Queen’s Speech — House of Lords, 2016-05-23
Topic: Macroeconomics
David Edward Lea (Labour, Centre-left): My Lords, following on in a sense from the line of thought of the noble Lord, Lord Low, I say that there are a number of headings under which one has to make judgments. In addition to the four pillars of policy, as magisterially set out by the noble Lord, Lord Kerr of Kinlochard, I shall pose some issues of significance where the Brexiteers seem to be in denial The first is that there is a likelihood of an economic setback. It is highly likely to be a trigger for a significant devaluation. Incidentally, a forced devaluation is quite different from an active policy, as was true twice for Labour Governments—although that point may be argued. Still, an active policy to devalue the pound is one thing; to find the pound collapsing is another. If it was a fall of around 20%, as some forecasters have said to me over the past few years, then we would be rapidly approaching parity with the euro. It would be an irony, would it not, if in trying to avoid the national humiliation of falling below the euro, we ended up, as it were, shadowing it. At that point we might as well join it, so thank you to the Brexiteers for that Then there is the red herring, if you follow the arithmetic, that we will destroy the health service if we remain because we pay the EU a gross figure of £350 million that could otherwise be spent on it. That has to be put alongside what I just said about a fall in the national income. We have found since 2008 a fall of several points from the national potential, and that soon adds up to between £30 billion and £50 billion. Each 1% loss of national income amounts to £13 billion, since the national income is £1.3 trillion. The Brexiteers are trying to get it into people’s heads that it is a disaster that we pay this sum of £350 million, which is beyond comprehension. However, that is a small fraction—one-20th or one-40th—of the loss of one year’s growth of national income, which would certainly be a minimum forecast for that loss. My question is: what is so cool about viewing with equanimity the prospect of a major devaluation of the pound as a result of a crisis Next, who can deny that those who argue that standards at work are being undermined through migration are in many cases the very same people who have always disparaged and misrepresented any and every move to advance and protect workers? I know this from personal experience, having advocated various aspects of the progress of these policies in the TUC for many years. The very same sorts of people who are now saying, "You are no longer protecting the workers"—and thank you very much for that compliment—claim that they are the ones who have protected workers. Each speech every day by Iain Duncan Smith or Michael Gove shows the schizophrenia of the people who are making such claims. The reason why we had to make all these advances at European level was that, if we had tried to make them at national level, each national employer would have said, "No, you can’t do that. We will be undercut". So the argument is totally the other way around. Parental leave, transfers of undertakings, you name it—they have to be implemented, as we succeeded in doing at European level Next, the Brexiteers are in denial of the inevitability—the indispensability—of any free trade area having a number of standards built into it. It happens that I chaired the last EFTA consultative committee that took place, with Britain in it, in 1972 in Vienna, and I assure Mr Duncan Smith and Mr Gove and the rest that the Stockholm treaty of 1959 had a lot of standards built into it, not least on state aids and the rest of it. I have a whole note on that which I do not have time to read out. Therefore we shared sovereignty then, and the whole Conservative Party and, I think, the whole Labour Party thought that EFTA was the bee’s knees, but it had all these requirements for a level playing field built into it I wish the best of luck to Mr Gove if he tries to cobble together his free trade area with Albania, Bosnia, Serbia and Ukraine. I will repeat that, because you could not make it up: Albania, Bosnia, Serbia and Ukraine. We ought to set it to music—I will have a go now. Surely no self-respecting experienced politician can go on repeating such fantasies when the facts of the matter are drawn to their attention. By the way, EFTA is now in effect subsumed into the single market called the European Economic Area, and all the EFTA countries, including Switzerland, are part of Schengen Therefore, on all these three points the credibility of the Brexiteers is zero.