EU: Recent Developments

Lord Monks Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Monks]

My Lords, this debate has inevitably concentrated on the very difficult and testing economic situation in the eurozone and, to some extent, on the UK’s awkward relationship with the EU. There has been no shortage of unsolicited advice to our neighbours and partners in the EU about all the things that they are doing wrong. I have one thing to say on that: never underestimate the determination of the leaders of Europe to keep the euro going. They will pay very heavy prices to do that. When we in this country preach such unsolicited advice from a background of an economy that rests to a large degree on devaluing our currency and on quantitative easing, our message does not come across with the authority that it might seem to have to some in this House. It is not taken awfully seriously on this subject.

I want to spend some time on a different subject, a different angle, an issue that has been as controversial as economic and monetary union in this country over many years, if not just at the moment—the social dimension of the European Union. Let us remember some of the incidents in its chequered history in this country. Mrs Thatcher was very hostile to Jacques Delors’ vision of a single market balanced by some social rules. She gave a fiery speech at Bruges that set in train some events that led to her downfall. Prime Minister Major negotiated an opt-out from the Maastricht treaty. It was the anniversary of that treaty just recently. Tony Blair ended the opt-out but was just as cautious—indeed, as hostile—on certain issues as the Major Government had been, and some were accepted only after many years of procrastination. The Conservative Party today is dedicated to the repatriation of certain powers, particularly on employment policy, although that has been watered down a bit in the coalition Government’s programme to a review of the balance of competences.

Open Europe, a think tank that takes an interest in these matters, as do I, is estimating at the moment that the cost of social Europe measures adds up to £8 billion a year for UK employers. I dispute that figure and ask your Lordships to reflect on it for a moment. Are people really asking the UK to save money by reducing the minimum entitlement to four weeks’ paid leave a year? Should that be scrapped? Are people saying that the UK should save money by scrapping the extensive health and safety regulations—many of which, by the way, are based on the UK’s own practices, which are the best practices in the European Union? That is one of the few areas where we can say that we are actually at the top of the league of labour market measures. How much money would in effect be saved by scrapping those European rules?

Are people saying that we should save money by scrapping the requirement to inform and consult employees about proposed decisions in companies? After all, that was made rather a major part of the recent coalition Government’s announcements on executive remuneration: that these channels should be used by the rest of the workforce to try to hold top earners to account. Are people saying that we should save money by scrapping the TUPE regulations on staff affected by transfers of ownership or privatisations? People are probably not saying those things specifically, although I will be interested to see whether some noble Lords do say them, but they are using these global sums, which I believe are fictitious, to justify the unjustifiable. Is that the direction that the UK would want to go in? I do not think so and I certainly hope not.

Another element of social Europe is not just the specific measures but the idea that the EU should have a strong social platform and embrace certain objectives—full employment, redistributive welfare states and the presence of institutions in the labour market, particularly social dialogue and collective bargaining—that seek to embed social norms of fairness, the more egalitarian distribution of market incomes and a restraint of excess at the top. In the current economic situation, all that is at risk.

I used to be the general-secretary of the European Trade Union Confederation, which is currently arguing that the approach by the European authorities should be more Keynesian, more expansionary, concentrated more on growth than on austerity and more a Marshall plan than the reparations-tinged measures that are around at present, not just in relation to Greece but in relation to other countries too. We, along with others, have been arguing that no moral hazard doctrine was applied to the banks when they needed urgent rescue but, when it comes to individual countries, moral hazard is the headline, not just in German newspapers but across many other parts of Europe as well.

It is not just the rescue packages that are affected. The strengthened rules, including the fiscal pact, look to enshrine fiscal austerity and a rather monetarist approach to economic policy. I see the noble Lord, Lord Flight, nodding his head; I agree with him on that particular point. From a union perspective you can see the controls on unit labour costs in the fiscal pact, the hostility to wage indexation and to sector-wide collective bargaining, and the downward pressure on public sector pay and on some minimum wage levels, which are very much a part of the programme.

I am pro-European and do not like the fiscal pact—it is going in the wrong direction—but when you look at the world as a whole, you see that the EU is the one significant part of the world, and an important one, that enshrines the values that I believe in. The campaign should be to seek to influence the EU to go in a more expansionary and generous direction, one in which Keynesian principles play a bigger part and the spirit of the Marshall plan is remembered. After all, Marshall was inspired in that plan by what happened in Greece in 1946, and he launched that campaign to defend democracy. We are not so far away from that in some parts of peripheral Europe at present.

I hope that the unions can do in Europe what they did in the Scandinavian countries, particularly in Finland after the collapse of the Soviet Union, which was to form social pacts in individual countries where people pulled together to put the country back on its feet. They did that very well in Finland after a catastrophic drop in GDP of 15 per cent in three months. It can be done in Europe. The problem with this situation as we debate it here is that we are rather isolated from some of these debates. It is a bit like being spectators at a match rather than players on the field.

In my remaining few seconds, I draw to the Minister’s attention the current situation in Hungary, where the Orbán regime, as he will know, has changed the constitution to recognise ethnic Hungarians in neighbouring countries, almost nostalgic for the borders of Hungary as they were at the end of the First World War. That Government have also sacked judges from courts that have not done things that comply with government policy. I understand, too, that there are new restrictions on churches: 14 have been legitimised and the rest have to apply for registration, including the Anglicans and Methodists. I ask the Minister what representations the UK is making bilaterally to the Hungarian Government, and in the context of the EU, to ensure that Hungary is in line with the best traditions of the European Union and is not being nostalgic for a Hungary of the past, which I do not think anyone should want to go back to.