European Union Act 2011 (Amendment) (No. 2)

Denis MacShane Excerpts

Tuesday 25th October 2011 Commons Chamber

[Mr Denis MacShane (Rotherham) (Lab)]

My speech last night consisted of six words. I may take a little more time today, although I will try not to take the full 10 minutes, and it is certainly not my intention to divide the House.

I rise in opposition to this Bill, and in wonderment and admiration for the extraordinary chutzpah of the hon. Member for Stone (Mr Cash) in introducing it; I mean that in a flattering sense. He regularly lectures the House on his objections to anyone from Europe in any way commenting on, or having a view on any aspect of, British affairs, yet the Bill says that there should be a referendum in this country if the members of the eurozone decide to move forward to an agreement on economic governance or on fiscal union. I think they will consider that to be a wonderful example of English irony—the notion that we should have a referendum to tell them whether they might move to a stronger or alternative system of governance. It is about time that we stopped lecturing the rest of Europe on what to do and got our own house in order. This country, with zero growth, rising unemployment, the highest inflation in Europe and a rising public debt and deficit, is in no position to tell any other European country what to do. We are part of the Euro-problem and we have to contribute to being part of the Euro-solution—and this Bill certainly does not so do.

That said, I share the hon. Gentleman’s expressions of concern, which I raised earlier in questions, about the Chancellor of the Exchequer’s remarkable insouciance—I think it is shared by the Prime Minister—in saying that there should be fiscal union and a single economic governance for about 75% of the EU economy. Throughout British history, we have opposed the notion of any single dominant European power, whether it is a religious power, a single state, an ideology such as fascism or communism, or one single trading or commercial model. We have liked Europe to move in different ways at different speeds so that Britain can find the interstices in which to make a profit and gain political support. But now we have our Chancellor of the Exchequer, and a Conservative Eurosceptic at that, calling for the creation of a European hegemon. The minds of all our historians and previous statesmen would boggle at that proposition. To that extent, I am with the hon. Member for Stone, because he brings these arguments to bear.

Right now, the Chancellor of the Exchequer is going in front of the European Court of Justice to insist on the French proposition that all eurozone bond trading should take place within the eurozone itself. That is a protectionist smash-and-grab raid on a huge chunk of the money that the City makes, and makes more efficiently and effectively than any other financial centre. So our Eurosceptic Chancellor is praying in aid the European Court of Justice against a proposition which, if carried through, could do serious damage to the UK.

Fiscal union conjures up the concept of a single unitary Europe. The United States is a fiscal union. California is bankrupt, but it does not stop using the dollar. New York was bankrupt in the 1970s and did not stop using the dollar. American states have different taxes, different industrial, employment and labour laws, and different investment policies. The use of a common currency is not the same as common policy. We certainly need stricter rules, and I think we all accept that.

Equally, we have to say to our German friends—we should be in this discussion—that not every European country can run a balance of trade surplus. It is economically illiterate to proclaim that. The European Union is a transfer union. We have been transferring wealth to Germany for the past 50 or 60 years. If we all stopped buying Mercedes and BMWs and bought Kias or cars made in India, the Germans would be the first to complain. We have to say gently to our German friends and other creditor nations such as China, which make a fortune from European consumption, “You have to be part of the solution as well.”

We also have to say to the European Central Bank, “Stop fighting the wars of yesteryear.” It is locked in a permanent struggle, like Moriarty against Sherlock Holmes at Reichenbach or Voldemort against Harry Potter, to curb inflation at all costs. Right now, we need more demand in our economy and we are not getting it from the ECB.

I am happy to support stronger economic governance. It allows variable tax-and-spend policies. One can spend a lot and tax a lot, provided that one remains in equilibrium. Our Nordic friends, on the whole, have maintained that policy. This does not mean a single tax rate or a single public expenditure rate. Those are still matters for sovereign Parliaments, even in a system of fiscal union and economic governance.

We ought to understand that it is the purpose of the European Union not to construct a fiscal union heaven, but to protect us—including this country—from the disintegrating hell of a Latin Americanised Europe, where every country maintains its currency against every other currency and its trade policy against every other trade policy. If we revert to 27 competing currencies, let us not imagine for one second that the single market will be maintained.

I would prefer it if it was our Prime Minister, Chancellor or Foreign Secretary making these points, rather than a humble and irrelevant Back Bencher like me. It is vital that Britain connects and engages again. I do not want to enter into curious political alliances with failed parties in Poland, Latvia or the Czech Republic, like at the Council of Europe, which we will debate again on Thursday, where our Conservative colleagues sit with the Kremlin-appointed Putin nominees, rather than work with likeminded centre-right parties. We have a serious political problem in our entire approach to Europe.

The Prime Minister, I presume, will make a report after the summit meeting tomorrow. On Thursday, we will be back to discussing the Council of Europe and the European Court of Human Rights. He will have a little break at the Commonwealth Heads of Government conference. I would like him to persuade most of our Commonwealth allies and partners, who have far more protectionist policies against British exports of goods and services than any European country, that they should be opening their markets. He will then return to the kinds of scenes that we saw yesterday.

I am sorry, Mr Speaker, if these few remarks in opposition to the Bill have been a little longer than my speech last night. I promise that the next time we discuss Europe, I shall try to be silent or to speak in fewer words than I used last night.

Question put and agreed to.

Ordered,

That Mr William Cash, Mr Bernard Jenkin, Mr John Whittingdale, Mr John Redwood, Geoffrey Clifton-Brown, Mr Greg Knight, Mr Graham Stuart, Mr Richard Shepherd, Jacob Rees-Mogg, Chris Heaton-Harris, Zac Goldsmith and Mr Peter Bone present the Bill.

Mr William Cash accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 January 2012, and to be printed (Bill 239).