European Union (Approval of Treaty Amendment Decision) Bill [Lords]

Debate between Bernard Jenkin and George Eustice

Monday 3rd September 2012 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I should start by saying that I agree with much of the analysis of my hon. Friend the Member for Stone (Mr Cash) about what is wrong with the euro and how we got to this situation. However, I disagree strongly with his conclusions about this Bill, because I think it is relatively uncontroversial. As the Foreign Secretary pointed out earlier, the new European stability mechanism is certainly an improvement on the European financial stabilisation mechanism that went before it. Under that previous arrangement, Britain was liable for some 15% of the liability, which could have been a bill of up to £9 billion, whereas the new ESM means that Britain will not be taking on any future liabilities. So, first and foremost, this is a step forward.

Secondly, we must bear in mind that the Bill is not about the establishment of the ESM itself; it is simply about the amendment to article 136. This is just about clarifying the legal basis on which the ESM is set up, and discussion is taking place about whether that even needs to happen, as my hon. Friend the Member for Stone pointed out. This has already been happening under article 122, and it is apparent that it is mainly a concern of the German constitutional court that has prompted this change. The one thing I would say is that if other European countries or all 27 member states are going to acknowledge the concerns of one member state—Germany—by amending the article to reflect its needs, I look forward to the day when that will be reciprocated. I look forward to those moments when Britain is in a minority of one in having concerns about some things European and that, too, is respected by the other member states.

[Mr Jenkin]

I cannot quite believe what I am hearing, because a criticism that my hon. Friend and I have regularly made of the European Union is that what we are categorically assured will not happen then happens, and when we amend the treaty just to tidy up the wording, that makes it more explicit that it was always intended to happen in the first place. May I just read to him what the no-bail-out article actually says? It says:

“A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State”.

That is what the treaty says now and he is supporting, by a sort of sleight of hand, that being negated and set aside simply because it has already happened illegally. Is that not the grandmother’s footsteps of European integration that he and I have always railed against?

[George Eustice]

I would simply say to my hon. Friend that Britain is not bound by the ESM; it is very clear that only eurozone member states will be affected. Is it proportionate for us to stand in the way of those countries that are wrestling with and trying to decide what is going to happen with the euro? Is it proportionate for us to block that particular tweak to that treaty? I just do not feel that it is. I agree with him in that I want renegotiation and I want it, at some future point, to be put to a referendum. However, we need to pick our battles and pick our moments, and I think it is wrong to nit-pick over what I would regard as a small change.

[George Eustice]

My hon. Friend makes a point that I was going to deal with. I simply return to what my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) said, as I do not think that by blocking this Bill we are going to stop the ESM. Other countries will continue, because they have decided that they need to do so to try to save the euro.

We also need to give the Government and the Prime Minister credit when they achieve things and make progress. My hon. Friend the Member for Stone and I would like to see faster progress made and a renegotiation sooner rather than later, but we should give the Government credit where they safeguard British interests and improve on the situation we inherited. We should not blame our own Government for the mistakes the previous Labour Government made. They engaged in sloppy negotiation, and, as a result, we ended up with the former arrangements in the EFSM. The situation has now been improved with the ESM and we should support that.

[Mr Jenkin]

Where is the consistency in the Prime Minister’s vetoing fiscal union at 27 in December last year and now implicitly consenting to it by scrapping the no bail-out article? Should we not be extracting a real concession? Should we not be getting the concessions we really want? Should we not be using this opportunity as a fulcrum for renegotiation? Is this not the moment—when these countries want fiscal union to support monetary union—to say, “This is what we want to pull back in return”? Instead, we are just giving this away, and for what?

[George Eustice]

I think that there is a big difference between the fiscal compact that we vetoed last December and this particular one. Again, this comes back to the point about what is proportionate. By vetoing that fiscal compact, Britain was sending a clear signal that we were not going to be part of a wider decision at an EU level for those types of fiscal integration, because we were not affected. That approach was absolutely right on a number of levels. First, it showed that Britain was serious and that, on these issues, when we said we were going to do something, we meant it and we were ready to use a veto. That will help us when it comes to budget negotiations.

Secondly, by vetoing that particular treaty at an EU level, the Government managed to limit its scope, because it was, thus, necessarily just about the eurozone members and it cannot affect the UK. Had we signed up to that particular treaty, we would have faced all sorts of threats and demands, and people trying to put other agendas on the table. We would have had months and months of wrestling over things we did not want, before we would probably finally have had to veto it in any case, so I think that we did the right thing. However, I am just not convinced that such an approach is right in this instance, for the reasons I have set out. As I say, I think it would be disproportionate, as the ESM is not going to affect the UK; there is nothing that will expose us to future liabilities. Would it be right for us to stand in the way of countries that think that it is the right thing to do? There is a question of whether it is the right thing, but would it be right for us to stand in their way?