European Union (Approval of Treaty Amendment Decision) Bill [HL]

Debate between Lord Williamson of Horton and Lord Liddle

Wednesday 23rd May 2012 Lords Chamber

[Lord Liddle]

The noble Lord, Lord Davies, is absolutely right. In addition to infrastructure, I think that we need a more moderate pace of deficit reduction. The Commission argues that the fiscal compact gives you all the flexibility that you need in a crisis situation. That should be done. Secondly, we should be mobilising the structural funds to tackle the employment issues, particularly the fact that in countries such as Greece and Spain, getting on for half of young people are out of work which is completely unsustainable socially and politically. It is also the case that a major competitive weakness of southern Europe is the low skills level of its workforce. That must be addressed from Europe through the structural funds—a crash programme of social investment in human capital.

Thirdly, the eurozone needs more balance between the strong and the weak in the urgent competitiveness adjustments that it must make. Stronger countries such as Germany have room for manoeuvre. Noble Lords talked about higher wages for German workers, which are certainly affordable. German wages have gone up very little despite the country’s enormous export success. I am glad that there is now a consensus between the Social Democrats and Christian Democrats on the introduction of a national minimum wage. Germany would have to tolerate only a bit more inflation to help the south, which is suffering debt-trapped deflation. That would enable the ECB to meet and maintain its target level of inflation of around 2% across the whole eurozone.

Our hope is that the political ramifications of the Hollande victory will result in a wider and bolder set of actions to build a stronger firewall, recapitalise the banks, adjust the pace of deficit reduction, offer immediate help on jobs and increase demand in countries with surpluses. That will not get us out of the need to make harsh adjustments. However, if we continue with collective austerity it will lead to collective suicide.

What is the coalition’s view? Is it still backing Mrs Merkel’s priority of fiscal austerity, which has been its policy at home for the past two years? Or is it undergoing a latter-day Keynesian conversion to the need for growth in Europe? If the eurozone can have a plan B, can we not have one at home? That is what we need. It is very odd for a Eurosceptic Conservative Party to argue that it is all right to have additional public borrowing through the EIB and project bonds at European level, but that of course it would be a complete disaster to tolerate any flexibility in the public borrowing of the UK. I find this an amusing contradiction in the present situation.

That confusion and contradiction, with a sharp eye for public relations, have been characteristic of the Government’s conduct of their European policy. As the noble Lord, Lord Williamson, said, they treat the eurozone as a convenient whipping boy to cover their own failures. As we know, last year growth in the eurozone was higher than in the UK. I am interpreting what the noble Lord, Lord Williamson, said.

[Lord Williamson of Horton]

It was a rather broad interpretation: the size of the Atlantic.

[Lord Liddle]

I apologise to the noble Lord, but the point is surely valid. Growth last year in the eurozone was twice that in the UK. Therefore, to blame the eurozone for the present double dip is nonsense.

The big point that the Eurosceptics fail to understand is that we cannot avoid the consequences of the euro by being out of it. In or out, our future is deeply affected because of our exports and the interlinking of our financial system. As Robert Chote said, if Greece exits, who knows what will happen? We may never in the foreseeable future recover the level of output that we had in 2008. A policy of splendid isolation from the continent was never realistic for Britain, but in the world of globalisation and economic integration it does not work at all.

Nor is our isolation very splendid. We are losing influence and clout in Europe to a dangerous degree. I will give one telling illustration. The Prime Minister claimed that the reason he used the veto and walked out of the December European meeting was that his partners would not accept a set of proposals that he tabled at 2 am in order to protect the City of London. A couple of weeks ago, on the capital requirements directive, the Chancellor, George Osborne, and the British for the first time found themselves outvoted by 26 to one at ECOFIN on a key question of financial regulation. The Chancellor has now recognised that he has to go along with the majority. That is not an effective use of the British veto. It just shows how influence is draining away from us at the moment.

European Union Bill

Debate between Lord Williamson of Horton and Lord Liddle

Thursday 23rd June 2011 Lords Chamber

[Lord Liddle]

I will not make any comments on the amendment of my noble friend Lord Lea, which the Minister dealt with very clearly. We on this side of the House greatly appreciate the courtesy with which the Minister has dealt with the many points that we raised in the long debate on the Bill—as has the noble Lord, Lord Wallace of Saltaire. However, what I failed to hear in the Minister's summing-up was an acknowledgement that the Bill that leaves this House is very different from the Bill that arrived, and that on fundamental points the House has amended it in a way that we hope the other place will take due notice of. We have reduced the compulsory requirement for referenda on 56 issues—I know that this figure is disputed by the Government—to three; we have clarified the sovereignty clause in a way that satisfies former Lord Chancellors; we have introduced a 40 per cent turnout threshold for a referendum to be binding; and we have passed a sunset clause that will require a future Parliament by positive resolution to revive the Bill. These are very significant changes and I hope that on the Government’s side there is an acknowledgement that they must think seriously about the views that were expressed on all sides of the House in a very broad consensus that the Bill is badly flawed.

[Lord Williamson of Horton]

I did not intervene earlier because I got the impression that this was not only Third Reading but probably fourth, fifth and sixth reading, given the many points that were made that did not appear to relate in any way to Clause 18. I shall be extremely brief in saying that it is correct that the Bill that now goes to the House of Commons is different because we have fully considered it and made changes, and we look forward to a serious and positive response from the other House.

I will make only one further point. If the Bill becomes an Act, I share the view of the Government on one important point; I hope that it will seriously improve the possibility of a better connection between the people and the European Union. That is the primary intention of the Bill and, however much it has changed, it is still very important that we should seek to achieve that.