EU Referendum and EU Reform (EUC Report)

Baroness Smith of Newnham Excerpts

Wednesday 15th June 2016 Lords Chamber

[Baroness Smith of Newnham (LD)]

My Lords, I welcome the suite of reports that came from your Lordships’ European Union Committee and, in particular, the fact that finally we have some documents contributing to the debate on the UK’s future in the European Union that are based on fact and evidence and, as The Process for Withdrawing from the European Union states, conclusions that are as far as possible neutral statements of fact. That has been very rare in the debate that we have seen in the country in recent weeks and months. We have seen fear, mendacity, hyperbole and hysteria on both sides of the argument, and that includes some of the actions of Her Majesty's Government; they cannot be exonerated either. We have heard from both sides arguments based on fear, myth and fantasy. But it may not surprise noble Lords, particularly the noble Lord, Lord Pearson of Rannoch, that I intend to focus particularly on the issue of what we might be withdrawing from and where we might be going to.

As the noble Lord, Lord Liddle, pointed out, there is an issue about why we are leaving and what the leavers think we are doing. First, though, I suggest that those who would have us leave, having already left the Chamber for today, have no agreed position on what it is they think they are leaving. If we are in the realms of fantasy and fairy stories, I thought I might give noble Lords a modern fairy story based on Goldilocks and the Three Bears. I suggest that at least three different visions of what the European Union currently is are being put forward by the leavers. The first, the Daddy Bear scenario, is that the EU is a dangerous place that has entrapped and ensnared us. As the noble Lord, Lord Forsyth of Drumlean, put it very graphically, we are caught in a bear trap, bleeding to death. One notes that this poor bear is looking at a £10 note, wondering how he got it when it used to be a £20 note, thanking God that it is not a euro note but still being extremely puzzled by how he ended up in an enterprise that he never thought he had agreed to be in.

Mummy Bear, meanwhile, is represented by my Cambridge colleague Dr Christopher Bickerton, who says that actually both sides of the debate have got it wrong and that the European Union is not overbearing, it is not a very strong edifice, it is not powerful and, although it is not particularly democratic, it is actually a mirage. The closer you get to Brussels, the more you see that the EU does not really exist. So Mummy Bear disappears as a mirage.

Meanwhile, Goldilocks goes and talks to Baby Bear, thinking, “Surely this third member of the family will have a better understanding of the European Union”. But she walks in and finds him with the godfather, Daniel Hannan, reading him a goodnight story: not Why Vote Leave but his elegant essay A Doomed Marriage: Britain and Europe—not necessarily something you would think was suitable for small bears or children, but nevertheless something that explains why the UK and the EU are fated to be separate and not to be together.

So we have three very different visions of what the European Union currently is, and the leavers cannot even agree on what it is they think they want to leave. Now they are trying to persuade us that we should vote to leave and negotiate some new arrangement. Of the three scenarios, the idea of a marriage breaking up is probably the best and most relevant. With regard to how we would get out of this European marriage, there is now a legal mechanism, thanks to Article 50, and your Lordships’ European Union Committee report makes it very clear how that would work legally. However, we do not have any practical experience of how this European divorce would work in practice because it would be the first time that Article 50 had ever been triggered. But one of the things that we know about divorce in the real world is that it is usually expensive and very often acrimonious. Even if a couple think they will be happier apart than together, it is very rare to have a divorce that does not include lawyers—who benefit probably more than anybody else—and that does not end up being costly. Then you leave behind the rest of the family.

The parallels with the United Kingdom leaving the European Union are surely clear. There is a legal process that is as yet untried, but the reality is one that is human, emotional and economic. The 27 other states that we are leaving behind, just like leaving members of a family, are not going to say, “That’s fine, off you go. We’re happy to see you go but we’ll carry on trading with you just like before”. Inevitably, those whom we leave behind will have a sense of hurt and betrayal, particularly given the amount of time that the other 27 states, plus the European Commission, spent on trying to create a deal that would work for the UK and keep us in the EU.

The leavers are not just saying, “Let’s have a divorce” but suggesting that they want another relationship altogether. Perhaps they want to go back to EFTA, which is what Daniel Hannan suggested recently—like a girlfriend they left behind years ago, trading her in for the European Economic Community because they thought that was the better offer. Like a long-term spouse, the EEC may have changed—but it is still your long-term spouse of over 40 years. Do you really want to give that up and walk away at considerable cost, trading it in for the mistress—the European Economic Area? Eventually you will find that being with a mistress is quite similar to being with a wife, except that your original family are a little unhappy, to say the least. They still have loyalty to the wife—the European Union. You have probably ended up with a slightly inferior relationship and have begun to wonder why you did it. Was it all worth taking the risk? I suggest not. The United Kingdom should not head towards an Article 50 type of divorce.

I hope that this will all turn out to have been just a fairy story, with Baby Bear waking up and finding that he has chased away the demons of Uncle Dan. I very much hope that citizens of the United Kingdom will do likewise on Thursday of next week; otherwise, they will only have bought into a cruel deceit and an unhelpful fantasy.

--- Later in debate ---

[Lord Howarth of Newport (Lab)]

My Lords, I add my thanks to noble Lords for the sober analysis of the processes of change provided in these reports. Tragically, however, the European Union is not capable of the reforms that could justify Britain remaining. The dreams of the Prime Minister in his Bloomberg speech have been all too comprehensively dashed. The EU is failing both economically and politically and its member states are incapable of achieving agreement on the reforms that might save it. There is very little willingness even to contemplate the radical redesign that the noble Lord, Lord Howell of Guildford, called for in his thoughtful speech. The noble Lord, Lord Boswell, deprecated the failure of the Government to explain—as I think he put it—what, if anything, is wrong with the European Union. Perhaps I might therefore venture to assist.

Britain joined the EEC in the early 1970s at a low point in our national self-confidence, and just when the economic miracle that had brought the original six to new heights of prosperity was faltering. Self-inflicted wounds followed: the Maastricht criteria condemned Europe to weak growth, and the ultimate hubris, the disastrous turning point, was the formation of the eurozone. Without political consent to create a federal “United States of Europe”, the single currency project could not work. The Germans have enjoyed an undervalued currency but even in Germany wages have stagnated. The Mediterranean countries have suffered grievously from an overvalued currency. There has been little redistributive fiscal relief across the EU. Membership of the euro encouraged reckless borrowing and creditors have ruthlessly ensured that there is no debt relief. Across swathes of the eurozone, unemployment, particularly among young people, has been running at catastrophic levels.

The eurozone countries are incapable of extricating themselves from their predicament, either by advancing or by retreating. Britain is infected by Europe’s economic stagnation and chronic financial instability. The UK should continue to reorientate its exports and strategically disengage itself from our debilitating entanglement with the European economy.

Of course I acknowledge the ideal of peace, about which the noble Lord, Lord Browne of Madingley, and the noble Baroness, Lady Sharp of Guildford, spoke so feelingly. I do not belittle that at all but it is not our membership of the European Union that prevents the French and the Germans going to war in 2016. Europe’s economic failure now begets political division and crisis. For all the invocation of ever-closer union, the gulf between Europe’s haves and have-nots has grown ever wider. Market forces, to which EU orthodoxy is dogmatically committed, have concentrated wealth in certain regions of the north and west of Europe: Baden-Württemberg, the Rhône-Alpes and Lombardy. Your Lordships should note that these areas of prosperity are regions, not countries, and that one of the effects of the EU is to fracture the old nation states. Meanwhile, the south and the periphery struggle and everywhere the less-educated and less-skilled, the industrial helots, the culturally alien and the urban underclass are frustrated and angry. Migration, both into Europe and across Europe, intensifies resentment and generates extremism.

The democratic deficit and the governing structures of the EU threaten to be as disastrous as the euro. The system is an aggregation of democracies but it is not itself democratic. It was never intended to be so by its authors, rational public servants who were horrified at what they had seen weak democracies and populist fascism do. Policy initiative continues to rest with the unelected Commission. The Council of Ministers as such has no accountability. The inner eurogroup—of which, of course, we are not members but which commands the majority and has no regard for our interests—takes the major economic decisions. It has no status in European law and its proceedings are opaque. The European Parliament and national parliaments remain marginal. This is not a system of government that should be acceptable to the British people, who take pride still in a unique history of parliamentary democracy.

[Baroness Smith of Newnham]

Does the noble Lord not agree, however, that there is a directly elected European Parliament and that it has the right of co-legislation in EU decision-making?

[Lord Howarth of Newport]

It has indeed gained some powers but I would still contend that its influence is marginal. I certainly do not see that the European Parliament has any worthwhile accountability to the peoples of Europe.

Yanis Varoufakis has described how, equipped with a democratic mandate from the Greek people, he sought to renegotiate the terms of Greek debt and, Germany’s finance minister, Wolfgang Schäuble, told him:

“Elections cannot be allowed to change an economic programme of a member state”.

With rule by technocrats, troikas and creditors, the gulf between governors and the governed is increasingly offensive to the peoples of Europe.

Across the European Union, parties of the far right are gaining support: PEGIDA, Law and Justice, Jobbik, the Front National and Golden Dawn. There is the SNS and its rival, People’s Party—Our Slovakia, whose leader Marian Kotleba takes to the stage wearing the uniform of the wartime Slovak fascists. The two neofascist Slovak parties already have almost 20% of the seats in parliament. The Freedom Party of Austria came within an ace of winning the Austrian presidency.

It is complacent to suppose that we are immune from this pathology. If in Britain our metropolitan political elite continues to display contempt for people who do not share its enthusiasm for membership of the EU and for globalisation, the disturbing problem we already have of disaffection from mainstream politics will grow worse. People who loathe the EU will seek recourse in the nation and if their nationalism is not to turn ugly, they must be listened to and treated with respect. If reputable politicians will not stand up for the losers, disreputable ones will. Remain campaigners, I suggest, would be wise to stop giving the impression that they regard supporters of leave, who decline to be instructed by experts as to what they should believe or how they should vote, as ignorant, stupid and bigoted. Remain MPs who threaten to use a majority in the House of Commons to thwart the will of the people in the referendum seem bent on destroying our citizens’ trust in politics.

I hope that the British people will have the confidence to leave the EU. We should not doubt that we have the enterprise, skills and resilience to cope with the transition. Our businessmen will know how to seize their opportunities across the world. Our excellent scientists will flourish in the global academic community—the free trade of the mind of which the noble Lord, Lord Hennessy, just spoke. We will forge new relationships with the peoples of Europe, with whom we have always engaged and always will. It will be open to us to become more, not less, internationalist. We will be able to handle the issue of migration decently on our own authority.

The process of withdrawal should open exhilarating vistas. After reclaiming rights to take our own decisions and before activating Article 50, we should engage our people in an extensive national debate of new quality—and we will find that the people of Britain do not want workers to be stripped of their rights, or science to be stripped of its funding. We should seek to reach national consensus on our objectives in negotiations, tough as they will be, with the EU and other global institutions and powers. There will indeed be a great programme of legislation. In all this lies the opportunity to renew our parliamentary democracy.