EU: Prime Minister’s Speech

Debate between Baroness Noakes and Lord Ashdown of Norton-sub-Hamdon

Thursday 31st January 2013 Lords Chamber

[Baroness Noakes]

My Lords, it gives me great pleasure to invite your Lordships’ House to take note of the Prime Minister’s speech on Europe. This was a bold speech about the future of our relationship with the EU, and was well worth waiting for. It may be too much to expect, but I hope that all noble Lords will today join me in welcoming the prospect of a new settlement in Europe, and in particular, the opportunity for the people of this country to have their say on it.

My right honourable friend the Prime Minister set the context for his speech by saying that he spoke as a:

“British Prime Minister with a positive vision for the future of the European Union. A future in which Britain wants, and should want, to play a committed and active part”.

It is well known that my party includes people across the whole spectrum of views on Britain in Europe. However, I believe that the Prime Minister’s plan to negotiate a sustainable basis for the UK to remain in active membership of the EU hits the sweet spot for our party and, I hope, for the whole country.

It is a fact that the financial crisis has exposed the fault lines in the euro, and there have to be changes to allow the eurozone to function. The lesson from history was that monetary union would not survive without deeper union on other fronts, and that is one of the many reasons why the UK will never want to join the euro. The first steps towards banking union have been taken with a single supervisory arrangement, which your Lordships’ House debated last week, but that is just the start of what will be needed to shore up the eurozone.

At the same time, countries outside the eurozone have to protect their own national interests against the development of a large voting bloc, particularly in relation to the single market. We have achieved protections in the context of banking union, at least for now, but the task will get tougher as the eurozone integrates further.

I am sure that those who are designing changes to the eurozone will move heaven and earth to avoid treaty changes; not because they are afraid of the UK, but because they will not want to risk testing popular opinion within the eurozone countries. Therefore, we may not have the opportunity of a treaty through which to negotiate a new way forward. Even if that opportunity does not exist, I believe the Prime Minister is right to pursue the reshaping of how the EU works, not just for us, but for all members.

The Prime Minister put forward five principles as the basis for a new start: the EU should be more competitive; there should be a flexible structure of membership, particularly for those who do not sign up to ever closer union; powers must start to flow back to member states; we need a bigger role for national parliaments; and any new arrangements must be fair for all members, particularly those outside the eurozone. I believe that all but the most ardent of federalists should support these principles. Yesterday, in the other place, the Labour Front Bench supported them and I hope that it will do so again today.

I am sure that some noble Lords today will try to dismiss the Prime Minister's determination to reach a new settlement in Europe as naive or foolish or both. I am sure that some whose careers and livelihoods depend on the EU’s institutions and powers hope that they can swat the UK away like an irritating fly, and carry on as before.

The UK’s concerns are not necessarily those of the majority but they are not held in isolation. Other countries will remain outside the eurozone and will need protection against eurozone bloc voting. Some countries within the eurozone, such as the Netherlands, also question the balance of powers between Brussels and their own democratic institutions. I am sure that many more have concerns about the decline in competitiveness in the EU, even if they do not yet share our view that the answer is less—not more—Europe. Importantly, there are countries, particularly those in the north, that positively want the UK to remain at the table as much as we want to remain there.

Of course, renegotiation will be tough. We cannot take it for granted that we can negotiate our way to a satisfactory relationship with Europe. I am absolutely convinced, however, that the British people must have the final word on whether or not we can remain in the EU, on whatever terms can be achieved. I know that some of your Lordships do not like referenda and believe that it is the role of politicians to make all decisions, but I do not share that view. I believe that the British people have to be consulted on major issues, and the EU and our relationship with it certainly is one of the major issues of our time. I believe that we can trust the British public to reach the correct answer. In recent history the British public have shown their innate common sense when given a referendum.

I hope that those on the Liberal Democrat Benches will not declare against a referendum simply because they might not like the answer. I gently remind them that before the previous election their leader fronted a campaign for what he called a “real referendum on Europe”; namely, an in-out vote.

[Lord Ashdown of Norton-sub-Hamdon]

I am listening very carefully to my noble friend’s impressive speech but, on a point of information, we should be clear that in 2008 at the time of Lisbon, the Liberal Democrats said, and repeated at the general election, that if there was a substantial shift of powers to Europe there should be a referendum. That was the position we took at the election. That is the position that has now been legislated for—just as a point of accuracy.

[Baroness Noakes]

That is very interesting and we look forward to hearing further from the noble Lord later, but I have seen the videos of Mr Clegg on this subject.

Last week Mr Miliband was quick to say that he was against a referendum but almost immediately his colleagues briefed that he did not want a referendum now—or yet. We can agree on that. The Prime Minister is not promising one now, but in 2017. I will be listening intently to the Benches opposite today in the hope that we will get some clarity on their position. This is not just a debating point. I am not foolish enough to think that a Conservative victory in the next general election is a done deal and hence that my party’s policy will definitely be implemented. The electorate must be left in no doubt about whether and when any Labour Government would give them a say as well.

The scaremongers have been saying that the Prime Minister’s speech has cast a damaging shadow of uncertainty over the UK economy for the next five years. These prophets of doom also predicted, with spectacular inaccuracy, that Britain’s failure to join the euro would be our undoing. In any event, uncertainty was created as soon as the eurozone states faced up to having to work together in a deeper way. We have to protect our national interests so our relationship with the EU inevitably has to change. The Prime Minister is right to be on the front foot on this and to seek a comprehensive way forward.

If the Prime Minister can negotiate a good outcome for the UK, which meets the five principles that he set out, I am sure that the British people will vote to remain in but it is a big “if”. Some of my honourable friends in the other place are engaged in the Fresh Start project and have recently produced the excellent Manifesto for Change. This includes major changes to social and employment rules, in particular being free from the costly working time directive and agency staff rules. It also targets policing and criminal justice laws, agricultural and fisheries policies, the bloated EU budget and further financial services legislation. I hope that my noble friend on the Front Bench will outline what the Government will target. I know that revealing one’s hand is not good strategy in poker but for the sake of the public debate the Government need to be open about what they want to achieve in the national interest.

If the Government achieved most of the Fresh Start agenda, that could create an EU worth staying in but if they achieve significantly less than that, an out vote will seem to many of us like a better choice. Leaving the EU is not my preferred outcome but I am not afraid of the prospect if the deal on offer is substandard. An exit from the EU would not be the end of the world. Three million jobs might well be connected with the 40% or so of the UK’s exports that go to Europe but they are at risk only if, as pointed out by the man who calculated that figure, Professor Iain Begg, we stop trading with the EU. There is no sign that we will, not least because we have a persistent trade deficit with the EU. It is therefore rational for the EU to want to carry on trading with us. It is also not clear that we have to accept the kind of solutions to which Norway and Switzerland have signed up. There are many other countries in the world that trade with the EU without conditions attached.

Some assert that we would lose out on foreign direct investment but there is no evidence for this. International studies show that there is a host of unquantifiable social, political and institutional factors at play when decisions on investment are made. There is a lot more going for the UK than its EU membership and I remind noble Lords that we did not suffer, as was predicted, when we chose to stay out of the euro.

As we have debated several times over the years in your Lordships’ House, there is no definitive study of the economic impact of leaving the EU and successive Governments have refused to commission such a study. The noble Lord, Lord Pearson of Rannoch, who is in his place, has often sought to press Governments to do just that. Professor Begg’s verdict on the impact of exit is that we,

“would probably find that the economic plus or minus is very small”.

That is good enough for me. Exit would not be easy but the consequences need not terrify us into staying locked in a loveless marriage in the EU.

Let me conclude by wishing the Prime Minister the very best of luck in negotiating a new settlement in Europe but at the end of that road the Government must be honest about the quality of the deal available and the extent to which it meets our national interests. There must be no attempt to portray a sow’s ear as a silk purse. A referendum in 2017 is an exciting prospect, but its result will need to stand the test of time and we must be absolutely clear, which we were not in 1975, about exactly what we will get for our vote.