European Union Bill

Austin Mitchell Excerpts

Tuesday 25th January 2011 Commons Chamber

[Mr Cash]

The hon. Gentleman is absolutely right on that important point, and I was immediately coming to it—I have in my hand the explanatory memorandum, to which I referred before he intervened, precisely for that purpose. It stands in the name of the Economic Secretary to the Treasury. A scrutiny matter is still outstanding, so paragraph 26 comes under the heading of “Other observations” and states:

“The Government regrets that the Scrutiny Committees”—

those of the Commons and the Lords—

“did not have time to consider this document before it was agreed at Council.”

I can tell the House that that happened because we were in a caretaker period and the European Scrutiny Committee, as such, was not sitting in that interregnum. The memorandum continues:

“It should be noted that whilst agreement on behalf of the UK was given by the previous administration, cross-party consensus had been gained.”

That is why I made the point that the responsibility lies with both this Government and the previous one.

[Austin Mitchell (Great Grimsby) (Lab)]

I am following the discussion with great interest and some concern. As I understand it, we are talking about a decision that could have been taken, and was being taken, by a majority vote, and our outgoing Chancellor could not have stopped it anyway. Is that correct?

[Mr Cash]

People keep saying that, but let us examine the actual operation of the European financial stability mechanism. The final decision is taken under the regulations concerned—this is what happened in the context of Ireland—only after the request has been made by the member state. I do not know whether this is one of the reasons why the current Taoiseach—only for the time being, it appears—is in deep trouble, but that is possible. What I do know for certain is that the prescribed procedure laid down under the regulations made under article 122 of the treaty on the functioning of the European Union was infringed by the manner in which the International Monetary Fund, the European Central Bank and others moved into Dublin before a request had been made. As we can recall, the Irish Government were saying that they had not made a request and that they did not need the money. It is also true to say that Mr Socrates is saying much the same at the moment.

[Austin Mitchell]

The hon. Gentleman is being very patient with us and the serious explanation he is giving is well worth considering. I also understood that article 122 was intended to apply to a destabilisation of the euro because of some kind of natural disaster. The destabilisation that took place was caused by the inherent faults in the euro, so why has article 122 been extended to cover a destabilisation resulting from the cracks and failures of the euro itself, given that it should have applied only to natural disasters?

[Mr Cash]

The hon. Gentleman and I have engaged in debates on the European question since we first met. I have the greatest respect for him and he has hit the nail right on the head here, because this problem does not just arise because of our exposure to what happens in Portugal and Spain in the future; it also arises from the lack of a sound legal base for the decision taken in the first place by the outgoing Chancellor and endorsed subsequently by the incoming Chancellor. We know that there was a consensus and that an agreement was reached—that answers the question put by the hon. Member for Ilford South. I would not be going about this if I did not believe that substantial matters of principle and of huge cost to the taxpayer are involved.

[Mr Cash]

I was not necessarily here when an impression was being given one way or the other. What I do know is that I have an accurate record of what did take place. I also have with me an article from Monday 10 May containing what are clearly accurate descriptions of the position of the then Chancellor—I believe he was just still the Chancellor then, because the coalition agreement had not been entered into. I recall writing to the Prime Minister on that day, suggesting, among other things, that he should go for a minority Government. I also said that if he was determined to go down the route of a coalition, he should require the Liberal Democrats to abstain on any matters relating to Europe that came up. That possibly explains some of my concerns as matters have developed and more and more European decisions, roadblocks and other difficulties in respect of the decisions we took in our manifesto have emerged.

[Austin Mitchell]

I am grateful to the hon. Gentleman for giving way; he is very patient. I normally agree with his views, even though I usually express them in rather shorter compass. He still has not answered my question, however, about whether what was agreed at the meeting was a distortion of the original purpose of the machinery, which was intended for coping with natural disasters and should never have been extended to destabilisation and problems caused by the euro.

--- Later in debate ---

[Mr Cash]

The short answer is not at all—that is the problem. That is why I tabled the amendment. I am very sad that more people do not have the opportunity to listen to this, because we are talking about a grand total of £8 billion of British money, which is a vast amount given the austerity that is expected of people. After the Irish bail-out payment has been excluded from the same zone, there is also the completely unwarrantable notion to which the decision commits us, unless it is unlawful and is challenged. I invite the Government to challenge it in the European Court—that is the route they should be adopting. That is what I have recommended to the Chancellor. I said, “You must vote against this and challenge the legality of it.” Whether or not he entered into some understanding at the time is a matter to be unravelled, but what is certain, to come back to the point made by the hon. Member for Great Grimsby (Austin Mitchell), is that the decision does not come within the framework of article 122—and the European Scrutiny Committee believes the same.

[Austin Mitchell]

I am puzzled, because the hon. Gentleman is attaching his faith to the €400 billion fund, which would mean that the new arrangement, which was agreed by the then Chancellor and the European Council on 9 May, would not be necessary. That is a puny fund compared with the scale of the problems. If Portugal goes and Spain follows, all that fund will be absorbed and will be necessary, and we will have to fall back on the provisions of article 122. The Irish loan has been portrayed by the hon. Gentleman and the Chancellor as a one-off loan between friends and business partners, but it must have been paid under the article 122 arrangement, so we have already sold the pass.

[Mr Cash]

The hon. Gentleman is not wrong to say that the situation has already taken place for Ireland, but that must be seen in light of what has yet to be established—whether or not it was lawful. More investigation is needed on whether that payment would ultimately be ultra vires, or beyond the law, and therefore reclaimable. I do not want to go too far down that route other than to say it needs to be looked into. Furthermore, the financial stability mechanism has not yet passed the scrutiny of the European Committee that is meeting on 1 February, so it is still subject to a decision of the House, although some might argue that the Rubicon has already been crossed.

[Austin Mitchell]

This is an important amendment for which I shall certainly vote, and I hope that the hon. Gentleman pushes it to a Division so that I have that opportunity. The legality of the decision and the use of article 122 in this way—for a purpose for which it was not intended—is subject to a decision by the European Court, which is a federal institution and always rules in favour of the federal side of the argument. So, I am afraid that his hope that the decision will be ruled illegal will not prevail.

[Mr Cash]

That is a general proposition with which one might agree in many instances, but analysis of the use of article 122 in this case, if it is examined as carefully as it should be, would give rise to so many uncertainties that the Court would have grave difficulty in trying to justify its use. However, that is looking to the future.

--- Later in debate ---

Do we wish to have our criminal justice and civil justice system—our legal system—determined in this House, or do we want to hand it over to the European Union, the European Commission, the European institutions and the European Court of Justice for them to rule on?

[Austin Mitchell]

I rise to speak for two reasons. First, I do not want all the speeches from Opposition Members to be an unremitting chorus of euro-enthusiasm. My hon. Friend the Member for Luton North (Kelvin Hopkins) and I are stalwart opponents, and I do not want the chorus from the Opposition Benches to be like the slaves chorus from “Nabucco”, singing the praises of the instrument of our own punishment—the European Union. Secondly, I support some of the amendments—81, 8 and 79 in particular.

I am very supportive of amendment 81, which was tabled by Members representing two glorious ports—I did not know they were fishing ports—in Essex, because it involves an important principle. There are constant attempts to remove our national limits, which were agreed when we entered the common fisheries policy in 1972. A few months before we began our entry negotiations, the policy was stitched together to get European hands on our fish, but we managed to preserve some national limits: the 6 nautical miles around most of the English coast, and the 12 nautical miles around north Britain and Scotland. We police the waters up to the median line, or 50 miles.

When I went out on a fisheries protection vessel, I was distressed to find that when the crew detected European vessels over-fishing, they did not have the right of hot pursuit, so all the European vessel had to do was to beetle across the median line and it was safe. My suggestion that the protection vessel should shell and sink the European vessel was taken as an unfriendly act towards Europe and, for some reason, discounted, but it is important to preserve our waters.

My concern arises from the recent Hugh Fearnley-Whittingstall programmes, which provided a very good service by highlighting the problem of discards. They are inherent among fish allocated by catch quotas. Indeed, if one allocates fish by catch quotas in mixed fisheries, one is always going to get discards. The discards increase as the quotas go down, because fishermen are bound to catch fish that are not in their current quota.

Indeed, I wrote to Fearnley-Whittingstall, suggesting that it would be a brilliant idea to establish a very expensive restaurant on a cruise ship that went round picking up Grimsby fishing vessel discards and cooking them for an exclusive clientele at enormously high prices. He does not seem to have implemented it yet, but it is a viable idea. It is very difficult to stop discards when there is equal access to a common resource, but that is the basis of the common fisheries policy to which Ted Heath unfortunately agreed in 1972 as the price of entry into the EU. He was so desperate to go in that he accepted that condition.

We certainly have to work to control our waters, as amendment 82 suggests, and to stop or reduce discards. There are various ways to do that. I am hoping that Fearnley-Whittingstall will come along to the all-party parliamentary fisheries group to tell us his ideas. I will not tell the Committee mine, because I would go off the subject.

[Kelvin Hopkins]

As my hon. Friend knows, I agree entirely with everything he is saying. Does he agree that we could operate British waters in the way that Norway operates its waters? It controls its own fishing grounds, every fishing boat is monitored, there are no discards and there is no over-fishing. It protects its fish in a proper way. That can be done only if countries husband their own resources in their own fisheries. That is the only way forward.

[Austin Mitchell]

My hon. Friend is absolutely right, as usual. The key is the ability of a nation to control its own waters up to the 200-nautical-mile limit, which it would have been sensible to retain, and which we could have retained had we negotiated harder in 1972, but we did not. Only a nation can conserve its own national resource—what is handed on to the next generations of fishermen. The Heath Government made a tragic decision from the point of view of the fishing industry. I want to reverse that, and we should work to do so. I still want to pull out of the common fisheries policy. Perhaps it would require a few gunboats around the coast to establish that.

[Martin Horwood]

I understand the hon. Gentleman’s point, but does he not fear that if we returned fisheries entirely to national competence, not every nation would be quite as observant of their own rules as the Norwegians, and there might be a free-for-all that would fatally damage the British fishing industry?

[Austin Mitchell]

That, of course, is nonsense, because nations that have taken control of their own waters and their own 200-nautical-mile limit, such as Iceland, have operated very good and effective conservation policies. It is only nations that have to admit other nations into their waters, under force of European law, that cannot do that.

--- Later in debate ---

[Kelvin Hopkins]

Spanish fleets would not fish in our waters, because the idea is that countries would fish in their own waters. I cannot see the problem and I agree with my hon. Friend.

[Austin Mitchell]

My hon. Friend is absolutely right. The Liberal Democrats are slavish in their idealism of Europe at any price, and will abdicate any British interest to express their devotion to the nefarious construction called the European Union.

[Martin Horwood]

rose—

[Austin Mitchell]

If the hon. Gentleman wants to express more devotion to the farce of the European Union, he is welcome to do so.

[Martin Horwood]

I am just intrigued about precisely what method the hon. Gentleman would use to defend our waters. The Icelanders use gunboats. Is he advocating gunboat diplomacy from the Labour Benches?

[Austin Mitchell]

Frankly, yes. However, I am sure that the hon. Gentleman is not so distrustful of our European partners and friends that he believes that if we took legal control of our waters, they would come in and try to steal our fish. Is that his estimation of their character? Is he telling us that there are nations of thieves that would come in and steal our fish if we took our own waters, as is our right? Is that what he is saying? Apparently not.

Amendment 81 expresses an important principle that we need to express and defend constantly. The amendment is a way of defending that principle, so I shall certainly vote for it if it is put to the vote.

I shall move on to amendments 8 and 79. I congratulate the hon. Member for Stone (Mr Cash) in drawing the attention of the Committee to this situation, because it is extremely dangerous from a British point of view. He said essentially that we will be liable, under article 122 of the treaty on the functioning of the European Union, for difficulties produced by the failure of the euro, and that we will have to make a contribution. That will be decided on by qualified majority voting. If correct, that is an appalling situation. It is important for the Government to tell us tonight whether it is correct.

In my view, one of the greatest achievements of the previous Prime Minister was that he kept us out of the euro when he was Chancellor, against the overwhelming enthusiasm of the then Prime Minister, who saw joining the euro as a romantic gesture of support for Europe—almost an emotional spasm of support for Europe—against the wishes of the majority of the Cabinet, and against the pressure of the Liberal party, which has always been slavishly devoted to any European instrument, however damaging the consequences.

[Martin Horwood]

indicated dissent.

--- Later in debate ---

[Austin Mitchell]

During the debate on the exchange rate mechanism, I remember the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) leading a huge Liberal crowd up and down Whitehall chanting, “Move to the narrower bands now! Move to the narrower bands now!” That was the Liberal party’s contribution to that great debate. It is slavishly attached to European gestures such as the euro, as was our former Prime Minister. The previous Prime Minister, when Chancellor, kept us out. That was a great achievement. He kept us out and warned that the regime was unstable.

There cannot be a common currency without a common Government to back it and redistribute money to the regions that are damaged by the common currency and the higher interest rates imposed by it. The basic problem is that the euro cannot work, because it brings together regimes under one currency that vary enormously in their productivity and power. The southern economies are not only weaker, but insolvent to boot and certainly uncompetitive. Those uncompetitive economies cannot be united in a currency with the powerful German economy, which is extremely competitive. Inflation is kept very low in Germany by investment, the restructuring of the economy and the agreement with the unions to keep wages down. It is impossible for economies such as Greece, Spain, Portugal and Ireland to remain competitive in that situation. To be competitive, they face a constant diet of cuts and attempts to get their inflation rates down to the German level. That is difficult and it has to go on for years. By joining the euro, those countries effectively said that they would deflate their economies, punish their people and face riots in the streets for 20 or 30 years in a desperate attempt—which will not work—to get their levels of competitiveness down to the same as Germany’s. That situation does not work.

[Kelvin Hopkins]

I agree entirely with my hon. Friend again. It is interesting that there has been friction recently between France and Germany because France wants to integrate the whole European economy more deeply and Germany is holding back. Germany can see that it will constantly have to shell out euros—or disguised Deutschmarks—to help the poorer countries in Europe, and it does not want to do that because it would become the paymaster of the whole of the European Union in perpetuity.

[Austin Mitchell]

That is true. Under the old system, the inflation rates in France and Italy were higher than that in Germany, so they were constantly getting out of kilter and becoming uncompetitive. They constantly resorted to devaluing, which brought them back to a competitive level because it reduced their costs of production in terms of foreign currencies. There is a history of France and Italy devaluing. They cannot do that when they are in the euro.

[Mr Cash]

Would the hon. Gentleman be interested to know that the Library has given me some figures showing that our balance of payments deficit with Germany was £12 billion in 2009? Heaven alone knows what it is now. Between 1999 and 2009 there was a deficit of £5 billion between the other 26 EU member states and ourselves, but we have a surplus of £11 billion with the rest of the world. His point is extremely sound—the EU is just not working.

[Austin Mitchell]

I am grateful for that point, which is absolutely true. We are earning a surplus in the rest of the world, which then goes as a tribute to finance our deficit in Europe. Before we entered the Common Market in 1972, we had a surplus in our trade with Europe. It then became a deficit, which has become ever heavier as the years have gone on because of our economy’s uncompetitive nature compared with the German economy. All the other weaker European economies face the same problem, and there is no way for them to get around it without facing a diet of cuts, freezes and squeezes for decades, and having to depress the living standards of their own people to keep costs down. That strain is built into the system, which Germany dominates and swamps because of its competitiveness and low inflation. Good luck to it—it has worked for that and run its economy in a very sensible fashion, but a common currency cannot be maintained in that situation. There will therefore be crises.

Those inevitable crises have, under article 122 of the Lisbon treaty, now been portrayed as the results of a natural disaster. That means that we, who have wisely stayed out of the scheme and warned of the consequences of going ahead with that insane regime, must also contribute to cost of clearing up the mess that is implicit in the system. That is a monstrous imposition.

I take it that at his last Council of Ministers meeting on 9 May, our previous Chancellor was conned. He was told that article 122 would apply under qualified majority voting, so it was no use his opposing it because we would be bound by it in any case. That was just not true, because if it applies to mutual support in the event of natural disasters, it cannot apply to faults inherent in the structure of the euro itself. That is not a natural disaster; it is a folly of man.

[Mr Cash]

I add a point that I really ought to have made in my own contribution. When the European Council arrived at the new mechanism that it has just set up, which the Prime Minister announced the other day, it used the most extraordinary language. It used the expression that there was “no need” for the continuation of the mechanism that was set up last May. It is not anything to do with need, however; it is about the fact that they know perfectly well that it was unlawful.

[Austin Mitchell]

Absolutely right. We need to be intellectually devious in trying to read through European documents, because they are extremely cunningly written and always cover up the reality very well. The same is true of Government statements on matters European. The Government do not want the full horror to emerge, so statements are rewritten to make them safe, saleable and acceptable. Once again, the hon. Gentleman is correct, and he has done the Committee a great service today in warning us of the situation and pointing out the consequences if it is prolonged. I believe that the arrangement extends to March 2013, or is it May?

[Mr Cash]

March.

[Austin Mitchell]

Right, and then it will lapse. Until then, we could be liable for enormous sums. Imagine what the British electorate would say. We have already extended a massive loan to Ireland, even though the Chancellor tells us that our country is over-borrowed and cannot borrow any more because world markets will cancel our credit cards and stop our credit on the bond markets. Suddenly, however, he can borrow huge sums—billions—to help Ireland. He says that it is a one-off and not a precedent, but if it is carried out under article 122 of the Lisbon treaty, it is a precedent for acceptance of a mechanism that is designed to deal with natural disasters.

The hon. Member for Stone hoped that the mechanism would be ruled illegal by the European Court, but I have given up faith in the European Court. It never rules how I want it to rule, whereas our courts do sometimes. It is probably composed of Liberal Democrat jurists, for all I know. It certainly gives that appearance.

[Kelvin Hopkins]

Again, I agree entirely with my hon. Friend. The ECJ has shown itself to be a political organ, not a legal one, by taking the side of employers in the Viking Line dispute and other cases. It is a court of the business class and of big business, not a court for ordinary people.

[Austin Mitchell]

That is true. It gives any verdict one wants, provided that it supports and advances the EU. That is the nature of the European Court, so should we ask that body to rule on the legality of treating article 122 as an all-purpose rescue operation to which we have to contribute?

The Minister smiles—indulgently, I hope. I hope that he will explain the Government’s view on the matter, because to my mind it is crucial that amendments 8 and 79 are accepted. I am glad to hear that the hon. Member for Stone will force a vote, because they are key amendments. We need to be sure that the British electorate will not be faced with a series of massive loans, such as the Irish loan, to support Portugal, for instance, or Spain if things go belly-up there. That is quite possible, and the costs there would be huge because Spain has a much bigger population than Ireland, Greece or Portugal. Why should an electorate who are facing a blitzkrieg of massive cuts and tax increases welcome with joy a decision to fork out more billions to help people whom we warned that they were entering into a disastrous situation by taking on the euro? That would be totally unacceptable, and the Government would be laughed out of court.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman will be aware that people from the UK are very generous people, and that they always like to help, but they do not have bottomless pockets and cannot keep on bailing out every country in the EU. Does he agree that a line has to be drawn in the sand somewhere, so that lending to other countries and subsidising them stops?

[Austin Mitchell]

I agree absolutely, and that line in the sand is here. Actually, it has to be a line in the concrete, because we cannot go on making contributions under article 122, which is meant for another purpose entirely.

[Ben Gummer]

Notwithstanding our treaty obligations, it seems to me that the hon. Gentleman is getting hung up on article 122. Is he really arguing that even if it were in our economic interest to support the bail-out of a country whose trade with us means that intervention is necessary, he would still oppose it?

--- Later in debate ---

[Austin Mitchell]

I have not actually said that, have I? I have said that the Chancellor treated the Irish case as a one-off, but it is not. It opens the door to giving aid to other countries that have put themselves in the same situation through a foolish adherence to a euro that is fated to collapse. I make no judgment about the Irish case, although it is a big bill to pay for a country that the Chancellor tells us is over-borrowed and has no credit on the world market. Why should that country start raising huge loads more money to pay other countries because of the failures of the euro?

[Stephen Gilbert]

I take the hon. Gentleman’s point, but can he imagine a situation in which rather than being a giver, the UK is the receiver of aid under that arrangement? Is he really saying that rather than get the aid that our financial sector might hypothetically need in a quick and timely way, he would want a referendum lock to apply?

[Austin Mitchell]

I am afraid that that is ridiculous. I was leaping with joy when the hon. Gentleman, a Liberal Democrat, said he was taking a point that I had made. I thought that sense had at last dawned, but alas it turned out to be only stupidity. Nobody is suggesting that the UK would want Europe to be liable if our system failed. The crucial point is that we did not enter the euro. Having not entered it, we should be immune from the consequences imposed on those who did. That is all I am saying. I do not want European aid. The wisdom of former Chancellors in keeping us out of the euro allows us to adjust our exchange rate. Other nations have problems because they cannot do that. We have had a 25% devaluation, and the pound could—and should, in my view—go lower. That reduces the cost of our currency and makes us competitive once again. That is our adjustment. We do not need help or aid because we have the flexibility of being outside the euro. Does the hon. Gentleman want this economic education class to continue or will he keep quiet?

[Stephen Gilbert]

Is the hon. Gentleman really saying that we are both outside the euro and outside the effects of the euro? Is he saying that Portugal, Ireland, Italy or any country that needs European financial help in future can be allowed to collapse, and that that will have no effect whatever here in the UK?

[Austin Mitchell]

Oh it is difficult talking to Liberal Democrats! I did not actually say that we would be outside the effects of the euro. In fact, the foolish deflation that is going on all over Europe damages us, because half of our trade is with Europe and we want our exports to Europe to increase. With our ability to devalue, we have the ability to increase our exports, and they are increasing for the first time in many years—thanks to devaluation. I want markets in Europe to be healthy, but I do not want the British taxpayer to be asked to support Europe in its folly.

[Kelvin Hopkins]

I want to reinforce what my hon. Friend is saying. We have a massive trade deficit with the rest of the EU. Even if in some mad world we decided to have a trade block, that would be beneficial. We would have more money to spend on our own things and to generate our own economy, and more money to spend elsewhere in the world. The idea that we benefit massively in trade from the EU is complete nonsense. It benefits massively from having us next door.

--- Later in debate ---

[Austin Mitchell]

That is true—and then the EU forces us to eat its overpriced agricultural products. The EU gets it all ways. It steals about £3 billion-worth of our fish every year through the common fisheries policy, and costs us about £18 billion on the common agricultural policy, and then expects us to buy its overpriced exports.

[Martin Horwood]

Is the hon. Gentleman aware that Iceland has just unilaterally increased its mackerel quotas, which if anything—I would not use the word “stealing”—is potentially damaging to Scottish fish stocks? That is quite a major diplomatic issue at the moment and it has occurred under precisely the regime that he is recommending.

[The Temporary Chairman (Mr Graham Brady)]

Order. May I suggest that we are ranging a little wide? Ranging as far as discussing Iceland might be out of order.

[Austin Mitchell]

You are absolutely right, Mr Brady. By raising mackerel, the Liberal Democrats were seeking to bring a lot of red herrings dancing into my view. I hold no brief for the Scots who want the Icelanders to stop catching mackerel. They have a perfect right to do so. It is daft to talk about cutting quotas of imports for Icelandic fish, which we need, to punish Iceland for mackerel fishing.

That Liberal Democrat red herring has robbed and wasted the Committee’s time and delayed my final peroration. The final word from me is this. The situation can be remedied by the amendments tabled by the hon. Member for Stone, particularly amendments 8 and 79. It should be remedied, because it is potentially disastrous to accept that article 122 of the Lisbon treaty can be applied to extract support from the UK for the failures of the euro, when we are not members of the euro. I hope that the Government clarify that position, and that the amendments are made.