EU: Recent Developments

Lord Liddle Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Liddle]

My Lords, this has been a mammoth debate and a serious one, without any partisanship. In that spirit, I congratulate the noble Lord, Lord Howell, on his efforts to give a positive view of the Government’s European policy. I also thank my noble and learned friend Lord Davidson of Glen Clova for his analysis of that policy’s weaknesses. We have heard many excellent contributions and it is a privilege to listen to noble Lords with their vast experience as former commissioners, former diplomats and even as former Chancellors of the Exchequer, with their different perspectives from my own.

In particular, I pay tribute to the noble Lords who spoke up in favour of European unity. The noble Lord, Lord Bates, made an excellent argument for Europe. The noble Earl, Lord Sandwich, on the Cross Benches talked about his belief in a Europe of the peoples. From my own Benches, the noble Lord, Lord Grenfell, spoke about a federal Europe and the noble Lord, Lord Radice, said that it was not time to give up on the euro. The noble Lord, Lord Judd, talked about a social Europe, as did the noble Lords, Lord Monks and Lord Lea. These were inspiring contributions. Obviously, I cannot commit the Labour Party to every detail of what they said; none the less this is the case for Europe that needs to be made.

There have been two big themes in this debate: first, the trials of the eurozone; and, secondly, Britain’s position in Europe. On the trials of the eurozone, I think we have heard rather too much of a flavour from the Benches opposite of how the euro is doomed, and too much of the view that it is impossible to restore competitiveness without the recreation of depreciating national currencies. An internal devaluation is, of course, painful but it can be done. You only have to look at what Germany has achieved from the mid-1990s until the middle of the previous decade to know that adjustments in competitiveness can be made within a fixed currency arrangement. Therefore, that can be done, but obviously I would like to see a stronger plan for growth. Like the IMF, I would like to see countries that have room for manoeuvre to expand their economies taking advantage of it. We would like to see—as the noble Lord, Lord Newby, proposed—a greater emphasis on the single market and trade to create more job opportunities. However, we also agree with the noble Lord, Lord Giddens, that that has to be done in the context of a much wider reform strategy to which we all need to give much deeper thought.

The noble Lord, Lord Tugendhat, made an excellent speech in which he expressed fears about German policy. I did not entirely agree with that aspect. I read an excellent speech that Helmut Schmidt made to the SPD congress in December in which, at the age of 93, he spoke to 2,000 people. It was a most inspiring speech about Germany’s role in Europe which I recommend to all Members of the House. Like the noble Lord, Lord Monks, my own view is that we should never underestimate the political commitment to make the euro succeed. I suspect that the new Franco-German arrangements that come out of the French elections in May will result in a better balanced policy.

However, on the more significant point of Britain’s position in Europe, we on this side understand the inability of the noble Lords, Lord Kerr and Lord Hannay, to understand what the Government did in December, and why they did it. The noble Lord, Lord Howell, tried to explain that to us but I thought there was a fundamental contradiction in what he said between our objection to a fiscal union, which is a matter of principle, and the question of whether we would have signed up if certain safeguards had been met. However, I think that looking ahead is far more important. If we look ahead, there is a choice to be made for Britain between the view expressed by the noble Lord, Lord Lamont, that 20 years ago we made the choice not to be in the euro and we have to live with it, and the view expressed by my noble friend Lord Mandelson that in fact to make the euro work—which is going to happen—there is going to be a euro mark 2, which will have deep implications for the United Kingdom and its policies, and that we have to think through what those implications are. The noble Lord, Lord Brittan, made an excellent point in saying that he was not sure how deep integration had to go in fiscal terms to make the euro work. We need to think much more about these issues in our future discussions and debates.

I also agree with the noble Lord, Lord Cormack, that what the coalition seems to lack is a bigger-picture view of Britain’s place in Europe and the world. The Churchill view on this at the end of the Second World War was of three circles: the maintenance of the British Empire, with the US relationship and Europe overlapping it, half a century later we know that the empire has become a Commonwealth. We know that there are a lot of good things about the Commonwealth but that it is not a trade bloc or a guarantee of economic benefits. We had a painful lesson on that with the Indian air force contract in the past few weeks.

As for our relationship with the United States, President Obama flattered us when he came to Westminster last year and talked about the special relationship. That was an easy compliment but the reality is rather different. It is of an America that is increasingly inward-focused, Pacific-facing, and cutting back on global engagement, and a Britain that, however much we may will the ends, can no longer financially bear the means of that kind of global role.

That leaves us with the third of Churchill’s three circles: Europe. To rework inelegantly Dean Acheson’s famous quote from the early 1960s, Great Britain exchanged an empire for a Commonwealth half a century ago, its relationship with America is no longer so special, but it has yet to find its confident European role. The idea of the European role has always been anathema to the anti-Europeans in this House such as the noble Lords, Lord Pearson and Lord Willoughby de Broke, but what I find worrying is the half-heartedness on the Benches opposite about the European commitment. It is the people who say, “Yes, we are in favour of political—”.

[Lord Pearson of Rannoch]

My Lords, does the noble Lord accept that we Eurosceptics are not anti-European; we are merely against the ill-fated project of European integration?

--- Later in debate ---

[Lord Liddle]

You are anti-European Union. I should have corrected myself—but you are anti.

[Lord Deben]

Given that the noble Lord has been interrupted, perhaps I may point out that there are some on these Benches who are in no way uncertain about the future of Britain in the European Union and support every word that he is saying.

[Lord Liddle]

That is a nice compliment from the noble Lord. What worries me is when people say, “Yes, we want Europe because it is good where we can have political co-operation on where we agree. Yes, of course the single market matters, but let us draw a clear line at that”. Whereas in the post-war era it is said that we had the myth of Britain standing alone at Dunkirk, which kept us out of effective engagement with Europe for 30 years, we are now recreating a new myth about Britain’s role in the world, whereby Britain alone in the new globalised world of the 21st century can thrive without the “shackles”—as the anti-European Union people put it—of engagement in Europe.

Of course Britain has global reach and global interests, and it can be an influential and effective networker in this new global world, but there is the idea of Europe as a shackle, that the single market is no more than a monster of bureaucratic regulation, that free movement of labour stops us having our own immigration policy, and that the things that people do not like—such as the rights culture and the health and safety culture—are all because of Europe.

I noticed that the noble Lord, Lord Flight, was almost cheering when my noble friend Lord Monks said that four weeks’ statutory holiday for people would be scrapped if we were no longer part of Europe. That is a dangerous and seductive myth that may well seriously cloud our judgment as a nation as to where our future best interests lie. We must recognise that the health of the European Union is absolutely central to our global interests. British-based businesses sell a higher proportion of their exports into the single market than German exporters do of theirs. That is partly because, due to the single market, Britain has become such an attractive base for inward investment. It is because of the base of the single market that we can specialise and compete in world markets.

We do not strengthen our position in the single market by diplomatically putting ourselves out of the room when, for all the paper promises made, key economic questions affecting this country will be discussed. It is nonsense to think that the world will pay more heed to a Britain that accounts for—what?—2 per cent of world GDP than the European Union, which still represents the biggest economy in the world. People who think that Europe is putting us in shackles to meet the challenges of the global economy have to explain why Germany is one of the world's most successful exporters to China and the emerging economies.

The anti-Europeans have a vision of how Britain can make its living in the 21st-century that is deeply antipathetic to the instincts of those on our Benches. We believe in a European vision of a modern social market economy, a Europe that takes the high road to competitiveness and combines the opportunity for successful private enterprise with decent regulatory standards and essential public investment in low-carbon infrastructure, research, education, early years, a modern welfare state, and so on. The vision against that is essentially the vision of an offshore Britain, a deregulatory tax haven, a Hong Kong-type vision, which would be a disaster for most of our people but for the City of London as well.

The coalition would like to think that we can have the best of both worlds, to keep the benefits of the single market while avoiding most of Europe's obligations and political commitments. Of course, we should try to do our best to shape Europe in a British image, and there is a huge agenda of European reform that we need to pursue, but if we are saying that we will stay apart for ever from the single currency, we will have nothing to do with the fiscal stability union, we will be no longer in Schengen or part of the justice and home affairs parts of the treaties, what other nation in Europe shares that vision of Europe's future? Where are we looking for allies if we are trying to stay out of everything?

The European Union is an exercise in pooled sovereignty or it is nothing. If we are not prepared to join in and do our bit, we will ultimately make ourselves irrelevant. We cannot indefinitely achieve our objectives by staying out of the room when we do not like what is being discussed, and we cannot achieve them by opting out of so much that it begins to look as if we might as well not be in.

We have to resolve this issue as a country: is our future European or not? That is the lead that we are looking for from the Government.