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11.38 am

The Minister of State, Foreign and Commonwealth Office & Department for Business, Enterprise and Regulatory Reform (Lord Jones of Birmingham): My Lords, I am pleased to have had the chance to listen to some amazing contributions and I thank noble Lords for making them. I know that I carry everyone’s thanks to the noble Lord, Lord Freeman, for the production of this excellent report. I ask the noble Lord to pass on the Government’s thanks to every member of the committee for all their hard work. A lot of it may go unnoticed but certainly not by me. Further to the excellent remarks of the noble Lord, Lord Dykes, on the calibre of the chairman, it begs the wish that he is not fired either.

I am pleased to have the opportunity to participate in the debate. When I heard that it was to be held and the noble Lord, Lord De Mauley, mentioned that perhaps I might be in a position to push it along, I gave up what I was doing today, cancelled everything and willingly and happily came to learn from your Lordships. I hope to make a contribution.

The single market is one of the European Union’s defining achievements. My noble friend Lord Mitchell referred to the weak dollar, which probably puts the comparative wealth aspect between the European Union and America in favour of the European Union right now, but, even with a strong dollar, the strength and power of the 27 countries would be so utterly different and significant than in the past. It goes along with the other huge achievements. It was the single market, that bastion of democratic capitalism, that could provide such a welcoming home to 10—and then another two—accession states, many of which had been subjected to disgusting state communism from the Soviet Union for so long. To have been able to put that phalanx

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of peace into central Europe is one of the lasting achievements that the single market and the European Union could deliver.

Let us remember that there have never been 60-odd years of sustainable peace between these 27 countries, ever. One or two of them have been knocking the living daylights out of each other at some point over the past 3,000 years. Now we have this great achievement of delivering peace, on the back of which so much can be achieved. It all comes back to the single market and the reality of, now, nearly 500 million people being able to enjoy an economic relationship that grows and strengthens every day, bringing renewed hope to so many people. That market has created around 2.75 million jobs. It has increased trade by 30 per cent between each member state.

Nearly 60 per cent of the United Kingdom’s total trade is with other European Union member states. Noble Lords will recognise that I spend the greater part of my life on aeroplanes and trains, going around banging the drum for brand Britain. I remind your Lordships that we sell more to Germany than we do to India, China, Japan and Russia put together. Germany then sells a lot of it to other countries, so UK goods and services get transported around the world. But if we ignore some of our fellow member states in the trade equation we do so at our own risk. I spend quite a lot of my time in the European Union doing that same job of banging the drum and trying to knock down some of the last vestiges of protectionism in how we go about our trade.

We reckon that about 3 million British jobs are linked to the export of UK goods and, increasingly, services—happily for our economy—to the EU. People in Britain benefit from a greater choice of higher quality goods and services at lower prices because of increased competition and stronger protections to guarantee their consumer rights, which in turn deliver a better product. Every year, EU investment helps to create and protect UK jobs and generate trade.

I hope noble Lords will remember that we are a favoured location for inward investment from all over the world; second in the world to the United States and first in Europe. Just under 20 per cent of all the inward investment from the world that comes into the European Union comes to this country. One of the reasons for that is that we speak the global language—which is not American, but English. We are in the right time zone. We have that fabulous jewel in the crown, a flexible labour market. At the same time, we have restructured our economy so that we make things and provide services that the world wants to buy. There are many reasons, but one of them is that we are right inside the single market. We are precisely where so many investing yen, dollars, roubles and rupees want to be. That is a fabulous achievement for the United Kingdom, and I feel privileged to be able to champion UK trade and investment around the world.

The Government welcome the European Commission’s publication on 20 November last year of its fundamental review of the single market. I am pleased that the Commission, led by President Barroso, shares with

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Her Majesty’s Government the priorities of the strengthening of competitiveness of the European economy, deepening liberalisation and furthering economic reform. I assure the noble Lord, Lord De Mauley, that the Government will strain every sinew to ensure that we carry on driving that forward.

We welcome the Commission’s recognition that the single market needs to be adapted to deal with the challenges of the 21st century. I shall explain what one or two of those challenges are. The European Union does not invest enough in research and development; indeed, nor does the UK. Collectively, the EU is behind Japan and way behind the United States. However—I say this with great pride because at UKTI we can push this forward all the time as a business equation, let alone as a matter of pride in brand Britain—the UK has four universities in the top 10 in the world: Cambridge, Oxford, Imperial London and University College London. We have six in the top 25 and nine in the top 30. The top French university is number 26, its second is number 28 and it does not have another in the top 70, while the top university from anywhere else in the whole European Union is in Holland, at number 48. Ireland has one at number 53. Germany’s first university in the top 100 in the whole world is at number 60. I wish Brussels would put more energy into putting forward that equation rather than indulging in the sometimes frustrating protectionist measures that we all know so well.

Protectionism, of course, is another of the great challenges of tomorrow. I listen with increasing alarm to the fight going on for the democratic nomination in the United States; they are even thinking of tearing up NAFTA, let alone what they are going to do to the WTO. America is meant to be the home of the brave and the land of the free; it might be brave, but when it comes to trade it is not free. The European Union together, using its single market clout, must get into Geneva and then across the pond; it must drive free trade, to the benefit of Africa, Brazil, India and Asia. That is an important use of the tool of the clout of a single market at a time when the challenges of the 21st century, a century that belongs to Asia, will change for ever.

At the same time, we have to get on to the page of allowing the commodities—things that sell only on price—to move to low-cost economies. Instead of concentrating on legislation in Brussels that tries to keep the same job for the same person, we should start thinking about getting those who are out of work into work; reskilling people into tomorrow. That should be the priority and we should use the clout of the single market to provide those opportunities. If, in the 19th century, enterprise and entrepreneurship clustered around transport—rivers, ports, canals and, eventually, the railway—and in the 20th century they clustered around the OEMs, the original equipment manufacturers—they sank the pit, they built the shipyard, they built the textile mill, they built the car factory—then in the 21st century they will cluster around the development, exploitation and transfer of knowledge. It will be the only distinction, the unique selling proposition, for any entrepreneurial exercise in the developed economy. If we can do that on the back

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of the wealth and power that are created in a single market, a 21st century that belongs to Asia holds no fears for the European Union. If, however, we carry on looking backwards and marching valiantly towards 1970, we will have a real problem. The single market is the key to this; it can provide the critical mass of tariff-free trade that can generate the wealth and provide the hope for so many people.

I shall turn to some of the points made by noble Lords during the debate. As the noble Lord, Lord Freeman said, the Prime Minister is banging the drum today in the spring Council. The four points are important. They mean the proper implementation and enforcement of what currently exists. In some countries, compliance is a voluntary event; we all know that. That has to stop in order to win street cred for all of this among European citizens. We want better regulation, but if this is going to work we want less regulation. I assure the noble Lord, Lord De Mauley, that that fight will continue.

We need to help the new members of the European Union get on with implementing those measures which create the single market—we are in a fabulous place to do that as a nation. They way to do that is to come at it as partners, not with the arrogance of pretending to be bigger or superior. We are the one nation that, right the way through, across the parties, never wavered in getting those accession states into the European Union. They know that we never wavered in our support. That gives us a special place in their hearts that we can use to help them to build capacity and understanding to make the single market work.

My noble friends Lord Harrison and Lord Mitchell referred to the constant need to help small and medium-sized enterprises, which represent 99 per cent of the private sector of the European Union, grow, develop and create the wealth and employment which will make the difference in a knowledge-based economy. The single market has made it easier to start or buy a business. The average cost of setting up a new company in the former EU 15 has fallen from €813 in 2002 to €554 in 2007. The time needed to register a company administratively, while still frustratingly far too long, has reduced from 24 days in 2002 to 12 days today. The fight goes on. We are doing better than most, but we could carry on trying to set an example and do it better.

The noble Lord, Lord Freeman, referred also to what is key to the future for the United Kingdom in a single market: the two great sectors of energy and financial services, especially retail. With energy, we must continue the drive. I can assure noble Lords that we will drive constantly to achieve liberalisation of energy markets across the whole European Union. With financial services and especially in retail, it is high time that certain countries—let us name some names: Germany and France—get on the page of a liberalised market, not for the benefit so much of business as of the consumer, to make sure that the customer gets a better deal across the whole of Europe.

I, too, share the frustration of the noble Lord in seeing the words “free and undistorted competition”

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removed from the draft treaty. It is sad that, while lawyers advise us that that does not affect the end game, it is the mood music which is created, the spirit of what this is all about, that are diminished. Noble Lords have my assurance and that of Her Majesty’s Government that the fight will go on to make sure that undistorted competition and a free market continue to be the at the very top of our agenda in all that we do in Brussels.

The noble Lords, Lord Bradshaw and Lord Berkeley, made some very helpful and obviously knowledge-based remarks on transport, especially the railway system. In my time at the CBI, I visited many countries. I remember sitting in the offices of an automotive components manufacturer in Ljubljana in Slovenia. One could have eaten lunch off the floor; it was a fabulous place. It had big markets for its components—into Torino in Italy, into MÃ1/4nchen for BMW, up into Paris for Renault and then into my home town of Brum for Jaguar and Land Rover. The person to whom I was speaking said that it took a truck about 48 hours to get up to Birmingham, having dropped off on the way. I said, “A truck? Why don’t you use the railway? It is environmentally sound and, I would suggest, more cost effective”. He laughed at me and said, “A railway? It gets to each of the different boundaries on the way up there. Sometimes, it all gets taken off, counted and gets put back on, and what gets put back on is less than what got taken off. Sometimes, they insist that the train is pulled through a particular country by a train that is actually made in that country. Sometimes, you get the whole train having to be run by personnel from that country, and then, of course, in other countries, freight waits and can sit in sidings for ages. I’d rather put it on a truck”. We will not achieve an effective single market, at a productivity level which can beat the Americans, who can put freight on a train in Chicago and take it off in New Orleans, or certain parts of India and Asia, or win anywhere in the European Union, if we do not have a cross-border railway system that works.

On regulation of the railway sector, I entirely agree that the focus should be on free, undistorted, liberalised and competitive markets. In the same way that the Government have influenced the energy sector with a view to opening it up, so we will continue, I assure the House, to work with the European Commission in pushing for a better regulated and more competitive railway sector. The Government would like to see greater regulatory co-operation across the European Union. The key is co-operation; the key is the independence of regulators. A flexible regulatory framework will require greater regulatory co-ordination and consistency, coupled with a robust process for reaching agreement on cross-border issues. That is the key to this; it is not individual government ownership or interference. Governance will depend on stronger and more independent national regulatory authorities. Noble Lords have this Government’s assurance that we will continue to push and press on that. I shall refer the specific transport points raised by noble Lords to the Secretary of State for Transport and I assure them that they will be taken up.

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I learn more every day from my noble friend Lord Borrie about regulation. Regulators and regulation are necessary, but they can be the last refuge of a protectionist. It is important that, in our quest for good regulators, we do not allow the protectionists to win.

I am indebted to my noble friend Lord Harrison for his remarks. As he said, it is a joy always to listen to the tour d’horizon that we receive. I came back from Saudi Arabia earlier this week; I am off to Thailand next week. Every time I come back, I know that I live in a different country from that described by certain newspapers in this country. It is not just the prerogative of one newspaper or other. I just know that I live in a different country from that which many people read about every day. It is important that all people in the public realm, not just in this House, constantly try to promote brand Britain for its values, many of which are encapsulated in the essence of the single market.

My noble friend Lord Mitchell moved on to roaming. I, too, speak with a vested interest in this, as does the taxpayer, because the taxpayer pays for the mobile phone bill when I call in from all over the world on government business. The phone bill is disproportionately expensive for the calls that I make and text messages that I send from overseas because of the roaming charges. It is not right that the UK taxpayer pays more for that than when I text from Glasgow to London. The fight goes on. I sincerely hope that the changes will mean a better deal for use of what is one of the great tools of making the single market work and better realising, especially for the young, the benefits of globalisation.

I am grateful to the noble Lord, Lord Freeman—

Lord Watson of Richmond: My Lords, does the Minister judge that the passage of the Lisbon treaty, both in this Parliament and all the Parliaments of the European Union member states, will facilitate the effective development of the single European market, or does he feel that it is irrelevant to that?

Lord Jones of Birmingham: Yes, my Lords, I would have said for the purposes of this debate that the Lisbon treaty is irrelevant to the continued drive for an effectively working single market. Many factors around the fringes will affect it, one of which, I suggest, if we are not careful, is the mood music. We have to make sure that people understand and enjoy the street cred that comes with a single market, and see it for the opportunity that it is, and not the threat. That understanding is more important in other countries than here; this country in its DNA gets globalisation and single markets. We like wider markets in which people get richer every day and buy our goods and services. It is not rocket science. We get it throughout the country. I cannot say the same for certain other countries. I will not name names, but I can think of one 22 miles south-east of Dover.

I want to deal with one point raised by the noble Lord, Lord De Mauley. He raised the single payments policy. That is a Treasury lead, not a UKTI lead. As the noble Lord knows, it is related to European

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Union monetary policy. I will refer the matter to Ministers in the Treasury and ensure that they get back to him.

In conclusion, Her Majesty’s Government believe that the Commission’s single market review, by highlighting areas in which the single market can be further improved, will give the European Union the impetus to move forward and create more jobs that are sustainable. It will centre the whole drive of enterprise and entrepreneurship around the development of knowledge to increase competitiveness and to ensure that there is a European Union single market which works for consumers and for businesses. Both aspects of democratic capitalism have to operate in a globally competitive environment, or we are history. At the same time we can use it to tackle the challenges of poverty, prejudice and ignorance that happen throughout the European Union.

The single market has created one of the great opportunities of this century. The United States is going to spend the next 20 years welcoming other powers to the top table. Its omnipotence economically is over. We will see China, India and others join it at the top table. I do not see the demise of America; I merely see a widening at the top. Whether the European Union—480 million people living in peace—wishes to join that top table, is going to be for the single market to deliver. On that basis the report from the European Union Sub-Committee B has made an important contribution to the analysis. I commend it.

12.01 pm

Lord Freeman: My Lords, in thanking the Minister most sincerely for that very comprehensive response, I shall briefly respond to the points directed at the Select Committee. This has been a very interesting and worth while debate. Your Lordships on all sides have spoken with a single voice. When the Hansard report is read by those in Brussels, they will be impressed by the coherence and unanimity of our views.

The noble Lord, Lord Haskel, reminded us that it is important that we should retrace our steps in Select Committees. We will do so in looking at the implementation of the services directive. The noble Lords, Lord Dykes, Lord Bradshaw and Lord Berkeley, form a powerful lobby, arguing for an examination of where we have got to, both for road and railway transport, in the internal market. That certainly has my strong personal support. The noble Lord, Lord Mitchell, talked about text messaging. I have to say to the noble Lord—and I know he realises this—that he and other members of the committee really did have influence on Commissioner Reding. Lords reports in Brussels really do count, probably uniquely, if I might say so, among many of the other nations in the European Union. The noble Lord played his part, and we will continue to follow mobile phone charging, but text messaging in particular.

The noble Lord, Lord Borrie, reminded us of the importance of looking at intellectual property. That is unfinished business in terms of the internal market. The noble Lord, Lord Harrison, asked us to look at

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SMEs. We will continue to do so. I stressed the importance of that in my opening remarks.

I thank my noble friend Lord De Mauley from the Front Bench. I am sure that the committee will agree with the vast majority of the comments he made. He is one of the few Front Bench spokesmen who seems to have a new portfolio each day. He discharges them with great distinction.

I thank the noble Lord, Lord Jones, for stopping off between Saudi Arabia and Thailand and for his good humour. Certainly from these Benches, but I think I speak for all noble Lords, we congratulate the noble Lord on the diligence and excellence of his contribution and on his experience. He is certainly not a wallflower, but I think that internationally he would make a marvellous dancing partner.

On Question, Motion agreed to.

House of Lords (Members’ Taxation Status) Bill [HL]

12.04 pm

Baroness Royall of Blaisdon: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the House of Lords (Members’ Taxation Status) Bill has consented to place her Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Lord Oakeshott of Seagrove Bay: My Lords, I beg to move that this Bill be now read a second time. I thank the noble Baroness, Lady Royall, for that reassurance; it is quite a relief.

This is a short Bill and a short speech. It is so simple; if you sit in the British Parliament and vote on laws for the British people, you must pay full British taxes on all your income like the vast majority of your fellow citizens. You must not hide income or assets offshore behind a veil marked “non-resident” or “non-domiciled” for tax purposes. If you accept a peerage from the Queen for life, you must not sign a tax return saying that you do not intend to stay permanently in this country, as non-doms do.

If, like the noble Lord, Lord Laidlaw, you give cast-iron undertakings to the House of Lords Appointments Commission that you will immediately become resident for tax purposes in this country in order to get a peerage, and then flagrantly dishonour them, you have simply obtained a peerage under false pretences. Even if you eventually take leave of absence, as this gentleman has, the stain remains on this House because you can still change your mind and pop over from Monte Carlo to pick up your peerage again any time you fancy.

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