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12.49 pm
Mr. John Bercow (Buckingham): I would like to focus my remarks on two issues. The first is a prominent feature of the Loyal Address, but the second is a notable omission from it.
Let me deal at the outset with the subject of regulation. The House will be aware of what is included in the Queen's Speech on this subject. It states that, as part of the Government's drive--as though there were such--to address inappropriate and over-complex regulation, legislation will be introduced to increase the effectiveness of the power to remove regulatory burdens. In so far as that goes, the words are honeyed, and welcome.
Unfortunately, on this subject--as on a plethora of others--the Government have form. They have previous convictions, and those convictions are a long way from being spent. Labour Members of Parliament would be singularly unwise to suppose that the public had forgotten those unspent convictions. In particular, they can rest assured that business has not forgotten the unspent convictions in relation to over-regulation. We intend to ensure that business remembers them for a long time to come.
What is the track record? I shall take the House through it. Ministers may not enjoy being reminded of it, but they must deal with the results. In April 1997, the then shadow Chancellor, the right hon. Member for Dunfermline, East (Mr. Brown), in the foreword to Labour's business manifesto entitled "Equipping Britain for the Future"--there was a photo of the right hon. Gentleman at the top of the foreword to demonstrate his commitment--declared that Labour would
On 7 November 1997, the hon. Member for Hornsey and Wood Green (Mrs. Roche)--then the Minister for Small Firms--told the House, apparently not in jest:
Even then, however, the Government had ushered in a whole tranche of new regulations. While the hon. Lady's remarks might have been well intentioned, they were directly contradicted by the facts of the Government's record.
In one of his last pronouncements as Secretary of State for Trade and Industry, the right hon. Member for Hartlepool (Mr. Mandelson), told the House on25 November--with the nearest approximation to a straight face that he could manage--that the Government
What is the record? As a number of hon. Members have pointed out, it is so far a record of massive increases in regulatory burdens and cost. Some 2,700 additional regulations have spewed forth from a Government risible for their lack of business experience or sensitivity to the needs of industry and commerce.
A number of my hon. Friends and others have pointed to some of the examples. There is the working time directive--£2.3 billion of extra costs for business, and a
mere 45 days' notice from the right hon. Member for Hartlepool of the content of the 71 A4 pages of regulations which business would then be obliged to introduce. The national minimum wage added a further £2.7 billion a year of costs to business, and a mere three weeks' notice was given to business to grapple with the 112 A4 pages of regulations with which they had to come to terms and to which they needed to give effect.
Mrs. Gilroy:
If the minimum wage protection was really damaging to jobs, Cornwall, which has had some of the lowest wages in the country, would have had very high levels of employment. That has not happened. Does the hon. Gentleman recognise that one person's red tape is another person's social protection? Will he say something at some point in his speech to those whose social protection he seeks to slash?
Mr. Bercow:
I am in favour of social protection. The best means by which to achieve it is to have a thriving economy. We need an enterprise economy, a dynamic economy, an economy characterised by the creation of small businesses and the advance of their cause. I have to tell the hon. Lady in all candour that if she believes that the motor of economic advance and extension of business opportunity is raising wage levels, I do not agree with her. We shall make a judgment in due course about the extent of the damage that has been done and we shall come forward with a proposal on the minimum wage accordingly. However, that it has increased wage costs and presented businesses with great difficulty is not in doubt.
Mrs. Gilroy:
Is the hon. Gentleman in a position to say whether the Conservatives support a minimum wage?
Mr. Bercow:
I am genuinely taken aback that, 18 months or two years before the next general election, the hon. Lady apparently expects me to give her an advance copy of the Conservative election manifesto. I have no intention of doing anything of the kind, although I understand why she seeks to divert attention from the legitimate and growing chorus of complaint against the over-zealous regulatory policies of the Administration that she supports. She should remember that 99.6 per cent. of firms in this country employ fewer than 100 people, that between them they employ 50 per cent. of the private sector work force and that they account for two fifths of national output.
Those businesses are not assisted by the Government's regulatory policies; they are held back and retarded by them. Examples abound across the board, for which the time in this debate does not allow. There is the child care credit, the disabled persons learning credit, the student loan repayment administration regulations and the working families tax credit. None of those measures is helpful to business and all of them, regardless of their other intrinsic merits or demerits, have one feature in common: they shuffle responsibility from central Government to beleaguered businesses, forcing the latter to become unpaid tax collectors and benefit distributors. In no way can even an authentic representative of new Labour argue that that is beneficial to small businesses,
which are the engine of economic growth. They are the seedcorn of our present and future prosperity. They are what we depend on if we are to be successful.
Mr. Bercow:
I have already given the hon. Lady two opportunities. I have politely to say that she has mucked them both up. She cannot realistically expect me at this stage of my speech to give her a third chance. If she is patient, I might give her another stab at it a little later.
The regulatory burden is very high. Hon. Members will be aware that I am always anxious to be helpful. Accordingly, on 27 April this year I presented a ten-minute Bill, supported by several of my hon. Friends, to reduce the burden of regulation on business. That seemed perfectly sensible.
My first proposal was that there should be an annual statement to Parliament on the costs to business of regulation and on the Government's plans in the ensuing year to reduce that cost. My second was that there should be a six-monthly report to the House on the progress of deregulatory initiatives. My third was that there should be a review of all existing regulations to see where gold-plating of European directives and regulations was taking place courtesy of British Government Departments and the all-knowing civil servants working in them. My fourth was that small businesses--which are the great majority of businesses in this country--should be exempt from the most damaging regulations. My fifth proposal was that the Government should institute a policy of sunset provisions by which regulations would automatically expire or lapse on a given date--perhaps three or five years after their enactment--if Parliament did not judge them worthy of putting back on the statute book.
I took my cue in that from the experience in the United States. I hope that the Minister has, in his short tenure of his post--on which I congratulate him--studied the Regulatory Flexibility Act 1980 and the Small Business Regulatory Enforcement Fairness Act 1996, which represent the American model. Those measures are profoundly helpful to small business. The United States has a magnificent record in the generation of private sector jobs, overwhelmingly through small firms.
Instead of looking to the continental example, which represents a good way of destroying jobs, as recent evidence testifies, we should learn from our American friends. I hope that the Minister will attend in detail to the merits of the American legislation with a view to its transposition, with appropriate amendments and allowance for national customs, to Britain.
The Secretary of State for Trade and Industry, under pressure in debate from my right hon. Friend the Member for Wokingham (Mr. Redwood), agreed to look at my Bill and comment on it. Some weeks later, he said that he saw some merit in sunset regulation. It is a sign of the complacency of Labour Members and of the way in which they take pride in exiguous achievements that they think it a cause for celebration that the Secretary of State has inserted one titbit of a measure into the Electronic Communications Bill to allow for future sunset regulation. They think that that is game, set and match. They think that it is clever politics, as it facilitates a little spin, might gain a headline and provides a cheap debating point, but
there is all the difference in the world between a temporary advance, with a small step of minimal significance, and permanent steps representing substantial advances with long-term significance.
My Bill, which drew on the experience and wisdom of many of my colleagues as well as on multinational experience, represented a positive step in the right direction at an opportune time. If Ministers are not worried by the fact that businesses continue to complain about the massive burdens on small business, they are foolish. They should be seeking to do something concrete about it, but the evidence is that they are not.
It is not surprising that, a fortnight ago at the CBI conference, Sir Clive Thompson complained that the Government shimmy to the right, dance to the left and are then away, as he put it, increasing costs and regulations, making life more difficult for business and reducing the flexibility of companies to adapt to changing circumstances. That is a damning indictment of which the Government should take note, as Sir Clive knows a thing or two about business interests.
Only this week, the estimable City commentary in The Times drew attention to the fact that the Government had failed "spectacularly" to get it right. It said that they were making life more difficult and increasing the burden, and did not appear to realise the seriousness of the situation that their actions and inertia alike had created.
I hope that we will not have complacent words or, worse still, no response from Ministers. They cannot continue arrogantly to pretend that everybody else is wrong and they are right. The CBI, the Institute of Directors, the British Chambers of Commerce, the Federation of Small Businesses and the Forum of Private Business, to name but a few, are united, whatever their other differences on public policy, in condemnation of the Government's over-zealous regulation. Ministers have a responsibility to consider the issues intelligently, to accept blame and to do something.
It is not good enough, either, for the Secretary of State to strike a reasonable tone that is not matched by action. The present Secretary of State is good at striking a tone of reasonableness, but unfortunately--unlike, I am pleased to say, the Prime Minister's wife--he does not deliver.
That is an unfortunate state of affairs. The right hon. Gentleman said earlier this year either to The Daily Telegraph or The Sunday Telegraph that the Government had not got it right on regulation. In a speech to the British Chambers of Commerce in June he heralded a major advance in deregulation, and he gave me the impression--no doubt it was just a sop to shut me up--that the Government would introduce substantial sunset regulation.
However, the Government simply have not done those things. They talk about the drive to address inappropriate and over-complex regulation as though that undesirable phenomenon had wafted into their presence and was in no way a consequence of their own conduct. Yet they are to blame for the present situation. They have been in office for 31 months, and it will not do for them to blame other people for their own inadequacies. Their failure to deliver is increasingly being identified, and it is more strongly resented throughout the country with every day that passes.
Another issue that is important to trade and industry and to the country as a whole, but which represents a notable omission from the Queen's Speech, is the euro--or, as I ought to say, the Government's proposed abolition of our national currency in order to enter the euro.
The Queen's Speech mentioned working for economic reform in Europe, achieving open markets, securing greater growth, new job creation and so forth, but there was no mention of the euro or the single currency. I am no conspiracy theorist, but I think that there is something significant about that omission. I happen to believe, and I hope that my hon. Friends agree, that the biggest attempted confidence trick in modern British politics is the Prime Minister's claim that he is open-minded about entry into the euro.
Nothing could be further from the truth. The Prime Minister decided long ago that he was determined to scrap the pound and join the euro as soon as he thought he could get away with it. Some people might say, "If that's a confidence trick, it isn't very effective because it hasn't conned me, and it hasn't conned my colleagues." It is not designed to do so. As I am sure that my hon. Friend the Member for Havant (Mr. Willetts) will agree, the intended victims are not Conservative activists, political journalists or hardened sceptics about the euro, but the British people.
That is why the Government have erected an elaborate smokescreen of spurious economic tests, contradictory ministerial statements, perplexing front groups, misleading Government advertising, deceitful lobby briefings and diversionary attacks on alleged xenophobes. Those are all part and parcel of a deliberate strategy by the Government to close down any serious debate about the most important economic and political issue that has confronted this country since our accession to the European Economic Community--or rather, the Common Market--in 1973.
That is why we hear so much of the supposed--I use that word advisedly--five economic tests. Surely by now the House must be aware that none of those tests is objective, none is measurable and none is capable of independent assessment. There are not five economic tests that the country has to pass before joining the euro. For the Prime Minister there is only one, electoral, test: whether a majority of the British people can be bamboozled and brainwashed into ditching the pound and joining the euro.
In the short term, that does not look likely. The most recent poll, commissioned by my hon. Friend the Member for New Forest, East (Dr. Lewis) and undertaken by ICM, asked, "Do you think that Britain should replace the pound with the single European currency?" It was a very straight, fair and unspun question. The answer: 64 per cent. said no and 27 per cent. said yes. That is a notable improvement on the 56 per cent. opposition and 32 per cent. support recorded in an exactly comparable poll 12 months previously.
So, it would appear that the Government are losing ground. There is reason for optimism, but, for those of us who are sceptical about this dangerous enterprise, there is no excuse for complacency. None of us should underestimate the sheer determination of the Prime Minister ultimately to get his own way. Let us make no
mistake, the Prime Minister is hellbent on dragging Britain into the euro, with a cost that he will not calculate, for a benefit that he cannot quantify and at a risk to the self-government of the British people that he dare not admit.
Why is there reason to be anxious about such a prospect? There are three reasons. The first is that entry to the euro automatically entails a huge arrogation of powers from this country to the institution of the European central bank. That bank is charged, legally by treaty, as right hon. and hon. Members know, with the operation of monetary policy in euroland and the setting of the European interest rate.
We need at least to reflect on the composition of the ECB's governing council. It comprises three Germans, two Dutchmen, two Finns, two Frenchmen, two Italians, two Spaniards, a Belgian, an Irishman, a Luxembourger and a Portuguese. What do they all have in common? They have in common--I say this, as my hon. Friends will understand, not pejoratively but as a statement of legal fact--no responsibility to promote or safeguard the interests of the British economy. Rather they are charged with responsibility for the pursuit of the European economic interest, as they, subjectively, in their best judgment, perceive it.
No one should underestimate the power of those gentlemen or ladies. For, under article 108 of the treaty of Amsterdam--the treaty so foolishly signed by the Government--the central bank is exhorted, no, obliged, not to seek or take instruction from any outside body about the conduct of monetary policy or the establishment of interest rates.
Moreover, the treaty goes on significantly and ominously to add:
It is critical to convey to the British public that the argument about whether we join the euro is not some minor technical debate about an instrument, a device or a means by which to facilitate an easier life for tourists or a saving of half a per cent. on the gross domestic product for business men as they face transaction costs. The treaty makers of Maastricht did not incur mass unpopularity in their own countries and endure the agony of pushing it through their respective Parliaments for that purpose. They did nothing of the kind. They did it because wider objectives were at stake.
The second concern about entry into EMU is the prospect of tax harmonisation--a point made continually by Conservative Members. History shows very clearly that currency unions, to be sustained, almost invariably have required the existence of a central authority making
fiscal disbursements. In the United States, where there is very substantial labour mobility--some 7 million people each year move from one state to another to obtain work--30 per cent. of the cost of regional economic downturns typically is borne by fiscal transfers from federal funds. Those transfers are possible because of the existence of a central tax authority.
Labour mobility in the EU is much lower. Long ago, the MacDougall report for the European Commission calculated that monetary unions typically require 20 per cent. of GDP to be disbursed from the centre, and that an absolute minimum of 5 to 7 per cent. of GDP would be required to be disbursed from central funds within euroland in order for the single currency project to be sustained.
The European Union is already involved in indirect taxation and in taxation of business and savings. The danger, and the overwhelming likelihood, must be that, once the single currency is up and running, the EU--eventually if not immediately but as sure as night follows day--will seek to arrogate to itself the powers of taxation and expenditure. That would be in accord with the wishes of the European Parliament which, in seeking to raise its status from flyweight to heavyweight, has already called for a direct relationship between European institutions and the European taxpayer.
The third reason for disquiet about early entry into EMU is that, as I hinted earlier, it is about politics, not economics. It is only we British who, in our peculiar and rather stubborn fashion, persist in debating this matter as though it were mainly about economics. On the continent, politicians and bankers do not merely admit to but positively rejoice in the political motivation behind the European single currency project.
The House need not take that just from me, estimable and upright member of the community though I try to be on behalf of my Buckingham constituents. The House should take it from those who know.
For example, Dr. Otmar Issing, former Bundesbank president, has said that there is no example in history of a lasting monetary union that was not linked to one state. Willem Duisenberg, president of the European central bank, has said that EMU is, and was always meant to be, a stepping stone on the way to a united Europe. Gerhard Schroder has noted that the risks will remain, especially if the bold step that led to a single currency is not followed by further bold steps towards political integration.
Finally, Romano Prodi, President of the European Commission, has said that the euro can only lead to closer and closer integration of countries' economic policies. Alarmingly, he went on to add, in a somewhat threatening tone, that that would demand that member states gave up more sovereignty.
Some trusting souls among Labour Members may say, "Those are just the high-falutin' pronouncements beloved of the continental statesman. We should read into them no great significance for their practical effect."
Anyone so naive as to think that should note the remarks of someone closer to home--former Irish Prime Minister John Bruton. He has said that political unity of purpose will be crucial if the euro is to work, and that member states will not be able to dine a la carte at the European table any more. Mr. Bruton maintained that
Europe must develop political institutions with sufficient democratic legitimacy to demand sacrifices of Europe's peoples and to mobilise them in a common cause.
Is it not a sad commentary on our affairs that we need to turn for guidance on these matters to the wise pronouncements of the Eritrean ambassador to the United States? I do not know his name. If I did, I am not certain that I would be able to pronounce it, but I pay tribute to that wise gentleman. His country had been through a bloody war with Ethiopia. It came to mint its own currency, and that gentleman said that an independent nation with its own policies needs its own currency to implement its decisions. That distinguished ambassador should probably be made an honorary member of the British Conservative party. How wise he was.
To those who say that there is no alternative, that the euro is inevitable, and that Britain will have to go into it, I say that that is a counsel of despair and it is intellectually dishonest. If they want to argue the case, let them do so openly, but let them not pretend that there is something automatic and inevitable about British participation. There is not.
To be effective, a single currency zone requires the existence of a common identity, a common purpose and a common willingness to make equal sacrifices to achieve that purpose. None of those conditions currently applies to this country in relation to euroland. The power of self-government, the right to hire and fire our rulers, and the capacity freely to shape our own destiny as an independent nation are inalienable birthrights of every Briton. They should not be traded in for a mess of potage, otherwise known as a back-row seat at a show called "The Heart of Europe."
"not impose burdensome regulations on business, because we understand that successful businesses must keep costs down."
The sentiment was welcome, but within weeks of its utterance the Government had begun the process of betrayal, which has culminated, thus far, in an additional 2,700 regulations flowing forth from the machinery of Government since 1 May 1997.
"We are moving purposefully and very speedily to bring about simpler government and cut red tape, which is a real barrier to growth for small businesses."---[Official Report, 7 November 1997; Vol. 300, c. 483.]
We are grateful to the hon. Lady for the apostolic conversion, which, as a member of the Labour party, she appeared at that time to have undergone.
"have no intention of introducing any legislation that presents a burden on business and reduces the competitiveness of British firms."---[Official Report, 25 November 1998; Vol. 321, c. 214.]
We were grateful to the right hon. Gentleman, except that the record flagrantly violated his words on that occasion.
"governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks."
The House should recognise that, if we were to enter the European single currency, the cost of mortgages and the price of business borrowing, to name but two subjects--subjects with which one would have thought democratically elected members of the British legislature could legitimately preoccupy themselves--would henceforth be determined permanently by people whom we did not elect, whom we could not remove and whom it would be illegal to seek to persuade of our point of view. That is not democracy; that is the antithesis of democracy.
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