Euro Area Crisis: EUC Report

Lord Judd Excerpts

Monday 21st May 2012 Lords Chamber

[Lord Judd]

My Lords, I join those who have thanked the noble Lord, Lord Harrison, and his committee and congratulated them on having had the courage to put their heads above the parapet and produce this report in the midst of all the challenges that face us. I also take the opportunity of joining others, including my noble friend Lady Crawley, in putting on record my admiration for the service given to this House by the noble Lord, Lord Roper, as Deputy Chairman of Committees. I have known him for 59 years and there has been a consistent theme from which he has never deviated in his life: a commitment to making a success of international institutions, which he sees as indispensable to the future of humanity. That conviction of his has enabled him to be such an effective operator.

It was interesting to contrast two trenchant speeches, that of the noble Baroness, Lady Noakes, and that of my noble friend Lady Crawley. The noble Baroness, Lady Noakes, finished by expressing her admiration for the Government and the Prime Minister for having made it absolutely clear that, whatever happens, the British national interest will be central to their considerations. The problem about that thesis is, as my noble friend pointed out, that we live in a totally interdependent world. It is a false analysis to suppose that you can look to the national interest without looking to the international interest, because our long-term well-being, survival and prosperity depend on the stability and well-being of the international community of which we are inseparably a part. That in an immediate sense starts in the European Community, of which we are in so many ways very much a part.

The difficulty is that we face a challenge. The challenge is not just all the financial nightmares with which we have been dealing; it is the dilemma with which people feel confronted. On the one hand, they are utterly dependent on effective solutions in an international context; but, on the other, they find globalisation and regionalisation quite threatening, because a large number of them feel that they are losing their sense of identity and purposeful significance. That was true of what we saw in the Arab spring. The Arab spring was not just about economic and social injustice; it was people asserting that they mattered and wanting that to be recognised. As we have the institutions today, they do not feel that. They see them as remote and impersonal; they see them as the preoccupation of a political elite of which they would regard us a part. That is the point that I make to my noble friend—my good friend—Lady Crawley.

Although of course we could argue that this is the very time not to start a major agonising debate, we can equally argue that it would be sheer obstinacy of the worst kind to pretend that there is not that crisis, to pretend that people are not disillusioned, that there is not a crisis of confidence among them, and that they are not feeling alienated—let us be prepared to use that word—from the processes in which we all participate. I do not separate myself from that. As someone who was fashioned and grew up during the Second World War, I put my commitment to the European project second to no one, but we have to face up to the seriousness of the human challenge, not just the economic challenge, that confronts us.

In a reflective moment, if we are looking for strong international regional institutions, confederalism may well produce them more successfully than federalism. People want to feel that they belong to something with which they can identify. The challenge is to enable people to see that that is not enough. We must reintroduce the whole concept of international co-operation, emphasise it and start giving it muscle.

As we look, more immediately, at the euro issue, there are those who say, “Of course we could not find a solution for our economic affairs in Europe while we had a euro without the fiscal discipline that should go with it”. It is about not simply fiscal disciplines but a cohesive social and economic agreed agenda; I do not see how we can have sustainable stability without one. When I was a Minister of State at the end of the Callaghan Government, we used to consider agonising issues. In my view, it is wrong to suggest that the urgency of the economic crisis means that economic and social priorities must wait. It is in times of economic stringency and hardship that economic and social priorities become more important than ever. If the remedies are to work, they must be in a context in which people feel confident that there is a prevailing ethos of social justice.

I find it very interesting that if you look at either end of the spectrum you get the same conclusion. Adam Smith did not write first, as a young academic, about liberal economics; he wrote first about ethics. He was a highly ethical man. He approached his economic theory in the context of a strong ethical commitment. The late Lord Soper, when the Berlin Wall collapsed, made the profound observation that it is not a matter of socialism having been tried and failed; it is a matter of socialism having demanded an ethic of which humankind has so far proved itself incapable.

Therefore, whether you are looking at it from a capitalist perspective or a more socialist perspective, the indispensability of the ethical priority cannot be overemphasised. We have to reassert in Europe, and in this country, the overriding importance of ethical discipline, not just fiscal discipline. If not, either system is doomed—I put it as strongly as that. What we have is a system in which greed has got out of control and in which, as has been often said of late, risk has been socialised and wealth and profit have been privatised. That is a recipe for tension and instability in society. It is the key issue that has to be tackled.

This is also a moment to pause and consider the issue of democracy itself and how it can work, which of course brings me back—I must be honest about it—to my own political orientation and attitudes. I have never understood how you can have a democracy if you have not got the accountability of economic power. What we are seeing is that we simply have not had the effective accountability of economic power where it matters. The noble Lord, Lord Marlesford, whom I have been fortunate to know as a friend as well, because we came into this House on the same day, was very right to remind us of what happened in Germany in the 1930s: of how the forces of Hitler and fascism gained momentum and what the social realities were around that.

I am sorry if I have said this before in this House—well, I am not sorry, but I recognise that I have said it before—but this is a juncture where I wish that we had more expression of some solidarity with the Greek people, because it was certainly not them who caused the crisis in which they find themselves. The noble Lord was right to say that the Greeks must make the decisions for themselves. We cannot make them for them and it is absolute madness to start lecturing them on their responsibilities. They have suffered enough. They have to weigh it up for themselves and see how they want the issue tackled. That of course has profound implications for us but we brought that on our own head.

It is absolutely clear in the midst of all this that the problem with the principle of unbridled market philosophy is that it emphasises the short term and squeezes out the longer-term perspective. One only has to think of the environmental issues as a good practical example of that. That is why we have to have balance and why an ideology of either left or right is not in itself enough. We have to have more pragmatism and more balance in the way we handle the issue.

I therefore conclude simply that what depresses me most about our predicament is that we are mesmerised by an almost neurotic search for some kind of structural, technical solution. If I have come to a conclusion about life, it is that no structure ever achieved anything of itself. Structures are inanimate; it is the objective against which the use of the structure must be judged that matters. It is the quality and values of the people operating the structures that matter. We have to regain a sense of vision, meaning: what kind of Europe do we want and need in the midst of this overriding reality of interdependence? How are we going to turn what is a massive crisis into an opportunity by asking the profound questions? I hope that my noble friend will forgive me for putting it as bluntly as this but, yes, I am asking profound questions. Where and why has it all gone wrong? Now what has to be done not just to patch it up but to find lasting solutions for the future?