European Council

David Nuttall Excerpts

Thursday 8th December 2011 Westminster Hall

[Andrea Leadsom]

Yes, I agree. The key issue is that if these countries are to have sovereign risk, they must completely guarantee and underwrite each other’s debt and obligations. That is very unlikely ever to be achieved in the EU, which just makes the problem of not having a lender of last resort even more existential for the eurozone. I therefore have genuine concerns about whether the proposals actually offer a solution.

Here we are on the eve of a very important summit, which is designed, on the face of it at least, to put the market’s fears to bed once and for all. The Prime Minister has a strong hand, because the German Chancellor and the French President need a treaty at the 27 member state level, for two practical reasons. First, if they started again, with just the 17 eurozone members trying to create a treaty between themselves, they simply could not do that in the time frame that the markets would permit them. That is a very practical issue, which they need to consider. Under the Lisbon treaty, however, treaty changes can be fast-tracked. Secondly, as was pointed out earlier, the 17, as a group, could not simply annex the EU institutions and use them for themselves; they would require the permission of the 27 EU members. For both those reasons, a treaty is needed at the 27 member state level, and that makes the Prime Minister’s hand very strong.

Like other Members, I am pleased that the Prime Minister is absolutely determined to protect Britain’s interests. What does that mean? First and foremost for every EU member, regardless of whether it is in or out of the euro, that must be about stopping the crisis—there is no doubt about that. If the euro descends into a disorderly collapse, that will easily cost 6% or 7% of British GDP, and it would probably push us into a worse recession than the one after the financial crisis of 2008. There is therefore no doubt that our top priority should be to solve the eurozone crisis.

[Mr David Nuttall (Bury North) (Con)]

As my hon. Friend will be aware, this is not the first time European leaders have met to try to resolve the crisis in the eurozone. Why does she think that eurozone leaders and, indeed, the leaders of the whole EU will be any more successful this time than they were on any of the previous occasions when they met to try to come up with a grand solution to save the euro?

[Andrea Leadsom]

I thank my hon. Friend for those remarks. There is a desire to come up with a solution; but as I said, I do not think that it will work, for reasons of economics and the markets’ actions. I hear what my hon. Friend says.

Britain is clearly struggling to recover. The eurozone crisis is testing us and is close to pushing us back into a no-growth, or even a recessionary, period. We therefore need to look after Britain’s interests by not only protecting the eurozone, but ensuring that we create safeguards for our most important industry, and I want to put in a plea for financial services.

There has been a lot of talk about holding a referendum, changing the common agricultural policy or simply repatriating powers, but what do all those things mean? If we hold a referendum, what would the question be? How quickly and easily could people understand enough about the implications of a question such as whether we should allow the 17 fiscally to unite? That is an extraordinarily complicated question, and referendum questions really need to be along simple lines, such as whether Britain should be in or out of the EU. At a time when these things are in flux, that is almost impossible to answer.

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[Andrea Leadsom]

That is an important point, because the Prime Minister will not be just having a chat and getting general agreement; he will want to get a firm assurance and put a marker in the sand saying, “We feel your pain and share your goal and will want to protect Britain’s specific national interest by including our own requirement in the treaty.” There cannot be simply a gentleman’s handshake, so that what is agreed can be watered down later. There must be a firm commitment on all sides that Britain’s national interest will be protected.

[Mr Nuttall]

Does my hon. Friend agree that the problem with marks in the sand is that, when the tide comes in, they get washed away?

[Andrea Leadsom]

That is a good observation and I have noticed that, but it was not what I meant, and my hon. Friend knows it. What I have outlined is down to the Prime Minister to achieve. He has committed to do it. We must have confidence in his determination to follow it through.

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[Martin Horwood]

The hon. Gentleman makes a rather interesting point about regulation of the smallest businesses, because we have a rather good case study. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), has been active in going to other European Ministers, in particular those with a similar outlook on economic policy, and taking a collaborative, positive and co-operative approach to reach agreement that we should lift onerous accounting rules from the smallest businesses, not only in this country but throughout Europe. [Interruption.] It might be a small concession, but it was progress through a collaborative process that has lifted some of the burden of European regulation from businesses in the UK. There will be other examples of what Members may call repatriation, if they want. In fisheries policy, we are likely to see the movement of powers over fisheries from the European level to national and regional levels in future. So it is possible to achieve change without a confrontational attitude and, as in both those cases, without treaty change.

As I have said, to defend Britain’s interests during the whole process is important. One of the ways to do so is to prevent marginalisation, which is a real danger. To an extent, I share some of the anxieties expressed by Conservative Members—it could happen that we might be excluded from the core of decision making in Europe—and I would not be happy with the Labour party’s approach that we should be observers to the process. I want us to be participants. We must ensure that Britain plays a central role in whatever new structures emerge from the crisis, and we need to be able to discuss and debate with the members of the eurozone how their economies move forward. As EU members, we will always have more say in the process than we would do if we committed the ultimate act of economic suicide and left the European Union, as some hon. Members might want. The risk, however, is that some marginalisation is possible, although we increase the risk of that if we roll up at European Councils with a list of unrealistic demands and throw a spanner in the work of resolving possibly the biggest crisis to have faced continental Europe for decades. That does not do us much good.

[Mr Nuttall]

Will my hon. Friend give way?

[Martin Horwood]

I will give one example. The hon. Member for South Northamptonshire (Andrea Leadsom) mentioned clearing house regulations. Since that dealt with transactions governing euros, how would we have influenced that legislation had we been outside the European Union? We might have found that by leaving the European Union we had excluded ourselves from such decision making and enabled the EU to take precisely that kind of decision, to the immediate detriment of the British economy and the status of the City of London, which is a European asset as well as a British asset.

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[Martin Horwood]

That is a lovely rhetorical line, but that accusation has been levelled at the Liberal Democrats on many fronts, and yet we find ourselves in government and sticking to the letter and the spirit of our manifesto on a whole range of issues. [Interruption.] I opposed the increase in tuition fees and think that we ought to have stuck to that policy, too. We have, however, certainly delivered on the pupil premium and a whole range of things, such as taking many of the lowest paid out of taxation altogether or developing the green economy, and we will stick to our pledge on the European Union as well, which is to act responsibly and to propose referendums when it is appropriate, which will involve a wholesale examination of the relationship of nation states to the European Union. That is not happening at the moment, because we are looking at an economic crisis in which the eurozone countries face a fundamental question about control of fiscal discipline. Germany, quite reasonably, is saying that, in return for any shift towards, for instance, the European Central Bank acting as a lender of last resort, some process of fiscal discipline that is rather stronger than the one that has operated inside the eurozone until now must be enforced. The other member countries, however, retain the choice whether to submit to that fiscal discipline or to plan some different future for themselves.

[Mr Nuttall]

On a specific point about the proposals that the Franco-German axis has come up with, is it not the case that if the eurozone had stuck to the rules that already govern it, it would not be in the mess that it is in today? It is in a mess, because no one was enforcing the rules.

[Martin Horwood]

I surprise myself again by finding myself in agreement with that statement. I completely agree with it. That was one of the weaknesses of the euro’s establishment and the stability mechanism surrounding it. It is precisely the sort of weakness that the eurozone countries must now address, and I think they clearly understand that, too. I suspect that some member Governments—Greece may be one—deeply regret having entered such a relaxed arrangement without the sort of fiscal discipline that was needed to make it work. That is probably common ground among people of all parties in many different countries.

The important message for Ministers going to the European Council and for the Prime Minister is that British national interests are at stake in the process, but that we can serve them best by acting positively and collaboratively and by taking an approach based on co-operation, not confrontation. As I have said, it is not always necessary to confront people to achieve shifts in responsibility to national level—we have seen that with regard to small businesses, and we may see it with regard to fisheries—and we must develop that sort of grown-up approach to EU politics, not a constant obsessive, confrontational attitude.

When it comes to talking about the Prime Minister’s position being comparable with that of Neville Chamberlain, and therefore implying that in some way our European partners are comparable to the Nazis—[Interruption.] I am sorry, but if the Prime Minister is Neville Chamberlain, who is he getting the piece of paper from? Such language in this debate has been deeply offensive. It is unworthy of this Parliament; it is unworthy of the Conservative party; it is profoundly insulting to the Prime Minister; and it is exactly the sort of xenophobic rhetoric that risks discrediting this country and deeply damaging our national interests.

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[Mr David Nuttall (Bury North) (Con)]

Thank you, Mrs Main, for calling me to speak. It is a pleasure to serve under your chairmanship.

I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on securing this debate this afternoon. I must say, as others have already said, that I find it incredible that, at a time when—as we all know—there is very little Government business going through the House of Commons, time could not be found for this debate to take place in the main Chamber. But we are where we are and we need to deal with the issue of what the Prime Minister should seek to do at this week’s European Council meeting.

At one level, European Union affairs are incredibly complex, with treaties, directives, regulations, protocols, opt-ins and opt-outs. It is all very confusing and legalistic. To be fair, it is very difficult for me, as a Member of the House of Commons with an interest in European matters, to follow the twists and turns of affairs in the European Union, so how much more difficult must it be for voters outside this House in their day-to-day lives? I say that without wanting to sound patronising. Politically, however, the issue is very simple: do we, as a country, want to continue with our present relationship with the European Union? Personally, I say, “No, we don’t,” and I believe that the overwhelming majority of the British people would also answer, “No,” to that question. This weekend’s European Council meeting presents a tremendous opportunity to start to rebalance the competences and powers between the European Union and this country.

Mention has been made of the danger of Europe developing into two groups, but we already have two groups. There are the countries in the eurozone and the ones that have not adopted the euro. We already have, if you like, a two-speed Europe, but I do not like to use that term, because it implies that countries that are going more slowly will sooner or later finish up in the same place as the ones going somewhat faster. It is right, however, to think of a two-tier Europe, with one Europe that is the eurozone, tied up in red tape and regulation, and looking only inwards, at how it can grasp ever more power. That is what we are seeing from the eurozone countries this weekend, and it is what we have already seen in the pre-meeting between France and Germany. They do not see the way forward as having less regulation, less bureaucracy and more freedom for nation states; they want to move faster towards the European Union’s declared aim of ever closer union. They see this as a great means of speeding up the project and bringing everyone together more quickly, so that Brussels will have yet more control over the member states in the eurozone.

We must be honest with our European neighbours. The whole structure of the European Union is being looked at, so there is no better time for us to sit down with our European neighbours and say, “Right. Great. No problem. If you want to get on with ever closer union, that’s fine. You crack on with it but, frankly, we don’t want to go there. We prefer another path, from where we can look to the rest of the world. We want our companies to be able to compete in a global marketplace, not just arguing within Europe and trying to get by with all the rules and regulations that are enforced by Brussels.” There is no better time than now to put our cards on the table and say what we want back. We could all have our own ideas, perhaps a shopping list of individual opt-outs, or the excellent idea presented in his opening speech by my hon. Friend the Member for Harwich and North Essex that what we need, and what I think the vast majority of the British people would expect, to be brought back from this European Council meeting is an opt-out, to the extent that in the future this country ought to be able to say, “Thanks very much for this but, frankly, it’s not suitable for the UK.” That should be retrospective as well as prospective. We should be given back the right to look through the European legislation that has already been enforced and determine what is not suitable for this country.

One would think that this would be quite a simple idea, but because Germany and France are wedded to the ideal of ever closer union enshrined in the founding treaty, the very idea that a member state could start repatriating powers is anathema to those who believe in the European Union project and in ever closer union. It is more than an economic union to them; they want not just a single currency but an economic and political union, with the development of what will become, effectively, the united states of Europe. I believe that the vast majority of the British people do not want that. I entirely respect the honourable position that has been adopted for many years, particularly by our friends in the Liberal Democrat party. That may well be why the party gets only 10% of the vote in opinion polls—I do not know—but it is nevertheless an honourable position. It is a small minority of the British people who think in that way, but it is an honourable position, and that is fine. It is great in a democracy that we have that other position, but I think that the vast majority of the British people want a much looser arrangement of our position within the European Union, and what better time to start than now? This weekend is the time to start renegotiating our position.

I know that other speakers want to get in, but in my final couple of minutes let me deal with the question of a referendum. My hon. Friend the Member for South Northamptonshire (Andrea Leadsom), who is not in her place, said that she thought that the Prime Minister had a strong hand. I agree that he does, because if others wanted us to not use our veto he could say, “Well, okay, I won’t use the veto provided I can have this, this, this and this.” However, how much stronger a hand would our Prime Minister have if this country had held a referendum of the sort we discussed on 24 October? If such a referendum had already been held, the Prime Minister of this country could have gone to Europe and said, “Look, I have the backing of the British people in a referendum.”

There has been much talk this afternoon about whether in view of the fact that we have the European Union Act 2011 it is right that there should be a referendum. I draw Members’ attention to paragraph 48 of the explanatory notes to what was then the European Union Bill:

“a referendum would be required before the UK can approve the extension of any competence of the EU relating to: (i) the coordination of economic and employment policies; or (ii) the EU’s common foreign and security policy.”

If what is suggested by Merkel and Sarkozy is not the co-ordination of economic policy, I do not know what is. So surely that Government explanatory note gives us our right to demand a referendum on the outcome of the negotiations.