European Banking Union: EUC Report

Debate between Lord Hamilton of Epsom and Lord Dykes

Thursday 24th January 2013 Lords Chamber

[Lord Dykes]

My Lords, it is always a pleasure to follow the noble Lord, Lord Davies of Stamford, because, whatever other interests and policies he has in his mind, he is always a very robust, fervent and positive European. We need more of that in this country. I am glad, too, that in recent years the Labour Party has become much more positive on Europe following the passage of the Lisbon treaty. That is a very good development for this country. It can emulate the good example of the Liberal Democrat party as being always in the vanguard of the pro-European position—patriotic Britishers, of course, but also enthusiastic Europeans, and those two things can go closely together.

Yesterday the Prime Minister made his sad speech—actually, it was not a sad speech but a sad occasion. One has to acknowledge that there were some good bits in the speech and, as my noble friend Lord Hamilton of Epsom said, he tried to appeal to everyone, and in that sense was quite clever. However, it was a sad occasion because he has unleashed for himself a number of very disturbing things, depending on how they develop in future, that are going to destabilise British politics significantly. I will return to those themes in my concluding remarks.

Many good things have been said so far about the EBU report. I shall refer to it briefly but that is not to decry its quality. In fact, we in this House are used to having reports of high quality from the European Union Select Committee and its sub-committees. I am going to embarrass the noble Lord, Lord Harrison, deliberately by saying that this report is outstanding. I thank him and his sub-committee members for having created this excellent report.

It highlights, in a disturbing and worrying way, the acute complexities of the architecture of the system. A number of significant members, led, I suppose, by the United Kingdom, which, in a way, is the largest of them, are not going to be involved in this important developing system and framework. That is a matter of great concern, and the sooner we have the courage to align ourselves with these proposals, the better. That may take some time, and of course nationalism raises its ugly head all the time and we have to contend with that. My noble friend Lord Hamilton of Epsom would not admit this or agree with me but, as a result of being driven out of the exchange rate mechanism in 1992—that hugely humiliating moment under a Conservative Government—the United Kingdom was subsequently very scared of the euro, afraid of the single currency, nervous as hell about what it might develop into and always looking for things to go wrong.

The fact that the report looks at the way in which this new system will control the banks—the clearing banks, the joint stock banks, the commercial banks and the other banks—in the eurozone area is an outstanding achievement. I want to quote from what was said by President Van Rompuy, but first I will give way to my noble friend.

[Lord Hamilton of Epsom]

Does my noble friend accept that if the United Kingdom were in the eurozone today, with the deficit that we are running and the debt levels that we have, we would be in intensive care?

[Lord Dykes]

I do not agree with that, and anyway it is too theoretical even to consider. By the way, our deficit is £100 billion and we have a free-floating currency that has now been devalued about eight times since the war, either formally in the marketplace or informally. It is interesting to measure and to see where that got us when we were kicked out of the exchange rate mechanism by market forces, when the Treasury was for a moment probably the worst ministry of finance in Western Europe. It has not carried on being like that—it recovered and has produced some very good decisions since then—but that was the lamentable position at the time.

President Van Rompuy, who met the committee, is quoted in the third paragraph on page 57 of the report as saying that,

“the EU was in a better place than a few months ago. No-one was now speaking about imminent eurozone collapse. Although the problems had not disappeared, things were ‘on the right track’ but the EU might ultimately need to give Greece more time”,

which is a very fair point. In the preceding paragraph, he also said that he had to remind the committee that these member states—sovereign member states, all of them—are very lively democracies, so it takes time to reach these decisions. So, although people complained about the process being slow, the slower it was, the better the structure that was emerging, as I hope the Minister will agree.

In the third paragraph of the summary, the committee states,

“we welcome the publication of the Single Supervisory Mechanism proposals as a significant first step towards banking union. We agree that the European Central Bank, to be given ultimate supervisory responsibility for every euro area bank, is the only organisation with the necessary credibility and authority to take on this role”.

When the Minister comes to sum up, will he deal with that matter and the concern that the committee expressed about the concentration of so much power and its practical effects on the institutional banking market place?

In paragraph 3 on page 7, the report states:

“Although the Government have made clear that the UK will not participate in a banking union … the UK’s decision not to participate, should not and need not adversely affect London’s position as the leading financial centre in Europe, nor undermine the single market. The strength of this argument may soon be tested”.

That is quite an ominous point and I would welcome the Minister’s reassurance on that matter.

I repeat my warm thanks for a truly excellent report. It has helped a great deal in taking an immensely complicated subject further. In his distinguished opening speech, the noble Lord, Lord Harrison, set an admirable precedent by referring to yesterday’s referendum decision and so on. I should like to conclude by making a few points on that in this debate.

It was a sad day for the reasons that I have suggested and the effects will be very disturbing as time goes on. I am very glad to see that the Deputy Prime Minister, quite rightly, established a different position—that there might in future be a need for a referendum depending on the outcome of any negotiations, but to threaten one now, when no negotiating posture is being created and there are many years to go before we reach the end year of this decision-making suggestion, will create a great many difficulties and uncertainty, particularly in the business world. There have been many comments to that effect.

It is sad that we have got ourselves into the position of being the bad member of the club. It is a great pity. It is rather foolish of this country to lecture other countries on the crucial importance of competitiveness and efficiency in their economies when we have a terrible statistical deficit in our own trading and do not have a very strong economy. To suggest to the Germans that they need to improve their economy in comparison with English examples is going too far. I wish I did not have to say that, but that is the reality of the situation. The Germans remain modest about their economic achievements.

The sheer awkwardness of examining the subjects in this report while not being in the eurozone will come out more and more as time goes on. If we could only restore our courage and become a mature and enthusiastic member of the European Union, it would be very good for this country.

There were some interesting points made in the press yesterday about Mr Cameron’s speech. In an article today in the best newspaper in the country—the Guardian, of course—Martin Kettle states:

“Cameron’s speech was not brave. It was reckless. The brave stance yesterday was Ed Miliband’s, sticking to Labour’s practical pro-Europeanism and refusing to follow suit. Instead, yesterday marks the moment when Cameron’s pragmatic centre-right political project finally bent the knee to the ideological fantasy about Europe that still grips the Tory party”.

Anthony Hilton, who has been a long-standing supporter of the euro and the eurozone and now feels that the eurozone has passed the danger point—after all, it has never been a weak currency; it has always remained a strong currency despite the crisis and it is only that there were four or five weak members of that currency which had to have assistance provided by collective action—says in today’s Evening Standard:

“If Cameron thinks these concessions”—

to what I believe he used to call the head-bangers—

“are going to appease his lunatic fringe and calm things down, he might equally consider applying to be Prime Minister of the planet Zog. The sad reality of his capitulation to Eurosceptic pressure is it virtually guarantees that Tory backbenchers and their media acolytes will talk about nothing else between now and an election which is still two years off”.

Of course, they might be tempted to cite the Irish as saying that it will be a good occasion, they are quite relaxed and will go along with it, but that is not true either. I quote the Irish reaction in today’s Irish Times, where Arthur Beesley says that,

“it is readily acknowledged in official circles that the British debate and uncertainty over its EU membership have clear potential to destabilise European politics and create friction with other member states”.

Finally, I shall quote my right honourable friend in the other place, Sir Menzies Campbell:

“This was never about the UK; it was always about Ukip. The declarations of satisfaction which came from the Tory right immediately following Mr Cameron’s speech were disturbing for those of us who are supporters of European engagement. Mr Cameron’s speech had nothing to do with Britain’s place in Europe and everything to do with his leadership of a bickering and divided party. Tory leaders of the past who have had to fight sections of their party over Europe have found it an unrewarding experience. Mr Cameron is fated to be among their number”.

I regret that because I think that in many ways Mr Cameron has been an excellent Prime Minister and a very personable senior political colleague, so it is a great shame that he has allowed himself to be put in that position.

As my noble friend Lord Hamilton of Epsom said, there is to be a major debate in this House next week on the decisions that were announced yesterday and the future outlook, in which I hope to take part. I shall therefore leave it at that for the moment, but it is part and parcel of everything that we will examine in our Select Committee and its sub-committees. It is all about the huge complexities of Britain remaining a bad member of the club and refusing to co-operate in these matters when co-operation is absolutely essential.

European Union Bill

Debate between Lord Hamilton of Epsom and Lord Dykes

Monday 13th June 2011 Lords Chamber

[Lord Dykes]

My Lords, I agree very much with the earlier utterances and express regret that I cannot agree with what the noble Viscount, Lord Trenchard, said. I do not think that there is any evidence that Ministers have become less enthusiastic about our membership of the European Union. That is irrespective of the colour of the Government. That applies to both parties in power in recent times and, as far as I can detect, definitely applies to the coalition—very positively so in respect of the first part of the coalition statement about their aspirations on Europe.

I am sure that it is because of what the noble Lord, Lord Radice, mentioned and what the noble Lord, Lord Triesman, hinted at less directly: because of what the British press say. It is mainly the tabloids—the comics that masquerade as newspapers in Britain. They are more and more like magazines rather than newspapers. That is affecting the broadsheets as well, particularly those with owners living in tax havens overseas, not normally living in the UK and not paying UK direct taxes themselves, mainly the Murdoch press, but all of them anti-European and attacking our membership of the European Union in a most extraordinary and vicious way, which has not been seen in any other member state that I can think of.

I have to declare an interest as I also live regularly in France at weekends whenever possible. The French press are not at all like that. My colleagues in politics in Paris express astonishment that we allow the overseas-based owners of the press here who do not pay UK direct taxes themselves to attack our fundamental membership of the European Union in such a way. That has been the reason.

The most astonishing contrast that I noticed was just at the moment of the IMAX launch by the new Prime Minister Blair, with his new Government, still very, very popular, not quite walking on water but pretty close to it in those early days and causing a lot of inspiration and enthusiasm among the British public for the new Labour Government. That launch was the beginning of the decline in the new Labour Government's support for Europe in atmospheric and psychological terms. That was tragic. Britain in Europe was destroyed by it. So was the European Movement—although it still exists, it is struggling along as a very truncated body doing noble work but very much at the fringes of British life.

It is a tragedy for this country that we have had this nonsense for so long: politicians refusing to stand up bravely and correctly for the benefits of our membership of the European Union. Therefore, I very much welcome the proposed new clause. It was debated in Committee and therefore we need not go into all the arguments now. We particularly thank the noble Lord, Lord Howell, for repeating that the purpose of the Bill is to oblige Ministers to promote the cause of our membership of Europe in what he would describe as a more correctly balanced sense because the public would have much greater participation through the referendum mechanism. Like the noble Lord, Lord Deben, I do not agree with that because I am against referendumitis and the populism that comes from it, but I can see his arguments. The proposed new clause would be a good thing, as we would return to promoting our membership—not in a propagandistic sense but in the practical sense of reassuring the public, explaining in detail many of the complicated matters and getting away from the dreadful xenophobia that is being allowed to develop because of the insouciance, nervousness, recalcitrance and hesitation of British politicians. There is a danger that that will start to affect the coalition if it continues, and I hope very much that it does not.

I do not want to take up too much of the House’s time but I conclude with an issue that may seem small, although it is very important. I refer to the display of flags—one of my favourite subjects. There is only one European flag within the vicinity of Westminster. It is on the Slovenian embassy building and we thank the Slovenians for their courage in daring to show it. It is the only one, apart from the one displayed on Europe Day in Parliament Square each year. All other major countries, together with some of the new ones, routinely proudly display the European flag alongside their patriotic national flag. Our national flag should be alongside the European flag on government buildings, as is routinely the case in France. When President Sarkozy makes a television broadcast, he always has the European flag alongside the tricolor. Why have all parties in this country been so hesitant and pathetic about this in the past? It is now time for the matter to be corrected. I have been encouraged by the words of the noble Lord, Lord Howell, on previous occasions in these debates and believe that the Government should accept this imaginative new clause.

[Lord Hamilton of Epsom]

My Lords, I have heard my noble friend Lord Dykes say on previous occasions that the only cause of Euroscepticism in this country is the Murdoch press, but I find that very difficult to go along with. I always reckon that to some degree the press has to reflect the national mood and, if it does not, it does not sell any newspapers. I also have a slight problem with the fact that Euroscepticism is growing at a pace in Germany, where I am not aware of the Murdoch press owning any newspapers. Therefore, I think that it is a little too simple to blame the whole thing on the Murdoch press.

However, let us get to the basis of the amendment and, for the sake of argument, start at the beginning, which seems to be a useful place to start. The Government will bring forward a measure to be put to a referendum of the people of this country only if they think they will win it. I do not accept the view of my noble friend Lord Trenchard that the Government might put something forward to be addressed by the country in a referendum if they want to lose, as I think that they can only possibly want to win it. If they do want to win it and if, as I think the noble Lord, Lord Triesman, said, this is an opportunity for UKIP to say, “Ah, we don’t want anything to do with the European Union at all. We must pull out”, then of course the Government will be compelled to argue the virtues of remaining in the European Union, and all his problems will be answered by the referendum. For that reason, the amendment is completely otiose and I shall not support it.