European Institutions

Wednesday 7th September 2011 Westminster Hall

16:30

[Priti Patel (Witham) (Con)]

It is a pleasure to serve under your chairmanship, Dr McCrea. I am grateful to the Speaker for granting me the opportunity to have this debate because, as the Minister for Europe already knows, one of my biggest complaints has been that we do not have enough time in Parliament to debate the EU and its institutions.

I want to cover a wide range of matters specific to various European institutions, those of both the European Union and the Strasbourg-based Council of Europe, because I fundamentally feel that these institutions have grown in power and that, if they are left unchecked, without action by the Government, they will become more and more powerful, with potentially serious consequences for our country. I would like to stress to the Minister the importance of there being more debate on European affairs in the House of Commons, not just on the matters that I will touch on today, but on the broader issues right now within the eurozone, which is the first topic that I want to mention.

There has, of course, been continued speculation about the eurozone, and we have heard a great deal from France and Germany about proposed financial transaction taxes, which, in my view, would have disastrous consequences for the City and its position as a world leader in financial services. There is a clear determination across the eurozone to prop up the euro, irrespective, as we have seen with the Greek bail-outs, of the wider concerns about the ability of other eurozone countries to pay their way. I take the view that we have seen some politically questionable arrangements in relation to bail-outs, regardless of the overall economic consequences, and I am concerned about the exposure of the British taxpayer, which is also somewhat questionable. It is not that surprising that we are now hearing alarm bells in relation to wider talk and discussion of fiscal union: a single regime of taxation and treasury, and unified public borrowing. That is not the solution to the continual problem, and it will, if nothing else, result in the further haemorrhaging of taxpayers’ money to Europe and the further surrender of powers.

What I would really like is for the Minister and the Government to clarify their position on fiscal union, as that could involve a new constitutional settlement with Brussels and could impact on British national sovereignty. British taxpayers must be protected further from any moves towards integration. If any change should come about, we should consider a referendum—we have heard a bit about that topic in the news today—because the British public must have a final say on the course of action that they ultimately look to the Government to take. I would welcome from the Minister a view on the current debate and discussions, and on the proposals that might be emerging in Europe right now. I would like to hear what position the Government might find acceptable or unacceptable, and on what it is that they are prepared to firmly stand up to Europe and question the future direction of travel. It is clear that the European institutions are very focused on closer European union. They are, in my view, using the current eurozone crisis as an opportunity to go for further integration.

Regarding EU directives and their regulatory impact on British business—on businesses in my constituency in particular—the businesses all recognise that we are dealing with the uncompetitive aspect of the EU, which has become a drag upon our economy and upon them individually. I refer specifically to the raft of gold-plated directives that keep coming out of Europe and have a disproportional effect on and an ultimate cost to British businesses, not only affecting jobs in this country but having an overall impact on economic growth. I urge the Minister and the Government to use every opportunity to renegotiate and to repatriate powers to the UK and, where possible, to axe the costly red tape and regulations that are coming out from Europe and affecting, and strangling, British business.

I also look at the advancement of the Europe 2020 strategy and the possible further threats in the form of Europe’s influence on economic, employment and social policies. I again urge the Government and their Ministers to resist all attempts at further competence creep in that area. Both business and the public have become fed up and feel isolated, because of Europe controlling more and more aspects of our lives and our country. Having been denied a referendum on the Lisbon treaty under the previous Government, there is an understandable degree of cynicism and distrust towards the Government—any Government—on this matter.

My views on all matters Europe are well known. If the Government have a sense of conviction and determination to bring an era of transparency and accountability to Europe—we see that more in our domestic policies, and there is a greater case to be made to use Britain’s role to urge Europe to do more of it—we can effectively find ways for the British public to bring powers back to Britain and at the same time engage the British public in the wider debate on matters such as transparency and accountability. If that does not happen, the Government will continue to face this wall of pressure, both from the public and parliamentarians, including me, to hold a referendum on the future of Europe, and on withdrawal from the EU as well. In the years ahead, the Government must pursue the virtues of less Europe and more Britain.

In addition to repatriating powers to Britain, we need an assertive approach to challenging the EU on its budget. The British Government must stand firm in this area, because culturally and institutionally the EU is wedded to an unreformed culture of high budgets. The European Council press release in July said that the EU budget for 2012 was to be trimmed in recognition of the difficult economic circumstances—somewhat an understatement—in many EU countries. What did the so-called trimming result in? It led to an approved increase in the EU budget of more than 2%. The public want the Government to stand up for hard-pressed British taxpayers. How can it be right that we are all financially squeezed here at home while we are bankrolling increased expenditure abroad and footing the bill for what I see as EU propaganda programmes—vanity projects such as EU citizenship programmes?

As part of budget negotiations, I also urge the Government to take a tough stance on defending the UK’s rebate, which is worth £65 billion to British taxpayers, and in particular to stand up against continued attempts by Europe to take what is left of that rebate. The Office for Budget Responsibility has already stated that the UK’s net contribution to the EU will increase to somewhere in the region of £8 billion to £9 billion per year during this Parliament alone. British taxpayers need a commitment from the Government that they will take all necessary action to block any future increases in the budget and to ensure that our rebate is safe.

Another subject that I want to touch on briefly is EU immigration. With the EU set to expand to include Croatia and other Balkan countries, we need stringent immigration controls. I look to the Minister for some assurances, primarily because we have suffered from uncontrolled levels of immigration following the expansion of the EU into eastern Europe. At a time when we need to get Britain working again, we cannot afford to lose more UK jobs to the next generation of European workers.

It is time for Britain to take robust action on the Strasbourg-based Council of Europe and its associated institutions, which include the European Court of Human Rights. From November, the UK will hold the chairmanship of the Council of Europe and in advance of that it is essential that this Parliament gets to debate the UK’s priority. The opportunity for reform must be grasped, as there are plenty of areas in which the UK should focus its attention to protect British sovereignty and the sovereignty of our Parliament, specifically in relation to human rights. Currently the Committee of Ministers, the Commissioner for Human Rights and other officials pass a lot of diktats and impose burdens upon countries, and we have heard a lot about some of the burdens that they would like to impose upon us. Those diktats are used by the European Court of Human Rights to influence judgments but we do not get the debates—they are agreed but the British public do not get to have a say on them.

One issue on which that has effectively happened this year is prisoner votes. The European institutions are thoroughly unaccountable to the British public, yet they exert an outrageous degree of control over this country. While the Government are seeking further delays in introducing legislation on prisoner votes because another test case is being considered by the Court, there is a chance to send a clear message to Europe that this country will not be bullied any more into changing its laws. This Parliament has spoken on prisoner votes, and our view should remain as it was in the debate in February. By doing so, the Government could set a precedent, demonstrate a clear commitment to defending British interests from power-hungry European institutions and provide the effective check on their undemocratic and unaccountable ways for which this country is crying out.

I make a final plea. Ministers must not miss this opportunity to pursue transparency and accountability and to tell Europe to bring its powers back into the hands of the British people, where they belong.

16:40

[The Minister for Europe (Mr David Lidington)]

This is the second day in succession that I have had the pleasure of serving under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Witham (Priti Patel) on securing this debate. I am certainly aware of her long-standing interest in the European Union and European institutions. As she rightly said, it would be good to have more opportunities to discuss such issues, and I would welcome the prospect of many more Members taking part in those debates. It is a pity that, often, only a number of committed aficionados attend European debates. I would like the issues to be debated more generally. As she rightly said, the decisions that British Ministers negotiate at European level have a direct and, in many cases, significant impact on the lives of the people whom we represent.

I listened carefully to the points that my hon. Friend raised and I agree that the European institutions that she mentioned have many shortcomings that, coupled with the previous Government’s reluctance to involve the people in important decisions about the European Union, have led to a growing sense of disconnection between the British electorate and the European institutions. I assure her that this Government are committed to addressing that disconnection and the issues underlying it.

[Bob Stewart (Beckenham) (Con)]

In that case, can the Minister assure us that any new European Union treaties will be put to a referendum of the people, as will any new measures, particularly fiscal ones?

[Mr Lidington]

I am grateful to my hon. Friend for raising a subject to which I was planning to come in the next stage of my remarks. The Government are intent on working hard within Europe to deliver the kind of Europe that suits British interests and the British people, in the knowledge that we now have, for the first time, a proper guarantee that, if it is ever proposed to pass new competencies or powers from this country to Brussels, the British people will get a vote in a referendum. That guarantee is provided by the European Union Act 2011, which recently came into force. For the first time, British voters will have their rightful say over any further expansion of EU powers. I believe that that will put our participation in the EU on a sturdier and more democratic footing. If a new treaty amendment or a brand-new treaty were to be introduced that involved the transfer of further competencies or powers from this country to the European Union, that treaty or amendment would be caught by our new Act of Parliament, and a referendum would be required subsequent to primary legislation here so that the British people would have the final say over whether those powers were transferred to Brussels.

[Mr Nigel Dodds (Belfast North) (DUP)]

That is all very well, and it is welcome as far as the future is concerned, but is not the problem that, under the Lisbon treaty and other measures, far too much power has already been ceded to Brussels? What we need is to get some of it back. Should it not be the Government’s priority to use the current situation in Europe to negotiate the repatriation of powers to the British people? That is the key issue as we move forward.

[Mr Lidington]

As the right hon. Gentleman says, the Act is not a panacea, and I have never claimed that it would be. It does not address the repatriation of powers. That was not its purpose. Under the coalition agreement, the Government are committed to examining the existing balance of competencies and what they mean for Britain, and we continue to consider that issue. I appreciate that both he and my hon. Friend the Member for Witham would have liked the coalition agreement to commit us to returning important powers from the EU to the United Kingdom. During the 2010 general election, I stood on and campaigned for exactly the same manifesto as my hon. Friend did. I do not resile from anything to which I committed myself then, but we must abide by the political reality of the outcome of that election, which the British people delivered. The coalition agreement forms the basis for this Government’s policy.

My hon. Friend argued that ongoing negotiations on EU reform could be an opportunity to deliver a new EU agenda. The current problems in the eurozone were predictable—and, indeed, predicted, not least by British Conservatives—but that does not change the fact that, although we seek to expand British trade with the world’s emerging powers, 40% of it is still with the countries of the eurozone, so it is in our national interests that the eurozone countries prosper and find a way through their difficulties.

The economic logic of a monetary union, as British Conservatives have argued frequently, is greater fiscal and economic union, and we see some signs that the eurozone countries are moving in that direction. If they wish to do so, we should not stand in the way of their progress. If, at some stage in the future, moves towards greater fiscal union among the eurozone countries lead to a treaty, there will be an opportunity for the United Kingdom to ask, “What is in our national interest?” That is the approach that we took on the treaty change to establish a European stability mechanism for eurozone members. As the Prime Minister said, Britain would benefit from taking some powers back from Brussels. However, I caution my hon. Friend that although events are fast-moving and predictions risky, there is no sign of an immediate move towards such a treaty change. Treaty change is neither easy nor straightforward, and the eurozone countries know that, whatever the position in the United Kingdom, several countries, including the Netherlands, Denmark and Slovakia, have provision in their constitutional arrangements for referendums in some circumstances, so it would be a complicated matter. For that reason, I do not think that there is pressure at the moment to go down that road.

My hon. Friend raised more general points about the future of the eurozone. Although the Franco-German proposals appear to be a step in the right direction, we must consider the detail carefully. She is absolutely right that we should not let ourselves be sucked into the deeper fiscal integration on which the eurozone appears to be embarking. That is important to the Government.

On financial transaction taxes, clearly, unless such taxes applied to all financial centres globally, we would see a relocation of trading from centres where taxes apply to centres where they do not. Therefore, a financial transaction tax that applied only to European Union countries would be extraordinarily damaging for every financial centre in the EU, including the City of London. The Government are taking an active role in international discussions exploring financial sector taxation. The Chancellor of the Exchequer has made it clear on many occasions that he thinks that the idea of an EU-only financial transaction tax would be profoundly counter-productive and unwelcome.

My hon. Friend mentioned budgetary discipline and financial efficiency in Europe. Both are cornerstones of the Government’s policy towards the European Union. We want all institutions to ensure that their spending and activity produce genuine benefits for our citizens. We are taking firm action on the 2012 EU budget. Of course, the annual budgets of the European Union are ultimately determined by qualified majority voting. We do not have a right of veto. Although the current proposal for an increase of about 2% is greater than the British Government would have wished, it is still roughly equivalent to a real-terms freeze in that budget, and it is significantly less than the Commission’s original proposal of 4.9%. I also note that it is almost €8 billion less than the budget ceiling for 2011, which was agreed by the previous Labour Government in 2005. We will continue to work with other like-minded countries to get the very best deal possible for the taxpayer. I shall embark on a further stage of that work when I go to Brussels next Monday for the General Affairs Council.

[Bob Stewart]

Is it possible that we could just say, “No, we are not giving you that money”? We know that that would break a treaty, but surely we are not alone in Europe in that respect. Would not one option for us to think about be for Britain to say no, as Margaret Thatcher did?

[Mr Lidington]

However tempting my hon. Friend’s suggestion might be, the problem with unilateral action is that it can so easily be used to justify unilateral action by others that would be profoundly detrimental to our national interest. Aspects of the European Union—most obviously the single market, the creation of Margaret Thatcher’s Conservative Government—have benefited the prosperity of and employment among British citizens. They have helped attract vast foreign direct investment to these shores. Other European countries have, at times, fumed and sworn at the fact that the single market meant that they had to dismantle protectionist barriers. However frustrating some aspects of the way in which the EU is organised may be, and however we might aspire to see changes in those structures, I caution my hon. Friend against unilateral action, because that could set a damaging precedent.

We in this Government believe that tax policy is for member states to determine at national level. The Commission has proposed certain new EU taxes. We think that those would introduce additional burdens and damage European—not just British—competitiveness. The United Kingdom will oppose any such new EU taxes.

If we look beyond the annual 2012 budget to the next, probably seven-year, financial perspective, where unanimity rather than qualified majority voting applies, we will see that the Prime Minister has stated jointly with his EU counterparts that the maximum acceptable expenditure increase is a real freeze in payments and that that should be year on year from the actual level of payments in 2013, not from the level of commitment, which is usually above the level of the money actually paid out.

I also assure my hon. Friends that the Government will certainly defend the United Kingdom rebate, which remains fully justified owing to expenditure distortions in the EU budget. We should not cease to remind the British people of the fact that the increases in our direct contributions, to which my hon. Friend the Member for Beckenham has referred, are the product of the shoddy budgetary deal negotiated by our predecessors, Mr Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when they were in office.

[Jonathan Lord (Woking) (Con)]

I welcome what the Minister has said about EU taxes and his approach to the budget, but what are we going to do about some of the social directives about temporary workers and so on when we desperately need to deregulate our economy to get growth? What are we going to do about that avalanche of new regulation coming from Europe?

[Mr Lidington]

The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is working hard to assemble a coalition of like-minded Ministers and is engaging with the Commission to seek to avoid the sort of damaging additional social regulation to which my hon. Friend rightly refers. We are also keeping a particularly close eye on the position of the working time directive. The Commission may come forward with new proposals in the next 12 months. Our priority will be to protect the opt-out, which is valuable to British competitiveness. If there also prove to be ways in which to mitigate or reverse the impact of the European Court of Justice judgments that defined time on call as working time we would seek to do that as well.

My hon. Friend the Member for Witham called for greater efficiency and the reduction of waste. I support her on that, as I do on her call for increased transparency over all the activity and detailed expenditure of the institutions. The more transparency we have over EU spending and the legislative process, the greater evidence we will find to support our arguments for improved efficiency and the reduction of waste. An important part of transparency is scrutiny, and I am keen to ensure that we do everything possible to make our own parliamentary scrutiny processes still more significant. It is a vital part of the democratic process and the Government are committed to ensuring that scrutiny committees can clear proposals before we agree to them at ministerial level.

My hon. Friend is right that the priority should be growth, competitiveness and jobs. That is where Europe should be focusing its energy and attention now. We are pushing for a further drive on the liberalisation of the single market, on breaking down barriers to trade, and on making European regulation less burdensome and expensive, especially for small and medium-sized enterprises, on which so many jobs throughout Europe, not just the United Kingdom, depend. We are determined to resist any gold-plating of European Union legislation.

My hon. Friend talked about the Council of Europe and prisoner voting. The Commons has given a clear view that prisoners should not have the vote. Indeed, my right hon. Friend the Prime Minister has echoed that call. The Government believe that it is right to consider the final judgment in the Italian case of Scoppola, as well as the wider legal context, before setting out the next steps on prisoner voting. I want those next steps to be as close as possible to the clearly expressed will of the House of Commons.

[Mr Dodds]

Will the Minister give way?

[Mr Lidington]

Forgive me, but I want to reply to my hon. Friend the Member for Witham. On immigration, the Government are committed to applying transitional measures on the migration of workers from new member states. The framework for this has already been agreed with Croatia for controls of up to seven years. Under the terms of Croatia’s accession negotiations, member states can apply the same type and length of restrictions to Croatian workers as those that apply to Romanian and Bulgarian workers, who may obtain permission to work on the basis that they are highly skilled or have the offer of a skilled job. The precise controls that we will apply for Croatia have not yet been determined. My colleagues in the Home Office are considering that at the moment.

The Government believe in championing the British national interest within the EU. We champion the UK position on every issue. Sometimes, getting the reforms that we want to see is a hard and slow business, but we will be relentless in our commitment to get the best possible deal for the prosperity, security and well-being of our own citizens.

Question put and agreed to.

16:59

Sitting adjourned.