Trade Bill (Second sitting)

Barry Gardiner Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 23rd January 2018 Public Bill Committees

[The Chair]

I do not know whether you have a thought to do so, or would like to do so, but you would be more than welcome to make a short introductory statement if you wish. If not, we will move straight on to questions, starting with Barry Gardiner.

[Barry Gardiner (Brent North) (Lab)]

Q I suppose what I would like to try to get out of this session is whether you feel that any lacunae have been created by Brexit in our system, whether there is appropriate scrutiny and transparency, and whether you feel that there are shortcomings in the Bill that need to be filled. May I start by asking the panel, perhaps beginning with Dr Hestermeyer, for examples of deals that will be the same, and of deals that may be different? Are they simply roll-over deals or are they substantively new, distinct legal entities?

Dr Hestermeyer: The first thing to note—in fact, it is even in the Government’s comments on the Bill—is that the deals will be technically new international agreements, so they will be technically separate. As to their content, first, there are the technical details that will need to be changed—for example, rules of origin, which define when a product benefits from a trade deal. Those are quantities, so they will say, “50% of a car has to be from the EU.” That, of course, no longer fits; it will have to be the UK, and the numbers will have to be changed too, because a UK car is substantially now 44% UK-content. We will not benefit from the deals if we do not change the numbers. Those are technical issues, but they are vital.

There are some deals that are structurally so different that, quite frankly, I wonder whether we really want to reproduce them one-on-one. For example, Norway, Iceland and Liechtenstein are in the European economic area—as was recently explained, in the sidecar to the single market. Do we really want to reproduce those deals by statutory instrument? It seems peculiar to me that we would want that. Turkey, for example, is in a customs union with the European Union. Do we want a customs union with the European Union? We might say yes or no, but I wonder whether a statutory instrument is really the way to take those decisions. Switzerland has a whole number of agreements, some of them linked by what is called a guillotine clause, free movement. Do we want that? That probably could not be reproduced even if we did want it, so that is also a no.

You might say, “All this is insignificant,” but if you add up the numbers, the EEA is 2% of UK trade, according to the Government’s assessment of the Bill; Turkey is 1.3% and Switzerland is 3.1%. That amounts to roughly half the trade we are talking about, or half the 15% that the Government assessment arrived at for those agreements. I do not think that will be rolled over, because I am not sure we would want it, quite apart from the technical issues that will arise and the question of whether other states and our partners will say, “We also want something.”

Dr Bartels: I would rather focus on the implementation aspects. Obviously, the question of which agreements the Government choose to roll over is a political decision; it depends on negotiations and so on. My reading of the Bill is that it talks about the implementation of those agreements. What is important there is to identify the scope of the agreements that can then be implemented.

One point of interest is that the Bill extends to agreements that have been signed but not ratified as of Brexit day. I think we can safely say that that is likely to be the comprehensive economic and trade agreement with Canada, the agreement with Japan and others as well; and if the EU agreement is provisionally applied at the same time, some might think that they are in force and ratified. In fact, I found the language in some of the documents around this area blurred the point a little bit, but there is a fundamental difference in international law between a signed and provisionally applied agreement and a ratified agreement. The Bill is quite extensive when it comes to signed agreements.

There are other points to do with the definition of the sorts of agreements that are covered here, such as a free trade agreement, which is here defined to include a free trade agreement and a customs union agreement by reference to World Trade Organisation definitions. Then, interestingly, we have in clause 2(2)(b),

“an international agreement that mainly relates to trade, other than a free trade agreement.”

I do not know whether you would like me to say anything about that now. It could be quite broad. I noticed one idea in some of the amendments, which was that it could be further defined as including a strategic partnership agreement, the language used for the framework agreement sitting on top of CETA, and mutual recognition agreements.

I must say that I think the amendment is very comprehensive; for a start, the strategic partnership agreement is not even tangentially about trade, so it could not really be described as an agreement about trade. The point of it is political and human rights conditionality and so on. In that sense, the definition is over-inclusive. It is also under-inclusive, in the sense that mutual recognition agreements are only one type of agreement relating to trade that one might legitimately want to include here. For instance, one would also have customs co-operation agreements as an obvious agreement that should be rolled over and implemented.

The broader point is that, despite what I said about the strategic partnership agreement, it is an outlier in this respect. A lot of agreements have to do with trade. Environmental agreements have trade aspects; the Montreal protocol on substances that deplete the ozone layer is all about banning trade in ozone-depleting substances. The convention on international trade in endangered species is all about trade in endangered species.

Therefore, I think the definition is a little bit unclear. One could say, “Well, it’s agreements that just liberalise trade,” but that is a problem too, because FTAs do not just liberalise trade. They have intellectual property provisions, which might arguably in some way promote trade, but more likely investment. Certainly, they are not the first thing that you think about when thinking about a trade liberalising agreement. There are provisions in the FTAs in addition to intellectual property: competition law, labour and environmental protection provisions are in all the modern EU agreements that we have talked about. Essentially, this gives the Government the ability to implement labour standards provisions, which include not exactly sanctions, but obligations that need to be performed. Frankly, these two Bills strike me as very old-fashioned; they do not seem up to date with the reality of modern trade agreements.

Jude Kirton-Darling: I will follow on directly from that last thought, from my experience inside the European Parliament as an MEP, scrutinising trade policy at EU level. Of course, our MEPs have done that job for the last few decades. From our perspective, what really is missing from the Bill is the parliamentary scrutiny dimension. No-one on the panel has mentioned that so far. In terms of process, compared with the parliamentary scrutiny powers that British MEPs have today in the European Parliament, the Bill is an enormous step back in democratic oversight of trade agreements.

To add to what has already been said from a legal perspective about what these trade deals are, any kind of roll-over is likely to come up against the offensive interests of our trading partners. We have already seen that what was supposed to be quite a technical question of the division of tariff-rate quotas going to the World Trade Organisation has turned into an enormous political issue, with countries who supposedly are our friends and allies defending very actively their offensive interests in relation to tariff-rate quotas.

Once we start opening trade deals up to technical tinkering, whether that is a number here or a point there, our trading counterparts will also use that opportunity to try to get a bit more leeway for their interests. It is likely that these deals will be very different at the end of the process from what we have at the beginning. That parliamentary scrutiny—the role of MPs in ensuring that there is democratic oversight—is absolutely crucial but entirely missing from the legislation.

Dr Fowler: If the question is which of these agreements will change significantly, my answer is, we do not know that. Other people who are much more expert than me in the details of trade agreements would have better sight of that, but as someone who looks at what is coming to and through the Westminster Parliament, we simply do not know at the moment. On that basis, I make two points.

First, Parliament needs to be happy that it has procedures in place to deal with agreements that might be changed significantly. Even the Government have indicated that that is a possibility—they use language about substantive change in the Bill documents. Secondly is the point about transparency and possibly some kind of reporting function, which does not have to go into the Bill; it could be done through other means. However, I feel that, given the number of these agreements that have to be dealt with in the amount of time that we are talking about, some kind of regular reporting transparency about exactly what is going on would be useful to Parliament.

[The Chair]

Thank you; that was very useful. It is not necessary for all four members of the panel to answer all the questions. You may want to target them, because we have half an hour left and we want to make the best use of our time.

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[The Chair]

We have 45 mins to hear from you, starting with Barry Gardiner.

[Barry Gardiner]

Q Perhaps I could start by asking Professor Winters about the economic partnership agreements that the EU has with developing countries. They are in the list of those that the Government are seeking to replicate. Do you believe that replicating those agreements and creating EU-UK equivalence is the best way forward in our engagement with the developing world? Are they models that the economic partnership agreements countries themselves would wish to see replicated?

Professor Winters: In general, they have been a pretty poor piece of policy. As far as the UK is concerned, I would suggest that we might want to consider rolling them over for two or three years, but I would hope that that two or three-year period was then used to try to devise a more satisfactory regime. They encourage distortions in the developing countries. The developing countries are put through the agony of trying to negotiate together, which is very costly and time-absorbing for them, and rather ineffective. What we need to do is to try to find a much simpler way of allowing developing countries access to the British market than the current EPAs.

[Barry Gardiner]

Q Given that there is this renegotiation going on, do you feel that those countries might seek to use the occasion as a means of bettering the current agreement in some way? Or would they feel—if they are being told, “You will not get a trade agreement unless you do this quickly”—that they are being bullied into doing it against their will?

Professor Winters: By and large, countries find it very difficult to resist the offer of tariff-free access to a market. If they were put in a position where they were told it was the equivalent of the EPA or nothing indefinitely, my guess is that most would shrug and accept the EPA, but given one quarter of a chance, they would want to talk to us about a more reasonable and satisfactory—and in the end more efficient—process of market access.

[Mr Prisk]

Q Professor Winters, we have before us in part 2 a broad legal framework for a future remedies authority. In your view, is it robust enough? If not, what should we be thinking about amending?

Professor Winters: The Trade Remedies Authority is something we clearly need. Without seeing a lot more details about exactly how it operated, I would not want to say whether it is robust, but I would like to emphasise three things about it. One is, I understand, Government policy; I think the others are not.

The so-called lesser duty rule is important for safeguards and anti-dumping. That is essentially the rule that says the duty you put on goods that are allegedly dumped is the lower of the amount of dumping—the dumping or injury margin—required to make good the British industry. That is a good rule to have.

The two things I am less clear are there at the moment are, first, a very strong degree of transparency. Its operations need to be, with the exception of commercial confidence, pretty much out in the open. The second is that experience through decades in nearly every country suggests that these trade remedies are captured by producer interests. They are complex, they are triggered by the producers complaining that they cannot manage or that they are being cheated, and the whole process essentially favours them.

The really important thing is that, exactly like the House of Commons, you need an opposition. I would urge that we try to supplement the Trade Remedies Authority with an officially sanctioned and resourced group to represent the consumer interest, to do the analysis and actually have the right of audience at the TRA to make the case.

George Peretz: If I may add to that, of course the trade remedies provisions are spread across this Bill and the customs Bill. If one looks at the customs Bill to find out where the appeal mechanism is—as a barrister, my first thoughts go to what the appropriate appeal mechanism is—all you find is a power of the Secretary of State to make appropriate regulations.

It is my personal view that that is somewhat unsatisfactory. There are a number of important questions that arise about appeals, one of which is very important, and that is what the appropriate standard of review is. Is it a merits review, which enables a specialist appeal court to correct the decision maker on questions of fact as well as questions of law, or is it simply a judicial review mechanism, where all the court is doing is saying, “Is this a reasonable decision, whether it is right or wrong?”? It is a very important decision to make and it seems to me that that is one that ought to be made by Parliament in primary legislation and not by the Secretary of State or the Executive in a statutory instrument. That is a decision for you.

The appeals mechanism is important. I said slightly flippantly that it was because I am a barrister, but it is the experience of all regulatory processes that what actually happens at the regulatory stage is often very conditioned and influenced by the form of an appeal. Any sensible regulator will, during the process, have their eye on what the appeal route is, who can appeal and what the level of scrutiny of their decision is going to be.

If you have a very robust form of appeal mechanism, which is open to both parties— the complaining industry but also a range of interest groups whose interests might be affected by the imposition of duty—and if they are allowed routes to appeal that will encourage the regulator, in this case the TRA, to take robust decisions. That is robust in the sense of fully reasoned decisions that will sustain detailed scrutiny, to ensure that all parties are properly heard so that they are fully aware of where the objections to what they are proposing to do are and can properly evaluate them. You get better decision making out of all of that.

I sent the secretary to this Committee a copy of a briefing paper I did for the UK Trade Forum website, which is there if any of you want to read it. It expands a bit on that point but I would emphasise the appeal mechanism. There are other issues about the trade remedies. I have probably spoken for long enough but if people have other questions they could ask about them.

Michael Clancy: I read your blog; it is very good. The other thing that I would say is that the tenure should be made more independent by having term limits. That is quite important in reinforcing independence and impartiality. We have had experience in Scotland of the whole system of judicial appointments being reworked for temporary sheriffs because they did not have a stated term and were subject to the whim of the appointing Ministers. That would be my addition to this discussion.

George Peretz: The provisions for the appointment of members of the Trade Remedies Authority are very similar to the provisions for appointments to the Competition and Markets Authority, which as anyone who has watched the press this morning knows takes very important decisions about the economy. There is a difference with the Trade Remedies Authority, and the argument why you might need a more constraining set of rules governing whom the Secretary of State might appoint. At the moment the Secretary of State appoints the majority and the rest are staff members. There may be an argument for a more constraining set of rules, particularly if the Trade Remedies Authority is—as the customs Bill contemplates—itself given the remit of applying a wide range of economic interest tests as the trade remedies body. That means that even if the TRA accepts that there is a legal basis for opposing a trade remedy, then as a matter of economic interest to the UK it is able to say, “We are not going to do so here because, for example, the consumer interest outweighs the interest of the particular producers affected.”

That seems to me to be a political position: it is balancing the interests of jobs in a particular area of the country against the interests of consumers across the country, to put it crudely. If the TRA is, as the customs Bill contemplates, itself going to be taking that kind of decision, then there is a case for saying that its composition ought to be balanced by statute and that it ought to reflect a variety of different perspectives. In that sense its role is much more political than that of the Competition and Markets Authority.

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[Faisal Rashid]

Q Thank you. According to the Queen’s Speech last June, the Bill is meant to set out the legislative framework for our independent trade policy. Do you believe that it establishes a proper framework to deliver what was promised?

Professor Winters: I would not hold myself up as an authority on exactly what was promised, but it does not deliver a satisfactory framework for negotiating new trade agreements. There are many different models, but experience from around the world suggests that one needs a good deal of consultation, input and legislative oversight of trade agreements. You cannot have a position where Parliament can unpick a trade agreement that has been concluded. If Parliament claimed that right, no one would negotiate with us. That means that Parliament and the devolved Administrations need to have an important role in setting mandates, and there need to be consultation and information during the process. Civil society would certainly claim that it, too, ought to be consulted, and I would advocate that, to the extent that one can generate one, there should be a discussion publicly.

Trade policy comes along in treaties. It is intrusive. It affects people’s livelihoods. It is a very good thing that we are talking about trade policy now in a way that we have not for decades—since before the EU existed, in fact.

George Peretz: I would add as a footnote that one of the best short things I have seen written about this is a piece by Stephen Harper, the former Prime Minister of Canada. He is not generally known as a politician who always wanted to do everything by consensus, but it is simply an explanation of how the Canadian side prepared itself for the CETA negotiations. It very much emphasises the need to consult with everybody in Canada, to bring the provinces together as well as all industry, trade unions, all the political parties and other actors to try to get as much consensus as possible on what Canada was trying to achieve at the outset of the process, before it started. It is a very good piece from somebody whose perspective on it is interesting.

[Barry Gardiner]

Q Picking up on both what Professor Winters said about not unpicking—Parliament should not be able to unpick a trade agreement—and what Mr Peretz said about Canada, Mr Clancy, once the UK Government, rather than the EU, set international trade agreements in place, what would be the implications if the devolved Administrations had a consent reserve and could implement some form of veto on internationally agreed obligations? How do you get that whole-of-governance approach where the consensus Mr Peretz was talking about is achieved so we know that what is agreed can ultimately be delivered without introducing an ex post facto power of veto that would stop it being implemented?

Michael Clancy: That is a very difficult question to answer without getting into uncomfortably hot waters.

[Barry Gardiner]

You could write to the Committee.

Michael Clancy: Let’s give it a shot, shall we? The important thing is that the UK Government are the negotiator of these international agreements. Parliament is the body that then ratifies agreements made by the sovereign power, exercised by Government. Therefore, in that sense, it is quite difficult to see how the devolved Parliaments would be able to exercise any form of consent reserve in respect of the making of an agreement and the ratification of an agreement.

The issue is that the parliamentary oversight of the agreement is deficient in this place and it is even more restrained when it comes to the devolved legislatures. That is the issue I would like people to focus on. Clearly something needs to be done to enhance oversight here. Earlier, we heard Brigid Fowler explain that the Constitutional Reform and Governance Act 2010 provisions are inadequate. Why are they inadequate? Because they have only got this perpetualisation of the 21-day period, and this Bill does not allow for any form of implementation order other than a negative procedure order. Therefore, there is an issue about that.

The read across to the European Union (Withdrawal) Bill and the sifting procedure that the Procedure Committee advanced and had accepted into the Bill—Mr Walker’s amendment last week or the week before—raises issues about what the relationship is between orders under this Bill and those under the EUWB. Why does this Bill amend the EUWB? Why not have amendments brought forward for that Bill, reflecting this Bill? I am sure that parliamentary draftspeople have an amour propre in respect of such things, but an ordinary individual—a rather rustic lawyer like myself—is not going to catch it immediately. These are the issues we ought to look at: parliamentary oversight, extending across these islands, and how we write something that attains the intention of Parliament.

If I might just cross over, I do not think the Bill is meant to implement new agreements; it is meant to transpose existing agreements. That is quite an important facet to dwell on. Although, if one scoots to the explanatory notes, one sees in paragraph 44 that there may be

“technical changes to the agreement”

and in paragraph 53 it says:

“It may also be necessary to substantively amend the text”

of the provisions. The question, therefore, is what is an existing agreement and how far does it have to be changed for it to change from being an existing agreement to a different agreement. That is a question that I do not care to essay on at the moment.

[The Chair]

We are grateful for that.

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[The Chair]

Perfect. I call Barry Gardiner. [Interruption.] Well, failing that, I call Mark Prisk.

[Barry Gardiner]

rose—

[Mr Prisk]

rose—

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[Mr Prisk]

Q Is that specifically the national interest?

Tom Reynolds: There are really four points. The public interest test and the economic interest test is of concern because, as Gareth has already pointed out, the lack of detail means it could operate in any number of ways. Our fear is that it might include an over-simplistic cost-benefit analysis that appears very seductive in its indication that the benefit for producers may be outweighed by the damage to the consumers, when it does not show the full story and perhaps the long-term impact to the consumer that removal of a competitive environment for domestic producers creates if the trade remedies are insufficient to keep production here in the UK.

A big concern for ceramics—the country of concern that is dumping into the European Union at the moment is China—is how you calculate the dumping margin in instances where the domestic price cannot be used because it is subject to such state distortion. That detail is crucial to the effectiveness of the trade remedies system.

There are other issues, such as the lesser duty rule—it was touched on earlier. For the proper operation of the lesser duty rule, we would need to see the detail and how you calculate injury. That is crucial. Pushing all of this into the long grass just adds a lot of uncertainty and concern for producers.

Cliff Stevenson: Because the Bill is simply setting up a framework for the TRA and not really having anything more substantive than that, there are only small points that you might look at, but there are some important points. For example, the composition of the members of the TRA is critical because trade remedies is a highly political area of policy where there are very different views. Some see trade remedies as purely protectionist and would abolish them completely, and some see trade remedies as an essential competition policy-type tool to correct multilateral distortions.

I am in the second group. I believe that, in the absence of multilateral competition rules, trade remedies are the only thing we have that allows state distortions and other unfair practices to be addressed. Within the EU, we do not need anti-dumping or anti-subsidies law because we have really good competition and state aid law.

What we want from this legislation—you have to see the two Bills together—is a coherent, robust system that could redress those problems. In terms of this Bill, the composition of the members is very important to look at because, if all the members thought trade remedies were protectionist, we would never get any trade remedies through—or all members might believe that trade remedies were essential. You would want to ensure that there is some balance in there.

There are some other smaller issues that could be significant. For example, regarding the provision that the TRA should report to Parliament annually, I think there could be a little bit more detail on what it might report on, so that, if the TRA was being biased one way or the other, by being obliged to provide certain statistics, such as number of cases opened, measures adopted and so on, it could be assessed.

[Barry Gardiner]

Q Picking up on your last point, Mr Stevenson, in the EU, the Commission is obliged to report to the European Parliament on trade events, so there would be an annual production of just such statistics. There is a lacuna in the Bill in that there is no provision to make such a report to Parliament and to aid parliamentary scrutiny on trade remedies in that way. Is that something that you and the trade remedies alliance would seek to redress? Would you like to see introduced in this Bill some way in which a report ought to be made—an annual report perhaps—to Parliament?

Cliff Stevenson: Yes, what would definitely be of importance is to have a substantial report submitted to Parliament on an annual basis. In the Taxation (Cross-border Trade) Bill, there is a provision on reporting. There is already a proposal for there to be an annual report. The EU anti-dumping regulation is quite specific about what the European Commission must report to the European Parliament in terms of the statistics it must provide. A little more detail ensuring that certain things were provided in this report would be useful.

Tom Reynolds: The question about Parliament’s ongoing role with the Trade Remedies Authority is an interesting one, but so is Parliament’s role in setting up the rules for the system. The point made by Jude Kirton-Darling earlier on about the level of involvement of MEPs in scrutinising and offering amendments on, for instance, the new anti-dumping methodology and the TDI modernisation, which was mentioned, has been integral in improving that legislation from the Commission’s original proposals. I would be more comfortable if there was a more rigorous approach for parliamentarians to get involved in the setting of the rules for the system as well.

[Bill Esterson]

Q Can you describe what you think the authority should be comprised of? Who do you think should be on it?

Gareth Stace: Do you mean the board?

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[The Chair]

Welcome back. We are going to change the order of questioning slightly, because Mr Stace has to go and give evidence to our sister Bill Committee.

[Barry Gardiner]

Q Picking up on something you said earlier about the importance of not having a weak trade remedies regime, in your view would it be a mistake to think that such a regime, which did not protect producers’ interests, might encourage other countries to do easier, quicker trade deals with us? Would it be a mistake to use that in some sense as a bargaining chip to get a trade deal?

Gareth Stace: I think it would. You are not going to say to the USA, “Hey look, can we do a really great free trade agreement with you? Look, our trade remedies is really weak and yours is really strong so can you weaken yours and then we will do a great deal?” They will not do that. They will keep their regime and hope that ours is weak, and they will then see more trade coming from them to us.

It is the same when we think about the zero tariff for steel with developed countries. When India exports steel to the UK, it is at zero tariff; when we supply steel to India a tariff is applied. So when we say to India, “Can we do a free trade agreement with you? Hey, you know, we could do zero tariff”, India will say, “We already have zero tariff, so why would we want to do anything else?” What would add something would be having a strong trade remedies regime in place.

If we had a weak regime, what would that mean? We talked about that before. It would mean a loss of jobs, and in the steel sector I do not want to talk about loss of jobs, because we saw a lot of that in 2015-16. But we would also see a rapid rise in imports. In rebar—reinforcing bar that goes into construction—in one year China had zero per cent. of the UK market. It did not import anything, and within four years, because there were no duties in place, China had 43% of the UK market. Then, once duties came in, the percentage went back to zero.

I know I have to go, but I want to make just one point about the lesser duty rule, which I am sure will be raised later. I know it is not in the Bill but it is very important, in that there is talk that if we did not have a lesser duty rule prices would rise and the consumer would be disadvantaged. Let me put that into context. In the hot-rolled flat case we had recently, the injury margin was 17.5% and the dumping margin was 29%. There is a difference there of 11%. If we think of a luxury car priced at €45,000, not applying the lesser duty rule in that case would increase the price of that car by a whopping €16.50. Everyone is saying that if we did not apply it in the UK it would be dreadful—consumer prices would rise and it would be awful—but €16 is all it would increase the price of a €45,000 car by.

[The Chair]

Mr Stace, thank you very much indeed for doing two Committees in one afternoon. That is very noble work. Thank you for your evidence to us. I think someone is going to escort you off to the other Committee.

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[The Chair]

Q I welcome and thank all four of our witnesses and particularly our former colleague, Mr Bain; we are glad to see you back here. I am sorry to be tough and difficult, but thank you all very much for taking time out to come and give evidence to us this afternoon. Perhaps you would like to introduce yourselves for the record, starting with Mr Bowles.

Edward Bowles: I am Edward Bowles, managing director at Standard Chartered Bank.

Stephen Jones: I am Stephen Jones, chief executive of UK Finance.

Anastassia Beliakova: I am Anastassia Beliakova, head of trade policy at the British Chambers of Commerce.

William Bain: I am William Bain, international trade and Europe policy adviser for the British Retail Consortium.

[Barry Gardiner]

Perhaps I can kick off with—sorry, is it Mr Jones who is from Standard Chartered?

[The Chair]

No, it is Mr Bowles.

[Barry Gardiner]

Mr Bowles is from Standard Chartered and Mr Jones from UK Finance. Is that right?

Edward Bowles: Correct.

[Barry Gardiner]

Q I will kick off, then, with the British Retail Consortium. [Laughter.] I am just keeping you on your toes!

The BRC has identified, among others, the agreements involving Norway and Turkey as the most significant of our EU FTAs. Of course, the Government have already indicated that there will be an end to free movement, which rules out simply replicating the Norway model, and that we will leave the customs union, which rules out simply rolling over the Turkish model, so what elements of the agreements—not just those two, but the others—do you consider it most important to replicate on substantially the same terms?

William Bain: The key provisions are those on tariffs, because if the UK leaves the European Union, it is not part of the EU’s common external tariff system, and we could then face higher tariffs on imported goods. A great deal depends on the kind of transitional arrangements that are adopted, but the kind of additional MFN tariffs that would apply would be 12% in relation to clothing from Turkey, 13% in relation to soft fruit from Chile and Peru and 27% on imported processed canned tuna from the Seychelles. Those would, I think, lead retailers and consumers to face considerable price pressures, so the main element that we would want to see is replication of the zero-tariff or low-tariff provisions on imports.

The other key areas that are very difficult in terms of replication and, we believe, may require a degree of assistance from the European Union are in relation to rules of origin. For example, with the Canada trade agreement, there is a complex rule of origin. The same is true in relation to South Korea. I think that diagonal cumulation is involved in the rules of origin in respect of the CARIFORUM trade agreements.

These are areas where it seems that time is running out, the clock is ticking, and a solution needs to be found if British business and British consumers are not to face a large cliff edge in March 2019.

Anastassia Beliakova: Absolutely. Rules of origin are a headache for businesses, and if we consider that there is the likelihood, in the roll-over of existing trade agreements, that they may have to comply with tougher rules of origin or that some of the benefits that they currently get by counting both EU and UK origin as single origin might be lost, that is very concerning. For about one in seven of our members, the existence of a free trade agreement is the determining factor in whether they export to or import from a country. I urge the Government to give stronger assurances for those agreements, as Mr Bain has mentioned, that already provide for, or have clauses mentioning, diagonal cumulation, but also to look at all the EU trade agreements and particularly those that have the greatest economic significance for the UK, and open up those discussions to provide for that as they are rolled over into UK-third country FTAs.

[Iain Stewart]

Q I would like to put to the panel the same question I asked the previous panel about part 3 of the Bill, which relates to trade information and the collection of exporter information by HMRC in particular. Are you content with the content of the Bill in this part? Is there anything missing or do you foresee any practical difficulties in HMRC collating this information?

Anastassia Beliakova: Not at first glance. However, the wider picture around trade data is that trade data is imperfect. It is particularly lacking when it comes to services, of course, and when it comes to intra-EU trading data. That is where we currently have significant gaps. If, in the future, there can be a more robust collection of data and stronger assessments of UK-third country trade, that would be helpful.

Stephen Jones: I have nothing to add.

Edward Bowles: Obviously, the collection of data is largely in respect of goods that cross borders. It is very difficult to do that for services, so I would have thought that a way of more robustly measuring cross-border flows of services would be quite an important thing to look at, so that you can get a better grip on revenue as much as anything else. Largely, it is more on the goods side than it is on the services side.

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[Bill Esterson]

Q Do any other witnesses want to pick up any of those points?

William Bain: The nature of the transition impinges on terms in the Bill, and the retail industry is keen to have a standstill transition in all elements—in terms of the current customs rules, the current tariff rules and the current SPS rules—but it also applies to the trade facilitation that we get from the bilateral trade agreements, which fit into part 1 of the Bill. I cannot stress how important it is to the retail sector, which imports products from countries like Chile, Peru, South Africa and Turkey, that we do not have a discontinuity in our trading arrangements at any stage after 29 March 2019. There are some connections and points of commonality with the kind of transitional deal that is done, but in a sense this is a slightly separate question. It really demands clear attention from the Government in order to get the job done by 29 March next year.

[Barry Gardiner]

Q I want to pursue what Mr Jones said. We have got away from the initial question of the sift Committee. You stressed the urgency of this and the need to try to get things through as quickly as possible, and you adopted an approach to delegated powers and Henry VIII powers of, “Well, maybe they’re necessary in the circumstances”. However, it was your organisation that recommended that there should be a sift Committee in the EU (Withdrawal) Bill. Would that not be an appropriate way of trying to say, “What we’re talking about here is a minor change to an existing agreement, but this is actually a major change”?

We are talking about 100 separate agreements between the EU and Switzerland alone, some of which include free movement of people. There are going to be some major changes, such as those we talked about with Turkey and the customs union, and with Norway, free movement of people and the four freedoms. Do you not think, given that you have already recommended a sift Committee in one form, that a similar sort of mechanism for trying to distinguish between what is and what is not vital, and what should have parliamentary scrutiny, is a sensible way to proceed?

Stephen Jones: Yes, sorry; forgive me for the lack of clarity. My reference was really to the existing provisions between the UK and the EU in relation to financial services. In my assessment, for the purposes of transition and of business services in financial services, the chances of change, and therefore of the need for sift, are zero. There just is not the time. In the context of other areas, where there is an assessment that change is possible, the sift Committee strikes me as a very sensible mechanism to prioritise and assess those changes and the degree of scrutiny that is required.

[Mr Prisk]

Q Mr Bain was very clear about the importance of continuity to business. Can I ask the chambers of commerce in particular, but also other witnesses, about that issue? Clearly, the Bill is about the continuity of existing arrangements. How important is that principle of continuity to your members?

Anastassia Beliakova: It is absolutely critical. Our members are operating on the assumption that during a transition period there will be continuity in our trading arrangements not just with the EU but with all the other markets with which we have a trade agreement of some sort. The working assumption is that they should not be making any changes currently or planning for significant changes in trading conditions in March 2019. Of course we are still waiting for greater clarity from the EU on this over the coming months, but I cannot stress enough that in the immediate future the continuity in our trading relationship with the EU during transition is critical. Our continuity, looking further ahead, with the other markets, is also something that our members want to count on.

--- Later in debate ---

[Judith Cummins]

Q Mr Bain, to accompany the release of your report “The Bilateral Trade Deals that Matter to Consumers”, you note the importance of the Government replicating the trade agreements that the EU currently has with third countries to ensure that consumers do not see a rise in prices as a consequence of imposed tariffs and so on. Your report notes that 6% of retailer imports are covered by all EU bilateral agreements. Could you identify the particular countries that your members are concerned about?

William Bain: Indeed. There is a good quantity of imported fish, from Norway and Iceland, that UK consumers buy. In particular, there is South Africa in terms of products like wine and some citrus, Chile and Peru in terms of soft fruits, and Morocco in terms of fruit, vegetables and some clothing. And there is principally Turkey in terms of clothing. There are many members of the BRC that source clothing in Turkey, which can be given to consumers for sale in this country on good terms. One of the fundamental issues is that, at the moment, that is under a customs union: is there going to be a functioning customs union between the UK and Turkey on 30 March 2019? I think that speaks to some of the process issues that come up in part 1 of the Bill. We know that there will be an interaction between the CRAG process of bringing a concluded treaty before this House, then interacting with the processes that have to be gone through in part 1 of the Bill.

Unless we have things like letters of intent ready to be signed at 11.1 pm on 29 March 2019, and unless we have the EU involved—what seems on the face of it to be bilateral is, in many cases, a trilateral negotiation—we will have a gap. That gap will cause uncertainty for business. Ultimately, it could cause gaps on the shelves and a lack of choice and availability. It is a serious issue for investment and for consumers.

[Barry Gardiner]

Q To follow up, I want to ask you all a question as business people. If someone introduced a break clause in a contract with you or one of your businesses, would you not take the opportunity to renegotiate the deal? Given all that you have said about the importance of clarity, stability, understanding and certainty about the future, which we entirely agree with you on—that is why we need a Bill to do this—do you not think that, if we were seeing changes introduced by these countries because of this opportunity, and some of the changes were substantial, and changed that clarity and certainty, then actually there should be a process of parliamentary scrutiny looking at them?

At the moment, we may not be in control of that process. We know that we would like it to be very simple, but it may not be. Given that, should the scrutiny not be in place for Parliament either to assist procedure or, using some other mechanism, to say, “Yes, this is important, and we need to make sure that we, as Parliament, deal with it in the appropriate democratic way”?

Edward Bowles: I would say be careful what you wish for, and I do not say that completely comedically. It would very much depend upon the scale of the market that you are interacting with, and the significance of it. The experience that I had of TTIP was one where the lack of initial transparency, of engagement with civic sector societies, and of disclosure of the mandate for the first 15 months of the negotiations very much allowed the debate to be run by outside interests that felt disenfranchised. Effectively, that stymied the political will to take the negotiation further forward even before the new President was elected.

It was absolutely clear that there are lessons to be learned from a negotiation of that scale, ambition and impact for the UK’s economy, to make sure that you have the right level of engagement, transparency, scrutiny and so on in an ongoing manner. For a much smaller market, I dare say that, given the time involved, it may not necessarily warrant a full-scale similar application of scrutiny because, frankly, the relative impact for the UK economy, and therefore for consumers, healthcare and so on, would be much less. Judge each of them on their merits.

Anastassia Beliakova: To follow up on what Mr Bowles said, the TTIP example certainly shows us how critical it is to have appropriate stakeholder engagement mechanisms. At the moment, the Bill is meant to deal just with continuity of existing agreements that have already had the relevant scrutiny from the European Parliament and have passed through the European Scrutiny Committee here. However, if there are very substantial changes or if we are talking about completely new agreements, provisions certainly need to be made for appropriate scrutiny in Parliament, and for stakeholder engagement for business, civil society and non-governmental organisations. It might make sense for that to have some form of statutory underpinning so that there is input that is not contingent on the political environment, which may change. As has been said, negotiations take a long time, sometimes even up to a decade, and during those negotiations you still need to be able to test both the public views and the impacts. I would urge for these kinds of mechanisms to be put in place where new agreements are implemented.

[Faisal Rashid]

Q I will put Barry’s point in a different way. You mentioned continuity, which is absolutely fine—the industry needs continuity. You also mentioned that you do not want to see any change, but the Government have already noted that these agreements will be legally distinct and are likely to be different to the corresponding EU trade agreements. Do you believe that it is appropriate for any changes to be waved through using Henry VIII powers? That is one question. For British Chambers of Commerce members, how important is consultation on any elements that might change in these agreements?

Anastassia Beliakova: Consultation is absolutely critical. If there are changes through these agreements that would alter the benefits that businesses currently see, our members would want to be consulted. At the moment, there is a question as to how the UK will set out on having an independent trade policy. We are conducting a study with the London School of Economics on that topic, which I would be happy to share once it is published.

There is a balance of interests between continuation—ensuring that there is no gap between the current benefits and some new measures that will be implemented—and appropriate scrutiny. That has to be considered on a case-by-case basis when it comes to the existing agreements. For any new negotiations, however, there needs to be a more clearly set out process.

William Bain: There are two important points to make. First, if we look at the guidelines adopted by the European Council on 15 December and the drafts that are circulating in Brussels for the draft directive to be adopted next Monday, it is very doubtful that the EU will permit the UK to vary these agreements at all. It will basically be small changes that will require the UK to still be subject to its current obligations under these agreements. That is all that the EU will be prepared to accept.

Another important point is that if the mechanism for the transition is that the UK is under the common commercial policy and the EU common external tariff, the UK will be applying all the EU’s external tariffs vis-à-vis third countries. That means that Canada and South Korea will get the advantage of relatively low-tariff trade into the UK market, but unless we get the EU on board to help us with the transitioning process, we will not get the advantages of access to the Canadian and South Korean markets. That is the absolute imperative of why this task has to be completed—so that we can have certainty and continuity for business.

The Economy and Work

Barry Gardiner Excerpts

Thursday 26th May 2016 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

There are measures to like in the Queen’s Speech. I argued for a soft drinks industry levy 15 years ago, although I warn the Government that it makes no sense to tax sugar while simultaneously cutting funds for sport in schools. Obesity must be tackled first and foremost through exercise, not through stand-alone measures like the sugar tax. The prison and courts reform Bill, if it is a genuine attempt to turn what is currently a penal system into a correctional and rehabilitation system, will certainly have support, and will bring about a much-needed transformation.

So there are measures to like, but beware: nothing shows the weakness of an Administration more than a failure to include big, controversial Bills in a Gracious Speech. This Queen’s Speech certainly contains policies that are wrong. The education Bill, for example, with its academisation programme and its national funding formula, marks an appalling return to the old obsession with structures rather than standards. The formula will take £18 million from schools in Brent, and will call that fair. We have reception classes with 29 children speaking 21 different mother tongues, and an 8.6% per pupil spending cut for them is not fair. It is wrong.

My point is that the Government have run out of steam or are too insecure about getting support from their own Members to risk big controversial measures. So perhaps in a spirit of mendacious assistance, I shall set out the Bill that I believe the Government could and should have placed at the heart of the Gracious Address. A green growth Bill would set a clear trajectory for the UK to lead the world in today’s low carbon industrial revolution just as we did 250 years ago in the coal-powered industrial revolution. Such a Bill would deal with energy, land use, water resource, transport and green city infrastructure in an integrated and sustainable way.

A green growth Bill would also transform the Treasury model from its current fixation on GDP growth to one that focused on wealth maximisation. To understand that GDP and wealth are not the same, one only needs to recall that the 2013-14 floods were the single biggest contributor to GDP in 2014 while simultaneously ruining thousands of people’s lives. GDP measures productivity, not wealth. A green growth Bill would make our country focus on what really mattered.

Businesses currently extract an estimated $7 trillion globally from the environment each year. This is in the form of free non-renewable goods and the equally free renewable services that they utilise. However, that $7 trillion does not appear on balance sheets; these are free goods—or externalities, as classical economics prefers to call them. No Government account exists to chart their contribution to the national wealth, yet they represent the annual income from a gigantic asset base that is quite simply the precondition of all other economic activity. What sort of economic managers do we have who fail to quantify an asset base of this magnitude and importance?

A green growth Bill would establish natural capital accounting so that by measuring nature we could make its contribution to our economy visible and allow for effective decision making. Such a Bill would appoint a Chief Secretary to the Treasury equivalent who would examine not just departmental resource and departmental expenditure limit budgets but their natural capital and ecosystem services depletion as well. Our natural capital debt is arguably a much more urgent issue than our financial debt, yet our Governments are failing spectacularly to reverse the decline in that asset base.

Budget Resolutions and Economic Situation

Barry Gardiner Excerpts

Tuesday 22nd March 2016 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Let me begin like this.

“My husband was diagnosed with oesophageal cancer and has not been able to work since. We are now reliant on the ESA he receives. There is nothing more that either of us want than for life to somehow return to normal and for him to be able to return to the job he loves. We did not choose these dreadful circumstances—the benefits system is intended to protect those in society as much as possible when things go badly wrong. Forcing people in very difficult circumstances into poverty seems an outrageous way for any government to behave.”

That is a letter from one of my constituents, and she is absolutely correct. More than 9,000 Brent residents rely on ESA to live independently and with dignity. Their income has been cut by £30 per week, and the cut in the PIP would have caused 640,000 disabled people to lose up to a further £3,500 a year by 2020. It is therefore with great relief that many of them will have watched the Government’s U-turn on the proposed £4.4 billion cut. However, disabled people in my constituency have already suffered real hardship under this Government as a result of the bedroom tax, the benefit cap, the benefits uprating policy, the scrapping of disability living allowance, and the 12-month time limit on contributory ESA.

Yesterday the new Secretary of State for Work and Pensions said in his statement that the Government would not be making further cuts in to the welfare budget, but that gives the Chancellor a serious problem. He has a fiscal charter which enshrines in law that he must achieve a budgetary surplus by 2020. Last Wednesday, he believed that in order to meet that fiscal charter, he had to make £4.4 billion of cuts affecting the most vulnerable people in our society, because he wanted to cut corporation tax and capital gains tax and to raise the higher-rate income tax threshold to benefit the very richest. If he is genuinely not seeking to identify other cuts in services to offset that £4.4 billion, it is essential that we are told how he does propose to balance the books. The choice is simple: he must make further cuts in services, increase taxes, or fail to meet his own fiscal charter.

The inescapable facts of the Chancellor’s record will come back to haunt him. In 2010, he promised to balance the books by 2015. He did not. This year, he has a deficit of £72 billion. He has a debt-to-GDP ratio of 83.7%, and productivity failure means that manufacturing still lags behind its 2008 level. This is the failing Budget of a failing Chancellor who lacked the courage to come to this House and explain its collapse yesterday. That failure branded him a coward. Today he came to the House, but his failure to apologise to the most vulnerable in our society has branded him a nasty coward.

Budget Changes

Barry Gardiner Excerpts

Monday 21st March 2016 Commons Chamber

[Mr Gauke]

Forty-five, 40, and about 4 million.

[Barry Gardiner (Brent North) (Lab)]

Does the Minister agree that it would have taken real courage for the Chancellor to come here today, and that in failing to show that courage he has shown he is not fit to lead his party? His failure of courage is not only that, however. It is a discourtesy to this House that renders us incapable of properly examining the Budget, because we do not know how the Chancellor proposes to meet his fiscal targets.

[Mr Gauke]

With the greatest of respect to the hon. Gentleman, that is a load of pompous nonsense. The Chancellor of the Exchequer will respond to the Budget debate, the first time a Chancellor has done so since the 1990s.

Spending Review and Autumn Statement

Barry Gardiner Excerpts

Wednesday 25th November 2015 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

This morning, the Government released the figures for the highest number of excess winter deaths this century—43,900—yet, in his statement, the Chancellor has cut the ECO budget, which was designed to improve home insulation, by 60%. How does he reconcile those figures?

[Mr Osborne]

We are ensuring we have an efficient home efficiency scheme, and at the same time we are cutting the energy bills for families. I remember the Labour party in the last Parliament—it did not do Labour Members any good in the end—campaigning to freeze energy bills. They should be welcoming this cut in energy bills.

Greece

Barry Gardiner Excerpts

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

Of course, we have a very small direct exposure as our banking system has greatly reduced its Greek liabilities. We have four pretty small Greek branches and one subsidiary. We are not directly exposed to loss and although we are a member of the IMF, no country has ever lost money supporting the IMF. Of course, people ask what might happen to Greece should it leave the euro, but I think we can leave that for another day.

[Barry Gardiner (Brent North) (Lab)]

Will the Chancellor remind the House of the amount of money that this country made available to the IMF as part of its assistance package to Greece? He has reasserted today that no country has ever lost money by lending it to the IMF, but of course the IMF has said that it believes that a serious restructuring is required for Greece to get through its current difficulties. That implies that the moneys owed to the IMF will not be repaid.

[Mr Osborne]

The IMF has existed since it was created out of the Bretton Woods conference and, by definition, it exists to support countries that are in very real financial distress. That is its business: lending to countries that are having real problems managing their debts. It is important to say again, however, that Britain and other members of the world community that support the IMF have never lost money in this way, because the IMF holds contingency reserves. It is also the preferred creditor. Frankly, I do not think that the prospect of us losing money through the IMF is that strong.

Royal Bank of Scotland

Barry Gardiner Excerpts

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

I thank the hon. Lady for her warm words. The Government noted the points made by HSBC in its report this week. We are proud of the fact that the UK remains one of the most attractive and competitive places in which to locate a financial services company and a bank. It is essential, in making us fully competitive in that regard, that we take the steps we are announcing today.

[Barry Gardiner (Brent North) (Lab)]

I, too, congratulate the hon. Lady on her appointment. She said in her statement that the Government were not responsible for the bail-out of RBS, but does she not agree with the Governor of the Bank of England that public ownership

“prevented enormous financial contagion at a time when the UK financial system was extremely fragile”?

Will she also confirm that the Chancellor is on record as insisting that the money spent on saving RBS from collapse would be recouped in full? Can she explain why he has changed his mind, by telling us how the perceived public benefit from the sale to which she referred will exceed the £7 billion quantified loss that has been calculated in her own report?

[Harriett Baldwin]

The hon. Gentleman has failed to apologise for the regulatory system that allowed us to get into this position in the first place. The letter from the Governor of the Bank of England is on the record. The hon. Gentleman must accept that this is part of the improvement in the overall long-term economic outlook—[Interruption.]

Budget Resolutions and Economic Situation

Barry Gardiner Excerpts

Friday 20th March 2015 Commons Chamber

[Hilary Benn]

No, I will not. I have answered the hon. Gentleman’s question.

There is another policy that the Government—actually, the Conservative party—have said that they will put in place if they are re-elected, which is to sell homes at 20% off. To go back to the chairman of the Conservative party, he was recently asked several times on Sky News how exactly that would be funded. He was not able to reply, but others have said that it will be done by exempting such sites, first, from the requirement to build social housing, and secondly, from the zero-carbon homes standard. I would tell the Secretary of State that the consequence will be that other people have less of a chance of getting a home they can afford, and people who move into houses built to a lower energy standard will end up paying higher bills than they otherwise would.

I have another question for Ministers. In talking about that plan, the Prime Minister said the homes

“can’t be bought by foreigners”.

I would be grateful if the Minister who responds clarified what exactly the Prime Minister meant.

[Barry Gardiner (Brent North) (Lab)]

They’ve gone very quiet.

[Hilary Benn]

Indeed. Suddenly silence falls on the Chamber.

Does that mean that EU citizens will be barred from buying one of these homes at 20% off? I think we should get an answer. The truth is that home ownership—[Interruption.] Well, I would give way if someone could give me an answer, but I do not suppose that I am going to get one. Home ownership is now at its lowest level for 30 years, and there are those with no home at all. Since 2010, homelessness is up by a quarter and rough sleeping is up 50%.

Charter for Budget Responsibility

Barry Gardiner Excerpts

Tuesday 13th January 2015 Commons Chamber

[Ed Balls]

It is either a three-year rolling five-year target to avoid ever getting to be judged on it, or it is because he could not get his quad partners to agree with it before the autumn statement. We know from the letter from the OBR that the quad signed up to the spending cuts, but perhaps the quad did not quite sign up to the fiscal charter the Chancellor wanted.

[Barry Gardiner (Brent North) (Lab)]

Does my right hon. Friend agree that perhaps the reason for the wording is that at any given point when the Chancellor is asked whether he has met the aim—not the target—he can say, “We are going to meet the aim because this is now the five-year rolling period and we aim to meet it in the third year”? But in no specific year will he actually be held to account for whether he has met it.

[Ed Balls]

Of course that is exactly what the Chancellor has done in this Parliament. In 2010, when he set his first mandate, he said that this would be done by the end of the rolling five-year forecast period. In 2010, the Prime Minister clearly thought that that meant 2015 but the Chancellor now thinks it means 2018 or 2019, which is why he still says he is meeting his fiscal target. Everybody else can see it is a completely preposterous claim.

--- Later in debate ---

[Barry Gardiner (Brent North) (Lab)]

The Chancellor said that he was not going to balance the budget on the backs of the poor. Yet since 2010 there have been 24 tax rises that have meant that ordinary families are paying £450 a year more in VAT. Households will be £974 a year worse off by the time of the next general election because of tax and benefit changes alone since 2010. The Chancellor cut the 50p rate to 45p, which gave an extra £3 billion not to the poorest but to the richest 1% in the country, meaning that someone earning £1 million will receive a tax cut of over £42,000 a year. The Chancellor has opposed a mansion tax to improve the NHS, but he has hit the poorest and the most vulnerable in our society with the bedroom tax. Not on the backs of the poor? I think not. All in this together? I think not.

In fact, the Conservatives have pencilled in spending cuts to public services in the next period that are 30% greater than those they have already introduced. The hon. Member for Wolverhampton South West (Paul Uppal) said that Labour wanted to take the country back to the 1930s. He should check the figures. In fact, it is his own party that will see the level of public spending as a proportion of GDP reduced precisely to the level it last was during the great depression, the way out of which was not to cut more taxes but to make sure that the economy grew. The Government have now announced £7 billion of unfunded tax cuts. We would like all our parties’ manifesto commitments to be scrutinised by the Office for Budget Responsibility, but the Chancellor has set his face against that. That is hardly surprising, because his failure is significant.

[Mr Jim Cunningham (Coventry South) (Lab)]

Will my hon. Friend give way on that point?

[Barry Gardiner]

I am sorry, but I cannot because of the time limit. I am conscious that other Members want to speak.

In 2010, the Prime Minister told the CBI:

“In five years’ time, we will have balanced the books.”

Some might say, “Surely that was before the general election—before he saw the books”, but it was not: it was on 25 October of that year, well after the general election. The Conservatives have broken that promise, and borrowing in 2015 is set to be over £75 billion. The Chancellor is now borrowing £200 billion more than was planned in 2010.

This failure to deliver on the central goal is fundamentally linked to the Government’s failure to tackle the cost of living crisis. Wages continue to stagnate for very many workers. Too many of the jobs that are being created are low paid and insecure; they are not jobs in high-paid, high-productivity sectors. As a result, our public finances have been weakened. Low and stagnant pay means that tax receipts are £68 billion lower, while receipts from national insurance contributions are £27.3 billion lower across the same period. Low pay combines with higher housing costs and failure to deliver benefit reform to drive social security costs higher. This Government are now set to spend £25 billion more on social security than they planned five years ago. The Government who came in to reform social security because it cost too much are spending £25 billion more than they said they would.

In the 2014 Budget statement, the Chancellor said that he wanted a vote on an absolute surplus. The country understands that there are few, but significant, levers that one can use to sort out the deficit: one can vary spending, vary taxes, and vary borrowing. However, varying spending and taxes can vary the level of tax receipts the Treasury gets in, and that level determines how much one needs to borrow to balance the books. The Chancellor said that

“in this Budget all decisions are paid for. Taxes are lower but so, too, is spending”.—[Official Report, 19 March 2014; Vol. 577, c. 784.]

He should have gone on to say: “But so too are tax receipts, and social security spending is up.”

The Government have failed on their fiscal mandate, but we should look at not just the Red Book but the green book, because growth cannot be built by eroding our natural environment—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. Time is up. I am reducing the time limit to five minutes per Back Bencher with effect from the next speaker.

Autumn Statement

Barry Gardiner Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Will the Chancellor confirm that the £2.3 billion identified for flood defences was originally announced last year, and that of the 1,400 schemes he says are going forward, 1,119 are not fully funded but rely on 80% partnership funding and a 10% efficiency saving that has yet to be made? Will he also confirm that the 300,000 households he says will have a reduced flood risk are going from “low” to “very low” risk, and that households at “significant” or “high” risk will rise from 490,000 to 800,000 in the next six years?

[Mr Osborne]

I know the hon. Gentleman represents a constituency named after a river, but he has not been fair about our flood defence policy. Did we set out the money last year? Yes, we did. We then said, “Let’s have a plan for how to spend that money”, and this week we have announced all the different schemes that show how it can best be used. That is an increase on the capital funding that the previous Labour Government provided. Flood defence schemes have always involved a contribution from businesses, and today I announced—the hon. Gentleman did not mention this—that we are expanding the tax relief available for those contributions.