European Council

Debate between Denis MacShane and John Redwood

Thursday 26th January 2012 Commons Chamber

[Mr MacShane]

I am very happy to hear the hon. Gentleman gloss over his speech, but that is the point I was making.

I am all for exporting to the BRICs, but their growth rates are slowing. India is talking about a return to “Hindu economic growth” and China might go as low as 8% or 7%, which is a real worry for the Chinese authorities. The same is the case in Brazil—[Interruption.] Hon. Members say that that is not bad and, of course, I would love a 7% growth rate for my own country, and I shall come to that. However, rapidly developing countries throughout history have had very high growth rates when peasants and others move from the fields and core industries are developed, but the plain fact is that we export more to Ireland than to all the BRICs combined. Belgium exports more to India than we do. The absurd notion that Brazil, India or Russia, run by kleptocrats, are an alternative to the mature, balanced, middle-class consumer economies of the European Union is not right.

[Mr Redwood]

Does not the hon. Gentleman understand that the markets that feed and clothe him are the people? The markets we are talking about today are his pension savings, his other savings and those of millions of other people who are trying to protect themselves from the euro disaster.

[Mr MacShane]

I do not really want to get into a debate about the markets as I am also pro-market, but the markets are also Mr Hester, the hedge fund billionaires and the donors to the Conservative party who make a fortune out of speculation and who have so increased inequalities in the past 30 years that we now have a generalised social crisis that might cause severe dislocation.

I do not share the cataclysmic views that some have about what the Prime Minister did on 9 December. I think he was ill-advised, that he allowed the Treasury to run the negotiations and that the key decision was taken at a time—2.30 am—when no sane person should take a decision. None the less, the plain fact is that across the rest of the European Union there is a sense that Britain does not want to engage or be fully part of the EU. Last week, at a conference with the former French Defence Minister who negotiated the French side of the French-British defence treaty of 2010, I was surprised to hear his extraordinary, virulent attack on what one could call “Albion perfide” and how Britain was no longer a defence player with France, was not prepared to co-operate and was doing all it could, he said, to sabotage the good effects that the treaty would have. That is the reputation we have and that worries me.

It also worries me to hear reports that one of the new intake on the Government Benches, whom I shall not name, said in a conference over the weekend that it would have been impossible to have been selected as a Conservative candidate in recent years—or, indeed, to be a Conservative MP—without showing the most strident Euroscepticism. [Interruption.] Well, if there is an exception that proves the rule and if the hon. Member for South Swindon (Mr Buckland) is about to make a pro-European speech I shall welcome that. None the less, that is the impression in this country.

--- Later in debate ---

[Mr Redwood]

As I just explained, it is totally different if a country has its own currency and can use monetary mechanisms to try to grow its way out of the problems, and can establish an exchange rate that allows it to export its way out of the problems, which is exactly what these countries have to do, yet are unable to do because they are locked in.

[Mr MacShane]

rose—

[Mr Redwood]

I have no more injury time available, so I need to develop my argument rapidly.

If those countries are to have some hope of prosperity, they need to solve the two underlying problems. It is obvious to most external observers that the way to solve the problem of competitiveness quickly is to devalue. Normally, an IMF programme for a country in trouble not only asks it to cut its budget deficit and reduce its excess public spending, but suggests that it devalue its currency and move to a looser monetary policy domestically, so that there can be private sector-led growth, export-led growth—the kind of thing it needs to get out of its disastrous position. That is exactly what those countries are unable to do. That is why the IMF should not lend a country such as Greece a single euro or a single dollar. Greece is to the euro area as California is to the dollar area: it is not an independent sovereign state, and it cannot do two of the three things that a country needs to do to get back into growth and prosperity, because it cannot devalue and it cannot create enough credit and money within its own system.

We need to give honest advice to our partners and colleagues in the eurozone, around the European conference table—in private, not in public—that the only way forward, the only way to resolve the crisis for those countries that can no longer borrow in the marketplace at sensible rates of interest, is to have an orderly way of letting them out as quickly as possible, so that they can re-establish their own currency, their own looser and appropriate monetary policy and their own banking policy, and offer some hope to their subject peoples.

I am very worried that this is not only an economic crisis, a banking crisis, and a currency crisis, but also now a crisis of democracy. The challenge, in countries such as Greece and Spain, is how the Governments manage to get buy-in to the policy of deflation and cuts with everything that is the only offering from the euro scheme and the euro system. We see in some of these countries now that the electorates do not choose the Government; the European Union’s senior players choose the Government. We see in some of these countries that the electorate change the Government but they do not change the policy. The new Government have to pledge to follow exactly the same policy, which does not work, in order to get elected and to be acceptable to the European Union, in order to carry on drawing down the subsidies and loans from within the European Union that have to be on offer to try to make the system operate to some extent.

I hope that the British Government will adopt the following position. I hope that they will say in public, whenever asked about the euro, that the British Government have no intention of providing any running commentary on the euro whatever or of saying anything that makes the position of the euro worse, but will always give good, strong, independent advice in private. That should be the public position. It is too dangerous to say things. Most of the things that politicians say about bond markets and currency crises make the position worse, so the United Kingdom would be well advised to have a simple formula, which all Ministers use, that we are providing no commentary on the euro and we wish the euro members well in sorting it all out.

In private, we are important allies and partners of the euro area and the British Government need to give honest advice to try to get our continent out of this mess. I do not believe there is a single fix that can solve that problem for all the countries currently in the euro. Many of them went into the euro with inflation rates that were too high, with state deficits and debts that were too high, and with currencies that were not in line with the German currency. It was a huge error. The founders of the euro knew that there had to be very strict requirements; they broke them from day one.

It will not solve the problem to sign up to some new constitutional pact that says that a country down on its luck, unable to borrow money, running out of cash, will be fined. Who will pay the fine? The answer is that the fine would have to be lent to the country in trouble by the very people who are fining it. It is so preposterous that I find it very difficult to believe that serious people can sit round a table, negotiating such an instrument. They should cast aside the draft instrument. It is irrelevant; it cannot work. They should sit down in private and work out how to get non-competitive countries out of this mess before even more damage is done to their economies and their democracies.

European Union Bill

Debate between Denis MacShane and John Redwood

Tuesday 8th March 2011 Commons Chamber

[Mr MacShane]

I am grateful that the poor fish thrown into the sea will now have their flippers flipped in the House of Commons.

I want our Government and our House regularly to debate Europe, but the plain fact is that it is the decision of this Government—this coalition—not so to do. The Foreign Affairs Committee, with its coalition majority, is also abolishing its regular trip to the European Union nation that holds the presidency.

[Mr Redwood]

Has the right hon. Gentleman noticed that we are debating Europe all day today, and that we have had quite a lot of days on this Bill?

[Mr MacShane]

Yes, and I well remember the right hon. Gentleman in the even longer debates—going through the night—on the treaty of Amsterdam saying that signing it would mean the abolition of Britain. When there is a new Bill, we have debates, and we have had many debates and some good discussions on this one.

European Union Bill

Debate between Denis MacShane and John Redwood

Tuesday 25th January 2011 Commons Chamber

[Mr MacShane]

My hon. Friend is one of the most decorative parts of this House, and I hope that, after the reduction of representation in the wretched Parliamentary Voting and Constituencies Bill becomes law—it will weaken the House of Commons unless the other place defends our constitutional rights—when there will be 50 fewer of us, he is to be found among the survivors.

This is the eternal argument. The most sovereign person in the world was Robinson Crusoe on his island. No one could tell him what to do, and he did not tell anyone else what to do. Our nation’s history is entirely about finding partners and allies and making treaties. I invite hon. Members to go to the National Gallery and look at the depiction of the signing of the treaty of London signed in 1604, which has four British dips and four Spanish dips and you cannot tell the difference between them. That treaty brought to an end 50 years of conflict between Spain and Britain because—

[Mr Redwood]

We won.

[Mr MacShane]

That is a good crack, but I think that the right hon. Gentleman will find that Spanish power messed up the continent for another 100 years until we won again. If the House of Commons only exists to express the sentiment of the football fan that “We won, and they have to lose”, Britain will never advance.

--- Later in debate ---

[Mr MacShane]

To be told to sit down by the hon. Gentleman, who, to his great credit, has never long warmed a Bench if he could stand up, is undoubtedly a real pleasure to be had from my small contribution to this debate.

[Mr Redwood]

The big difference is that the Government’s health reforms are reversible if they do not work or if a future Government do not like them, whereas the surrender of power to Europe is irreversible.

[Mr MacShane]

Again, this shows a failure to understand that if we do not like a treaty, there is an alternative. I have been told over the 16 years in which I have sat in the House that almost any change would undermine Britain. Indeed, the right hon. Gentleman famously said that the Amsterdam treaty would mean the abolition of the United Kingdom. Can anybody in the Committee tell me a single thing that was in the Amsterdam treaty?

European Union Bill

Debate between Denis MacShane and John Redwood

Tuesday 7th December 2010 Commons Chamber

[Mr Redwood]

rose—

[Mr MacShane]

rose—

Draft EU Budget 2011

Debate between Denis MacShane and John Redwood

Wednesday 13th October 2010 Commons Chamber

[Mr Denis MacShane (Rotherham) (Lab)]

I rise to cast a protective arm over the Economic Secretary as she confronts the massed ranks of well-argued opposition from those on the Benches behind her. The hon. Member for Stone (Mr Cash) gave a masterclass on why the amendment of the hon. Member for Clacton (Mr Carswell) should not be pressed to a Division, but we will see what happens.

This debate is part of a long process of changing our relationship with our partners in Europe, and I do not know where it may end. The hon. Member for Clacton emotionally talked about the nursing jobs that could be saved and the extra soldiers who would not need to be relieved of their duties, but the problem here is not the fault of the European Union. Rather, it is a consequence of a set of decisions that the Conservative and Liberal Democrat coalition has taken. It is seeking to reduce the deficit over four years, much as if I could abolish my mortgage deficit over that period. I wish I could do that—by starving my children, perhaps, or cutting back on other spending. That is the Government’s decision. It is nothing to do with Europe itself. At the end of the day it must never be forgotten that the EU budget represents just 1% of Europe’s gross national product.

[Mr Redwood]

rose—

[Mr MacShane]

That proportion is less than when the right hon. Gentleman was a member of the previous Conservative Government.

[Mr Redwood]

Given that the EU is urging all member states to cut their budgets in order to cut their deficits, why does it not show the way by giving a lead in cutting its own?

[Mr MacShane]

I have absolutely no objection to that point. The right hon. Gentleman is right. If he wants to advance that argument, however, he does not have to persuade me, and the hon. Member for Clacton does not have to persuade the fellow signatories to his amendment. We have to link up with others, in the right hon. Gentleman’s case with fellow conservatives and centre-right politicians across the rest of Europe.

The hon. Member for Stone brushed aside my earlier intervention, but the plain fact is that a fortnight tomorrow the leaders of Europe—the vast majority of European Governments including those of Mr Reinfeldt, who has just been confirmed in Sweden, and the new conservative-liberal coalition being formed in the Netherlands—[Interruption.] I am so sorry for the disturbance caused by my mobile phone ringing. I shall make a donation to any charity you wish, Madam Deputy Speaker. Those leaders in Europe will sit down to dinner and discuss precisely the points raised here tonight, but there will be a Banquo at that feast: the British Prime Minister.

I am not going to tell the Prime Minister what to do. He did not quite win the election, but he has settled in well as Prime Minister. He has to decide whether his collegial dining comrades at European feasts where decisions are taken should include rather interesting gentlemen from Latvia, Poland and elsewhere. I can quote the Deputy Prime Minister’s description if it helps, but I think most Members have it in their mind.

The other point that we have to consider is that 20 years ago the EU was largely financed by what is called own resources, such as VAT and duty. I know tax is anonymous but some taxes are less in the payer’s face than others. There has been a massive change in the past 20 years in that the EU budget now comes from direct Government contributions. Therefore these arguments are now deeply sensitive in all nations. People in the poorer—perhaps the east European—countries ask why they are signing a big cheque for the British rebate. I am prepared to defend it, but we would be in a much stronger position if more Members were networking across the continent, making the points they are making today and finding allies and friends of weight and seriousness. Frankly, the Conservatives are not doing that at present. I try to make that point more in terms of political science; at this time in the evening, there is no point in seeking controversy.

This is the first of a serious set of debates, and the Government will have to decide. My estimate is that the Economic Secretary to the Treasury, is speaking just as if there had been no change of Government. The European policy of the coalition is no whit different from that of the previous Government in its broad approach to European issues. That may change, but the Conservative party will have to decide whether it wants to confront the deep national interests of this country that have never opted for protectionism or isolationism, no matter how seductively those positions have been put—they have certainly been put that way tonight.