EU: Recent Developments

Lord Judd Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Judd]

My Lords, it has been very good to hear these inspiring words and we are glad that the noble Lord, Lord Bates, has had a successful return from his fascinating walk. In a sense, my remarks follow on quite naturally, because I am a bit disappointed about this debate so far in that I wish we had found time to send a stronger message of solidarity to the people of Greece. Whatever the misdemeanours and misguided policies of their leaders in the past, it is the innocent people of Greece who are going through the agony and the pain now. They need friends and solidarity, and I wish we could send that message.

I feel this particularly strongly because, as I have told the House before, I had the privilege of being the director of Oxfam. I do not think that many people know that Oxfam started in the library of the University Church in Oxford in the darkest years of the war in 1942. It was the famine in Greece that started Oxfam, as the Oxford Committee for Famine Relief. The prospect of these people going through agony again, in less than 100 years, is not a good sign. Look at the turmoil that followed in Greece after the experiences of the war. What are we going to encounter if Greece collapses economically? Strategically, it is intensely important on that wing of Europe, and there will be consequences for the world.

I come from the school that says the first reality of life is total global interdependence. I had my 15 year-old grandson to lunch here yesterday. I was looking at him and thinking about his future. We talked about it a bit in a good, cheerful way. I cannot think of a single major issue that is going to affect him and his contemporaries in his life that can be solved in a national context. They all demand international co-operation and international solutions. That is true of economics, the environment and climate change, and it is certainly true of security. Europe will be judged by the contribution that it makes to that global reality. Is it an effective instrument for meeting the global challenges that exist? Of course the rise of China and, even if we do not like to face it, the recovery of Russia are significant in this context.

Back in the 1970s, I was Minister of State in the Foreign Office with responsibility for Europe. We had not long been in Europe at that stage, and I remember that there was still quite a real intellectual debate about which was the better road. Were we ultimately going to have a stronger Europe by increased harmonisation operating from Brussels, or were we going to have a stronger Europe on the basis of the co-operation of nation states? There was a debate about the European Assembly, as it then was: should it be a parliament or a representative assembly of parliamentarians from the member countries? Might that not bring a more real and significant political presence to the affairs of Europe? These were real debates.

I was quite certain that once we decided to go into Europe there was only one course to take, and to me it was blindingly clear: we had to be second to no one in our commitment to Europe. That was how we would bring influence and how we could play a real part in shaping Europe. Over and again, under successive Governments, we have not done that; we have been the reluctant partner. So often, the name of the game for Ministers—let us be honest about the nitty-gritty of what happens—is to come out of some deliberation and say how well you have done for Britain, how well you have held this reality at bay and how you have defended the British people, instead of coming out of the meeting and saying, “This is what we’ve been able to contribute to the long-term well-being of the British people by what we’ve been able to do together in Europe”. Are we surprised that we now find these tensions coming home to roost?

It is clear to me—I just do not know why we go on agonising over this—that for the eurozone to work it will need a unified fiscal and monetary approach. I happen to think that we were right not to become part of that. We were not ready to be part of it or to play the role that was necessary. It was not just that we were anxious about our own selfish needs. It did not make sense and it would not make sense now. But that is the logic and I suspect that the membership that comes out of this grim experience will be smaller than it is now.

What are we learning from this experience? It is being driven by the concept of single markets. We have heard a great deal about how we want to preserve a single market on our terms. My political experience, and I urge noble Lords to believe that I have never regarded myself as an ideologue, leads me to believe that we are discovering that single markets are just not enough. For stability and security we have to have social agendas and a social programme. Without social justice and fairness in society as a whole, how on earth are we going to hold this economic monster together? It therefore seems to me that we need to reassert the importance of the social agenda in the future of Europe.

If Portugal and Spain follow Greece into the kind of grave calamity that has come about there, I am quite certain that the argument about the kind of Europe that we want will begin to re-emerge. Do we want a confederal Europe or a unified Europe? We have to be open to the argument that the stronger, most realistic kind of Europe, meeting all the objectives about which the noble Lord, Lord Bates, spoke so warmly, would be one that had the full-hearted support of the nations. Nations are made up of people. If there is anyone in this House who is stupid enough to believe that there is not a real issue here about the democratic deficit in the functioning of Europe, they are blind to themselves and everybody else. The reality is that Europe has been seen as remote, run by technocrats, and not part of the real life and political experience of ordinary people. We have to address that problem.

The noble Lord, Lord Jay of Ewelme, was absolutely right to urge us to speak more often about the positive things that are coming out of Europe in spite of everything else. One thing has been pretty central to my life; I have talked about my time with Oxfam. The European Union is the world’s biggest multilateral donor—bigger than the World Bank—with an annual aid budget in 2010 of around €12 billion. This size and the presence of the 130 EU delegations, recently upgraded to represent the whole of the EU around the world, allow the European Union to implement development programmes on a scale which bilateral donors simply cannot match and, in places, cannot reach. For the UK, for example, aid channelled through the European Union is supporting countries across west Africa, some of the poorest in the world, which are currently experiencing a critical food crisis where DfID does not have significant bilateral programming. Specifically in the context of the current, emerging food crisis in west Africa, the EU has so far played an important role in drawing attention to the crisis and the need for an early response. It has been swift to provide funds—an extra €10 million was committed in November 2011—and it is playing an important diplomatic role in encouraging other donors to start unlocking funds.

The millennium development goal contracts launched by the European Union in eight countries in 2008 are an example of very well designed aid. They link delivery of aid to results in a way that helps developing countries reach the millennium development goals. They provide general budget support to developing-country Governments over a six-year period, with at least 15 per cent of the finance linked to the country’s performance in meeting a series of MDG-related targets, which are assessed midway through the agreement. The approach is arguably a win-win for donors and recipients. It allows developing-country Governments a substantial degree of predictable up-front financing directly to their budgets, which is vital to enable scaling up in the provision of much needed basic services such as health and education. It also provides an incentive for good performance by withholding sums of money until results have been delivered.

As we debate, proposals are under way within the European Union for a financial transaction tax to be adopted in Europe in some form. While there were hopes that this would be an EU-wide tax, the fact that the UK will certainly veto this means that many countries are now pushing for a proposal that can be taken up by the majority of EU countries, without everyone within the EU. Nine countries recently wrote to the Commission calling for this process to be speeded up. Those countries were France, Germany, Italy, Austria, Belgium, Finland, Greece, Portugal and Spain. A recent report by distinguished academics has brought home that there is far more reason to be positive about the prospects of this financial transaction tax than has sometimes been assumed. One very authentic report recently calculated that the benefit to the European Union would be, initially, at least 0.25 per cent. I simply do not understand the Government’s intransigence on this. It is a small tax which spread across could have huge results and benefits for Europe and the wider world. I hope we will hear something about the Government’s deeper thinking on this when the Minister comes to reply.