Section 5 of the European Communities (Amendment) Act 1993

– in the House of Commons at 7:00 pm on 23rd March 2016.

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Votes in this debate

  • Division number 232
    A majority of MPs voted to approve the Government's assessment of the UK's medium term economic and budgetary position for submission to the European Commission.

Debate resumed.

Question again proposed.

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

I wish to put on the record again the position with regard to the single market, and I would really like the Minister, for whom I have a lot respect, to answer my question, which I have put over and over again. It is based on figures from the Office for National Statistics and the House of Commons Library.

There is no disputing the fact that we run a trade deficit on current account transactions—imports and exports and good and services—of £58 billion a year, which is a lot of money. That £58 billion deficit is with the other 27 states of the European Union. In a nutshell, we run a loss of £58 billion a year, and I do not regard that as small change. However, Germany runs a surplus of £67 billion with the same 27 member states. If someone can tell me that that is a single market that we need, I would like to hear them repeat it from the Dispatch Box, because it cannot be in our interests.

Furthermore, if we take that same criterion of current account transactions, we run a surplus of well over £36 billion with respect to the rest of the world, and that is selling the same goods and services. Clearly, therefore, there is nothing wrong with our goods and services, but such trade does not work for us in the way that it could and should when we are dealing with the European Union and the single market.

Photo of John Redwood John Redwood Conservative, Wokingham

Does my hon. Friend agree that £12 billion of the £58 billion deficit with the European Union is the money that we have to send to it and that we do not get back? It is payment in order to buy its imports. One does not normally have to make a contribution to a country in order to import things from it.

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

It has been said in the past that the House of Commons is the only lunatic asylum that is run by the inmates, but I think we pale into insignificance compared with the European Union. This just does not work. I ask the Minister to make a note on the piece of paper in front of him to remember to answer my question relating to that deficit and surplus issue, because every time I raise it, I get no answer. Although I agree that we will continue to trade and to co-operate with Europe—we want to do so and they want to do it with us—when it comes to this question of the need to stay in the single market, it simply does not stack up. This document is put forward for approval by Parliament, so we are entitled to an answer to that question.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

In case the Minister does not answer, let me say that a sizeable proportion of the imports that Britain takes from the EU are in fact intermediate products, such as automotive parts, that go into goods that we then re-export. We are talking about supply chain interconnection, not free-standing goods.

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

I can only refer to the fact that these are ONS figures. They are endorsed and verified by the House of Commons Library, and I will leave my point at that.

The argument on page 19 moves forward to a suggestion that any

“new relationship which gives the UK…access to the single market that it needs”— that assertion continues to be made—

“would involve contributing financially to the EU”, which we are certainly doing to the very substantial extent of about £10 billion a year, and

“accepting the free movement of people”.

The European Scrutiny Committee has been trying to have a debate on that for the best part of 18 months, but without success. I had a meeting with the Minister about it only today. That goes right to the heart of the viability of free movement and the immigration that flows from it. The argument continues:

“and adopting EU rules without having any say over them.”

I repeat: without any say over them.

Today, the European Scrutiny Committee embarked on an investigation into the influence it is claimed we have and the manner in which decisions are taken in the European Union. This document implies that, somehow or other, we have massive input. The European ombudsman is looking into the question of trilogues, but within the decision-making process of the Council of Ministers it is horrendous to observe the extent to which votes are not taken. The so-called consensus on all matters, including those dealt with on page 19, is arrived at without a proper degree of accountability—in fact, I would say no real accountability of any kind. Decisions are taken in what I would describe as a Dan Brown’s “Da Vinci Code” situation, in which the Illuminati—otherwise known as COREPER—make deals behind the closed doors of unsmoke-filled rooms. We do not know and cannot find out how the decisions are arrived at. There is no agenda; nobody knows who decided what and on what basis. It is an affront to the democracy of this country that the decisions that affect the daily lives of everyone in it in respect of the whole gamut of European rule making are made almost entirely without majority voting taking place, in COREPER. It is deeply offensive. It is a black hole and the European Scrutiny Committee is looking into it.

Finally, page 19 talks about productivity. All I would say on that is that, as I understand it, the OBR, whose report is contained in this document, says that the biggest problem this country has is lack of productivity.

The whole of our economic performance is being presented to the European Commission for approval under the 1993 Act and to Parliament for approval today. I will not vote in favour of the motion and I certainly will not approve this load of rubbish. I will vote against the Government because I do not believe that page 19 is true or accurate. I do not agree that the basis of the statistics relating to PIP is such that the document is sufficiently valid to be presented to Parliament. It is a serious matter. We have become far too accustomed to saying, “Oh well, it’s just a blip—just a slight mistake. Someone got something wrong. Let’s not take too much notice of it.” Well, I am going to take notice of it and I shall vote against the Government this evening on that account.

Photo of John Redwood John Redwood Conservative, Wokingham 7:08 pm, 23rd March 2016

I share the concern of my hon. Friend Sir William Cash about page 19 and that is the main reason I have entered this debate. It is an unfair exposition on the opportunities and risks linked to our membership of the European Union and I do not think it accurately reflects what the OBR has been saying. I am pleased that the OBR has now spoken for itself and put on the record the important point that it does not believe that in the five-year forecast period, were we to leave, there would be a decline in economic output or activity. Like many forecasters, the OBR believes that the net impact would be quite small. Of course, in line with others it has said that there could be volatility in currency and asset price markets. All I would add is that there has been massive volatility in those markets in the years we have been a member of the EU, so it would be somewhat outrageous to claim that that would suddenly stop were we to leave the EU, but I cannot see that it is a particularly damning point.

My hon. Friend has gone on at some profound length about what is wrong with page 19. I hope Ministers will look again and realise that it is not a fair exposition of the OBR’s position. Linking the OBR’s position with Christine Lagarde’s comment, which is obviously a comment made for the “stay inside” campaign trail rather than for normal commentary purposes, gives a misleading impression.

I wish to make some more fundamental points about the figures and the document before us this evening. Let us start with why we are doing this at all. It is a completely pointless exercise, but it is legally required by the treaty and the framework of law under which we live. It is a great pity that in the renegotiation this, along with dozens of other things, was not sorted out because if, as the Minister says, the Government can ignore the advice and the policy laid down by the European Union to control the deficit and get the debt down, what is the point of the Government having to table 300 pages of carefully selected documentation, go through the surveillance procedure, on some occasions receive a report saying that their policy is not good enough or they are not converging in the way that the European Union wishes, and the Government then saying, “Well, fortunately, there is no penalty on us so we will ignore that”?

It is strange to belong to a club, accept the rules and then, when we do not like the rules, say, “Of course, we didn’t really want any of that and fortunately we have been opted out of the penalty bit of it.” It is a strange exercise. I suspect that the official machine of the Government, which goes on whoever is in office, is quite guided by all this. There is probably a wish on the part of officials to get the British Government policy and the figures closer to the convergence requirements. It is high time the European Union itself had an honest debate about the most pressing and most difficult target it has set—the target that all member states should keep their stock of debt to 60% of their national income.

Practically every member state is way above that, and some of them violate the target by having more than double the level set down by the European Union. Why does that body think it is sensible to persevere with a target that none of the member states wish to keep and none of them are trying to reach?

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian

May I add that the rule that sets the 60% target also states that member states in breach must have a rectification programme and bring their debt level, whatever it is, down by five percentage points a year, which this Government have significantly failed to do and significantly will fail to do for a long, long time?

Photo of John Redwood John Redwood Conservative, Wokingham

All the Governments are failing to do that, and it is even more pressing and difficult for a country such as Greece, where the penalties do apply because it is in the euro scheme. Despite all the best efforts of the European leadership, the European Central Bank and others, and very cruel and difficult expenditure cuts that Members in this House would not have accepted for the United Kingdom, Greece is still miles off getting anywhere near the stock-of-debt target and it has struggled until recently to get down to the deficit target.

We need to ask fundamental questions of our European partners about why we go through this routine and what malign influence it has on some economies and some economic performances around the European Union, which should be a matter of common concern all the time we remain in that body. The Minister says this is not a new exercise and it is not much of a burden on the British state; it is just one of those things, and we send in figures that we produce for other purposes. That is not quite true. The introduction to the document clearly has to be written, the selection has to be made, it is clear throughout the document that it is written for domestic purposes and for the purpose of forwarding it to the European Union, and we try to produce figures that we would not otherwise produce in order to conform with the workings of the European Union.

Next, I would like to highlight the figure for the convergence criteria and the so-called treaty deficit on page 186 of the report. That shows that in 2016-17, if all goes well and these figures work out, for the first time in many years we will get below the 3% target to 2.9%. That makes my point: we would not have to calculate that treaty deficit, think that it was significant or use it as part of the guidance for the British economy if we were not signed up to this surveillance and management system within the European Union. The Minister has to bear it in mind that there is actually some subtle guidance in the European policy. I think that many of my constituents would find it quite surprising that we have to table 300 pages of detailed financial and economic information in order to comply, and that that is then put through a scrutiny and surveillance process.

The next figure that I would like to highlight is on page 156, which shows how much in “expenditure transfers” we have to make to the European Union institutions—in other words, how much money we send that we do not get back. We see that the November forecast for 2016-17 was £10.7 billion, which is a very considerable sum, and that the March forecast, just four months later, has gone up to £11.8 billion. Between the autumn statement and the current Budget there is an increase of £1.1 billion in next year’s expenditure transfers to the EU institutions.

That figure of £1.1 billion is very close to the figure that the Government had pencilled in for disability cuts. I do not know about you, Mr Deputy Speaker, but I would rather not have the disability cuts and not pay £1.1 billion extra to the European Union. Why can we not make those kinds of choices? The reason, of course, is that we are signed up to membership of an organisation that thinks it knows better than we do how to spend our own money. I think that people in the United Kingdom are getting very frustrated at being told that we have to be very careful about our priorities, only to discover, if they get guidance from these complex figures, that the European Union can take £1.1 billion extra off us for next year without a by-your-leave. That leaves us struggling to find that money when we try to make the Budget add up, ending up with options and choices that I am sure Ministers did not really want to make, and which Parliament, in its wisdom, has decided should not be made.

I draw the House’s attention to some very important figures on page 205 that the Government are sending to our European partners and masters about projected net migration into the United Kingdom. I was very happy to campaign with my right hon. and hon. Friends at the previous general election on a sensible and sensitive policy of controlled migration, wishing to get it down to the tens of thousands by the end of the Parliament. It was a very popular policy, because I think that people liked the idea that there would be a fair system offering sensible rules so that people could understand it before deciding whether or not to come to our country. Interestingly, the forecast that we are sending to the European Union shows that the level of migration will stay much higher than the Government’s target—it shows 256,000 in 2016, declining to 185,000 in 2021. There is also a further projection in which net migration stays considerably higher, actually above 250,000 in every year.

I think that matters, because the Government’s intentions are very clear: they would like to get net migration well below these forecast figures. Why, then, is the forecast so high? I think that it is very simple: the forecast is that high because the European continental economies, particularly in the south of our continent, are performing very badly and have created mass unemployment on an extremely worrying scale, so the UK, which has a more successful economic policy that is generating a lot of jobs, is acting as a magnet for people who are otherwise without hope of employment.

That policy is making it very difficult for the United Kingdom Government to hit their very popular target on migration. I hope that when this document is submitted Ministers will follow it up by pointing that out to the European Union and saying that they have a solemn promise to keep to the United Kingdom electors, who helped elect them to government, and that this set of EU policies, creating joblessness and therefore triggering a lot of foot-loose migration around the European Union, is making it very difficult to honour that promise.

It also leads us to worry about the quality of some of these forecasts, because I am sure that the Government wish to get the level down, but there is a great danger that the variant of a much higher level has been put in, because actually that is what they are afraid will happen. I hope the Minister will consider that when he replies and that if we are going to go through the process of submitting our homework on economic matters to the European Union to be marked—by sending it 300 pages of figures—we will also say to it, “You are making it impossible for us to meet our legitimate wish to create more jobs to mop up unemployment in our country and to get wages up, as we would like to, because your failing economic policies in many parts of the euro area are bringing a number of migrants into our country that makes it impossible for us to meet our targets.”

Those are just a few brief comments on an extremely complex set of documents and numbers, which show that, while we stay in this body, we need to engage much more and to get some change so that there is honesty in the targeting and an understanding of the damage that some of the targets and policies are creating. However, it will not be a surprise to hon. Members to learn that I think that the simplest thing would be for us to leave the European Union so that this is the last one of these documents we ever have to produce. We can then take control of our own money, banish austerity, spend the £10 billion on things that we want and leave the European Union free to get on with its political union, which is clearly what it will need to do to try to deal with the mass unemployment, the lack of cash transfers and the inadequacy of its regional policies.

I hope tonight’s debate will be of use to the general public and that they will understand that we can take back control, spend our own money, and have prosperity, not austerity. That is what we will get if we leave the European Union.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury 7:21 pm, 23rd March 2016

The debate has addressed both the Budget and our membership of the European Union, so I am grateful to be on my feet at this point, and not later.

Let me respond to some of the points that have been made. To come back to what I said to my hon. Friend Sir William Cash about the numbers, it is important that the document is based on information that has been published in advance and that we do not produce a mass of separate information and documentation for the purposes of meeting this requirement.

As my right hon. Friend John Redwood will be aware—indeed, he touched on this—the requirement goes back to the 1993 Act. We are complying with obligations in our domestic law to provide this information, and it is therefore right that we do so.

The point raised by my hon. Friend the Member for Stone about our trade deficit with the European Union brings me to the wider issue of our membership of the EU. I know that he shares with me a belief in free trade, and in transactions where there is a willing buyer and a willing seller, both parties benefit from the transaction. The point I would make in the context of our membership of the EU is that, whereas 44% of our exports go to the European Union, only 7% of the European Union’s exports come to the United Kingdom.

My right hon. Friend the Member for Wokingham mentioned the contributions we make to the EU. It is worth pointing out that, thanks to the deal secured by the Prime Minister, our net contributions—whether in cash terms, in real terms or as a proportion of GDP—are in fact falling.

Let me turn to the remarks made by Rob Marris, who speaks as a shadow Treasury Minister. For the first time in the six years I have been a Treasury Minister, we have heard an apology from the Labour Front Bench for borrowing too much money before the crash. That is something the hon. Gentleman deserves some credit for, because, try as we might on many occasions, we never got one out of Ed Balls.

The hon. Gentleman criticised the Government’s record on borrowing, but let us be clear: had we stuck with the structural deficit that we inherited, by 2020 we would have borrowed an additional £930 billion over 10 years. It is also worth pointing out that in May 2010, the International Monetary Fund forecast the UK to have had the largest budget deficit in the G20 that year. Between 2010 and 2016, the UK is forecast to have reduced its headline deficit at the second fastest rate in the G7—it is second only to the United States. The IMF forecasts that the UK will reduce its net debt as a share of GDP by more than any other G7 country between 2015 and 2020. If the hon. Gentleman believes that the problem is that we are borrowing too much money, perhaps he could explain why, time and again, the Labour party has opposed every measure we have taken to reduce the deficit.

We have had a lively debate, and I hope the House will support and approve the motion.

Question put.

The House divided:

Ayes 241, Noes 180.

Division number 232 Government Assessment of Medium Term Economic and Budgetary Position for Submission to the European Commission

A majority of MPs voted to approve the Government's assessment of the UK's medium term economic and budgetary position for submission to the European Commission.

Aye: 241 MPs

No: 180 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 224 MPs

Absents: A-Z by last name

Question accordingly agreed to.

Resolved,

That this House approves, for the purposes of Section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment as set out in the Budget Report and Autumn Statement, combined with the Office for Budget Responsibility’s Economic and Fiscal Outlook and Fiscal Sustainability Report, which forms the basis of the United Kingdom’s Convergence Programme.