What is the Bruges Group?

By Matthew Barrett
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My series profiling the groups of Tory MPs continues with a look at a pioneering Eurosceptic group which helped backbenchers cause significant headaches for Prime Minister John Major during the early 1990s. The Bruges Group is a well-established forum for advocating looser ties with Brussels, and it has gone from a relatively small collection of Tories to one of the groups that best represents mainstream Conservative thinking on its particular policy area.

Origins of the group

The Bruges Group was founded in February 1989 to promote and uphold the ideas Margaret Thatcher expressed in her famous Bruges Speech in late 1988. Mrs Thatcher argued that the tide of opinion on the continent was towards centralising the structure of the European institutions - and this would be unsuitable for Britain's national identity and democracy. In the most famous passage of the speech, Mrs Thatcher said:

"I want to see us work more closely on the things we can do better together than alone. Europe is stronger when we do so, whether it be in trade, in defence or in our relations with the rest of the world. But working more closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy. ... We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels."

The group was set up by Patrick Robertson and Lord Harris of High Cross, ie Ralph Harris, the director of the Institute of Economic Affairs from 1957 to 1988. Lord Harris' work promoting free-market economics at the IEA was instrumental in the creation of Thatcherism.

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Cameron hears Tory consternation about European budgets and banking union - and receives grilling on in/out referendum

By Matthew Barrett
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Yesterday afternoon, the House of Commons questioned David Cameron on his trip to the European Council. Backbench Conservative opinion being mostly Eurosceptic, the Prime Minister received some testing questions. At the Council, issues like the next European budget and a Europe-wide banking union were discussed, and at home, the issue of a European referendum continues to trouble the Government.

One of the confusions over the Government's intentions is the "new settlement" requiring "fresh consent" which the Prime Minister has hinted at. It has so far been clear what the result of a "no" vote to such a "new settlement" would be. Peter Bone pressed this line of inquiry:

"Mr Peter Bone (Wellingborough) (Con): The whole country will be grateful for what the Prime Minister has done, especially because he has said, if I have understood him correctly, that when he is returned as Prime Minister, without the pesky Liberal Democrats in coalition, he will renegotiate with the European Union and put a referendum to the people in which they can vote yes for the renegotiation or no to come out.

The Prime Minister: ... I think that Europe is changing. The deepening of the eurozone, which will inevitably happen as a result of the problems of the single currency, will open up opportunities for a different and better settlement between countries such as Britain and the European Union. We should pursue that. I have said that we should have both strategic and tactical patience, because the priority right now is dealing with the problems of the eurozone and the firefighting that has to take place, but I think it will be possible to draw up that new settlement and then, as I have said, seek fresh consent for that settlement."

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Philip Hammond gets rough reception from some Tories as he announces historic cuts to the Army

By Matthew Barrett
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Philip Hammond's statement to the House this afternoon announcing cuts to the Army was bound to be a challenging time for the Secretary of State for Defence. The announcement signals the beginning of a long transformation for the Army, and jobs will undoubtedly be lost as a result of the changes. Mr Hammond told the House that the 5th Battalion the Royal Regiment of Scotland, 2nd Battalion the Royal Fusiliers, 2nd Battalion the Yorkshire regiment, 3rd Battalion the Mercian Regiment and the 2nd Battalion the Royal Welsh would all be "withdrawn" or disbanded. The Secretary of State said: 

"These withdrawals and mergers, unwelcome as I know they will be in the units affected, are fair and balanced, and have been carefully structure to minimise the impact of the regular manpower reduction and optimise the military effectiveness of the Army."

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The 2010-12 parliamentary session was the most rebellious on record

By Matthew Barrett
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Philip Cowley and Mark Stuart of the University of Nottingham have released a new pamplet - "The Bumper Book of Coalition Rebellions", which documents the 239  backbench rebellions so far in this Parliament, in which 544 votes have been held. 

The pamplet takes us from the first rebellion, on the government’s control of time in the Commons, to the last, on Sunday Trading during the Olympics. This Parliament has seen more rebellions by government MPs than in any other session in the post-war era. As "The Bumper Book" says, "It comfortably beats the previous record of 128, held by Conservative MPs in the 1971-72 session. Indeed, a figure of 239 is higher than all but three entire post-war parliaments."

In fact, there were more rebellions in the last two years than there were between 1945 and 1966 - a period which saw six Prime Ministers and six parliaments. On a different measure, the "relative rate of rebellion", this session's 239 rebellions constitute a rebellion by Coalition MPs in 44% of divisions, which is a record in post-war parliaments. The 44% figure can be broken down further: Conservative MPs have rebelled in 28% of votes, while Lib Dems have rebelled in 24% of votes.

It is also notable how much of a contrast there is between the 2010-12 session and most first sessions in a parliament. As the pamplet says: "The rebellion rate for coalition MPs collectively is way above all other first sessions in the post-war era (the previous record was 28%, for Labour MPs in the 2005-6 session, as the party entered its third, and most troublesome, parliament under Tony Blair)".

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Rolling record of Tory MPs' comments on new EU Treaty

Friday 8.45am John Redwood MP blogs:

"Orderly but rapid break up would be the least cost option. It would liberate the countries allowed out, and permit them to adjust their competitiveness by a devaluation which would be swift and easier to sell than large wage cuts. There is  no foundation to the proposition that the EU would lose 10-50% of its output if they changed currencies. To my knowledge 87 countries have left currency unions since 1945. In most cases they have prospered more after exit. The successful break up of the 16 member rouble bloc could be the model."

8.30pm Philip Hollobone told Sky News:

"...we need to have a disorderly breakup so that the whole of Europe and the rest of the world economy can get back to significant economic growth in the future. This idea that we can prop up the eurozone in the next ten years with constant austerity is just not going to work."

6.45pm The leader of the Conservatives in the European Parliament, Martin Callanan MEP said: 

"If there is any treaty change which creates European fiscal union then clearly that will radically effect the UK and that should be put to a referendum. That is what democracy demands, because we would be creating a fundamental change to the EU and our relationship with it. However, that could take years to complete. It might be a way to solve the next crisis - but not this one. That is why the focus should be on measures to address the issues at the heart of this crisis."

He said these would include "The casual one-size-fits-all approach that had undermined the euro from its foundations", "The massive economic imbalance between its prosperous and economically-disciplined members and those which were debt-ridden and financially dysfunctional", "The over-regulation which hampered wealth-creation and innovation and encouraged a dependency culture in struggling states."

5.30pm Paul Waugh reports that Edward Leigh said the following in a Westminster Hall debate this afternoon:

"We have had enough of reading of British prime ministers over the last 20 to 30 years in the days preceding a summit that 'they will stand up for the British national interest' and then coming back from a summit with a kind of Chamberlain-esque piece of paper saying, 'I have negotiated very, very hard, I have got opt-outs on this and that and I have succeeded in standing up for British interests'."

Update: Paul Waugh tweets: 

"No.10 hits back at Edward Leigh's Chamberlain remarks. PM's spokeswoman: "It was offensive and ridiculous.""

5.15pm Nadine Dorries blogged: 

"I have no doubt that the PM will return with some form of a guarantee for Britain as the last thing Merkel wants is a referendum in Britain. If Britain succumbs, other countries may follow suit and the effect such an event would have on the markets would be damaging for Germany. After all, it’s all about Germany. A fiscal union of 17 EU members forming one new country and in effect a new trading block will have huge implications for Britain and British business. It's time we gave the British people their say via a referendum. The next two days will test the Prime Ministers courage and skills. If he misses this opportunity to grasp the nettle and give the British People their say, they may eventually make him pay with the one vote they will have."

4.15pm Nick Boles appeared on the Daily Politics show this afternoon, and argued:

"Today is the moment of maximum economic danger for Britain. Our retail sales are falling, manufacturing output is collapsing, Brazil has stalled, China has stalled. The entire global economy is sitting on the edge of an abyss and the urgent priority for the British people is to protect our economy and their jobs by getting this Eurozone crisis fixed. We need to repatriate powers but we need to come to that after we've saved our economy, not before. ... What I want David Cameron to do is to protect our economy, protect our jobs - mainly, because that's the thing that's under most threat from the Eurozone - protect the City of London, but he needs to help them get a solution to the Eurozone crisis so that the entire European economy doesn't fall apart. ... We are going to work out an entirely new kind of outer-tier relationship, and that is a big exercise, it's a very important exercise, and it offers big opportunities for Britain, but it's probably going to take two or three years - it's not the work of a weekend when the global economy is on the precipice."

3.30pm Sir Peter Tapsell told Radio 4:

"The fact is the French and German leaders have been meeting for weeks and weeks. I have very little doubt that they will not be able to solve the eurocrisis on Friday but it is very much in the British national interests that it should be solved. As we argued at the time of the Maastricht Treaty to think that you can have a single a interest rate for a whole variety of countries at different stages in their development. And that remains true today and although we opted out of the euro right from the beginning and very sensibly so, but we are affected by the euro and I feel really sceptical that they can solve to eurocrisis, I don’t expect it to survive. ... The reason why Europe is in crisis has to be traced back to the Maastricht Treaty. They then introduced a whole series of measures which weakened the European economy by comparison with those of the Far East and America and so on."

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29 32 Tory MPs rebel against Britain's £9.3 billion EXTRA contribution to IMF bailouts

By Tim Montgomerie
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Last night at least 32 Tory MPs (listed below) voted with Labour against an 88% hike in Britain's contribution to the IMF. The hike is to partly fund the IMF's ability to fund bailouts. I write "at least" because I've only quickly scanned the voting list. Please email [email protected] if I've missed anyone off the list.

1. Steve Baker
2. Brian Binley
3. Peter Bone
4. Douglas Carswell
5. Bill Cash
6. Chris Chope
7. James Clappison
8. Philip Davies
9. David Davis
10. Zac Goldsmith
11. James Gray (added at 9.30am)
12. Gordon Henderson (added at 9.30am)
13. Chris Kelly
14. Edward Leigh
15. Julian Lewis
16. Anne Main
17. Karl McCartney
18. Nigel Mills (added at 11.30am)
19. David Nuttall
20. Matthew Offord
21. Andrew Percy
22. Mark Reckless
23. John Redwood
24. Simon Reevell
25. Richard Shepherd
26. Henry Smith
27. Graham Stuart
28. Peter Tapsell
29. Andrew Turner
30. Martin Vickers
31. Charles Walker
32. John Whittingdale

The Government won the vote to increase Britain's contribution from £10.7 billion to £20.15 billion by 274 votes to 246. This is the first time that the Labour frontbench has voted with Tory Eurosceptics. Labour was voting against an increase in the IMF subscription that was largely agreed during Gordon brown's time in office.

On his blog John Redwood suggests that the 29 rebels are only one sign of Tory discontent. Given that there are more than 300 Tory MPs he calculates that AT LEAST 80 Conservatives were unavailable, abstained or voted against the government. He writes:

"Some of us want the UK government to use the influence it says it has at the IMF to halt the futile bail outs of Eurozone members. The debt markets show the markets do not believe that Greece can repay all its debts in full and on time. Yesterday was a day when market worries spread beyond Greece, Ireland and Portugal to Italy. Those in  charge of the Euro scheme need to get a grip. It is doing a great deal of financial and economic damage, and they no longer seem to be in control of their project. The IMF should decline to bail out rich countries that have shackled themselves to a currency scheme that was badly put together and needs a thorough re think."

10.30am Douglas Carswell has just blogged this:

"The decision to raise our IMF subscriptions by 88 percent was first mooted when Gordon Brown was in charge – but was okayed by the current government last October.  While Canada, Switzerland, Holland and Belgium all managed to keep the increase in their subs low, whoever negotiated the deal on our behalf seems to have preferred to have UK taxpayers assume greater debt liabilities so that they could sit on a bigger chair at the various international summits they attend on our behalf. Alongside fiscal policy and monetary policy, our approach towards the bailouts and the IMF shows that there has been remarkably little change in economic policy at the Treasury since Gordon Brown was in charge." 

More from Douglas Carswell.

Three sharp questions for George Osborne from his backbenches

by Paul Goodman

George Osborne bested Ed Balls yesterday.  But the Treasury team also faced three sharp questions from its own side, which the sketchwriters have duly picked up this morning.  Here they are in full, together with the answers.

First -

"Mr David Davis (Haltemprice and Howden) (Con): There is a lot of public disquiet about alleged enormous sweetheart deals done with major public companies-Vodafone and others-in the last five years. Three or four months ago, I tabled a question asking how many of these deals had been done, costing more than £100 million at a time. The answer I received was that the information requested was "not readily available" and could be provided "only at disproportionate cost". I received a similar blocking answer this morning. When is the Minister going to tell the House what HMRC has been up to?

Mr Gauke: The National Audit Office has investigated and examined that as a matter of course. There is no question of sweetheart deals. The reality is that HMRC is seeking to recover as much tax as is due. That is what it has done in a number of cases. I am not going to comment on individual cases. That is a matter of confidentiality; I do not get to see the details. None the less, I think wild allegations have been made against HMRC, for which there is little or no evidence."

Second -

"Mr Douglas Carswell (Clacton) (Con): The Chancellor is entirely right to emphasise the need to be careful with public money. Will he therefore please explain his role in approving the deal to make the UK taxpayer liable for billions of pounds to bail out the euro under the European stabilisation mechanism? Will he respond to my freedom of information request, and publish the advice that he was given on the agreement on assuming office?

Mr Osborne: First, I will look at my hon. Friend's FOI request, because I have not seen it. The broader point that I would make is that my predecessor as Chancellor, in the weekend between the general election and the creation of the new Government, agreed to the creation of the European stability facility. That involves a UK commitment which takes place on the basis of qualified majority voting; we do not have a veto. I made it clear to the previous Chancellor at the time that I did not support what he had done. However, it has happened and we have to live with the consequences."

Third -

"Sir Peter Tapsell (Louth and Horncastle) (Con): Do Treasury Ministers agree that the real problem with bankers' bonuses is that they are paid not out of profits, but out of revenues? Taxing banks after the bonuses have been paid merely depresses dividends, particularly for pension funds. Why are bankers' bonuses not paid out of profits, as they always were by my very efficient stockbroking firm?

Mr Hoban: My hon. Friend makes an important point. Of course, under the old regime, there was no clawback when bonuses were paid out in cash, and no lock-up. The new code on remuneration introduced by the Financial Services Authority, which is ahead of international practice, has clear rules on deferral, requires that bonuses be clawed back for poor performance, and requires that bonuses for significantly highly paid members of staff-those who take risks-be paid out principally in shares, not in cash. That will ensure that the interests of bankers are aligned with those of shareholders."

George Osborne mocks the Government's growth projections

It was Treasury questions yesterday.

Shadow Chancellor George Osborne poured scorn on the Budget growth forecasts:

"As the Chancellor knows, the growth forecasts that he gave us in the Budget last week, which predicted a return to boom levels of growth in just two years, and that the economy would stay at those boom levels, were greeted with near-universal derision, yet they were the fiction on which he constructed every other Budget forecast. When he gave those forecasts, did he know that the IMF was planning to contradict them flatly just an hour later?

Mr. Darling: Yes, of course I knew the IMF forecasts. The IMF takes a more pessimistic view, not just of our economy but of every economy across the world. However, we ensure that our forecasts are based on the information that we have. If hon. Members look at the IMF and its forecasting over the past three months, they will see that it has downrated its forecasting three times since last October, which demonstrates the uncertainty in the system. However, I believe that because of the action that we are taking, because of the fact that we have low interest rates, because inflation will be coming down this year, and because of the action that most other countries are taking to look after and support their economies, that will have an effect, which is why I remain confident that we will see growth return towards the end of this year.

Mr. Osborne: Frankly, I do not think the Chancellor is in any position to lecture anyone else about downgrading their forecasts after last week. Is not the truth this—that the dishonest Budget has completely unravelled in the space of just a week? We have seen the IMF produce those growth forecasts, which were wholly different from the ones given an hour earlier to the House of Commons. We have the CBI saying that there is no credible or rigorous plan to deal with the deficit. We have the Institute for Fiscal Studies pointing to the black hole, and yesterday a former member of the Cabinet, beside whom the Chancellor sat at the Cabinet table, said that his tax plans were a breach of a manifesto promise that is damaging not just to the Labour party, but to the economy. Today we had the Prime Minister getting a lecture in prudence while he was in Warsaw. We are used to Polish builders telling us to fix the roof when the sun is shining, but not the Polish Prime Minister as well.

Does not the collapse of the Budget in the past week and the damage to the Chancellor’s credibility make an almost unanswerable case for an independent office for Budget responsibility, so that we get independent forecasts on Budget day and the assumptions of the Budget are believed by the public?

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Government still too slow to act on Equitable Life

Treasury questions came around yesterday.

The Equitable Life scandal was rightly prioritised by Conservative members, who leapt on Economic Secretary to the Treasury Ian Pearson, who had this to say:

"I am very disappointed that the Public Administration Committee should choose to obscure the real help that it accepts the Government’s payments scheme will deliver under extreme headlines, seemingly driven by an uncritical acceptance of the findings of the ombudsman’s report and by its unjustifiable and irresponsible characterisation of the manner of the Government’s response. [ Interruption. ] As a Government, we do not depart lightly from any of the ombudsman’s findings, but— [ Interruption. ]

Mr. Speaker: Order. The hon. Gentleman is in order.

Ian Pearson: The Government do not depart lightly from any of the ombudsman’s findings, but in such an important and complex case we have a clear duty to the taxpayer to ensure that our response is informed by a proper and comprehensive consideration of her report. That is what we have done and, as I have indicated previously, we want to move forward with an ex gratia payment scheme just as quickly as possible. We are talking to Sir John Chadwick about the advice that he is providing."

South Staffordshire's Sir Patrick Cormack (above right) was appalled:

"Is the Minister aware that he has just made one of the most shameful statements to have been made from that Dispatch Box in many years? He has rubbished a Committee presided over by one of his own greatly respected colleagues, and discounted the unprecedented second letter from the ombudsman that we all received this week. He has had no support from the Benches behind him, as not a single Labour Member has risen to echo his words. He should be deeply ashamed of himself, because he is bringing the Government and the whole system into disrepute.

Ian Pearson: I have a lot of respect for the hon. Gentleman, who has a very long track record of upholding standards in this House, but we have departed from the ombudsman’s findings only where we have clear and cogent reasons for doing so. We have applied scrupulously the terms of the Parliamentary Commissioners Act 1967, as interpreted by the Court of Appeal in the Bradley judgment. For no other reasons have we departed from those findings. I have to say that I remain very disappointed indeed that the PAC does not appear to have understood some of the arguments that we have made to it."

(The Public Administration Committee is chaired by Dr Tony Wright.)

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Highlights from the Pre-Budget Report debate

Following Shadow Chancellor George Osborne's success in securing it, the House of Commons held an Emergency Debate on the Pre-Budget Report yesterday.

Mr Osborne was on bullish form:

"The public would have found it extraordinary if the House of Commons had not properly considered the huge tax measures put forward by the Chancellor on Monday, or indeed the tax measures concealed by the Chancellor on Monday. Those measures are being debated by families across the country who fear their impact, and it is astonishing that the Government did not want them debated in the House of Commons.

The only explanation is that the Prime Minister is running away from the argument, because he knows that he is losing the argument. This Budget started to unravel from the moment it was delivered. The doubling of the national debt shocked the entire country. [ Interruption .] Labour MPs may not be shocked, but the country is shocked to realise that the Government have taken it to the edge of bankruptcy. Within minutes of the report being published, it became clear that the national insurance rises would, contrary to the Chancellor’s claims, hit people on modest incomes. The small print of the Budget book shows that the Chancellor had been less than candid about the stealthy duty rises on alcohol and petrol. Then we discovered the £100 billion black hole in the tax revenues with no explanation of how it will be filled.

...

Yesterday lunchtime, the Institute for Fiscal Studies pointed out that the new top rate would raise, in its words, “virtually nothing”. The Governor of the Bank of England told the Treasury Select Committee yesterday that the Government should be focusing on fixing the banking system. Meanwhile, retailers are up in arms about the huge costs and logistical nightmare imposed by the temporary VAT cut. Last night, the Chancellor U-turned on the proposed hike in whisky duty, which he had announced only 24 hours earlier. Finally, it has been revealed in an official Treasury document signed off by a Treasury Minister that there is a secret tax bombshell to increase VAT to 18.5 per cent."

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