EU: Prime Minister’s Speech

Lord Pearson of Rannoch Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Pearson of Rannoch]

My Lords, in this heavily Europhiliac debate, I thought I would concentrate on just one of the basic misconceptions to which noble and Europhile Lords, and indeed the Prime Minister, still cling: that the single market is a good thing and that we might lose inward investment, free trade and jobs if we left the EU and its customs union. The single market is a bad thing: it is what imposes the thousands of regulations which weigh down all EU economies in their trade with the markets of the future. Together with the euro, it is the economic iceberg which will eventually sink the whole project of European integration, at great social cost.

As for us, in the mean time, our free trade with clients and suppliers in the EU will inevitably continue when we leave it. Articles 3, 8 and 50 of Lisbon oblige Brussels to negotiate a free trade agreement with a departing country. The EU already has FTAs with 67 countries and dozens more are in the pipeline. As its largest client, and with our substantial trade deficit, we will hold the whip hand in agreeing our own free trade agreement, which will be unique to us.

Your Lordships may have missed the Government’s Written Answer on 14 December to my noble friend Lord Stoddart, who had asked whether the burdens of single market regulation applied to countries signing FTAs with Brussels. According to the Answer:

“It is not the case that as a result of these trade negotiations the countries concerned will have to adopt all the legislation and regulations that apply to EU member states. The aim of these negotiations is to eliminate, as far as possible, duties applied to trade in goods and to address non-tariff barriers that affect trade in goods in services—ie rules, regulations and practices that affect market access. Non-tariff barriers can be overcome through a variety of methods. These include the adoption of international rules”—

the World Trade Organisation—

“mutual recognition of approaches to testing, standards, et cetera, and commitments to end discriminatory practices”.—[Official Report, 14/12/12; col. WA 263.]

What more do we want?

Why should inward investment be affected when the reasons for investing here will not have changed? It is interesting that our Invest in the UK agency gives 13 good reasons for investing here—and not one of them is our membership of the European Union. Therefore, I hope we will hear no more scaremongering from the same old quisling voices of big business and elsewhere, which told us that if we did not join the euro, the City of London was finished. It became number one in the world, so why should we listen to them now? Some hope, my Lords, but I trust that the British people will ignore the Brussels propaganda when the time comes.

EU: UK’s National and Trade Interests

Lord Pearson of Rannoch Excerpts

Wednesday 16th January 2013 Lords Chamber

[Baroness Warsi]

It may well be that the noble Lord opposite has had sight of the speech and is therefore making judgments based on his opinion of what is in the speech. I await to see what will be in that speech, as do many of us in this House, and I can assure the noble Lord that this Government have done all they can to make sure that when opportunities present themselves, both within the Commonwealth and in the wider world, especially in relation to India, Brazil and China, we have very clearly laid out our store to say that Britain is open for business.

[Lord Pearson of Rannoch]

My Lords, do the Government agree that we have some 3 million jobs exporting to the European Union but that it has 4.5 million jobs exporting to us? Are we not, in fact, its largest client? When we leave the EU, will it not come running after us for a free trade agreement which suits us at least as well as our present arrangements?

[Baroness Warsi]

The noble Lord always has an interesting take on these matters and is in an interesting position to trade statistics. I can assure him that most Members of this House believe that we are stronger for being within the European Union.

European Union: Recent Developments

Lord Pearson of Rannoch Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Pearson of Rannoch]

My Lords, as the noble Lord, Lord Liddle, mentioned this phenomenon as well, and turned and wagged his finger at me with great energy when he said that millions of people want to join the European Union, do those noble Lords agree that that wish is guided by the political classes in those countries far more than by the people? It is, of course, the political classes who stand to get at least 10 times their present salaries on the EU pay scale either at home or in Brussels?

[Lord Roper]

As we have been constrained to keep to seven minutes, I shall say no more than that in almost all of the countries that have acceded recently, there have been referendums and that, therefore, the people of those countries have given their consent to the process of accession.

Turning to the Prime Minister’s Statement, which we heard earlier, the agreement in ECOFIN and then in the December European Council on the method of guaranteeing the interests of the non-members of the eurozone as the banking union develops, is, I believe, very satisfactory, and suggests that it will be possible to find effective arrangements for those member states outside the eurozone as economic and monetary union develops to preserve the integrity of the internal market in financial services. On the other hand, it must be said that the progress towards achieving an effective road map at the European Council to develop such an economic and monetary union was very limited, and suggested that it will take rather longer than expected.

We are approaching the 40th anniversary of British accession to the European Union, and we should, I believe, be celebrating the contributions of the UK Commissioners and officials from the UK who have played a part in that development. We have heard from one, and we will hear from another shortly. Instead, we are being exposed to competing proposals for less or more repatriation of competences to London from Brussels. This was referred to in only general terms by the Prime Minister in his press conference on Friday, but may be made more explicit in his much awaited European speech.

It is difficult, on one level, to equate such proposals with the view frequently stated in this country that we should operate on a level playing field, because this seems to be an attempt to make the playing field not level. Even before President Hollande’s categorical remarks on Friday, it is very difficult to see that they would be acceptable to the other member states. Indeed, President Hollande echoed remarks made earlier this year by the German ambassador. The idea that the United Kingdom could bargain such repatriation against our support for the constitutional changes needed for full economic and monetary union and putative political union is not plausible. The other members would follow the precedent of last December and proceed with a treaty among themselves.

This is not to say that there are not many unsatisfactory aspects of the current operation of the European Union and that there is not considerable validity in many of the criticisms of it. However, we need to find other ways to implement a reform agenda. I believe that the way is to work within the union to make changes that would then apply to all member states. The coalition Government have already had some success in this and should pursue it.

For instance, we strongly supported the proposals of Commissioner Damanaki, first considered in July this year, which, when implemented, will fundamentally overhaul the common fisheries policy. Incidentally, they follow very closely the proposals in your Lordships’ European Union Committee’s report on the common fisheries policy, which was produced in July 2008. They would involve devolving powers over the design of sustainable fisheries to a regional and national level, so that they can design innovative and tailored policies for their seas within the overall CFP.

In another example, when he was a Minister in BIS, my right honourable friend Ed Davey, working with a group of like-minded countries, negotiated the first exemption for small businesses from European Union accounting rules, saving small businesses £400 million a year. This has led to an EU commitment to exempt small businesses from all new EU regulations wherever possible. More recently, my right honourable friend Vince Cable has put forward, together with 12 other member states, a 10-point plan for smarter regulation.

The same approach can be seen in, for example, making changes to the working time directive. These examples demonstrate the opportunities for working within the European Union to deal with problems, rather than seeking unilateral repatriation.

Finally, the balance of competences review which the coalition Government have set up may discover examples where the principles of subsidiarity and proportionality have not been followed in the past. In these cases it would seem very useful to raise them within the various institutions, with a view to changing the European Union legislation concerned. We have significant opportunities for effective reform within the Union, but not by unilateral repatriation.

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[Lord Pearson of Rannoch]

My Lords, I hope your Lordships will not consider me ungracious if I point out that of the 19 previous speakers, at least 13, and perhaps more, were strong and vociferous supporters of this country joining the euro. We can all now see that it has been the disaster that some of us forecast it would be, yet we have heard not a word of apology or repentance from any of them. I hope that we will do so from the seven noble and europhile Lords who are yet to speak. In the mean time, I will just ask why we should pay heed to their wisdom about the EU’s future when they got its past so wrong.

I think we can take it that there will soon be a referendum in this country to decide whether we wish to stay in or get out of the EU. The Prime Minister apparently wants the choice to be between leaving and staying in a reformed EU, with powers being returned to Westminster from Brussels. But I trust that Monsieur Hollande, the French President, put him right on the possibility of reform last week. As I have said to your Lordships many times over recent years, to change a comma in the treaties of Rome, let alone to retrieve a power, would require unanimity among all its member states—28 of them now—and a new treaty to be ratified in all of them. I fear that that is not going to happen for any worthwhile powers.

I suggest that the referendum, when we come to it, will turn on one word: jobs. I suppose we can assume that the other great fallacy of the EU project—that it has brought peace to Europe and is essential to maintain peace in future—will not feature much. The historian Antony Beevor puts this rather well in an article entitled “Europe’s Long Shadow” in this month’s edition of Prospect, which I recommend to all noble and still europhile Lords. I quote:

“The argument that it was European unification which prevented another war on the continent was always a completely false one … Democracies do not fight each other. The key question is therefore the inverse: will a dramatic increase in the democratic deficit lead to unrest and even conflict as Europe ‘tears itself apart,’ in the controversial phrase of the governor of the Bank of England?”.

I would just repeat that the employment, misery, and civil unrest already sweeping Europe are entirely caused by the project of European integration and its euro. What is the eurocrats’, and our political leaders’, reaction to this obvious fact? Why, more Europe of course. I quote from Mr Beevor again: the eurodreamers,

“should perhaps remember that both in war and in peace, reinforcing failure through obstinacy has always tended to turn a crisis into a catastrophe”.

Have the Government given any thought to the contention that the disasters caused by the euro, with worse to come, can be solved only by getting rid of it? Could not all 17 finance ministers meet and declare the obvious—that the euro has failed—and go back to their national currencies at initial exchange and interest rates, to be agreed in one weekend? Of course it would be messy, but I understand that much of the work has already been done. Changing a currency costs only about 4% of GDP, which may turn out to be a small price to pay against what has already been wasted in keeping the euro going and what may lie in store. I fear that it will not happen, of course, but I thought that I would just ask, if only for the pleasure of saying “I told you so” when the tumbrils come to collect us. I look forward to the Government’s reply.

I go back to trade and jobs, on which the forthcoming referendum will turn. The Government and other europhiles will, no doubt, still intone the falsity that we must stay imprisoned in the EU because 40% of our trade and 3 million jobs depend on or are linked to the single market. I hardly dare repeat it again, but there are 4.5 million jobs in the EU that depend on their trade with us; we are their largest client, so we will be in the driving seat when we have voted to leave. The EU has, or is concluding, free trade agreements with 38 other countries, according to a government Answer to me on 19 November. It is inconceivable that we could not have trading and other arrangements at least as good as those enjoyed by Switzerland.

We have never said that we want to be in the European Economic Area like Norway, a fax democracy obeying the EU rules without taking part in their making. A number of noble Lords have made that point today, but we have never said so. I hope that we do not have to hear the Norwegian comparison again. We could have our own arrangements, and it would not matter that we no longer wasted so much time in Brussels, agreeing all the regulations that are steadily sinking the single market in the great ocean of the new markets of the future.

The US and China, and all the other countries that export to clients in the EU, do not do so either. We do not make the rules for exporting to the United States of America, but it helps to put the steering wheel on the left if you want to sell a car there. So of course we would obey the rules if exporting to the EU, as does everyone else. However, none of our exports to the EU, nor the jobs that deliver them, would be lost if we left the political construct of the treaties of Rome. The truth of this is underlined in Hansard for 14 December, at column 263, in a Written Answer to the noble Lord, Lord Stoddart, from the noble Lord, Lord Green of Hurstpierpoint. This confirms that there really is no difference between a free trade agreement and membership of a single market. I trust that my noble friend will quote the Answer in full when he comes to speak later.

As I have often said before, only 9%, and falling, of our GDP goes in trade with the EU anyway; 11%, and rising, goes to the rest of the world; while 80% stays right here in our domestic economy—yet Brussels diktats smother 100% of our economy. It is madness, really, when you look at it like that.

I hope that the Government are slowly beginning to understand some of these points. The noble Lord, Lord Strathclyde, the Leader of the House, told me on 21 November that,

“the noble Lord may wish to take heart that, despite tough conditions, British exports of goods have increased in the past two years to China by 72%, to India by 94% and to Russia by 109%”.—[Offical Report, 21/11/12; col. 46.]

If that is so, could we not make the conditions less tough by negotiating our own free trade arrangements with those countries? There is also the rest of the Commonwealth, and the whole world outside the sclerotic EU.

So, millions of new jobs indeed depend on the EU—they depend on our leaving it. Anyone who doubts this should read the briefing notes on the globalbritain.org website, where it is all set out in succinct form. I ask again whether anyone in the Foreign Office or the Treasury has actually read that store of unanswerable wisdom. What do they think of it, if they have? I look forward to the meeting offered by the noble Baroness, Lady Warsi, in Questions on 26 November, when she offered to give me,

“a briefing on the economic importance of our continued membership of the EU”.—[Official Report, 26/11/12; col. 10.]

I have written to her saying, “Yes please”, and I await the date with fervent anticipation.

When we have voted to leave the EU, by what method will we do so? Will we simply repeal the 1972 Act, which we were always promised, at the time of Maastricht and before, was the way of leaving the EU and retrieving our sovereignty, if that was what we wanted to do? Does that promise still stand or will the Government feel constrained to follow Article 50 of the Lisbon treaty, which sets out an expensive process that can last two years, with Brussels in control of the terms of our departure? I trust that it is still the former: we repeal the 1972 Act and then all its subsequent amendments—the Single European Act, Maastricht, Amsterdam, Nice and Lisbon—fall with it, including Article 50 of the latter. I look forward to the Government’s answer to that one.

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[Lord Davies of Stamford]

My Lords, this is not the first occasion when I have had the pleasure of following the noble Lord, Lord Dobbs, in a European debate. As he rightly anticipated, I did not agree with him this time any more than I have done on previous occasions, though he said his piece with his usual charm.

It has been a stimulating and worthwhile debate, but it is essential that we have another debate when the Prime Minister has made his long-awaited speech. Can I urge the Government that when that happens we have the whole day for the debate, and that the Government do not reduce the time by introducing Statements or debates on matters that, however fascinating they may be to some people, do not have quite the same potential historical significance as this one.

I may be a bit old-fashioned but I still have the idea that a debate should try to make progress, so I want to take advantage of being put rather low in the batting order this afternoon, not to make a prepared speech but to comment on some of the remarks that have already been made, particularly those that appear to be most memorable.

I am delighted to see the noble Lord, Lord Taverne, come in at this very moment, because the first speech that I want to refer to is his. He made a masterly analysis of the justice and home affairs issue. He demonstrated clearly and conclusively that there are no pragmatics about the Government’s attitude to this; the national interest is completely irrelevant. The Government are simply playing politics with the national interest. A bone—a very important bone, sadly—is being thrown to the Eurosceptics for purely party political reasons. This is a disgraceful state of affairs.

I also to pay tribute to my noble friend Lord Monks, who made an excellent speech about the Social Chapter, based on a unique degree of experience in these matters. I would like to add something about that issue. I am not known to be timid about attacking the modern Tory party or for being particularly indulgent to it. However, I wonder whether even the modern Tory party would seriously go about repealing the limited government measures that have gone through under the Social Chapter, to which my noble friend referred: the parental leave directive, part-time or agency workers’ directive and the four weeks’ paid leave directive. The one thing that Mr Cameron cares about is votes, and I do not think that he would get any if he legislated along those lines. No doubt the Institute of Directors, some right-wing think tanks and a lot of Eurosceptics would be delirious with pleasure; but I do not think that that would help him at the next election. So I anticipate that the Tory party is much more likely to say, “We want to pull out of the Social Chapter for ideological reasons, but we won’t actually repeal the measures that have gone through”.

If you think about it, though, that is the worst of all possible worlds. If we are going to have these measures—which are costly, of course, but essential in a humane society, to which we all want to be committed, and which are supported by all reasonable employers—it must be in our interests to ensure that they are part of the Social Chapter, and that there is no one else within the single market who can conduct their business without these kind of costs. Otherwise we would be damaging our own competitiveness within the single market, which would be a self-destructive thing to do. The Government pretend to care about the national interest, but an important aspect of the issue has not been taken into account at all.

Now I turn to the Government and to the noble Baroness, Lady Warsi. In a most excellent speech, my noble friend, Lord Liddle, quoted the Prime Minister as saying that, for him, Europe and referenda went together. I cannot think of another sentence that a Prime Minister could have pronounced which more obviously, immediately and dramatically would create uncertainty about our position and future in the European Union. Yet we had the noble Baroness, Lady Warsi—and, before her earlier today, the noble Lord the Leader of the House—saying, “Oh no, there’s no uncertainty at all; the Government are quite committed to our membership of the European Union and we haven’t created any uncertainty”. That is really quite a fatuous remark. The Government have gratuitously created a lot of uncertainty; as the noble Lord, Lord Pearson, said, a large number of people in this country believe that we are set on a course that will lead us to leaving the European Union in the next Parliament. Not only a lot of people in this country believe that and work on that basis, but a lot of our partners, sadly, believe that and will be working on that basis, which will mean a reduction in our bargaining power with them on many issues. Worst of all, many investors believe that, are working on that basis and therefore will not invest in this country. Whether they are British-domiciled or foreign-domiciled, they will invest somewhere else in the single market if they want their operation to be certain to continue to be in the single market and in a country that has a full weight in the decision-making process of that market so it can protect their interest.

I turn to the noble Lord, Lord Pearson of Rannoch. I do not want him to think that this is a personal attack. In fact, I have a high personal regard for him; I admire his courage and persistence in continuing to voice views that I think are completely misconceived but he does so very lucidly. Since he has set out so lucidly today what is the standard narrative of Eurosceptics, both in UKIP and the Tory party, I hope that he will not mind if I make him the object of my final remarks.

The problem that all Eurosceptics, whether UKIP or Tory, have in this country is that you just cannot make a credible economic case for leaving the European Union. There is no way that anyone can argue—I have not seen anyone even pretend to do so—that the mere fact of leaving the European Union will add one job to our national economy or one basis point to our GDP. Of course it will not; the argument is entirely the other way. The argument is about how many jobs it will destroy and how many basis points, or, indeed, percentage points of GDP, it will remove and over how long. That is how the argument is conducted—on whether it is hundreds of thousands of jobs we will lose, or millions. Generally, people recognise that if we were left with no access to the single market altogether, it would be more in the millions than in the hundreds of thousands.

Faced with that fact, what do you do if you are a Eurosceptic? I am afraid that you go in for some pretty evasive and disingenuous arguments, which we hear the whole time, and I am sorry to have to say to the noble Lord that we heard them from him this evening. We hear people say in the same speech, “We can negotiate continuing access to the single market”, and, almost in the same breath or sentence, that what is all wrong with this thing is the regulatory burden that we face, which is why we must leave the European Union. Yet if you continue to have access to the single market you continue to have the same regulatory framework, to which you are committed. That is the case with Switzerland and Norway, and it would be the case under all circumstances if we negotiated continuing access to the single market.

The difference, and it is a very important one, is that you are no longer part of the decision-making structure. You have no influence on the evolution of that regulatory regime, on the new regulations or on changes to them. You have no opportunity to propose a reduction of regulations, if you think that is the right thing to do. You are out of the dialogue—

[Lord Pearson of Rannoch]

Would the noble Lord give way?

[Lord Davies of Stamford]

I do not want to speak for too long. I am afraid I cannot give way because we have had imposed on us an unofficial time limitation, because the Government have preferred to do other things.

[Lord Pearson of Rannoch]

My Lords—

[Lord Davies of Stamford]

I am afraid I must insist. I am very sorry. I would love to give way to the noble Lord. I believe in debate in that sense, but we cannot do it consistent with having a time limit imposed on us.

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[Lord Pearson of Rannoch]

Before the noble Lord sits down, will he therefore tell us how every other country in the world manages to trade perfectly satisfactorily with the single market without having its ridiculous rules?

[Lord Davies of Stamford]

We have much greater penetration into the single market than other industrialised countries such as the United States or Japan, and we have that by virtue of being part of the single market. A great many businesses have been set up in this country, both by British-domiciled investors and by foreign investors—including, importantly, by Japanese and American investors—in order to have access to the single market. That is where we have gained enormously; we are part of the market itself. That is a priceless advantage and I think that the noble Lord implicitly accepted it when earlier on, slightly in contradiction to the question he has just asked me, he recognised that we must negotiate some continuing access to the single market or we shall face the most appalling economic losses.

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[Lord Lea of Crondall]

NATO has majority voting in its own way. What about the UN? Is there any comment from UKIP about that?

[Lord Pearson of Rannoch]

My Lords—

[Lord Lea of Crondall]

No, obviously not.

[Lord Pearson of Rannoch]

Yes, my Lords.

[Lord Lea of Crondall]

They have no comment because their case is demolished.

[Lord Pearson of Rannoch]

I am doing my best.

[Lord Lea of Crondall]

It is healthy to—

[Lord Pearson of Rannoch]

Would the noble Lord please not go on asking questions to which he does not want answers because they are too uncomfortable for him? We are happy to be in the United Nations because we could withdraw—

[Lord Wallace of Saltaire]

This is a Second Reading debate. Given the lateness of the hour, we should really have one speech after the other rather than general exchanges. Perhaps the noble Lord who is speaking could bear that in mind.

EU: United Kingdom

Lord Pearson of Rannoch Excerpts

Monday 26th November 2012 Lords Chamber

[Lord Liddle]

My Lords—

[Lord Pearson of Rannoch]

My Lords—

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, we have time. Perhaps we should hear the noble Lord, Lord Liddle, and then the noble Lord, Lord Pearson?

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[Lord Pearson of Rannoch]

My Lords, has the noble Baroness read yet another respectable analysis, this time from Professor Tim Congdon, which finds that our EU membership is costing us about 10% of GDP or £150 billion per annum? Is it not now obvious, even to Her Majesty’s Government, that our prosperous future lies outside the EU and free of control from the bloated octopus in Brussels?

[Baroness Warsi]

The noble Lord makes an important point but I do not intend to trade academic reports from the Dispatch Box. However, if he has the time, I shall be happy to give him a briefing on the economic importance of our continued membership of the EU.

Her Majesty the Queen’s Diamond Jubilee: Commonwealth

Lord Pearson of Rannoch Excerpts

Tuesday 20th March 2012 Lords Chamber

[Lord Howell of Guildford]

My noble friend is right: the commitments were put forward, and many of them were adhered to, at the Perth meeting of the Heads of Government which I attended, while many others were remitted for further work. The next stage is a ministerial task force to carry those ideas forward. Ideas for strengthening the values and standards of the Commonwealth, as well as strengthening many of its other aspects, will be for the task force, and then later in the autumn the Foreign Ministers of the Commonwealth will meet to implement and carry those ideas forward. Not all of them are totally agreed—in any family there are bound to be some differences—but the broad thrust is to promote and uphold the Commonwealth standards in democracy, human rights, good governance and the rule of law.

[Lord Pearson of Rannoch]

My Lords—

[Baroness Hollis of Heigham]

My Lords—

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[Lord Howell of Guildford]

The short answer is yes, I am very happy to remind the UKBA and any other authority of those kinds of figures. I am sure that the noble Baroness will not overlook the fact that despite questions having been raised about visas, which I fully admit, there are thousands and thousands of overseas students in this country—an enormous number from non-Commonwealth as well as Commonwealth countries. So our role and performance is not all bad—in fact it is extremely good—but there is always more that can be done. I am very happy to join with those who point out the enormous benefits of getting more and more genuine students to visit this country and to return and benefit our promotion and reputation in the future.

[Lord Pearson of Rannoch]

My Lords, is it not now clear that we took the wrong road away from the Commonwealth in 1972, as the noble Baroness, Lady O’Cathain, has indicated in her Question, when we joined the project of European integration? Would we not have done better to lead the Commonwealth in free trade and friendly collaboration, and could we not still do so, thus benefiting from the markets of the future instead of being stuck on the “Costa Concordia” that the modern EU has become?

[Lord Howell of Guildford]

These aspects of being a good member of the European Union and an effective member of a reinvigorated Commonwealth are by no means exclusive; on the contrary, they go together. We can ensure that although our trade may be handled mostly by the European Union, our investment, all our other links and our movements of capital are not so limited by the European Union, and it is through those links that we can maintain excellent contact. At the same time the rest of the Commonwealth is developing its own intra-Commonwealth trade at a fantastic rate, and all these developments benefit the United Kingdom.

European Parliament

Lord Pearson of Rannoch Excerpts

Monday 5th March 2012 Lords Chamber

[Lord Howell of Guildford]

It has been the view of Her Majesty’s Government under successive Governments that this is a very elaborate, expensive and out-of-date arrangement, but unfortunately there is one considerable and powerful country in the European Union that takes a very different view. Until it can be persuaded otherwise, I fear that this double-hatting and double-travelling will have to go on.

[Lord Pearson of Rannoch]

My Lords, is the European Parliament not merely a democratic fig leaf for the whole ill fated European project because it cannot even propose legislation? So, if we have to have elections to it, should we not keep the existing system which, after all, allowed UKIP to beat Labour and the Liberal Democrats at the most recent election? UKIP came second; therefore it must surely be an excellent system.

EU: Recent Developments

Lord Pearson of Rannoch Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Bates]

My Lords, I wonder whether it is possible to be an economic sceptic but also a political enthusiast about Europe. I just want to unpick that a little from a slightly different perspective—that of having spent the past 10 months walking across Europe from Greece to the United Kingdom.

The noble Lord, Lord Dobbs, said that we must pitch ourselves to see what it would be like to stand on the streets of Athens. I was doing just that in April amid the tear gas and everything else that was going on. In fact, I arrived in Greece just as it had been downgraded. I arrived in Italy just as it was downgraded and I arrived in France just as it was downgraded. The Chancellor then begged me not to come back to the UK. I arrived back and there was a Moody's warning, but I promised him that I would return to France as soon as possible on that basis.

In the course of that walk, a couple of things began to crystallise in my mind. When I left this House in April, I would have described myself as moderately Eurosceptic in my approach to things. As I walked, two particular things struck me. The first was the point of Europe. This was brought home most forcefully to me a couple of weeks ago when I stood beneath the Menin Gate with the last post sounding in Ypres in Belgium. That incredibly moving event has been repeated every single evening since the First World War, apart from the time of German occupation. On that memorial are the names of 54,800 British and Commonwealth troops who died in that first Great War. They are part of nearly 1 million British and Commonwealth young lives that were lost in northern France and Belgium in the First World War.

As I walked the section from Arras to Lille and then Ypres towards Dunkirk, I walked alongside meticulous cemeteries maintained by the British and Commonwealth War Graves Commission. Their Portland stone headstones commemorate the incredible loss that was suffered in human life, not just on our side but throughout Europe. In many ways, the First World War gave birth to the Second World War, which gave birth to the Cold War. An incredible catastrophe was unleashed in Europe.

As a Conservative I resile from the petty bureaucracy and interference in the lives of business and ordinary citizens that constantly seems to come from the European Union. But I was left with a view that it might be better to be sitting arguing about what the label should read on the jar of Women's Institute jam than whose label should be on Alsace-Lorraine. It is far better that disputes, fallouts and arguments that we witnessed at the European Council meeting in November be played out in television studios, debating chambers and committee rooms than on the battlefields of Europe.

I know that that is an obvious point and that noble Lords know it well—very personally in many cases—but to me it was something of a dawning. The penny dropped. This is why Europe is important. We could no more stand aside from Europe in its economic crisis than in its military and political crisis in 1914 or 1939. In a globalised world we are all connected to the economic mainland. To borrow a phrase from the Chancellor, we are all in this together.

I had lots of conversations in bars and restaurants—probably a few too many, otherwise I could have been back a little earlier. In those conversations I discovered a couple of things. First was the enormous affection for British people and British culture across Europe, not least in somewhere like Belgium where people know the sacrifice that was made by the armed services of this country in defence of their liberty. You see people on the high streets wearing and carrying the union jack on bags, watching Premier League football, and speaking the English language. There is a huge appetite for British education.

At the same time, there is the argument of Robbie Burns about seeing ourselves as other people see us. After spending some time outside the UK, I began to see a little of how other people saw us. In relation to Europe, they would see us perhaps as a touch arrogant sometimes in looking at the problems that they were facing, as if somehow we had it all right and were sitting pretty and driving ahead with no pain or dislocation—as if we did not have a banking crisis and billions and trillions of credit card debt in this country. It was as if we had got a perfect world and were going to tell everybody else how to get it right. That was just a perception that people had of us. There was another perception, which said that Britain gets a pretty good deal out of the European Union given that we are not part of economic and monetary union and the Schengen agreement. I had to go through passport control at the borders of Slovenia and Greece but not in other countries. We are not part of that agreement and have managed to get a few different opt-outs here and there along the way. The noble Lord referred to our contribution. In net terms, Germany pays about €9 billion, France and Italy pay around about €6 billion and we pay about €4 billion. I am not saying—

[Lord Pearson of Rannoch]

My Lords, would the noble Lord be interested in the Pink Book figures, which put our net cash contribution to the European budget at £10.3 billion last year, and rising?

[Lord Bates]

I would indeed be interested in that. I am going on other figures, which came from the European Union itself. I know that is inviting an immediate riposte, but I wanted to make that general point that there is a sense in which Britain does have an enormous influence within Europe and is respected. We need to view Europe as a community that we willingly chose and asked to be part of, and which is going through very tough economic times. There is a real desire for us all to pull together so that the reforms that are being suggested from an economic standpoint—which are absolutely necessary and which my right honourable friend the Prime Minister was putting forward—will strengthen Europe and therefore strengthen our greatest market. In strengthening the economy, it will also strengthen those political institutions that have done so much to bring us peace for 70 years in this country. As a parent, looking at those headstones really brought it home that it is something to be thankful for, to not treat lightly and to take with care, so that we are humble in the way that we communicate our grievances.

--- Later in debate ---

[Lord Pearson of Rannoch]

My Lords, I hesitated to put my name down to speak today because I have already said most of what I have to say about the European Union—some of it several times, thanks to your Lordships’ enormous patience over the last few years. Most recently, I addressed the crippling economic costs of our EU membership on 25 November last year, at the Second Reading of my Bill to secure an impartial cost-benefit analysis. I dealt then with the Europhile propaganda, which confuses our membership of the EU with our access to the single market by claiming that we need to be in the EU to trade in the single market and by claiming that by being in the EU we influence its policies and benefit from its negotiating strength in the World Trade Organisation. As I tried to explain then, none of this stands up to rational examination and I regret that we have heard so much of it again today from noble and Europhile Lords.

[Lord Lea of Crondall]

Noble and Europhile.

[Lord Pearson of Rannoch]

Yes, I would not remove their nobility. That Bill passed through your Lordships’ House unamended and was killed off in the House of Commons by the Government, presumably because they do not want the British people to understand that we can no longer afford our membership. Nowadays of course, all eyes are focused on the euro and the suffering it—and it alone—is causing to the people of Greece and, soon, elsewhere. Much has been said about that today, so I will say no more, except that I am with those who favour Greece’s orderly return to the drachma, after which it could be supported by the IMF and return to growth with its own interest and exchange rates.

However, I will have another try at getting your Lordships and the Government to see that it is not just the euro that is designed for disaster. It is the whole project of European integration. I repeat, yet again, the big idea that launched it all: that the nation states of Europe had caused two world wars and much bloodshed over the centuries, so they and their unreliable democracies had to be emasculated and diluted into a new form of supranational government run by technocrats. That was the big idea that underpins the whole project. This well meaning but misguided experiment was supposed to bring peace and prosperity to Europe. Indeed, the Eurocrats still airbrush NATO out of history, and even have the nerve to justify their expensive and unaccountable existence by claiming that the EU has brought peace to Europe since 1945 and still does so today.

Surely, though, we can all now see that that big idea has gone wrong. The EU has instead brought austerity, slump and civil unrest, and will go on doing so. Apart from the tragedy of the euro, the debate in this country focuses on whether we should stay in the European Union, or on whether there should be a referendum to decide that question. However, I want to take the debate one stage further to its logical conclusion, as I have tried to do in Oral Questions without getting a satisfactory Answer: now that the idea that spawned it has failed, what is the point of the European Union at all? We clearly do not need it for our trade or jobs, it has been irrelevant for peace and it is now causing violent unrest. Can the Government tell us why the planet needs it?

For instance, do the Government think that the EU’s vast new foreign service is a help or a hindrance? Did we not have an adequate Foreign Office before? Why do we need the EU’s common agricultural and fisheries policies, with the immense suffering that the CAP has inflicted on the developing world? Why does Brussels need to have overall supervision of our vital financial services? Could we not do all these things, and much more, better by ourselves?

Why do we need the 70,000 expensive and unaccountable bureaucrats in Brussels with little to do but misspend our billions and strangle the European economies with their endless overregulation? Why should they blight the democracies of Europe with their interference in our immigration, rubbish collection, post offices, light bulbs, herbal medicines, car premiums, pension funds and working times? I think noble Lords know that I could go on with that list for a very long time; it now includes every aspect of our lives. Are the democracies of Europe not perfectly capable of deciding these things for themselves in friendly collaboration and free trade?

I ask the Government again: would Europe not be a happier and more prosperous place if the EU simply were not there—if we got rid of it altogether? What is the EU now for? I look forward to the Minister’s reply.

--- Later in debate ---

[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 Wallace of Saltaire]

My Lords, at the end of a seven-hour debate in which a very wide range of points have been made and perspectives have been introduced, it is of course impossible to answer everything that has been raised, so I promise that either I or my noble friend Lord Howell will write to noble Lords to answer the points that I am not able to reach. In some ways, it has also been a debate on the just-published EU Committee report, The Euro Area Crisis. It is unusual to have a debate on a report that is close to publication, and I am sure that the noble Lord, Lord Harrison, is pleased about that. The Government are very pleased with the report and we will of course be responding in due course.

The coalition Government have no doubt that the UK is better off in the EU, not better off out of it. We support a prosperous and competitive Europe and a strong single market. These are good for Britain. It is therefore in Britain’s interests that the eurozone sorts out its current serious problems. We want to see a reformed and strengthened European Union, better able to cope with the new international pattern of powers and influence. We want Europe to succeed not just as an economic force but as a political force—that is, as an association of countries with the political will, the shared values and the voice to make a difference in the world. European countries acting together pack a bigger punch in a changing world. To repeat what my noble friend Lord Howell said in opening this debate, Britain is part of the European Union not by default but by choice. It fundamentally reflects our national interest to be part of the single market on our doorstep and we have no intention of walking away.

The benefits of the single market are hard-wired into the UK economy. Half our trade is with Europe—not surprisingly, as this is our nearest and most open market. This trade has been growing faster than our overall trade without diverting British companies with global ambitions from trading more and more with the big emerging markets. There is an absurd view which I see when I look at some of the Eurosceptic blogs that somehow being in the European Union prevents us trading more with China and Brazil. They do not look at the figures which show that German trade with China and Brazil is four times as large as that of Britain and that currently French trade with China is twice that of Britain. These are not contradictions. The UK therefore continues to play an active role and to lead the way in the European Union, and the Government continue to act decisively to defend our national interests within it, as do other Governments within the European Union.

In October, the eurozone countries set out the package of measures that will be needed in the short term if the euro is to resolve its ongoing problems: Europe’s banks need to be recapitalised properly; the uncertainty in Greece needs to be brought to an end; and the firewall must be big enough to deal with the full scale of the crisis. In the longer run, proper fiscal discipline in the eurozone is essential, and the question at the December European Council was on how this process should be taken forward. My right honourable friend the Prime Minister sought sensible and reasonable safeguards to protect the integrity of the single market, and my noble friend Lord Howell has spelt out what those safeguards were. The eurozone countries and others have since reached an intergovernmental agreement outside the European Union.

With the eurozone at the centre of the crisis, the UK is to some extent unavoidably at one side. Some say that we should have been more active, engaged and critical; others, such as the noble Lords, Lord Newby and Lord Kerr, say that we should not intervene too far—that unsolicited advice only irritates those who have to sort out the mess in which they find themselves. The Prime Minister, the Chancellor and the Foreign Secretary have all made it clear that the UK wants the eurozone to survive and prosper. However, we have also made it clear that the single market must not be threatened or sidelined, and there have been a number of noises from some other Governments who have suggested that they would not be unhappy to see aspects of the single market threatened. Europe needs economic recovery and growth, not the stability and no-growth pact of which the noble Lord, Lord Kerr, spoke. We are continuing to pursue that agenda in Brussels through active bilateral conversations as well as with groups of like-minded countries, with which the Government are fully engaged. We are neither isolated, nor ignored. There are many active exchanges in which all of us are fully engaged.

In a rather underreported speech the other day in Berlin, Chancellor Merkel went out of her way to say:

“Britain is essential and also more pro-European than some other countries. We want to have Great Britain in the European Union. We need Britain, by the way. I want to say this emphatically, because Britain has always given us strong orientation in matters of competitiveness and freedom and in the development of the single European market”.

This Government are actively engaged in close relations with Germany. After all, Germany is now the central power—the central economy—in the single market and therefore we all have to ensure that we are fully engaged with it.

Many noble Lords have quoted Keynes and said that they are already Keynesians. Halfway through the debate, I dashed out to find my copy of The Economic Consequences of the Peace, where on page 14 the young John Maynard Keynes argues against the very harsh reparations being imposed on Germany and that Germany was, after all, the natural centre of the European economy. I quote:

“Round Germany as a central support the rest of the European economic system grouped itself”—

it is talking about the 1890s and the 1910s—

“and on the prosperity and enterprise of Germany the prosperity of the rest of the Continent mainly depended. The increasing pace of Germany gave her neighbors an outlet for their products, in exchange for which the enterprise of the German merchant supplied them with their chief requirements”.

We are back to that position and we need to ensure that we erect the complex political mechanisms and exchanges in which we can ensure that we all manage to return to growth together.

There are tremendous problems in the European political system in which we operate about rhetoric and practice. Part of the problem, including in the past two or three months, has been that what people say is very often different from what they mean. The fiscal pact itself is a good example of that. The noble Lord, Lord Kerr, argues that we should have signed after all because it would not make any difference, to which one has to say that, if it will not make any difference, then it is not worth signing.

There are some very large issues in that respect. Institutional construction has been too frequent an alternative to policy change. The rhetoric on political union is still with us. Years ago when I was a graduate student, I remember Karl Deutsche saying that the concept of political union was immensely attractive to politicians because it means so many different things—indeed contradictory things—to many different people. The French and German Governments often believe contradictory things about what they mean by political union. “The European project” and “ever closer union” are phrases that are very loosely defined. We started with the threat of a financial transactions tax which was thought to be, and puffed up in Paris to be, a threat to the City of London. We are now in the process of discovering that what the French will propose is a stamp tax on share transactions at a much lower rate than the British already have for the City of London. What appeared to be an enormous threat turns out to be a very small step forward and attacks on Anglo-Saxon capitalism from Governments whose banks have been very rash in how far they have overextended themselves in lending to Greece and Portugal.

We need to promote, among other things, a greater interchange among economists, or at least a dialogue among economists. When I taught at the London School of Economics, I used to say to my international relations students that, if they went to lectures in the economics department, they would discover that according to the economics taught in the London School of Economics the German economy should have collapsed about 25 years before. I fear, at present, that if one follows the economics taught in German universities, we are pushing the Greek economy into collapse. We need to learn from each other and begin to understand how interdependent our approaches to financial economics and real market economics need to be. We also need to recognise that passing regulations is not the same as implementing them. Part of what we discovered about Greece was the extent to which it had simply ignored the rules of the single market. The noble Lord, Lord Pearson of Rannoch, said absurdly that the euro alone brought down Greece. What we are now discovering about the extent to which the Greek economy was running, with a structure of expensive restrictive practices and very extensive tax evasion, demonstrates that there was always a very large and deep domestically oriented problem there.

[Lord Pearson of Rannoch]

My Lords, perhaps I may put the question slightly differently. Would the Greek people be suffering as they are today without the project of European integration and its euro?

[Lord Wallace of Saltaire]

My Lords, in the context of a global recession, the Greeks would be facing a very severe run on the drachma and quite possibly also a default. As a number of people have remarked, the Greeks defaulted on a number of occasions over the past 120 years.

People talk also about a common European foreign and defence policy. When I am in Germany, politicians there often tell me they are deeply committed to it—and to a European army. However, they cannot explain the strategy, funding, structure or command structure that it would have. In practice, the United Kingdom contributes a great deal to a European foreign policy and to European co-operation in defence. The UK/France defence relationship continues to move forward very well. We are working with others to cope with the immensely complicated problems of the Syrian crisis. In Libya, we flew missions with our French, Belgian, Danish, Swedish and Italian partners. We have been working in Helmand with Estonian troops embedded in British battalions. When I went some weeks ago to the joint command centre at Northwood, I was briefed by a Latvian naval officer on the anti-piracy patrol. In practice we are very deeply embedded in co-operative defence and foreign policy in Europe.

We will have to work hard to defend liberalism in a recession. I mean liberalism in the broader sense of liberal societies, open markets and international co-operation. The noble Lord, Lord Judd, made a wonderfully liberal and internationalist speech. Nationalism, populism and protectionism thrive when unemployment rises and incomes go down. The noble Lord, Lord Monks, mentioned the problems in Hungary. The Commission is now in active dialogue with the Hungarian Government about the extent to which some of their new laws will fit with EU rules. I was fascinated to hear from my Finnish friends that there is now a sort of Eurosceptic International across the European Union, with Eurosceptics in Britain working with their Danish, Finnish and other colleagues internationally against internationalism, so to speak.

The problem of popular opinion across Europe is very severe. I suggest to the noble Lord, Lord Grenfell, that young people in Europe are often not immensely committed to internationalism. They take what they have for granted and they do not support the distant co-operation of elites through international organisations, which is what the European Union provides. It would be easy for us to give way to similar forces in the United Kingdom, in the belief that leaving the European Union would relieve us of international regulation. The demonisation of Germany is part of the way in which one finds easy answers to very complicated problems.

A number of noble Lords said that the fundamental underlying issue was that of Britain's place in the world. On my blog this morning, I came across references to a speech by Daniel Hannan MEP to the Conservative Political Action Committee in the United States, in which he praised Newt Gingrich and was in turn praised by Fox News. He made all the obvious references to Churchill and the Nazi threat, and suggested that Britain should leave Europe and blindly follow wherever the next American Republican Administration might lead us. Others would like us to become Switzerland with nuclear missiles or Norway without having to pay the very substantial sums that Norway contributes on a “voluntary basis” to the European Union. Our political leadership over the past 25 years, including the previous Labour Government, has failed to make the case for active engagement in Europe.

--- Later in debate ---

[Lord Pearson of Rannoch]

I was going on Pink Book figures, which include a number of contributions which we make to the European Union that are outside the ambit of the Treasury. The Pink Book figure of €10.3 billion last year is the correct net figure.

[Lord Wallace of Saltaire]

We will continue to disagree.

The noble Lord, Lord Kakkar, raised the working time directive and asked a number of other questions. We are working to ensure that it retains a secure economy-wide opt-out. We would welcome more flexibility on the areas of on-call time and compensatory rest. On the General Medical Council and the overinterpretation of language testing, I am confident that that is also an issue on which the British Government are actively engaged. I will write to the noble Lord further about that.

EU: Treaties

Lord Pearson of Rannoch Excerpts

Monday 30th January 2012 Lords Chamber

[Lord Howell of Guildford]

The noble Lord’s last words are the key to the matter. The treaty on the table is designed for the 17, although others may go along with it. It will be debated in the various Parliaments. It is designed for the 17 and involves degrees of surveillance and control that are not congenial from the British point of view; we believe that we can best proceed not by being within and making constant objections and delaying the whole process of the 17 that want to go ahead, but by being supportive from outside. That is the position, which seems perfectly sensible and constructive.

[Lord Pearson of Rannoch]

My Lords, do the Government agree with their own lawyers who have advised that it is illegal to allow the ECJ to police something that is not in the treaties—in this case, the proposed fiscal compact’s debt brake rule? Would it not be wiser to insist that the eurozone follows its own law in the hope that that brings an orderly end to the euro, with a return to national currencies at agreed initial exchange and interest rates? Is that not the only sensible way forward?

[Lord Howell of Guildford]

The noble Lord is letting his vivid imagination roam into the future. We have not reached the situation that he describes; perhaps we never will. I have made it clear that we reserve our position on how and which institutions should be used and how they may usefully be used to police the new intergovernmental treaty. These matters are yet to be decided; the position, I repeat, is reserved.

EU: Disintegration

Lord Pearson of Rannoch Excerpts

Thursday 26th January 2012 Lords Chamber

Asked By

[Lord Pearson of Rannoch]

To ask Her Majesty’s Government whether they have contingency plans for the disintegration of the European Union.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the Government do not envisage the disintegration of the European Union. The United Kingdom remains a full member of the EU and we will continue to work hard with our many allies throughout Europe to advance our national interests, as well as those of all other EU member states.

[Lord Pearson of Rannoch]

My Lords, both Chancellor Merkel and President Van Rompuy have said that if the euro breaks up, the EU itself will follow suit. In case they are right, should we not plan to develop our trade and ties with the countries of the future, most particularly and obviously with the Commonwealth? Secondly, should we not be encouraged in this initiative by the knowledge that the EU was supposed to bring peace and prosperity to Europe, whereas in fact it has brought—

[Noble Lords]

Peace.

[Lord Pearson of Rannoch]

My Lords, that is now wishful thinking. The EU has in fact brought austerity, slump and civil unrest. What is the EU for? Why do we need it at all now?

[Lord Howell of Guildford]

My Lords, we have to be clear-sighted about the future. In one respect the noble Lord is right: all the great growth in new consumer markets, and the areas in which we must succeed as a nation if we are to maintain—let alone increase—our living standards, tend to lie in the emerging powers of Asia, Africa and Latin America. That is where my right honourable friend the Foreign Secretary has emphasised all along that we must develop our commercial, economic and political clout in order to survive. In that sense the noble Lord is right. However, at the same time, Europe is our neighbourhood and our biggest market. It is full of innovation and potential for the future. There are eurozone difficulties—no one denies that—at the moment, although with the European Central Bank now issuing unlimited three-year loans to all banks in trouble, there is at least a breathing space ahead on the question of the eurozone itself.

As to the specific matter of the Greek debt structure and how it will be resolved in the next few days, I really could not comment. However, one obviously hopes that it will be an orderly affair.

EU: December Council Meeting

Lord Pearson of Rannoch Excerpts

Wednesday 11th January 2012 Lords Chamber

[Lord Howell of Guildford]

The precise issue was that the safeguards against additional incursions into financial interests, of which this country holds a very large proportion in Europe, were not going to be agreed. This led my right honourable friend the Prime Minister reluctantly to say that he could not agree to the kind of treaty being proposed. The other 26 countries are looking at it—as are we, in participating in the current operations and examination—and are finding out whether it works for them. I am not sure that in the end either the 26 or even possibly all 17 countries will be really prepared to go along with every detail of the treaty so far. However, a new draft has been produced that already begins to adjust somewhat to the concerns that my right honourable friend voiced and that other countries have expressed as well.

[Lord Pearson of Rannoch]

My Lords, was the European Union not supposed to bring peace and—

[Lord Campbell of Alloway]

Is the noble Lord aware that this question of ever closer union could not be agreed at the Messina conference and could not be interpreted in the Rome treaty? As a result, a compromise amendment was made that the Court of Justice could deal with the matter, which is where we are today. We are now in the twist of a federal demand that we should remove, with other people, our residual sovereignty for imposed financial restriction, to which I personally object.