European Union Fiscal Union

Debate between Lord Hanson of Flint and Brian Binley

Wednesday 14th September 2011 Westminster Hall

[Mr Hanson]

I believe that the single market and the European Community have contributed to growth and jobs in this country and throughout mainland Europe. The hon. Member for Stone touched on the potential difficulties with the euro and Greece, Portugal, Spain and Italy, but the argument that he advanced about renegotiation does not fly and would not be a starter in relation to the positive policies that I hope I share with the Minister on engagement and the future of Europe.

We need to look at three issues. The economic growth strategy for Europe is key to economic growth as a whole. When we look at what we are doing in reducing public spending—in achieving a balance between public spending and private expenditure—we see that the growth strategy is missing in Europe and that the collective strategy of reducing public spending will not lead to economic growth.

Given the potential collapse of the euro, it is important that we look at the current stability mechanism, and I am sure that the Minister will speak about the future stability mechanism for 2015. We must consider negotiating an earlier end to the temporary European financial stability facility, of which the UK is a member. The UK’s exposure is too high and is a risk, and if the euro collapsed now we would face severe difficulties with the funding mechanism.

My right hon. Friend the Member for Edinburgh South West (Mr Darling) negotiated the facility—with, I believe, all-party agreement, although there is dispute about that—before the general election, and it is key to stability with the euro. It is not in this country’s interest for Greece to fail, for the euro to break up or for other countries to default. As my right hon. Friend the Member for Oxford East (Mr Smith) said in an intervention on the hon. Member for Northampton South, one of the reasons why the Prime Minister and the Chancellor are looking to develop an EU fiscal policy to follow the current agreement is to ensure that a collapse is avoided, that the currency is strengthened and that a positive Europe, geared to growth in the future, is maintained.

[Mr Binley]

Will the right hon. Gentleman explain how that policy might be policed to ensure that nations properly abide by its dictates and do not act as they do in many other instances with the other regulations imposed on them?

[Mr Hanson]

One of the hon. Gentleman’s points that struck me most forcefully is that some countries do not play by the same rules as this country on tax evasion, tax avoidance and other issues, but that is not a reason to say that we should leave the pitch. It is our job to work responsibly within the structures of the European Community—with our Members of the European Parliament, with the European Commission and with national Parliaments—and to make the case for a single market, properly regulated, in which tax evasion and other issues are dealt with firmly.

We cannot walk off the pitch and withdraw from the European Community, although that is the ultimate aim of Members who have supported the hon. Member for Stone today. We must ensure that the replacement mechanism in 2015 is strong and stable but oriented solely on the eurozone, where the UK Government’s liabilities are limited.

Honourable, determined and consistent though the hon. Member for Stone is, and difficult though the challenges are in relation to countries, such as Greece, that should not have joined the euro in the first place, the failure of the currency and our failure to act to help to maintain stability in Europe would ultimately lead to lower growth, further unemployment and the UK being distanced from potentially successful markets.

There are many issues ahead of us about which there is clear disagreement between Labour Front Benchers and Members who have supported the hon. Member for Stone today, but I look forward to hearing the Minister’s response.