EU: Prime Minister’s Speech

Baroness Falkner of Margravine Excerpts

Thursday 31st January 2013 Lords Chamber

[Baroness Falkner of Margravine]

My Lords, I, too, thank the noble Baroness, Lady Noakes, for this opportunity to reflect on Mr Cameron’s speech last week. The Prime Minister was on that occasion speaking as leader of the Conservative Party, and, on that basis, it was indeed one of the best speeches on the EU delivered by a Conservative leader. It enabled the country to hear from him where he stood on the EU, where he expects to lead his party, and, if the voters give him the opportunity, where he expects to take this country should he get a mandate in 2015.

That is all well and good, one might say, except for the consequences. Broadly, there are three. The first is that by “coming out” so clearly, he has created considerable uncertainty for business, investment and jobs in terms of investment decisions and planning. Only today the London School of Economics has published a report on UK economic growth which points to the UK political process as being the greatest barrier to a virtuous circle of investment. It describes the PM’s decision to seek an in-out referendum as “misguided” because it creates the,

“very uncertainty that will damage investment and productivity right now”.

It points out that we need a more stable environment for investment. This is not improved by adding to policy risk which deters investors worried that the rules might change before their payback begins. This will not only affect the services and manufacturing sectors but adversely impact on financial services too, particularly at a time when the uncertainty of regulation around banking union is still so unclear.

The second consequence is that we have a firm commitment accompanied by a date. The Prime Minister might have done better both by his party and the country to have left things more open. Nailing the date of 2017 to a mast is perhaps unwise when he is not clear as to what exactly is to be renegotiated, with whom and in what manner. We are delighted that he has prioritised multilateral negotiations, working with other, like-minded countries to bring about the kind of changes that we all want in order to make the EU more competitive and fleeter of foot in meeting global challenges. Reform of the EU is not simply a UK priority but is shared across most of the Union. It may have been wiser to accept that the process needed time—conceivably more time than he has allowed himself.

Finally, while we greatly welcome the Prime Minister’s robust rejection of the Norway and Switzerland model, he risks creating greater confusion by not spelling out exactly what we would negotiate for. This Government have gone further than any other in ensuring that significant powers cannot be transferred to the EU by putting in place the European Union Act 2011. This is surely the right way forward, both for the UK and the European Union.

In concluding, I want to answer clearly the question from the noble Baroness, Lady Noakes, on the Liberal Democrat position. We proposed an “in or out” referendum in the previous Parliament against a backdrop of relative stability in both the eurozone and the European Union. It was right for the time. The situation has changed dramatically since then. A new architecture for the eurozone, and consequently for the European Union, is unknown, hence our view that this is not the right time to be putting up these lines.