Treaty on Stability, Co-ordination and Governance

Denis MacShane Excerpts

Wednesday 29th February 2012 Commons Chamber

[Mr William Cash (Stone) (Con)]

I beg to move,

That this House has considered the matter of the legal and other action now to be taken by the Government in upholding the rule of law and protecting UK interests in respect of the nature and content of the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union.

Thank you, Mr Speaker, for approving my application for this debate. I am also deeply grateful to all those Members—some 100 or so—who rose so spontaneously and strongly to support the proposal that I put to the House yesterday afternoon. This is only the fifth emergency debate since 2001. The debate is about the rule of law: not only the rule of law as it affects the United Kingdom but, inevitably, the rule of law in Europe as a whole. The Prime Minister, to his great credit, rightly exercised the veto to protect UK interests, but this is not simply a question of the single market and financial services, however important they may be to the UK economy.

The rule of law is inseparable from democracy, which, based on freedom of choice, leads to the making of law through general elections in line with the wishes of the voters. That is as important as it is simple. Unfortunately, the European Union, despite its much-vaunted claims and aspirations, has increasingly departed from democratic principles and from the rule of law in the pursuit of ideology. We are now witnessing ever-increasing tendencies towards bureaucracy, and even the imposition of technocratic Governments on individual member states, as in Italy and Greece. Yesterday, as it has in the recent past, the Bundestag voted on European bail-outs. According to opinion polls, about 80% of the German people are against the bail-outs, yet the German Government and the Bundestag passed the proposals by a massive majority.

[Mr Denis MacShane (Rotherham) (Lab)]

This line about European technocrats imposing technocratic Governments all over the place is very fashionable. However, the truth is that the current crisis, which is very serious—the hon. Gentleman is right to hold this emergency debate—is about the raw power of politics. It is about the politics in Germany in not wanting to bail out Greece; the politics here; the politics in Greece, where people voted pretty overwhelmingly to accept the bail-out package, with parties splitting up; and the politics in Italy, where people dumped the wretched Berlusconi and put in quite a good guy, Monti, for the time being. The Commission is not involved in this; the technocrats are out of the game; the Eurocrats are off the pitch. It is about raw politics. We are in the driving seat, and the hon. Gentleman might be as well.

[Mr Cash]

I am grateful to the right hon. Gentleman, who makes an important point. However, this is not merely about technocrats but about the brutal fact that the political game as it is now being played is increasingly coercive. That is part of the problem that I shall address.

--- Later in debate ---

[Mr Denis MacShane (Rotherham) (Lab)]

I will do my best, Mr Deputy Speaker.

I do not really disagree with some of the points that the hon. Member for South Northamptonshire (Andrea Leadsom) has just made, but to achieve her aims she will have to find allies. The difficulty is that the Conservative party is perceived as profoundly hostile to European co-operation. It is allied with some very odd gentlemen in the European Parliament, as we know, and it sits with the Russians at the Council of Europe. We represent a democratic political organisation in this Parliament, and we cannot achieve co-operation at a supra-parliamentary level by just telling people what we want and expecting everybody else to agree. Therefore, there has to be a new approach to Europe.

I congratulate the hon. Member for Stone (Mr Cash) on securing this debate under Standing Order No. 24. It is absolutely outrageous that we do not have proper debates on Europe in Government time. Indeed, I am sorry that the Leader of the House is not here—I have made that point to his face; I am not saying anything behind his back. It is unfair to ask the Backbench Business Committee, which is generous on a number of issues.

[Mr Bone]

The right hon. Gentleman is making a fair point. The Backbench Business Committee is not given the time in advance to plan any of these debates, so he is absolutely right.

[Mr MacShane]

And it is not as if this place is crammed full of legislation, is it, Mr Deputy Speaker? I really wish that the Government would stop continually hiding behind the Backbench Business Committee’s existence to deny their allocation of time for what are important debates.

The hon. Member for Stone made the interesting observation that the EU institutions could not be used for just a group of EU member states, but of course that is nonsense. They are used if there are rows over Schengen, which does not include us, or if there are rows over fisheries policy, which on the whole does not involve Austria, Hungary or other land-locked nations. Also, there have always been groups or clusters of EU member states with particular concerns which the European institutions have to have some regard for.

[Bob Stewart]

Will the right hon. Gentleman give way?

[Mr MacShane]

If the hon. Gentleman will forgive me, I want to give time to other colleagues and do not want to take up my full time.

I should inform the House that I might not be here for the wind-ups, because I have to go and hear Monsieur François Hollande speak at King’s college London. I am excited about meeting Monsieur Hollande, this socialist who is proposing to increase the income tax on people earning €150,000 to 45%—in other words, lower than the business-crushing tax rate that the present Chancellor of the Exchequer imposes on higher earnings. Of course, Monsieur Hollande is not proposing to rip off the epaulettes or the légion d’honneur from bankers he does not like—as our Prime Minister did with Sir Fred Goodwin—nor is he proposing retrospectively to deny bankers their bonuses or to introduce retrospective tax legislation on what bankers earn. We have the most anti-banking Prime Minister in the history of Great Britain. As a low-tax socialist, I will be glad to be at the college listening to Monsieur Hollande, who seems to have a much more moderate and pragmatic policy.

I would be interested to hear from the hon. Member for Stone, who has left his place, why exactly the Royal Bank of Scotland—partly owned by us—and HSBC are running to the European taxpayer, in the form of the European Central Bank, to ask for cheap loans. Why on earth should the European taxpayer bail out appallingly badly run, inefficient British banks that do not lend their money, but continue to try to pad out their bonuses and salaries? I certainly do not object to their doing so; indeed, I hope that the European taxpayer will show some generosity.

[Mark Reckless]

The right hon. Gentleman is commenting about two banks, which he has given as an example, but as for HSBC at least—a large international bank with interests throughout the world, particularly in Asia—the UK is only a modest part of its operations. Frankly, his comments are unjustified in that respect. What is the objection to those banks accessing liquidity ECB support on the same terms as anyone else, and why should they not do so?

[Mr MacShane]

Because of the breathtaking hypocrisy of the Conservative party, in that when action is needed to allow HSBC and RBS—British firms—to continue functioning and operating in a Europe that needs to keep its head above water, and which therefore might need some help from the IMF, all we hear from the Conservatives is that we should not be part of it. However, what is sauce for the RBS and HSBC goose—going and asking for euro taxpayer handouts—has to be sauce for the UK gander. We are all in this together.

[Jacob Rees-Mogg (North East Somerset) (Con)]

Will the right hon. Gentleman give way?

[Mr MacShane]

Although I will lose time, I will give way—it is the hon. Gentleman, for heaven’s sake.

[Jacob Rees-Mogg]

I am grateful to the right hon. Gentleman; I will be very brief. RBS has business in Ireland. It is lending against its loans in Ireland, which are in euros and are therefore a matter for the eurozone. Of course it ought to be able to get money from the ECB on that basis.

[Mr MacShane]

And 50% of our exports go to the eurozone; therefore, it makes sense for us to help the eurozone stay alive. However, that will be difficult, because in our broad economic and fiscal policy we are more European than the Europeans. We are implementing anti-growth, deflationary, 1930s-type policies that Herbert Hoover or Heinrich Brüning would have instantly recognised. That is why unemployment is going up, why job creation is falling and why growth is flatlining. The paradox is that we need new policies for Europe, but they are not on offer from this Government, this Chancellor or this Prime Minister, who is entirely on the same wavelength as Chancellor Merkel, President Sarkozy and all the others who are currently pursuing job-killing, growth-crushing, deflationary, austerity, Treasury-driven financial and fiscal policies in Europe. I am surprised that we have not heard the terms “Camkozy” or “Merclegg”, because there is undoubtedly very little difference between the right-wing Conservative policy of our political leaders and that of the politicians controlling the big continental countries.

Let us be clear: the Commission is not involved in this. The European technocracy and bureaucrats are not involved in this; they are utterly sidelined. This is about the raw politics of anger in Germany against Greece, and the raw politics in Greece against Germany. It is also about the raw politics of the Conservative party in this House, some of whose members rightly feel that all the pledges made by their leader, now the Prime Minister, on referendums, renegotiation and repatriation have not in any way been delivered. That is what is causing upset and concern in the House of Commons. I am sure that it was also raw politics in Ireland that led the Taoiseach to agree to the referendum there. We know that Monsieur Hollande has said that, if elected, he will renegotiate the treaty. We also know that Mr Rajoy, the new conservative leader in Spain, has said that he will not implement a Merkozy-type dose, because Spain could not take it.

We need a new approach in Europe, and in this country. I would have no problem if, after 15 years of wallowing in Euroscepticism, the Conservative party rejoined the real European world. I would like to see Conservative MEPs sitting with other centre-right MEPs, precisely to create the links that the hon. Member for South Northamptonshire mentioned. We need more engagement, and not in order to join some Euro-federalist nirvana—that is not on offer at the moment. We are living in not a two-tiered Europe but a multi-tiered Europe, and we have to be part of it. We are not at the moment, but I hope that the Government can change their course before it is too late.

[Martin Horwood (Cheltenham) (LD)]

It is always a pleasure to follow the right hon. Member for Rotherham (Mr MacShane) in debates on Europe. He is the authentic voice of Euro-enthusiasm on the Labour Benches—[Interruption.] He is one of the authentic voices. I could not, however, work out from listening to his speech whether he was in favour of the treaty or not.

It is also traditional to congratulate the hon. Member who secured a debate such as this, but in this case I think that the hon. Member for Stone (Mr Cash) has missed the point on a colossal—almost historic—scale. There are questions of legality and politics around the treaty, but they are dwarfed by the really big issue, which is the future of the European economy. The treaty represents a sincere and concerted attempt to make that future stronger, safer and more prosperous. We can argue about its chances of success, but I think that the hon. Gentleman is trying to have his cake—perhaps I should say “gâteau”—and eat it. He is calling on European economies to practise fiscal responsibility without the treaty, while simultaneously criticising them for not sticking to the previous, more flexible, regime. I do not think that he can have it both ways.

That is in stark contrast to the letter written by the Prime Minister and 11 other Heads of Government in the run-up to the summit, which tried to address the real issue of promoting prosperity in Europe. It talked about completing the single market in service markets and promoting the digital economy, as well as

“providing a secure and affordable system for cross-border on-line payments, establishing on-line dispute resolution mechanisms for cross-border on-line transactions”.

It also proposed promoting an “internal market in energy” and “energy interconnection”, as well as a

“commitment to innovation by establishing the European Research Area, creating the best possible environment for entrepreneurs and innovators to commercialise their ideas”.

That is exactly the agenda that should be dominating our discussion of the summit. We should be talking about how we are going to get the whole of the European economy back on track towards creating jobs and sustainable prosperity.

We have to ask ourselves: what is the real threat to the UK’s national interests? Is it really the use of EU institutions by fiscal compact countries? Could that not be interpreted as a connection that will strengthen the interests of the 28, relative to the fiscal compact countries? That connection, and the involvement of the Commission, will mean that at least one institution will have to uphold proper adherence to the European Union treaties and the safeguards in the fiscal compact treaty.

Is there any threat to the single market, which is one of Britain’s primary interests in all this, given the safeguards that we have succeeded in inserting into the treaty by having a seat at the table and being part of the discussions that led to the drafting of the treaty, despite not being a signatory to it? That is in contrast to the view expressed by the hon. Member for Wolverhampton North East (Emma Reynolds), who is no longer in her place. I believe that that was a positive step by the Government, and a positive example of the re-engagement that we have seen since December.

[Mr MacShane]

Does the hon. Gentleman still share the view of his leader, now the Deputy Prime Minister, that the Conservative party’s colleagues in the European Parliament are “nutters”, “anti-Semites” and “homophobes”?

[Martin Horwood]

I think that the right hon. Gentleman is misquoting the Deputy Prime Minister, who was referring to the other parties that are members of that group. I obviously have a great deal of sympathy with that point of view, but I can assure the right hon. Gentleman that our leader was not accusing Conservative MEPs of that.

What is the most serious threat to the UK’s national interests? Is it the use of the EU institutions? Is there a threat to the single market, given the safeguards that have now been inserted into the treaty? I would say not. The most serious threat to the UK’s national interests is the most serious economic crisis in Europe’s post-war history. It is a real and present danger to British jobs, British prosperity and British companies. Why would we now throw a spanner into the works of the only vehicle with a chance of bringing that crisis under control? To use the term used by the hon. Member for Stone, I think that such an idea reveals something about his own pursuit of ideology, rather than any real defence of the UK’s national interests. For that reason, I think that he might even be losing sympathy among his Conservative colleagues for what must now count as the political equivalent of antisocial behaviour in continuing to be completely obsessed by the legal minutiae and institutional details, rather than the really big picture that is facing Europe and Britain within the European economy.