European Union: Recent Developments

Lord Monks Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Monks]

My Lords, I start by declaring an interest. I act from time to time as an unpaid adviser to the President of the European Commission.

I certainly welcome this debate. It is very timely and inevitably it is centring on the UK’s awkward relationship with the European Union. As we have heard, the Prime Minister is poised on the verge of a major speech that will define future policy—at least, that of the Conservative Party—towards the EU. I am not sure whether this speech will pre-empt the current review of the balance of competences, which is a major government exercise, and I should be grateful for clarification on that. Whenever he gives the speech—perhaps over the next few months—will the PM not be jumping the gun? He will no doubt seek to differentiate between his role as Prime Minister and his role as leader of the Conservative Party, but will others understand this distinction? Will the Liberal Democrats, for a start, understand it? I certainly do not think that other EU leaders will, and there will be the inevitable risk of a further deterioration in UK relations with the EU. As I said before, should not the PM at least wait for the completion of the review of competences exercise?

I recognise the pressures on the Prime Minister. Those who yearn for a UK free from and unfettered by ties to the EU continue to push him towards a voluntary Dunkirk. They see the world through a sepia lens, clouded with nostalgia. They ignore some uncomfortable truths, such as the extent of foreign ownership of the UK economy, some of which is here to take advantage of the EU single market. They do not address the issue of whether UK companies are perhaps too vulnerable to foreign takeovers, especially as they become cheap following devaluations of sterling. For example, when Cadbury fell to Heinz, we could have done with more pressure on that American company. Where were the nationalists then? I never heard a squeak. Nor do they address the question of what an exit or a transfer to a new semi-detached status for the UK would mean for social policy. As my noble friend Lord Liddle said so well, the working time directive is a frequent target, but the UK—wrongly, in my view—already has an opt-out from the 48-hour week. What more is required? Do they mean the minimum entitlement of four weeks’ paid holiday? That was a big step—perhaps the biggest social step that Europe took. So when there are remarks about all this social nonsense, that is what they are talking about: a minimum entitlement of four weeks’ paid holiday. Before that, the entitlement for many workers was less than three, and the average was about three weeks for manual workers.

So what are we actually on about? Are we talking about the underpinning of maternity rights, the right to information and consultation on major decisions, or the European Works Councils, with which about 450 British companies are entwined at present? I could go on. What do the Eurosceptics mean in relation to social policy? By the way, all these measures are gladly accepted by the Eurosceptics’ current pin-up, Norway, and the noble Baroness, Lady Falkner, gave further details about Norway’s entanglement with the EU.

More fundamentally, the Eurosceptics fail to see that Governments in the West and elsewhere have been weakened by globalisation, by the rising power of multinational companies and by foot-loose capital and the bond markets. This is highlighted very well in the recent report from the United States National Intelligence Council. These constraints on national freedoms are far more significant than our obligations to the EU. However, what do we hear from the nationalists and the Eurosceptics? Not a squeak. Indeed, the EU offers a better opportunity of standing up to the dark side of globalisation than any individual member state can have, yet the UK continues to seek opt-outs from measures such as a financial transaction tax and, now, a peg on bankers’ bonuses. Despite our claims of affection for the single market and our love of free trade, we seem to be protectionist when it comes to the City of London.

I am critical of the EU from a different perspective. It has seemed that the EU has often tried to reduce labour costs to German levels, and initially it used the economic crisis as an opportunity to do so. Instead of treating Greece as the US did after World War 2, initiating the Marshall Plan, or treating Greece as the EU, including the UK, did in relation to failing banks, it applied moral hazard—a punishment of almost Old Testament class—and extended this to Ireland and Portugal. This approach, I am pleased to say, has now softened, and it is important that it does. A transfer union is slowly emerging. Reading last Friday’s conclusions of the European Council, I note that there could be some return to the concept of “social Europe”. Do noble Lords remember that? It made Europe popular, at least on the left side of politics under the presidency of Jacques Delors and certainly in the trade union movement. I believe it is about time that we revisited the lesson that a single market needs some good and popular tunes.

I hope we will see some of these social issues being tackled, including at European level, and I hope very much, too, that we move on the issue of mobility and collective agreements. I do not have time to explain that at present but will do so on a future occasion.

In conclusion, surely we should look to learn some lessons from the other side of the North Sea—from the other countries which are successful in Europe. We must stop turning away from the central part of the EU towards the fringes and to some mirage—or perhaps it should be called a “Farage”.