointments model offers a useful precedent here.

Secondly, the Government have issued to the CMA what they describe as a “strategic steer”. Do the Government think that that will continue to be appropriate once the CMA has assumed a new role in relation to state aid? It seems to me that a strategic steer comes perilously close to being a direction to the CMA by the back door, and that would clearly be wholly inappropriate in relation to state aid decisions.

Thirdly, within the strategic steer, the Government currently commit to a presumption that they will accept the CMA’s recommendations but allow for policy override. I do not think that that will be good enough for state aid responsibilities. Will my noble friend agree that the Government will need to show a firmer commitment to abide by the CMA’s decisions in relation to state aid?

Those are points of detail. The main message is that no burning issues arise from this report, and certainly none that the Government are not already fully engaged on.

Queen’s Speech

Debate between Lord Lea of Crondall and Baroness Noakes

Thursday 5th June 2014 Lords Chamber

[Lord Lea of Crondall (Lab)]

My Lords, after that Panglossian account, I wonder whether the noble Lord who has just spoken was knocking on the same doors as I was a couple of weeks ago. Many Labour politicians who were knocking on doors found a deep sense of insecurity right across the country, apart from in London, where the experience is generally not the same as that of the rest of the country. All the statistics show that—not least the fact that house prices in London are double the rest of the country. The rest of the country more or less moves together.

There is no easy way to fix this, but fix it we must because otherwise we will be left in the position of those people on the continent who remember the 1930s. I remember that when I was on the Bruno Kreisky commission on unemployment in Europe one wise old bird said, “Well if people don’t believe that politicians can do anything about their insecurity in employment, why do we need any politicians?”. That has dangerous implications. I do not want to exaggerate, but the malaise is not unrelated to some of the types of data that we have been hearing about. I will give two examples.

Involuntary temporary and part-time work is growing, but the actual numbers are startling. I was going to say, “Hands up who know that the ONS has shown that these categories of involuntary temporary and part-time work have risen by 66% and 103% respectively since 2008”. A new analysis by the ONS of zero-hour contracts shows the scale of insecure work. There are 1.4 million such contracts—or 2.7 million if the 1.3 million contracts for people who are reported as doing no work over the two-week time period used for the analysis are included.

There is another example of an unjustifiably satisfied gloss being put on the state of our economy at the moment. I pick up the point that arose from a remark by the noble Baroness, Lady Noakes, with whom I always enjoy crossing swords on these occasions. It is true, as she said, that no major advanced economy has grown as fast as we have in the past 12 months. But the explanation for that is very largely that, in the vernacular, if you dig a bigger hole, you have to grow faster to get out of it. I will give you the statistics. If we look at the total position of the British economy and the German economy from the same benchmark starting date of the same quarter of 2008, our position as of April is that we are still two thirds of 1% lower than before we fell off the cliff. We are still below the peak. Germany, from the same benchmark starting date, is now 3.83% higher than before the peak. That is the relevant statistic—not how fast we are growing in one or two quarters at the present time, welcome as that is.

[Baroness Noakes]

I am fascinated by what the noble Lord said. Could he remind noble Lords under which Government the hole was dug?

[Lord Lea of Crondall]

It was Lehman Brothers what dug the hole, if we want to get to that level of sophisticated debate. Gordon Brown was the most courageous statesman in the world in stopping it being even worse than it was. The noble Baroness represents the flash boys in the City and so on as part of the ideal economy, but I would say that it is those people what created the crash. Unless there are any more questions I will proceed.

We had a 7.2% fall from the peak, as I think my noble friend Lord Adonis pointed out.

One party in the coalition Government was the party of Disraeli, who famously referred to one nation. We are losing a sense of one nation and I would like to hear a little more from the Benches opposite about whether they do not think that there is a deep, chronic problem now in talking about one nation. Of course, there are three or four dimensions of it. There is the regional dimension, which I will come to, and top-down, education and social class. We all know that you can measure all the interactions until the cows come home. However, it would be foolish to deny the absolutely extraordinary change in the degree of inequality in this country over the past few years. We have now gone back to before 1945. I am holding up a graph which normally hangs on my wall. It looks like we are climbing Mount Everest, having last seen a similar peak of this ratio before the Second World War. That is not conducive to one nation or to a healthy economy.

I want to talk a little about the structural problem that is reflected in the contrast between the two economies in the United Kingdom: the London economy and the non-London economy. All the figures for the non-London economy of the UK correlate to some extent and show that the London economy is nothing like that of the rest of the UK. A brilliantly argued and well researched report by Deutsche Bank Securities published last November reached the conclusion that,

“there was less correlation in growth patterns between London and the rest of the UK than between the different members of the eurozone”.

It is hard to believe that, but it is pertinent to another point that will immediately become obvious. What are the implications of this? How many people in this House, particularly those on the Benches opposite, which have one or two more Eurosceptics than there are on the Labour Benches, have argued that the economic growth patterns seen in the eurozone mean that it is not possible to have a single monetary policy or any sort of economic governance? Based on that criterion, what if I were to say that we cannot possibly govern the United Kingdom? Would it be said in this House that we cannot possibly govern the United Kingdom?

Energy Bill [HL]

Debate between Lord Lea of Crondall and Baroness Noakes

Tuesday 8th February 2011 Grand Committee

[Lord Lea of Crondall]

I am comparing the price elasticity of home heating with the price elasticity of petrol for your car. That is my main point. It is precisely because people do not generally in this country freeze to death that price elasticity is different.

It is necessary to note that, in practice, the people at the bottom are stopping motoring. There is another statistical problem, or fallacy, built into the ONS statistics. Because they have disappeared from the statistics, it does not look as if the detailed distribution for motorists is as bad as it was. It is rather like saying, “The working class can no longer go to the Costa Brava for their holidays. We do not want that riff-raff going there anyway”. They are out of the statistics and they are out of the motoring statistics. This is another problem with the idea that we can easily use the price mechanism to determine consumption, even though in an ideal world it might be somehow very nice if there was a big reduction in motoring or airline expenditure. As I said in an earlier intervention, the logic is to have the same market externality carbon price, whether it is for aviation or for anything else. But how do you deal with the poverty effects on home heating?

I have three other points. At Second Reading, I used the phrase, “hypothetical hypothecation”, which will not get wider circulation in the bar in Burton upon Trent. We need a statistical picture which would be revealed by hypothetical hypothecation—I will not use the word again I can assure you—but would be quite separate from the actual amount of recycling of revenues within the system to deal with the actual regressiveness.

On the consultative forum, people will ask themselves intuitively, “Where is all this money going?” There is an extent to which we want to say that it is obvious how we are going to spend it. My noble friend Lord Prescott always used to say, “It doesn't matter if someone is charging £50 to drive 100 yards down Piccadilly in a Rolls-Royce. You can throw £50 notes out of it and that will satisfy the Rolls-Royce driver”. But Ken Livingstone or somebody like that would put it all into new buses. That is hypothecation. There is implicitly some undercurrent of the need for hypothecation—with a less fancy word—in what we are talking about. We need a statistical picture that would be revealed by hypothecation even though that is separate from the actual amount of recycling of revenues.

Finally, on fiscal arithmetic, there is a price floor for carbon, which is currently £15 per tonne. The power industry argues that the price needs to be about £35 a tonne to provide a viable return and the noble Lord, Lord Stern, for his part, is in a different fantasyland with an assumption of £75 a tonne at 2010 prices to make his scheme work.

Putting all that together, we have to take a crack at what I am saying in my first amendment so that there is no doubt that we have an agreed statistical basis. Who is going to agree it? That is the second amendment. A consultative body, I might be told by the noble Lord, Lord Marland, is not going to be flavour of the month with a coalition Government who is scrapping public bodies right, left and centre. However, I will make a practical point that even the Government’s own philosophy on the Public Bodies Bill is that it is not supposed to be the slaughter of the innocents. It is supposed to be ostensibly the slaughter of those who are not fit for purpose. I radically disagree with some of the conclusions that they make about that, but fit for purpose this would be. It would have a very clear purpose to get agreement, understanding and therefore some ownership of buy-in on behalf of their constituents—in every sense of that word—and all the different stakeholders in the country.

We have got to a point where this will literally begin to make sense in the bar in Burton upon Trent. It is those people who will complain about the price of heating, petrol, congestion taxes, parking taxes or whatever. This is where the regressiveness issue provides a bridge with the consultative stakeholder forum I referred to on Amendment 37B.

I should leave it there. I thank the noble Lord, Lord Marland, for his co-operation in getting some of these statistics sorted out with the department and the Treasury. I beg to move.

[Baroness Noakes]

My Lords, I rise to support the principle behind the amendment of the noble Lord, Lord Lea of Crondall. I am not sure that the wording is easy to follow because it starts with the term “fiscal instruments”. The noble Lord went on to talk about a lot of the things that are leading to increased energy prices. He referred to the document put out by the department last summer showing the impact of policies on prices. Most things that have an impact on prices are not fiscal instruments in the way that you would customarily describe them in the sense of specific moneys going in or out of the Treasury. They are items that are borne by the energy companies and passed on to consumers. At the heart of what the noble Lord, Lord Lea of Crondall, was talking about is an important issue: there is a complete lack of transparency on the impact of the Government’s various energy policies and the way in which they impose costs on the energy sector, which are in consequence passed on to consumers. It is important that we have greater transparency.