Section 5 of the European Communities (Amendment) Act 1993

Debate between Alec Shelbrooke and William Cash

Wednesday 27th April 2011 Commons Chamber

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I start by drawing on the last intervention by my hon. Friend the Member for Stone (Mr Cash). He made an important point, and it was the one that I made last night. Government money is not our money, it is the public’s money generated by the private sector. We cannot simply say that we should carry on pouring in money, because it is not our money. We must think about where it comes from.

The hon. Member for Nottingham East (Chris Leslie) said that if certain actions had not been taken, an extra £6 billion would have come in to the Exchequer, but in our emergency Budget we cut the deficit by £6 billion. If we had not done that, there would not have been any extra money, would there? We would have borrowed an extra £6 billion instead. We would have been borrowing money, churning it out, collecting it back in and saying, “What great money generation”. We would just have been turning money around. We can get money coming in to the Exchequer only through growth, and that can occur only if the private sector is in a credible position so that it can move forward.

The Opposition’s comments are interesting, because there is a paradox in that they paint a gloomy picture but meet it with glee and struggle to keep a straight face. Of course, we know that if we had followed the previous Chancellor’s spending plans, we would have been cutting £7 for every £8 that is being cut now. The margins are small. Let us not get into a discussion about the idea that if the Government’s actions had not been taken, a further £6 billion would have come in. We cut the deficit by that amount in the emergency Budget, so there would not have been any extra money. The money that we borrowed would just have been churned out and collected back in, which would have done nothing to stimulate the growth of the economy. I agree with the hon. Member for Nottingham East that the growth figures are small, but they are growth figures. He says that they may be flat, but we know that things can be choppy. The point is that we are growing and moving forward.

Let us come back to tonight’s debate and the history of the Council of the European Union. Back in July 2008, the Council of Ministers decided that the UK had an excessive deficit and asked it to correct that by the financial year 2009-10 at the latest. In April 2009, the Council concluded that the UK had failed to correct its excessive deficit within the time set. In December that year, it adopted a recommendation that the UK end its continuing excessive deficit by the financial year 2014-15, by bringing it below 3% of gross domestic product. In 2009-10 it was at 11.4% of GDP, but the convergence document now predicts it to be at 2.6% of GDP.

That is in stark contrast to the Opposition argument that it is unnecessary to make cuts and that we should continue as before. I shall tell the House later how I actually feel about the EU’s interference in such matters, but people outside this country were saying, “You are spending too much; you need to make those changes,” and we are now doing so. Whether we should have to do that for the EU is a slightly different debate, and my hon. Friend the Member for Bury North (Mr Nuttall) was right to say that we are using parliamentary time and publishing documents containing information that the EU could quite easily find out for itself. That adds to the already bloated EU system, and perhaps indicates why it asks us for a 5% increase in its budget, which is an absolute disgrace at times of austerity.

The hon. Member for Glasgow South West (Mr Davidson) spoke of the imbalance of trade with the German economy. The German manufacturing economy is a powerhouse of Europe, and as my hon. Friend the Member for Stone outlined, we have a very low manufacturing base. The picture that that paints is that economic integration in the EU is not possible with sovereign countries generating high GDP growth and trade imbalances. For integration, countries must move to one common taxation policy. That, if anything, is proof that the euro is leading to a common taxation policy and a loss of fiscal sovereignty.

[Mr Cash]

As my hon. Friend may have noted, I raised that question with the Prime Minister earlier today in relation to voting against the provisions for a corporate tax base for the whole of Europe. That decision will in fact be made unanimously, and we can get rid of it with our veto. I did not get an answer from the Prime Minister, and I hope my hon. Friend continues to urge against having a tax system imposed upon us by the rest of Europe.

[Alec Shelbrooke]

My right hon. Friend the Prime Minister has a very pragmatic view on such things, and I am sure he took great note of my hon. Friend’s question. I am also sure that the Prime Minister will listen to the mood of the country and ensure that the EU does not move towards such a common economic base.

This is crux of the matter: we are publishing documents tonight to pass back to the EU that show that the UK is in compliance with the rules. Those rules mean that we could qualify for the euro. People have often asked, “With the pound so close to parity with the euro, why don’t we join?” but we will not join because we will not fudge the figures just to get into the euro—not that we want to join—[Interruption.] Please! I would not want anyone to leave the Chamber thinking that I am pro-euro, because I certainly am not—perish the thought.

To qualify for the euro, countries must have a budget deficit of 40% of GDP and they must borrow no more than 3% of GDP annually. We know that the Italians fudged that. That is one reason why the euro is in the mess that it is in, and why it is nowhere near competing with the US dollar, or indeed the Chinese currency, in the way that people thought it would. The fact is that if the EU wants to have a strong economic case, it must go for full monetary union, which is totally unacceptable for sovereign countries.

As we know from the treaty of Rome, the original European partnership of six nations was set up to try to prevent further wars in Europe, to bring peace to the European nations, and to get everybody trading together as one bloc. That was the vision. However, I do not think that the rise of far-right parties across Europe and the increasing moves down the federalist route are coincidental. People feel that they have lost their sovereignty and identity. If the EU moves forward to a full, integrated economic policy, that will be the end of the EU, because people around Europe will vote in extremist parties to try to reclaim their national identity. I say that as a warning, with no joy. I am probably one of the more dove-ish Government Members when it comes to violence or military matters, but I fear where those moves could lead.

The Opposition’s main argument this evening has been: “You’ve got your economic policy completely wrong. You could have had more money coming to the Exchequer.” However, they have forgotten that the money coming to the Exchequer was the money they printed, pumped out and brought back in before saying, “Oh, look at all the money we’ve generated!” I do not think so. This is about creating growth, and in the document before us, an independent body has said that the Government’s policy is correct and in line with what we want to achieve, which is what the previous Government singly failed to achieve despite the warnings in December 2009.