Oral Answers to Questions
Ian Davidson Excerpts(10 years, 2 months ago)
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Nicky Morgan
My hon. Friend is entirely right. The Government have taken difficult decisions to place the public finances on a sustainable footing, while protecting important areas of expenditure such as the NHS. The Government’s long-term economic plan to return the public finances to a sustainable path has restored fiscal credibility. It is notable that the Labour party has no plan, long-term or otherwise, other than to borrow more, spend more and tax more.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Does the Minister accept that the cuts to the welfare budget will lead to an increase in poverty, particularly child poverty? Does she believe that that is a price worth paying?
Nicky Morgan
The number of children in poverty has fallen and the number of children in workless households has gone down by 100,000.
Draft European Union Budget
Ian Davidson Excerpts(11 years, 10 months ago)
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Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
As the Minister will be aware, I am no great defender of the previous Government’s position on these matters. However, simply pointing to the previous Government’s position is not answering the question. Will this Government make it clear that they will not agree to an increase in the money going to the EU? Yes or no?
Mr Hoban
We are going through the process and we have been very clear about our red lines for own resources and the rebate. We have tried to reach a common position with our allies on the size of the budget and of the multi-annual financial framework. We have been very clear that, at a time when member states across the EU are being asked to curb their spending, the EU should play its role in doing that, too. That is what we are seeking to do, not just in the budget but in the financial framework. Just as we have delivered spending restraint at home, we are urging the case for delivering spending restraint in the EU. We have argued forcefully that we need to tackle the chronic over-budgeting and strictly prioritise EU spending. We need significant cuts in the Commission’s spending and I think that they are possible without impeding efforts to boost growth.
Chris Leslie
That is why we need to change the approach of Ministers in negotiations. We have to come to a settlement. This year, we are on the cusp of Ministers having a veto power over the seven-year spending review period. This is the moment when we need them to be particularly firm.
Mr Davidson
Does my hon. Friend feel so strongly about making sure that the agreement we strike with Europe has the support of the people of Britain that he thinks the budget settlement should be the subject of a referendum? That would be an ideal way to determine the long-term budget—the people themselves voting in a referendum on whether they are prepared to accept it.
Chris Leslie
I see the tempting avenue down which my hon. Friend wants to go. I am not sure that it is necessarily good to budget by referendum. It would be simple for the Chancellor, the Prime Minister and the Minister to firm up their position and set out things much more clearly than they have in the motion. I urge hon. Members to look at the airy-fairy fudging language of the motion today—and going forwards, which the Minister does not like to talk about.
The Minister was right to draw on the Financial Times analysis, including in pointing out the reduction of just six administrative staff from the 41,000 EU posts. Some increases for pensions, for schooling allowances for EU officials and even for some of those extra accession activities in relation to Croatia, are still pencilled in by the Commission. I do not think that the administrative budget proposals on the table are justified. Instead, we should be reprioritising the resources paid to the EU budget so that they are sweated more effectively for a pro-growth, pro-jobs position—looking at energy markets, high-speed broadband and the infrastructure and structural fund changes that need to be made. I do not think that the Government have appreciated the strength of feeling on this matter.
Chris Heaton-Harris
No, I cannot. One point that I am trying to make is that, if we want to be stronger and to cause a bit of upset among our European partners, we could dig our heels in. The Government are doing what they can, while abiding by the letter and spirit of the law, but we could change the face of public services in the UK with just the increase in our contribution to next year’s budget. It is therefore perhaps worth digging our heels in that bit harder and threatening to do something that might be against the letter of the law. There would be a relatively large amount of public approval for such actions in respect of an organisation that has not had its accounts signed off for 17 years, as the hon. Gentleman says.
There would be more public approval for such actions if people knew what the money is spent on. I shall speak for just one more minute, because I know other hon. Members wish to speak, and outline a handful of things that the European budget goes on. Total EU spending in 2012 on quangos and agencies, which the Minister mentioned, was about €2.48 billion. Some agencies and quangos completely duplicate other bodies that serve the EU and member states, such as the Economic and Social Committee and the Committee of the Regions, which the European Commission is meant to consult but which no one has ever heard of, apart from those illustrious members of our communities that enjoy going on the monthly trips to serve on them. We could cut those and save €215 million straight away, but British Governments of either political complexion have never suggested it.
There are two human rights agencies. We could cut at least one of them, saving €15 million. Four agencies are involved in workplace and environment issues. We could cut a number of those and save €50 million. If we dig and delve deeply enough, we find that each EU Commission budget line funds all sorts of things that it probably should not. Hundreds if not thousands of non-governmental and other organisations get money from the EU budget. The have become slightly too close to the EU and should question whether that helps them to get their point across, even if it helps them in budgetary terms. Greenpeace is not one such organisation—it refuses to take any money from any governmental institution.
Mr Davidson
Is the hon. Gentleman aware of how the system operates? The EU gives money to organisations that it has established, so that they can lobby the EU to spend money on their aims.
Chris Heaton-Harris
To illustrate exactly that point, I shall quote the reasons Greenpeace gives for not taking money from governmental institutions:
“Greenpeace does not solicit or accept funding from governments, corporations or political parties. Greenpeace neither seeks nor accepts donations that could compromise its independence, aims, objectives or integrity… Greenpeace relies on the voluntary donations of individual supporters, and on grant support from foundations.”
I take EU lobbying by Greenpeace way more seriously, because it comes from the heart and not from an EU budget line.
My next example is the LIFE+ programme budget line, which funds, among other groups, Avalon, which co-ordinates activities and lobbies on behalf of sustainable rural development in central and eastern European regions; BirdLife Europe; CEE Bankwatch; Climate Action Network Europe; Coalition Clean Baltic; Danube Environmental Forum; EUCC Coastal and Marine Union; Eurogroup for Wildlife and Laboratory Animals; EUROPARC; the European Environmental Bureau; European Environmental Citizens Organisation for Standardisation; European Federation for Transport and Environment; European Landowners Association; European Water Association; Federation of Associations for Hunting and Conservation of the EU; FERN; Friends of the Earth Europe, which constantly lobbies hon. Members on all sorts of things; Health and Environment Alliance; International Federation of Organic Agriculture Movements EU group; International Friends of Nature; International Network for Sustainable Energy; Justice and Environment; and the Mediterranean Information Office for Environment, Culture and Sustainable Development. The list goes on. Just one budget line funds all those organisations.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
It is noticeable that, so far as I am aware, not a single Member has risen to defend the European Commission’s case for an expansion of its budget. Not even my right hon. Friend the Member for Leicester East (Keith Vaz)—representing Leicester and Brussels East—who is just departing, dared to suggest that the budget should be increased. I note that not a single Liberal Democrat has bothered to turn up to defend the EU’s budget proposals either. When I indicated my intention to speak in this debate, the Whips Office very generously offered me the chance to have the day off, on three occasions, despite the three-line Whip. Nevertheless, I felt it appropriate to share my views with the House.
This is the one area where, in respect of the UK Budget, virtually everybody is agreed that substantial cuts can be made. At a time of austerity, it is clearly indefensible to spend copious amounts of money on the European budget in the way we do. If I remember correctly, the Minister mentioned European schools, so will he tell us how much money is spent per teacher and per pupil in European schools in comparison with schools in the UK, either for the individual nations or across the UK as a whole? That would enable people to see the disparity. Will the Minister provide for the information of Members an account of the salaries and other rewards, and the tax and other deductions, of the top 100 most highly paid people in the European Commission and of those of the top people employed by the British Government? I believe such a comparison would reveal the level of extravagance of the European Commission in supporting itself in the style to which it has become accustomed to be outrageous and indefensible.
The Minister did not mention to any great extent the case for making cuts in the common agricultural policy, which is the wildest example of a benefits system for the least deserving that I have ever come across in my life. We have attacked the poor by changing their benefits system, yet we are not prepared to take any steps to try to amend the benefits system that works for this country’s wealthiest landowners. The waste and extravagance of the EU fails to be audited successfully year after year—to the great complaint of the Public Accounts Committee on which I served for many years.
It seems obvious that the Minister and Conservative Members must have something in their notes, saying: “weak case; kick Opposition”. I accept that the Opposition’s case is weak. I did not support the budget changes when we gave away the rebate: we got virtually nothing for it; we got no change to the common agricultural policy, and those responsible for it did not even get the presidency of the European Union. In those circumstances, it was a patently disastrous deal, but simply reflecting on that is not sufficient. The Minister needs to be more explicit about how exactly he proposes to deal with the situation in which we are perpetually outvoted in qualified majority voting by those who receive money from those who pay. There is an in-built majority of recipients, so it is inevitable in those circumstances that we will always lose.
The question arises of what we do about the next overall budget for the longer period. I am not clear whether the Government are saying unequivocally that they intend to veto that budget if it is unsatisfactory. I am not clear how they will judge whether or not the proposed budget will count as unsatisfactory. An hon. Member asked earlier whether the Government would view a cash increase as acceptable in any terms. I would have thought that a cash freeze should be the very least that the Government would expect from the budget going forward. I would have hoped that we wanted to see, at the minimum, substantial cuts in a whole host of areas of the EU budget—and that otherwise we would reject it. If that brings about a confrontation with our European allies—those with whom we wish to work on many fronts—it might bring about the sort of issue on which we want a referendum.
I have not previously favoured an in/out referendum because I regard neither of those options as particularly attractive: a yes to stay in would be seen as a green light to ever-closer union, while a no to get out would be seen by isolationists as a green light to their position. I believe in co-operation with our European allies, but on different terms from those that we have at present. The Government have a responsibility to be fair to our European allies so that they do not feel that they have been ambushed by our producing—like a rabbit out of a hat—a whole set of red lines at the last minute. We should be spelling out now what it is that we are not prepared to accept in any drastic redrawing of the budget.
I hope, of course, that the budget cuts will be so drastic that my hon. Friends support them as well. It is noticeable that Opposition Members have been unanimous in criticising the European budget, and I think that if a vote were taken now among the Opposition Back Benchers who are currently present, the budget would be subjected to stringent cuts.
The Government must recognise that the country is far more Eurosceptic and suspicious of EU budget spending than the élites of Europe who are disproportionately spoken for in the House. It is true that the Liberal Democrats are not here, but they are not the only guilty parties. There are those who have become hypnotised by the lure of Brussels and the concept of flying back and forth throughout Europe. They have been sucked in by a very seductive embrace: the idea of becoming a European statesmen, and world statesmen, and so on and so forth. That leads people to forget what life is like at home, and the feelings and ambitions of ordinary people, let alone the price of milk.
I hope that the Financial Secretary will not only agree to provide the information for which I asked about schools and the salaries and taxation of the top 100, but spell out more clearly the rules that the Government intend to apply for the forthcoming budget period.
IMF
Ian Davidson Excerpts(12 years ago)
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Mr Osborne
No, there are no such instances. Every single country that has lent money to the IMF has got its money back.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
First, will the Chancellor withdraw the outrageous slur that all Labour Back Benchers were in favour of Britain joining the euro? Secondly, surely his distinction between currencies and countries is mere sophistry. The reality is that this is about bailing out countries whose difficulties have been caused, or at least exacerbated, by being in the euro. When does he expect to have to bail out the eurozone again? When will the eurozone’s next request for money come?
Mr Osborne
I talked about loyal Labour Back Benchers and would never apply such an outrageous slur to the hon. Gentleman, whereas it is certainly applicable to the hon. Member for Birmingham, Selly Oak (Steve McCabe). The distinction is not sophistry, because an IMF contribution, were there ever to be one, to a eurozone bail-out fund, would basically put that money into a eurozone pot and then the eurozone would decide how it was spent. If there is a country programme for a specific country in the eurozone, the IMF team would turn up, wherever it happens to be, impose its own conditions and do its own analysis, and that is fundamentally different. The logic of the hon. Gentleman’s question is that the IMF would never help a eurozone country, which would lead to the eurozone countries leaving the IMF, and we would then be fundamentally undermining one of the most important institutions the world has seen in the past 60 years.
Sovereign Grant Bill
Ian Davidson Excerpts(12 years, 10 months ago)
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Mr Osborne
Let me just answer this point before giving way again.
Although I do not want to speak for the Comptroller and Auditor General or the PAC, I suspect that if they wanted to look at the funding arrangements between the MOD and the royal family, they would be able to do so under the provisions of this Bill.
Mr Osborne
Let me give way to the hon. Member for Glasgow South West (Mr Davidson) and then I will answer both hon. Gentlemen’s points.
Mr Davidson
The Chancellor mentioned his view that income from the Duchy of Cornwall and the Duchy of Lancaster is private money of the royal family. Surely he recognises that in the previous Parliament the Public Accounts Committee established quite clearly that that is not the case—that this is not the private property of the monarch or her family but a trust established by the nation in order to fund the various members of the royal family. That is different from saying that it is the private property of the royal family themselves.
Mr Osborne
I should make it clear that it is an established principle that the income from that property, which is held in trust, is for the private purposes of the royal family.
In response to the hon. Member for North Durham (Mr Jones), I point out that there are of course some areas of royal financing—I will come on to say something about royal protection—where it is very difficult to be public about some of the sums of money involved. The Bill—I hope that we will soon get into the meat of it—is a mechanism for helping to continue the current level of spending. As I say, it is perfectly within the rights of the National Audit Office and the Public Accounts Committee, if they want to, to look at payments from the Ministry of Defence, but that has to be a matter for them.
Mr Osborne
It is understood that there are certain pieces of property, such as Buckingham palace, Windsor castle and the Crown Estate, that belong to the institution of the monarchy, and certain pieces of property and assets that are the private property and assets of the Windsor family. That is a well-established precedent and has been recognised by the House for many decades. Nothing in the Bill changes that.
Mr Osborne
I will give way on that point and then make some progress on clause 1.
Mr Davidson
I am very grateful. The Chancellor is undoubtedly correct that some pieces of property are tied in with the institution of the monarchy, such as Buckingham palace, but the coastline of Scotland and the undersea surface are not intimately connected with the monarchy and have never, as far as I am aware, been visited by the monarchy. In those circumstances, I am not clear why the two categories are being conflated. Surely it would be better, if the Chancellor wants a method that is tied to growth in the economy, if it were simply tied to, say, gross domestic product. If GDP went down the Queen and the monarchy would suffer the same as the rest of us, and if it went up, they would benefit in line with the rest of us. That would be better than tying the fund to a measure that I envisage will make it grow at a far greater rate than the economy as a whole.
Mr Osborne
First, I do not want to speak for the Queen, but I think she is quite familiar with the Scottish coastline.
Mr Osborne
I will get back to the hon. Gentleman specifically on that point—I do not have specific information on Marlborough house with me at the moment—but on his broader point, for the first time, we will allow the National Audit Office to crawl over the arrangements that he describes.
I was going to go on to explain that some senior members of the Ministry of Defence and our military live in properties that are rented from the Crown Estate at below the market rate. The properties are within extremely secure zones, and it would not be possible to rent them to virtually anyone else. That arrangement suits the MOD, because it gets properties—not very many—at below the market rate, and equally, it suits the royal estates, in that they can rent out properties that they would not be able to rent out otherwise.
Let me talk about those sums. As I have pointed out, the average over the past five years is £34 million, which is much less than 20 years ago, when it was £49 million. In 2013-14—the first year in which the new sovereign grant mechanism will apply—the level will be determined by the profits in 2011-12, as I said earlier. We do not know precisely what those profits will be, because we are in the middle of the financial year, but the recently published Crown Estate annual report for last year showed profits of £231 million, and the Crown Estate confirms that that is pretty much what it is expecting in profits for 2011-12. The result of all that—this is the key point for the House—is that the sovereign grant in 2013-14 would be £34 million, which is in line with the average for the past five years. I would not say that that is a coincidence, because we have partly designed the mechanism to ensure that that has happened.
If projections for the Crown Estate are correct over the rest of this Parliament, we should see a real-terms cut of up to 9% in the funding for the official duties of the sovereign in that period.
Mr Davidson
The Chancellor will be aware, from discussions on the Scotland Bill, of a proposal for part of the Crown Estate to be devolved to the Scottish Parliament in Edinburgh, or handed to local authorities, community groups and so on. What would happen to the Crown Estate and the money going to the royalty if that proposal were passed?
Mr Osborne
That is not something that the Government are proposing today. If we were to propose it, we would of course address the impact of such a decision on the royal finances. I am assuming that even under such arrangements, the Queen would remain the Queen of Scots. I believe that most of us are happy with the current arrangements.
Mr Davidson
I am grateful to the former Chairman of the Public Accounts Committee for giving way, and I have to tell my colleagues that he is not nearly as bad a man as he often appears. Does he accept that there is a difference between what the royal family undertake as their public duties, which should, quite rightly, be examined by the Independent Parliamentary Standards Authority or a similar organisation, and what they undertake in their private lives, which should not be accessible to the public? Does he accept that extravagances in their private lives should not be charged to the public purse? That really is the difference. Like the hon. Gentleman, I recognise that we do not wish to intrude into every element of that family’s life; but if they do not want us to intrude, they should not charge such things to the public.
Mr Leigh
I am not sure whether the Queen or the Prince of Wales charges “extravagant” aspects of their private lives to the public purse, but what worries me is that if Prince Charles went on an official trip to America and took so many hairdressers, butlers, private secretaries and all the rest, the media and the hon. Gentleman, if he was still a member of the PAC, would immediately demand a public inquiry, and there would be a gradual drip, drip of attacks in the tabloid press against the royal family. We should be aware of that and warn about it. That is why the role of the Comptroller and Auditor General is absolutely crucial; he is not a politician. The reason I am making these remarks—if he reads Hansard—is that he must stand firm and make an overall judgment.
Mr Davidson
I can assure the House that, when I have travelled abroad, I have certainly never taken a hairdresser with me.
The sort of rules that apply to the Prime Minister ought to apply to the royal family in this context. The Prime Minister and senior members of the Government must have a certain degree of support and status when they travel abroad on parliamentary and official business. The royals similarly ought to have some status when they travel abroad. However, the two ought to be comparable. To be fair, the Prime Minister has never taken hairdressers, butlers, valets, chauffeurs or anything similar with him.
Mr Leigh
This debate is useful in a way, because it shows precisely the problem. I understand that the Duke and Duchess of Cambridge have taken extremely modest entourages and staff on previous trips. Apparently, the Duchess has had more than 37 different changes of outfit in America and Canada. I do not suppose that the Prime Minister or even the hon. Gentleman changes his outfit 37 times when he goes on Select Committee trips abroad. There is a completely different order of scale between a Head of State, who is part of the ornamental part of the constitution and who represents our country, and even the Prime Minister. If we are now to have questions and relentless pressure in the PAC about how many dresses need to be taken on every royal trip, it will be ridiculous, and it would start to make the royal family look more and more ridiculous. That is what I am warning against.
Jacob Rees-Mogg
I remember the secret treaty of Dover well, although I was not an active participant. However, it is not particularly relevant to this debate. It has to be borne in mind that Louis XIV did not deliver the cash, which is always a slight problem in such negotiations.
The Crown Estate belongs to the sovereign. Any other great landowner who has inherited land owns that property outright and is free to pass it from generation to generation. The Crown Estate is in that position. We have discussed before whether, because it is exempt from death duties or because it used to be used to pay for Government expenditure, it is in some sense different and the nation’s. I would argue that that reasoning is not accurate. In the same way that the feudal duties that fell upon other landowners were abolished as time went on, so the Crown Estate would in all normal circumstances have become the Queen’s outright.
I therefore go back to my point, which the hon. Member for Newport West (Paul Flynn) dislikes, that the Queen pays an 85% tax rate. There would be £200 million or more in income for the Queen every year, but in fact there will be only about £30 million. So Her Majesty is the highest-paying taxpayer in this country. Members of Parliament might like to think that we could do a deal with the Government, hand over our salary and be given £9,000 a year back.
Mr Davidson
Does the hon. Gentleman recognise that there is a distinction between the monarch as an individual and the monarchy as an institution? The Crown Estate is the property of the state, inasmuch as it is the property of the monarchy as an institution, not the monarch as an individual. It is therefore untrue to say that the monarch as an individual is paying 85% tax.
Jacob Rees-Mogg
I am very grateful to the hon. Gentleman, but I think it is immeasurably confusing when we start trying to divide the Queen up in that way. Her Majesty is our sovereign, full stop. She is one person, indivisible. She is not the trinity—Her Majesty the Queen, Her Majesty Mrs Windsor and Her Majesty the third party of the trinity. It does not work like that. She is one sovereign individual.
The next point that I want to make is one on which I agree, as I often do, actually, with the right hon. Member for North Durham. [Hon. Members: “Honourable.”] I am so sorry, the hon. Member for North Durham (Mr Jones). It is in Her Majesty’s gift, of course, to promote him, and perhaps she might have looked more favourably on that if he had been a bit more loyal in his comments. However, I agree with his point that we have to pay for the constitution that we have. The Queen is not here to bring in tourism and things like that. She is here as an essential part of our constitution. That is why it is worth the military taking on the costs of sending attachés and so on and so forth. The military owe their loyalty to the Crown, not to politicians, senior generals or people who could abuse that power to change how this country is run.
Our constitutional settlement, which works extraordinarily well and has worked well for hundreds of years, is worth paying for. On that basis, we get stability as a nation and the effective operation of our constitutional system. The judges owe loyalty to the Crown; the military owe loyalty to the Crown; we, as Members of Parliament, swear an oath to the Crown. It is the Crown that is at the pinnacle of our constitution, outside and above politics and a defender of our liberties. Indeed, as Charles I said at the scaffold, he died the martyr of the people, because he had been defending the liberties of the people, as the Queen has done now for jolly nearly 60 years. We must be willing to pay the right price for our constitutional settlement, and I think that should be a generous price.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
Follow that, Mr Davidson!
Mr Davidson
It is difficult to follow a speech like that because in many ways, it took the biscuit.
Mr Davidson
Of course, as my hon. Friend says, that biscuit would be a Bourbon.
It is worth while clarifying the question of the ownership of the Crown Estate. Is it owned by the monarch as an individual or the monarchy as an institution? When the Public Accounts Committee looked at this matter, there was a consistent attempt by officers of the monarchy to confuse and conflate the two. We need to ask ourselves this question: were the monarchy abolished, would Crown Estate moneys and properties belong to the deposed monarch as an individual or would they remain with the state? It is quite clear that they would remain with the state. Therefore, the moneys and the estates are not the property of the individual who happens to be the monarch at any particular time. That clarifies a number of things.
Mr Davidson
No, I want to proceed because we are short of time.
I am seeking clarification from the Chancellor, who, I remember, was on the Public Accounts Committee when he was a young whippersnapper—I have often wondered what happened to him since. Will the National Audit Office, the interventions of which I will welcome, also be able to look at all elements of royal involvement? In particular, can it look at the royal art collection, about which there were serious discussions and disputes in the past? That would seem to be covered by what he has said, but it is not immediately clear.
Is the Crown Estate the right body to take into account when determining the monarch’s income? Those of us on the Public Accounts Committee who examined the Duchy of Cornwall’s accounts were absolutely clear that the Duke of Cornwall was manipulating the money involved, by playing a major role in determining the amounts of expenditure and income, thereby determining how much money came, or was available, to him as an individual.
Quite clearly, the Crown Estate could be leant on by the monarchy to make decisions on expenditure and income in the short term to affect the amount of grant that the royal family receive. The grant would then be on, as it were, a golden ratchet—a bit like EU expenditure, it would always go up, and never down. There is clearly scope for abuse in those circumstances. Will the Chancellor clarify those points?
Will the Chancellor also take into account the fact that there is due to be a windfall from wind and wave power? Will he assure the Committee that all of that will be taken into account when the review takes place in due course?
Mr George Osborne
I shall deal briefly—because time is short—with the points raised. I should say first, however, that I am grateful to the Committee and the Opposition Front-Bench team for the general support they have given to clause 1 and indeed the whole Bill.
My hon. Friend the Member for Gainsborough (Mr Leigh) raised the key question: how do we create a mechanism that preserves the dignity of the monarchy while ensuring that the House is accountable for the expenditure of public money? As I said in my opening remarks, there is the question of whether the money provided is enough or too much. I said that we do not want a cut-price monarch or a lavish monarchy. As a general guide, I have looked at how much the monarchy has spent over the past five years. On average, £34 million of public money has been given per year through various forms of grant and money drawn from a reserve built up using public money. I have said that that is not a bad guide for the future and that 15% of Crown Estate revenue will provide that amount over the rest of the Parliament. In 2016, we will review whether that is the right amount.
Tristram Hunt
In Committee, the hon. Member for Gainsborough (Mr Leigh) said that the monarchy was a fragile institution, but I beg to differ. The monarchy has shown itself to be a very powerful and strong institution, lasting over the centuries. If the British state was beginning again, we probably would not start by creating a monarchy: it is irrational, inequitable, inherently sexist, myopic and averse to many of the principles of progressive politics and the social democratic future that we on the left hold dear. However, we are where we are and there is no enthusiasm for dismantling the monarchy.
Tristram Hunt
Among the public as a whole.
We in opposition should be brave and confident enough to think about some of the monarchy’s strengths, which is partly what the Bill is about ensuring. First, the monarchy gives a broader notion of citizenship. We on the left often get in a lather about being subjects rather than citizens and whether that holds back our politics, but the virtue of the monarchy is that it creates a notion of citizenship that is not necessarily linked to ethnicity. It is not a blood-and-soil notion of citizenship. The political scientist John Gray put it rather well when he wrote:
“The monarchical constitution we have today—a mix of antique survivals and postmodern soap opera—may be absurd, but it enables a diverse society to rub along without too much friction.”
It also points to a wonderful thing about Britain—that we have no purpose in the world, unlike the great republics of France, America or Italy, where there is an endpoint, or telos, to do with happiness or improving equality. Britain has no ultimate endpoint and monarchy is part of that.
Scotland Bill
Ian Davidson Excerpts(12 years, 11 months ago)
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Mr Gauke
Let me be clear: I am not making the case against lower corporation tax per se; I am saying that if Scotland had a lower rate of corporation tax, that would have an impact on the Exchequer, and Scotland and the Scottish Government would have to pick up that cost. I do not believe that that is a matter of dispute or that the hon. Gentleman disagrees with that. Indeed, we are not even talking about something that we could pursue under European law—I am sure that he will be aware of the details of the Azores judgment. [Interruption.] That point is clear, so I am surprised that there are so many mystified faces on the Opposition Benches.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
This relates to the Minister’s point about the Azores judgment—people in my constituency speak of little else. I want to clarify the important question of transparency. Have the Government provided the Scottish Government with the figures that the Minister has quoted, in order that they can challenge them or produce any additional information? It is important that this debate is conducted not just at the level of rhetoric, but that firm proposals are made with numbers attached. Will the Minister therefore clarify whether there has been an inter-governmental dialogue on these matters?
Mr Gauke
We are talking about preliminary numbers, which I have put forward on the basis of early estimates produced by the Treasury this week. We are keen to engage with the Scottish Government, just as we have with the Northern Ireland Executive. I am sure that there will be exchanges of correspondence, meetings, discussions and a full examination of both the numbers and the methodology used in producing them. We are more than willing to engage in that process, but we are also waiting for the Scottish Government to offer their analysis of the impact of devolving corporation tax, of what the costs would be, and of the economic advantages and disadvantages. We know that the Scottish Government take a great interest in this—they make this point on a regular basis—but we await their analysis.
Mr Gauke
It was about five minutes ago when we last set out the reasons that corporation tax remains a reserved matter. The Bill provides for a substantial devolution of tax powers to the Scottish Government, but corporation tax has always been a matter for the United Kingdom. We are exploring this matter in the context of Northern Ireland, but if there is a case to be made for a radical change in this area, we would like to hear it and we look forward to doing so soon.
Mr Davidson
Did not the Minister say earlier that the Government had produced their latest estimates only about seven days ago? In the circumstances, this criticism seems a trifle unfair, even though the Scottish Government have had a long time to produce theirs. Surely they would benefit from this Government sharing their figures. If the Treasury undertook to pass on its figures to the Scottish Government, I am sure that a response would soon be forthcoming, enabling us to conduct this debate properly and not simply on the level of transitional demands.
Mr Gauke
The hon. Gentleman is clearly anxious to move the debate on, and he makes a perfectly reasonable point. The Treasury and the Government would be quite happy to share our analysis with the Scottish Government, and if that would assist them in their work, we would be pleased to be of assistance.
Iain Stewart
I am happy to come to some agreement with the hon. Gentleman. My solution is to provide a detailed breakdown on a territorial basis of actual spending and receipts—what is spent and received by each part of the United Kingdom.
Mr Davidson
I understand the point that the hon. Gentleman is making, but with reference to the different parts of the United Kingdom, does he accept that there are enormous divergences among different parts of England, and that that is fuelling much of the sense of grievance felt by many of our English colleagues? Much of this is a within-England problem of unfair distribution, particularly to the north-east and the north-west of England, which ought to be addressed by his Government.
Iain Stewart
The hon. Gentleman anticipates my next point exactly. It is too crude to look at the four constituent nations of the United Kingdom. In Scotland and in England we need to break that down further and look, as he says, at the different needs in the different parts of the kingdom. I will give a constituency example. My constituency, Milton Keynes South, is in the affluent south-east of England, yet I have very deprived wards in my constituency. Taking health spending as an example, what Milton Keynes is allocated as its formula share of health spending in England is capped because there is a transfer to other parts of England. I contend that that is not fair and it disregards some of the areas of need in my constituency, but it illustrates the problem that arises if the formula for analysing spending is too crude.
Iain Stewart
I have great respect for the hon. Gentleman in many matters, but this is not one of them. The argument that defence spending in Scotland would somehow be enhanced through independence is not one I agree with. I am not sure whether the Scottish National party’s policy is still to withdraw from NATO, but it used to be many years ago. I see Scottish defence assets only being decimated in the event of independence, so I agree to disagree with him on that point.
I will return to what I propose as a solution. Before we start recalibrating the Barnett formula or developing some other formula or mechanism, we need hard facts on the fiscal relationship between each part of the kingdom. Once we have that, we can move forward on a sensible basis towards having a stable and fair system in the UK. However, I will end on a note of caution. In a previous exercise I looked at other countries that operate some form of fiscal transfers between different parts of the country, such as Australia, Canada and Germany. There are different models in each country, but in all of them the spending relationship between the constituent parts is still a big political issue. I fear that we will never get to a point where everyone is completely happy with the relationship, but I believe that we can arrive at a stable solution.
Mr Davidson
It is important to put on the record that even under devolution Glasgow clearly gets far less than its fair share from a Scottish Government based in Edinburgh. I have just been to the Shetlands with the Scottish Affairs Committee, and people there feel that they are equally badly treated by Edinburgh. We also need a needs-based assessment within Scotland to stop money disappearing and being sucked down into the black hole that is Edinburgh.
Iain Stewart
Having been born and brought up in Hamilton, which is between Glasgow and Edinburgh, I am in something of a no man’s land on that point and wary of intruding on private grief. The hon. Gentleman’s point is an important one. The analysis should be not only among Scotland, England, Wales and Northern Ireland, but among the regions and cities in each nation. I do not intend to press my amendment to a vote, but I would be grateful if the Minister could suggest some alternative working or make some statement.
Mr Field
I might accept that there is an argument; my plea is that the information should be set out clearly for us, so that we can understand if there are differences and, if there are, establish a basis on which they can be defended. If I manage to conclude fairly quickly, I know that there are Members on the Government Benches who have written and spoken about the need for us to move expeditiously to a needs-based formula, although we all understand that if we did that the period in which we phased in the new formula would be crucial. I am not in favour of doing things that rough people up unnecessarily; timing is important.
Mr Davidson
Like the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who spoke earlier, I think that these are important points. May I suggest to my right hon. Friend that there are two different aspects that he ought to be picking up? One concerns the allocation of money—to some extent I tried to address that when speaking to the hon. Member for Milton Keynes South (Iain Stewart), because there are divisions in England as well—but the second is the choices made by different jurisdictions. The devolved Parliament in Scotland has clearly made decisions that are different and better than some of the things done in England. However, when it comes to waiting lists, services and education, it is also true that some things in England are better than in Scotland. Does my right hon. Friend, like me, welcome the fact that the Select Committee on Scottish Affairs and the National Audit Office are undertaking an evaluation of
“the progress made in various policy areas, comparing devolved Scotland to other jurisdictions”?
Mr Field
The answer to that, briefly, is yes.
Reference has been made to the incredibly interesting debate held in the other place last week. I was struck not only by the unanimity on the view that the status quo cannot hold but by the fact that the Minister replying to the debate found it terribly difficult to marshal a case against all those contributions.
Mr Davidson
I would like to speak to the amendments but also to refer to some sections of the Scottish Affairs Committee report. Like other hon. Members, I have attended many of these debates and I recognise that this is not the end of the process. We are just mid-way through it.
My first point follows on from my intervention on the Minister about making more information available. It is essential that we try to raise the tone in these debates rather than lower it. Our debates should be based on argument and figures rather than on the yah-boo politics that we see too often in the Chamber between Scottish Members on these issues.
Some Members may remember the “magic bullet” theory. Professors Hughes Hallett and Scott—all three of them—[Laughter]—suggested that simply devolving financial powers to Scotland would result in an automatic boost. That was seen as a panacea and a deal-breaker. Only after a substantial amount of debate did they reach a conclusion. The Select Committee report states:
“when questioned on the relationship between the devolution of fiscal powers and economic growth, Professor Hughes Hallett said that: ‘the empirical evidence is inconclusive on the question of whether it does or doesn’t lead to an increase in the growth rate systematically. Some studies say yes, and some studies say no’… Professor Scott stated clearly, however, that ‘the actual act of giving power does not in itself create a bonus’.”
The exchanges that resulted in that conclusion advanced the debate considerably, and I think that many other matters that we have discussed, such as corporation tax and excise tax, ought to be dealt with in the same degree of detail.
When our Committee produced its report, we said that we were conscious that the misuse of figures resulted in a sense of manufactured grievance which suited some participants in the debate. The way in which to defeat manufactured grievances is to produce accurate figures, and I think that the Government have been slow in producing the full details and slow in producing the facts.
One of the main issues identified by the Committee, which is relevant to some of the new clauses and amendments, is the key principle of transparency. Another is evolution. We need to recognise that the Scotland Bill, and the relationship between Scotland and the rest of the United Kingdom, will constantly evolve. Most people in Scotland believe that an obsession with constitutional detail has diverted attention from real issues on which there is not nearly as much division as many suggest. On a number of issues there is substantial common ground between the nationalists, Labour and the Liberals—the Tories, of course, are beyond the pale—but that is often masked by the obsession with small difference.
At the last moment, points about such matters as excise duty have been produced like rabbits out of a hat. There may not be much division between us in terms of the objectives that we wish to achieve, but there may be much more when it comes to method, and more still when it comes to the interpretation of what are only partial statistics. The Committee stated:
“Progress should not be measured solely by the extent by which powers are sucked into Edinburgh and we will wish to look at how reserved responsibilities can be exercised closer to the people they serve.”
All bar one of its members agreed with the point that I made earlier about Edinburgh being a black hole into which powers are sucked. All who were not nationalists shared that perspective and that of the report. The issue of whether we are philosophically committed to devolution involves decentralisation beyond Edinburgh. Edinburgh is not an end in itself, except for people who happen to live there. The vast majority of people in Scotland want powers to be transferred closer to them, which does not necessarily involve Edinburgh. As people in many parts of Scotland will recognise—
Mr Davidson
Will my hon. Friend allow me to finish my point, for the avoidance of doubt? Edinburgh as a centre of government is as distant from many people in Scotland as is Westminster—or, indeed, Brussels—as a centre of government. Having said that, I shall happily give way to an Edinburgh Member.
Mark Lazarowicz
I am grateful to my hon. Friend for giving way, and I am glad that he made it clear that when he speaks of “Edinburgh” he actually means the Scottish Government and Parliament based in Edinburgh. Perhaps he should use that longer form in future, rather than give the impression that Edinburgh is benefiting from some largesse from the Scottish Government and Parliament, because we certainly are not.
Mr Davidson
If my hon. Friend is saying that the sucking of powers into Edinburgh has not benefited Edinburgh, things are even worse than I thought, and I will certainly take that into account in future.
The Committee dealt in detail with corporation tax, and we also welcomed the Scottish Parliament Committee’s points on the subject. Professor Muscatelli summarised the main reason why, on balance, we came down against the devolution of corporation tax, saying:
“tax competition was the main reason why our group recommended that corporation tax should not be devolved.”
He made the point that it was very likely that a reduction in corporation tax in one UK jurisdiction would result in the cannibalisation of tax from other parts of the UK.
Dr Whiteford
The hon. Gentleman and I sat through some very long evidence sessions with any number of erudite professors of economics, none of whom seemed to agree with each other, but who nevertheless managed to find agreement on some pretty simple principles in respect of corporation tax, one of which was that if we lower it too far we will harm revenue, and if we raise it too high we will harm growth. Those very learned people disagreed because there are so many contingencies and uncertainties at any given point in time, and because the interlinking of the economies of various parts of not just the UK, but the European Union and beyond nowadays, makes it very difficult to pin matters down with any certainty, and therefore they become highly theoretical. Does the hon. Gentleman agree that—
Dr Whiteford
Does the hon. Gentleman agree that the way to secure the Scottish economy is to create jobs?
Mr Davidson
Well, that is a hard one, isn’t it! Yes, clearly the way to improve the Scottish economy is to create jobs, and as far as I am aware not even the Conservatives are against that. The arguments to which the hon. Lady refers were so complex that it seemed at some points that even Hughes and Hallett were disagreeing. [Laughter.]
We did reach conclusions, however. I think everyone agreed that there were risks in devolving corporation tax, and, as we said,
“not least in that this could lead to competition which could result in the ‘cannibalisation’ of the UK’s tax base.”
There was a political difference there, because we went on to say:
“We recognise that this is not necessarily a concern for those who wish to consider the financial position of Scotland in isolation.”
I understand why a nationalist would not be concerned about the cannibalisation of UK taxes if there were a minor gain to Scotland, but for those of us who take a wider perspective across the whole of the UK, that is a valid point to take into account.
It is generally agreed that a reduction in corporation tax in Scotland would result in some drawing in of business from the rest of the UK; I have heard no serious opinion suggesting anything else. If we accept that, we can do no other than recognise that that is not likely to improve relations between the jurisdictions, and as we would hope that in the event of an independent, or further devolved, Scotland there would be an ongoing relationship, beggar-my-neighbour politics on corporation tax is not helpful. The risk of driving that divide between England and Scotland by achieving a marginal gain in corporation tax revenue in the short term is not worth the candle.
Mike Freer
I am grateful to the hon. Gentleman for giving way and I pay tribute to his chairmanship of the Scottish Affairs Committee. Does he also recall the evidence we got from the editor and the business editor of The Scotsman? The issue was not the cannibalisation of corporation tax but the fact that the business community did not trust the SNP not to drive business out of Scotland with a high tax policy.
Mr Davidson
That is true, but that is a slightly different point. The business community was absolutely clear that it was worried not only about uncertainty but that the SNP might end up having an anti-business or a business-unfriendly regime. For the purposes of this debate, however, I was not going to go down that particular route at the moment. It is fair to say that nobody who was raising arguments in favour of the devolution of corporation tax was suggesting that it should be raised, but there was an assumption that devolution was in order to reduce it. It was noticeable that even with the points that were made in the Committee and subsequently we have not heard an argument about how the initial gap between the moneys that were previously received from the UK Treasury and the reduced amount would be made up. Even if in the longer term corporation tax was going to result in a growth in business taxation, which I doubt, there would undoubtedly be a short-term shortfall, and we have not heard any solution as to how that would be bridged.
I have great reservations about committing, in the current economic difficulties and a time of recession, to a set of policies that give more money to the private sector and rich people and that cut services for ordinary people who depend on those public services. That is the choice we are being asked to make. If we are all in this together, as has been suggested, how reasonable is it at a time when Scotland has economic difficulties and faces cuts in its budget, to suggest that the budget should be cut further to give a gratuitous tax break to business? That has to be further explored.
As I said earlier, I do not think this is the end of the matter—it will run and run. That is why the Government have to make available as quickly as possible as much information as they can. I suspect that the Scottish Government produced their figures some time ago and sent them down and that they have either been misfiled in the Scotland Office or lost in the post. I simply find it impossible to believe that after all the huffing and puffing that was done, those figures have not been calculated and sent down here, and I urge the Minister to search at the very bottom of his filing tray just in case poor staff work has misfiled those important documents. We have to make sure that this issue is resolved as quickly as possible.
The point on which the shadow Scottish Secretary was howled down was a very fair one. The interventions from the nationalists managed to distract her from making the important point that in 1988—it is true that was some time ago—Alex Salmond, who was then an SNP MP, was suspended from the House of Commons for attacking the Tory Government’s reduction in corporation tax, calling the proposals an “obscenity”. He might have been right then, but the policies he is adopting now seem slightly different, whereas, if anything, the economic situation is the same. I remember seeing that particular pantomime and, if I remember correctly, Mr Salmond decided to have his intervention because he believed that at a time of economic difficulty cutting taxes for business and for those who had most, for the wealthiest, was an inappropriate use of resources. Exactly the same economic situation pertains now and I think we need an explanation as to why what was an obscenity then is not an obscenity now. I recognise that times move on, cultures change and people develop, so if it was a youthful indiscretion, all well and good. If he tells us that, we may forgive and we may forget, but I very much doubt it. It would be helpful to the debate if that was clarified.
Mr Reid
The Bill brings about a substantial increase in the powers that are devolved to the Scottish Parliament, especially those relating to taxation and borrowing. As such, it represents a substantial event in the process of devolution. I congratulate Professor Calman and his commission on bringing forward the proposals after detailed consultation, and on achieving consensus among three political parties. His proposals were subject to detailed scrutiny in the Scottish Parliament Bill Committee and by the Scottish Affairs Committee here. I also congratulate the Secretary of State and the Under-Secretary on their hard work in putting the Bill together and taking it through the House.
It is an old saying that devolution is a process, not an event. This is an important process; there will no doubt be further processes to come, but it is important that the subsequent devolution processes follow the same process as the Calman Commission and the Bill. There must be widespread consultation, detailed evidence should be produced and examined and then the Bill should be taken through after detailed scrutiny. The amendments rejected earlier this evening did not have the detailed evidence behind them.
Mr Davidson
I want to pick up on the issue of process. Amendments have been defeated tonight, but they will probably reappear in the Scottish Parliament. Does the hon. Gentleman agree that before they are debated further in this House, the Scottish Affairs Committee and others must examine them forensically to make sure that the gaps in the evidence that were identified earlier this evening can be exposed so that we can have a proper discussion and debate about the choices to be made?
Mr Reid
I certainly agree with the Chairman of the Scottish Affairs Committee and hope that his Select Committee will subject these proposals to detailed scrutiny.
Two of Scotland’s political parties took part in the original constitutional convention, which went up to three in the Calman commission. The party that has not taken part in any of these processes is the Scottish National party. I accept that it has a mandate for a referendum on independence and I look forward to that campaign. Where I think the SNP goes wrong is that it makes no attempt to bring about consensus within Scotland. Its referendum will fail and I suggest that in future it works with other parties so that detailed proposals can be subjected to scrutiny and we can take the process of devolution further forward. This Bill represents an important step. I hope that the House of Lords will pass it speedily so that all the important extra powers given to the Scottish Parliament can be put into effect.
Mr Davidson
It is very difficult to summarise several months of work in three minutes. I commend the Scottish Affairs Committee report to the House, and I hope everyone will read it carefully.
A number of points are worth repeating at the conclusion of our debate. Although I recognise that this is not the end of the story and that discussion will continue, the question of transparency in the figures is vital; that cannot be over-emphasised. If amendments from the Scottish Parliament are to be debated, they must be scrutinised as the proposals from Professor Hughes Hallett and Professor Scott were scrutinised—and, of course, in the end those proposals fell by the wayside because they were found to be wanting.
We must also recognise that financial pressures on the Scottish Parliament are likely to result in pressures for decisions in areas that did not previously have to be addressed. Hard choices are going to have to be made, so it is therefore again essential that the necessary information and arguments are put forward.
We must also be clear about what the verdict of the Scottish people was. Some 50% of the people in Scotland did not vote in the election. [Interruption.] Of those who did vote, fewer than half voted for separation. [Interruption.] We must remember that more people voted for my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) to be Prime Minister than voted for Alex Salmond to be First Minister.
Not everything the Scottish National party proposes is accepted, therefore. We must remember that Alex Salmond called clearly for a yes vote in the alternative vote referendum and was roundly defeated. [Interruption.] I notice that efforts are being made to shout me down. That is what has traditionally happened in Scotland when people have challenged the nationalists, and those of us who want to challenge the narrow neo-fascism of the nationalists have got to be prepared to have discussions—
Mr Davidson
Is it not neo-fascist to attempt to shout down speakers with whom one disagrees? We have had robust debate in the House on several occasions, but it has frequently been the case in my constituency, after I won it from the nationalists, that they have attempted to shout me down.
Eurozone Financial Assistance
Ian Davidson Excerpts(12 years, 12 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jim Shannon (Strangford) (DUP)
I rise to support the motion before the House and to add some comments to the debate. I want to give a couple of examples—fishermen and the farming industry—where the EU is creating more hassle than can be justified. I am of the school of thought that we should make the best of a bad job, and on many occasions we have to do that. The EU, along with the way in which it is run, is most certainly a bad job, yet at present we are in it whether we want it or not. It therefore falls on this House, MEPs and another place to do our best to hold the EU to account as far as possible for the events that take place over in Brussels. We have an opportunity today to debate that and vote on it.
It is clear that the European financial stabilisation mechanism is not fit for purpose; owing to this, the UK could be held liable as a member state. On 9 May 2010, the European financial stability facility was created, and it is a special purpose vehicle agreed by 16 members of the eurozone and aimed at preserving financial stability in Europe by providing financial assistance to eurozone states in economic difficulty. Thus far, we are not at all involved, but no to the euro meant no to the EFSF. The tricky part came with the notion that the facility may be combined with loans of up to €60 billion from the European financial stabilisation mechanism, which is again reliant on funds raised by the European Commission using the EU budget as collateral, and up to €250 billion from the IMF, all to secure a safety net of €750 billion.
If there is no financial operation in activity, the EFSF would close down after three years, on 30 June 2013. If there is a financial operation in activity—which of course there is—the facility would exist until its last obligation had been fully repaid. There has indeed been activity, and a good deal of it involving the EFSM, despite the fact that it should not have been involved to the extent that it had an equal if not greater share of the bail-outs. The purpose of the European financial stabilisation mechanism is to provide an emergency funding programme that is reliant on funds raised on the financial markets and guaranteed by the European Commission using the European Union budget as collateral. I want to give some examples of where things have gone pear-shaped, to use that terminology.
It seems abundantly clear that, as a non-eurozone member, we can be held accountable only for the EFSM, yet for some inexplicable reason it was this funding that bailed Ireland out—to the tune of €5 billion—as opposed to the eurozone funding, which should have borne the brunt. We are neighbours of Ireland, and I do not wish to be harsh. Of course we want to help out where we can, as a healthy Irish economy could benefit the Northern Ireland economy, owing to the shared land border. However, it is hard to grow this sense of neighbourliness when we see the fund enabling Ireland to undercut us on corporation tax, which subsequently encourages business investment in the Republic as opposed to Northern Ireland, or when we see that it has enabled fuel duty to be reduced, which has also taken flight business away from the Province. So, we bail them out and then they use that to our disadvantage. Why should we doubly lose out—through access to European funds, along with increased competition for our business in Northern Ireland within the United Kingdom—when the eurozone fund should have been responsible for bailing Ireland out all along?
Mr Davidson
That point is of significance to Scotland as well, because the pressure from Northern Ireland to reduce its corporation tax to compete with the Irish Republic is being replicated in Scotland. Does the hon. Gentleman have any idea why this Government are using British taxpayers’ money to fund an opportunity for the Irish Republic to undercut us on corporation tax in that way and thereby cannibalise British revenues?
Jim Shannon
The hon. Gentleman makes an appropriate intervention. We in Northern Ireland certainly do bear the brunt of that, and we feel the pain more than most, as does Scotland. Perhaps when the Minister responds we will get an idea of exactly why that has happened.
The second example is from Iceland—there is more than one cloud hanging over Iceland, by the way—and the second referendum there. Iceland rejected a proposed deal to repay €4 billion that Britain and Holland spent in 2008 to reimburse savers hit when Iceland’s banks collapsed. Meanwhile, I am hearing complaints from my constituents about the amount of fish that fishermen can catch and the number of days that they can work being restricted by EU legislation, as opposed to the Icelandic raiders—they are certainly not an ice hockey team—who are sweeping in, despite Euro-protests, and fishing mackerel that belong to our fishermen. Those are just two simple examples of the failure of the bail-out system in Europe. It is passed the time that this be brought to a head and we ensure fairness for all in Europe.
The hon. Member for Rochester and Strood (Mark Reckless) has stated that the legality of the EFSM is called into question by the current wording of the treaties, which must be changed accordingly. That is exactly the issue that we are trying to address. Therefore, the answer is very clear: use the upcoming meeting of the Council of Ministers or the European Council to vote against the continued use of the EFSM unless a eurozone-only arrangement that relieves the UK of liability under the EFSM has been agreed.
For far too long we have slavishly followed the dictates of Europe, throwing pound after pound into that deep hole that is Brussels and awaiting some kind of recompense for doing things the right way. For too long we have watched other countries prosper—and not too far away from us, either—with bail-out funding, while we cut funding to schools, hospitals and infrastructure in order to remain solvent and claw our way back to a sound financial footing. Everyone in the Chamber today will be able to give examples of that from their constituencies. For too long we have paid in while watching our farmers and fishermen flounder under the weight of European dictates, at the same time as we watch other nations flout the very same rules that our officials seem to have an almost evangelical zeal in enforcing. Indeed, we have been fined £60 million in Northern Ireland for mistakes in bureaucracy and forms that have been filled in.
We need to assert ourselves by saying to the EU that we will no longer be Europe’s nodding dog, making do with a pat on the head every now and again, as if that is okay. We more than pay our way. Others must be held to the dictates that we adhere to. That should start with the matter of this funding and how it is used. I fully support the motion and urge every Member here today—those who embrace Europe and those who oppose it alike—to state that from now on we will make a better job of what is currently a bad job and demand our rights as a member state, beginning with the right to exclude ourselves from the euro without paying for it through the back door.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
The wider question we need to address is why it appears that this Government are consistently going soft on the European Union. When they were elected, the impression was given that they were going to be much tougher on Europe than the previous Government had been, and I welcomed that different position, on that issue if on no other. I welcomed the fact that the Conservatives gave the impression they were going to stand up to Europe much more than the previous Government, and that they were going to seek opportunities not only to repatriate powers but to reduce the amount of money we give to the EU and to pursue all possible ways to clip the European Commission’s wings. Why, therefore, has it come to pass that they seem to be simply acquiescing in so much that goes on in the EU?
I do not for a moment accept that the current Government should be allowed to hide behind the playground argument that a big boy did it and then ran away. I accept that the previous Government were not without fault in this matter, but simply to say that they did it so there is absolutely nothing whatever we can do about it now is not acceptable. To their credit politically, this Government have said in respect of a whole number of policy areas that they wish to reverse the previous Government’s line, and they are taking steps to do so. Where they believe it is important, they have taken steps to undo the previous Government’s work—and I oppose what they have done—yet in this area they seem unwilling to do so. I simply do not understand that, unless they have struck a secret deal with the Liberals whereby the Liberal tail is wagging the Conservative dog.
Today’s debate appears to be largely a row among Tory Eurosceptics, with the provisional wing arguing against the official wing. I cannot accept that people I have heard speaking in a Eurosceptic fashion on other issues seriously believe that the Brussels bureaucrats are going to be terrified by the prospect of the British Government raising the issue—I can just see them running off into the bars to have a stiff drink in fear lest this issue be raised! Goodness me, if the drafters of this amendment had been serious they might have said that they urged the Government to “Stamp their foot on the floor if they do not get their way,” or “Write rude words on the toilet wall if nobody pays any attention,” because that would have much the same impact. This is a bit like a child in the classroom threatening to hold their breath until they are sick unless teacher gives them an apple. It is weak and miserable, and smacks of the Yosser Hughes phrase, “Gissa job.”
Those who drafted and signed the amendment have been far too easily bought off by the Government Whips. Perhaps some among them are deluded, but perhaps the others have set their price too low. If Members show our party Whips that we are prepared to be resolute, even though they might have told us that their current offer—or bribe—is the only one available, they will ultimately find another that might be more to our liking.
We must recognise that the eurozone’s problems are economic manifestations of political problems. The eurozone—its creation and membership—is clearly a political construct, and the admission of Greece was politically, rather than economically, decided. I think we all know that the Greeks lied about their economy in order to get into the eurozone. The problems that have now arisen have not come out of a clear blue sky; not only were they predictable, they were predicted. It was predicted that these problems would arise. Therefore, those who are now running about like headless chickens pretending it is all the fault of bad snow, leaves on the line, sunspots and other events that could not possibly have been foreseen, are doing themselves and this House a disservice. We must recognise that these are political issues that have to be handled in a political fashion.
I recognise that we have an economic interest in the well-being of the eurozone, but the Liberal position seems to be that because this is a political construct they wish to support, we have to keep shovelling in money regardless of how much it costs. I agree with those who say that we have spent enough and we must spend no more. I certainly agree with the position of the previous speaker, who seemed to be saying that we are looking for great things from this Government in terms of freezing or reducing the overall level of the EU budget. This debate should be a prelude to that argument that we must have. We should be taking a robust and vigorous line on this, in order to ensure that there are no concessions on the EU budget.
I will vote with whoever I think is most extreme on this matter. It seems to me that that is the only way we can gain Europe’s attention. Simply threatening to stamp our feet and indicate our displeasure will be brushed aside, as will simply acquiescing in the Government Whips’ bidding. This is an issue on which we must vote extremist, so that the UK Independence party does not come and get many of the Members on the Government Benches.
Chris Leslie
I will not because I have only a few minutes left.
The situation has changed markedly since last May. The circumstances under which the EFSM was then agreed have altered, casting doubt on whether it is being used appropriately, as many hon. Members have said. Because of the various weaknesses shown by the current Administration in Europe, we have ended up increasingly paying more than our fair share in relation to the EFSM facility, especially as time and again the junior EFSM fund in the bail-out package has ended up shouldering up to a third of the bail-out costs, as some hon. Members have pointed out. We have found that the agreement in May regarding the EFSM sum of €60 billion would represent only 12% of the non-IMF contribution, with the remaining €440 billion being borne by the wider eurozone fund. The British liability for that was going to be only 12.5%, but the proportion contributed from the EU-wide EFSM to the Irish bail-out was greater than the eurozone proportion. The Portuguese bail-out was hardly an improvement, with one third coming from the EFSF, one third from the EFSM and another third from the IMF.
The Minister must explain to the House why the EFSM, which makes up only 12% of the non-IMF contribution, is being drawn upon to the same extent as or more than the EFSF. That forms a crucial part of the motion tabled by Back Benchers. The Minister is under an obligation at least to say why we are using the EFSM to such a high degree. That is incredibly important. It has been in the gift of Ministers to answer that question, but so far they have neglected to do so.
The EFSM was supposed to be a temporary mechanism all along. The failure of the Government to push forward with a permanent mechanism, despite opportunities to do so, is an abandonment of UK interests. The temporary emergency EFSM was only ever meant to be a short-lived interim arrangement. We should have been moving on as quickly as possible to a permanent eurozone-only mechanism. Why has the Chancellor failed to press his European colleagues to sort out a permanent eurozone-only fund more urgently?
The Chancellor attended an ECOFIN meeting on 18 May. The Financial Secretary attended ECOFIN on 8 June last year, the Chancellor on 13 July, the Chancellor again on 7 September and the Financial Secretary again on 30 September, yet the press releases from each of those ECOFIN meetings suggest that not once did Ministers raise the issue of pressing forward with that permanent arrangement. Can the Minister explain why not?
Mr Davidson
The shadow Minister is rightly attacking the Government for being weak and vacillating. Will he tell us what bold, straightforward and clear position he is urging us to take on the vote?
Chris Leslie
I am happy to do that. Unfortunately, the wording of the motion refers to the legality of the EFSM, and I do not think the former Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), would have acted illegally to sign up to it. I accept that that is a small point, but it is for that reason that we will abstain today.
We will have to revisit the issue time and again. It is hugely important that hon. Members understand the situation. We have not yet seen any occasion on which Ministers have raised the subject of moving to the permanent arrangement as swiftly as they can. They claim that they are responsible for having secured a commitment to move to a permanent arrangement in 2013. The temporary arrangements were always going to expire in 2013 anyway. So much for the famous victories claimed by the Prime Minister, the Minister and other hon. Members.
Too often we have an empty chair at the European table. Only a few weeks ago, on 6 May, Britain was excluded again from a meeting that took place in Luxembourg—the empty-chair approach was very evident when ECB officials met the Finance Ministers of Germany, France, Italy, Spain and Greece. Will the Minister say whether there was an active decision by the Treasury to continue to take an empty-seat policy, or were we simply not invited? We see in the Financial Times that Swedish officials are concerned that the Prime Minister is not pressing harder to prevent key decisions from being made only among eurozone members. Will the Minister say what we are doing to stop being sidelined at that European level?
We know very well that that temporary fund was needed. We recognise that it was part of a concerted pan-European action, standing together against the global forces that threatened the bond market with contagion. That is especially the case now in the eurozone. We have to acknowledge that we have trading partners in Europe and it is in our interest to support their continued economic stability, but Britain has already paid its fair share in the stabilisation process in the case of Ireland and Portugal. The time has come for a stronger voice with real influence in Europe to ensure that British interests are properly served, which must mean a swifter move to a permanent eurozone-only bail-out mechanism.
The fund was always due to expire in 2013. That was not Ministers’ doing; it was the original design. We know that Ministers were involved in the cross-party consensus during the transition from the previous Government to the present one. Ministers cannot wriggle out of their responsibility now in relation to the EFSM. The Government are on extremely shaky ground and even their natural allies are questioning the coalition’s leadership. The issue will no doubt return on another day.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I recognise that there is a lot of frustration at the way the motion was dealt with today. However, things have been carried out in order. I am sure that the Leader of the House will reflect on the hon. Gentleman’s comments and think about them, but I am also sure that he will speak to the Committee to see whether there is a way forward for everybody. Hopefully, some amiable agreement can be reached in future, if that is the desire of the Committee.
Mr Davidson
Further to that point of order, Mr Deputy Speaker. Does that not demonstrate quite clearly that this set of Government Whips is just as bad as the previous one?
Section 5 of the European Communities (Amendment) Act 1993
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Mr Hoban
Indeed. If my hon. Friend has studied this carefully, as I am sure he has, he will recognise that large chunks of it are familiar from the Red Book. Of course, chapters 6 onwards are taken from the Office for Budget Responsibility’s economic and fiscal outlook. This information is in the public domain and Parliament has had sight of it before its presentation to the European Commission.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Will the Minister remind me exactly why we have to produce all this information for the European Union? I have not read it in enormous detail but it seems that Parliament is telling teacher or the boss why we have done what has been done. That places the House of Commons very much in the position of being subordinate to the European Union.
Mr Hoban
I do not agree that Parliament has been placed in a subordinate position. We are passing this information to the European Union having already made it available to the House, particularly during my right hon. Friend the Chancellor’s Budget speech, and there is no requirement on us to accept any recommendations that the Commission might make as a consequence of having read the information. We are in a very different situation to those member states that will provide their convergence programmes at the same time as the UK, but before their Budgets rather than after them.
Chris Leslie
I simply note at the outset that we are now engaging in a particular debate. Yes, I am glad that it is taking place on the Floor of the House, but we did not really know that it was going to be on the Floor of the House, in this particular form, with this set of papers and this particular motion, until 24 hours ago. It is curious that the Government, in their relationship with many hon. Members throughout the Chamber, have not made it clear that this is quite an important component of our obligations under European Union treaties. I know that Ministers are keen to abide by their obligations under such treaties, but I just point out that some Members might be less keen.
Mr Davidson
Given that this debate is so important, will my hon. Friend clarify whether the programme has already been sent to the European Union or if we will have to wait for the result of this debate before it is posted off second class?
Chris Leslie
I presume that the House has to agree the contents of the convergence programme before it can be posted to the European Commission. The hon. Member for Bury North (Mr Nuttall) implied that the Commission could probably glean all the information online, and there is a perfectly reasonable argument that the Commission should follow events in member state countries rather than expect these matters to be handed to it on a platter. I do not think that presenting the information is necessarily genuflecting in front of Brussels, but the obligation to do so is certainly a core component of the treaties. I simply point out that fact.
The point of the motion about which we need to be most wary is the noting “with approval” the Government’s assessment of the economy, particularly given the Chancellor’s and Treasury Ministers’ lamentable failure to understand the need for economic growth. Page 13 of the convergence programme, which was published just 24 hours ago, says that the recovery is in line with previous recoveries. That, of course, is not the case.
In the recessions of the early ’80s and ’90s the economy had clawed back economic strength by this stage in the economic cycle. However, since this Government took office, the trajectory of recovery has stalled. We are already seeing that the information in the document, published just 24 hours ago, is becoming out of date.
Jacob Rees-Mogg
It is relevant to look at the United States economy and at the gold price, which is up at $1,500 and not because more people are getting married and want wedding rings—although I congratulate my hon. Friend on his forthcoming nuptials and I am sure he is buying a large piece of gold for his future wife. The gold price has been so strong because the financial markets have lost confidence in the US dollar and because the American political forces—the President and Congress—have not been willing to tackle the deficit in the way that Her Majesty’s Government have done. The gold price in sterling terms has not risen by anything like so much, because people have confidence in what the Government are doing.
Normally, I take the view that there are two people in this world who should be obeyed. One is the Holy Father and the other is my hon. Friend the Member for Stone (Mr Cash). When my hon. Friend speaks on European matters, he does so with a degree of infallibility that belongs to only one other living person, although I hasten to add that the remit of the Holy Father does not cover European matters. My views diverge slightly from those of my hon. Friend on one point: I think we should be proud of the document that Her Majesty’s Government are sending because of what the Government have got right. The situation they faced a year ago was desperately serious, needed urgent attention and had to be brought under control by their taking measures that are not necessarily popular.
It is important to emphasise that point because all Governments, when they take tough decisions, face gentlemen such as the shadow Minister, the hon. Member for Nottingham East (Chris Leslie). Over the next year or two, as people see the cuts coming through, it will be very tempting to listen to such voices and to think that perhaps there is an easier way and a land flowing with milk and honey that we have not yet found where we can borrow more money, where the financial markets will turn a blind eye, where we can spend money we do not have and not worry about our children and our grandchildren and where the banks will suddenly miraculously lend to bankrupt people to keep inefficient systems going. That is when those on the Treasury Bench must stiffen their sinews and summon the blood and not give way to those voices. At the moment, that is still relatively easy, because there has not been much coming through in the way of cuts. We have not seen the pain that will come from those difficult decisions. Now, however, we are sending our plan abroad. We are telling people not just in this country but in foreign countries of what we are doing and we should be proud of it because it is right. If we do what is right, the economy will begin to recover.
We on the Back Benches, in particular, must support those on the Front Benches when they do such things and when the critics from the other side appear to be doing well in the opinion polls. That is the point of maximum difficulty. Let us think of the great lady in 1981, when 360-odd economists wrote to The Times—a great newspaper with very fine editors—to suggest that the economic policy was wrong. That was two years in and it was the hardest point and that Government stuck to their guns, which led to the recovery we then had.
Mr Davidson
The hon. Gentleman has spoken movingly about the need for cuts and indeed for pain—pain that I suspect will not be felt by him. Pain will be felt by poor people whereas bankers, who are rich people, will feel no pain whatsoever. It is the unfairness of what the Government are doing that is causing so much opposition and bad feeling in the country and that is why the Liberals will suffer so badly in the AV referendum and the election.
Jacob Rees-Mogg
The fundamental flaw in the hon. Gentleman’s argument is to think that there is a painless way out of a major crisis. It is simply a question of whether we deal with it now and ensure that the problem is resolved and that the economy can grow again or whether we delay it and have a much worse crisis later. The pain I was talking about was political pain for the Government as people notice the cuts. Our approach will reduce the pain for individuals because it will ensure that the economy is rebalanced sooner rather than later. That is the way to minimise pain—not thinking that there is a never-never land with no pain after we have lived on debt and incompetent Government policies for the past 13 years.
Scotland Bill
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Mr Gauke
I only wish I could have signed it off—such is my enthusiasm for the Command Paper. I work closely with my right hon. Friend the Chief Secretary, however, and the point I made was that the Treasury signed off the Command Paper. We work happily as one Government, so I am pleased to be able to respond to the amendments—assuming I now have the chance to do so.
The Government’s proposals in the Bill facilitate the largest transfer of power from the United Kingdom to Scotland since the creation of the UK. By devolving stamp duty land tax and the power to set a Scottish rate of income tax, the Scottish Parliament will be able to raise approximately one third of its own budget, thereby significantly improving its financial accountability. Only last Thursday, the Scottish Parliament voted overwhelmingly to endorse the Bill—121 in favour, three against and one abstention. To devolve additional taxes now, as the hon. Member for Dundee East argues, without the consent of the Scottish Parliament would be thoroughly inappropriate. There has been a long consultative process that both the UK Government and the Scottish Government and Parliament have been through, so to include the devolution of additional taxes now, on a whim, would not be the right course of action.
As well as those general points, there are some specific reasons why these taxes should not be devolved now in the Bill. I shall deal with those in a little detail. First, on amendment 37 and new clause 8, the Calman commission did not recommend that fuel duty be devolved. It concluded that different fuel duty rates would make artificial opportunities for cross-border shopping, creating economic distortions. More significantly, however, it highlighted the EU energy products directive that sets a principle of one rate of fuel duty per member state. Devolving fuel duty to the Scottish Parliament would require the EU to grant the UK a derogation from this directive, and the Calman commission acknowledged that it would be unlikely to be granted. A contrast can be drawn with the rural fuel discount derogation that the Government are pursuing.
Amendment 58 and new clause 15 relate to quarrying and mining. Although the Calman commission recommended devolving the aggregates levy, a tax on quarrying and mining is much wider and has not been endorsed by the Scottish Parliament. Even if the scope of the amendment was narrowed to devolve only aggregates extracted from the land, as Calman recommended, I would not accept it at this point. The aggregates levy is currently under legal challenge in the EU courts, and it would be reckless to devolve it while the challenge remains. I will not devolve a tax to the Scottish Parliament where there is any risk that it could subsequently be deemed to be illegal. That would be a substantial risk for the Scottish Parliament, which was the point made by the hon. Member for Glasgow North (Ann McKechin).
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Will the Minister clarify how it is reckless? What is the element of risk involved were it to be transferred now to the Scottish Parliament?
Mr Gauke
The risk is this: should it be found subsequently that the aggregates levy, as currently constituted, is not legal, the loss of that revenue would be immediate and significant for the Scottish Government. The hon. Member for Dundee East referred to the special rates of aggregates levy in Northern Ireland, and asked why they could not therefore be applied in Scotland. I make the point, however, that the Northern Ireland credit scheme was suspended on 1 December owing to the legal challenges at the European courts.
The confirmation sought by the hon. Member for Glasgow North is set out in the Command Paper accompanying the Bill: once the aggregates levy has overcome the legal challenge, we will devolve it to Scotland. Clause 24 enables that to happen.
Mr Davidson
I am genuinely unclear about the point that the hon. Gentleman is making. I fail to see how the Scottish Government lose if the action results in the aggregates levy being ruled illegal. They do not have an aggregates levy at the moment. If it is transferred to them and then abolished, they will not have it either. Not losing something that they do not have already is not a deficiency. Would any additional risk result from the transfer of the aggregates levy?
Mr Gauke
The point is that there would be a reduction in the block grant, because the revenues from the aggregates levy would be going to the Scottish Government. If it was subsequently found that the aggregates levy in its current form was not legal, either we would have to readjust the block grant or the Scottish Government would have to bear the shortfall.
I shall move on to amendment 57 and new clause 16. The Calman commission recommended the devolution of the UK’s air passenger duty, not a general power to tax air travel, which is what the amendment seeks. The UK Government are exploring changes to their aviation tax system, as stated in last year’s June Budget, and will look at devolution of this tax base in that future work. However, it is not appropriate to devolve aviation tax until these changes have been explored, with any major changes subject to consultation, and a decision on the future of UK aviation tax made. To do otherwise would mean that the Scottish Parliament would have to plan the future of their new tax without the context of the UK version. I would also like to answer the point about the process of a new tax. Clause 24(6) provides that any new tax would need to be approved by the Scottish Parliament, under section 80B of the Scotland Act 1998. That would clearly apply in these circumstances.
I turn to amendment 60 and new clause 17. The Calman commission recommended that corporation tax not be devolved. The Scottish Parliament has endorsed this, although it wants to stay engaged in any future discussions on corporation tax devolution. Both the Calman commission and the Scottish Parliament recognised very good reasons why not to devolve the tax. First, the Calman commission concluded that if comparable levels of public services were to be maintained, the scope for substantive reductions in the rate of corporation tax in Scotland was limited, unless the Scottish Government are able to increase revenues from other sources. As the hon. Member for Glasgow North said, under European law there will have to be a reduction in the block grant commensurate with the value of the reduction in the corporation tax rate.
Secondly, the commission also believed that the potential administrative impacts of such a move were significant. The creation of compliance costs to businesses operating on either side of the border, as well as the increased collection costs to the Government, would be undesirable in the present economic climate.
Stewart Hosie
No, I said that I welcomed the fiscal stimulus to the economy. Many of the efforts on financial intervention were absolutely necessary, and I supported them. Of course that had to be done. My criticism was not that action was taken during difficult periods, but that we went into the recession and the downturn with half a trillion pounds of debt. I am digressing, however—
Stewart Hosie
I am not giving way immediately, as I want to carry on developing my case on capital borrowing.
Any code has to take into consideration all the issues and be based on an established set of principles for long-term sustainability. That is incredibly important. The Bill, however, currently limits borrowing to loans, which prevents the use of bonds and other instruments. That is significantly more restrictive than the borrowing powers available to Scottish local authorities and to many Governments in other countries with comparable responsibility.
Mr Davidson
I want to clarify whether the hon. Gentleman has a specific figure in mind for borrowing. I understand his point about the criteria, but it would be immensely helpful if he gave us an indication, first, of the figure and, secondly, of whether the bonds and other means of borrowing money would be in addition to that amount or part of the total.
Stewart Hosie
I do not have a specific figure, and let me tell the hon. Gentleman why. If bonds are issued in such a way as to generate revenue, that revenue can be used in one sense to offset the level of the loans. That is why I am not being prescriptive about the amount. What I am saying is that the cumulative £2.2 billion is too low for the reasons that I have explained and that the code of practice would allow us to take into consideration all the sustainability and affordability issues and reach a figure that would be much more appropriate. I am not going to be prescriptive; it would be wrong for me to do that.
Mr Davidson
If the hon. Gentleman cannot give a figure, how can he say that £2.2 billion is too small? How does he arrive at that judgment when he is unable to use the same reasoning to identify what the figure might be?
Stewart Hosie
There are annual amounts and cumulative amounts. The annual amount at 10% of the capital departmental expenditure limit is very modest and the cumulative amount is less than the amount spent on capital in recent years. That strikes me as inappropriate when we are seeking to stimulate the economy and do all the things that the hon. Gentleman and I both want to see happen. As we can have revenue streams coming in to offset some of this, I do not want to put a limit on it, but the code of practice would do that. [Interruption.] I am not going to be drawn on that. I have explained why and I want to move on to bonds, which is another important issue.
Professor Gerald Holtham said in his evidence to the Committee that there is no macro-economic rationale to prevent the Scottish Government from having bond-issuing powers. I raised that on Second Reading, when I said:
“The borrowing powers in the Bill will limit the Scottish Government to certain types of borrowing. They will be able to use loans, rather than bonds or other instruments that would provide greater flexibility. Transport for London, which is a local authority in respect of its borrowing powers, is currently issuing commercial paper worth £7 billion for Crossrail and other projects. Birmingham city council issued paper to the tune of £250 million in 2006”.—[Official Report, 27 January 2011; Vol. 522, c. 541.]
As I said at the time, it is strange that what should be a seriously enhanced power for the Scottish Parliament, as described in the Bill, does not even put it on a par with TfL or Birmingham city council in its ability to raise cash through commercial paper for important national infrastructure works.
Professor Iain McLean and others have noted that bond issues would have several benefits. First, they would provide the Scottish Government with greater flexibility in the financing of capital projects, and the ability to issue a range of instruments would allow projects to be financed by a mixed portfolio of borrowing both in terms of repayment periods and the interest and other terms of the borrowing instrument. Secondly, in certain circumstances, issuing instruments in the market may offer a better deal on rates and repayment terms than a loan from the Treasury or a commercial bank. Indeed, the Treasury recently announced in the spending review a 1% rise in the charge or cost on loans from the Public Works Loan Board, increasing the cost of local authority borrowing. Having an option to seek financing from the market would provide an alternative in the event of a punitive interest rate being imposed at some future point by the Treasury. Professor McLean said in his evidence that
“it should be for the Scottish Parliament and Scottish ministers—not the UK Parliament or UK ministers—to decide on the soundness of the capital projects to which they commit themselves, and to deal with revenue fluctuations.”
That is the answer to the point raised by the hon. Member for Congleton (Fiona Bruce). If we are serious about responsibility—I hope that we all are—the Scottish Government must be allowed to make the decisions. Those decisions should land squarely on the desks of Scottish Ministers, or those in whatever other body is responsible for raising capital.
Mr Gauke
We will, of course, look at what the Scottish Parliament has set out and we will engage with those suggestions on alternative ways of proceeding. None the less, given the difficulties that would arise if bonds were issued, particularly in the circumstances we face—there is a crisis in the public finances and it is essential that we meet our fiscal mandate and stick to our spending and deficit reduction plans—we need to take into account the uncertainty and additional cost that could be created at this point. However, there is a general point to be made about borrowing limits. Circumstances will change and the opportunity for greater flexibility in future is something we are willing to look at, but we believe we have the balance right at the moment.
Mr Davidson
Am I correct in assuming that the Minister is pretty strongly wedded to the set of proposals that he has introduced at this time, but that he and the Government are not necessarily wedded to them for all time? If devolution continues to evolve, that may well result in the relaxation of those rules, a review and a beneficial alteration of the figures.
Mr Gauke
The hon. Gentleman sets the position out well, and I do not disagree with him. The Bill essentially sets out a base for current and capital borrowing. It can be increased, and there is a mechanism in the Bill to do so. We would need to look at the circumstances in future to see whether we could increase flexibility in that area. We have to bear in mind the state of the public finances and the importance of maintaining credibility.
Mr Davidson
On a point of order, Mr Hoyle. According to the votes, eight nationalists have been voting on all these things, and now they are down to seven. Has somebody been kidnapped? [Laughter.]
The Chairman of Ways and Means (Mr Lindsay Hoyle)
Now, then.
Clause 32 ordered to stand part of the Bill.
Clause 33
Maximum penalties which may be specified in subordinate legislation
Court of Auditors 2009 Report
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Justine Greening
In fact, it is 16 years, and the Government view that as completely unacceptable. I hope that the hon. Member for Luton North (Kelvin Hopkins) will bear with me while I set out some of the steps we have already taken and those we plan to take over the coming months to play our part in getting these issues tackled.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Does the Minister accept that every previous Government, of whatever party, have always said that that situation is unacceptable, yet nothing has ever changed? Why are her Government so soft on Europe?
Justine Greening
I completely reject the hon. Gentleman’s intervention about this Government being soft on Europe, and I think that even he does not believe it. Far from being soft, we have taken a proactive approach to managing down the EU budget and getting control over it. We are dealing with a key part of that because, as he is aware, we have been leading the debate on the size of the EU budget, with some success. We plan to lead the debate as we enter the next financial perspective about how large the budget should be and the need for it to reduce in real terms over time. He will also be pleased to hear that we are steering the debate on what we should be spending the budget on. However, we are here tonight to debate the fact that although that is crucial, if we do not have the final piece in place—ensuring that once the decision has been taken on that money it gets spent in the way that was intended—we are not fulfilling what we need to fulfil. That means we are not getting value for taxpayers’ money, and that is why this debate is so critical.
The hon. Member for Glasgow South West (Mr Davidson) asks how we can make a difference. I hope the fact that I am an accountant will bring some—[Interruption.] He is groaning, but it is a good thing to be an accountant in this role. I understand some of the technical issues involved in auditing and managing financial accounts and in managing budgets, and I assure him that I shall bring that experience to my role as Economic Secretary on behalf of the Government.
Let me set out for the House the background to this issue before taking more interventions from hon. Members who rightly want to have their say on this topic. First, managing taxpayers’ money properly is crucial at any level, be it local or national Government or across the EU. It is a key part of the responsibility of Government and essential to the credibility of the EU budget and the European Union as a whole. As I have said, this Government and I, like other Members of the House, find it completely unacceptable that the Court of Auditors was, for the 16th year in succession, unable to provide a positive statement of assurance on the EU’s accounts. That is a continuing blot on the EU’s reputation and it raises serious questions about the management of EU funds. As I have said, British and EU taxpayers need to know their money is being well spent, but the Court of Auditors cannot provide that assurance. We are talking about large sums of money and it remains difficult to spend them effectively to deliver clearly the results we want—growth, jobs and a stable EU.
Justine Greening
Let us be clear that the responsibility for the catastrophic decision on the EU rebate is fairly and squarely political. I hope that the shadow Minister will tell the House why somebody in the Cabinet and the former Prime Minister, Tony Blair, thought it was a good idea to give up the equivalent of £10 billion in rebate over the course of this Parliament, in return for a common agricultural policy review that has taken years to come through and will ultimately be part of an overall budget review and a discussion on the financial perspective. In other words, they gave it up in return for a debate. That was a terrible deal for the UK taxpayer.
I assure my hon. Friend that I will take every opportunity I get, as I am sure he will, to make sure that people remember just how badly the previous Government dealt with this whole area, and just how badly they let down the UK people when it came to standing up for our interests in Brussels and having the judgment to make the right call on behalf of the UK taxpayer. That relates not just to the rebate, but to the Lisbon treaty.
Mr Davidson
I agree completely with what the hon. Lady said about the appalling deal that was reached by the previous Government. I and many of my colleagues took that view at the time.
Does the hon. Lady agree that the rising fraud figures should be approached with caution, because they are often an indication of rising detection rates, which are to be welcomed? Has she made a study of the matter that leads her to believe that some countries are starting to take it more seriously? I used to visit the EU when I was a member of the Public Accounts Committee. We were constantly asked to redefine the rules so that things would no longer be counted as fraud or irregularities because the goalposts had moved. I hope that she would not be amenable to such a settlement of these issues.
Justine Greening
The hon. Gentleman is right, and the discussion with the Bulgarian Finance Minister yesterday showed that statistics can take us only so far. There had been a debate about why Bulgaria had spent only a very small proportion of the funds that had been committed to it, but actually, if there is difficulty in spending those funds effectively, it is good for Bulgaria not to get through all of them until the problems are sorted out.
The hon. Gentleman may be right that there is now a better ability to detect suspected fraud, and he is right that there is substantive change to be made beyond this debate. We need to consider how individual member states can work within the rules to ensure that they are more effective and do not create dysfunctional decisions and systems at national level. The Court of Auditors needs to take a risk-based approach to examining how spend is managed, and it needs to work more proactively with member states so that improvements take place to address the problems that it uncovers. There is a clear agenda to be taken forward.
I look forward to hearing what hon. Members have to say. We have debated this matter on many occasions, which shows how important it is. When the UK Government and the UK people are having to take and bear the consequences of such difficult decisions, it would not be acceptable if we did not go through the same process at EU level with the same intensity. The Government are determined, and I am determined, to ensure that we lead that agenda at EU level. I hope that with the support of the House, we will be able to have some success in doing so.
Mr Cash
Exactly. The trouble is that the moment anyone starts to get to grips with what is going on, the steel shutters come down and people are thrown out of the European institutional arrangements simply for asking questions that would be regarded as completely normal in any proper democratic system. That is the essence of the problem.
As I have said, I could enlarge at great length on the contents of these 1,035 pages, and every word would be entirely relevant because they are so important. Huge sums of taxpayers’ money and resources are being churned into this failing quagmire. This is not just the ranting of a Eurosceptic; it is the reality of what affects the daily lives of the people of this country, and we seem to be prepared to go along with it.
Mr Davidson
Does the hon. Gentleman accept that part of the difficulty of conveying these issues to the electorate is that the sums involved are so enormous? It is difficult for people to understand sums of £10 million here and £100 million there. As the Chair of the European Scrutiny Committee, would he consider undertaking a piece of work that looked at the value for money provided by a European operation in this country? An example would be the European schools, some of which are situated here. Why does not he compare the cost of a European school with the cost of a normal school? It would make sense to people if they could see the extravagance that the European Union applies in such circumstances. That would bring it all home to people far more than any number of quotations involving zillions.
Mr Cash
I rather agree. It would be very nice for me to be able to make a comparison between the different kinds of school systems, but this is not only about schools; it is about everything that moves. The reality is that this all-pervasive, all-encompassing ectoplasm has managed to work its way into every nook and cranny of our lives. It slips under doors and through windows, and it is absorbing us to the point at which we are being totally Europeanised. Within that framework, our taxpayers’ money is being absorbed into the bloodstream of the European Union, and the monitoring and accounting are inadequate, which is what this European Court of Auditors report is all about.
Mr Davidson
I was making a much more specific point a moment ago. I was referring not to schools in Europe in general but to the schools that are run by or on behalf of the European institutions themselves, of which there is at least one in the United Kingdom. A comparison of that school with a similar-sized school elsewhere in the UK would be enormously informative to parents and everyone else. Such an exercise would help to overcome the difficulties that we have in explaining the magnitude of the sums involved.
Mr Cash
I certainly agree with the hon. Gentleman’s concern. If he would like to write to me about it, I would be more than happy to take the matter up in the European Scrutiny Committee if we have an opportunity to do so. We are going through a process of reinvigorated European scrutiny, as I hope he has noticed, and we are determined to get to the bottom of certain issues. This is one of them.
I do not want to take up too much time, because many others want to speak. I will simply make the general point that this is a failing system with a failed accountancy system, and the taxpayer is being badly affected by the way in which these matters are being conducted. There are always paragons of virtue, but this system falls so far below the threshold of what is required that the whole thing needs shaking up. In a nutshell, I would like to see principles of the same kind that apply to the National Audit Office applied to the European Union, so that the people there can be roasted when they get it wrong.
Kelvin Hopkins
The evidence that we have seen so far is not very encouraging, is it? I must say that I agree with the hon. Gentleman.
The hon. Member for Stone made the serious point that the Court of Auditors is not really a separate organisation in the sense that the National Audit Office is in Britain. I should like it to be much stricter. If it were stricter, it might reveal even more irregularities and fraud than it does now, and might bring the European Union into even greater negative focus.
At the end of our last presidency, I urged the Government—from the other side of the Chamber—to call for the abolition of the common agricultural policy, which is the main problem in relation to the budget. We were given endless assurances about reform of the CAP at that time. Apparently, at the end of our presidency, the then Prime Minister, Tony Blair, went to the European Union to call for its reform, if not its abolition, but what he came back with was no reform at all. As was pointed out by the Economic Secretary to the Treasury, he had given away a substantial proportion of our rebate. According to her, it amounted to some £10 billion over a five-year Parliament, or £2 billion a year, which is four times the sum that the Government plan to save by abolishing education maintenance allowance. Tony Blair gave that money away, and not one question was raised before he did it. Apparently he did it on the spur of the moment, hardly even checking with the then Chancellor of the Exchequer.
The Economic Secretary and others have mentioned the previous Government. I believe that the former Prime Minister, who is still a Member of Parliament—my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown)—was on our side, in a sense. He prevented us from joining the European single currency despite immense pressure from Tony Blair and others, and it could be said that by doing so he saved us from worse difficulties.
Mr Davidson
Does my hon. Friend accept that, at this moment, there are more Members on the Government Benches who are in favour of joining the euro than there are on our Benches?
Kelvin Hopkins
I do not see many Members on any Benches who are in favour of it at the moment, and I am greatly encouraged by that. I believe that we have a kind of common sense.
I should say to the Economic Secretary that I appreciate her sincerity. I believe that she will fight as hard as she can to support our interests, and the interests of the European Union as a whole as well. It is important for other countries as well as ours that we get these things right as much as we can. As the hon. Member for Stone has suggested, the Economic Secretary and everybody else faces serious inherent problems when considering these matters. It is the system.
The common agricultural policy is one of those problems. If it did not exist and member states simply managed their own agricultural industries, choosing to subsidise where they thought appropriate, not where someone else thought appropriate, the system would be much better. The CAP will cause more difficulty, because when it comes into full effect in respect of the new member states, it will cost much more than anybody anticipated. That is because wages have risen in those countries, so the cost of subsidising agriculture in them will be much higher. There are ongoing problems with the CAP and we ought seriously to suggest to the European Union that the CAP should be abolished, by being phased out or whatever. Let us give notice that we want it abolished—let us say within the next five years, in order to give France time to adjust. That would save a lot of problems, as a range of difficulties in the budget would disappear.
Other areas of the budget have problems, too. The suggestion that I have made several times in the Chamber and in Committee is that we should get rid of the budget in its current form, which is about fiscal transfers. It is about transferring income or money from the more wealthy nations to the poorer ones; it is a redistribution policy. It does not work very well because of the formulaic way in which it is done, with some countries unfairly contributing too much and other countries unfairly receiving too much.
Let us suppose that there were no such thing as the CAP and all the other budgetary arrangements, and the European Union simply transferred a substantial sum to countries that needed it from countries that could afford to pay. For example, we might contribute 0.5% of our gross domestic product and Romania might receive 1% of its GDP. A lump sum would be handed over to the Governments of the countries involved and they would then decide how to spend that largesse. That would be more accountable because those Governments would be accountable to their own electorates. At the moment, no direct accountability is involved and we cannot do much to control the budget spending, but the member states themselves, with their own democratic Parliaments and Governments, could control that spending. That could be done in Britain at least and one hopes that that would spread to other countries.
I have suggested many times that instead of having this complicated arrangement of special budgets for all sorts of different things, we should have a system of a simple payment each year from the more wealthy countries to the poorer countries, in proportion to their living standards. So the wealthiest nations would give according to their wealth and the poorer nations would receive according to their need.
Financial Assistance (Ireland)
Ian Davidson Excerpts(13 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
I thank my hon. Friend for his support, and the answer to his question is yes.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Will the Chancellor be a little more clear about whether he is ruling out providing financial support in future to Greece, Portugal, Spain, Italy or any other country in the eurozone? Yes or no?