EU: UK Membership

Baroness Anelay of St Johns Excerpts

Tuesday 25th November 2014 Lords Chamber

[The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)]

My Lords, I also join other noble Lords in congratulating the noble Lord, Lord Liddle, on introducing this debate. I particularly congratulate my noble friend Lady Smith of Newnham on her excellent maiden speech.

The debate of the noble Lord, Lord Liddle, has proved again that the question of the United Kingdom’s membership of the European Union remains one of the most important and divisive issues in British politics. There has been passion, commitment and enlightenment —by some definition. Others might disagree on the definition, but I have seen enlightenment. However, that has led to very different conclusions. There is an election next May and I suspect that we will see a lot more of that debate to come.

We have heard noble Lords such as my noble friend Lord Phillips of Sudbury and the noble Lord, Lord Howarth of Newport, but particularly my noble friend Lord Inglewood, posing the question of how we make sure that the electorate can make up their mind correctly. My noble friend Lord Inglewood asked what we in the Government were going to do to protect the electorate from political snake oil. Let us not talk down to the electorate but respect them and listen to them. Let us keep to our principles and say what we really mean. Noble Lords today have certainly said what they really mean, which is refreshing.

As the Prime Minister outlined in his speech to Bloomberg in October last year—to which the noble Lord, Lord Liddle, referred in part—the world is changing and the EU must respond and reform. We have made it clear as a Government throughout—my right honourable friend the Prime Minister continually makes it clear—that we have achieved much without treaty change. There is much more that we can and must do without treaty change. We have work ahead. We need change to ensure: that the EU becomes more competitive in international markets, through smarter regulation, a deepened single market and more free trade agreements; that the EU becomes more democratically accountable by strengthening the role of national Parliaments in EU legislation and ensuring that the European Council sets the strategic agenda; and that the EU does more to protect the interests and the rights of member states, both inside and outside the eurozone.

We have made already progress by reducing the EU’s seven-year budget for the first time in the EU’s history, reforming the common fisheries policy and exempting the smallest businesses from EU red tape. My noble friend Lord Howell asked how reform will come about. We must be bold. My noble friend Lady Smith of Newnham made clear that we must form alliances, just as my noble friend Lord Howell said. Indeed, the Government are not alone in seeing a need for reform. Many other European Governments agree, as do many representatives of industry. We have been engaging in those alliances. My right honourable friend Philip Hammond has been spending a lot of time this summer and last week on finding a way forward, travelling throughout Europe, meeting his counterparts and making alliances, out of which come practical, pragmatic changes.

Let me quote a couple of EU heads of government. The Italian Prime Minister Matteo Renzi said:

“We want better Europe, not more Europe … A very balanced Europe, against the red tape of bureaucracy”.

As my noble friend quoted, the Dutch Prime Minister Mark Rutte has called for:

“Europe where necessary, national where possible”.

We agree. As my right honourable friend the Foreign Secretary has travelled through Europe, he has been building a strong coalition, which we need to continue to build.

My noble friend Lord Bowness posed a question against the background of what is happing now, both within government, Parliament and some think tanks—not one of the think tanks of the noble Lord, Lord Liddle, I hasten to say. I am sure that an article in the press yesterday spurred my noble friend to ask: “What about Article 50?”—the treaty of Europe. He wanted to know what the Government thought about that and what the implications were. Whatever others say, they do so in a personal capacity and there will be a lot more of that from every single political party—and from none—as we go forward to the next election. The Government are not considering invoking Article 50. We are clear that Europe must change to be more competitive, flexible and democratically accountable, and we believe that we can work with our EU partners to achieve those reforms—so Article 50 does not come into it.

The noble Lord, Lord Liddle, was very clear, as were others around the House, in putting the economic case for membership of the European Union. Of course, I know that the noble Lords, Lord Stoddart, Lord Pearson of Rannoch and Lord Willoughby de Broke, totally disagree with the way in which those figures have been produced. I agree with the noble Lord, Lord Liddle. The EU is the world’s largest and wealthiest common market. Through our membership of the EU, British businesses have free access to this market, its goods and its skilled labour. Some 40% of UK exports go to European markets and four of our top five export destinations are EU member states. The other is the US, with whom the EU is currently negotiating a free trade agreement. TTIP would not be negotiated now were it not through the EU. Around the world, the UK is seen as the gateway to Europe where we are the top destination in the EU for foreign direct investment.

I agree with my noble friend Lady Ludford about the advantages that membership of the EU gives to the UK with regard to global influence. The noble Lord, Lord Radice, kindly referred to David Lidington. I was grateful for that. He was right to quote him and I appreciate the work that my right honourable friend is doing.

I agree entirely that remaining a member of an EU with 28 member states gives the UK a stronger voice in international affairs. It gives us, for example, more influence when negotiating free trade agreements with key international markets such as India, China and the US, to which I have already referred. I agree with the noble Baroness, Lady Morgan of Ely, that it gives us a stronger voice when we are talking about security and matters such as the fight against Ebola, which is not only a threat to millions of people and their security in west Africa, but elsewhere in the world.

My noble friend Lord Maclennan of Rogart, along with the right reverend Prelate the Bishop of Coventry, made a point of reminding us of the importance of the EU. Every day we think of the EU it reminds us that its birth was after a period of conflagration in the early part of the last century. Since then we have been working together and arguing. Boy can we argue, and why not? We do that in Parliament so why not in Europe? We can argue and come to sensible, pragmatic decisions where we can make concessions to each other. We can go on working together without raising a gun. That is what is important.

It is important for us to stand together in defence of our democracy and the rule of law. It is vital that we do so, for example, in the cases of Ukraine and Syria. I heard what the noble Lord, Lord Pearson of Rannoch, said and I fundamentally disagree with him over Ukraine.

[Lord Pearson of Rannoch]

My Lords—

[Baroness Anelay of St Johns]

I will not take any response to that. I need time to get through this. I find the noble Lord’s allegations that the EU is in any way responsible for the action that Russia took in Ukraine simply unacceptable.

The noble Lord, Lord Liddle, recognised the need for fairness, but the Government believe that the EU must focus on the areas where it can add the most value, such as increasing competitiveness, reducing the democratic deficit and ensuring fairness both in and out of the eurozone. I know that we will have disagreements about some of the implications of that; I listened very carefully to noble Lords. I will take competitiveness first; here, the EU needs to do more to facilitate jobs and growth. We know this because we have undertaken the largest ever analysis of the impact of EU membership on a member state. The balance of competences review was an enormous undertaking and I pay tribute to all those who took part, including someone who is sitting very close to me.

This review, due to be published by the end of the year, highlights the concerns of businesses and Governments across the EU that it is not doing enough to ensure smarter regulation. Through the balance of competences review, stakeholders across Europe told us that the EU needs to change and improve its regulatory processes. My noble friend Lady Ludford referred to the need for better regulation and the noble Lord, Lord Smith of Finsbury, made the point that not all regulation is bad: it depends on how it is framed, how it affects you and also, as we have seen from the Deregulation Bill currently before Parliament, how you change it when you know that it is out of date or having the wrong effect.

Of course, we have all read newspaper stories about EU red tape—a burden that is felt most by small and medium-sized enterprises. After all, SMEs employ two out of every three members of the EU workforce. We cannot forget them. The fact is that a 25% reduction in EU administrative burdens on businesses could lead to an estimated increase of 1.4% in EU GDP—equivalent to €150 billion. Smarter regulation helps us all.

We also need to strengthen the common market. For example, the services sector accounts for 70% of EU GDP and over 90% of new jobs, but it makes up just over 20% of intra-EU trade. We need to ensure that British businesses online are able to access customers in all 28 member states without facing legislative or regulatory obstacles.

My noble friend Lord King was absolutely right to draw attention to the fact that the number of members has changed over the years. As we now reach 28, with others seeking accession—I will turn to the question asked about accession by the noble Lord, Lord Giddens, in a moment—we need to ensure that our systems are not only robust for now but for the future. We need to ensure that British citizens can use their skills and qualifications when moving to another member state. I will also refer to migration in a little while.

In addition to strengthening the common market, the EU must continue to negotiate free trade agreements such as the Transatlantic Trade and Investment Partnership to benefit businesses in all member states by giving them access to other important global markets. But as I have mentioned, alongside the need to increase competitiveness, there is a need to redress the growing democratic deficit at EU level.

While the European Parliament has a legislative role, it cannot recreate national accountability at a European level. National Parliaments play a crucial role in holding their Governments to account, with systems of parliamentary scrutiny based on their individual democratic models and traditions. In her maiden speech, my noble friend Lady Smith of Newnham drew attention to that. We must remain true to the principle of subsidiarity. Whenever possible, action should be left to individual member states and their national Governments and Parliaments—giving them a stronger say in EU legislation.

Against the background of all this work that we need to do to reform the existing EU of 28 member states, the noble Lord, Lord Giddens, asked a pertinent question—was the UK in favour of further EU enlargement? He will know that I have been asked questions at this Dispatch Box over the last few weeks about the background to previous enlargements, and how previous Conservative Governments have worked with that; how we welcomed new members on the basis that we update the EU practices in order to reflect what they can bring to the EU and how they can work effectively within the EU. We must address the concern that many citizens in the UK currently have—and not just here but around the EU—about the impact of enlargement or we risk losing public consent.

I meet people from across the boundaries and beyond the EU who dream of joining the European Union. It is important that if their dream comes true it does not become a nightmare because we have failed to explain the case to the British public or, more importantly, failed to reform the EU to make it possible for enlargement to take place in a way that does not damage the interests of any country. We are therefore proposing reforms to the transitional controls, which need to be addressed ahead of any further accessions that might well take place.

Much mention has been made of migration, which has been discussed strongly, not only in this House but in the press and across the media. It has been raised by many noble Lords today, including the noble Lord, Lord Empey, and my noble friend Lord Maclennan of Rogart. I have already answered questions at the Dispatch Box regarding work that the Government are undertaking, in negotiation with their partners in Europe, to ensure that we can have a more robust system that will not prevent free movement or undermine the principle of free movement, but recognises that free movement is not and has never been a right without responsibilities and conditions. It has never been a completely unconditional right. It has been linked to the right to move to work.

The noble Baroness, Lady Morgan, referred to Labour Party policy. Over the last week the Government have looked to the Dano judgment regarding the German position on benefits that may or may not be claimed. We are looking very carefully at all the technical details before we fully announce what changes might be possible that are not already being undertaken. We believe that the option of living and working in other EU member states is a clear benefit of EU membership for UK nationals. However, we need to ensure that it is not used merely as a way to claim benefits. That underpins the work that has taken place both in Germany and here.

The Prime Minister set out a number of domestic measures that we are taking across government to ensure that we maintain free movement in the way that it was originally intended, but also to ensure that our controls on accessing benefits and services—including the NHS and social housing—are robust. That includes measures to prevent EU jobseekers and involuntarily unemployed EU workers from claiming jobseeker’s allowance for longer than three months unless they have a genuine prospect of work, and measures to ensure that EU jobseekers will be unable to access jobseeker’s allowance until they have been resident in the UK for three months. In July that restriction was applied to those seeking to claim child benefit and child tax credit.

The measures also include: strengthening the habitual residence test, which all migrants have to satisfy to claim income-related benefits; introducing an earnings threshold to trigger an assessment of whether an EU national has work that can be treated as meaningful and effective; amending regulations so that new EU jobseekers are unable to access housing benefit, even if they are in receipt of income-based jobseeker’s allowance; and quadrupling the maximum fine on employers for not paying the minimum wage from £5,000 to £20,000.

The Government are taking action. We believe that membership of a reformed EU is in the UK’s national interest—but reform there must be. The EU needs to become more competitive and needs to continue to sign free trade agreements with key international partners. It needs to draft smarter regulations that support, instead of hinder, SMEs. It must consolidate the common market, especially in new areas, such as the digital field. We have not done that properly yet. It needs to remain flexible and embrace our continent’s diversity and individuality, and it needs to respect and protect the democratic mandate of our national Parliaments. All those changes would be beneficial for this country. It is in our national interest and in the interest of our security, but it is also in the interest of all 28 states.