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”.

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.

Diplomacy

Lord Monks Excerpts

Thursday 11th November 2010 Lords Chamber

[Lord Monks]

My Lords, it is a pleasure to follow the noble Lord, Lord Hannay, in a debate on diplomatic questions because of his immense knowledge and experience of world diplomacy. I lay claim to some experience, if not expertise, in that field; I currently work in Brussels for the European TUC as general secretary. The UK diplomatic representation, inelegantly called UKRep, is generally admired as the classiest operation, the top team, around the town—even by the French.

I do not always agree with what UKRep does on behalf of Her Majesty's Government. It has blocked progress on some important social issues dear to my heart, such as insisting on maintaining the working time opt-out. Why is it that UK workers can be pressed to work what are on average the longest hours in the European Union? On posted migrant workers—the category of migrants who are brought with an employer to fulfil a contract—why do only the minimum rates need apply in the UK, not the rate for the job? They often undercut British workers, and then people are surprised when there is some anti-migrant feeling.

Why do successive UK Governments continue to oppose a social clause in the single market and downplay the need for the single market to have a social dimension? Without such a dimension, hostility is likely to grow against free trade and the single market. That will encourage the protectionism that we saw in last week's American elections.

These are questions on which I battle weekly with the UK representation. Ruefully, I have to subscribe to the chorus of admiration for the skilful way in which it plays its cards. It is a powerful agent for UK government policy, and diplomacy is truly an area of British excellence.

I am conscious that I am very privileged to join this House. I hope to bring some insights, especially into economic and employment policy and European affairs. Eighteen years, first as general secretary of the TUC—it is good to see a quintet at least of former members of the General Council of the TUC, including the trio in front of me—and another eight years after that as general secretary of the European TUC, have strengthened a deep commitment to trade unionism as a force for good in our society. I hope that the economic crisis that we have at the moment will be rather like the 1930s in one respect in that people in difficulties will turn again to the union movement in democracies and that it will take its full and proper place in the national life of the country, not just as the awkward squad but as a real force for constructive engagement, especially on promoting greater equality, skills, productivity and, critically, higher standards of performance and governance in many of our companies.

I was addressing a City audience not long ago and making the case for more long-termist perspectives from investors and entrepreneurs. One financial executive smirked and said, “I have some long-term investments; they were short-term investments, but they have gone wrong, and I can’t sell them”. Short-termism is a British problem. It is a major reason why so many of our private sector companies, not just Manchester United and Liverpool, are carrying so much debt, why our manufacturing sector has shrunk to worrying levels and why foreign companies are able to pick up household names at bargain prices.

I certainly do not knock foreign companies generally. Some are exemplary long-term players, and they show up the weaknesses in too many of our own firms, but we need more home-grown companies that can hold their own in the world and do not sell out at the first whiff of a big cheque for shareholders and top executives. How company boards run themselves, which interests are included on the board, whether shareholder value should be the sole goal of companies, how to organise takeovers, and, if necessary, block them, and what to do about the often excessive levels of boardroom pay that risk directors being regarded, in Richard Lambert's memorable phrase, as “aliens”, and in my words as the Bourbons of our age, are all questions that are ripe for powerful scrutiny and new thinking. I am watching carefully the right honourable Vincent Cable, who has expressed himself strongly on these issues, to see whether he will maintain his interest and not get swamped by urgent, but not more important, questions.

Today is Armistice Day, and we remember all those who made and make the ultimate sacrifice for the country. The European Union was born out of the wreckage of the Second World War and has been a major part of ensuring that any repeat now seems a remote prospect. That is a huge achievement in a continent scarred by too many bloody battlefields and haunting cemeteries. Britain's place is in Europe, not just for reasons of the past, but for the future too, as new, major, formidable economies emerge to take a prominent place in the world. It is not just aircraft carriers that will need sharing in our corner of this world if European influence is to be sustained. Indeed, as the noble Lord, Lord Hannay, said, the European External Action Service, under the capable leadership of the distinguished former Leader of this House, the noble Baroness, Lady Ashton, is recognition that diplomatic efforts can usefully be shared in many parts of the world. I am sure that British diplomats will flourish on this particular European stage.

I finish by thanking noble Lords, the Clerks and, indeed, all the staff of the House for the friendly welcome that has been extended to me from all sides. I am very much looking forward to making my contribution to the work of the House.