Euro Area Crisis: EUC Report

Baroness Williams of Crosby Excerpts

Monday 21st May 2012 Lords Chamber

[Baroness Williams of Crosby]

My Lords, that was a very eloquent speech by the noble Lord, Lord Judd. There are real concerns about what has happened to the moral framework underlying the market. For lack of time, I cannot go into that and will follow the noble Lord in only one respect: in paying tribute to the noble Lords, Lord Harrison and Lord Roper, for an insightful, thoughtful and brilliantly written report. I add my congratulations to the noble Lord, Lord Roper, on the way in which he has led the committee, which still produces work of the highest possible quality.

Let me say right away that the committee report calls for leadership. A necessity for leadership is adequate information, and that leads me to ask the Minister a direct question. Is there any prospect of the Prime Minister’s draft protocol and the safeguards that he called for at the December Council of Europe being made public—after all, it is now nearly six months later—so that this House and those who are concerned about the future of Europe can have the profound discussion that they are capable of, but which is made more difficult because they do not have the information they need to pursue that matter?

Signor Amato, the former and very good Prime Minister of Italy, said honestly, “We have made a great mistake”. The great mistake in the creation of the euro was the failure to recognise that not only was a technical outcome required but a profound institutional change as well. In its pursuit of democracy within Europe, the European Commission and the other European institutions specifically required that. Some Members of the House will remember the Copenhagen criteria, a brilliant set of requirements for creating a real democracy. They range from independent courts up to the necessity for free and safe elections. The Copenhagen criteria are still being discussed with Turkey. They create the kind of countries that become part of the kind of Europe for which the noble Lord, Lord Judd, called. In the case of the euro, no such provision was made. There was no period of transition and no requirement that the basic, fundamental institutions of the eurozone had to be laid down by nation states. One of those institutions is an honest and transparent fiscal system. It is not polite to say so, but the truth of the matter is that very few rich people in Greece, Italy or Portugal ever pay taxes. At most, they pay nominal taxes, and that is not a basis on which one can build a sound and lasting eurozone. Institutional reform is crucial.

For lack of time, I shall make only two other points. First, we should ask why the ESM, which is not yet with us, but will be within a few weeks, decided not to require there to be a general mutual agreement by stakeholders alongside taxpayers to share the pain of the changes that are required. That was a very profound mistake because one of the real challenges to democracy is that when there is pain and sacrifice, it must be shared among society. I agree with the noble Lord, Lord Judd, that it cannot be loaded on only a section of society while the other part goes untroubled and untainted by the need to meet the requirements that are laid down.

Finally, the president of the IMF, Christine Lagarde, made a terrifying, chilling remark: “We may be sliding into a 1930s moment”. I very much commend what noble Lords have said about the real dangers to democracy from what is happening now. We must recognise that none of us can bale out of those requirements. They are part of what it is to sustain democracy at a particularly hard time.