Henry Thorley and HMRC
William Cash Excerpts(10 years, 9 months ago)
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Mr William Cash (Stone) (Con)
I am holding this Adjournment debate in consequence of a very grave injustice that has been done to my constituent, Mr Henry Thorley, who is now aged 88, and in line with the fundamental principles of our constitution, namely redress of grievance and accountability, which go back to the earliest times of our Parliament.
I am appalled by the manner in which this matter has been handled because it strikes me that a case of this kind, relating to a man aged 88, whose correspondence has already been sent to the Chancellor of the Exchequer and to the Exchequer Secretary and has been handled by the person responsible in Her Majesty’s Revenue and Customs, the director of criminal investigation, Mr Donald Toon, does not provide the justice that I believe is owed to my constituent.
The case goes back to the 1970s—indeed, it goes back to a period when my predecessor, Sir Hugh Fraser, was the Member of Parliament for Stafford. I became the Member of Parliament for Stafford in 1984 and I am now the Member of Parliament for Stone, where Mr Henry Thorley resides. I sent to the Minister on 21 May a letter that I received, which summarised various points relating to the case in question. The case is simply explained. At Stoke-on-Trent Crown court in December 1979 Mr Thorley was convicted of theft arising from VAT returns. In 1980 the Court of Appeal quashed the conviction and Mr Thorley left the court utterly blameless.
It appears clear that from the outset the prosecution case was fatally flawed, and the prosecution knew it. A Customs and Excise official had conducted a satisfactory inspection for the period subsequently complained of, and said so in a written report. So, in the words of leading counsel,
“How any prosecution could thereafter be considered let alone persisted in beggars belief.”
He goes on to say that the prosecution of Mr Thorley was, he believed, motivated by malice and conducted in chaos. That is why I have raised the matter and why I am looking for a suitable response from my hon. Friend the Minister.
I have here the report, which has already been sent to my hon. Friend. It is a note of the visit of the person in question from the then Customs and Excise, which shows four items and states quite clearly against them the word “satisfied”. On 2 July 2013 I received a letter through my office from Mr Toon which thanked me for my letter to the Exchequer Secretary and stated that on behalf of the chief executive he would reply, as he had operational responsibility for criminal investigation. He went on to say:
“I have reviewed the papers provided by Mr Thorley’s advisers”—
which, by the way, are well known in the Department—
“but I am afraid that there is nothing more I can add to David Gauke’s letter to you of 23 May 2013. Whilst I sympathise with Mr Thorley, HM Revenue and Customs has no papers in relation to this case and therefore nothing on which to base an apology. The papers enclosed with your letter seem to show that the Appeal Court overturned Mr Thorley’s conviction because of misdirection by the judge in the original trial but this does not mean that the decision to prosecute was flawed.
I know that Mr Thorley will find this reply disappointing but I hope you will understand that without the original case papers I cannot comment further.”
I also had a letter dated 23 May from my hon. Friend the Exchequer Secretary, in which he said:
“I am afraid that following my inquiries, I can only repeat what he has been told in previous letters. HMRC does not hold any papers in relation to his court case. There is no official record, either paper or electronic, of any information in relation to this case and so HMRC cannot confirm on what basis a prosecution was undertaken. Neither can it ascertain from records whether or not there was an appeal. It follows therefore that I cannot comment on the outcome of that appeal. HMRC does not hold any records in relation to Mr Thorley’s original VAT registration, which would have presumably been active when the prosecution took place. Whilst there are some records in relation to a later 1992 registration, these papers make no reference to any previous prosecution.”
In the light of the information I have supplied, I find it unbelievable that there would be no basis for an apology. My constituent—who, at 88, does not have by any reasonable standards much longer to live—has throughout this period been seeking by various means to obtain an apology. He does not want compensation and has made that absolutely clear in correspondence. There is no need for HMRC to be concerned about that if it made an apology. There is no need for electronic files; he was convicted and sent to prison for three years, serving 11 months. As a result of the diligent conduct of his defence by his lawyers, he was released from jail on the orders of no less a judge than Lord Justice Eveleigh. He asks only for an apology.
The judgment of the court was read on 27 and 28 October 1980 by Lord Justice Eveleigh. I will not go through every detail of it—the Minister has a copy—but I will read out some salient points. In June 1975, an investigating officer named Mr Evans from Customs and Excise went to Thorley’s office to investigate the claim for the repayment of £43,000. He expressed the view that he was satisfied, in the document I mentioned earlier. He was given a large number of documents and made inquiries—chiefly from a Mrs Mannering. He was left in the office to investigate these at his leisure and sent in his report. He wrote “satisfied” against all four periods that he investigated. Mr Evans also states that he investigated the position in depth. At the trial four and a half years later he could not say what had happened but felt that the word “satisfied” meant that he had compared the claim with the totals in the books and that the returns had been reconciled. That is why he put “satisfied” against it. I have the paper in front of me signed by this gentleman and so has the Minister.
No one is doubting that the trial took place, that my constituent was sent to jail and released, or that Lord Justice Eveleigh importantly quashed the conviction. Against that background, to my mind it is utterly astonishing that my constituent cannot even get an apology, simply because the records are not available. It is not for me to lay down rules about what records have been or should have been held by the Departments in question, or any other Department, but nobody with any sense of justice—or, indeed, with any common sense—would seriously dispute the facts as I have described them. Nobody has attempted to dispute those facts; they say only that they cannot find the records.
My constituent is now aged 88. He is an old man whom I have met on many occasions, and he is clearly deeply concerned and affected by the manner in which he is being treated. He simply wants an apology—that is all he is asking. The note that I have states:
“This Court concludes that the crux of the Appeal was the misdirection relating to Mr Evans…There had been a misdirection on the material point and the Court concludes that conviction must be quashed.”
Part of that includes a sworn statement by Mr Ian Wright, who stated:
“Between October 1957 and July 1994 I was a Customs and Excise Senior Officer.”
He described what happened, which I have already explained to the House. The statement continues:
“At the time of my own initial visit to Mr Thorley’s company and before the decision to prosecute Mr Thorley was taken I was aware of a report by a colleague, one Graham Harry Evans, of his control visit to the Thorley companies in 1975. This did not indicate anything untoward…Throughout my work alongside Mr Riley whilst in support of his investigation into the affairs of Mr Thorley’s company, I was made aware that Mr Evans’s report would not feature in any way in the Department’s conduct of the case.”
That is from a senior Customs and Excise officer who was looking at the manner in which a prosecution had been levied against my constituent, who has been convicted and released because the conviction was unsound. The statement goes on:
“I progressively became more anxious about this deliberate omission and discussed this in detail with Mr Riley and with numerous of my own senior colleagues over some months before the Court case. At the commencement of Mr Thorley’s trial, the omission of what I considered a very important document (Evans’s report) became apparent to me. Before my own evidence was due, I remonstrated directly with a Crown Solicitor that there were very great dangers in not producing the Evans report. It was then produced in Court immediately thereafter.”
I understand that it was only five minutes before the jury gave its verdict.
I also have a letter dated 13 May 2013 from Mr Thorley’s accountant, which was supplied to me and has been passed on to the Minister. It expresses, on behalf of its client, many of the concerns one would expect. Among other things, it says that, in 1980-81, Mr Thorley lost his home, his business and his family pride. His family were made homeless and his wife had to recommence work to provide food for the family. The letter says that since then he
“has had to try and rebuild what he has lost. Mr Thorley has also tried in vain to get an apology from HMCE (Now H M Revenue & Customs) for their failure of withholding back such crucial evidence.”
Mr Thorley says he is not seeking any financial compensation—
Mr Cash
I find it impossible to understand why so far the Minister has not been prepared to issue an apology. It simply does not stack up. There is no serious dispute about the facts. Is he going to say that Lord Justice Eveleigh had no case? Will he explain why HMRC does not hold the records or why my constituent was put in jail for three years and released because the Court of Appeal, on considering the facts, regarded it as completely unfair, unjust, unacceptable and unreasonable? I cannot explain it any better. It is incredible. I have never before come to the House on an Adjournment debate with such a case. I doubt whether many people have had to come to the House to ask a Minister to apologise. I do not know what he will say, although I have no reasonable doubt about what he should say. I will supply any necessary documents in my possession to anybody at any time to get the justice due to my constituent. He is not asking for compensation; he just wants an apology, which I think the House will agree he is due.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I thank my hon. Friend the Member for Stone (Mr Cash) for his remarks, for securing this debate and for putting forward his constituent’s case with his characteristic eloquence. The case relates to the investigation and subsequent prosecution of one of his constituents by what was then Her Majesty’s Customs and Excise. His constituent and his advisers have approached my hon. Friend requesting a public apology for what they have described as a malicious prosecution by HMCE. I have great sympathy with his constituent for the worry and distress that the case has clearly caused both him and his family, and I hope this afternoon to offer reassurance that the case can be further investigated by Her Majesty’s Revenue and Customs. I shall return to that in a moment.
For reasons I shall explain shortly, however, HMRC does not old information about the case, other than that supplied by my hon. Friend in his correspondence and by his constituent.
Mr Gauke
I am not disputing any of the facts provided by my hon. Friend, but I hope he will allow me to explain the reasons why HMRC does not hold information about this case, other than what has been provided to it by him, and why that constrains what HMRC can say. I will also explain how we might be able to take this matter a little further forward.
Let me deal with the first point about why HMRC does not hold information. In line with the requirements of the Data Protection Act, HMRC must not hold personal data indefinitely, so the organisation regularly reviews and destroys or deletes information. For cases involving criminal investigation, the retention period varies depending on the outcome of the investigation. The default period is six years from the conclusion of the investigation, but when the investigation leads to a conviction, the retention period is the length of sentence imposed plus one year, or six years, whichever is the longer. When an investigation ends in conviction but that conviction is later overturned on appeal, as clearly occurred in this case, the retention period is six years from the Court of Appeal ruling. In the case of my hon. Friend’s constituent, the data relating to the investigation and prosecution would have been destroyed as early as 1986.
However, the Data Protection Act also requires that when someone makes a request for the release of information, the recipient of that request must make a thorough search to see whether it is held, even if the normal destruction date has passed. To that end, HMRC has carried out a department-wide check of all electronic systems and a targeted search of manual records. It also asked the Crown Prosecution Service to check its records to see whether it held anything relating to this constituent’s case. That check has revealed that no such records exist.
Further correspondence from my hon. Friend, enclosing correspondence from his constituent and addressed to the Chancellor of the Exchequer, was passed to HMRC to reply under normal Treasury procedure. That correspondence was dealt with under HMRC’s complaints procedure for ministerial correspondence. I should make it clear that HMRC of course welcomes complaints as an opportunity to apologise and put things right where it has made a mistake, and as a source of learning to make its services better for taxpayers in future.
Mr Cash
On the question of procedure, is my hon. Friend aware of the Cabinet Office’s 2005 guidelines on dealing with letters from Members of Parliament to Ministers, which set out very precisely what has to happen in relation to such letters and the manner in which such letters have to be handled under the Cabinet Office guidelines prescribed by the Prime Minister?
Mr Gauke
The Treasury is aware of the guidelines that apply to ministerial correspondence, and we seek to comply with them. Where operational matters are involved and it is more appropriate for HMRC to deal with them in order to provide as much information as possible and to deal with them as appropriately as possible, HMRC will respond to those letters. My hon. Friend has received a letter from me and from HMRC—indeed, he has received several items of correspondence—on this front.
Let me return to the procedure. Usually, HMRC has a two-stage complaints process, which seeks to deal with as many complaints as possible at the first review. At the end of that stage, the reply tells the customer that if they are still unhappy, they can ask HMRC to look at the complaint again. At that stage, a different official takes a fresh look at the complaint and gives HMRC’s final response. If the customer remains unhappy, they may approach the Adjudicator’s Office. The Adjudicator’s Office will investigate the complaint, drawing together a full and impartial summary of details from the customer and HMRC.
Mr Cash
I have read out the salient reference in the statement of Mr Ian Godfrey Wright, the senior Customs and Excise officer involved. He is a member of HMRC, or he certainly has been—I dare say he is retired now. This statement is dated 1996, so it is possible that it could be followed up, and it contains serious allegations by a senior Customs officer about the conduct of Customs and Excise—as I believe it still was—at the time. It is not as though we are talking just about communication between me and the Minister; we are also talking about sworn statements made by a senior Customs officer, which can be followed up. They must have this record—if they have not got that, I do not know what is going on.
Mr Gauke
Again, I will not repeat the data protection guidelines and the length of time for which HMRC is entitled to hold on to personal data. I note my hon. Friend’s comments about a statement being made in 1996. I do not know what communications there were with HM Customs and Excise, the body in place until the merger in 2005, or how they were made. As I have made clear in my remarks, a search was made across HMRC to locate records on the case, and no records were found.
As I was saying, the Adjudicator provides an independent review of details and makes her decision and recommendation. Customers who continue to be dissatisfied can ask an MP to refer their complaint to the Parliamentary Ombudsman, who will then decide whether to investigate the complaint. If she decided to do so, her investigation might also look at the way in which the Adjudicator’s Office reviewed the complaint.
It is worth noting that this specific case did not follow the normal procedure. My hon. Friend is perfectly entitled to contact Ministers about the matter. He has received replies from senior officials at HMRC and one from me dated 23 May 2013. All those replies carried the same message: given the age of the case and the lack of any of the original papers, HMRC is not in a position to comment with any certainty on the case.
Letters from the Adjudicator to my hon. Friend on 13 March and 25 April 2012 contained a similar message and provided contact details for the Parliamentary Ombudsman. However, if the constituent or his advisers provide HMRC with full copies of all the documents they hold in connection with the matter, I can assure my hon. Friend that it will carry out a thorough review and revert to them with its findings.
Mr Gauke
I will give way, but first I will make this point: my hon. Friend has provided HMRC with information regarding the case that indicates that a conviction was quashed following the finding that there had been a misdirection. As he will also be aware, his constituent’s concern is that there was a malicious prosecution against him. If HMRC has evidence that there was a malicious prosecution against someone, of course it should apologise. If that evidence is presented to it and it is satisfied that that is what has happened, I would hope and expect it to do exactly that.
Mr Cash
Whether or not it was malicious, the question is whether an apology is due, given the fact that—of this there is no doubt—there was a prosecution, my constituent spent time in jail, the conviction was quashed and then he was released. I am simply asking for an apology. There is an element of farce about the situation. I do not want to be told that I should go off to the Ombudsman; I am talking to the Minister, who is accountable to the House. He has responsibility for HMRC and for the conduct of Customs and Excise before it, in one form or another. All I am asking for—it sounds as though I am not going to get it, even this afternoon—is an apology on the Floor of the House from the Minister in relation to this. It is no good just reading out all the bits of paper that have been supplied—
Mr Speaker
Order. The hon. Gentleman’s intervention is a little on the long side. He has expressed some frustration that he does not think that he will get what he wants this afternoon but, on the strength of his 29 years of service in the House and the indefatigability with which he has pursued a variety of causes over those years, he will be well aware that it is open to him to pursue the matter again, and again, and again.
Mr Gauke
Thank you, Mr Speaker, for setting out that prospect.
What I am seeking to say to my hon. Friend is that his constituent clearly feels wronged. He was, as my hon. Friend says, convicted on a case brought by HM Customs and Excise, and that conviction was subsequently quashed. I understand my hon. Friend’s position, which is, in essence, that in any circumstances when someone has been wrongly convicted, the prosecuting authority should apologise to that person. I fully respect that position. However, it must also be said that the fact that an individual is found not guilty after a criminal trial or their conviction being quashed by a higher court on appeal does not necessarily mean that it was inappropriate for the case to have been investigated, or even prosecuted, in the first place. I am sure that my hon. Friend, as a distinguished lawyer, can appreciate that point.
It may well be that in this investigation over 30 years ago HM Customs and Excise behaved wrongly and inappropriately. If that is the case, then his constituent would deserve an apology in those circumstances—let me clear about that—and I would be very happy to give that apology on behalf of HMRC. However, before HMRC is in a position to give a full apology, it needs to see the facts more fully. As I say, the mere evidence that a conviction has been quashed does not necessarily mean that HM Customs and Excise behaved in an unacceptable way. That is why I believe that it is essential that my hon. Friend’s constituent provide all the available paperwork that he and his advisers hold to enable HMRC fully to assess the reasons for the quashing of the conviction.
Mr Gauke
I will allow my hon. Friend to intervene again; he need not worry that I am galloping towards the end.
I am keen to ensure that HMRC looks at the evidence again thoroughly, and if it is in a position to make the apology—I can understand the reasons why my hon. Friend wants that apology sooner rather than later—I am keen to do all I can to facilitate that. My hon. Friend rightly has a reputation for being someone who weighs the evidence thoroughly, and HRMC also needs to weigh the evidence thoroughly before it reaches a conclusion. It might be the easiest thing in the world just to announce an apology, but it should do so on the basis of the facts, and at the moment it does not have those facts.
Mr Cash
Let me refer again to the statement by Mr Wright—a senior Customs officer who I presume, or hope, is still available to be spoken to because his statement was so clear. There is also the opinion of the leading counsel, and there are all the other papers that have been supplied. If the records are not in the Department and no papers are available other than the ones we have already supplied, then I do not know what else we would be able to produce. I think that a careful judgmental assessment of the justice of this case is required, and that the apology is due, although my hon. Friend is now making some very helpful remarks.
Mr Gauke
I am glad that I have had the opportunity to make some helpful remarks. I say to my hon. Friend that the more evidence there is that can be presented, the better. I assure him that HMRC will consider the matter thoroughly and follow the evidence. If an apology is due on the basis of that evidence, it will of course make an apology. I accept that no apology was made when the conviction was quashed more than 30 years ago and that there has been no apology in the intervening 30 years.
I hope that this wider airing of the case and the offer for HMRC to review all his constituent’s paperwork go some way towards providing the assurance that my hon. Friend is seeking. If I have not provided that reassurance or if HMRC’s investigation of the evidence proves to be less than fruitful as far as he is concerned, I suspect, as you have said, Mr Speaker, that we will return to the subject.
Question put and agreed to.
Financial Transaction Tax and Economic and Monetary Union
William Cash Excerpts(10 years, 10 months ago)
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Greg Clark
My hon. Friend is right, and that is why I was keen to have this debate and make sure the Committee’s concerns on this matter can be aired at an early stage. As I said a few moments ago, the proposals so far do not cohere into proposals that will come forward to be scrutinised, but this debate offers an opportunity for this House to send a clear message, as my hon. Friend may be able to do later, during this process of working-up ideas as to what this House’s clear expectations are with regard to the role of national Parliaments. That is very important.
Mr William Cash (Stone) (Con)
I hear what my right hon. Friend says, but in the light of the assumption, based on what the Chancellor has said, about the remorseless logic of allowing the core member states to go ahead with proposals for monetary union—which are implicit in the 52 pages of the blueprint alone—does he accept that our policy is allowing this to happen, and although we may not, it appears, be directly involved, we will certainly be affected by it?
Greg Clark
We have taken the view that the problems in the euro area that require resolution should be resolved by its members, and it is in the interests of the international economy that that should be so. My hon. Friend is right to point out, however, that our interests are engaged in this, and we will make use of our powers and rights in the EU to insist that those interests are protected. An early example of that is in the single supervisory mechanism, where through repeated interventions and insistence by the Chancellor and me at ECOFIN meetings, the Prime Minister was ultimately able to secure agreement by way of a text in the regulation of that mechanism explicitly stating that there should be no discrimination against any country or currency as a result of these arrangements.
These matters will come up from time to time, and protecting our interests requires eternal vigilance. The work that the Committee does in scrutinising and bringing matters to our attention in advance of discussions at European level is crucial to that, which is why the importance of this Parliament needs to be underlined, and will be by this debate.
Mr William Cash (Stone) (Con)
I thank the Financial Secretary for his extremely diligent approach to the debate. He has dealt with all the arguments on the financial transaction tax and I leave those on the record. It is extraordinary that the Opposition should promote the idea, but there is no need for me to go into that this afternoon. I am primarily concerned about the other aspect of the debate and the report, which is the question of primacy. Without primacy, there is no democracy in the House, and without going back to the financial transaction tax, that is a subset of the question of primacy, which is why the Scrutiny Committee insisted on having this debate. I do not think my right hon. Friend will mind my saying that there was a little uncertainty about having it, and I am indebted to him for the clarity with which he has understood this vitally important question.
Our democracy and legitimacy as a Parliament in this House is the basis on which we decide questions of taxation and spending. As my right hon. Friend the Prime Minister said, in the Bloomberg fourth principle, national Parliaments are at the root of our democracy. Therefore, it is absolutely fundamental that we stand by that. I veer away slightly from the trajectory of my right hon. Friend—which he takes for perfectly sensible reasons, but which I disagree with none the less—that somehow the blueprint, which is described as “launching a European debate” is somehow just a piece of blue- sky thinking. It is not. It is absolutely fundamental to the one question that lies at the heart of the Bloomberg speech, in the light of what is said in the Commission document and in the van Rompuy conclusions, both of which put the prime emphasis on the European Parliament, to all intents and purposes at the expense of national Parliaments. They use the word “commensurate”, but it is not commensurate. We cannot have two Governments dealing with the same subject matter. We cannot have two Parliaments dealing with the same subject matter. It is impossible, which is why we have to assert the primacy of this House, and, as the Prime Minister rightly said in the Bloomberg speech, it is at the root of our democracy.
Mr Redwood
I thank my hon. Friend for highlighting this crucial issue and bringing it to the attention of the House. Will he accept that those of us who will not have time to speak today are fully behind him in wanting to re-establish and re-assert the primacy of this House in all matters that are important to the British people, and we have a long way to go to do that?
Mr Cash
We have a long way to go, and in fact the journey is becoming longer. I am extremely glad that we are having a proposal for a referendum Bill, which will enable us to decide these questions, if it comes off. I also believe that there is an understanding among possibly 240 Government Members that there is a serious problem in relation to the EU. There are some who take a different view, but it is a tangential question for them. For us it is fundamental. The biggest demonstration of the problem is this fundamental relationship, which turns on primacy. That is what the Scrutiny Committee focused on, and that is what I will speak about, somewhat briefly.
Basically, the landscape involves a two-tier Europe. I am astonished that the shadow Minister should have said, in parenthesis, that he did not really want to go into—I paraphrase—the rather self-indulgent ruminations on institutional differences with monetary union and the like. I am certain that if the primacy question were properly explained to the hon. Gentleman and Opposition Members, they would appreciate that it is fundamental.
I pay tribute to the hon. Member for Linlithgow and East Falkirk (Michael Connarty) because he understands that. I am sure that he will not mind me referring to an interesting altercation the other day with Olli Rehn in a committee meeting that we had in Brussels. The hon. Gentleman made it crystal clear with regard to this idea of the centralisation, with the contracts that he referred to in an intervention, when he was rather abruptly caught short, The reality is that he understands that it is an infringement of our democratic relationship with the electorate. It is about the person in the polling booth voting and making a decision about the kind of Government that they want, and the kind of economy that they want. He and I may have a difference of view about whether there should be adjustments to the public purse. I would argue that if there is a black hole out there in the EU and the black hole prevents growth in the EU and we trade 50% with it, we cannot pay for the public services. The hon. Gentleman understands that.
This goes right to the heart of the issue of whether we are prepared to accept, at this fork in the road—which is what this document represents—this launching of the European debate, which we must carry forward to ensure that we retain primacy in this House over taxation and spending. The shadow Minister nods, so now he concedes that it is not a matter of self-indulgence, but a matter of significance. That is why the debate has to take place. I am afraid to say that the black hole, and the direction in which it is going—because of the two-tier arrangement that is being created, on which they are determined; I could quote from the documents, which talk about political integration that is needed within the hard core and they know what it means—will lead to a German Europe. They will control that hard core. The bottom line is that we cannot be part of it. That means that there is a change in the fundamental relationship, not merely for monetary union reasons, not merely for reasons of remorseless logic, but for political ones.
Jacob Rees-Mogg
I seem to remember that 365 economists said that Margaret Thatcher had got it wrong in 1981, but one great and noble Prime Minister had got it right and 365 economists were flawed in their thinking. I would back the British politician against a collection of academic economists living in an ethereal world.
A financial transaction tax would ultimately be paid for by the British people through higher housing costs, lower pensions and possibly through higher Government borrowing costs leading to higher overall taxation. Of course the Labour party wants higher taxation, because that is what it has always been in favour of—more taxes, more spending and a worse economy.
I would now like to move on to the points made by my hon. Friend the Member for Stone (Mr Cash), because they, too, are extremely important. They relate to the European Union’s ambitions to become a superstate based on the euro. I accept that we are outside the euro, but that is not entirely a protection from the development of the EU along the lines of a single state with a single Government based in Brussels. Of the papers we are considering today, there is one from the European Commission showing that it wants within 18 months to have a eurozone seat on the International Monetary Fund’s board, that it wants within five years to co-ordinate eurozone tax and employment policies, and that it wants a political union with adequate pooling of sovereignty with central budgets as its own fiscal capacity and a means of imposing budgetary and economic decisions on its members. That means a single Treasury and a single fiscal union.
The danger for us is that, as the European Union obtains more powers for the eurozone, our association with it will become very different from the present one, and one in which we have little influence over what happens because we are outside it. Alternatively, we could get dragged into the arrangements because, as our experience of the European Union shows, our opt-outs will ultimately expire. We have seen that happening with the social chapter, and we will see it again next year with the decision on title V of the Lisbon treaty. We should therefore be very careful about the ambitions of the European Commission in relation to this single government for the eurozone.
We should also be cautious about what the President of the European Union, Mr van Rompuy, has to say. He has published a paper lauding the success of the euro and all that it has done. It states:
“The euro area needs stronger mechanisms…so that Member States can reap the full benefits of the EMU.”
That is a fascinating way of phrasing it: “the full benefits”. After all the other benefits that they have so far received, there are further benefits to give the member states if only they will join a tighter system of governance. I wonder whether the unemployed Greek youths have noticed all the benefits that they have received from this wonderful beneficent eurozone.
Mr van Rompuy has also been kind enough to say:
“‘More Europe’ is not an end in itself, but rather a means for serving the citizens of Europe and increasing their prosperity.”
I am proud to say that I am a subject of Her Majesty, and not a citizen of Europe. The idea that we need more Europe to benefit the citizens of the member states is palpably false. The more Europe we have had, the worse the situation has become. The more powers that have accreted to Europe, the more bureaucratic, less democratic and worse run has become the whole system of the European Union. The economies of the European Union have suffered because of the euro.
Jacob Rees-Mogg
I apologise, but I will not, as I have only 45 seconds left, and counting. I have had two extra minutes already.
I want to finish on the point of democratic legitimacy and accountability. I am glad that my right hon. Friend the Minister for Europe is in the Chamber, because it was his Bill in 2011 that so wisely reminded us that United Kingdom powers are ceded to Europe only by Act of Parliament and can be withdrawn. However, van Rompuy says that
“the involvement of the European Parliament as regards accountability for decisions taken at the European level”
is key. I deny that. It is this House that is key, and it is this House that should maintain our democracy.
Economic Growth
William Cash Excerpts(10 years, 11 months ago)
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Mr Jim Hood (Lanark and Hamilton East) (Lab)
I am delighted to have caught your eye, Mr Deputy Speaker, and to speak in the debate on the Gracious Speech. I made my maiden speech in a debate on the Gracious Speech on 8 July 1987, following Mrs Thatcher’s third victory. I remember using an analogy. I said that the Government and the Gracious Speech were more of the same poison in a different bottle. I thought of that comment when I looked at the Conservative Back-Bench amendment. It is déjà vu, or Maastricht, all over again. If historians check the speeches on the Maastricht debate in Hansard against what we have heard in the past hour or so, I am sure they will understand what I am saying.
Mr William Cash (Stone) (Con)
As one who led the Maastricht rebellion, I should say that, at the time, we made predictions. Exactly what we said would happen has happened—that is the difference.
Mr Hood
The hon. Gentleman has been saying exactly what he said in the Maastricht debate ever since, at every opportunity. It will surprise no one, including me, if he continues to say those things, but I am speaking to the reality. Some say that the Conservative amendment is a UKIP amendment. In fact, the hon. Member for Harwich and North Essex (Mr Jenkin) accepted that he agrees with a lot of what UKIP says.
I remind the House of something the Prime Minister said in his Conservative party leadership campaign. He promised the country and his party that he would make the Conservatives electable again, and get rid of the “nasty Tory” image. He travelled to the Arctic to embrace huskies, and came back here and cuddled hoodies. These are changed days. Where is he now? This week, with conspiracies going on behind his back in his own party in Parliament, he is away negotiating an EU trade deal. You could not make it up! As my grandmother used to say, when the cat’s away, the mice will play. That is what is happening to him.
The debate and the run-up to it are more like Shakespeare’s assassination plot in “Julius Caesar”. The big question is who will be Brutus. Margaret Thatcher’s political assassination in 1990 had nothing, or nothing much, to do with Europe, but we have the same modus operandi. As my hon. Friend the Member for Bolsover (Mr Skinner) pointed out in a speech two weeks ago, the Conservatives kicked Mrs Thatcher out on the street like a dog.
Mr William Cash (Stone) (Con)
Basically, I regard the whole question of having a referendum as fundamental. I led the Maastricht referendum campaign, and the question now is about the same fundamental questions we were addressing then. This is the problem: nothing has changed, but much has got worse. The real problem is one of urgency. This is not just about an abstract theory of sovereignty; it is about the economy, who governs Britain and whether we can achieve economic growth, which is what the debate is actually about. We cannot achieve economic growth in the circumstances I shall now describe. In my judgment, it would be wrong to wait until 2017, given that the situation is so urgent, as hon. Members will hear in a moment. The British Chambers of Commerce, which represents 104,000 businesses and 5 million employees, is concerned about the delay and the uncertainty that goes with it and about over-regulation.
It is generally acknowledged by all parts of the House that our relationship with the EU has to change, but the trouble is with the institutional treaty changes, on which I have had meetings in Brussels. I saw Mr Van Rompuy only 48 hours ago and also Mr Olli Rehn, and the fact is that they are on a railway line, and are continuing along it. They talk about destiny, contracts with other countries—unenforceable as they might be—and more centralisation. The European Scrutiny Committee had an interesting meeting on that.
Mr Jenkin
In his travels around Europe, has my hon. Friend gained the impression that there is any appetite in the Commission or among our European partners for substantial treaty change that would allow the United Kingdom to have a different relationship with the EU while remaining signed up to the existing treaties?
Mr Cash
It is my opinion, based on extensive discussions yesterday and over several months, that there is absolutely no prospect of any changes that would even begin to alter the circumstances we are now in and which are pivoted on the existing treaties.
The problem is one of debt and deficit. We cannot pay for the public services needed in the country, whether health, education or whatever. I hear the point from Opposition Members and I agree with some of their arguments—it is not right that people should be deprived of services—and I do not believe that the entire answer depends on cuts. It depends on the subject of this debate, which is economic growth. We can grow with the rest of the world. We are running a trade surplus of about £13 billion with the rest of the world, other than the EU, with enormous potential in south-east Asia, India and Africa, which is where the emerging markets are. This is where we have to concentrate our efforts.
On our trade relations with the other 26 member states, I ask hon. Members to take account of the following very alarming figures. Two weeks ago, during a debate on the Maastricht treaty and the convergence criteria, I gave what was then the latest figure, which was that we were running a trade deficit with the other 26 of £47 billion. Now, some might think a deficit of that scale is an awfully big loss, but the following Monday the new figure came out. In one year, the deficit had risen from £47 billion to £70 billion. Furthermore, the German surplus, which was running at £30 billion, rose to £70 billion between 2011 and 2012. It is essential that we take note and hold this referendum—and hold it urgently—because we have to deal with fundamental changes in the relationship that will enable us to disentangle ourselves from the spider’s web that we have got caught up in and which we have not asked the British people about since 1975. It is a vital question of national interest, and I beg hon. Members to listen.
Mr Jenkin
Is not the corollary of what my hon. Friend is saying that if we follow the programme of the Labour party and continue to pursue a policy of closer integration and more burdens on our economy, it will mean more cuts, more borrowing, slower growth and more unemployment than if we sort out this relationship?
Mr Hood
I am listening with interest, as I always do, to the hon. Gentleman’ s speech, and I have heard it a few times—a lot of times, in fact. If he gets his referendum and the vote is overwhelmingly, or marginally, in favour of staying in the EU, will he then embrace the EU and work from the positive side, in the same way as everybody else?
Mr Cash
I have come to the conclusion that we have to leave the existing treaties, but I will say one last thing. The UK Independence party argument is self-defeating, for a simple reason. If UKIP were to take a number of marginal seats on the scale that seems likely and we were to lose the next general election, UKIP will not get the referendum or make the changes it wants, because we would be faced with a Lib-Lab, pro-integrationist, anti-referendum situation, which would be a complete disaster. UKIP, with which I am quite obviously much in agreement, will not produce the answers, because it is not possible to repeal the European Communities Act 1972 or have a referendum without a majority of MPs. It does not have a majority and it will not get one.
Section 5 of the European Communities (Amendment) Act 1993
William Cash Excerpts(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Greg Clark
I do not think that that is entirely right, although I happily acknowledge that the hon. Gentleman was on the side of right throughout. I remember working for the Foreign Secretary when he was leader of our party. In November 1997, when, as the hon. Gentleman said, the received opinion was that our joining was inevitable, my right hon. Friend made the courageous decision to set out in a lecture to the conference of the CBI, which then was in favour of joining, the forensic reasons why it would not be in our interests. He committed then, right at the beginning of the parliamentary process that resulted in these measures, to campaign for Britain to stay outside it. While I acknowledge the hon. Gentleman’s distinguished record, I think he would acknowledge that the Conservative party was the first party to commit itself to oppose these measures.
The Government plan to make their submission by 30 April, with the approval, we hope, of both Houses of Parliament. It explains the Government’s medium-term fiscal policies, as already set out in the 2012 autumn statement and Budget 2013, and includes the Office for Budget Responsibility’s forecasts. We think it right and proper to draw from previously published documents presented to Parliament, rather than incur the cost and time to produce bespoke documents for this purpose.
Mr William Cash (Stone) (Con)
Is my right hon. Friend aware that the very document to which he refers states:
“The IMF forecasts UK GDP per person to grow faster than the rest of the G7 between 2012 and 2017, with the exception of the US”?
Of course, he will have read the comments made by Madame Lagarde only yesterday. Does he not find them a little incongruous, given that the IMF is now taking rather a different view?
Greg Clark
The IMF is considering its view, and we will see what it has to say in the months ahead, when it issues its review. We have always been clear that, as we have advised all EU member states, keeping control of finances is an important precondition for growth. That is an important matter.
As I said, we have been parsimonious in not generating excess quantities of paper. Members will be aware—certainly my hon. Friend the Member for Stone (Mr Cash) will be—that we did not follow the advice that other countries followed and align our financial year to fit in with the norm in Europe. We think it right to stick with our financial year and make use of the documents presented.
With the Budget announcement having taken place on 20 March, shortly before Easter, I appreciate that the timetable was tight, but we made every effort to provide early copies of the convergence programme to the House and the other place in advance of this debate.
Greg Clark
I do not agree with that. The hon. Gentleman will be aware that the IMF recommends to many countries around the world, not least in Europe—this is the point my hon. Friend the Member for Bury North (Mr Nuttall) referred to—that they should get their public finances in order.
When the Office for Budget Responsibility revised its forecast for global economic growth—and eurozone growth in particular—and world trade downwards, that had an inevitable impact on UK growth, given that the euro area is the destination for 40% of UK exports. Over the past year, net trade was the key factor in the underperformance of the economy relative to earlier OBR forecasts, as well as in the downward revision of the forecasts this year and the year after. Fiscal consolidation, on the other hand, has not had a larger drag on the economy than the OBR expected in June 2010. Indeed, the UK’s fiscal situation argues strongly in favour of maintaining our commitment to deficit reduction.
Opposition Members sometimes accuse us of going too far, too fast, but there is further to go and we must get there as fast as we sensibly can, not least because so much rests on the market-tested credibility earned by this Government. The near historic low gilt yields that underpin the low interest rates that are so important to millions of households and businesses cannot be put at risk. As shown by global developments, the consequence of losing market confidence can be sudden and severe. A sharp rise in interest rates would be particularly damaging to an economy weighed down by the burden of so much public, corporate and personal debt, built up during a time when it should not have been.
Mr Cash
The OBR’s executive summary states:
“Public sector net debt…is forecast to peak at 85.6 per cent of GDP in 2016-17, rather than 79.9 per cent a year earlier as in our December forecast.”
In reality, debt is simply out of control, although much of it is the responsibility of the previous Government.
Greg Clark
Of course my hon. Friend is right that the inevitable consequence of running a deficit is that debt increases. It continues to be our purpose to reduce the deficit and return the economy to a balanced budget in order to start to pay down debt, and it is important that we should do that.
Budget 2013 also set out measures to equip the UK to compete in a global race. The Government will give every business and charity a £2,000 allowance towards their national insurance contributions from April 2014, benefiting more than 1 million businesses. We will achieve the ambition for the UK tax system to be one of the most competitive in the world, which includes a further cut in corporation tax to 20%—the joint lowest in the G20—from April 2015. We will increase capital investment plans by £3 billion a year from 2015-16. Public investment will be higher on average over this Parliament and the next than under the previous Government. We will devolve a greater proportion of growth-related spending to local areas from April 2015, in response to Lord Heseltine’s review.
As well as action in the UK to tackle the economic challenges that we face, progress needs to be made to tackle the crisis in the euro areas. However, the growth challenges in Europe continue to be serious, as every Member is aware. We have seen a welcome fall in borrowing rates, particularly for Spain and Italy, from the high levels that they reached last summer, but recent events in Cyprus remind us—and leave us in no doubt—that the euro area continues to be a fragile environment. Only a sustained period of successful reforms and improvements in financial markets can lay the foundations for growth. Economic activity in the European Union remains subdued. In the euro area, most of the so-called peripheral economies are in pronounced recessions, with weak labour markets, adverse credit conditions and an ongoing process of deleveraging all weighing on growth.
Structural reforms at the national level should be supported by the co-ordination of progress towards freer markets at the EU level. The improvement of the single market, regulatory reform and free trade agreements can all help to improve the growth prospects of every country in the EU at a minimal cost. This is a critical agenda that the UK and other like-minded states have advanced at successive European Councils, including in March, and we will continue to push.
Mr Cash
My right hon. Friend says that it is critical that we enter into EU free trade agreements. I hope he appreciates that under the majority voting system, the power of the European Commission under the Lisbon treaty means that at present our influence is only 8% at maximum—although it will shortly rise, albeit to only 12%. The whole policy will effectively be driven by the European Union and its objectives, which are largely dominated by Germany. It will not be in British interests.
Greg Clark
It is possible for our influence to go beyond our voting weight, just as there are Members of this House—I might include my hon. Friend in this—whose influence goes beyond their proportional representation in this place. I hope he agrees with that.
It is important to maintain momentum on bilateral EU free trade agreements. Ninety per cent of global growth will come from outside Europe after 2015, so the EU needs an outward-looking trade agenda. A free trade agreement with the United States of America is, and must be, a major opportunity that should be pursued with all vigour. It is estimated that EU free trade agreements that are currently under way or in the pipeline could add £200 billion to EU GDP and create 2 million jobs across the EU. We welcome the European Commission’s stated commitment to bringing forward concrete proposals to reduce regulatory barriers for small and medium-sized enterprises. That is long overdue and we look forward to seeing those proposals in June.
It is estimated that removing all barriers in the single market would increase UK GDP by about 7%, while prices could fall by 5% due to increased competition. The single market already adds €600 billion a year to the EU’s economy. Further progress is possible. Ambitious implementation of the services directive by all member states could result in increased national incomes. Service liberalisation would be particularly beneficial to the UK, as services are an area of enormous comparative advantage, as we know, and the UK has had a trade surplus with the EU in services since 2005.
Chris Leslie (Nottingham East) (Lab/Co-op)
That was a paean of praise from the Minister for the right hon. Member for Richmond (Yorks) (Mr Hague); it is a pity that there was not quite so much for the Chancellor of the Exchequer. One of the strange things about this debate is the strong sense of having been here before to debate this issue. Indeed, it was about this time last year that we did so—and, sadly for me, the year before that as well.
Chris Leslie
In my case, it is not 20 times. I have responded to these debates only since the general election.
The key to the debate is the Budget Red Book. I suspect that many Members are not in the Chamber this evening because they have looked at the screens advertising the debate and seen a reference to some obscure European legislation, but I draw all Members attention to page minus 2 at the very beginning of the Red Book. In tiny 9-point font, beneath the statement that the Red Book is printed on paper containing 75% recycled fibre content minimum, it states:
“The Budget Report is presented pursuant to section 2 of the Budget Responsibility and National Audit Act 2011 and…constitutes the Government’s assessment under section 5 of the European Communities (Amendment) Act 1993 that will form the basis of the Government’s submissions to the European Commission”.
If Members knew that we were debating whether the Chancellor’s assessment of the economy was a true and accurate reflection of what is going on in the UK economy, for the purposes of that Act of Parliament, they would be absolutely astonished.
We have obligations under the Maastricht treaty articles; that is essentially what we are talking about when we refer to the European Communities (Amendment) Act 1993. Article 103 states:
“For the purpose of this multilateral surveillance”—
I know that those words stick in the throats of some hon. Members—
“Member States shall forward information to the Commission about important measures taken by them in the field of their economic policy”.
Chris Leslie
That is one way of looking at it.
The point that concerns me is that the Government have in recent days tried to shove this issue off the Floor of the House and sweep it upstairs to a Delegated Legislation Committee. The Minister has said that this is a busy time of year and that the Government do not want to waste the House’s time with these questions, but we are already faced with an opaque description of the legislation, so it is no wonder that they are trying to push it out of parliamentary time. It is, in fact, the kind of legislation that ought to be advertised more to hon. Members.
Mr Cash
I would no doubt have a lot in common with some of the remarks made by those who were critical of the Maastricht treaty. Will the hon. Gentleman be good enough to tell me whether he would like to leave the existing treaties, and to describe the basis on which this nonsense, this farrago, is now being conducted?
Chris Leslie
Well, this does feel like rather an anachronism, but we have legal obligations under those treaties. No doubt there will be revisions, and some of the reporting requirements ought to be considered afresh, but my principal concern is whether it is right for the House to endorse the Red Book as a true and accurate reflection of what is happening in the UK economy. In my view, the Government must be kidding if they are saying that the Red Book reflects the facts. It is more like a work of fiction. They have been spinning furiously as the key indicators have taken a turn for the worse, as my hon. Friend the Member for Luton North (Kelvin Hopkins) said. In fact, the Red Book is little more than a vanity exercise cloaked in an official publication. It revolves entirely around the Chancellor’s need to retro-justify his failing economic ideology.
I invite hon. Members to look seriously—and without cracking up—at page 1 of the Red Book, and to ask themselves genuinely and dispassionately whether it is a true reflection of what is happening in the UK economy. The first line states:
“The Government’s objective is to…build…a fairer society”.
Well, tell that to those who are struggling with the new bedroom tax while they watch the great and good millionaires of this country rake in a typical £100,000 tax cut, thanks to the reduction in the 50p rate of income tax for those earning more than £150,000. So much for a fairer society!
Here is another one:
“The Government’s plan…is based on…fiscal responsibility to deal with our debts with a credible debt reduction plan”.
That is in total contradiction with the first page of the Office for Budget Responsibility report, which states plainly that the deficit reduction plan has “stalled”. That is the word that the OBR uses. No one would think from reading the Budget Red Book that the Government had presided over an increase in the national debt of 38% during their three years in office.
Mr William Cash (Stone) (Con)
This is an extremely important debate, but I am sorry to have to say that the Government did their best to prevent it from being held on the Floor of the House. Speaking as the Chairman of the European Scrutiny Committee, I feel that that must be put on the record. It was very unfortunate, to say the least, and no doubt the Committee will consider it when we meet next Wednesday.
Having said that, I must add that this is an opportunity to put in context the tributes that should be, and indeed have been, paid not just to Margaret Thatcher but to Alan Walters and all who took part in the Maastricht rebellion, and also to those who have fought so tenaciously throughout the accretion of these treaties, from the early days until the present time. I use that collective term because many new Members who are in the Chamber now—notably my hon. Friends the Members for Rochester and Strood (Mark Reckless), for Bury North (Mr Nuttall), for St Albans (Mrs Main), for North East Somerset (Jacob Rees-Mogg) and for Bedford (Richard Fuller)—are apprised of the seriousness of the situation, as indeed we were at that time.
Section 5 of the European Communities (Amendment) Act 1993 was passed 20 years ago as a result of a very tense debate about these questions. In the last 20 months, there have been at least 20 economic summits in an attempt to unravel the dysfunctional nature of the economic requirements with which we are having to comply, in the context of the convergence criteria and as set out in papers that have been placed before the House. I imagine that many Members have not had an opportunity to read those papers, but they have been placed in the Vote Office for the benefit of those who wish to do so.
While we are dealing with the consequences of the Maastricht treaty, I want to take the opportunity to put on record a correction to a book by the former Chief Whip in the House of Commons, Lord Renton. After making some fairly disobliging remarks about certain Members—I need not ignore the fact that I was one of those of whom he did not particularly approve—he wrote that
“the vehicle for their resistance was the parliamentary approval for the Treaty of Maastricht.”
He went on to observe, astonishingly,
“Although this had been signed by their heroine, Margaret Thatcher, they revelled in defying three-line whips in order to vote against its enactment into British law”.
That is complete and total arrant nonsense. Margaret Thatcher did not sign the Maastricht treaty, although she certainly became a patron of the Maastricht referendum campaign, which I organised along with Bryan Gould and a Liberal Democrat Member who represents one of the Devon seats. However, the present Prime Minister himself has now said that there should have been a referendum on that treaty, and I believe that, had there been one, we would have won. The father of my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) was one of the leading campaigners in the House of Lords for the referral of the treaty to a referendum, but his campaign was defeated by a monstrous whipping operation, with the result that we are where we are.
There was a complete refusal to listen to what was said at the time, and there has been a complete refusal to listen to what has been said ever since. I fear that the coalition is still not listening, although it is now clear as crystal that our predictions were right and that riots, massive unemployment, the rise of the far right and the failure of the system are destroying not only the European economy but Britain’s prospects for growth. I shall say more about growth in a moment, because it is fundamental to the issue that we are discussing.
Mark Reckless
As my hon. Friend pointed out, the Prime Minister now says that there should have been a referendum on the Maastricht treaty. Does he recall that the Prime Minister was at the time a special adviser to the then Chancellor of the Exchequer, who had been Chief Secretary to the Treasury under Margaret Thatcher and who refused to sign the treaty? A junior Minister, my right hon. Friend the Member for Horsham (Mr Maude), had to go and do it instead.
Mr Cash
The hon. Member for Stone—who is also Chairman of the European Scrutiny Committee—will of course do just that. I am grateful to you, Madam Deputy Speaker, for drawing my attention to these interesting documents. Among the interesting statements in the documents is this in paragraph 2.17:
“The euro area is the key market for UK exporters, accounting for 42 per cent of UK exports in 2011. As a consequence, the euro area sovereign debt crisis and subsequent recession have weighed heavily on the UK recovery. Action by European policy makers in 2012”—
I must say that I am astonished by the phrase that follows—
“helped ease the crisis and there are signs of investor confidence improving, but as the situation in Cyprus demonstrates the challenges facing the euro area are not fully resolved.”
Well, we can tell that to the people of Cyprus, but we can also say it to the people of Britain. This is not just a eurozone problem; it is a European Union problem, but above all else it is a British problem, and that is why we must take the necessary action.
The document is completely wrong to describe the euro area as “the key market”. In fact, as I pointed out in a paper that I wrote with my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), the UK runs a trade deficit with the other 26 member states of £47 billion a year, yet we have a surplus of about £20 billion in our trade with the rest of the world. Furthermore, the Germans—about whom I shall say more in a moment, because of what was said by Angela Merkel at 3 pm today—run a surplus of no less than £29 billion a year with the other 26 member states.
That is why the debate is so important.
Jacob Rees-Mogg (North East Somerset) (Con)
On paragraph 2.17, does my hon. Friend share my view that it is a mistake to look at the euro area as one export market, as the individual countries that make up the eurozone have their own characteristics, and we naturally have a huge trade with Ireland, as all countries do with their nearest nation, irrespective of which currency bloc they belong to?
Mr Cash
Absolutely, and one of the greatest pleasures I have had in the past couple of years has been to have my hon. Friend serving on the European Scrutiny Committee, with the diligence, knowledge and judgment he brings to all these matters.
It is also stated, at paragraph 2.19, that
“Brazil, Russia, India and China taken together were the destination for 6.5 per cent of UK exports in 2011.”
The real problem here is that our exports certainly have to go to the BRIC countries and also to the rest of the Commonwealth, which is where the emerging markets are, as well as to the United States.
I strongly recommend that this House of Commons and this Government start waking up a bit. I really mean that, as I am very concerned indeed, as any right-minded person in this country should be.
It is also argued in this paper that:
“Between 2009 and 2012 UK goods exports to Brazil increased by 49 per cent, to Russia by 133 pre cent, to India by 59 per cent and to China by 96 per cent.”
I have heard those figures before, but I asked what our actual import penetration into China was in relation to that of the rest of the world. It is 2%. The 96% increase is entirely relative, therefore. The real question is how much we are managing to export into China. Germany exports into China 45% of all the EU exports into China. I do not cite that figure in order to denigrate the expert efficiency, determination and political will of those who run Germany, but I do say that we had better get our act together. Continuing to be locked into these absolutely penalising treaties is causing us enormous damage, when we could gain so much by trading not only with Europe, but with the rest of the world on a much more enhanced basis.
There is far too much discussion and not enough action, and I was glad to note the campaign launched today by 500 business men and run by Matthew Elliott, and I also commend the book about the euro by the Institute of Economic Affairs, which puts its finger on many of the problems in the euro area.
Richard Fuller (Bedford) (Con)
I am very interested in what my hon. Friend is saying. Does he agree that this report has given us an opportunity to put an alternative argument against the strong argument about commonality? I know he will draw the House’s attention to the interesting comments about Europe by the Chancellor of Germany today. My hon. Friend talks about those other economies, and there is an argument against commonality and for the UK having an opportunity to be able to trade with the rest of the world, but that is being lost as a result of such statements. Is there an opportunity for us to make this case, because I am not sure we are making it strongly enough?
Mr Cash
I agree with my hon. Friend. We must be realists. T. S. Eliot once said,
“human kind
Cannot bear very much reality”,
but Britain has got to wake up. It is crucial at this stage that we understand—in a constructive, not a negative, sense—that we have both a problem and an opportunity, but that opportunity will not last much longer, and we must not simply repeat the recitations and mantras about section 5 while not tackling the intrinsic problems.
These papers were, no doubt, prepared by worthy civil servants, but they may well not reflect the real situation. Let us look at the question of the level of debt, for instance. I mentioned that in an intervention on my right hon. Friend the Financial Secretary, and I gave him the percentage figures. However, under the previous Government—I now turn my attention to those on the Opposition Benches—I repeatedly said, along with my right hon. Friend the Member for Wokingham (Mr Redwood) and one or two other Members, that the debt that was accumulating under them was causing so much damage to our economy. Furthermore, as I said at the time of the last election in my manifesto—or, rather, in my personal message to my constituents—the stated debt levels, which is the key issue, were based on what could only be described as a lie.
Chris Leslie
What does the hon. Gentleman think about the fact that the national debt has risen by 38%—by over a third—in the past three years, while the current Front-Bench team has been in charge?
Mr Cash
Not only am I appalled by that, but I also recognise that the genesis of much of this can be traced back to the time of the previous Government. Furthermore, we now understand from the official figures published by the UK Statistics Authority that the level of debt—which at one time was, astonishingly, described as being “merely” £1 trillion—will go up to £1.5 trillion. However, under the previous Government the real level of debt—taking into account public pensions, Network Rail, nuclear decommissioning and several other factors, which we cannot ignore—was actually up at about £3.25 trillion, as I argued at the time, and if we include those factors it is now likely to be about £4 trillion.
That is the inheritance of the young people of this country. They have got to be brought into work as a result of growth, but the prescription from the Opposition Benches is more debt, not less, and more Europe, not less.
Regardless of how I vote this evening, I pay tribute to the fact that at least the coalition Government have begun to look at these questions. My complaint is that they have not done enough and they are going too slowly. If they do not get on with it, there will be a catastrophe. In fact, we are already living through the beginnings of a catastrophe.
There is another question to be asked about growth. We can only grow our economy by growing from the other countries with whom we trade. In a nutshell, we must engage in cuts, but we need the taxation from the growth of small and medium-sized businesses in order to provide the public services those on the Opposition Benches say we need to provide. All they do is call for ever more cuts, but they talk about growth but do not actually do anything about it.
The European approach of large, and greater, Government spending tends both to increase the rate of Government debt and to lower the GDP growth rate. As a result, growth in most European countries, and the possibility of getting Government debt under control, recedes. The rigidities imposed by a single currency—the euro—and the burden of EU regulation on EU economies are continuing to cause frictions and difficulties and will destroy the countries in the European monetary union.
If only people would listen at the time, when it matters, rather than afterwards and then try to cover things up. Only a few weeks ago, Moody’s downgraded our economic performance, and Fitch did so in the last couple of days. Portugal, Ireland, Greece, Spain, France and Italy are now all countries of perpetual economic concern. There is a black hole, but the call is for more and more Europe.
I referred to the remarks of Angela Merkel today. It is regrettable and unfortunate that she was quoted as saying that countries in the eurozone must accept that Europe “has the last word,” and need to work more closely together if the continent is to avoid going into decline. I am sorry to have to say this so specifically, but that is precisely because there is a centralised approach, which is driven by German requirements and goes back to Chancellor Kohl.
In the 1990s, I wrote a pamphlet called “British and German National Interest”, and we are seeing a repetition of that time. Chancellor Merkel said:
“We need to be prepared to break with the past in order to leap forward. I’m ready to do this.”
In fact, she is going back to the past—not the dark past we all witnessed so vividly, but the kind of past that assumes it is not actually a European Union, but in practice, a German Europe. We should ask people in Cyprus and Greece what the position is. She said:
“Germany will only act together with the others—hegemony is totally foreign to me.”
It may be foreign to what she wants, but the practical reality is that it is happening.
We are now being lectured by Madame Lagarde, who was a French economic Minister and is now head of the International Monetary Fund. She said:
“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”
Those are the rules we are discussing. On top of the theft in Cyprus, everyone knows that those of us who argued the case have been proved right.
I am sorry to hear that Madame Lagarde appears to have criticised our Chancellor. It is some gratitude for all the work he did urging her to accept the presidency of the IMF, and leading the charge to make sure she got it.
Everyone wrings their hands, but what are the Government doing? We are being locked into the question of whether the debt is being sufficiently reduced, but the debt is escalating and the deficit remains unacceptably high. Problems in the eurozone have a real effect on the UK economy. I repeat that it is not just about the eurozone, or just about the European Union; it is about Britain, which is why we have to get our act together. I notice that the Chief Whip has just come into the Chamber, so I hope he will listen with care, because these debates will unravel.
Real GDP fell in every quarter of 2012 in the eurozone, and by 0.6% over the year as a whole. The IMF forecasts a further fall of 0.3% this year. What is happening is completely unacceptable. No wonder the UK Independence party is making such headway; it will continue to do so until there is real growth.
We have the opportunity. We can deliver. No doubt the commentariat will fail to report this debate, as it fails to report other debates when we deal with facts and not mere speculation, but that will not prevent us from continuing the fight. We have the means to achieve the results. Some of them will come from a change of position by the Government, going for more and more growth based on real policies for growth and disentangling ourselves from the shackles of the regulatory arrangements of the European Union, making sure that the EU does not dominate the free trade agreements that are being determined. We have to be able to trade on our own terms, just as we in this Westminster Parliament have to decide the future of British policy.
As the Prime Minister said in his five Bloomberg principles, our national democracy depends on our national Parliaments. European democracy depends on their national Parliaments. He was right about that. Let us do something about it. Let us make sure that we run our own economy based on our own assessment and that we do not remain shackled to the existing treaties. It is time to put an end to them.
Kelvin Hopkins (Luton North) (Lab)
I rise to speak briefly in support of my hon. Friend the Member for Nottingham East (Chris Leslie) about the nonsense of presenting the fiction of the Red Book as though it represented the truth about our country. Another organisation—perhaps the Institute for Fiscal Studies—would do a better job.
Last week, in a speech in the Chamber, I reminded colleagues of an organisation that used to get forecasts right: the Cambridge Economic Policy group. But it was a left-leaning Keynesian group and the Conservative Government of the time withdrew its funding, because they did not like its answers and chose to follow the London Business School, which always got the forecasts wrong. The Sunday Times always gave it nought out of 10. Let us not pretend that all forecasts speak the truth. Officials will never present the Chancellor with a gloomy picture; they try to put as big a gloss on things as possible so that the Chancellor can say nice things to us in the Budget speech.
I only wish that the colour of the Red Book represented some of the policies inside, but I am afraid it does not. The antiquated language is nonsense. The Minister drew our attention to the fact that the reference to convergence was born of the past assumption that all countries would be in a single currency, we would all be growing nicely together, and poorer countries would become rich countries. That has all been washed away; it is all complete nonsense. It seems the only convergence we seek now is with an area that might be in terminal decline—the European Union. It is in serious economic difficulty, so do we want to converge with it? I suggest we want to diverge from it and make our economy work.
Although there are areas where we would have definite disagreements, the hon. Member for Stone (Mr Cash) often says things I agree with. He said we were talking about a German European Union. In 1989, the Institute for Public Policy Research published a document called “The German Surplus,” which was quickly suppressed because it was too explosive. The whole political establishment was moving towards a pro-euro, “Let’s join the single currency and the exchange rate mechanism at the wrong time” approach. I still have a copy of the document and I think it can still be found on the internet. It said that Germany had built an economy around itself, such that it could sustain low parity for its currency against all the others. Building that low parity for their currency into the euro meant that the Germans would always have a competitive edge over the other countries and could export to them freely. What they did not appreciate was that over time those countries would run out of money and Germany would have to lend them money to buy German products, which is what has been happening. Germany either has to dissolve the whole arrangement or carry on giving vast sums of money to other members of the eurozone to help them buy German goods.
Kelvin Hopkins
I shall certainly look it up.
Ministers go on and on about the importance of exports to the rest of the European Union—our Ministers did too—but they rarely talk about imports. We have a gigantic trade deficit, which is getting worse and worse every year. Even between January and February, the goods deficit with the EU rose from £4.8 billion to £5.1 billion. It now looks as though the trade deficit this year may be £60 billion. That is enormous; it is more than £1 billion a week. We are buying £1 billion more goods from the EU every week than the EU buys from us. That is not a sensible way to run an economy.
Cyprus
William Cash Excerpts(11 years, 1 month ago)
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Greg Clark
I do not think anyone is suggesting that the measures that have been taken are not rigorous and exacting. The reaction in Cyprus and across the eurozone indicates that these are regarded as very tough measures, including on the transparency of the banking system, particularly to avoid the reputation for money laundering. However, this is a matter for the Cypriot Government. They have had to convince their partners in the eurozone that this programme represents a credible set of conditions which can give confidence to those who are helping to bail them out.
Mr William Cash (Stone) (Con)
The Minister will no doubt appreciate that Mr Draghi’s comment that the European Central Bank will do whatever it takes clearly includes daylight robbery of British pensioners, among others. Does he agree that this is symptomatic of the dysfunctionality of the European Union? Will he also note that Germany has very much driven the measures itself, and furthermore that it has a surplus of £29 billion with the rest of the European Union, whereas we have a deficit of £48 billion?
Greg Clark
Clearly, it is a matter of regret, and lessons should be learned from the situation that Cyprus finds itself in. One of the clear lessons is that it should not have been allowed to descend into this state of indebtedness, and the banks should not have been allowed to get into their present position of vulnerability. It is in our interests, as well as in the interests of other members of the eurozone, that we have a much more soundly based banking system right across Europe.
Banking Union and Economic and Monetary Union
William Cash Excerpts(11 years, 6 months ago)
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Greg Clark
A number of mechanisms could require that, for example, the requirement for a dual majority. A number of possibilities are being discussed at the moment. What I have set out clearly is a very firm principle that we will not find ourselves in a position where we will be dominated by the ECB. That is what we are taking into the negotiations. We take a firmer view even than we are urged to do by the amendment.
Mr William Cash (Stone) (Con)
Does my right hon. Friend not accept that because this is governed by qualified majority voting, even with our best endeavours the reality is that it is not merely likely but it is as certain as we could imagine, given what we hear from the other side of the European Union, that we will be outvoted? To follow on from the remarks made by my hon. Friend the Member for Basildon and Billericay (Mr Baron), what guarantee can the Minister give, in the light of the fact that this is so important for the City of London?
Greg Clark
As my hon. Friend knows, the ECB aspect of the regulation requires unanimity, and we regard both aspects of this as reinforcing each other. We have made it plain, as I am doing from the Dispatch Box today, that it is an absolute requirement that we will not be dominated by the ECB. After the Prime Minister goes to the Council he will come back to this House. If he has been able to establish agreement, he will set out what that is, and if not, he will set out why it was not possible.
Let me deal with the second part of my hon. Friend’s amendment, where he draws attention to the need to ensure that the powers of the ECB’s governing council are not delegated to the single supervisory function in a way that is unlawful in terms of the treaties. That is a serious matter. It is vital that the weighty responsibilities that the single supervisory mechanism will discharge are vested in a way that is accepted to be legal. His observation in his amendment that it would ultimately be a matter for the European Court of Justice if there were doubts about the legality of the final arrangements is very constructive and accurate, and I hope that he will accept my assurance that our criteria in evaluating the SSM will be as in his amendment. In other words, they will be: first, that it is lawful—we reserve the right to establish that; secondly, that the integrity of the single market is respected, as I said; and, thirdly, that the UK cannot be discriminated against in the way that is proposed.
Mr Cash
Does my right hon. Friend recall that in relation to the fiscal compact our representative at UKRep, Sir Jon Cunliffe, wrote a letter to the Secretary-General of the European Council specifically stating that the UK Government wanted a legal reserve in respect of the illegality of that matter? On this issue, where there is clear evidence from the Council of Ministers’ legal adviser that the matter is regarded as unlawful, will my right hon. Friend guarantee that not only have we received a legal reserve, but, unlike on the previous occasion, we have followed it through with a reference to the European Court? So far, we have got a promise but no completion of it.
Greg Clark
I am grateful to my hon. Friend for that. I am not as familiar as he is with what went on in the previous exchange of correspondence, but I can say that it is essential that the arrangements need to be legal. There is no point marching up a hill of banking union if the whole thing falls apart—I mix my metaphors, but he understands what I mean. There are also other matters on which we will need to be satisfied before any of the proposed measures can be adopted.
Chris Leslie
The hon. Gentleman is too kind, as uncharacteristic of him as that may be.
I am afraid that this is a tall order for the Government to negotiate. It is a conundrum. I do not in any way shrink from the mountain that needs to be climbed in squaring this circle, if I may mix my metaphors in that way. I am just concerned that the Government’s approach—perhaps an echo of their approach to the EU budget—is not ambitious enough. I urge hon. Members to talk to institutions across the City of London and to financial services practitioners across the country. They are very worried about their position if they are not able to be part of a single market. They know very well that there are forums in which the rules will be made and shaped, and yet of course they want to reserve our rights from a UK position. Somehow, we have to try to forge a negotiating strategy that manages to do better.
Chris Leslie
I will in a moment, but I am conscious of time.
The motion expresses, in only the most general terms, the Government’s policy to
“remain outside the new supervisory arrangements while protecting the single market in financial services.”
That is necessary, but it is not sufficient. Perhaps it would be better if Ministers found ways to stay outside the scope of the eurozone’s rules—the point made by the hon. Member for Harwich and North Essex (Mr Jenkin)—but somehow still be in the room on EU-wide supervision matters as they develop, and to secure protections in any future settlement on EBA rule-making and mediation.
Mr Cash
Surely the hon. Gentleman is missing one major point, which is that the transfer of the jurisdiction under the single market arrangements that took the City of London away from the United Kingdom and gave it to the European Union was a decision taken by his Government. That is why the problem he is now having to deal with—the anxieties he referred to—has arisen. That the coalition has acquiesced in that is another story. The fact is, however, that the real responsibility lies with those who transferred the jurisdiction, as I pointed out in the Financial Times three years ago.
Mr William Cash (Stone) (Con)
I beg to move amendment (a), in line 10, leave out from ‘and’ to end and add
‘whilst welcoming the Government’s desire to seek safeguards for the UK, calls on the Government in respect of Regulation (EC) No. 1093/2010 to use its best endeavours to ensure that the proposed changes in the voting rights in the European Banking Authority are not adopted, to use its veto in respect of European Union Document No. 13683/12 so as to ensure that the powers of the Governing Council of the European Central Bank are not unlawfully delegated to the Single Supervisory Mechanism without an amendment of the treaties and/or to refer that matter to the European Court of Justice for adjudication of that proposal.’.
I am deeply troubled by the wording of the motion. In my judgment, it simply does not make sense to state that the House should welcome
“the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.”
We acquiesced in to the Lisbon treaty, the Labour party agreed to the transfer of jurisdiction over the City of London to the EU, which was wrong—the Single European Act was never remotely intended to produce such a result—and, furthermore, views I have received from the City clearly demonstrate that it does not believe that the proposals in the motion will protect the UK or a single market in financial services.
There is another massive issue about the rule of law in Europe. The Foreign Secretary, in his speech to the Körber Foundation conference in Berlin a fortnight ago, said that what bound us together in the EU and the reason for the Government wanting to remain part of it was that it
“has helped to spread and entrench democracy and the rule of law across Europe.”
The tragic reality is that the EU does not subscribe to the rule of law. On 17 December 2010, Madame Lagarde said about the first bail-out fund, the European financial stability mechanism:
“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”
Germany and France themselves broke the stability and growth pact. Furthermore, both the Government and the Attorney-General are clearly of the view that the agreement on the fiscal compact was unlawful, but in reality nothing has been done—hence my call for the legal reserve on this matter, although the legal reserve issued before has never been implemented.
The Government know that the proposals referred to in the second part of my amendment are unlawful. The Council of Ministers’ own legal adviser, in a lengthy opinion which I have seen and which the Government cannot dispute, states that there will have to be an amendment to the treaties if the powers of the governing council of the ECB are to be delegated to the single supervisory mechanism.
The legal opinion says on the proposal amending the EBA regulation, in effect, that in terms of the EBA’s dispute resolution powers there is no justification for treating the ECB differently from banking authorities in non-eurozone member states by exempting it from those powers. To do so would be a clear breach of the principle in law of non-discrimination.
As to the proposal giving the ECB prudential oversight of credit institutions in the eurozone, the legal opinion states that in establishing the single supervisory mechanism the council must respect the legal framework for decision making within the ECB set by primary law—that is, the treaties. This framework does not allow the ECB’s governing council to delegate decision-making functions on banking supervision to a subsidiary body such as the SSM. There is nothing in the legal base for the SSM proposal, in article 127(6) of the treaty on the functioning of the European Union, which would permit secondary law—that is, this draft regulation—amending the rules laid down in primary law. There is no question about it and the Government know that.
Non-eurozone member states are not entitled to participate in the ECB’s decision making, so they can have no formal decision-making role in the SSM as conceived. Furthermore, the law on banking supervision in the EU will be made up of directives to a significant extent. This is a requirement of the treaties. That means that the ECB cannot propose one-size-fits-all legislation on banking union. Rather, it can propose legislation which allows for differences in national transposition.
We simply cannot countenance a situation in which there is a wilful breach of the rule of law and where the dysfunctional European Union vaunts the rule of law, yet deliberately breaks its own rules. This is precisely what led to the kind of constitutional crisis that we have seen in our own history when Governments from the Stuarts onwards claimed a divine right to rule but then broke the common law. This is the primrose path to constitutional disaster not only for the United Kingdom, but for Europe as a whole. I hope the House will understand my concern, as I suggested back in the 1990s that this would happen.
I hear what the Minister says but I cannot understand why and how, given comments that I have received from the City of which I am sure he is aware. Those in the City make it clear that the single market would be put at risk by an imperfect single market in financial services in which rules differed by level of membership of the EU. Furthermore, they say:
“It is essential that voting arrangements within the European Banking Authority are clarified so as to avoid members of the Banking Union voting together en bloc and imposing financial regulation on non-Eurozone members through qualified majority.”
For “clarified”—
Mr Jenkin
Does my hon. Friend agree that for us to invoke the single market is doubled-edged, because in the end it will be the Commission that invokes the single market as a pretext for levelling the playing field which has been unlevelled by measures taken by the banking union? We will therefore finish up with measures that we do not want being imposed on us by qualified majority voting.
Mr Cash
That is precisely right. It was never intended when we voted—and I voted at the time, with a reservation about the sovereignty of the United Kingdom Parliament, which I was not allowed to debate—that we would be in this very position. That was in 1986 when I voted for the measure, but it was with that reservation.
To complete my point, where the comments from the City say “clarified”, I would say changed. We must change the rules, not merely clarify them, but we cannot do so because of QMV. That is the problem and it comes from the Single European Act.
Mr Baron
Does my hon. Friend agree that the Government’s defence that QMV cannot be extended to decisions regarding the City cannot be right, and their defence of the idea that the ECB cannot override non-eurozone members is at least highly questionable when it comes to the legal situation that my hon. Friend is highlighting, and that therefore there is a distinct danger?
Mr Cash
I would go further and say that the Council’s legal adviser knows exactly what the position is, as do the whole European Union and our own Government. The opinion is out there; I have read it and it is crystal clear. The reality is that there is absolutely no question about it.
I have great sympathy for the Minister and pay tribute to him. I will not go into the details, but it was because of him that we got the documents in the first place. He is a man of great integrity, and I think that he is in a very difficult position tonight, stuck between a rock and a hard place. I have to say that I do not believe that what he has told us really gives us the necessary guarantees and satisfaction. This is not about what we think, or about grandstanding or being difficult for its own sake; as he said at the beginning, this is in many respects—I would not say entirely—on a par with the matters on which we rebelled last week. We do not want to have to do this, but it is a matter of fact that we face this situation.
I have another commentary from City analysts stating that the concern is that the UK could
“still lose the ability to prevent a decision from being taken by the EBA to intervene in a UK bank directly under the EBA’s binding mediation powers.”
They make a similar point about the need for amendments to the treaties. The truth is that it would not be right for Members of Parliament not to register their votes against these proposals in the hope—like Mr Micawber—that something would turn up, because I am afraid that what this amounts to is complicity by our own House and our Government in the violation by the EU of its own laws and the avoiding of amending the treaties for reasons of mere expediency. Even if the EU does come up with something, I believe that it will be merely a fix to avoid revealing its real intentions and, of course, the real results, which will cause so much harm to the UK and the City of London. I blame the Labour party for much of this, as I warned of it several years ago.
The so-called remorseless logic of advocating a banking union is more of a remorseless shift away from our own national interests while the banking union moves the eurozone into an ever deeper and blacker hole with money, either invented or printed, pouring into it. That is a recipe for economic disaster.
Multiannual Financial Framework
William Cash Excerpts(11 years, 6 months ago)
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Mr William Cash (Stone) (Con)
The Labour party—the Opposition—will of course vote with us this evening, not the other way round. As the hon. Member for Bolsover (Mr Skinner) correctly pointed out, exactly the same happened with the Maastricht treaty.
The amendment spoken to so ably by my hon. Friend the Member for Rochester and Strood (Mark Reckless) is absolutely right. It deals not just with the mechanics or the technicalities, but with what is really going on under the surface. The real questions are, “Where is the money coming from?” and “What is the object of this multiannual financial framework?”
I have been to many conferences in the past year in my capacity as Chairman of the European Scrutiny Committee—in Cyprus and Denmark, and, before that, elsewhere—and I have attended similar conferences with my right hon. Friend the Member for Aylesbury (Mr Lidington). They are living on another planet: that is the real problem. The main feature of that big landscape is where we are today. This is part of a picture that must be dealt with.
I know that my right hon. Friend the Prime Minister is conscious of that. He knows that Mr Barroso’s speech calling for a federal Europe, which was made only a short time ago, has put us at a crossroads. We cannot continue to assume that what was being considered before that date still applies. We are now on a different journey. They are on one planet, and we are on another. We have to make a stand, and that is what this is all about.
A letter dated 18 December 2011 from the Prime Minister and from the Prime Ministers of several other member states, included the following passage:
“European public spending cannot be exempt from the considerable efforts made by the Member States to bring their public spending under control.”
We are cutting here; we need growth. They are not cutting, but increasing. That is the point.
Chris Kelly (Dudley South) (Con)
I know that my hon. Friend has a great deal of empathy with the private sector. The private sector is the engine of growth in our economy and it becomes more efficient every year, but does my hon. Friend agree that in Brussels the only thing that increases is the appetite for our money?
Mr Cash
Absolutely. It is impossible to make any public expenditure—including our contributions to the whole of the public sector: health, education, local government, the lot—unless the money comes from reasonably taxed small and medium-sized enterprises. Yet the whole of the Commission’s paper—which is at the heart of the 2020 strategy and at the heart of why the Commission is asking for this increased amount of money, which it calls an investment for growth—contains only one reference to small and medium-sized businesses, in one line. That is the problem we are up against. We cannot give money to the public sector unless we get it from private enterprise on a reasonably taxed basis.
The Prime Minister’s letter continues:
“The action taken in 2011 to curb”—
“curb”: that is the word he uses—
“annual growth in European payment appropriations should therefore be stepped up progressively over the remaining years of this financial perspective and payment appropriations should increase, at most, by no more than inflation over the next financial perspectives.”
The situation was wrong then, and it has got worse since. That was in December 2011. We are now in October 2012, and we know what the picture is, and it is getting progressively worse. That is why we had to call for a reduction rather than merely what the Prime Minister describes as an
“increase, at most, by no more than inflation over the next financial perspectives.”
Mr Christopher Chope (Christchurch) (Con)
Will my hon. Friend take some support from the fact that on 20 June our right hon. Friend the Foreign Secretary told this House he thought reductions in the EU budget of 20% were “highly desirable”?
Mr Cash
Absolutely; that is a very good point indeed.
I would like to dig a little deeper into what this money is supposed to be used for. It is all set out in the papers laid before the House for the purposes of this debate. They talk about turning the EU into a “smart”—whatever that means—“sustainable and inclusive economy” delivering
“high levels of employment productivity and social cohesion.”
How on earth are they going to achieve that given the measures they think will produce growth? Almost every single aspect of what they want to deliver is based on increasing grants and subsidies, but not on asking where the money is coming from.
The money comes from our constituents. It comes from the taxpayer. It does not grow on trees. That is what they do not understand. Therefore, the entire strategy on which this multiannual financial framework is based is nonsense. It is an Alice in Wonderland fantasy, as I have repeatedly said when I have had the opportunity to meet the other 27 Chairmen of the national scrutiny committees. I have noticed that there is increasing awareness, too. The hon. Member for Luton North (Kelvin Hopkins) was with me only a few weeks ago, and he noticed the degree of response I was getting from the other member states’ national chairmen. They understood that they were in deep trouble.
The money does not grow on trees in Spain; that is why there are demands for independence from Catalonia. The money does not grow on trees in France or Germany either. The fact is that it has to be found.
Wayne David
The hon. Gentleman and I have significant differences about what this country’s approach to the EU should be, but does he agree that the important thing at this moment in time, with every EU member state having to make public expenditure cuts, is that the EU itself should make cuts? That message should go out from both sides of this House.
Mr Cash
The hon. Gentleman is right. I do not think this is just a cynical move, even though there is an element of that. As I find when I go to meetings with those in the presidency, there is a recognition: they know they cannot go on spending money that is not there. That is the truth. That is all this argument is really about. It is about the big landscape of whether, like Mr Micawber, we can just hope something will turn up. It will not; it has to be built through real growth policies.
Unfortunately, the report the European Commission produced only a few months ago shows it has not got a clue how to generate that growth. I was also deeply disturbed to see that the amazing report by the European Parliament calling for all these increases was welcomed by the vice-president of the European Commission, Maroš Šefcovic. He said the MFF was “an investment budget” for delivering growth in “the entire EU.” He condemns himself outright simply by endorsing the 150 pages of unadulterated rubbish that came out of the European Parliament in its interim report.
Mark Reckless
Even for those in the House who are genuine Keynesians, if our goal is to stimulate the economy is it possible to think of a worse way to spend money than the way the MFF sets out for the EU?
Mr Cash
I absolutely agree. The real problem is that their answer is to give more money to the public sector and to ventures and projects that, as the Court of Auditors report shows, increasingly fail. The trouble is that the European project is a failing project.
They will not recognise that, so what are they doing? They are saying, “We are going to go off and have a federal Europe.” Well, let them have it. They can have their federal Europe if they want, but we, in this country, cannot possibly be part of it—that is unthinkable. The Prime Minister knows it is unthinkable, and my genuine belief is that he will come to discover that it would be better to veto this and to ensure it does not go through, because he has already been presented with the crossroads. The crossroads was presented by Mr Barroso, and the crossroads is being presented by the other member states. There is no turning back. We therefore have to say no. We say no to this, we say no to the illegal banking regulations that we have just been looking at and we will be saying no to the proposals for any new treaty. If we are prepared to put our money where our mouth is and actually say that we will not accept this, we will be serving the national interest.
Mr Nigel Dodds (Belfast North) (DUP)
It is a pleasure to follow the hon. Member for Wellingborough (Mr Bone). I agree with him entirely that the Prime Minister has a wonderful opportunity, if he wishes to grasp it, to use the united stance of the Commons on EU budget cuts to increase his bargaining power in Brussels, but I fear that the Prime Minister’s negotiating position is more about damage limitation than about getting the EU budget reduced. A unique opportunity exists for EU budgetary reform and all due diligence should be directed towards advocating an overall reduction in the EU budget.
The House of Commons Library has set out clearly what the reductions are for each of the Departments over the current comprehensive spending review period. There are reductions of 23% for the Home Office, 27% for the Ministry of Justice, 19% for the Ministry of Defence and 19% for the Department for Work and Pensions. Across the board there is an 11% real reduction in Government spending. In the Northern Ireland Office the reduction is 12%, in the Wales Office 12% and in the Scotland Office 11%. These are real cuts. There is nothing in these figures which allows for a freeze still less an increase to cover inflation.
It is difficult for people in the community, as has been said by previous speakers, to understand why the Prime Minister tells people that in order to get the economy on the right footing, drastic real-terms cuts in the budgets of Government Departments are necessary, affecting front-line services. That message has been sent out by national Governments in the EU, right across the board, yet when it comes to EU expenditure, we are told that the most that we can aspire to is some kind of inflation increase. To the people in the street, to whom the hon. Member for Wellingborough referred, this is not only bizarre, but incomprehensible. They expect the Members whom they send to the House of Commons to stand up for the United Kingdom and for them, and to say that the same rules should apply to spending on the EU as to everybody else.
Mr Cash
Does the right hon. Gentleman know that the European Parliament describes the Commission’s proposal as representing a freeze of the multiannual financial framework between 2014 and 2020, and says that it would not be sufficient to finance the existing policies which come out of the treaty of Lisbon? Is there not something ironic in that, in relation to the Government’s motion?
Infrastructure (Financial Assistance) Bill
William Cash Excerpts(11 years, 7 months ago)
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Rachel Reeves
I thank my hon. Friend for that intervention. He will know that there are 1.42 million people working part time who wish that they were working full time. As of April, about 200,000 families lost support through working tax credits because they could not find the additional hours that they need to still be eligible for that extra support to help them when they are in work; that support helps them to avoid poverty.
It is no wonder that people are asking whether they can have faith in anything the Government are saying, given that in every area we see dither and delay. In communications, the Government have put back the 2012 broadband target to 2015 and may not meet that new deadline. In house building, recent statistics show that new housing starts are down by 24% on a year ago. In waste management, the plan promised for spring this year will now not be delivered until the end of 2013. In energy, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy”.
In transport, we still await the long-promised national policy statement on transport networks and aviation, and tough decisions on airport capacity have been kicked into the long grass. Instead of the drive, decisiveness and clarity of vision that businesses are crying out for, what do we get in sector after sector? We get dither and delay; we get initiatives and announcements driven by the desire to hit headlines rather than to deliver results.
The Bill—the Government’s latest scheme—is a strange piece of legislation. It is being fast-tracked through Parliament, with the justification that the situation is immediate and urgent. However, given this need for speed, we are bound to ask whether legislation is necessary, particularly given that, as the House of Commons Library note explains, such commitments
“do not typically require…legislation”.
The UK guarantee scheme at the centre of the Bill was first announced by the Prime Minister in a speech in May. It was re-announced by the Chancellor in a speech in June. The press release came from the Treasury in July. It is therefore hard to resist the conclusion that the Bill is designed more to create the impression of activity and delivery than to get real results in the quickest way possible.
However, the Opposition’s biggest concern with the Bill is that it is simply inadequate to meet the challenge we face. Many in industry are sceptical that it will make any difference. Even where it is taken up, the tight criteria of economic and commercial viability may mean that it amounts to only a deadweight subsidy, aiding projects that would have gone ahead in any case. The best anyone has been able to say for it is that it might help some schemes at the margin, but that is hardly commensurate with the challenge we face.
The schemes that have been most frequently mentioned as strong candidates for assistance are those the Government have announced are going ahead several times already. Let me cite one example, which the Chief Secretary mentioned in his speech. Earlier this month, he said:
“Detailed discussions are already taking place with the Mersey Bridge Gateway project”.
We certainly welcome progress, but many may experience a strange sense of déjà vu, given that a year ago the same project was announced by the then Transport Secretary, who noted that although some transport plans are long term, this one could be
“implemented more quickly…creating jobs when they are needed most.”
What happened in the past year? It is no wonder the Government are gaining a reputation for more talk than action. As the director general of the CBI said today,
“firms fear initiative overload and are becoming impatient with delivery, leaving many companies still sceptical about the overall impact on investment.”
Mr William Cash (Stone) (Con)
Does the hon. Lady accept that this Bill is, in effect, pure Keynesianism? If she had the opportunity to read Nicholas Wapshott’s recently published and excellent book on the arguments between Keynes and Hayek, she might conclude that elements in this hoped-for infrastructure programme carry with them the germs of really serious difficulties if we pursue a policy of pure Keynesianism and do not take into account the arguments of Friedrich Hayek.
Draft European Union Budget
William Cash Excerpts(11 years, 10 months ago)
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Mr Hoban
That is an important point, and I shall address it shortly.
Our response to the Commission’s inflation-busting proposal has been robust. At a time when Governments across Europe are making difficult decisions on public spending, a 6.8% increase in EU spending in 2013 is completely unacceptable. First, the economic circumstances have changed dramatically, and the Commission cannot ignore the facts. By 2014, the level of public debt across the 27 member states will be over 50% more than it was back in 2007, two years after the last seven-year budget was agreed. Secondly, a larger EU budget will not solve the eurozone crisis. A smaller, leaner and better-targeted budget is the best way to drive growth across the EU.
We have identified many areas of EU spending that are ripe for reform. It is time to cut the quangos, EU staff pay and programmes that offer low added value or are poorly implemented. For example, the Commission set itself the target of reducing its headcount by 1% this year. Although 286 posts have been cut—equivalent to a 0.7% reduction—that has been offset by the creation of 280 posts for Croatia’s accession. There has been no attempt to redeploy staff to meet the needs of Croatia’s accession. As ever, the Commission’s knee-jerk reaction is simply to increase the number of people employed in the EU. As a consequence, this year the Commission has cut just six posts. We estimate that if it had cut the headcount by 1%, it could have saved €45 million.
The total salary bill for the EU institutions’ staff in 2011 was over €3.5 billion, more than 2.8% of the Commission’s budget proposal for the year, and more than double the amount spent on freedom, security, justice and citizenship. Staff at EU institutions, who may have lived in Brussels for more than 30 years, continue to be paid an extra 16% “expat allowance” on top of an already generous salary, and a teacher at the European school is paid twice the average UK teacher pay.
Mr William Cash (Stone) (Con)
My hon. Friend is making a powerful case and I take it seriously. I do not in any way suggest cynically that the Government are merely trying and not succeeding, but when I see the words
“seeking significant savings…across all budget headings and in…strenuous efforts to limit the size”,
I feel that there is another answer. In the light of his powerful argument, which has not yet even finished, there is a strong case for our saying that we insist, rather than merely seek, and for saying, “We will not pay any more. We will refuse to do so if you are not prepared to do something about it.” This really is getting out of control, as is the work load of law that we discussed in the previous debate.
Mr Hoban
I will come on to deal with the process of negotiation that we are going through, but my hon. Friend will, of course, be aware that the EU budget is determined by qualified majority voting, whereas the framework is determined by unanimity. As he said, he has practised law for some time, so I am sure that he would not be encouraging us to break the law—
Mr Cash
I am grateful to my hon. Friend for walking straight into that one. He knows the formula that I have adopted in the past, notwithstanding the European Communities Act 1972. I have put it to the Prime Minister, and the European Scrutiny Committee report endorsed it as a potential weapon. I simply say to my hon. Friend that there comes a point when we simply have to draw a line and we may have to override European law. The EU breached the law with the stability and growth pact and the fiscal compact. I think it is about time we started showing a bit more mettle.
Mr Hoban
I have to say that I always thought it was appropriate to obey the law, even in circumstances where we would perhaps rather not do so. We need to take our obligations seriously, but that does not in any way weaken our resolve to get the best possible deal for British taxpayers.
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.
Mr Cash
I am glad that the hon. Gentleman used the phrase “strength of feeling”. What is his strength of feeling about the fact that every justification for proposing an increase of 6.8%, in all the papers that I have read as Chair of the European Scrutiny Committee—everything in the European Parliament and the multi-annual financial framework discussions in which I took part a few months ago—is, “We need to do it because of the Lisbon treaty”? Will the hon. Gentleman, on behalf of the Opposition, now accept that the Lisbon treaty was a great mistake?
Chris Leslie
No. Some commitment appropriations are certainly being pencilled in—“We can’t undo the budget because of previous commitments”—but almost an equal number of appropriations are new programmes that the European Commission could vary and change. I am all for expenditure at European level and doing our part collectively to boost and stimulate economic growth, but there is not sufficient justification for some of the continued administrative back-office areas of expenditure that simply do not help at this time, especially when we have so many economic difficulties in the UK.
My question to the Minister is very simple: what exactly is the Government’s position? Are they in favour of a real-terms reduction in the budget or not? The Minister would not say. I urge his hon. Friends to try to pin down the Government on that, because we are at a crucial juncture. From reading the reports this week in The Guardian about a deal being done whereby we will not touch reform of the common agricultural policy, for example, I get the sense the Prime Minister likes an easy life with business as usual and wants to continue in that vein.
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 Cash
On a broader question, will my hon. Friend consider that if we were to consider a Swiss-style relationship with Europe and negotiate a proportionate drop in our net contributions, we could reduce the amount we pay to no more than £1.3 billion, saving nearly £7 billion? Does he find that an attractive idea?
Chris Heaton-Harris
Anything that saves UK taxpayers significant sums of money I deem worthy of further investigation.
There are lots of areas in which the Government, working with others on the Council and Members of the European Parliament, who have an opportunity to amend the budget, can do a lot more, but only if there is a tiny threat that we might not want to increase our contribution at all. We have the reason to do it—the accounts not being signed off—but I urge the Minister to consider the opportunities that present themselves in the coming years. I support the Government in trying to reduce our budgetary contribution. I know that it is unbelievably hard work—I have sat in on these trilogue meetings in Brussels—but it is worth the effort, because we could save the UK taxpayer billions of pounds.
Mr William Cash (Stone) (Con)
The debate is extremely important, particularly in the light of what we heard from the Foreign Secretary this morning, because it is about our relationship with the European Union. As I said in my response to the Foreign Secretary’s statement, it is fundamental that we concentrate not merely on powers, but on democratic power. The debate is about sovereignty and tax and spend, it is about how much we should contribute, and—as I said to the hon. Member for Nottingham East (Chris Leslie)—it is about the increase in functions that has led to the increase in the budget. The hon. Gentleman knows that, and we know it. The fact is that the Lisbon treaty should never have been allowed to go through. The budget question is at the heart of this, and I say no, no, no.
Neil Parish (Tiverton and Honiton) (Con)
My hon. Friend is absolutely right. If we want to curb the powers of the European Union we should pay it far less money, which it should spend more efficiently, and, given that Europe is facing austerity, it is entirely wrong to ask for a 6% increase.
Mr Cash
It is indeed. In fact, the Commission is asking for 6.8%.
I agree with the Minister that the Government have fought hard, but they have not fought well enough. Although an amendment that I tabled last year proposing no increase was accepted by Members on both sides of the House, we ended up with a 2.5% increase. I think I am right about that, although the Minister appears to disagree. As for the year that we are discussing now, we need to ensure that, if necessary, we take firmer steps in the light of the changed relationship that has resulted from these times of austerity.
I think that we should say no and ensure that the amount in question is at worst a flat increase. Furthermore, I think that we should say no to the final results. QMV does not impress me: other member states have been breaking the law all over the place, particularly Germany and France over the stability and growth pact. The whole of the fiscal compact was unlawful. It is time that we took a firmer line. We are a major net contributor to the EU budget, of which, last year, 45% was spent on policies for sustainable growth, 41% on the preservation and management of natural resources, and the rest on, for instance, “the EU as a global player” and administration. We are the second largest net contributor after Germany. The current annual budgets under the multi-annual financial framework are going in the wrong direction. We should restrain all further expenditure to the EU. We must take action on the gross payments. The gross payments, less abatement, were £12.915 billion in 2010, up from £8 billion in 2005. There is an ever-growing increase in real terms. That is unacceptable in a time of austerity.
I shall conclude by referring to a point I have already made. We must change our relationship with the EU in the way anticipated by those of us who would make the most of what the Foreign Secretary said earlier today, and we must do so sooner rather than later, and certainly before 2014. If we were to adopt a Swiss-style relationship and negotiate a proportionate drop in our net contributions, we would be able to save at least £7 billion for the British taxpayer. That is the direction we should go in. It is time that we said no, not maybe.
Professional Standards in the Banking Industry
William Cash Excerpts(11 years, 10 months ago)
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Mr Cash
I am extremely grateful to the shadow Chancellor for giving way. On the question of the alternatives of a Select Committee and a judicial inquiry, it is perfectly clear that we can make any necessary adjustments through our Standing Orders on such issues as taking evidence on oath, for example. I will seek to explain that in more detail if I get the opportunity to make a speech.
Ed Balls
The hon. Gentleman has proposed that a QC could advise the Committee; perhaps he will make that proposal later. Those important points take us down the road towards the judicial inquiry. The problem is—and this is my third objection—that experience shows that only a judge-led inquiry can ensure the necessary forensic cross-examination of witnesses, prevent witnesses from avoiding answering key questions that are important for establishing the truth and, in particular, avoid blanket refusals to answer questions on grounds of legal advice. I would be happy to take an intervention from the Attorney-General on this point, because we have seen it happen in parliamentary hearings.
The argument is that a witness before a parliamentary inquiry can say on legal advice that they will not answer a question, but in a judge-led inquiry the judge has the ability to explain to the witness why answering the question in the particular form set by him according to his legal judgment will not cross the line. Unless a judge is properly testing the boundary between self-incrimination and the answers that must be given for a proper inquiry, we cannot make progress. That would be doubly the case with the prospect of criminal investigations, which might take some years down the track. On the question of witnesses not incriminating themselves, it seems to me that the evidence shows—perhaps the Attorney-General will correct me—that it is impossible for a parliamentary inquiry to call any witness who might be implicated in the LIBOR scandal without the witness saying, “On legal advice, I will say nothing.” The inquiry cannot work like that. Only a judge can sort this out.
David Rutley (Macclesfield) (Con)
Many years ago, when I was at business school with my hon. Friend the Member for Bedford (Richard Fuller), I took a summer job in Wall street. I shall never forget the occasion on which I was interviewed by a certain individual who sat with his feet up on his desk, wearing big red braces, smoking a huge cigar, and chewing gum. The interview was for a job in leveraged buy-outs. Before even introducing himself, that individual said to me, “David, how greedy are you?” I do not remember what my response was, but in my head it was pretty clear: “Not greedy enough to take this job.”
My interest in investment banking evaporated pretty quickly after that experience of outrageous behaviour and outrageous remarks. Behaviour of that kind on the part of a few bankers has led to investment banking in particular, but banking across the board to some extent, being given a very bad review by many of our constituents, and it has failed to build the trust that is so badly needed.
I went on to spend most of my career in retail, much of it at Asda, building its financial services business. There was a stark difference between supermarkets and banks when it came to levels of trust—and that was back in 2002; I hate to think what the difference is nowadays. Every day the supermarkets had to go out and compete for the right to earn the trust and loyalty of their customers, so that they would shop there every week. The lifetime value of those shopping baskets was vital. The supermarkets knew that if they captured that loyalty, it would lead to profits on the bottom line. In banking, by contrast, the focus is so much on short-term profit that the banks lose sight of the customer side of the equation. That was brought home to me starkly when I spent a couple of years working for Barclays before the election, trying to address some of the effects of the credit crunch on its business.
My work in retail financial services highlighted the need for change, and also how difficult it is to bring it about: to break with accepted norms, and to move on from rules of the game that people have previously regarded as being quite acceptable. The LIBOR-fixing scandal has highlighted the desperate need for root-and-branch change in investment banking. That change is needed, and it is needed sooner rather than later.
It is hard to believe that it is five years since the collapse of Lehman Brothers, and five years since we saw the queues outside Northern Rock. The public expect change, and they expect it quickly. It is for that reason—the need for urgent action—that I support the call for a parliamentary inquiry. We cannot wait until 2015 or 2016 to secure the answers and, more important, the solutions. A properly resourced parliamentary inquiry with full access to papers, officials and Ministers, with evidence given under oath, could make much-needed progress.
Mr Cash
Does my hon. Friend agree that we could also adopt the system applied to hybrid and private Bills, with a cross-examination carried out by a fully forensic Queen’s Counsel, so that we could get to the root of what is really going on? Could we not have specialist advisers on the Committee as well?
David Rutley
I am not familiar with that approach. As a former member of the Treasury Committee, however, I should like to say that I have worked with my hon. Friend the Member for Chichester (Mr Tyrie), and that I have a huge amount of respect for his knowledge and experience in Treasury-related matters, and also for his independence of mind and personal integrity.