Economic Growth

– in the House of Commons at 1:26 pm on 15th May 2013.

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Votes in this debate

  • Division number 2
    A majority of MPs voted against a package of economic policies including bringing forward long-term infrastructure investment, building 100,000 affordable homes, and guaranteeing jobs for the long term unemployed.
  • Division number 3
    A majority of MPs voted not to express regret that the Government had not included proposals for a referendum on the UK's membership of the EU in their legislative programme.
  • Division number 4
    A majority of MPs voted against devolving tax raising, and borrowing, powers to the Welsh Government.
  • Division number 5

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission 1:26 pm, 15th May 2013

I inform the House that I have selected amendment (g) in the name of the Leader of the Opposition. I have also selected amendment (b) in the name of Mr John Baron and amendment (e) in the name of Mr Elfyn Llwyd for separate Divisions at the end of the debate. Those amendments may therefore be debated together with the Leader of the Opposition’s amendment. The amendments will be put in the order: (g), (b) and (e).

Photo of Andrew Lansley Andrew Lansley The Leader of the House of Commons

On a point of order, Mr Speaker. For the benefit of the House, may I ask you to set out your application of the terms of Standing Order No. 33, relating to the number of amendments to the Queen’s Speech motion that are selectable?

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission

Yes, I am very happy to do so, and I am grateful to the right hon. Gentleman for his point of order. I believe that there is a need to interpret the Standing Orders in a way that facilitates the business of the House in a developing parliamentary context. Conditions and expectations today are very different from those in October 1979, when that Standing Order was made. I must tell the House that I have studied the wording of Standing Order No. 33 very carefully. My interpretation is that the words “a further amendment” in the fifth line of the Standing Order may be read as applying to more than one amendment successively. In other words, only one amendment selected by me is being moved at any time. Once that amendment is disposed of, a further amendment may then be called. I am extremely grateful to the right hon. Gentleman—almost as grateful, I suspect, as he is to me.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer 1:30 pm, 15th May 2013

I beg to move amendment (g), at end add:

‘but regret that the Gracious Speech has no answer to a flatlining economy, the rising cost of living and a deficit reduction plan that has stalled, nor does it address the long-term economic challenges Britain faces;
believe that the priority for the Government now should be growth and jobs and that we need reform of the European Union, not four years of economic uncertainty which legislating now for an in/out referendum in 2017 would create;
call on your Government to take action now to kickstart the economy, help families with the rising cost of living, and make long-term economic reforms for the future;
and call on your Government to implement the five point plan for jobs and growth, including bringing forward long-term infrastructure investment, building 100,000 affordable homes and introducing a compulsory jobs guarantee for the long-term unemployed in order to create jobs and help to get the benefits bill and deficit down, legislate now for a decarbonisation target for 2030 in order to give business the certainty it needs to invest, implement the recommendations of the Parliamentary Commission on Banking Standards and establish a proper British Investment Bank.’.

Thank you for your ruling, Mr Speaker. It is certainly in line with my understanding of the particular interpretation of that Standing Order, and I hope that it satisfies the Leader of the House as well.

It is an honour to open the final debate on the Queen’s Speech today, and to move the amendment, which you have selected on behalf of Her Majesty’s Opposition. It is a Labour amendment that calls for decisive action and a stimulus now to kick-start the recovery, boost living standards and get the deficit down, including 100,000 affordable homes, urgent action to accelerate infrastructure investment and reforms to get young people and the long-term unemployed back to work, with a compulsory jobs guarantee.

The amendment also proposes radical long-term reforms to promote economic growth and investment in manufacturing, services and our creative industries by implementing the recommendations of the Parliamentary Commission on Banking Standards, legislating now for a 2030 decarbonisation target to give businesses the certainty they need to invest here in Britain and setting up a proper British investment bank. It is a one nation Labour amendment, which stands in marked contrast to the complete and utter shambles we have seen from the Government over the past seven days since the Gracious Address—a divided coalition, out of ideas and running out of road, and a weak Prime Minister, out of touch and fast losing control of his party and his own Cabinet.

Photo of Nadhim Zahawi Nadhim Zahawi Conservative, Stratford-on-Avon

How much more money would the shadow Chancellor need to borrow to deliver on his alternative Queen’s Speech?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

As I said in my opening remarks and as our amendment says, we need a stimulus now. We, the International Monetary Fund, the Business Secretary and The Economist all agree that taking action now to kick-start our recovery is the right thing to do. We should borrow now to get growth moving, so that we get our deficit down.

I have to say to the hon. Gentleman that that very question was asked of the Business Secretary on the “Today” programme just a few weeks ago. He was asked by John Humphries, “So, should you borrow more?” Guess what the Business Secretary said? He said:

“Well we are already borrowing more”.

That is the truth—£245 billion more. I will tell you what I want to do—[Interruption.] I will answer the hon. Gentleman’s question. I want to get the borrowing down. Under this Chancellor, the borrowing has flatlined—the same last year, this year and the year after. That is the reality.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

Will the right hon. Gentleman come clean with the House: how much more would he borrow?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

As I said, I want to see the borrowing coming down, and it is not coming down because this Chancellor has flatlined the economy. We have had almost no growth since 2010 and the result is that he is borrowing £245 billion more.

I have made speeches in the last two Queen’s Speech debates: I have said that there should be a temporary VAT cut, which would cost £12 billion. I have called for a national insurance cut, VAT at 5% and for infrastructure investment to be brought forward. If those things had been done, borrowing would be coming down now; under this Chancellor, it is not. The economy has flatlined and the deficit reduction plan has flatlined as well.

With the IMF here in town, what the Government should do is listen to the IMF chief economist, who says they are “playing with fire”. The IMF has said they should slow the pace of deficit reduction, stimulate the economy and get growth moving to get the deficit down. That is what the Government should do.

Photo of Christopher Pincher Christopher Pincher Conservative, Tamworth

Is that the “borrow, borrow, borrow” advice that the shadow Chancellor gave to the President of France, whose deficit is well above the EU average and whose economy has shrunk by 0.2%? Is that the kind of advice he is giving to his fraternal friend?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

The EU produced the latest growth figures today. The figures for France are disappointing. France has gone into recession. It is in the eurozone, trapped in austerity, and its economy is not growing. I looked at the figures today to see what French growth had been since the Chancellor’s spending review compared with the UK. Since the spending review in 2010, growth in France has been 1.1% and growth in the UK has been 1.1% as well, compared with Germany, which has had three times more growth, and America, which has had four times more growth. The eurozone is locked into austerity by virtue of those countries’ membership of the single currency. Our Chancellor imposed on our economy austerity that went too far, too fast, and what has happened? He has delivered the same growth performance over the last two years as that of the French economy, well behind that of Germany and America, where, as we now know, the deficit is coming down.

Photo of David Rutley David Rutley Conservative, Macclesfield

With the IMF in town, will the shadow Chancellor confirm that the IMF has forecast that the UK will be growing faster than France over the next two years?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

The hon. Gentleman should be congratulating me and the Labour Government on not taking us into the single currency in 2003. That is what he should be doing, but if he wants to have a debate about the IMF, this is what the IMF said in September 2011:

“If activity were to undershoot current expectations, countries that face historically low yields”— such as Germany and the United Kingdom—

“should also consider delaying some of their planned adjustment”.

In April—just a month ago—it said:

“In the UK, where recovery is weak owing to lacklustre demand, consideration should be given to greater near-term flexibility in the fiscal adjustment path.”

That is technical language that means the Chancellor should slow the pace of deficit reduction, provide a stimulus and get the economy moving to get the deficit down. What do we hear from the Treasury? Treasury advisers, who a year ago were saying the IMF was on their side, now say that the Chancellor will ignore the IMF and plough on regardless with a failing plan.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

I am glad to see that the shadow Chancellor is beginning to agree with our plans for regional banking reform with local banks. However, he would improve his banking credibility if he were to repay the £3 million owed by the Labour party to the Co-operative bank. Does he agree with that?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Guy Opperman has made some wise interventions in these debates. He said just last year that

“too often we are talking about the 50p tax, a tax which affects those on six times the average salary, rather than the taxes on the lowest paid.”

It is a pity his Front-Bench team did not listen to his views in this year’s Budget.

Several hon. Members:


Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I want to make some progress, then I will take some more interventions.

This is not simply the Queen’s Speech of a coalition Government who have ground to a halt; it is much worse than that. At a time when living standards are falling; when child poverty is rising; when more than 950,000 young people are out of work; when, as we learned today, unemployment is rising again and is now higher than at the general election; when, as we also learned today, prices are rising four times faster than wages in our economy; when our economy has flatlined for three years; when overall business investment has stalled and actually fallen in the past two years; when, as a result, our triple A credit rating has been downgraded; when the Office for Budget Responsibility says that the deficit reduction plan has completely stalled; and when the International Monetary Fund is now in town saying that the Chancellor is “playing with fire” by sticking to his failing plan, you would think that the priority for the Prime Minister, the Chancellor, the Cabinet and the Conservative party would be to see what they could do to boost economic growth and long-term investment in our country. But no, it seems that that is not their priority.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

We have already had a credit downgrade from one of the agencies, and the agency made it clear that that was a result of the problems that our economy has had in recovering. Is the right hon. Gentleman not concerned that if we were to abandon our plans, there could be a further downgrade? If we simply did as he suggests and opened the floodgates to more debt and borrowing, we would put our economy into severe crisis as a result of rising interest rates and a lack of credibility in international markets.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I ask the hon. Lady to reflect for a moment on the logic of her position. For the past three years, she and the Chancellor have consistently said that they had to stick to the plan, even though growth was low, even though the deficit was not coming down and even though living standards were under pressure, because otherwise they would lose the triple A credit rating. Now, they have lost the triple A rating, but they still maintain that they have to stick to the plan. That is completely illogical. The credit rating agency said in terms that it had downgraded us because there was no growth in the economy, and that that was choking off deficit reduction. Sticking with a failing plan that is not working and that has resulted in the deficit reduction being stalled is not the way to keep our credit rating—if that is the Government’s objective. The way to keep it is to get the economy moving, get people investing and get people back into long-term sustainable jobs. Until we do that, the Chancellor is going to continue to fail.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

If the hon. Lady would like to have another go, I am happy to give way to her.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I am grateful to the right hon. Gentleman for letting me have another go. I put it to him that he really does not understand the point about the credit rating agency in this context. The whole point about confidence in the British economy is that people need confidence in Britain’s ability to get out of the economic mess that his Government left us in. This is not about the absolute level; it is about market confidence. He must surely understand that keeping a very good credit rating is essential in order to have an affordable cost of borrowing.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I do not want to prolong this argument, but I must explain to the hon. Lady the term structure of interest rates. The 10-year bond yields are the accumulation of market expectations of three-month interest rates added up every three months over 10 years. Why are our long-term interest rates so low? It is because people think that short-term rates are going to stay low because the economy is flat on its back. People would have to be economically illiterate to think that our long-term interest rates were driven by market confidence at a time when we are being downgraded by the agencies. Our long-term interest rates are low because our economy is not growing.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I was hoping to debate the Europe issue with the hon. Gentleman in a moment, but I am happy to give way to him on this one as well.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

I look forward to debating many issues with the right hon. Gentleman. The markets show confidence in this Government’s policy by keeping interest rates low. This is not purely to do with an expectation of where short-term rates will be; it is about confidence in the creditworthiness of the British Government under this Chancellor.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I have to say that that is a deluded view of the way in which credit ratings work. Let us not forget that in 2007 these same credit rating agencies were saying, “Stick with Lehman Brothers” and giving America a triple A rating despite all the sub-prime lending. That is the reality. The fact is that the credit rating agencies are downgrading Britain because our economy is not growing. That is the fundamental problem.

I will give the hon. Gentleman a bit of ground, however. It is true that the Labour Government left a longer-term interest rate structure than other economies. We had far less foreign currency borrowing and more index-linked borrowing than other countries. That helped, but the fundamental thing was that we did not join the single currency. In Spain, Italy and elsewhere, we see a currency risk premium, which relates to the central bank’s ability and willingness to stand behind sovereign debt. That is not an issue here. Our interest rates are low, and they have fallen because our economy is not growing. The market is therefore reflecting expectations of continuing stagnation. I am afraid that that is the reality—aside from the political rhetoric of the Chancellor.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

In my previous intervention, I was careful to talk about the markets, not the credit rating agencies. It is the markets that count, because they reflect people investing their money. I agree with the right hon. Gentleman that the credit rating agencies got the whole of the pre-crash period wrong, but it is the markets we need to bank on.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Unlike the Chancellor, the markets do not pay a huge amount of respect to the credit rating agencies. The hon. Gentleman agrees with me on that. That is why, two or three years ago, it was so ridiculous for the Chancellor to say, “Trust me. I’ll keep us as a safe haven because I’ll keep the triple A credit rating.” We told him, in 2011 and 2012, that the plan was not working, that the economy was not growing and that the deficit was not coming down, but when we told him to change course, he said, “I can’t do that because the credit rating agencies will downgrade us.” Well, they downgraded us anyway, because the economy was not growing.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

The shadow Chancellor believes in plain speaking, so I want to give him a third—and perhaps final—opportunity to tell us the amount of extra borrowing that his policies would require. Just a number—plain and simple.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I am not going to write our Budget for 2015 two years ahead. That would be the wrong thing to do. Right now, if the Chancellor had done what I recommended a year ago, borrowing would be coming down. At the moment, however, it is absolutely flat.

What have we learnt in the last seven days? What have we learnt from today’s Tory amendment about the priority of the Conservative party? What are Conservative Members demanding in their amendment? What are they rebelling on? Accelerated bank reform? Energy market reform? Housing investment? Infrastructure investment? Tough welfare reform through a compulsory jobs guarantee? If they want all that, they can vote for our amendment today. But no, according to the Tory amendment, the No. 1 priority that is so vital that Conservative Members are planning to vote against their own Government’s Queen’s Speech involves enabling legislation to allow Eurosceptic Conservative MPs to try to take Britain out of the European Union.

The Tory amendment states that those Members

“regret that an EU referendum bill was not included in the Gracious Speech.”

Let me tell the House what they should be regretting. They should regret the fact that, after three years of pursuing a failing economic plan, the Chancellor is still ploughing on regardless, even when the IMF is telling him to change course. They should regret the fact that, when calculations based on Institute for Fiscal Studies figures show that families are, on average, £891 worse off this year, the Government have cut taxes for the highest earners, giving a £100,000 tax cut to 13,000 millionaires. They should regret the fact that the Government have refused to use the Queen’s Speech to put in place the long-term reforms necessary for our economic future—reforms that I fear will not be in the spending review, either. The Chancellor and the House should regret, too, the fact that the Conservative party seems to have been hijacked by those within its ranks, including within the Cabinet, who are determined to lead Britain out of the EU regardless of the impact on investment and jobs.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

Will the shadow Chancellor confirm that the number of Labour Members who have signed this Tory amendment on the EU referendum is now in double figures?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I have not seen the figures, but I would be happy to study them—it is when it spreads to the Cabinet that there is a real problem. The hon. Gentleman should regret the 15% rise in long-term youth unemployment in his constituency, which was confirmed today. I have to say that this coalition was really not worth his support.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

The shadow Chancellor is generous in giving way. It is a shame he is not the leader of his party, because if he was he would make sure it was not the anti-referendum party—I think those were his very words. The message from today’s debate and tonight’s vote will be that Labour is against an EU referendum and the Conservatives are in favour of it. To put the facts straight, it is not just Conservative Members or just Labour and Democratic Unionist Members who signed the amendment—a Liberal Democrat Member signed it, too.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I will read our amendment to the hon. Gentleman so that he knows exactly what we will vote for. We say

“that the priority for the Government now should be growth and jobs and that we need reform of the European Union, not four years of economic uncertainty which legislating now for an in/out referendum in 2017 would create”.

Let me quote to the hon. Gentleman the press release issued this morning by the Engineering Employers Federation, which knows about manufacturing investment in the long term. It says:

EEF, the manufacturers’ organisation believes the current debate is ‘letting British business down’ with politicians making claims that the EU isn’t working for Britain rather than focussing on how to work to make it better”.

Let me set out further our position on this reform agenda, which has been set out in recent weeks and months by the Leader of the Opposition, the shadow Foreign Secretary, the shadow Home Secretary and me.

Instead of four years of uncertainty, our Labour amendment says that the priority now should not be walking out of meetings or being entirely ignored but arguing with influence to get the reforms agreed. These include reform of the common agricultural policy, tough new budget discipline in the European budget with stronger independent audit—


Conservative Members should listen, as I would have thought they agreed with many of these things. The priorities include reform of family-related payments to EU migrants, greater national flexibility in transitional arrangements, a balanced growth plan and a new growth commissioner, an end to the wasteful Strasbourg Parliament and more powers for national Parliaments.

Let us reflect for a moment on what the president of the CBI said just a few weeks ago:

“UK membership of the EU encourages large company capital investments within the UK, creating jobs and wealth that trickle down to medium and small company suppliers”— the kind of trickle down we quite like. He continued:

“Departure would be bad for employment and growth across a broad business spectrum.”

This is what Sir Richard Branson wrote in January:

“An exit would be very bad for British business and the economy as a whole...The EU is the UK’s biggest trading partner, its combined market dwarfs the US and China. For that reason alone the UK must stay in to help rebuild the EU.”

He was right.

Let this sink in: Conservative Back Benchers, with the blessing of many Conservative Front Benchers, are proposing today an amendment that aims to break our ties with our main trading partner, blight inward investment into the UK and put at risk upwards of 3 million jobs. Let it sink in, too, that the leader of the Conservative party, the Prime Minister of our country is not just too weak to do anything about it—he is caving in, day by day, to their demands.

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution)

I agree with the shadow Chancellor almost entirely on Europe, but will he pledge today that he will not support an in/out referendum that might take the UK out of Europe?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I want us to stay in the European Union; I am absolutely clear about that. Our amendment is absolutely clear, too, about the effect of an in/out referendum announced now. I am going to quote someone, which might go down well with the hon. Gentleman but perhaps not so well with some Conservative Members. Lord Heseltine said:

“To commit to a referendum about a negotiation that hasn’t begun, on a timescale you cannot predict, on an outcome that’s unknown, where Britain’s appeal as an inward investment market would be the centre of the debate, seems to me like an unnecessary gamble”.

My answer to the question of Pete Wishart is that we will not take that unnecessary gamble now. It would be the wrong thing to do. This is exactly the same position as the one the Prime Minister and the Chancellor joined us in the Lobby to vote against in October 2011. How things change!

Let us remind ourselves of what the Prime Minister told the Conservative party conference in 2006; it is worth reading the whole quote so we can understand its full impact:

“For too long, we were having a different conversation. Instead of talking about the things that most people care about, we talked about what we cared about most. While parents worried about childcare, getting the kids to school, balancing work and family life—we were banging on about Europe.”

His party has certainly been banging on about Europe day after day over the last week—banging the nails in the coffin of Tory modernisation and in the coffin of this Prime Minister’s prime ministership, too.

We should not forget that this is the Prime Minister who last summer rejected calls for an in/out referendum. Then, just three months ago in his much-heralded Europe speech, the Prime Minister pulled his referendum stunt—a Europe speech to wrong-foot Labour and UKIP and unite the Conservative party. This is how The Independent reported Downing street’s gleeful boasting back in January.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Let me tell the hon. Gentleman what The Independent said about Downing street; then we can reflect on it together in a few moments. It said:

“They judged that, to calm the fractious Tory pack, they had to split off the hardliners who want to leave the EU from pragmatic Eurosceptics...They also needed to unite the Tories at the next election and reduce the threat from the UK Independence Party...The best way, they calculated, would be to promise an ‘in/out’ referendum after 2015. The trick seems to have worked”,

the article concluded,

“at least in the short term.”

Downing street claimed the speech took six months to formulate; it has taken just three months to unravel. We have seen Tory Back Benchers last week defying the Prime Minister to vote against the Queen’s Speech; former Tory Chancellors openly calling for Britain to leave the European Union; serving Cabinet Ministers joining the chorus at the weekend, saying they would vote for Britain to leave the EU now; and the embarrassing spectacle and truly ludicrous sight of a British Prime Minister in Washington negotiating an EU-US trade deal, while back home members of his own Cabinet say they would vote to exclude Britain from its benefits.

Then, on Monday night, we heard the Prime Minister’s panic announcement that he would, after all, publish a draft referendum Bill—not as Prime Minister, but as leader of the Tory party—only to be told by his own Back Benchers the next morning that it was not good enough because the public did not trust him, and they did not trust him either. This is really what it means for a Prime Minister to be “in office, but not in power”. It is not John Major all over again; it is much worse than that, because at least he tried to stand up to the Eurosceptics in his Cabinet.

Photo of John Baron John Baron Conservative, Basildon and Billericay

I am afraid that the right hon. Gentleman fundamentally misrepresents the amendment. Members in all parts of the House believe that the time has come to give the British people their say on our relationship with the European Union. May I put this question to the right hon. Gentleman? Why does he not trust the British people on the issue?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I will take a second intervention from the hon. Gentleman if he will tell me how he would vote in the referendum.

Photo of John Baron John Baron Conservative, Basildon and Billericay

No, no, no—[Interruption.] All right, I will answer. [Interruption.]

Photo of John Baron John Baron Conservative, Basildon and Billericay

I will answer the right hon. Gentleman’s question most directly, provided he promises to answer my question most directly. My answer to his question is that if the referendum were held tomorrow, I would vote “out”, but I support the Prime Minister in his idea of holding a referendum in 2017. If he can successfully renegotiate and re-engineer an EU based on trade and not on politics, that will be a different kettle of fish, and we will judge it at the time.

May I now return to my question to the right hon. Gentleman? He has ducked it, and that is what gives politicians a bad name outside this place. Why will he not give the electorate their say on this issue?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

For precisely the reason that I gave in an earlier answer—and I have to say that I am not sure that the public like to hear us repeating ourselves.

Let me quote the words of another business organisation, London First. [Hon. Members: “Answer the question!”] I will answer the question. London First—[Interruption.] London First—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. We have a long afternoon ahead of us. It would be good to hear everyone’s views on this subject, which means not shouting over speakers.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

No wonder the Prime Minister has gone to America, Madam Deputy Speaker, if that is what he has put up with.

Let me quote the words of London First[Interruption]—which is my answer.

“The announcement that a referendum on our membership of the EU may be held in a few years’ time, dependent on the result of the next General Election, risks condemning the UK economy to several years of further uncertainty.”

London First is completely right. We can see why the Prime Minister is so worried. If that is the kind of support he has, no wonder he is in trouble.

Photo of John Baron John Baron Conservative, Basildon and Billericay

We have just had an exchange in the Chamber, Madam Deputy Speaker, in which I directly answered a question in return for the Chancellor’s directly answering mine. [Hon. Members: “Shadow Chancellor.”] I mean the shadow Chancellor. He has refused to answer my question. Let me ask it one more time. Why is he denying the British public their say on Europe?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I am the shadow Chancellor, not the Chancellor—at least for now.

I have answered the question, but I will answer it again. We do not believe that a referendum now is the right priority. The hon. Gentleman asked me why, and I have answered the question. I have answered the question because, actually, I agree with him. This is what he said last year:

“Austerity can only do so much. Longer term, the better solution is greater competitiveness and economic growth.”

I think that the priority now, in the Queen’s Speech, should be for the Government to act on economic growth, short-term and long-term. Hanging a sign above our door saying “For the next four years, Britain is closed for business” would be a very, very foolish thing to do.

Photo of John Baron John Baron Conservative, Basildon and Billericay

I thank the shadow Chancellor for giving way. He is being gracious, if nothing else. However, he still has not answered the question. Why will he not support the concept of trusting the British people to make up their minds on this, say, in 2017? Does he support that position?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I have answered the hon. Gentleman’s question. For us to join him, or the Prime Minister, in committing ourselves now to a referendum four years ahead would lead to lost investment and lost jobs, and would be the wrong priority for Britain. Our amendment makes it absolutely clear that we disagree with that strategy.

If there were a treaty change that altered the balance of powers, we would support a referendum. I think it important for us to listen to and understand people’s concerns about Europe, and show that we can reform. I must say to the hon. Gentleman, however, that we will not get the reform that we need by walking out of the room in a flounce, as our Prime Minister did in December 2011. That was one of the worst pieces of statesmanship we have seen for many years.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

In order to be a member of the European economic area outside the European Union, would we not still have to pay a membership fee and accept most of the rules and regulations coming from Brussels? Would we not also lose our seat on the Commission, lose our seats in the European Parliament, and lose our voice on the Council of Ministers?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

My hon. Friend is entirely right. The problem is that the Prime Minister no longer knows whether to agree, disagree, or sit on the fence on that question, which is why we are in such a mess.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

The right hon. Gentleman has seen the Prime Minister’s draft Bill. If it became an Act of Parliament requiring a future Government to move an order to set a date for a referendum before 2017, would he do so?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

I have just explained that we do not support the idea of legislating now for a referendum four years ahead, for precisely the reasons that the Engineering Employers Federation, London First and Lord Heseltine have set out and I have set out in our amendment, as have my colleagues. I think that it would destabilise investment and jobs.

Several hon. Members:


Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Normally there are plenty of interventions in debates on the economy, jobs and growth, but it seems to be Europe that really gets them going. I give way to Andrew Selous.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

The shadow Chancellor is being very generous in giving way. Will he explain very briefly what he meant when he said hat he did not want his party to be caricatured as the anti-referendum party?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

We are not against the idea of referendums. We proposed the first referendum, in the 1970s. If there were a change in the balance of power in the treaties, we would support a referendum, but it would be wrong to do so now.

Photo of Geraint Davies Geraint Davies Parliamentary Assembly of the Council of Europe (Substitute Member)

As my right hon. Friend knows, today’s figures show that unemployment has risen again. He also knows that the EU provides 50% of our trade. In the event of our securing a free trade agreement between the EU and the United States, alongside bilateral trading agreements between the EU and other countries such as China, what does he think the impact of withdrawal from the EU would be on growth, jobs and trade?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

In 1983, our party supported the idea of withdrawal from the European Community, as it was at the time, but the Conservative party and the Confederation of British Industry agreed that it would cost 2.5 million jobs. Our trade share with Europe has deepened since then, and our labour market is bigger. I think that upwards of 3 million to 3.5 million jobs would be lost now, because we would be turning our face away from those big markets around the world.

Several hon. Members:


Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Many other Members want to make speeches, and I have taken rather a lot of interventions already.

Let me ask a political question that brings us back to the economy. Why have things gone so badly wrong for the Prime Minister and his strategy over the past three, four, five months? I think I can help. I have discovered a column that was written in January by the Chancellor’s cheerleader, the former Member of Parliament, and now Sun columnist, Louise Mensch. Straight after the Prime Minister’s Europe speech, she wrote that

“the sound we just heard was Cameron shooting Farage’s fox...This speech saw the George Osborne/Michael Gove wing of government triumphing over the Nick Clegg one...Canny Tories will take this and run with it...George Osborne is a tactical genius.”

There we have it, from a former MP whose one political achievement was to make Corby Labour again. There it is, completely exposed: the Prime Minister is the front man, but the tactical genius—the brains behind the Europe strategy—is the Chancellor of the Exchequer.

We all remember when the Prime Minister said that his Europe speech represented

“a tantric approach to policy-making.”

I have to say that from this side of the House it looks more like sado-masochism—and we all know that the Chancellor likes a bit of that. “'If it’s not hurting, it’s not working” has been his motto for a long time.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Not now.

I have checked this, and, sadly, it is true. A rather more serious Conservative commentator, Mr Paul Goodman of ConservativeHome, confirmed on his blog back in May of last year that the Chancellor was, indeed, the brains behind the Prime Minister’s referendum stunt. That casts further doubt on the judgment of the Prime Minister. Surely by now he has worked it out. After all, his Back Benchers and the country have worked it out. This is the Chancellor who claimed bringing back Andy Coulson would be a strategic triumph. He is the one who said taking child benefit away from middle-income families would be a masterstroke. He is the one who said that gambling his credibility on our triple A rating was sound economics, and that cutting tax credits and labelling as scroungers 3 million working families—an average of 6,000 in every Tory constituency—was somehow good politics, and that cutting taxes for millionaires would wrong-foot Labour. Surely even the Prime Minister has worked it out by now. This is the man who last year gave us “Omnishambles 1” and “The Budget debacle” and who has now given us “Queen’s Speech 2”, “Omnishambles 2” and the European debacle as well. The fact is the economic plan has failed, the deficit plan has failed and the European plan is failing as well, and when this Government finally collapse in chaos, it will be this Chancellor who gets the blame.

Photo of George Osborne George Osborne The Chancellor of the Exchequer 2:11 pm, 15th May 2013

That was certainly an odd speech from the shadow Chancellor. He called me a tactical genius, but those on his side are going around calling him a busted flush, and after the extraordinary 40 minutes of comments we have just heard from him, we can see why. The contrast is with a Government who are building an economy where those who want to work hard and get on are rewarded. The contrast is with a tax system that is being changed to support effort, with the largest ever increase in the personal allowance. The contrast is with a welfare system that is being changed so it always pays to work and benefit bills are being capped so no family gets more from being on benefits and out of work than the average family gets from being in work.

In this Queen’s Speech we have measures to help those who want to set up a small business and employ people through our employment allowance—which was not mentioned by the shadow Chancellor, but I assume the Labour party will not vote against it. We have measures to help families who dream of home ownership and to help them with their mortgage costs. We have measures for savers, with a Pensions Bill that will provide a generous single-tier pension, and we have measures to help those who want to stay in their homes and avoid the lottery of care costs, with our Care Bill. The only reason we can do all these things is because we are clearing up the mess and the things that went so badly wrong in our economy.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

On the issue of fairness, the 13,000 people who earn more than £1 million a year share a combined income of £27.4 billion, and they are going to share in a £1.2 billion payout. How can that be justified and fair?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

In every single year under this Government the rich will pay more in tax than in any single year of the Labour Government that the hon. Gentleman consistently supported, and the top rate of tax will be higher than in any single year of the Labour Government he supported. We put up capital gains tax so we avoided the scandal that they presided over—indeed, that the shadow Chancellor presided over—of cleaners paying higher rates of tax than the hedge fund managers they work for. That is what we have done to ensure fairness in our tax system, and that is what we are going to continue to do.

Photo of Anas Sarwar Anas Sarwar Labour, Glasgow Central

The Chancellor said those who work hard will be rewarded. Can he explain why wages are falling, household budgets are falling and the cost of living is going up? How is that fair?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Let us look at what the Governor of the Bank of England said in his press conference this morning:

“there is a welcome change in the economic outlook…But this is no time to be complacent—we must press on to ensure a recovery”.

Yes, there was also the disappointing news that unemployment had gone up, but we also saw that the claimant count and youth unemployment had come down, and the monthly unemployment data were a lot more encouraging than the three-month survey. That is the reality of the current data.

Photo of Geraint Davies Geraint Davies Parliamentary Assembly of the Council of Europe (Substitute Member)

Does the Chancellor agree that the key problem is that the debt:GDP ratio will rise from 55% in 2010 to 85% by 2015? The answer to that problem is not just to cut the debt, but to increase GDP. Under Labour, GDP went up by 40% between 1997 and 2008, and the Chancellor inherited a growing economy which is now flatlining because of his policies.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We inherited an 11.5% budget deficit that was adding to our national debt every year, and what the hon. Gentleman and the shadow Chancellor want to do is add further to borrowing. The shadow Chancellor was asked time and again what the cost of the proposals in the amendment the Opposition are asking the House to vote on tonight would be. He would not give that figure, but I will give it for him: it is a £28 billion amendment that would add to borrowing. He comes up with the ludicrous argument that by borrowing more, we can borrow less. That is why he is making so little progress with his economic argument.

Photo of Chris Williamson Chris Williamson Shadow Minister (Communities and Local Government)

Will the Chancellor at least acknowledge that when he came into office he inherited a growing economy, and his policies have led to it flatlining?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

This is what I have to say about the idea that this Government had some kind of golden economic inheritance from the Labour party: we inherited a situation in which Britain had had the deepest recession since the 1930s, the worst banking crisis in the entirety of British history and the highest budget deficit in the entire peacetime history of this nation. If that is a golden economic inheritance, I would hate to see what the hon. Gentleman thinks a hospital pass looks like.

The shadow Chancellor mentioned France in his remarks. Exactly a year ago the Labour leader could not contain his excitement about the economic programme being unveiled in France and about the red carpet being rolled out for him at the Elysée palace. “Chers camarades” is how he addressed the Socialist party gathering. He said, “What President Hollande is seeking to do in France, I want to do in Britain.” We do not hear much these days about Labour’s French connection. We still have liberté and egalité, but not much fraternité—although fraternity has never been a great topic for the Miliband family.

What we did not hear from the shadow Chancellor was his response to the fact that 1.2 million jobs have been created in the private sector, and that although, yes, our deficit is still too high, it has fallen by a third. He says we are borrowing more. We were borrowing £158 billion a year as a country in 2009-10, and this year it is forecast that we will be borrowing £114 billion. That is a £45 billion reduction in borrowing. None of that has been easy to achieve, and every single measure has been opposed by Labour. Not a single measure in its amendment today would help deal with that deficit, but our plan of monetary activism, fiscal responsibility and supply-side reform is delivering progress.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

On employment, is the Chancellor aware that the United Kingdom’s overall employment rate is growing at almost double that of the United States and is rising faster than that of any other G7 country?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

My hon. Friend is absolutely right. Last year, employment in the UK grew faster than in the US, France, Germany, Japan and the eurozone as a whole. Employment in the UK is now above its pre-recession level. Of course we must go on taking the difficult measures necessary to get our deficit under control, and make sure we support businesses that want to hire people to support the private-sector recovery. The path being offered by the Opposition, however, would lead to complete disaster.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

When the Chancellor’s party was in opposition, Mr Clarke took the credit, before the banks collapsed, for the economic prosperity, claiming he had created it when he was Chancellor. How does the current Chancellor answer that point?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The hon. Gentleman is saying that somehow we have a responsibility for the financial crash or for the problems in the banking industry, but he neatly skips the fact that not only was Labour in office for 13 years, but the shadow Chancellor was the City Minister. He did not have any old job in Government

—he was the City Minister when Northern Rock was selling those 120% mortgages and the Royal Bank of Scotland was thinking of taking over ABN AMRO. He is the architect of the tripartite regulation, which failed so catastrophically. He is, literally, the last person to have any credibility on this subject.

Photo of Nadhim Zahawi Nadhim Zahawi Conservative, Stratford-on-Avon

The shadow Chancellor also claimed victory in keeping this country out of the euro. Will the Chancellor remind the House of the cost of the euro preparation unit, and when that unit was closed down?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The euro preparation unit was shut down by this Government in 2010, but the shadow Chancellor does not seem to know what Labour policy is. The Labour party is committed in principle to joining the euro. [Interruption.] The shadow Treasury team do not know what the monetary and currency policy of their own party is—that is absolutely ridiculous.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

The Government have set out a clear and costed economic policy, which they are pursuing. Does the Chancellor share my concern that the Opposition cannot set out their costings, cannot say how much they would borrow and cannot even say whether they would back a referendum? The shadow Chancellor has been completely unable to answer any questions put to him in any straight way whatever.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The shadow Chancellor could not answer the simple question of how much the amendment he is asking us all to vote on this evening would cost. Surely he must reflect a little and realise that each year his appearance in these debates is a source of consolation and comfort to the Government. He must wonder why each year he makes the same arguments for borrowing but there is no improvement in Labour’s economic credibility. He does not seem to understand that the public think that Labour spent too much, wasted their hard-earned money and would do it all again. Does he not feel that he owes it to the British people to apologise for the mistakes he has made and the damage he has inflicted on their living standards? Should he not stand up and say, “I’m sorry, we got it wrong and we won’t do it again”?

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury)

The Chancellor’s point, “You can’t borrow more to borrow less”, is a good soundbite, but he does himself a disservice, because some of the borrowing undertaken by this Government has been very effective in reducing the deficit. Only yesterday, we saw 850 new jobs in Allstate in Belfast as a result of investment in the broadband network—that is 850 new taxpayers. Does he not accept that we can borrow, and that by borrowing and putting the money into the right things we can bring the deficit down?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I am all for spending money on vital economic infrastructure, including broadband, and all for trying to switch the budget more from current spending to capital spending. That is precisely what we are engaged in as part of this spending round, but we have to take the hard decisions on where we are going to get our revenue from or take the hard decisions on what we will cut instead. We are making a sensible switch towards capital spending.

Photo of George Howarth George Howarth Labour, Knowsley

Can the Chancellor name a single occasion before the banking problems in 2008 when he and his party argued for tighter regulation of the City?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

My party voted against the tripartite arrangement. I do not have the quote with me today—I will send it to the right hon. Gentleman or ensure that my right hon. Friend the Chief Secretary has it for the wind-up—but the shadow Chancellor at the time, my right hon. Friend Mr Lilley, warned in this House that taking prudential regulation away from the Bank of England was a massive mistake and that the Bank of England would not be able to spot the growth of debt bubbles in the economy. Tragically, that is precisely what happened a decade later, and in part the responsibility lies with the people who set up the regulatory system. Is it not extraordinary that Labour Members get up and say that the Conservatives said this or that, yet we are looking at the City Minister at the time? We are looking at the person who, before that, was the chief economic adviser who devised the system and who used to take pleasure in telling everyone that he turned up in Government and gave Eddie George a letter saying that he was no longer in charge of banking regulation—that used to be the shadow Chancellor’s story, but he never talks about it now.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

I think the country understands that we could not go on as we did, with a completely unregulated City, with bonuses out of control and with unjustifiable profits. The Government’s policy on taxation is fairer now than it ever was under the previous Government. May I ask the Chancellor, however, to address the matter of the housing market, to which he partly referred? In addition to the welcome measures in the Queen’s Speech, will he look into how we can increase the supply of social rented housing and deal with the fact that many non-domiciled people are buying property in this country, not to live in or to rent out, but to keep empty, forcing up prices for everyone, beyond what people can afford?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We are putting in place, right now, new guarantees—the first time that the Treasury has done this—for social housing associations to enable them to build more social homes; in the Budget, we also confirmed support for an additional 30,000 social homes, so we are taking action to help on that front. With our Help to Buy scheme we are also helping those who want to buy their own home in the private market. My right hon. Friend is absolutely right that we should do both, which is precisely what we are doing.

Photo of Barry Sheerman Barry Sheerman Labour, Huddersfield

As we learned with great interest, there was much in the Queen’s Speech that will affect employment, skills and manufacturing in our country. This is an important part of our country’s future. Can the Chancellor assure me that there is a unit in the Treasury—or a plan for the Treasury—to carry out an independent evaluation of how skills, jobs and manufacturing would be affected if this country left the European Union?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I will come on to talk briefly about reform in the European Union, but I am clear that an unreformed European Union is also doing damage to British competitiveness and British jobs.

Photo of Margot James Margot James Conservative, Stourbridge

The estimated cost of the Labour party’s plans is £28 billion. Labour opposes every one of our spending cuts, so does that not imply that it would fund the whole lot by pushing this country’s borrowing back towards £150 billion? Is that why the shadow Chancellor is so reluctant to say what more borrowing he could commit to?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

My hon. Friend is right to say that that is the approach of the shadow Chancellor. Mr Hain, who is sadly not in his place, gave the shadow Chancellor some unsolicited advice last week—I think it was unsolicited. He said:

“Labour’s Treasury team need to get out on the stump now and work even harder. It shouldn’t just be left to Ed and Harriet”—

Miliband and Harman—

“to carry the heavy load” on shows such as the “World at One”. We could not agree more, because it is fair to say that when the Labour leader appears on the radio—I am not sure how to put this delicately—there is a little confusion about what Labour’s economic policy might be. Ten times he was asked whether borrowing would go up or what his party’s policy was, and he did not reveal it. I will be fair to the shadow Chancellor and say that he is much more straightforward. He has a much clearer message than his leader: “Vote Labour and borrowing will go up. Vote Labour and welfare bills will rise.” Vote Labour and he will do it all again. It is not just the right hon. Member for Neath who wants to see the shadow Chancellor on the media more—we want to see him on the media much more.

Photo of Helen Goodman Helen Goodman Shadow Minister (Culture, Media and Sport)

Yesterday, I met the chairman of Fujitsu, which has just put £800 million into the British economy. He told me that his company had done so only because this country is in the European Union. He was, however, rather disappointed not to have had a reply from the Prime Minister after writing to him with that news. Does the Chancellor of the Exchequer not understand that his Government should be more interested in providing stability for business than in pleasing their own Back Benchers?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

It is very good news that Fujitsu is choosing to employ in the United Kingdom. I do not see the hon. Lady’s intervention as a hostile one that has put me on the back foot; what am I supposed to do about the fact that international companies are choosing the United Kingdom as the place to invest and create jobs? That is a tough one!

I have to admit that the hon. Lady has a point, but let me come on to say something about the change that is required, including the change in the European Union, which of course is a subject of debate today.

It is true that for much of my political life and, I suspect, the political life of many in the House, the concerns about Europe have primarily been ones of sovereignty and constitutional power—not exclusively, but those have been the most dominant. Those concerns have not disappeared, but they have been complemented by economic concerns, and those economic concerns have grown. There is concern that the European prescription of high taxes, expensive social costs and unaffordable welfare is slowly strangling the European economy. There are concerns from business that directive after directive, regulation after regulation load costs on European companies, especially small firms, and cripple their ability to compete against new challengers around the world.

The crisis in the eurozone has created an immediate institutional challenge for the UK: as 17 member states attempt to take steps to save their monetary union, how can we change the EU to protect our interests and make it work for us? But the crisis has only accelerated an economic argument that was coming anyway: is Britain’s membership of the European Union right for Britain’s economic future? My answer, like the Prime Minister’s, is that if we can achieve real change in Europe and our relationship with the EU, then yes, it is. That is the renegotiation that my right hon. Friend the Prime Minister seeks—a Europe that is more globally competitive and more flexible, a Europe that creates jobs and offers its people prosperity and accountability.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Is not the Chancellor exactly right? Is not his view shared by those on the Conservative Benches? I am sure the Chancellor is forced by coalition politics not to be able to vote for the amendment, but if he were free from that restraint, would he back the Prime Minister’s policy by voting for the amendment tabled by my hon. Friend Mr Baron?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

This is a coalition Government with a coalition Queen’s Speech, which contains things such as the single-tier pension, the Care Bill and the help for small employers, which will make a real difference to people across the country. Our view is that the best route to achieving what I know my hon. Friend wants to achieve is by legislating in this House. As the Prime Minister said in his January speech, we now have draft legislation for an in/out referendum on the EU. We have done it in good time for this Session’s ballot for private Members’ Bills. It is now open to any hon. Members who do well in that ballot to adopt the draft Bill that we published yesterday and take it forward as the basis for legislation. As the Prime Minister said yesterday, we will do everything we can to make it law.

Photo of Pat McFadden Pat McFadden Labour, Wolverhampton South East

A moment or two ago the Chancellor said that if the renegotiation that the Prime Minister has set out on produced fundamental change, he would vote to stay in the EU. What will his position be if the renegotiation does not produce much change? That is what happened the last time this was tried in the 1970s. Not much change is not exactly an unlikely prospect, given the attitude of other European member states so far to the Government’s stance.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I do not think the Prime Minister will fail in his negotiating effort. I do not think the Conservative party will fail in its negotiating effort with the European Union. Do Members know why I do not think we will fail in that effort? The Prime Minister pulled us out of the eurozone bail-outs when everyone said that was impossible. The Prime Minister delivered a cut in the European budget when everyone said that was unachievable. The Prime Minister vetoed a bad treaty when people said that was unprecedented. I am confident we can achieve that new settlement.

There is another reason why I am confident we can achieve that settlement. I see around the table in Europe—around the ECOFIN table, where I was yesterday— many countries as concerned as we are about the future of jobs and investment on the European continent, people who know that the EU is not working as currently arranged.

Several hon. Members:


Photo of George Osborne George Osborne The Chancellor of the Exchequer

I will give way to the Scottish nationalists in a moment.

It was not this Chancellor but the German Chancellor who said the other day:

“If Europe today accounts for just over 7% of the world’s population, produces around 25% of global GDP and has to finance 50% of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.”

That was the leader of Germany speaking. I believe that there are out there other people who also seek change, but above all, for the United Kingdom, because of the changes happening in the eurozone, we need a new settlement and I am confident that the Prime Minister will deliver it.

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution)

The Chancellor of the Exchequer and I know that the UK is halfway out of the European Union. Does he agree that the best way for the Scottish people to remain within the European Union is to vote yes in the referendum next year?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

As our Scotland analysis papers show, Scotland would have to apply to join the European Union as it became a new state. I am glad the Scottish National party is taking part in this debate on economic policy. Perhaps we will get a clearer view from SNP Members, after the shambles of the past three weeks, of what their policy is on the currency that Scotland would use, should Scotland vote to leave the Union. We have not had a clear answer. Some members of the SNP have said that Scotland should have its own currency, others have said that Scotland should join the euro, and still others have said that they would negotiate a monetary union with all of us in order to keep the pound. There is complete confusion in the SNP ranks and until they have a clear answer to that, they will not be listened to on much else.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

Does my right hon. Friend agree that the Government are committed to what one might call a policy of negotiate and decide, although that has a familiar ring to it? Would it not help the clarity of this debate if the Government set out exactly what they intend to negotiate on? That has not been clear from anything they have so far said.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

As my hon. Friend knows, and he takes a close interest in these matters, this is the beginning of a process of setting out what we want to achieve in a renegotiation, and in a conversation about that. Of course, we will then seek to achieve that renegotiation, achieve that new settlement—I am confident that after the election the Prime Minister and a Conservative Government will be able to achieve that—and put it to the British people in a referendum.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

One of the things my hon. Friend drew attention to was the problems facing our European neighbours and the challenges posed by their welfare states. Our action in getting on top of the problems of welfare, reforming welfare and making sure that work pays is key to dealing with our place in the world and making this country competitive. I draw a distinction between that and the attitude of the Labour party, which has opposed every welfare reform proposed by this Government.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

My hon. Friend is right. There was a ludicrous remark—I do not know whether anyone noticed it—from the shadow Chancellor when he said that Labour supports tough welfare reform. Labour Members have voted against every single welfare proposal put to the House. The shadow Chancellor thinks the benefits cap is “too low” and that it is not set at the right level at £26,000. That is the problem. Any view of Britain, and any view of western nations, is that they need to do more to constrain the growth of entitlement spending and more to make sure that welfare pays, and to spend the money that they save on things such as infrastructure in Northern Ireland, broadband, high-speed trains and the Crossrail project under London—the vital economic infrastructure that our country needs.

Several hon. Members:


Photo of George Osborne George Osborne The Chancellor of the Exchequer

I will give way to Labour Members in a moment if they can help me answer this question. What on earth is the policy of the Labour party towards an in/out referendum on Europe? The shadow Chancellor was asked that again and again. The question is this: do the Opposition rule out offering an in/out referendum at the next general election—yes or no? What is the answer?

Photo of Chris Williamson Chris Williamson Shadow Minister (Communities and Local Government)

Perhaps the Chancellor can answer this question. Toyota, just down the road from my constituency and the biggest inward investment in western Europe, came to Derbyshire because it gave access to the European market. Does the Chancellor think that, if an in/out referendum was hanging over this country and Toyota was thinking about investing now, it would take that decision to invest in Derbyshire, or would it take its investment somewhere else inside the EU?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

A lot of those big Japanese car plants came to Britain under a Conservative Government who were offering them a competitive place to do business in the world. I am pleased to say that under this coalition Government we now export more cars than we import for the first time since the mid-1970s, and we will go on having a successful car industry because we have specific policies to back the car sector, but above all because we have cut corporation tax and made this a competitive place in which to do business.

Several hon. Members:


Photo of George Osborne George Osborne The Chancellor of the Exchequer

I will give way to whichever Labour MP can answer this question: do the Labour party rule out an in/out referendum on Europe?

Photo of Andy Sawford Andy Sawford Labour, Corby

It is six months to the day since the voters of Corby in east Northamptonshire delivered a damning verdict on the Government. The key issues in that by-election were not the preoccupations of the right wingers in the Chancellor’s

Tory party, but jobs and health care in this country. But since the Chancellor is so keen to ask us questions, will he answer the question that Mr Baron answered very clearly, which is: if there were an in/out referendum tomorrow, how would the Chancellor vote?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The policy is this: change the European Union, seek a new settlement, then put that to the British people in a referendum. This debate has revealed that Labour cannot answer the simple question: does it rule out offering an in/out referendum before the next general election? If it cannot answer that question, it will not be listened to on this subject any more, and people will be very, very clear that the only way to get an in/out referendum on Europe is to have a Conservative Government after the next election, so people should vote Conservative in that election and make sure that they have their say.

Photo of Nadhim Zahawi Nadhim Zahawi Conservative, Stratford-on-Avon

Does the Chancellor not agree that the double-speak we heard from the shadow Chancellor and his reluctance to trust the British people feed the people’s mistrust in politics?

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I listened very carefully to the hon. Gentleman’s intervention and I am sure that we are not implying any misleading in this Chamber by any hon. Member.

Photo of Nadhim Zahawi Nadhim Zahawi Conservative, Stratford-on-Avon

Double-speak is not misleading.

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

I think it implies something. [Interruption.] I would be grateful if the hon. Gentleman did not argue with me, particularly if he wants to be called in this debate. That is a very dangerous route to take. All hon. Members would do well to moderate their language and participation in the debate to a more reasonable level.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Let me conclude, because I am conscious—

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Hold on. I have not given way yet. I will give way to any Labour Member who can answer the question: do they rule out an in/out referendum before the next general election? Yes or no?

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

To avoid any risk of double-speak, Madam Deputy Speaker, in order to make sure that we have the full facts before us, the Chancellor claimed that he was tackling the welfare bill—[Interruption.] No, no double-speak. Let us be absolutely clear that between 2010-11 and 2012-13, expenditure on benefits has gone up, because of higher unemployment, inflation and other things, by £8.1 billion. To avoid double-speak, will the Chancellor confirm that welfare spending is up by £8 billion in the last two years?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We have spent more on pensions, and we are proud that we have done so, and we have a triple lock on pensions and pensioners last year got the biggest ever increase in the state pension. As for other areas of the welfare state, we have cut welfare entitlements by £19 billion a year.

Let me conclude, because there is a five-minute limit on Back-Benchers’ contributions. We have spoken about Europe, but many of the economic challenges that we face remain at home. We spoke about banking regulation, and an important part of the legislative programme this year is the Financial Services (Banking Reform) Bill, which is a carry-over Bill. We are making the changes necessary to fix our banking system, ring-fence our retail banks and make sure that we deal with the too-big-to-fail problem. We also have legislation to support small businesses. It will not be the most controversial Bill, because I suspect that the Labour party will not dare to oppose it, but it will be of enormous help to our constituents and to many businesses throughout the country. Our new employment allowance will cut the tax on jobs—

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We have to get the legislation because we need a national insurance Bill, which is what—[Interruption.] The hon. Gentleman had 13 years to do something for small businesses, and the only idea he came up with was to put up the small companies’ tax rate.

From next April, every business and every charity will have their employer national insurance contributions bill cut by £2,000 a year. It means that a business will be able to employ four adults on the minimum wage without paying any employer NICs at all. I know that the shadow Chancellor does not want to hear it, because his policy was to put taxes up on jobs. That is what he fought the general election on, and that is what he still talks about when people listen to him in his interviews. That is the point. The Opposition offer more borrowing; we are reducing the deficit. They want to increase the size of government; we want it reduced. They penalise enterprise and wealth creation; we support it. They would put a tax on jobs; we are abolishing it. While they would repeat all the mistakes of the past, we are engaging in the great economic challenges of the future. We are building an economy that will enable Britain to compete and succeed in the world. We are building an economy that helps people who want to work hard and get on. I commend the Queen’s Speech to the House.

Several hon. Members:


Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I remind hon. Members that there is now a five-minute limit on contributions from Back Benchers. I ask that interventions are brief and relevant, and those waiting to speak might wish to be a little conservative, or however one might like to put it, and not make interventions that would reduce the time available to them later in the debate.

Photo of Margaret Beckett Margaret Beckett Chair, National Security Strategy (Joint Committee), Member, Labour Party National Executive Committee, Chair, National Security Strategy (Joint Committee) 2:47 pm, 15th May 2013

The best that can be said about this Queen’s Speech is that it is inadequate on the economy. A pattern is emerging in the way the Government weigh the national interests on the one hand against the interests of the Conservative party on the other. From the outset, the Chancellor claimed that we had to cut faster and deeper than Labour had proposed, because only that level of austerity would reduce the deficit. It was clear then that the speed and depth of the proposed cuts were dictated by a political goal—a massive early deficit reduction speedily followed by economic success well before the next election.

The Chancellor was warned then that the scale and pace of that austerity risked the fragile growth re-established before the election, but for potential political gain he was ready to take a huge gamble with our economy. To that gamble he added self-inflicted wounds. He constantly told the British people, again for political reasons, that we were on the brink of bankruptcy, and so almost destroyed confidence. He made a fetish of our triple A credit rating, and then he lost it. He has hit our economy with a double whammy—greater austerity and, as a direct result, higher, not lower, borrowing.

There are three ways to cut the deficit: growth, taxation and spending cuts. The Chancellor made it clear from the beginning that he preferred spending cuts to tax increases, though his VAT increase hit everyone. Now he talks only about either tax or spending; he never mentions growth, because he does not have any. Meanwhile, other developed countries that have not followed his lead are growing while we are not.

The Chancellor is neglecting the opportunity of green growth. Potential first-mover advantages in green technologies are, just, still to be had, and with them new high-skill, high-value-added jobs, but unless the Treasury allows more ambition, those jobs will be elsewhere, not in this country. Meanwhile, his cuts increasingly come at the expense of the most vulnerable, justified by the rhetoric of scroungers and strivers. He justifies the bedroom tax as encouraging people to downsize, but the Government must have known that for many people there is nowhere to downsize to, so it is just a cut. If we cannot afford not to cut that benefit, as he alleges, we cannot afford to cut taxes for millionaires in the same week.

With the EU referendum omnishambles, what began as a gamble with our economy in the interests of the Conservative party has become the disregard of our economic interests. The Conservative party claims to be the party of business, but a key hate of business is prolonged economic uncertainty. Now we are telling inward investors, “We might leave the EU, but we’ll let you know in four years’ time.” Japanese, American and European inward investors all make it clear that they are in the UK because the UK is in the EU. Millions of jobs are at stake. A semi-detached status, such as that of Switzerland and Norway, means being bound by EU decisions without having a voice. The voice we have now is continually being weakened by the continued uncertainty about our membership and whether the Government even support it.

It is crystal clear to everyone, in this country and outside, that that disregard of our national interest has nothing to do with cool calculation of how that interest is to be served and everything to do with the interests of the Conservative party. The Prime Minister and the Chancellor are running scared—scared of the UK Independence party and scared of their own Back Benchers. As has been said already today, they are in office but not in power.

Photo of John Baron John Baron Conservative, Basildon and Billericay 2:51 pm, 15th May 2013

I would like to thank you, Madam Deputy Speaker, for selecting the amendment standing in my name and those of other hon. Members, and I would like to thank those Members who have signed it for their unwavering support. There can be no doubt that the nature of our relationship with the EU is of fundamental importance to this country, but the EU has changed since we first joined, and it is still changing. “More Europe” is the cry, and “More political and economic harmonisation” is the shout, but that is not why we joined.

Photo of James Clappison James Clappison Conservative, Hertsmere

Does it not follow that the time for the British people to be given their say is long overdue and that we should give them every assurance that they should have that say?

Photo of John Baron John Baron Conservative, Basildon and Billericay

I completely agree. I think that the political system has denied the electorate their say for far too long and that Parliament needs to understand that. That is why some of us on the Conservative Benches have been campaigning for some time for a referendum in the next Parliament. I am pleased to say that the Prime Minister deserved credit for listening. In January he became the first major party leader to offer the country a referendum in 2017. But we, as a group on these Benches, have also long argued that our commitment must be both credible and believable. It is credible because the referendum in 2017 has an “out” option, but it is not yet believable.

The British electorate, quite understandably, are deeply sceptical of any politicians making promises about matters European, particularly EU referendums. Too many promises have been broken in the past. They remember Tony Blair’s broken promises about a referendum on the EU constitution, which never materialised. They are constantly reminded about Liberal literature promising an in/out referendum, which never materialised, even when they came to power. That is why we on these Benches have also campaigned for legislation in this Parliament for a referendum in the next, not because we do not trust the Prime Minister, but because the electorate do not trust politicians generally. I would argue that we as a party are more united on this issue than we have been for a generation. We have all signed up to the referendum in 2017; what we disagree on is the best way of convincing the electorate of the seriousness of our intent.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Will my hon. Friend make it clear that 2017 is the back-stop, the latest date for the in/out referendum, and that it might in fact be earlier?

Photo of John Baron John Baron Conservative, Basildon and Billericay

It could well be earlier, but I am very content having a referendum in the next Parliament, because that will give time to renegotiate. However, that option does exist.

That is why legislation is more believable than election manifesto promises, too many of which have been broken in the past. That is why I very much welcome the party’s promise to support a private Member’s Bill, something that was not on offer when I asked a week ago. I also support the publication of the draft Bill yesterday. It just goes to show that a week can indeed be a long time in politics. However, the problem with a private Member’s

Bill is that it is the second best option. We all know that a determined minority can block it by letting it run out of time. The Bill will fail, as so many others do, on a soggy Friday afternoon when no one notices.

That is why I urge the Prime Minister—I am pleased to see that the Chancellor is still in his place—to support the amendment. It provides him with a golden opportunity. If we were to win, that would provide him with the mandate to try to introduce legislation through the normal channels, which would stand a far better chance of succeeding. He should seize the moment. He could claim, quite rightly, that the situation was not of his making and blame me or us as a group. It would therefore be outside the confines of the coalition agreement. I must say to my right hon. Friend the Chancellor that the Liberals would be very hard pressed indeed to refuse to give time, given that Parliament would have expressed its view and that of the electorate. Let the media then knock at the Liberals’ door to ask questions.

The argument that there is no certainty that we would win such legislation is weak. There is no downside in trying. We may well win. Some MPs on other Benches—honourable and principled Members—support the concept. Even if we fail, we will have tried. On a matter of this importance, political transparency is paramount, and the electorate could then take note.

As a group on these Benches, I hope that we have helped in a small way to move the party closer to the electorate on this issue, but it is more important than party politics. I encourage other Members to do likewise within their own parties. Were the amendment to pass tonight, we as a Parliament would be opening the door to the possibility of introducing legislation that would stand a far better chance of succeeding. It would take a majority to defeat that legislation, rather than the determined minority it takes to defeat a private Member’s Bill. I therefore urge Members across the House to support it. I urge my own Front Benchers to support it. I urge the doubters to put aside their doubts and support it.

For too long the electorate have been unable to express their opinion on the changing nature of our relationship with the EU. The political establishment have essentially closed ranks over the past 30 years and denied the electorate a choice. We now have a golden opportunity to right that wrong. We should be bold of heart, seize the moment and do what is right by the electorate, and indeed by the country. I therefore intend to move the amendment.

Photo of George Howarth George Howarth Labour, Knowsley 2:58 pm, 15th May 2013

I will first say a few words about employment, particularly in the light of statistics released today, and then a few words about Europe. The employment situation in the UK and in my constituency is frankly depressing, and the figures released today by the Office for National Statistics emphasise that. Nationally, 3.8% of those aged 16 to 64 are on jobseeker’s allowance. Today in Knowsley the number of JSA claimants is 4,245, which equates to 6.3% of Knowsley residents, well above the national rate. Similarly, the JSA count for those aged 18 to 24 is 7.2%, whereas in Knowsley it is 13.2%. In my view, therefore, there is no room for complacency.

To be frank, many of the existing opportunities do not reflect the expectations of an ambitious country. Practices such as zero-hour contracts and the use by many high-profile companies of unpaid internships and agency work amount in many cases to systematic exploitation, particularly of young people.

There is growing concern about what is often referred to as the race to the bottom. In The Times a few days ago, the noble Lord Sainsbury of Turville was reported as arguing for a more progressive form of capitalism that recognises social justice and discussing the role that institutions could play in bringing it about. He also rejected the neo-liberal consensus of the past several decades.

Frances O’Grady, the recently appointed general secretary of the TUC, has mentioned the Prime Minister’s ambitions to erode workers’ rights. She said:

“'The Prime Minister wants to ‘repatriate’ those rights, and not because he thinks he can improve them”,

but because he

“wants to make it easier for bad employers to undercut good ones”.

Moreover, on the question of employment rights, Jon Cridland, the director general of the CBI, has said that the Prime Minister’s proposals would not be his starting point in any negotiation. It is clear that there is an emerging consensus that we should be discussing the quality of employment and the opportunities for people, rather than taking away the rights and privileges they already enjoy.

I am a Eurosceptic compared with many on the Labour Benches. I voted against the Maastricht treaty, because it removed the social contract. I am in favour of renegotiating the terms of our EU membership and think there should be a referendum at some point. It is not healthy for our democracy that the relationship between the political classes and the country has eroded to the extent that it has.

Where I part company with the Prime Minister, however, is on the sort of Europe that he wants to renegotiate, which is entirely different from the sort of Europe that I want to be a part of. I believe firmly that there is a case for renegotiation and that it should be followed by a referendum, but I certainly do not agree with the sort of Europe that the Prime Minister wants to bring about.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

The right hon. Gentleman is making a thoughtful speech and I understand entirely his position, but will he consider voting for amendment (b)? It does not specify a particular Bill; it just regrets that there is no EU referendum Bill in the Queen’s Speech.

Photo of George Howarth George Howarth Labour, Knowsley

No, and the reason why I am not prepared to do that is because the hon. Gentleman and the amendment anticipate a different kind of renegotiation from one that I would support. I have given serious thought to supporting the amendment, but it is possible on occasion to agree with the words of an amendment while not necessarily agreeing with the sentiment behind it. I do not want to be associated with a proposal to renegotiate Britain’s involvement in Europe that differs from how I would want it to be conducted. The difference between me and the hon. Gentleman and others who support the amendment is not necessarily over its wording, but over the intention behind it, which I do not want to be associated with.

I hope that in the coming years we will see a different arrangement between Europe and the United Kingdom. I also hope that we can improve people’s working lives and make work pay for a lot more people, particularly young people. I do not believe that that is the direction that this Government want to take, and I hope that when there is a change of Government we will be able to make the changes that I want to see.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester 3:04 pm, 15th May 2013

Successive Governments have spoken of localism and sustainable communities, but the reality has not matched the rhetoric in many respects. That is particularly true with regard to the loss of post offices and neighbourhood and village shops, whereby Government policies over the past 30 years have hastened their decline, rather than helped sustain them to the overall benefit of society and the communities that lose them.

Nowhere is Government failure more obvious than in the closure of thousands of neighbourhood and village public houses—the traditional English “local”—and the rise of mega-drinking establishments with wall-to-wall boozing and round-the-clock easy availability of alcohol, aligned with below-cost-price special offers in supermarkets, which has fuelled an explosion in alcohol-related incidents in town and city centres, making many people wary of going to them in the evenings and putting serious extra pressure on our emergency services, including clogging hospital accident and emergency departments.

There is also worrying evidence from health professionals of an increase in drink-related conditions and that this self-inflicted rise in alcohol-induced illnesses is occurring in increasing numbers of young people. All this adds yet further burdens on the national health service and it also, of course, leads to devastation for the individuals concerned and their families. It is therefore a huge disappointment that we have not been presented with a Bill to address the failure of the past 30 years.

Early-day motion 57 supports a campaign group—a coalition of organisations—known as Fair Deal for Your Local, which is calling, as its name suggests, for a fair deal for local public houses. The group comprises the Federation of Small Businesses, the Forum of Private Business, the Campaign for Real Ale, Fair Pint, Licensees Supporting Licensees, Justice for Licensees, Licensees Unite, the Guild of Master Victuallers and the Pubs Advisory Service. That is a worthy list of organisations whose views both the coalition and the Opposition should listen to.

The campaign’s emphasis is on a much-needed reform of the tied model operated by large public owning companies, or pubcos as they are commonly called. Pubcos take more than is fair or sustainable from the sales of drinks, which makes it difficult or impossible for many licensees to make a living. This results in the failure, on a huge scale, of pubs up and down the country, with a closure rate of 20 or more a week and the pubcos selling them as though they were asset-stripping property developers rather than custodians of our nation’s rich social heritage.

The following statement could easily be adapted as a Bill:

The Fair Deal for Your Local campaign believes that the way to ensure a fair deal for pubs—and to deliver the Government’s clear commitment—is to include in the statutory code an option for tied publicans to only pay a fair, independently assessed market rent to the pub owning company—a ‘market rent only’ option.”

It is estimated that this would bring down the cost of a pint in pubco-owned pubs—around a third of all British public houses—allowing many pubs to survive and thrive. It would also lead to fairer access to public houses for small brewers, which would boost their businesses and increase choice at the bar. I would have thought that the coalition welcomed such measures. It must be stressed that all family brewers would be excluded, because the code would apply only to companies that own more than 500 pubs. This relates to pubco public houses, but legislative help would also benefit other neighbourhood public houses.

In commending the Fair Deal for Your Local campaign, I congratulate the excellent work of my hon. Friend Greg Mulholland, who tabled early-day motion 57. I also remind the House of what I have said on this subject in previous debates. In November I said:

“We need to amend the tax levy on beer sold in our traditional public houses. We should have a tax-neutral approach to keep the Treasury happy and bring huge social benefits, including job retention and creation, rather than there being the loss of jobs that we continue to witness in the sector.

Most publicans of neighbourhood and village public houses run responsible establishments. Their customers should be rewarded, not financially penalised because of the irresponsible marketing carried out by supermarkets and mega-drinking establishments.”—[Hansard, 1 November 2012; Vol. 552, c. 429.]

I returned to this theme in the Budget debate in March, when I observed that

“there are mixed messages on alcohol tax and the coalition Government’s desire to tackle binge drinking and improve the health of the nation.”

I described the confusion caused by having a debate on whether there should be minimum unit pricing alcohol when the Chancellor was knocking 1p off the price of a pint of beer, and added:

“We need a variable price structure to help traditional, community and village public houses, which would fit well with the coalition Government’s localism agenda and the last Government’s sustainable communities legislation.”—[Hansard, 25 March 2013; Vol. 560, c. 1362.]

Time prevents me from mentioning other Bills that I would have liked to be included, such as one on building council houses. The lack of council house building over the past 30 years under the policies of the Tory Governments led by Thatcher, Major and Blair has led to a housing crisis.

Unlike some, I will loyally support the Queen’s Speech this evening.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill 3:09 pm, 15th May 2013

As always, I listened carefully to the Queen’s Speech with the intention of examining how the new measures would affect my constituents. I was also looking for measures that would ease the strain on the families in my constituency who are worried about unemployment and the rising cost of living. I was sadly and expectedly disappointed.

Before listing my concerns, I will place on the record a couple of observations on how we got into the deep economic difficulty that is causing desperate hardship for many families in my constituency. The fundamental error of this stagnant coalition Government was to assume that they could clear the deficit in four years. Their plan was to use the final year in office to hand out sweeteners to the electorate, who would be so overwhelmingly grateful that they would elect a Conservative majority.

Dealing with the deficit is the defining issue facing this country. However, that should never have been conditional on or linked to the outcome of the next election. That was a political fix that was destined to fail. Everybody could see that it was politically too far-fetched, except for the opportunistic Liberal Democrats who disregarded their electoral mandate and traded their principles for government office.

The UK economy is 9% smaller today than was expected when this stagnant Government took over. In 2009-10, the deficit was £159 billion. It is now forecast to be down to £121 billion. However, the public debt overall is rising from £795.5 billion to a predicted £1.1 trillion.

On any reasonable analysis of our economic situation, two significant themes scream out loud and clear. The first is the continual anaemic economic performance and the second is our ability to pay off the debt, which is becoming increasingly strained as a consequence of the first point. While those two heads travel in opposite directions, our economy will never recover. The policies simply have to change. It is time that this stagnant Government chose to put the national interest first and their party political interests second.

Ordinary hard-working people and their families are struggling. Rents and mortgages have to be paid, as do ever-increasing energy and water bills. Families who spent £600 a month to cover those costs in 2005 now spend more than £800 a month. We have record fuel prices and record amounts of people in fuel poverty. We have 1 million young people out of work and left behind. Lending to businesses is continuing to fall. We have soaring unemployment. We have a Chancellor who has to borrow £245 billion more than he planned, who has failed his own economic test of retaining our triple A credit rating and who, over the course of this Parliament, will have delivered growth of a mere 1.7%. Ordinary working people are paying the price of this out-of-touch Government’s economic stagnation.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Does my right hon. Friend agree that one of the methods that the Government are using to make ordinary people pay for their incompetence is the bedroom tax?

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill

My hon. Friend raises a very important point. While we witness the introduction of the second home subsidy, the effects of the bedroom tax are being seen in my constituency, where an estimated 2,128 individuals will be affected, two-thirds of whom are believed to have disabilities. Citizens Advice Scotland has revealed that nearly 800 victims of the welfare axe are desperately seeking its support. Welfare recipients are an easy target, but we should not point the finger too quickly because no job is safe in this economy.

To get our economy moving again, we need investment—investment for jobs, investment for the future and investment in the ordinary hard-working people of our country. We have been treated to a more-of-the-same economic plan, with no change on anything of importance. The Government are cutting taxes for millionaires while cutting support for our economy. Led by the Prime Minister and the Chancellor, this stagnant Cabinet of out-of-touch, upper-class millionaires has run out of ideas and run out of steam, while our country is running out of time. What a way to run Britain.

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee 3:15 pm, 15th May 2013

As a secondary modern schoolboy, I am always pleased to follow Mr Clarke.

In the regrettable absence of a debate on foreign affairs, I will use today’s theme to focus on the EU’s rule in economic growth. The British economy is not an isolated beast. It is part of a global economy and, in particular, a European economy focused on the EU. That European economy needs reform, but we need to be part of it.

Global economic success is to be found in single markets around the world. We should look at the economic growth in Brazil, Russia, India, China and the USA. What do those countries have in common? They are all single markets. The EU single market, an invention of Margaret Thatcher, which stretches from Athens to Oslo, is the largest single market in the world. We in the UK are 60 million in a world of more than 7 billion—less than 1%. Do we want to face the global markets alone or as a member of a trading bloc that represents 500 million people?

What is the alternative? Perhaps we could be outside the EU, negotiating our own terms of trade. Perhaps we could be an independent sovereign state, calling the shots on our own terms like Norway and Switzerland. Those propositions may sound attractive, but I disagree with the Secretary of State for Education, who says that life outside the EU would be “perfectly tolerable”. Norway and Switzerland do not call the shots. They pay billions every year for access to the single market and Switzerland has been forced into renegotiation.

We would have to renegotiate our own free trade agreements. The holy grail of trade agreements is an EU-US deal. We would look pretty dumb if we were leaving the EU just as it was signing up to such a trade agreement. Imagine the impact on our car industry, which exports five out of every six cars made in the UK, if it had to pay the EU import tariff on cars of 9.6%. Where would a foreign car manufacturer invest, faced with that situation?

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

The United Kingdom has a trade deficit with the other 26 EU member states of £70 billion. I cannot imagine that the EU would want to cut itself off from the British market by getting into a trade war with the United Kingdom. May I also point out that we export more to the rest of the world than to the EU? The EU is declining in relative terms, whereas markets in the rest of the world are expanding. Surely we are a global trading nation, not just a regional trading nation, and that does not require us to be a member of the single market.

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

We can all trade statistics on who trades what with whom, but about 50% of our exports are to the European Union. We export four times as much to the EU as to the United States.

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

I will not give way.

We sell more to Sweden, which has a population of 9 million, than to India, which has a population of 1.1 billion. That is the truth of the matter.

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

I am not giving way.

The EU is not going to let us set up an offshore free trade island like Hong Kong, undercutting its industries. We will have to pay for access to the single market. The EU will dictate the terms of trade, and we will still be under the thumb of Brussels. I say to my hon. Friend that that is not gaining sovereignty, it is losing it. The plan to impose an EU-wide financial transaction tax is just a warning shot. As a member of the EU, we can go to the European Court of Justice and challenge it. Outside the EU, it would simply be imposed and we would just pay the tax.

I say to the Economic Secretary that his policy on the eurozone is spot-on. Supporting policies that will stabilise the single currency area and encouraging growth through integration is exactly the right approach. At the same time, we expect the Treasury to keep a watchful eye on the national interest in the single market. A good example of that is the agreement on the single supervisory mechanism in the banking union, which shows the clout that we still carry in the EU and how we protect our position inside the single market but outside the eurozone. He should continue with that approach. That example also illustrates how far we have come in building alliances inside the European Union since the veto in December 2011. Inside, we simply have more strength.

No one denies that the EU needs reform, and I am no great Europhile on this. [Interruption.] May I say to my hon. Friend Mr Jenkin that that sort of contemptuous laugh does no good to the debate whatever? No one denies that the EU needs reform. Primarily, it has to choose between being a social market economy and being something tougher. In his Bloomberg speech, the Prime Minister set out a course of action that recognises British Euroscepticism but keeps us at the table, using our influence. Within the EU, the UK will continue to thrive as a major player on the world stage and our economy will be stronger, but outside, I believe that the future will be bleak.

Photo of Stewart Hosie Stewart Hosie SNP Chief Whip, SNP Deputy Leader, Shadow SNP Spokesperson (Treasury) 3:21 pm, 15th May 2013

It is a pleasure to take part in the debate. This Queen’s Speech is important, sandwiched as it is between the Budget and Red Book, which we already have, and the forthcoming spending review, the details of which we do not have but which still casts a shadow over the potential for growth and recovery in the UK. The Prime Minister mentioned growth in his speech on the opening day of the debate, stating that the measures in the Gracious Speech would “grow the economy”. He also said that they would

“deliver a better future for our children…win the global race”—[Hansard, 8 May 2013; Vol. 563, c. 28.]

and “cut the deficit”. Given the austerity programme so far, it looks like it will lead to 300,000 more children being in poverty by the end of next year, and the forecasts are that there will be up to 4 million children in poverty in a few years’ time. It is difficult to see how any of the measures in the Queen’s Speech can possibly live up to the billing that the Prime Minister gave them.

Given that the balance of trade has been in deficit to the tune of more than £100 billion for the past two years, and that the gap in the total balance of trade has risen by more than £10 billion in the past year, it is difficult to see how anything in the Queen’s Speech can live up to the Prime Minister’s description and do anything to allow us to “win the global race”, whatever that means.

Bringing the deficit down was another of the Prime Minister’s claims, but as Mr Clarke said, net borrowing was forecast at £92 billion but ended up being £121 billion. The cumulative deficit—the net debt—was forecast to rise to about 92% of GDP in a couple of years, but it is now forecast to hit more than 100% of GDP and about £1.6 trillion. There is a great deal of Government rhetoric about what the measures in the Queen’s Speech are supposed to do, but very little real evidence.

However, it is not as though the Queen’s Speech contained no growth measures. There was one potentially significant one—the national insurance employment allowance. However, that was not altogether new. It was in the Red Book and budgeted to cost the Government £1.3 billion next year. It is welcome, but because the impact of the Budget policy decisions is to be fiscally neutral over the five years from 2013-14, the overall impact on economic growth of that one meaningful measure will be muted to say the least. It is worse than that, because any beneficial effect on growth of that sensible policy will be wiped out entirely by the additional cuts to expenditure that are anticipated in the forthcoming spending review.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

If Scotland became independent, which currency would it use?

Photo of Stewart Hosie Stewart Hosie SNP Chief Whip, SNP Deputy Leader, Shadow SNP Spokesperson (Treasury)

It would use sterling. We have answered that question many times. We are speaking about the UK Government’s Queen’s Speech and how their programme for the Session will fail to deliver growth not just for Scotland but for everybody throughout the UK.

Let us be clear that the impact of the one good thing in the Queen’s Speech, the employment allowance, will be wiped out entirely if the economy is supposed to absorb the anticipated £11.5 billion of new cuts. That is the figure most commonly used for what is likely to be in the spending review. That will take the UK to discretionary consolidation—tax rises and cuts—somewhere in excess of £155 billion a year, every year, from 2015-16 onwards. Indeed, the Institute for Fiscal Studies has helpfully provided some information stating that it believes the real level of discretionary consolidation could reach £172 billion a year by 2017-18.

The Government plan to cut £11.5 billion, in addition to the cuts so far. To return to the point made by Charlie Elphicke, that will be added to the 8.7% real-terms departmental expenditure limit cuts and 25% capital DEL cuts in Scotland. It seems extraordinary that when we are looking for real growth, the Government seriously propose stripping consumption out of the economy to the extent of about 8% of GDP and putting an additional £11.5 billion on top of the £140 billion or so of discretionary consolidation that is already planned, and replacing it with only a single sensible measure, the employment allowance.

What the Government are trying to do is not doable. They are trying to cut their way to growth, which cannot be done. They are ignoring all the evidence that austerity is hurting across the board, and I urge them even at this late stage to think again about their plan. They should rethink not just the contents of the Queen’s Speech or what we are likely to see in the spending review in June but the measures that we have already had in this and previous Budgets. Those measures will lead, as Olivier Blanchard from the International Monetary Fund has said, to the Government “playing with fire” if they allow the economic stagnation to continue.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee 3:28 pm, 15th May 2013

When I received, somewhat to my surprise, a telephone call from my hon. Friend Mr Baron, inviting me to add my name to an amendment that regretted the absence of an item in the Queen’s Speech, I confess I was somewhat astonished. I think it a mark of the enormous shift in opinion that is taking place on what has for decades been a matter of fundamental consensus in British politics, that we find ourselves straining the conventions and normal behaviour, and even the Standing Orders of the House, to accommodate this debate. I say to my hon. Friend Richard Ottaway that I utterly respect the sincerity of his views, and I was expressing no more than frustration that he would not allow me a spare minute of his time to explain the statistics on which I think this fundamental debate should be based.

I agree with the terms of the amendment and will support it, although I might not have tabled it myself. I doubt that some of the noise and discord around this issue has impressed those who failed to support us in the elections two weeks ago, reflecting a certain and widespread despair about the ability of all three main parties to keep their promises on referendums, which has become an emblem of the distrust in which so many of our voters hold the British political establishment.

Photo of Anne Main Anne Main Conservative, St Albans

Many members of the British public, whether they hold the views of my hon. Friend Richard Ottaway or those of my hon. Friend Mr Jenkin and indeed myself, would like to have the discussion. We went into a referendum on the alternative vote with a discussion led by the Prime Minister, who was not in favour of it, and other Members held honourable positions on the issue. This is about giving the discussion to the British public, however they would like to view it.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

I am grateful to my hon. Friend for that intervention. I will not debate at length the quality or timing of an EU referendum, although I think that those who voted for UKIP and are likely to do so in next year’s European elections will not be impressed unless we make every effort to hold a referendum as soon as possible, rather than when it suits the three main political parties for whatever reasons we have to continue putting it off.

I wanted to say to my hon. Friend the Member for Croydon South that I have the figures from the House of Commons Library, and our total earnings from abroad constitute 44% of our GDP. We are a global trading nation and trade a higher proportion of our GDP than any other major European state. Trade with the EU comprises 19% of GDP, and 25% with the rest of the world. The rest of the world is the growing proportion; the EU is the declining proportion. Manufacturing is the only part that would be excluded, by virtue of the tariffs that were mentioned earlier by my hon. Friend the Member for Croydon South, and manufacturing exports to the EU comprise 10% of GDP, and 10% to the rest of the world—a substantial and important part of our economic activity.

The point is that there is no evidence that we would not continue to trade that proportion of our manufactures with the European Union—incidentally, the figures are inflated by what we know as the Rotterdam-Antwerp effect because a lot of what we export to the EU is instantly exported to the rest of the world. We are regulating our entire economy and burdening our taxpayers with the costs of the contribution—rising to £19 billion gross—with our membership of the European Union. One hundred per cent. of our economic activity is burdened with those regulatory costs for the sake of less than 10% of our overall GDP.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

May I ask my neighbour and parliamentary colleague whether anything he has just said could not have been said by a member of UKIP?

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

I totally agree. The irony of this debate is that a lot of people in UKIP are saying things that are similar to what is felt by a lot of people who would like to vote Conservative at the next election. There is a majority in this country, and I think the Prime Minister was right to say that he wants a different relationship—a new relationship with our European partners.

This entire debate is conducted on the premise that membership of the single market is indispensable to our national interest, is it not? Those who say we must remain in the EU come what may believe that the single market is indispensable to our national interest, but here are the facts. I have already mentioned how little of our GDP that we export in goods would be subject to tariffs were we not to have a free trade arrangement with the EU—probably around 8.7% of GDP. The idea that 3 million jobs are dependent on exports to the EU and that we would lose them if we left is a myth. There is no substantial evidence that we would lose any jobs.

On the contrary, if we had a freer and less regulated economy, we would probably create more jobs by trading more easily with the rest of the world.

The EU is in long-term structural decline and our non-EU markets are expanding. The UK enjoys a trading surplus with the rest of the world—with which we trade much more effectively—and we have a £70 billion trade deficit with the EU. The rest of the EU would therefore not want a trade war with the UK; it would not be in its interest. The idea that Ireland, or even Germany, would enter a trade war with the UK is absolutely ridiculous.

By the Commission’s own admission, EU red tape costs 4% of the EU’s GDP. The single market does not reduce the costs of doing business in the EU; it is a regulatory burden on trading in the EU.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

I am not going to give way.

The EU internal market has become an end in itself—it is a means of promoting political integration. We must accept that, in the minds of our European partners, the single market is indivisible from the treaties. Even if the UK were to leave the EU altogether and apply for article 50, the EU would be legally required to negotiate free and fair trade with non-EU countries, so we would continue to have access to EU markets. That different perspective, which voters and large parts of business are beginning to appreciate, is shifting the burden of the debate.

Are we doing the right thing in creating such long uncertainty by putting off a referendum until 2017? Should we not have the referendum much sooner to bring the debate to a head? Are we too scared of our own voters to face the truth?

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East 3:35 pm, 15th May 2013

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.

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee

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.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

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, 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 Mr Skinner pointed out in a speech two weeks ago, the Conservatives kicked Mrs Thatcher out on the street like a dog.

Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk

My hon. Friend is asking questions, but not pointing fingers. Does he think it was significant that the Chancellor made a very anti-European statement today? He made it clear that he is in line with the people who are calling for the referendum, and demanding we join them, while the Prime Minister is away. He may not be the great wizard, but he is certainly the great Machiavellian.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

I do not disagree with that. The Chancellor is supposed to be the campaign manager for the Conservative party and he could well fit the title of Brutus. I do not want to accuse him of being a Brutus, because there are so many of them about. It will be interesting to see who is the first to stick the dagger in. I should thank Richard Ottaway for having the temerity to speak up from the Government Benches in a pragmatic and sensible way on our membership of the European Union.

One of the many questions thrown at our Front-Bench team is whether they support a referendum. Hon. Members should not bother to ask me. I do not support a referendum on staying in the United Nations, I do not support a referendum on staying in NATO and I do not support a referendum on staying in the European Union. Yes, the EU needs reforming, but it can only be reformed from within. We cannot reform it and influence it from outside, and I hope that can be taken as read.

It is my judgment, supported by a considerable weight of evidence, that today’s Conservative party is so far to the right that it refuses to select candidates that are moderate, pragmatic or pro-Europe. There lies the difficulty. I started my younger political life being anti-Europe, but I accepted that the world moves on and I moved on with it. In the Labour party in the late ’70s and ’80s, it was difficult to be a candidate for a European seat without being anti-Europe. That is exactly where the Conservative party is now. The selection process is causing all the difficulties for its leader today in Parliament.

Photo of Anne Main Anne Main Conservative, St Albans

The hon. Gentleman is making an interesting speech. Does he not see that there is a slight bit of humble pie he should eat when he has a leader who is selected and guided by the unions?

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

The hon. Lady will know that I always try to be respectful, but that is a foolish comment to make on such a serious subject. If she wants me to give my comments on the leader of the Labour party, I am absolutely delighted. I supported the leader of the Labour party, and I might point out that he is not doing badly, because we are considerably further ahead in the opinion polls than the Conservative Government.

It looks like I am running out of time. The Queen’s Speech should have been about stability, growth and employment.

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee 3:43 pm, 15th May 2013

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.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

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?

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee

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.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration Committee, Chair, Public Administration Committee

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?

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee

My hon. Friend is completely right. Labour caused the debt and the deficit; now Labour Members want to engage in more borrowing without the growth that would come from expanding our trade with the rest of the world.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

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?

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee

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.

Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton 3:51 pm, 15th May 2013

The Tory party is obviously going through one of its regular hissy fits over the EU. My experience is that it is best not to intrude in toxic family feuds, so I will confine my remarks to the economy.

Support for the Chancellor’s policy has totally evaporated. His intellectual ballast, provided by Reinhart and Rogoff—namely, that growth rapidly declined once a threshold of debt of 90% had been reached—has been blown out of the water. The International Monetary Fund, the citadel of neo-liberal capitalism, has deserted the Chancellor. The British Chambers of Commerce, the Federation of Small Businesses and even the CBI are now openly criticising from the sidelines. The only austerians who are still full square behind the Chancellor are those in the eurozone. I hope he takes comfort from the fact that that paragon of economic virtue is now his last remaining ally. Contractionary fiscal expansion—his policy—is, to use the words he used today, a totally busted flush. It is an absurd oxymoron, as it always was. Once the rate of growth has slowed below the expansion of debt, the policy is doomed, and that is exactly where we are. Given that, it is so counter-productive now to continue with a policy of semi-permanent stagnation that one has to wonder what the Chancellor’s real motives are—apart, of course, from his own personal survival.

The US has put in place demand-creating measures and is steadily coming out of recession. The UK and the eurozone have not put such measures in place and they are slowly sinking deeper into recession. So why is the Chancellor so obstinately refusing to accept what the evidence is telling him? Why is he refusing to accept what even the IMF is telling him to do? The only plausible explanation is that this is not, in the last analysis, a deficit reduction policy at all; it is ultimately driven by the obsession to shrink the state and squeeze the public sector into the farthest recesses of a fully privatised regime. If that is so, crucifying the UK economy on a cross of ideology is hardly a proper way to proceed.

Of course, the Chancellor likes to defend himself, as he did again today, by saying that any stimulus to the economy will only increase the debt and thus make matters worse, but that is simply not true. First, instead of being kitted out for privatisation, the Royal Bank of Scotland and Lloyds—which taxpayers and the Government own 82% and 39% of respectively—could be instructed to prioritise lending for industry, infrastructure, low-carbon technology and key manufacturing niches in which the UK has a natural advantage.

A second option is the taxation of the hyper-rich, who have so far contributed almost nothing to tackling the recession that they largely caused. The latest rich list published in The Sunday Times a month ago showed that the richest 1,000 people—that is, 0.003% of the adult population—have increased their wealth over the past four years since the crash by a staggering £190 billion. That is considerably more than the total budget deficit, and if it were taxed at the current capital gains tax rate of 28%, it could theoretically raise £53 billion.

Photo of Stephen Williams Stephen Williams Liberal Democrat, Bristol West

I note that the right hon. Gentleman talks about the “current” capital gains tax rate of 28%. Would he like to remind us what the rate was for the last five years of the Government in whom he served?

Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton

As the hon. Gentleman and everyone else knows, it was 10% less. I strongly opposed that; I think that it was wrong. I do not think that 28% is right either. The rate should be where Nigel Lawson left it—namely, at 40%. But let us stick with 28%. That would easily raise enough money to create between 1 million and 1.5 million jobs in two years, which would kick-start a virtuous spiral of growth.

The third option is another tranche of quantitative easing. The gigantic sum of £375 billion of quantitative easing has already been printed, and it has disappeared into consolidating bank balance sheets. A further, much more modest, tranche of £25 billion, invested directly into the economy, bypassing the banks, could once again kick-start the economy without any increase in borrowing at all.

It is also highly relevant to point out, which the Chancellor never does, that the balance of payments on our traded goods, which has been going up for a long time, reached the staggering level of £106 billion in this last year. That is 7% of gross domestic product. Worse news can be seen when we consider the growth that we like to think occurred in the UK during the best years up to 2007. The National Statistics register shows growth of £300 billion, but that is slightly less than the total for equity withdrawal from housing for the same period. In other words, the inflation of property assets largely accounts for the apparent growth. So, rebalancing the economy, which is now vital, is not going to occur simply with a flourish of the Chancellor’s wand. It will need a hard-won, relentless programme of manufacturing revival, and the restructuring of the banks to ensure that they look after the national interest and not their own.

Photo of Ben Wallace Ben Wallace Conservative, Wyre and Preston North 3:57 pm, 15th May 2013

People used to say that England’s bread hung by Lancashire’s thread. In this debate, I want to focus on some of the good news on the rebalancing of the economy. The news has not been all bad, and, despite the economic circumstances, my constituents and the people of Lancashire have a good track record of rebuilding and moving forward and of expanding exports and manufacturing.

Manufacturing output rose last month. Today’s figures show that, in my constituency, unemployment dropped again. It dropped compared with last month and with last year. We now have 81,000 more people working in manufacturing than we did in 2011. Despite all the economic troubles, the people of Lancashire live in the real world. They know how the welfare changes have helped to encourage people to get back into work, and they know that the Government’s policy is trying to help businesses large and small to export and grow.

Despite our domestic difficulties on the European Union at the moment, that “real-worldness” of my Lancashire constituents has been demonstrated in the recent local elections. The real story in Lancashire was not the United Kingdom Independence party; it was that the Labour party failed to take back the county that it had run for 26 years. Funnily enough, people are not convinced by the Ed and Ed show, or by Labour’s economic credibility. But let us move away from the European thing. I know that the Opposition would like to focus on it, but I think that it will pass—




Opposition Members might laugh, but there are nine marginal seats in Lancashire, and if Labour cannot win Lancashire county council, it is not going to win a general election fast. Labour knows that.

BAE is one of our local employers, and 19,000 people work in the aerospace industry. Profits are up, orders are up, and it has recently landed a £2.5 billion order from Oman to build Hawks and Typhoons. The Typhoon Eurofighter is made in Samlesbury and Warton. That did not happen by accident, but because of the investment in skills that successive Governments and this Government have put into my constituency. Recently, the Government announced extra funding for Preston further education college, and more is on the way for Myerscough. Building up the skills base is one reason why BAE remains one of the most competitive and leading exporters in the country, training thousands of apprentices every year—some Government funded, some not.

As we speak, the Prime Minister is abroad yet again, trying to make sure that we negotiate a free trade treaty to allow British business to prosper in the American market. Only recently, we had a state visit from the President of United Arab Emirates, which was partly about trying to sell more British and Lancashire-made manufacturing to the middle east. The Prime Minister has taken rebalancing the economy and moving forward on growth seriously.

We have seen investment through the Department for Business, Innovation and Skills, under its Secretary of State—the Liberal Democrat part of our coalition—that has helped to support the Lancashire local enterprise zone in Samlesbury, where we hope to get skills academies and more investment in our young people.

Then, beyond that, are the changes the Chancellor has produced in the Budget—an increase in the use of the R and D tax credit that rewards our investment, for example, and the rolling out of the patent box, which means people who exploit their intellectual property in this country will pay some of the lowest corporation tax in Europe. That is why this country has a future in growing its manufacturing base and is on the right path to rebalancing.

In future, I want the Government to continue to invest in the F-35 joint strike fighter and the new generation of unmanned aerial vehicles. I also look to a city deal for Preston, hopefully worth £300 million—if we can get the Treasury to move along a bit quicker.

Something that is important for the future of the whole country is shale gas, and it is under my feet, in my constituency, that the Bowland shale exists. It is currently valued at 35 billion barrels of oil equivalent of gas—a $200 billion revenue stream, should it be extracted. We need it in Lancashire and in the country more widely for security of supply; we need it as alternative energy; and we need it to make sure that this country benefits from its assets and its mineral wealth.

We in Lancashire have a story to tell. Lancashire’s history is about reinventing itself and building for the future. It is not for nothing that Preston is one of the northern cities that bucked the trend since 1908 and has been one of the most progressive cities. Let us remember for the future that—

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles 4:02 pm, 15th May 2013

I am pleased to follow Mr Wallace, but I can assure him that it is not our party that is obsessed with Europe. I think he needs to get his own house in order.

The last few years have been enormously difficult for families trying to make ends meet, working really hard and trying to give their young people a decent start in life. Arguments will rage about austerity cuts and the lack of investment—there are as many opinions as there are economists. I do not want to rehearse those arguments today, but to talk about something practical that I believe can help to address our economy’s problems that are causing such misery to thousands of families across the land.

There is sometimes a moment—in business, in politics and in communities—when an idea begins to take root, to gather support and to gain traction and momentum. I believe that the emergence of social value is one such moment. If it is pursued with energy and integrity, it could make a reality of the so far rather nebulous concept of responsible capitalism.

Eighteen months ago, I worked with Chris White to take the Public Services (Social Value) Act 2012 through this House, and I was delighted to do so. The duty to put social value at the heart of public procurement came in at the end of January. If implemented across government, across local government and in private sector supply chains, I believe it could make a huge difference to the number of apprenticeships, the amount of local labour, the building of small and medium-sized enterprises and the encouragement of innovation.

Over the last year, I brought some big companies together with social enterprises to see how they could collaborate to renew our economy. I have been heartened by the commitment from the private sector. Good companies know that this is not about philanthropy or altruism, because doing good is good business. Moving from traditional corporate social responsibility into a place where businesses are using their mainstream models to make a social impact in procurement, human relations, marketing and product development is helping to get social value into companies’ DNA. That is the way to get our economy moving.

Let me give a couple of examples. Sodexo, whose headquarters are in Salford, is working with one of my local social enterprises to take on ex-offenders to carry out grounds maintenance and facilities management. That is a fantastic partnership. Deloitte is helping 30 social enterprises to grow to scale under its social investment pioneers programme. CH2M HILL, which built the Olympics stadium and is working on High Speed 2, has values that extend to every level of the company when it comes to apprenticeships, training and social mobility. Trading for Good is a brand new website where people can ask questions such as “Which is the company that takes apprentices? I want that company to redo my roof. Which is the company that is building local supply chains? I want to spend my money there.” It is a fantastic resource.

Photo of Barry Sheerman Barry Sheerman Labour, Huddersfield

Does my right hon. Friend agree that social value, if combined—as it can be, and will be—with crowdsourcing and crowdfunding, will bring a real democratic renewal and a modern capitalism to our country?

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

My hon. Friend is absolutely right. The combination of social value and the creation of social investment through crowdsourcing, peer-to-peer lending and the activities of the Big Society Capital bank, which was a Labour idea, will take us along precisely that track.

My final example is Interserve, which employs 50,000 people and has a turnover of £2 billion. Its chief executive, Adrian Ringrose, recently committed himself to reinvesting 3% of his profits in the communities where his companies operate. That is the kind of thing that good, decent companies can do, and it can make a big difference. Such companies want to rebuild trust and secure a better reputation for big business, which has suffered from a lack of trust because of the activities of the banks and others. There is also the fact that it is good business.

The challenge for the Government is to enable that activity to become mainstream, rather than a niche activity in which only a few people engage. I ask them to think seriously about extending the Public Services (Social Value) Act 2012 to cover goods and major infrastructure. Over the next five years, we shall spend £200 billion on the really important things that we need: energy, transport—including High Speed 2—and building broadband. Why should we not include social value clauses relating to local labour and local supply chains in all infrastructure contracts? Can we not imagine the difference that that could make?

When money is tight—and it would be tight for us if we were in government— we can make a real difference by gaining extra impact from procurement and by doing business differently. We need community reinvestment, and we need to provide incentives for companies such as Interserve to do the right thing. A year ago, when I presented a ten-minute rule Bill in the House, I suggested that bankers could voluntarily put some of their income into local social enterprises. That might even make bankers popular, for goodness’ sake, and it is a very practical thing that we could do.

The Government must also support the development of measurement and metrics for social impact. There is a lot of good work going on. The Connectives Limited in Manchester, which is run by two inspirational woman accountants, has done fabulous work on social audit and accounting, but if we are to make such activity mainstream, we need to ensure that the metrics are rigorous and substantial. I should like the Treasury to do some more work on that.

In the time that I have left, I want to mention the Big Society Capital bank. It was the bank’s first anniversary last week, and I went to an event to mark it in the City. There was standing room only because there was such a huge appetite for the creation of a social investment market. The leadership of Sir Ronald Cohen and Nick O’Donohoe is first class. They have some really good ideas about how to get products to market, and about new types of bond such as social impact bonds. They are trying to persuade foundations and pension funds to invest. I welcome the Government’s consultation on a tax relief for social investment; I think that that is a very good idea. It could release an extra half a billion pounds into the market.

Difficult economic times demand creativity, innovation and boldness. We must get behind that, and make it happen.

Photo of Peter Bone Peter Bone Conservative, Wellingborough 4:08 pm, 15th May 2013

It is a great pleasure to follow Hazel Blears, who made a passionate and knowledgeable speech about social value.

Amendment (b) has been signed by 92 right hon. and hon. Members, drawn from the Conservative, Labour, Liberal Democrat, and Democratic Unionist parties. The amendment respectfully regrets

“that an EU referendum Bill was not included in the Gracious Speech.”

Members may wonder why I am speaking about the European Union on a day that was allocated to a debate on economic growth. The one thing that is certain is that there is absolutely no connection between economic growth and membership of the EU—quite the reverse. However, it is the Labour Opposition who choose the subject for each day of debate on the Queen’s Speech. On no day did they choose to debate foreign affairs, which indicates how little regard they have for international relations in general and Europe in particular. I suspect they did not want to let the House know of their divisions over Europe.

The Prime Minister would have liked to put an EU referendum Bill in the Queen’s Speech, but was blocked by the Deputy Prime Minister and the Liberal Democrats. However, yesterday the Conservative party published a draft EU referendum Bill. If this Bill can be debated in Parliament, I believe it can become law.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

The hon. Gentleman has just imparted some very interesting information to the House. Is he saying that the Prime Minister has told the Conservative party that he wanted a referendum Bill in this Queen’s Speech but he was stopped by the Liberals?

Photo of Peter Bone Peter Bone Conservative, Wellingborough

That is exactly what I am saying.

The published Bill is short and to the point. The question is clear—

Photo of Peter Bone Peter Bone Conservative, Wellingborough

May I make a little progress, as I am about to quote the question?

The question is clear:

“Do you think that the United Kingdom should remain a member of the European Union?”

If the Bill is passed, the Prime Minister could try to negotiate a European free trade area or, in other words, a common market, without all the regulations, red tape, and cost, without the EU laws, the European Court, the European Parliament, the Commission and the bureaucracy, without the £19 billion a year it costs just to be a member of the EU, and without the £30 billion-plus trade deficit with the EU each year. However, ultimately I do not believe that these negotiations will succeed, not because of the efforts of the Prime Minister, but because of the attitude of the EU elite.

Photo of Stephen Williams Stephen Williams Liberal Democrat, Bristol West

I thank the hon. Gentleman for giving way. I sometimes think there are three parties in the coalition: my party, the Liberal Democrats; the sensible wing of the Conservative party, whose Members serve on the Government Front Bench; and the hon. Gentleman’s wing of the Conservative party. However, my information is that the Conservative party did not ask for this referendum to be in the Queen’s Speech, so I think he ought to have a word with his colleagues.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

It is very good news that the Liberal Democrats have had a change of heart and will now allow the European referendum Bill to come forward in Government time. I appreciate that useful intervention.

In any case, once these negotiations have finished, there will, for the first time in 30 years, be a vote by the people of this country on whether we should remain in the European Union. That will happen no later than the end of 2017, but of course it may be much earlier.

Anyone who votes against the amendment in the name of my hon. Friend Mr Baron is clearly opposed to a referendum on our relationship with the EU. However, if Members vote for the amendment, they are clearly supporting the prospect of an in/out referendum. If the amendment is carried, the House will, in effect, have said that the Government should bring in an EU referendum Bill. It will say to the Prime Minister that the House of Commons supports his position. It will say to the Liberal Democrats, “How dare you block the will of this House and the will of the nation?”

The Liberal Democrats went into the 2010 general election claiming that they would offer an in/out referendum on Europe. On page 67 of their extraordinary manifesto “Change that Works for You”, the Liberal Democrats said:

“The European Union has evolved significantly since the last public vote on membership over thirty years ago. Liberal Democrats therefore remain committed to an in/out referendum”.

That works for me. This change of heart is, even by Liberal Democrats standards, totally absurd.

Now I shall turn to the position of the Labour party. The Labour Opposition promised a referendum on the EU constitution before they were elected, yet as soon as they came to power, they dropped the referendum. On Europe, they are the poodles of Brussels—they roll over and do everything the EU wants, including giving away Mrs Thatcher’s hard-won rebate. They simply cannot be trusted on Europe.

The shadow Chancellor sort of indicated that Labour Members would vote against the amendment today—it was impossible to know what he thought about an EU referendum—but every Member will have to make their mind up. Members who vote against the amendment are voting against an EU referendum—[Interruption.] Colleagues from the Scottish National party will do so, and their position is clear. Labour Members who do so will also make their position clear—they are against giving the people the chance of a say on the relationship with Europe.

A vote for the amendment today would give the Prime Minister the moral authority to bring in his EU referendum Bill as a Government measure. Members of the House should vote for the amendment because it is in the national interest. It is right that after 30 years the

British public should have their say on Europe. When Members cast their vote tonight, they should not decide on the basis of party politics. That is not why we are in this mother of Parliaments; we are here to represent our constituents and to put the country first. I know that some principled Opposition Members will support the amendment, and many principled Opposition Members will oppose it, because they do not support having a referendum. One thing is for sure: every Member of this House must vote according to their conscience, and when it comes to the vote, their constituents will know whether they are in favour of an EU referendum or against it.

Photo of Pat McFadden Pat McFadden Labour, Wolverhampton South East 4:16 pm, 15th May 2013

The central question since the financial crash has been how to secure recovery in tough economic times. When the election took place, economic growth had been restored and unemployment was falling, but since then we have seen precious little growth, and unemployment is rising once again. Dealing with that should have been the central purpose of this Queen’s Speech and this debate.

There are measures in the Queen’s Speech—some worthwhile—to help small businesses to recruit new employees, which we called for, and to extend apprenticeships, which were significantly expanded during our time in government. However, one is left with the impression that although some of the measures may be worthwhile, as a whole they are not equal to the depth and durability of our economic problems. In fact, the Government seem to have given up and are waiting desperately for the new Governor of the Bank of England to secure the economic growth that they have so signally failed to secure.

The Queen’s Speech seems to be more about positioning and fear of the UK Independence party than about genuinely dealing with the country’s economic problems. UKIP, however, is a movement against the political establishment as a whole. It is based on a vision of the United Kingdom as it used to be, not as it is or how it will be. I have to say to Government Members that they cannot fight nostalgia with policy or positioning; the only way to answer nostalgia is to offer a better tomorrow, rather than having an argument about a better yesterday.

The Queen’s Speech has been completely overtaken by the argument about Europe. The amendment has attracted more and more signatures, and as it has done so, the Prime Minister’s professed relaxation has become greater and greater—presumably, by 7 o’clock tonight he will be completely asleep. His relaxation is not strength but weakness, and it fools no one. It is not only about the Back Benchers; while he is in the United States arguing for a European-American trade agreement, his own Cabinet Ministers are touring the studios to say that they would vote to come out of the European Union. It all feels very familiar, and it is little wonder that John Major’s former press secretary said this week that

“there are some parallels with the back end of John Major’s premiership.

One of the differences is, that was when the Conservatives had been in power for 17 or 18 years. Now the Conservatives have only been in power in coalition for two or three years.”

No wonder President Obama had to warn the Prime Minister this week that the UK’s influence is greater when we are engaged with and in the European Union. The notion that we can swap membership of the European Union for some other transatlantic embrace is confounded by that warning, which I hope is heard on the Government Benches.

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

Is it not about time that we asked the British people—that the people of the United Kingdom made the decision, rather than politicians dictating to them the future relationship with Europe?

Photo of Pat McFadden Pat McFadden Labour, Wolverhampton South East

We then come to the draft Bill. There was no talk of that beforehand, no suggestion of it in the Queen’s Speech. It is a panic response to the amendment, a failed attempt to buy off tonight’s rebels. This tells us so much about how the Government operate—short-term tactics, not long-term strategy. However, the tactics fail to buy off the rebels, who are simply emboldened and come back for more. Even this afternoon we have heard people saying, “2017 is not soon enough. We need the referendum now.”

The truth is that whether the Bill is a private Member’s Bill or a Government Bill in this Parliament, no Parliament can bind the next Parliament. The time to put legislation forward to have a referendum is before the Government want the referendum, not four or five years in advance. The tactics will not work in the short term; they will simply increase the Government’s pain. Instead of stopping banging on about Europe, the Tories are back to doing little else. That is because too many people on the Government Benches care more about this than about the country’s economic problems or about being in government.

The centrepiece of the Prime Minister’s strategy is renegotiation. We have been here before, too. Harold Wilson had exactly the same strategy in the 1970s—renegotiate, then hold a referendum. He put the conclusions to the House in March 1975. To those who have not read them, I recommend that they do so. They will find plenty about beef, butter and sugar, but nothing about fundamentally altered terms of membership.

When today’s Prime Minister is asked what he wants from the renegotiation, the only specific he mentions is the working time directive. The working time directive was already renegotiated in the previous Parliament. We dealt with the on-call issue and the preservation of the UK’s opt-out. The important thing about that is that it was done without threatening to leave the European Union. If that is all that the Prime Minister can come up with, no one will believe it. Of course the European Union needs reform. It needs to be more flexible and less rigid and it needs to concentrate more on growth and jobs. The Prime Minister has a far greater chance of achieving those goals if he is not threatening to leave at the same time. This is a broader argument about our vision of the UK. Is it to be engaged or is it to retreat into nostalgia? I know which I prefer.

Photo of Ian Swales Ian Swales Liberal Democrat, Redcar 4:22 pm, 15th May 2013

I was pleased to see that the Gracious Speech mentioned tackling tax evasion, and that the Chancellor later added tax avoidance in a G8 conference interview. He often says he is proud of a corporation tax rate that is the most competitive in the G20. Unfortunately, large companies can easily move their profits and operations outside the G20. I want to speak about the effect that this is having on the UK economy and growth.

There is widespread bafflement about how we can have an extra 1.2 million private sector jobs and so little growth. Part of the answer is tax avoidance, because many of those workers are employed by offshore companies. For example, Amazon is growing in this country at more than 20% a year. It employs thousands of people, but its sales of £4 billion do not appear in our economy. They appear in Luxembourg. Microsoft, eBay, Google and others have large businesses in the UK but their figures do not show up either, and the Google chief executive proudly talked about avoiding $2 billion in tax last year.

Now let us turn to the companies that are based here. The tax system encourages them to move manufacturing and other parts of their supply chain overseas. The Government’s change in controlled foreign company legislation makes this even more likely. Companies that do declare large profits here will find that they get a knock on the door from a well paid tax partner of a large accountancy firm, who will put forward schemes whereby corporation tax can be avoided, the simplest of which is to export the profits to Luxembourg via interest payments. This is a route followed by well-known companies such as Vodafone and Pearson, owner of the Financial Times. In fact, it is done by most of our national newspapers, which might explain why media reporting of this issue is patchy at best.

If a profit-making company fails to succumb to the charm offensive of the tax partner, something more sinister is likely to happen. The next knock on the door could be from the vulture capitalists—representatives targeting an aggressive takeover of the company. Let us take a current example. The outstanding business success and growth of Betfair has led it recently to declare £247 million in profits. Its prospective suitors are CVC Capital. What will it bring to Betfair—better management; outstanding new internet technology? The clue is probably in the description of CVC as a London and Luxembourg-based venture capitalist. I am guessing that it will bring a shameless approach to exporting Betfair’s profits to avoid paying UK corporation tax. Boots and Thames Water are just two of the many companies that have been taken over and had their UK profits stripped out of the country and placed in tax havens.

The Government have themselves facilitated tax avoidance, not just through the tax framework but through their procurement and private finance initiative activity. The Green Book on PFI assessment still contains an assumption that 10% of total PFI payments, not profits, will come back to the Government in tax. This is risible when one examines the facts. The vast bulk of PFI deals now have an offshore element. HMRC’s own offices are owned in Bermuda, the Home Office HQ is owned in Guernsey, PFI schools in my constituency are 50% owned in Jersey, and, most bizarrely of all, junction 1A to junction 3 of the M40 is 50% owned in Guernsey. This is the story throughout the country. It is high time the Green Book was changed.

The leakage of money from our tax system and the incentives for companies to operate in certain ways are bad for the economy, bad for growth and bad for individual taxpayers. I welcome the moves that the Government have already made. Let us remember that nearly all the framework was put in place or left in place by the last Government, and they compounded the problem by sucking up to their friends in the City, stripping high-level resource out of HMRC and telling it to go easy on big companies.

I hope that the Government will consider limiting offshore interest payments and closing the loopholes in Luxembourg and Holland, via our membership of the EU. They should prosecute tax evaders and expose and, where appropriate, prosecute their advisers. They should add advisers to their team who are not from big business or big accountancy firms and can speak up for ordinary taxpayers and small business, and they should increase specialist HMRC resources. Tax evasion and avoidance is a cancer in our society and I hope that the Government will keep on acting aggressively to cut it out.

Photo of Barry Sheerman Barry Sheerman Labour, Huddersfield 4:27 pm, 15th May 2013

The debates on the Queen’s Speech are a good time to look again at the relationship between us as elected Members and those who sent us here. I always feel that the one thing that I should be doing for my constituents in Huddersfield is to try to ensure that they have a good life, and most of us know what that entails. One of the things that make me feel that the good life is achievable is that over the years we have come closer to being a high-skilled, high-paid economy. However, in recent years we have faltered, and we must look closely at the challenges that we face, globally and internationally, that might lead to us being a low-skills, low-pay economy. There is already great competition around the world from people with high skills who are low paid, and I think of India in particular. Any Queen’s Speech debate on the economy must think thoroughly about the policies that we pursue in order to obtain the good life for our constituents, with high pay in a high skills economy.

I quite liked some measures in the Queen’s Speech, including those relating to capital allowances and the employment allowance. It is not all bad; it is just all a bit vapid. There are some big gaps; big opportunities. We have just spent about 18 months with almost nothing to debate in the House, so there is plenty of room for a vigorous programme to get this country moving and working again.

I would have loved to see more vision, leadership and courage in the Queen’s Speech. There are so many things that we could be doing. Everyone will know of my interest in skills. I think that any Queen’s Speech at this time, when nearly 1 million young people are unemployed, should have introduced a Bill to abolish unemployment before the age of 25. It would cost only between £4.5 billion and £5 billion a year, but it would have stopped politicians condemning young people to live in the shadows of society on a bit of unemployment benefit here and a bit of housing benefit there. We could have ensured that every young person in this country was in education, training or work experience of some kind. That would have broken, and can still break, the curse of intergenerational worklessness. That is what we should have had in the Queen’s Speech.

What is wrong? We can have high-falutin’ economics in this debate, but the fact is that I would be in favour of a little inflation and debt, rather than less. Keynes was in favour of that, and so am I. I am an economist, I am afraid, and my economics are from the London School of Economics. We had two good things there: we were pretty Keynesian in those days, but certainly not Marxist, and we believed in our motto, which was “To know the causes of things.” It means getting beneath a subject and understanding it in an intelligent way.

There are two things that I think plague us today. First, because people are so threatened, they are turning to UKIP, and the terror and fear on the Government Benches is apparent, as today’s debate has been taken over by a debate on Europe and fear of UKIP. The fact of the matter is that I have seen no major independent assessment of what the impact of leaving the European Union would be on the living standards of my constituents and on the well-being and good life of the people of this country.

Secondly—I will just throw this point in—I am a little worried about one thing that is in the Bill: HS2. It is expected to cost between £45 billion and £50 billion. That money, if invested in the northern and midland cities of this country, could transform the lives of cities that are now endangered. I will use the debates as the Bill goes through to make that point.

There were some good things in the Queen’s Speech, although there has been a bit of a diversion today, and it is sad to see the Conservative party in such a terrible state of distress, but the fact is that there could have been more content to get jobs, skills and homes into our country.

Photo of Richard Drax Richard Drax Conservative, South Dorset 4:32 pm, 15th May 2013

It is a pleasure to follow Mr Sheerman. I very much agree about the importance of apprenticeships, on which the Government are rightly concentrating. One radical solution would be to reduce welfare even further and use the money to encourage employers to employ youngsters so that we can train them and get them back into work, rather than giving them money to stay wherever they are doing nothing. That would be a radical solution, or part-solution, to our problems.

We have been talking about negotiating with Europe for some time, and I learnt from the Library today that we have failed to block a £6.2 billion hike in this year’s EU budget, a rise of 5.5% on the original plan. If that is a successful negotiation, I would hate to see a bad one. For the United Kingdom, that means an extra £800 million, taking our contribution this year to £14.7 billion.

Yesterday I heard Nick Robinson on Radio 4 describe the amendment tabled by my hon. Friend Mr Baron, and signed by me and others, as “parliamentary graffiti”, which I understand to be a meaningless scrawl that has no real impact. I must say that I am slightly tired of the way the press and other commentators just deride the genuine aim of looking at our relationship with the EU, which is desperately needed. Members on both sides of the House—this is what is so extraordinary—agree on that point. As I indicated at the start of my speech, despite the negotiations that go on, we simply do not succeed.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

My hon. Friend is making a powerful speech. Does he agree that the problem with the BBC is that it is institutionally biased towards the European Union?

Photo of Richard Drax Richard Drax Conservative, South Dorset

After I left the BBC I think it certainly lurched to the left.

We have seen what happens when we peddle the line of fruitcakes and loonies: the electorate, who are disaffected enough with us as it is, vote for the party accused of having fruitcakes and loonies. The votes for UKIP two weeks ago only showed what thousands and millions of voters believe. They do not believe that the amendment is graffiti; they believe that we have a major problem and that we—this is why I was sent to this House—have to deal with our relationship with the EU.

The amendment is not, and we are not, attacking the Prime Minister at all. In fact, if hon. Members listen to what the Prime Minister has said, they will hear that he agrees with the amendment. We have been sent here—all of us—to look after our country’s interests and those of our constituents. It is my view, and that of many learned Members, that a renegotiation with the EU is vital. I suspect that it will not be successful, which will lead, I hope, to a referendum and the inevitable vote of “out”.

How often have I heard—I have heard it again in today’s debate—those who are opposed to leaving the EU say that we should focus instead on the economy and jobs? But that is what the EU debate is all about—it is about the economy and jobs. Mr Sheerman turns his eyes to the ground as if to say, “Oh dear, here’s another xenophobic Euro-nutter banging on,” but that is not what I am doing; I am speaking for our country and acknowledging what the vote for UKIP showed. We have to wake up in this place.

Photo of Richard Drax Richard Drax Conservative, South Dorset

I will carry on, if I may.

If we do not wake up, we will lose the respect of the people of this country. I would suggest that repatriating the competences that still go to the EU, despite the treaties that have been agreed and the promises that have been made, would do more than anything else to generate jobs in this country. This is a golden opportunity that we must take if we want to restore the trust in this House and this country that was thrown away as a result of the failed promises over Maastricht and Lisbon.

What more evidence do we need that the EU is dead? It is finished. Look around! Wake up! Greece is a disaster and Spain is potentially on the brink of civil war—53% of youths are unemployed. [Interruption.] Hon. Members say, “Oh, my God!”, but there are riots in the streets and their own police are bashing youngsters over the head. This is the Europe that we now face.

Photo of Richard Drax Richard Drax Conservative, South Dorset

I will not give way, because I have only a short time left.

France is a basket case. Outside the EU, the economies of the BRIC nations—Brazil, Russia, India and China—and Asia are growing. In the past few days, President Obama has been encouraging our Prime Minister to fix the relationship with the EU. We have been trying to do that for years and years, but we have not succeeded. We joined the common market to trade with Europe and that is the relationship that we need and must have. Finally, this is not about nostalgia, as I think an Opposition Member has said, but about reality.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury) 4:38 pm, 15th May 2013

It is a pleasure to follow Richard Drax. The Democratic Unionist party endorses his views on the amendment, which we support. We believe it is important that the people of the United Kingdom should have a say about their relationship with Europe. Some of those who oppose the commitment to a referendum claim that it will somehow leave us with four years of uncertainty and that that will damage investment in the UK, but the genie is out of the bottle as far as renegotiation and a referendum are concerned. Any investor knows what will happen at some stage in the future, so there should be no difficulty in giving the people of the United Kingdom a say on this very important issue. I will concentrate on other issues that relate to economic growth, but I accept that our relationship with Europe impacts on economic growth in this country.

If we are to achieve the objectives in the Queen’s Speech of giving people job opportunities, rewarding hard work and reforming welfare, economic growth is important. If we are to create economic growth, we need proper stimulus. The Chancellor and the Government argue that we cannot borrow more in order to borrow less. That is not true. Good, solid investment in the economy would help us to grow and to pay our debts. That is not the view of those on the extreme left wing; it is the view of the IMF, which is hardly a left-wing organisation. In fact, many of its policies resonate with what is said by the Government. It is also the view of many industry organisations.

More importantly, the evidence of what has been happening in the economy bears out that view. Mr Wallace talked about what is happening in his constituency. Nearly every example that he gave was the result of stimulus through Government borrowing and spending to create infrastructure and produce jobs. I could give stacks of examples from Northern Ireland. There has been investment in our tourism industry. Not so long ago, we got a Barnett consequential as a result of the Government deciding to spend more money on housing. We put it into co-ownership housing, which has brought money down from the banks and has led to almost half of the houses being built in the private sector. Just a small amount of money from the public sector has created construction jobs and allowed people to pay their taxes, which adds to Government revenue and helps to pay off the deficit.

There is a strong case, even from traditional supporters of the Government, for borrowing and spending more money to stimulate the economy. The Chancellor made a big point today about the money markets. Actually, the money markets are quite relaxed about this. They are lending money to the United Kingdom on negative interest rates. There is more demand for Government bonds than supply. If there are sensible investment policies, the money can be made available. The question is whether there is the will or whether the Government have some other motive.

I am disappointed that there is not much detail on what the Government intend to do about banking. According to the figures published by the British Bankers Association, lending by the banks in Northern Ireland has fallen substantially since 2010. We have not dealt with the banking crisis. There is not time in this debate to talk about the detail, but unless the Government grasp the nettle and decide what to do with failing banks that are undercapitalised and unable or unwilling to lend, we will not stimulate growth. I believe that there is great potential and that a Government stimulus could release the billions of pounds of cash assets that are sitting on company balance sheets, which would enable us to get growth and achieve the objectives of—

Photo of Neil Carmichael Neil Carmichael Conservative, Stroud 4:44 pm, 15th May 2013

It is a great honour to follow Sammy Wilson.

This debate is about economic growth, and quite right too. It is good that the Governor of the Bank of England has signalled that growth is on its way and that inflation is likely to decline. That is a good combination. It is absolutely right, therefore, that we should focus on monetary activism.

Another important matter to which the Gracious Speech referred was supply-side reform. We still need to achieve elements of that, and we still have two years to do so. It is at the core of rebalancing the economy, so I want to say a word or two about supply chains. We labour under an illusion in our arguments about the trade deficit if we do not understand the complexity of supply chains and their importance across Europe and the globe. It is not just the finished product that matters but the components that make it, which provide added value. The Department for Business, Innovation and Skills is looking into that matter, because if we understand supply chains we will get a better understanding of why the European Union and the single market matter to us. That situation is made clear in my constituency, where Delphi makes the diesel injectors for the engines of 40% or so of heavy trucks manufactured and used in Europe. That is an example of component parts that go towards an end product making a big difference to the economy as a whole.

I move on to trade, and first to EU-US trade. We have to have a relationship between the United States and the European Union that makes sense and promotes trade. Right now, there are far too many tariffs, both the type that we know about and hidden tariffs. We have to end that, and the Prime Minister is absolutely right to talk about doing that. That is why President Obama was helpful to him in pointing out that we may as well fix our relationship before we decide to end it. That is a simple message that we have to consider.

Germany, Italy and usually France trade more than we do with India, China and Brazil, the economies with which we need to develop relationships. We have to pose the question whether leaving the EU would help us overtake the countries that would still be in it, and the answer is no. Instead, we should consider what we can do here to improve our exports rather than worry about having an alibi and a series of excuses. It is what we do here that actually matters. That is why it is important that UK Trade & Investment, for example, is providing the right network of support for small and medium-sized enterprises. We need to ensure that some of our SMEs are big enough to penetrate the markets that I mentioned and have the right skill sets and determination. We need to start emulating Germany’s mittelstand approach to ensure that our firms are big, robust and strategic enough to tackle export markets. If we do that in a way that signifies an intention to improve our export performance, we will succeed, but it will not be because we have abandoned our partners.

Obviously we need to renegotiate our relationship with the EU, because no form of government or system of institutions should remain unchanged and unreformed. The EU is a classic example of that. However, we have to decide what our priorities in those negotiations are and what we need to achieve. For me, it should be increased competition, both within Europe and through Europe being able to compete globally. We are in a global situation, and we cannot start arguing about some sort of family dispute. The reforms have to focus on the global scale and the need to be competitive.

One area that we need to explore is energy, because we need competition and connectivity between energy producers, especially for the benefit of consumers. I would put such topics on the agenda, but we need to reform and be positive, vigorous and confident.

Photo of Adrian Bailey Adrian Bailey Chair, Business, Innovation and Skills Committee 4:49 pm, 15th May 2013

It is a pleasure to follow Neil Carmichael. I agreed with virtually every word he said—I am sorry if that ruins his future career.

We are now in the fourth year of this Government, and during their time in office we have had flatlining economic growth, a squeeze on family incomes with a reduction of something like £2,000 per family per annum, and mounting debt, borrowing having increased by £245 billion. The growth industries are the payday loan companies or food banks, and in such a situation one might have thought we would have a Queen’s Speech that addressed those problems.

Instead, we have a Queen’s Speech that, as the Prime Minister said, contains as its flagship piece of legislation a Bill on immigration. Since then, an amendment to the speech has demonstrated that the preoccupation of a great majority of Government Back Benchers is with Europe and not issues that directly address the everyday concerns of our constituents. I looked at the Queen’s Speech and at the Prime Minister’s introductory remarks in support of it, and I could not help thinking that although some measures will be beneficial to the economy, the overall tone of its language and the way he introduced it could be profoundly prejudicial to our economic growth.

Let me start with the proposed legislation on immigration. The Prime Minister said:

“Backing aspiration means sorting out our immigration system.”—[Hansard, 8 May 2013; Vol. 563, c. 25.]

I cannot think of a more profound slur on the generation of migrants who came to my area, set up businesses, employed people and promoted economic growth in the black country. It is an insult to people such as the modern Polish worker—that demonised character—in David Manners, the Jaguar Land Rover spares company, which is a small business in my constituency. He uses his ability to speak Russian and Czech to work and find markets abroad for the seller of those parts, and last year he created £200,000 in extra contracts for his local company. The comments are also an insult to other countries and a repudiation of would-be students who want to come to the UK, study and contribute—at least for a limited time—to boost our economy.

We have an expanding world market in bright graduates worldwide. There were more than 4 million in the last academic year, which is increasing by 7% per year. They contribute £8 billion in this country alone. If we really want economic growth, one would think there would be a legislative and market strategy to reinforce the genuine affection that many of those students will have for this country, and their desire to use our first-class education system and research facilities to contribute to universities, local economies and the national economy.

In another quote—I cannot resist this one—the Prime Minister stated that

“from India to Indonesia, from Brazil to China. We must forge new trade deals that will bring new jobs and greater prosperity. We must use our commitment to open economies, open Governments and open societies to support enterprise and growth right across the world.”—[Hansard, 8 May 2013; Vol. 563, c. 22.]

That is at the same time as he introduces immigration legislation with the most inflammatory language, and while his Back Benchers are totally preoccupied with a policy in Europe that will marginalise us in that market.

I would like to go into these issues in more detail, but time prevents me from doing so. The core message, however, is that the headline issue in this Queen’s Speech, and the subsequent reaction of Conservative Back Benchers, is damaging to economic growth, which is the underlying issue that must be addressed to help the people of this country.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover 4:54 pm, 15th May 2013

It is a pleasure to follow Mr Bailey who is the true voice of the Labour party, particularly in his refreshing directness—we do not hear enough these days of the Labour party’s belief in open-door, unchecked migration to this country. My constituents in Dover and Deal raise migration on the doorstep time and again and say they are concerned.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

I will give way in a moment. My constituents know that 5 million people in this country could work but do not—

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

I will give way to the hon. Gentleman in a moment.

My constituents feel that 5 million in this country could work but do not. They ought to have more investment and opportunity, and more chances to fulfil their potential. That is why the reforms to welfare to make work pay, the reforms to the skills agenda, the reforms to control migration, and the reforms to control, police and secure our borders are important—they give our fellow citizens more of a chance to do well and succeed in life, and to see their potential unleashed.

Photo of Adrian Bailey Adrian Bailey Chair, Business, Innovation and Skills Committee

I thank the hon. Gentleman for belatedly giving way. His response to my speech—he has attempted to put words in my mouth that I did not say—demonstrates the exact problem within the Government. They are prejudicial and damaging to the carefully constructed and reasoned debate on immigration that we need in order to get a policy that suits our economy.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

I thank the hon. Gentleman for his intervention. I have set out my concerns on behalf of my constituents, who raise immigration on the doorstep time and again. They simply say to me, “I want my sons and daughters to have a chance. I want to be able to get a job, do well and succeed in life.” The Conservative party is the party of aspiration and success, and the party of realising the potential that each and every one of us has. I support the Government’s reforms.

I also support the Government’s reforms on tax avoidance and evasion. Let us imagine the Labour party’s response if the Government doubled income tax and let “their chums” in big business off the hook. There would be howls of rage, and accusations that the Government are on the side of the rich and attacking the poor—accusations that they are latter-day sheriffs of Nottingham—but that is exactly what happened in 13 years of Labour government. Income tax receipts went up by 81%. The working people of this country were soaked with Labour party taxes. Meanwhile, leaving aside oil duties, corporation taxes went up by only 6%. Such is the legacy of the prawn cocktail offensive, representatives of which are in the Chamber.

The Labour Government sold the pass on fair and open competition for smaller businesses in this country in favour of large multinationals. People who work hard for a living were hit with high income taxes while large businesses were allowed to avoid taxes on an industrial scale. That is the legacy of 13 years of Labour. I am delighted that the Chancellor and the Queen’s Speech rightly take action on that.

YouGov polls show that 62% of the public consider legal tax avoidance—it is all perfectly legal, is it not?—to be unacceptable. A ComRes poll has found that 84% agree that the Government should crack down on tax avoidance by businesses operating in the UK. Indeed, 60% are prepared to call the bluff of every large corporation that threatens to disinvest from the rich, highly vibrant and successful UK market, saying that the Government should crack down on business tax avoidance even if it caused unemployment and caused some companies to leave the UK.

That is how strongly the British people feel. I feel strongly, and I was delighted to hear that my hon. Friend Ian Swales does, too. The Government are right to deal with the legacy of tax avoidance on an industrial scale. They are right to tackle the problem as an international problem, requiring international action. I therefore welcome the Chancellor’s use of the UK presidency of the G8 to take collective action to deal with tax avoidance and evasion.

In particular, we need to reform tax presence. The idea that Amazon is based in Luxembourg defies reality to the ordinary person. They look askance at Amazon warehouses from the motorway and just do not buy the idea that Amazon is based in Luxembourg. The rules need to be updated to cope with the globalised, competitive, internet-enabled world in which we live.

Photo of Dominic Raab Dominic Raab Conservative, Esher and Walton

My hon. Friend is making a powerful speech. As well as welcoming the Government’s initiative on tax evasion and tax avoidance, will he join me in lamenting the fact that criminal convictions for tax evasion plummeted to 107 in the last year of the previous Government?

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

Absolutely. We need to send a clear message that everyone should pay a fair share of taxes. We have had too much unfairness for too long.

It is also important to reform the rules on transfer pricing. Starbucks has been the whipping boy for something that is done on a consistent basis by all large international businesses—accountants call it “supply chain optimisation”. Action to tackle it would be fiercely resisted, but it is something we should do. It is not right that profit parking by international tax planners means that our Exchequer does not receive its fair share.

Part of the agenda must be a positive, engaging discussion with the European Union where we say, “Look, these are the reforms we need.” I am pleased to see that the Chancellor has been getting the Germans on board and talking to the French. Indeed, he should talk to the US, because it too is losing tax revenues. Profits that should go back to the States get parked in tax havens, so Uncle Sam loses out as well. This is an international problem that needs to be dealt with internationally.

In Europe, a key reform must be to look again at the parent subsidiary directive, which a German MEP recently described as the heartland of tax avoidance, and which is too often abused. We need to ensure that the EU works positively with member states to help to secure their tax bases. The public finances of every member state in the EU are under pressure. Every member state in the EU should see it as in their interest to take effective, international co-operative action to deal with this problem that we all face. It is high time we stood up to large international businesses and said, “We have to secure our tax base.” We have to secure a fair deal for each individual who is living in this country, so that they pay a fair share of income tax while large international corporations pay a fair share of corporation tax. We must ensure that there is a level competitive playing field for home-grown businesses, just as much as there is a level competitive playing field for international businesses. That would be the right settlement and tax framework for the UK and all our European neighbours.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West 5:01 pm, 15th May 2013

I think that some of us who have sat through this debate find it regrettable that, to a large extent, it has been hijacked by the obsessively anti-European faction in the coalition parties. It is not that Europe is not important, but the debate is about the Queen’s Speech and a reflection on the Government’s record after three years in office. Rather than intruding on the private grief of Government Members caught up in their internal and agonising debates, I would much rather say to those on the Treasury Bench that, in all seriousness, they have to face up to the fact that after a full three years in office they are responsible for the economy: they are responsible for the situation we are in, and they are responsible for getting us out of it. Unless they accept that responsibility, they will never accept the measures that are necessary to find a way out of the chronic situation in which we still find ourselves.

Three years ago, after only a few months into office and after they brought in the cuts that went too far and too fast, the Chancellor was already crowing that the plan was working and the recovery was on track. We know what the recovery was meant to achieve: central to all economic policy is growth. In the three years to date, we were meant to have achieved 6% growth, but have achieved only 1.1%. I wonder whether the Government realised that what they were committing themselves to, and which after three months they thought was working, would achieve only one-sixth of their central economic objective. Those who have doubts about whether they should change course should reflect on that. Had they realised what that would achieve, they would never have embarked on it. The only way forward is to change course. Of course, as my right hon. Friend Ed Balls pointed out, to do that would mean going back on so much of what they proclaimed to be absolutely essential, and that is impossible for them to do.

Time is limited for all Members, so I want to concentrate on just two aspects of economic policy where the Government’s incompetence and failure is hard to explain. The first is investment. What the Government call the national infrastructure plan has been variously described by conservative organisations as “hot air”, “complete fiction” and, by the chairman of the CBI, as “lacking all delivery”. Where does this leave investment? One cannot understand the Government’s failure, because there is no cross-party debate on investment or conflict over it. Less still is there any doctrinal argument such as we have on economic growth or financial policy—on the components, predictors or causal factors of, say, bond yields in 30 years and so on. Everybody in the House I have ever heard speak on this has said, “We must have more investment,” because traditionally the UK has not invested in R and D or fixed equipment and plant as much as we should have done or as much as our competitors. There is no argument about that.

Photo of Steve Barclay Steve Barclay Conservative, North East Cambridgeshire

I am struck by the hubris of the hon. Gentleman, who is a former Paymaster General. The report on the extension of the private finance initiative by the Public Accounts Committee, which is chaired by a Labour Member, found that the previous Labour Government wasted more than £1 billion. Half, or more, of the PFI projects in the housing sector came in at double their original budget. He needs to accept his party’s record on major infrastructure projects.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

Here we go again. I do not know of any major infrastructure project that has not run over budget. As my hon. Friend the Member for Huddersfield

(Mr Sheerman) said, let us see what happens to HS2. They all run over budget. Some terrible PFI deals were done—there is no question about it—but all Government Members ever do is say what Labour did badly. We have admitted that we did many things badly. We failed on certain things, but it will not help to get the Government’s plan going to say, “Oh, look what you did when you were in office.” Nothing could be more pathetic. That is what I am trying to get through to the Government. They are now in charge, and they now have to face up to their own failures and the things that need to be done to put them right.

I come now to what those things are. I have mentioned how the Government budgeted for 6% growth, but in fact have achieved about 1% growth. It could not get much worse than that. Under their national infrastructure plan, they have about 567 projects in the pipeline, ready to go, but in three years they have achieved seven of them, or 1.2%. Everyone agrees that these projects are good ideas, so why can they not get these things done? We own one of the banks outright—I shall come to the banks in a moment—and we have a substantial stake in another, but the Government have created their own business bank. It could be investing in some of these projects, but against a background in which bank lending to businesses has fallen by £4.8 billion in the last quarter alone, they are offering £300 million through the British business bank. It is no wonder they are not getting the projects through. It is no wonder they are failing.

Photo of Steve Barclay Steve Barclay Conservative, North East Cambridgeshire

With respect to the hon. Gentleman, who is a senior Member of the House, he is just not engaging with the facts. Public investment as a share of GDP will be higher on average over this Parliament and the next Parliament collectively than under the last Government. On housing, which was my previous example, his party’s record was absolutely shocking, whereas our build to rent fund is addressing some of these issues. Action is being taken. He is ignoring his own record as a former Treasury Minister and the action that this Government are taking. It is remarkable.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

The Chancellor produces that tired statistic every time we mention investment. Let us take construction. The last time the level of house building was this low was in the 1920s. Overall, the level of construction has fallen 11% in the last year. This is against a background of a chronic need for the jobs and growth that investment can supply. We need a major uplift in the level of investment. It is higher, marginally, than it was 10 years ago, but so it ought to be. It is pathetic that they continue not to face up to the reality of the failure of their own programme. As long as they do not, they will not succeed. Would Stephen Barclay really have embarked on this plan if he had known that, instead of 6% growth, we would end up three years down the road with 1% growth? Would he? Of course not: nobody on the Government Benches would have done that, and if they had, they would have needed their brains tested—perhaps they need them tested anyway. That is the truth of it.

Then we come to the failure of Merlin and the question of the banks. Instead of making the Royal Bank of Scotland a national bank to invest in such projects, all the Government want to do is flog it off ahead of time. That will be another failure to add to the long list. This is a Government of failure who will not admit it, and therefore they will not put things right.

Photo of Mike Thornton Mike Thornton Liberal Democrat, Eastleigh 5:10 pm, 15th May 2013

May I say that just a few months ago I could only have dreamt that I would be able to follow such a distinguished and respected Member of the House as Mr Robinson?

Hon. Members will be glad to know that I will be brief—I will also talk about something other than our coalition partner’s internal difficulties over Europe. My e-mail inbox—like, I imagine, everyone else’s—is filled with demands that we spend more on the health service, education, defence and so on. However, to be able to do so in the current budgetary situation requires the economy to grow faster than spending. Otherwise, the resultant increase in debt would act like a massive anchor on a ship, bringing the SS Great Britain to a shuddering halt and leaving it vulnerable to the international winds and tides of financial misfortune.

I want to consider five fundamental issues, which I think the coalition is addressing. They are: jobs, jobs, jobs, jobs and jobs. Let me deal first with jobs in our small and medium-sized businesses. We are putting in place £2,000 for each business to help them to take on new staff. They include businesses as diverse as SPI Lasers, Oswald Bailey and La Fenice in my constituency. We are looking at helping young people to get jobs. Already, 1.2 million apprenticeships have started. In Eastleigh, that has meant a 65% increase in apprenticeships since we came to power.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

The hon. Gentleman will be aware that the unemployment figures came out today and that long-term youth unemployment is now more than double what it was when his Deputy Prime Minister introduced the Youth Contract. Does he think the Youth Contract is therefore working?

Photo of Mike Thornton Mike Thornton Liberal Democrat, Eastleigh

The Youth Contract still has a few months to go, but I think we can see that it has already been effective, and the March figures demonstrate a return to increasing employment and a reduction in unemployment. What is more, part of our work on apprenticeships is about preventing abuse of apprenticeships. We are setting out a definition of what an apprenticeship is, which will be a significant help in enabling businesses to take on more apprentices.

We have also seen an increase in jobs in manufacturing, with our continuing commitment to green energy and £5 billion of extra investment in science and high-tech. The electricity market reform alone could support as many as 250,000 jobs in that sector. Then there are jobs in the regions. I am lucky to have a very low rate of unemployment in my constituency, but a £2.6 billion investment in our regions is spurring economic growth in all our constituencies, not just mine. Finally, there are jobs through design. By making it easier for businesses to protect their designs, intellectual property rights will spur further investment in this British success story.

What do all those schemes mean? They mean more jobs, and more jobs mean a better life for millions of people, which I am sure all of us in this House would like to see. They also mean more revenue for the Government—more funds for the NHS, the disabled and our schools. What is more, the Lib Dem initiative to increase the tax allowance to £10,000—and, hopefully, onwards and upwards—means more take-home pay for every single one of those new employees. If that is what Liberal Democrats can achieve when they are in government as part of a coalition, just imagine what we could achieve with a Lib Dem majority in this place. [Laughter.] If Members want to hear, I will tell them what: a stronger economy and a fairer society, so that everyone can get on.

Photo of Emily Thornberry Emily Thornberry Shadow Attorney General 5:14 pm, 15th May 2013

I should like to begin by belatedly congratulating Mike Thornton on his election to the House. I also congratulate him on his constant optimism. For the sake of the record in Hansard, I must point out how very lonely he must be on the Liberal Democrat Benches. He is largely by himself over there.

So, here we are after three years of the coalition Government. The early growth that they inherited has been strangled, and the economy is flatlining. We have terrible rates of unemployment, particularly among the young, for whom long-term unemployment continues to increase. Many of those youngsters have no hope. Living standards are being squeezed, and it is more and more difficult for people to make ends meet. Business confidence is dying, and investment is declining as a result.

The country is crying out for a change and for the Government to do something. People were looking forward to a Queen’s Speech that would show that the Government were prepared to do something, but Her Majesty might as well have stayed at home. The measures in it do not address our economic crisis at all. I am not saying that there is nothing in it for us to welcome. Reform of the Independent Police Complaints Commission is long overdue. We have yet to see what it will involve, but I hope that the commission will be improved. I also hope that a proposal for a register of struck-off police officers will be included in the legislation. I even welcome some of the changes to the Dangerous Dogs Act 1991.

Apart from that, it is hard to see how this Queen’s Speech will help the country. We need a new plan to tackle the lack of jobs and growth, but it offers us nothing. Do the Government really believe that the draft deregulation Bill will get the economy going again? Do they believe that by snipping away at red tape they will encourage the private sector to rise up like the Incredible Hulk and get the economy working? I do not think that they really believe that. They cannot believe that that is going to save the economy. Surely they do not believe that they can just sit back and do nothing. In circumstances such as these, it is surely the responsibility of the Government to take a lead, but I am afraid that the Chancellor of the Exchequer gives every sign of being a man who has decided that he cannot afford the loss of face that would inevitably accompany a change of course. He cannot afford to expend so much political capital on doing something new, and we are all paying the price as a result.

Photo of Henry Smith Henry Smith Conservative, Crawley

I take it that the hon. Lady is suggesting some sort of plan B, as offered by her party. Does she feel that the socialist model that has been pursued by President Hollande in France over the past year has led to success in that economy, given that it has now entered a triple-dip recession, compared with the growth in the UK economy?

Photo of Emily Thornberry Emily Thornberry Shadow Attorney General

The difficulty is that, by carrying on regardless, this Government are killing the economy. I do not have time to go through my bundle of suggestions put forward by various economists, but Paul Krugman has said that the Government’s austerity plan is “fundamentally mad”. I was hoping to have time to read out more such views, but there is not time.

I would like, however, to use the few minutes that I have to give the Government some advice. They might listen—you never know! How about looking into housing? For example, £30 billion spent on infrastructure investment in housing—particularly affordable housing and social housing for rent—would represent 2% of GDP. The International Monetary Fund has said that the fiscal multiplier resulting from such investment could be between 0.9% and 1.7%, which could boost growth by 2.6% of GDP. That would be a short-term boost, but the TUC recently commissioned the National Institute of Economic and Social Research to look at the effect of such investment over the longer term. That research showed that such investment would continue, three to four years on, to have a positive effect on debt and GDP.

This is not just about the economy; it is also about fairness. We know that there is not enough housing. We know that people need jobs and training, and that our youngsters need something to do. They need hope. Investment in housing would provide all those things. This Government are building the smallest amount of housing of any Government; they have the worst peacetime record of doing that of any Government since the 1920s. Council house waiting lists continue to grow. If the Government continue at this rate, it will take until 2129 to build enough housing to meet the current need.

Of course, we know that the Government want to cut back on the benefit bill. They say it is wise to introduce a blanket cap without thinking about how some areas that have a desperate housing crisis will have much higher housing costs. My constituency provides a very good example. If a family of five is living in a three-bedroom house in the private sector in my constituency and someone is unlucky enough to become unemployed, the rent would be £400 a week. The question I wanted to ask the Chancellor earlier—unfortunately, he did not allow me to intervene—was this. If the rent is £400 a week and the cap is £500, what does such a family of five do? Does it live on £100 a week or not pay the rent instead? If the rent is not paid, does that mean the family is intentionally homeless, and if it does, does the council have to re-house the family? If the council does have to re-house them, but there is not enough social housing, where does the family go? Where would the Government suggest these people go? Perhaps they would go to Dover or to some of the marginal seats in outer London. Unfortunately, the Government have no idea of where these people should go. The tragedy of the debate so far is that there has not been enough emphasis on fairness.

Photo of David Rutley David Rutley Conservative, Macclesfield 5:21 pm, 15th May 2013

The Queen’s Speech sets out a positive agenda—one that shows that Government Members are supporting hard-working people who want to get on in life and working to boost our national competitiveness to build the foundations for much needed sustainable economic growth.

The draft Deregulation Bill rightly focuses on reducing the bureaucratic burden faced by all too many businesses. It is a subject on which I have campaigned long and hard during my time as a Member of Parliament. The Institute of Directors has calculated that the cost of regulation on business in this country is £110 billion a year. That is clearly too high. This Bill will make a difference by exempting from health and safety law the self-employed whose activities pose no potential risk to others. It will also give non-economic regulators a new duty—to have regard to the impact of their actions on growth. These are positive steps for businesses in Macclesfield and across the country.

Our ability to innovate has always been critical to our competitiveness. That is why it is indeed time to introduce the Intellectual Property Bill. I welcome the fact that the Federation of Small Businesses has said:

“Streamlining the patent system…will make it more cost effective for small businesses to protect their inventions.”

The Bill goes further by improving design protection, too. That is good news for this vital part of the UK economy, which accounts for more than 1% of gross domestic product.

As competitiveness improves, businesses will be better placed to create more jobs, and the national insurance contributions Bill clearly demonstrates the Government’s commitment to this vital task. The new £2,000 employment allowance will encourage in particular small businesses looking to take on more staff, and it will build on the Government’s proven track record of job creation, with over 1.2 million jobs created in the private sector since the election. I am pleased that we have the ambition to go further.

The Queen’s Speech sets out an important agenda that will improve our national competitiveness, but that ambition does not stop at the English channel—much to the disappointment of my hon. Friend Charlie Elphicke, who is no longer in his place. There is more work to be done within the EU and in wider international markets. As the UK’s competitiveness improves, we need British businesses exporting more. Britain needs to fall in love again with enterprise, entrepreneurs and exporting. Equally, businesses need to be more curious about exploiting opportunities overseas and follow the example of successful SME exporters such as J Tape in Macclesfield.

Trade associations and chambers of commerce should help raise awareness of the sources of support available to SMEs and they need to make sure that they are out there representing British businesses in vital growth markets such as Brazil and South Africa, where I suspect they are currently under-represented. British businesses should seize the day and make exports our business once again.

There have been reports in recent days of a real and growing appetite among my Conservative colleagues to address our relationship with the European Union. I can categorically confirm that those reports are true. It is increasingly clear that the public want the issue to be addressed as well. They understand that it is not just about sovereignty, but poses a clear and present danger to our real economy. I am pleased that the Conservative party, alone in the House, recognises that, and will offer an in/out referendum.

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution)

We have just learnt from The Spectator that Nadine Dorries is talking about a UKIP-Conservative candidacy at the next general election. How many other Conservative Members are considering that, and does it constitute a new realignment of the right?

Photo of David Rutley David Rutley Conservative, Macclesfield

Whatever the hon. Gentleman may have read in the paper, and whatever blog may be in existence, there is no plan for any such coalition.

Photo of David Rutley David Rutley Conservative, Macclesfield

Absolutely. We are categorical about that. We have a very clear plan. We are the only party in the House that is presenting proposals for an in/out referendum, and things will stay that way. On the back of that, I am confident that we can secure an outright Conservative victory.

Photo of Angie Bray Angie Bray Conservative, Ealing Central and Acton

Does my hon. Friend agree that it is essential for us to get the message across that only under a Conservative Government will the country have an EU referendum, and that the referendum will come after we have renegotiated our terms of membership with the EU? That is vital if we are to give people a proper choice and present them with the best options. The draft Bill that was published yesterday underlines that message very clearly.

Photo of David Rutley David Rutley Conservative, Macclesfield

What my hon. Friend has said is absolutely right. It is crystal clear that if the public want an in/out referendum, it is only the Conservative party that will offer them the choice. That is why I support the Prime Minister’s position, and welcome the publication yesterday of the draft referendum Bill. It is entirely proper for the British people to have a right to vote and to make their views heard on this vital issue.

I am keen to see a fundamental realignment in our relationship with the European Union. Although I am half-Danish, to me our involvement with the EU is about hard-nosed economic benefit, and has nothing whatever to do with some woolly sentimentalism that others may consider important. We are not alone in Europe in wanting to bring about fundamental changes in the European Union. I recently went to the Bundestag and met members of the Christian Democratic Union and the Christian Social Union. It is clear that they too have concerns about the future direction of the EU. When the public can see that youth unemployment in Spain is now at 50%, it is clear that new solutions need to be found. That is critical for the United Kingdom, and vital for other member states.

The Prime Minister’s recent speech has served as an important catalyst in taking forward the debate. Urgent negotiations should follow in the months ahead. A Member asked earlier, from a sedentary position, when those negotiations should take place; they need to start immediately. Given the promise of a referendum, other member states should not underestimate our resolve. When those negotiations have been completed, it will be absolutely right to let the people have their say.

We are entirely clear and serious in our intent. The plans have been set out, and I hope that other member states will recognise that the clock has started ticking. It is time for action. The Queen’s Speech shows that we are taking action to improve our competitiveness and create jobs at home, and we need to see the same commitment to action in the EU.

Photo of Natascha Engel Natascha Engel Chair, Backbench Business Committee, Chair, Backbench Business Committee 5:28 pm, 15th May 2013

It is a great pleasure for me to take part in this final day of the Queen’s Speech debate, and to talk about the Government’s plan for economic growth. I have serious concerns about their proposals for the big infrastructure project HS2, which will mean that high-speed trains will go through the northern part of my constituency, just south of Sheffield—through Staveley, Killamarsh and, in particular, the village of Renishaw.

My main objections are to the lack of information for, and consultation with, the people whom the project will affect; the lack of a coherent economic case beyond a vague promise to open up the regions; and the lack of any real information about that economic case, when £800 million of taxpayers’ money has already been spent on preparatory work, and preparation is currently being made, in the two Bills that are to come before Parliament, for the spending of at least a further £33 billion.

Some of the things I am most concerned about, however, are the complete lack of understanding about people’s lives and the communities in which they live, and the fact that regeneration projects were blighted on the very day the plans for the HS2 route were published. Even though nothing will happen in my part of Derbyshire for 20 years, people are already finding it almost impossible to sell their homes, and businesses are starting to suffer. The main business and employer in the village of Renishaw is a fabulous wedding venue for people all around south Yorkshire and northern Derbyshire. It is very famous and has been operating for many years. Even though it is 20 years before anything may or may not happen, people are already cancelling weddings there simply because of the uncertainty.

The Chesterfield canal project, which regenerates very poor parts of the constituency, has also been operating for decades. The HS2 tracks will go right over the canal, and any match funding raised for the development of the canal has already stopped. These are important economic regeneration projects that have been stopped in their tracks because of the publication of a train line route, which has not even been finalised yet, let alone built.

This is not a “not in my backyard” argument. The tracks will go right through families’ houses, and through villages in which people have lived for many generations. They will not benefit from HS2, as the train does not stop in Derbyshire, but the HS2 project will stop all the regeneration and economic gains we have been making since the closures in the coal and steel industry.

That is not the only thing that is of concern to me. This is feeding into a far wider political problem. We say we represent these people, but they say they are not being consulted and not being allowed to have a say. In fact, we are saying we know better than they do what is good for them, but in this case we do not. I urge the Government to consult, persuade and explain, and to listen to all these people whose lives we are proposing to destroy. Until we do so, I will oppose these plans.

Several hon. Members:


Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk 5:32 pm, 15th May 2013

I am very grateful to be called to contribute to this debate, particularly since some Members have decided to put Europe, which is one of my interests, firmly on the agenda.

This debate should be framed in the context of a paper passed by the Council of Europe in the last year entitled “The young generation sacrificed”, and the follow-up papers in which I have been involved. They address educational needs and opportunities for young people, the need for technical training and skills, and the right of youth to fundamental rights and access to a better life, because that is the generation we have stolen from as a result of our errors both in this country and across the EU. We should measure our Government’s wider performance alongside how that generation is treated.

In the European context, I have spent two days in Brussels and the Netherlands with the Chair of the European Scrutiny Committee, Mr Cash, and others. I was astonished at the extent to which not just the EU but the eurozone are straitjackets preventing growth. We met Olli Rehn, Commissioner for Economic and Monetary Affairs, who had a blueprint, put forward on 5 December. We also met Herman Van Rompuy—one more president of Europe—who put forward a blueprint for a deep and genuine economic and monetary union in December 2012. On 29 January 2013 José Manuel Barroso, the other current president, spoke at a European conference in support of Van Rompuy’s blueprint, saying it was the only way forward. However, what it was, in fact, was a constraining arrangement in economics—in countries’ banking systems and budgets—as the Chair of the ESC said. The arrangement would be contracted and would have penalty clauses, and it would punish Governments who are already in dire straits, and the people of their countries, for not coming up to what are, in fact, the aspirations of the northern European countries, who are making so much out of the European arrangement at present.

In fact, the statistics showed that we had a growth-free, recession-bound EU, and alongside it we have a growth-free, austerity-choked UK economy. As we have heard, even in these times, our deficit against the EU has gone up to £72 billion, which represents more than £1.25 billion every week. These countries are in a bad condition, but we are still in a worse condition. Oddly, the G7—our Prime Minister was there—reported how happy it is with the arrangements for the EU to continue to squeeze and choke these people, but that contradicts what the Chancellor said today. What he said about the ECOFIN meeting suggests that there would appear to be an argument against how the EU is performing and constraining people. I do not know who is telling the truth—was he just making his speech because of the leadership bid in the background, was he playing to the dissidents on his Back Benches, or was he genuinely saying that an attempt is being made in Europe to unlock that terrible arrangement set up in response to the eurozone crisis?

The crisis is a eurozone one. Everyone we spoke to did not talk about the countries in the south being a danger to the EU; they said that they were a danger to the euro. The euro has become the symbol of what they are doing to others to punish them, because the euro is more fundamental than the European project, and that really worries me. There is a growing meanness of spirit in what is being talked about in the EU: people are to be punished because the euro is being threatened. That is very strange, and it is certainly not what I voted for when I voted yes in the referendum to join the EU. There are serious questions to answer here, because I do not think the renegotiation being talked about by the Prime Minister has anything to do with that—it is on the fringes. His renegotiation is to do with justice and home affairs and Schengen agreements; it is not about the fundamentals of the European project, which is now an economic project driven by the euro and not by the interests of the people of Europe.

I wish to remark on some things in the Queen’s Speech, one of which is apprenticeships. We must be frank about them. Apprenticeships are now talked about by McDonald’s, which has them—in-service training for six months constitutes an apprenticeship. Tesco and Sainsbury’s say that they have apprenticeships, too, but these are not apprenticeships. The reality is that 60% of the skills shortages are in non-graduate technical skills—we are not training proper apprentices to do the jobs that need to be done.

Secondly, my constituency contains a large petrochemical industry that is losing money hand over fist; it is burdened by massive energy taxation that is not paid by the rest of the world, and even has a 5% to 10% disadvantage against the EU. What is there in the Queen’s Speech to remove those burdens from our industries to let them take people on? If those burdens are not addressed, we will not deal with the problem in the beginning, that of the youth who have been betrayed by this Government and, basically, by the European project.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 5:37 pm, 15th May 2013

First, may I say how much I enjoyed the speeches of the hon. Members for Dover (Charlie Elphicke) and for Redcar (Ian Swales), and their comments on tax evasion and tax avoidance? I have been raising those issues for more than a decade in this House, and we are now starting to take them seriously. If we collected the tax that is owed, we would go a long way towards solving any spending problem we have. The speech made by Sammy Wilson was also first class, and I agree with what my hon. Friend Natascha Engel said as well.

I want to focus on the economy. Clearly, austerity is failing, and I was among those who predicted its failure. Early in the life of this Government, I quoted Paul Krugman and his view that the Government were going in precisely the wrong direction. What Britain needs is a reflationary programme, not austerity, with a boost to public spending in specific target areas. We have 2.5 million people unemployed, so it is logical that additional spending should be directed to areas of high labour intensity: construction and the public services, which are precisely the areas that have suffered the most savage Government cuts. Construction output has fallen by 12% since 2010 and by 20% since 2008, and thousands of jobs have been cut in the public services. Jobs in construction and the public services have the added advantage of pumping additional economic demand primarily into the domestic economy, so maximising the reflationary multiplier effects to boost growth. Reducing unemployment quickly and substantially will cut the bill for benefits, raise tax revenues and bring down the Government’s spending deficit into the bargain. Moreover, the kind of jobs created by such a programme will go to those whose marginal propensity to consume is high, thus putting their newly increased income straight back into the economy as they spend their new wages. If, indeed, additional borrowing is required—it may not be required if we just collect the taxes we are owed—the kick-start should not be expensive. I do not think reflation will be a problem. Interest rates are in any case very low so the costs of borrowing are also very low.

There is, however, a serious problem with such a reflationary programme. Although construction and the public services have minimal import content, meaning that additional spending goes initially into the domestic economy, the additional spending will quickly begin to suck in imports and Britain already has a massive and growing trade deficit, largely with the rest of the EU. The figures are stunning. We had a deficit on the current account in 2012 of minus £57 billion, up from minus £20 billion the year before. The goods deficit was more than £106 billion in 2012, more than £2 billion a week. The bulk of this deficit is with the EU 27 and rose from £4.8 billion in January this year to £5.1 billion in February, on course for a deficit of more than £60 billion this year and possibly £70 billion, as was said before. This is a massive problem.

There is a goods deficit with the rest of the world too, up to £4.3 billion in February from £3.4 billion in January, so the deficit is not just with the EU, but the EU is the major problem. Britain therefore has a desperate trade problem that can be solved only by rebuilding and expanding the UK manufacturing sector. It is a shocking fact that manufacturing as a proportion of GDP in the UK is half that in Germany, and it is no surprise that we have a gigantic trade deficit specifically with Germany.

This phenomenon is not new, of course. I have with me a copy of a pamphlet published 24 years ago by the Institute for Public Policy Research called “The German

Surplus”. Even then, there was a massive problem that had grown quickly over that decade. It was just such trade imbalances that Keynes knew would cause economic damage and, if they were not addressed, would ultimately cause serious economic and political tension between economies and between nations. The 1944 Bretton Woods conference decided to provide for essential devaluations by deficit countries, and Keynes proposed too that countries with large trade surpluses should be required to revalue their currencies. The latter proposal was rejected by the US, but the necessity of appropriate exchange rates was recognised. This is why the euro is such a disaster and is doomed to fail.

Mercifully, Britain avoided the euro trap and is able to flex its exchange rate. However, it is glaringly obvious that we need to depreciate our currency to become competitive again and to maintain an appropriate exchange rate so that we can rebuild our manufacturing industry. We have seen manufacturing deteriorate over several decades and we need to reverse that trend.

Photo of Henry Smith Henry Smith Conservative, Crawley 5:42 pm, 15th May 2013

Thank you, Mr Speaker, for unexpectedly calling me in this debate. It is a great pleasure to follow the hon. Members for Luton North (Kelvin Hopkins) and for Linlithgow and East Falkirk (Michael Connarty), both fellow members of the European Scrutiny Committee. I very much enjoy the time we spend on that Committee, the worthwhile discussions and debates and the evidence that we take from witnesses. However, on this occasion I disagree with them both about our economic growth.

Listening to some of the contributions earlier this afternoon from the Opposition Benches, including the remarks of the former Paymaster General, Mr Robinson, one would be forgiven for thinking that this country had not been left with the highest peacetime deficit that we have ever witnessed in our history. It is remarkable that in three relatively short years not only has that deficit been paid down by a third, but we see economic growth starting to come through. Compared with our competitors—France has gone back into negative growth and back into recession and Germany has seen economic growth of only 0.1%—the latest growth figure of 0.3% is a remarkable testament to the very difficult and invidious decisions that this Government have had to make in clearing up the crisis that was left by the Labour Administration.

Fortunately, evidence of economic growth is coming through in my constituency. Today’s unemployment statistics in Crawley showed that in April unemployment fell to 3.4%, although I appreciate, as someone who has previously been unemployed, that it is 100% of a problem for each individual who makes up that statistic. That figure represents a fall on the previous month, and a fall on this time last year. Earlier this year, I was honoured to open a new production line at Vent-Axia in my constituency, which represented jobs coming back to Crawley from China—a sign of growing confidence in the British economy. I congratulate Gatwick airport on its significant infrastructure investment of £1 billion to upgrade its terminals, making that an attractive international trade destination, which is to the benefit not only of my local economy but of the UK economy.

In the brief time I have, I want to touch on the issue of the eurozone and the future of the EU, and the significant drag that that has had on this country’s economic growth. It is an example of a political project, which essentially is what the EU is, rather than largely an economic project, which is what it should always have been. The resulting eurozone crisis means that demand in the eurozone is down and therefore demand for British goods is down. Despite that, our Government’s performance in engendering economic growth is remarkably impressive. I was pleased in the last Session to serve on the Growth and Infrastructure Bill Committee, and am pleased to see in the Queen’s Speech further measures to reduce regulation and burden on business. If we give the people of this country a choice on our future membership of the EU, we can further free ourselves to ensure that economic growth and our competitiveness as a global, free-trading nation, a bridge between our historic links in the Commonwealth and our proximity to Europe, will mean that this country has a far brighter future.

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution) 5:47 pm, 15th May 2013

In the few minutes available to me, I want to confine my remarks to amendment (b). When the history books are written and we come to the chapter that describes and explains the UK’s exit from the EU, this week will go down as an important and significant week. After this week, the UK’s departure from the EU becomes almost unstoppable.

The UK, already a surly, sulky, semi-detached member of the EU, always available to offer some withering criticism to one of its few remaining allies within the EU, already halfway out of the exit door, is like some sort of staggering drunk looking for the oblivion of last orders, on its way out chanting, “We are the famous United Kingdom. No one likes us. We don’t care.” That is the reality of the UK within the EU. Its exasperated, declining number of allies in the EU do not know whether to boo, cheer or sing hasta la vista, such is the state and condition of the UK’s membership of EU.

It is clear that the UK is on its way out. It will either be out on the basis of the salami-slicing favoured by the Prime Minister—let us renegotiate a new terms of entry, which will obviously be rejected by most of its European allies—or, more likely, it will be wrenched out following the yes/no referendum plan by the Government, in a sort of in-your-face Barroso gesture from the UK electorate. What we actually have is an irresistible momentum for the UK to be taken out of the EU.

Of course, the EU was not even mentioned in the Queen’s Speech—that now appears to be an unfortunate oversight—but it is centre stage, because we are entering a new Session of Parliament, the UKIP session. It is the age of Farageism, a desperate creed characterised by an obsession with departure from the EU and with immigrants. It is an unpleasant, intolerant, neoliberal creed with a disdain and hearty contempt for minorities. That is what will underpin this Session of Parliament, because the Government know that UKIP will win the next European election.

That is not my country and I do not want it. I want my country out of all that. My country is very different. The reason UKIP does not do well in Scotland, and the reason there is the lone panda of one Conservative

Member in the Scottish Parliament, is that that agenda simply does not chime with the collectivism and the social attitudes and values of Scotland. That is why UKIP got less than 1% of the vote in the most recent Scottish parliamentary elections. I am proud that my country is so different from the one we observe south of the border. I hope that England and the rest of the United Kingdom do not go down that road, but they are entitled to have the Government they vote for, just as my nation is entitled to the Government we vote for.

There is now the real prospect of a party whose members the Prime Minister refers to as fruitcakes, loonies and closet racists having a share in the running of the United Kingdom. What will the Government do to ensure that does not happen? They have tried to name-call and disparage, but that has not really worked, given UKIP’s success in the local elections. They could try to buy UKIP off, but that would not work either. They are absolutely stuffed. My advice to the Government is that they had been doing all right and should have stuck with the hoodie-hugging and huskie-mushing new Conservatism. They simply could never out-UKIP UKIP, which is the master of European obsession and grievance. They should stick to their guns and ensure that they are different from UKIP.

It used to be said that Scottish independence would lead to Scotland being taken out of the European Union. Not many people are saying that now.

Photo of Henry Smith Henry Smith Conservative, Crawley

Does the hon. Gentleman think that an independent Scotland would have to join the euro, or does he want to keep the British pound?

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution)

The hon. Gentleman is not on particularly steady ground when it comes to the debate on Scottish membership of the European Union. To answer his question, we will not be joining the euro but instead will follow Sweden’s example.

The Scottish people are observing two futures. In one future they remain shackled to the United Kingdom, which will become increasingly shackled to an intolerant, right-wing agenda. Nadine Dorries has already said that she will have a joint UKIP-Conservative candidacy at the next election. I do not know how many more Conservative Members will adopt that stance. What we are seeing is a realignment of the right. All I have heard from the 1922 committee, which has not been very pleasant recently, with all the disagreements about Europe, is that there is a faultline running through the Government. The Scottish people have a choice: they could have that future, or they could have their own future, determined by them and based on their values.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The hon. Gentleman is making the case that Euroscepticism is an entirely right-wing view. In fact, across Europe the majority of Euroscepticism is on the left, among socialists, trade unionists and working-class people.

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution)

That might be true, but that is not how it is being demonstrated politically.

What we have observed is a total realignment. There are two different countries, and one is emerging south of the border with increasing UKIP results. It is absolutely certain that UKIP will win the next European election, and Conservative Members should be very careful about all that. They are right to be wary, because it could deprive them of office. I do not know what will happen, but Scotland has a choice—thank goodness—to do something different. We can remain shackled to an increasingly right-wing United Kingdom, almost relaxed about its continuing decline, or we can decide to have a future of our own, a future determined by the Scottish people, based on our social values and the type of community we want to develop and grow. We can choose to be a consensual and helpful friend in Europe, rather than one that likes to criticise, is semi-detached, does not really enjoy being there and is on its way out. Thank goodness we have that choice.

I know the type of future that my fellow countrymen and women will choose. They will opt to ensure that their future is in their hands. They will determine the type of Scotland they want: a Scotland standing proud in a coalition of nations around the world. That is the country I want and I am absolutely certain that that is what my fellow Scots will choose next year.

Photo of Jack Dromey Jack Dromey Shadow Minister (Housing) 5:54 pm, 15th May 2013

This is a Queen’s Speech that does not begin to rise to the challenges facing our country, that lacks ambition and that is so thin in content it could have been written on the back of a fag packet, had the Prime Minister not given in and shelved plans for plain packaging of cigarettes. It was vetted by a dubious Australian spin doctor, who deleted any reference to a measure on curbing the activities of lobbyists.

This is a Queen’s Speech from a failing Government presiding over the toxic combination of a flatlining economy and the biggest housing crisis in a generation. House building is down and housing completions are at their lowest since the 1920s. Homelessness is up; it fell 70% under Labour and has risen 30% under this Government. We have a mortgage market in which young couples in particular struggle to get mortgages, and a rapidly growing private rented sector characterised by insecurity over quality and ever-soaring rents.

I see first hand in my constituency the consequences of the Government’s failure, including the lengthening queues at my surgery of couples desperate to get mortgages and couples desperate to keep a roof over their heads. A building worker in Kingstanding burst into tears when he said he was desperate to get back to work, but could not do so—80,000 building workers like him have lost their jobs under this Government.

Photo of Douglas Carswell Douglas Carswell Conservative, Clacton

Does the hon. Gentleman think that the answer to this problem might be even more cheap credit—perhaps a British version of Fannie Mae and Freddie Mac? What does he think we should do to sort out the lack of availability of mortgages?

Photo of Jack Dromey Jack Dromey Shadow Minister (Housing)

No, I do not believe that we should take the same approach as Fannie Mae and Freddie Mac in Britain. I will come in a moment to our proposal.

Three admirable young people in Castle Vale in my constituency told me recently that they were desperate to do an apprenticeship in the construction industry, as their dads and uncles had done, but they could not get one. R&C Williams, an excellent local building company, is surviving despite the problems in the construction sector. Nevertheless, its managing director told me that the previously successful companies run by his two best friends have now gone out of business.

I also see in my constituency the working poor—people on minimum wages and whose wages are being held down and sometimes cut—who end up having to claim housing benefit as their rents go up. It is a startling statistic that 10,000 households a month now go on to housing benefit, because struggling families cannot afford to pay their rent. Such things are pushing up the benefits bill, as is rising unemployment in the west midlands. The number of people unemployed rose in the last quarter by 16,000 to 253,000, which is up by 26,000 over the past year.

That is why Labour proposes urgent action now. The building of 100,000 homes would put 80,000 building workers back to work, create apprenticeships for young people who desperately want a future, lead to wealth in the supply chain—all those who manufacture bricks, glass and cement—and add 1% to GDP. The lesson of history is that our country has never had sustainable economic recovery after events such as the depression, the war and every recession since the war other than when there has been a major programme of public and private house building, and that is why Labour’s amendment proposes action to do precisely that.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

Is not the set of measures mentioned by my hon. Friend in stark contrast to the Government’s own NewBuy scheme? We were promised that 100,000 families would have access to cheap mortgages, but only 1,500 families were able to take up that initiative.

Photo of Jack Dromey Jack Dromey Shadow Minister (Housing)

My hon. Friend is right. The Government have a miserable track record of promising the moon and failing to deliver. I will say more about that in a moment.

There is growing demand for urgent action to stimulate the building of affordable housing from organisations ranging from the National Housing Federation to the CBI. There is a chronic lack of confidence not only in the economy, but in the Government’s housing policies. There have been four “Get Britain Building” launches and 300 separate initiatives, and yet the sorry saga of failure continues.

We now have Help to Buy. We are in favour of helping people to realise the dream of buying their own home. However, a powerful report by the Treasury Committee described the scheme as “unconvincing” and said that it was likely to push property prices up and unlikely to produce the significant lift in the supply of new homes that is badly needed. There is also the bitter irony that Help to Buy will help millionaires, fresh from their tax cut, to buy a second home worth up to £600,000—an absurd anomaly that stands to this day. There is one law for the rich and one room for the poor because of the bedroom tax.

That leads me to my concluding remarks. The Chancellor spoke earlier about the need to get benefits down, ignoring the reality that it is soaring rents and unemployment that are pushing benefits up. He has engaged in the most disgraceful debate that divides our country between shirkers and strivers. Only yesterday,

Lord Freud said in a speech that people affected by the bedroom tax should—I kid thee not—get a job or sleep on a sofa. What would he say to the severely disabled couple who came to see me who can no longer sleep in the same room, but whose son has moved out? Because they have a “spare room”, they have to pay the bedroom tax. It is an immoral tax that will cost the taxpayer more because there will be a higher housing benefit bill as people are pushed out into the private sector and disabled people will be forced to move from adapted homes to unadapted homes that will then have to be adapted by local authorities and housing associations.

Instead of doing what they should be doing, the Government are seeking to divide the nation. They are driving more and more people into the trough of despair. The essential difference between them and us is this: they divide the nation, we will build one nation.

Photo of Margot James Margot James Conservative, Stourbridge 6:02 pm, 15th May 2013

I welcome the Queen’s Speech, especially the Bills that will drive growth and help businesses in my constituency. Manufacturing companies will welcome the capital allowances and companies of a certain size and charities will welcome the national insurance rebate. Everyone, including businesses, will welcome the fairer taxes and the Government’s commitment to tackling corporate tax avoidance.

I am delighted that the UK is now one of the 10 most competitive countries in the world in which to do business, according to the World Economic Forum. We must capitalise on our improved competitiveness by exporting more to the rest of the world outside the European Union. Our recent success is demonstrated by the two-thirds increase in our exports to China, India and Brazil over the past two years.

In the debate about our membership of the European Union, some people, including Lord Lawson, have argued that we need to extricate ourselves from the European Union to capitalise on the opportunities in the rest of the world. I disagree with that. We should be capitalising on the opportunities in the rest of the world as well as, not instead of, doing the bread-and-butter business that we already do with the European Union.

I liken that situation to running a business. I ran a service company for 15 years and we were always trying to balance our efforts to generate new business with the need to look after our existing business. That is always a tension. It is the same for the country. We have 45% of our exports going to the EU, and we need to look after that business in difficult times, but at the same time we need to go after the new business. That is why, out of the top 20 markets that UKTI is prioritising for Government support for exports, only one, Poland, is in the EU. All the rest are in the rest of the world, and that is as it should be.

The EU is fundamentally about the economy, growth, improving competitiveness and jobs. Throughout Europe, we need to improve our competitiveness. As my right hon. Friend the Chancellor said earlier, Chancellor Merkel stated at the beginning of the year that Europe accounts for 7% of the world’s population and 25% of its GDP, yet 50% of its social spending. That cannot go on in the EU and Britain.

The Prime Minister’s strategy of negotiating a new settlement with the EU and a change within it, has to be about improving the competitiveness of all member states. There has already been some success over the past two years. Britain has been extricated from the EU bail-out funds, we have a better policy on fisheries, we have managed to make some progress on the EU budget—not as much as we would like, but at least we have had no real-terms increase in the multi-annual financial framework for the first time ever—and there is starting to be some movement on regulation.

Regulation is a key matter. I am talking about not just employment law but all regulation. Businesses in some areas of my constituency are considering relocating their manufacturing outside not just the UK but the EU as a whole to become more competitive, and that problem has to be tackled. However, we will not tackle it by rubbishing the Government’s strategy of reforming the EU, which is the path that many in the press want to lead us down. We should give the Prime Minister our backing, because his strategy rests on change being delivered throughout the EU—change that will benefit all member states, not just Britain. That is the basis on which our strategy of negotiating change in the EU will succeed.

Photo of Yvonne Fovargue Yvonne Fovargue Shadow Minister (Transport) 6:07 pm, 15th May 2013

There may have been concentration today on a certain topic in the Queen’s Speech, but in Makerfield it is the economy, the cost of living and jobs that concern my constituents the most. Without confidence in the economy and job security, they will not spend, and without spending the economy will not thrive. I stress that there need to be real jobs with real opportunities. When I last checked the universal jobmatch site, 45 of the 67 sales jobs that were advertised within 10 miles of Wigan were self-employed catalogue distribution jobs, many of which demand an up-front fee. lp;&5qI welcome the consumer Bill of Rights, which has been proposed to simplify and consolidate consumer law. If people are to spend, it is important that they are free from misleading and aggressive practices and have access to proper redress if they have been ripped off. They should not have to go through tortuous legal processes because of grey areas. Last year, Citizens Advice found that three quarters of consumers had had a problem that was covered by existing consumer rights, and 94% of them had complained but only 10% were successful. Improvements are needed, and I hope that the consumer rights Bill will be amended so that consumers understand their rights, are clear about what to expect and are given a time scale within which they can expect redress.

One notable omission from the consumer rights Bill, and from the Financial Services (Banking Reform) Bill, is action on lead generators and the marketing texts that people receive. Some companies, particularly in the high-cost credit sector, for example Cash Lady, do not provide the service themselves but simply gather details and pass them on to lenders. The consumer is often not aware who their lender is until they get the paperwork. They do not know whether the company from which they are buying is in a trade association or has a code of practice that they can use if there is a problem. They think they are taking out a loan with one company when they are actually taking it out with another.

The consumer Bill of Rights aims to provide transparency, which I would like to see extended to all products and services. Particularly in the high-cost credit sector, consumers do not always know the full implications of their agreement. How many, for example, would agree to a continuous payment authority if they knew that it gave the lender unlimited powers to dip into their bank account at any time and for any amount? Such a power also militates against the rigorous affordability checks required.

Another area contributes hugely to the strength of our economy but is often overlooked: the humble bus. A excellent report was launched this week by Pteg entitled “The case for the urban bus”, and it describes the contribution that buses make to the economy. Bus networks generate more than £2.5 billion in economic benefits, about £1.3 billion of which reflects user benefits from access to jobs, training, shopping and leisure opportunities. The remaining £1.2 billion of benefits accrues to other transport users and society at large through decongestion, reduced pollution, lower accident rates and productivity. The overall economic benefits are around five times higher than the amount of public funding going to the bus networks, and the bus industry has a turnover in excess of £5 billion, much of which is ploughed back into regional economies through the supply chain and consumption expenditure by staff.

Public expenditure on bus networks is therefore likely to have a large and direct impact on regional economic growth. It helps the economy by contributing to flexible labour markets and by increasing the number and range of jobs accessible to workers, in particular less-skilled workers who are likely to have less access to a car. However, the bus service operators grant has been cut, and there are fears that it might be under threat in the next spending review. Instead of salami slicing the BSOG—an easy target—I urge Treasury Ministers to read the report and recognise the contribution that the bus makes to the economy. It might be the Cinderella of the transport service, but it is used by the highest numbers of our constituents—more than any other mode of transport—and we must look at the benefits that the service accrues, instead of cutting it willy-nilly.