Category: Debates

Mr John Redwood (Wokingham) (Con): I welcome anything that recognises that it is the role of shareholders and competitive markets to decide pay in companies. With that in mind, let us consider what happens where the Government are the shareholder. Will the Secretary of State remind us what deal the Labour Government signed up to for RBS top executives, explain why it was so far in excess of the dreadful results that have been delivered in public ownership, and say what this Government can do to put that right?

The Secretary of State for Business, Innovation and Skills (Vince Cable): My right hon. Friend is right to stress the central role of shareholders and to remind us about the conditions according to which the head of RBS was appointed and the contract negotiated. Of course, the problem is not just with pay; we are now also having to consider the problem of knighthoods that were awarded for appalling behaviour in British banking.

Mr John Redwood (Wokingham) (Con): A number of people who have written to me condemning the High Speed 2 project have alleged that Britain has to build it under the EU network ruling. Will the Minister confirm that Britain remains free to make its own decision on whether to have High Speed 2?

The Financial Secretary to the Treasury (Mr Mark Hoban): My right hon. Friend is, as is often the case, spot on. There is no requirement under the proposal for us to build High Speed 2.

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1.1pm

Mr Redwood: Will the shadow Minister bring us up to date with Labour thinking on the IMF having more money to lend to save the euro? Does Labour think that it would be a good idea because it would promote growth, or a bad idea because it would damage the British budget?

Chris Leslie (Nottingham East) (Lab/Co-op): We are all waiting to see what proposals come forward. The Chancellor has said that he will come to Parliament and let us have a say on many of these things. Indeed, perhaps the Minister can help us out with the timing of those proposals—[Interruption.] If he would care to listen to my questions, perhaps he could also tell us when we will get the Bill to enact the European financial stabilisation mechanism permanent bail-out fund. We are all waiting for that. The eurozone countries are supposed to be rolling together the European financial stability facility and the EFSM into that permanent arrangement, but as I understand it we will have to legislate for that. Will he tell us when that will happen, because it is related to this question about potential IMF funding? We need clarity from the Government—and from the IMF as well.

Mr John Redwood (Wokingham) (Con): May we have an early debate on who speaks for England and who should make decisions for England in an increasingly devolved United Kingdom?

The Leader of the House of Commons (Sir George Young): I understand my right hon. Friend’s concern. We announced on Tuesday the establishment of the West Lothian commission, which will look at a range of options. For example, with issues that affect only England and Wales, one option would be that only English and Welsh MPs voted on such matters. In my view, that would be an appropriate rebalancing of the constitution to take account of the fact that in Scotland they have their own Parliament in which issues are resolved on which English MPs cannot vote. It seems somewhat perverse that Scottish MPs can vote on those very same issues when they apply only to England.

Mr John Redwood (Wokingham) (Con): Does the Minister agree that the gloom about the consequences of an early break-up of the euro has been greatly exaggerated, bearing in mind the very positive economic experience for eastern European countries from the break-up of the rouble zone—very similar to the euro—in the early 1990s?

The Minister for Europe (Mr David Lidington): I have to say that it is unusual to find my right hon. Friend looking to the example of the former Soviet Union for inspiration. We have looked across Government very carefully at what the consequences of a eurozone break-up might be, and one of the key differences between now and 20 years ago is that the economies and the financial systems of Europe are much more closely interlinked now than they were then. It is certainly our judgment that it would be damaging to the British national interest were a collapse of the eurozone or a prolonged recession in the eurozone to take place.

Mr John Redwood (Wokingham) (Con): What do the Government propose should happen to the shared debts and the shared membership of the European Union were Scotland to leave the Union?

The Secretary of State for Scotland (Michael Moore): The right hon. Gentleman asks an important question. I am sure that it is one of many that will be at the heart of the debate about Scotland’s future when we come to the referendum itself, but for now I want to ensure that we can get on with the proper substantive debate.

Mr John Redwood (Wokingham) (Con): Will the Secretary of State tell us how much the Government propose to spend on the project during this Parliament, and will she confirm that no construction contracts will be let during this Parliament?

The Secretary of State for Transport (Justine Greening): No construction contracts will be let during this Parliament, and my understanding is that the spend over the course of this Parliament will be in the region of a couple of hundred million pounds.

6.48 pm

Mr John Redwood (Wokingham) (Con): Of course, the Prime Minister stopped a treaty for the 27. Did the right hon. Gentleman see that the statement that was issued was made only by the 17 euroland Heads of Government? The other nine have not signed up to it. That is very clear in the statement, so it is misleading to say that Britain is isolated when the other nine think it is a lousy treaty as well.

Mr Nigel Dodds (Belfast North) (DUP): The right hon. Gentleman is absolutely right, and I will come to that. Even today, we are hearing of issues in Denmark and that Sweden is unlikely to sign up. In Poland, it has been pointed out that two thirds of each House will have to support what has been agreed if the country is to sign up, and it is unlikely to get that. We are hearing similar things in Finland, the Czech Republic and other countries, never mind what is going on in Germany and even France. This is potentially a watershed moment in British politics.

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Mr Redwood: The right hon. Gentleman is making a good point. Did he see that if, for example, Ireland or the United Kingdom joined the so-called stability pact, they would have to make massive cuts in public spending and massive increases in taxes? It is a sort of mutually assured austerity pact.

Mr Dodds: Yes. For precisely that reason, I believe that when the peoples of each country—and even some of the politicians, who are currently going around saying that the UK has done a terrible thing—begin to study the detail and realise the restrictions that will now be imposed on their freedom to set their budgets and taxes, to borrow and so on, they will seriously reconsider the proposal. Having caused the greatest economic catastrophe for many decades, by creating the euro and the one-size-fits-all approach, EU leaders have come up with a bizarre answer: no comprehensive solution to deal with the immediate and pressing crisis, and no overarching deal that will properly address the problems that Greece, Italy and Spain face, but a plan to deepen and extend European integration—a plan for more treaty change and more institutional tinkering.

After all the arguments about the Lisbon treaty, we were told that Europe had learnt its lesson and that there would no more institutional debates and treaty changes. Instead, Europe was to get on with the business of trying to create jobs, growth and economic prosperity, yet here they are, at it again. There is a one-track mind among many European federalists about deepening European integration, and political and fiscal union.

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Mr Redwood: Can the Minister assure me that the Government have no intention of agreeing to this fiscal pact or of letting them use EU institutions to enforce it?

The Minister for Europe (Mr David Lidington): The position on the use of the institutions was set out in some detail by my right hon. Friend the Prime Minister yesterday. The truthful response to my right hon. Friend the Member for Wokingham (Mr Redwood) is that we are at an early stage. The 26 countries agreed to a pact, but not to a legal instrument, and we do not yet know what action they plan to take. We want the new treaty—if it turns out to be a treaty—to work in stabilising the euro and putting it on a firm foundation, and we understand why those countries want to use the institutions, but it is new territory and raises important issues that we will need to explore with our colleagues in those other European countries.

In the months to come, our intention is to be engaged in the debate about how institutions that have been created and built to serve the interests of all 27 member states and not some subset should continue to operate fairly for all member states and, in particular, for the United Kingdom. We have been very supportive of the role that the institutions—in particular, the Commission—have played in safeguarding the single market, and we will look constructively at any proposals with an open mind, but we need to be clear that if this country had agreed treaty change without safeguards, there would be no discussions going on at all and no protection for important United Kingdom interests.

It is not the case that there was something extraordinary or wrong about the Prime Minister’s decision to veto agreement to a treaty at the level of 27 member states last weekend. The safeguards that he was seeking were safeguards not just for the United Kingdom, but for the whole of the European Union. They were modest, reasonable and relevant and, when they were not forthcoming, the Prime Minister made the right decision, which was to use our veto to protect our national interest.

As the right hon. Member for Belfast North said, we have heard before many of the dire warnings about isolation and retaliatory measures. We heard them when the euro was first created, and it turned out that far from joining the euro being a great opportunity for the UK and for UK business, we were well served by the decision to stay out of the single currency, and I have seen little evidence in the last couple of years to persuade me that—

Several hon. Members rose —

Madam Deputy Speaker (Dawn Primarolo): Order. I am sorry to interrupt the Minister. He has indicated several times that he is not prepared to give way at this point. I hope that we can hear what he has to say now, and he may feel like giving way a little later.

Mr Lidington: I have already explained why I do not intend to give way as frequently as I usually do in these debates. Several of my hon. Friends have had, and will continue to have, many opportunities to put their arguments to me. I am sure that they will seize themselves of those opportunities, but tonight I am conscious that this is one of the rare occasions on which the debate belongs to the Democratic Unionist party, and I do not want their members to be crowded out because the Front Bench goes on for too long.

The truth is that we have always had a Europe in which there have been multiple forms of co-operation. We are not in the euro and nor do we plan to be. It is good that we have our own economic policy, interest rates and ability to deal ourselves with the problems we face in our economy. The United Kingdom remains a key—indeed, a central—member of all initiatives on European foreign and defence policy co-operation, but we are not in the Schengen borders organisation. We are a key member of the single market, and in fact it is the UK that often drives change and improvement in the single market.

On the other side of the equation, at the same time that the European Council was in progress, the British Government were working closely with EU partners to shape a successful negotiation on climate change this weekend in Durban. Our intention is to continue to work hard with our many allies in Europe to advance our interests. That is not isolation: it is defending Britain’s national interest, and that is what the Government are going to continue to do. That does not mean, as some have said, pulling back from our relationship with the European Union. We remain a full member of the European Union, and that membership is vital to our national interest. Our national interest and the EU interest are not mutually exclusive; we have genuine common interests.

Mr John Redwood (Wokingham) (Con): I congratulate my right hon. Friend on his excellent statesmanship. Does he agree that Britain has much more negotiating strength today, because Europe knows that it is dealing with a Prime Minister who will say no if he needs to, than when we had two Prime Ministers who gave in to bad deal after bad deal, including giving away our rebate for no good reason?

The Prime Minister (Mr David Cameron): I am grateful to my right hon. Friend. It is the case that on too many occasions under the previous Government, Britain was outnumbered, but on the issue of the rebate, it was given away for nothing in return simply because they wanted to go along with a cosy and comfortable consensus. Sometimes it is necessary to say no. In my judgment, we did not have the safeguards that we needed, so, as a result, it was right not to agree to this treaty.

Mr John Redwood (Wokingham) (Con) rose —

Mr Byrne (Birmingham Hodge Hill) (Lab): I shall give way in a moment.

The weakness in the jobs market is not abstract; it shows up in people’s pay packets. That is exactly what the Office for Budget Responsibility confirmed yesterday. Earnings, it says, are now set to fall throughout the rest of this Parliament. By 2016 wages will be no higher than they were in 2001—£1,400 below their pre-crash peak—yet prices are not falling; they are rising. Prices are going up over the course of this Parliament. Wages are falling and prices are rising. That double whammy is now hurting families all over this country.

Not long ago, the Governor of the Bank of England said that we in this country now confront the worst squeeze on living standards since the 1920s. Yesterday, the Institute for Fiscal Studies said that the squeeze was “unprecedented”. This is the biggest fall in household income since records began. With our nation’s family budgets under such pressure, we would have thought that the Government would step in to help. Not a bit of it. Instead, working families are being asked to pick up the pieces.

Mr Redwood: The right hon. Gentleman is making a very important point—that a big squeeze on living standards started under his party’s Government. It is continuing under the coalition. As the forecasts make clear, a big element in that is energy and fuel prices. Does he have any proposals that the Government could adopt to tackle that problem?

Mr Byrne: We do think that Government should be doing more in the energy market to help to bring down prices. The right hon. Gentleman will, I know, feel strongly about that, because of the 6,500 families in his constituency who are now seeing cuts in tax credits.

When wages are falling and prices are rising, people would expect the Government to do more to help—but what we now have is a budget set out yesterday that tightens the squeeze on working families. Last Friday the Deputy Prime Minister blustered his way through an interview on the radio and said, once again:
“We will not balance the books…on the backs of the poorest”.

That is an old line, and today it rings pretty hollow, because that is exactly what the Government are doing.

Yesterday, the Government rejected any new tax on bankers’ bonuses. Instead, it is children, women and working parents who are picking up the tab for the Government’s failure to get people back to work.

3.19 pm

Mr Redwood: Will my right hon. Friend confirm that it is his strong intention always to make sure that it is worth while working, and will he bring us up to date on the progress and timetable on that?

The Secretary of State for Work and Pensions (Mr Duncan Smith): I will indeed. The point I was making was that, as the universal credit comes forward in the next two years, it will do huge amounts to ensure that the incentives to return to work are improved. Secondly—and this relates to complaints from Opposition Members about the tax credit—it will reset the baseline so that those incentives will be increased and improved. Had we remained in the same position as the previous Government with their tax credits, there would be no way back for us now.

Mr John Redwood (Wokingham) (Con): As there is a danger of the euro crisis now spreading to Italy, can the Prime Minister tell me what the leaders of euroland have said they will do by way of buying Italian bonds or offering subsidised loans to Italy to head off the crisis in the market there?

The Prime Minister (Mr David Cameron): My right hon. Friend asks an important question. It goes back to the question that the Father of the House (Sir Peter Tapsell) asked, about the actions of the ECB. The ECB has been intervening in markets and buying bonds of countries that are under pressure. That is what makes it so difficult to understand why some in Europe are so opposed to the ECB being more of a monetary activist, if I could put it that way. The key with Italy—everyone should be careful about speculating about another country, but the point I made in my statement is that Italy must demonstrate that it has a credible fiscal path. That is as much about the confidence of the markets that it will be able to pay its deficit and pay its debts. If it can do that, its interest rates will fall.