Parliamentary Sovereignty and EU Renegotiations

Debate between John Baron and Kelvin Hopkins

Thursday 4th February 2016 Commons Chamber

[Mr John Baron (Basildon and Billericay) (Con)]

As ever, you have been very generous, Mr Speaker.

I beg to move,

That this House believes in the importance of Parliamentary sovereignty; and calls for the Government’s EU renegotiations to encompass Parliament’s ability, by itself, to stop any unwanted legislation, taxes or regulation.

I thank the Backbench Business Committee for granting this debate, and Members on both sides of the House who supported the application for it.

There can be no greater issue for this Parliament to debate and defend than the country’s sovereignty, as that goes to the heart of everything we do. Without it, we cannot truly have the final say on a host of issues, including the primacy of our laws, the integrity of our borders and the extent of burdensome regulation. As our EU renegotiations proceed, however, it appears that little effort is being made to truly restore parliamentary sovereignty. It is not a priority, which I suggest is a great opportunity missed.

We have a golden opportunity to pitch for fundamental change in our relationship with the EU for the benefit of both parties, as the Prime Minister promised in his Bloomberg speech, but we are missing it while No. 10 tinkers at the edges. Without consulting his parliamentary party, in my view the Prime Minister is sidestepping the issue completely by arguing for temporary measures, and measures that require us to club together with other Parliaments, in the vain hope of stopping the EU. That is not restoring parliamentary sovereignty. If we as a Parliament and a country cannot on our own stop any unwanted EU taxes, directives or laws, then it is clear that if we vote to stay in, we vote to stay on the conveyor belt towards ever closer union, as laid out in the EU’s founding treaty. Parliament will become nothing more than just a council chamber of Europe.

To those who say that the UK already accepts a certain pooling or loss of sovereignty when joining other international organisations, I say that only the EU can force us to take in economic migrants despite the strain on our infrastructure, override our laws, and foist burdensome regulation on our companies, despite the vast majority not even trading with the EU.

[Kelvin Hopkins (Luton North) (Lab)]

I congratulate the hon. Gentleman on raising this important issue, and I agree with everything he has been saying. The great 19th-century constitutionalist, Walter Bagehot, divided politics into the “effective” and “decorative” parts of the constitution. Does the hon. Gentleman agree that this place must be the effective part of our constitution, not just a decoration?

[Mr Baron]

I completely agree, and that is why I suggest that the issue of sovereignty goes to the core of our relationship with the EU. If we do not take the opportunity to address it now, it could be lost for a generation.

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

Debate between John Baron and Kelvin Hopkins

Monday 10th September 2012 Commons Chamber

[Mr Baron]

I rise to support my hon. Friend the Member for Hertsmere (Mr Clappison), and to question my right hon. Friend the Minister for Europe on a number of what I consider to be design flaws in the ESM.

First, although £500 billion in lending capacity sounds like a big figure—and it is—it would be a drop in the ocean should an economy the size of Italy need help. That is especially the case as the ESM’s mandate will be broader than was initially envisaged. In fact, it could be argued that the perception that the eurozone rescue funds could run out of money could drive borrowing costs higher for the Italian and Spanish Governments and raise the likelihood of such an outcome.

Another design flaw, and perhaps a more fundamental one, concerns the circularity of having the facility guaranteed by the same group of countries that might need to draw on it. What will happen if one of those countries needs to draw on it? The burden on the remaining countries will increase, thereby increasing the likelihood that they, too, will face a debt crisis. That is another potential flaw that I wonder whether the Minister has considered.

A further flaw is the reliance of the ESM on the creditworthiness of all its guarantors. The triple A credit rating that it aims to achieve, and hence the low borrowing costs, hinge on a sufficiently large number of eurozone countries maintaining their credit ratings. We have seen in the past the effects of ratings downgrades, such as in January 2012 when Standard and Poor’s downgraded nine eurozone countries, including France. That was followed by a downgrading of the European financial stability facility only four days later. Has the Minister considered those potential but fundamental flaws in the design of the ESM?

Finally, I put it to the Minister that the ESM would not exist if were it not for the political will to maintain the euro. It is quite obvious to many, and certainly to many eurozone leaders, that one cannot have monetary union without fiscal union and, in large part, one cannot have fiscal union without political union. As many of us on the Conservative Benches and, to be fair, some on the Opposition Benches, have long argued, the euro endeavour is a political initiative to move towards closer political union, and the chickens have finally come home to roost.

If the politicians were not interfering so much, we would have something similar to the Asian debt crisis at the end of the 1990s. For a short period, that was a pretty bloody affair, but as nations’ sovereign debt was allowed to be reneged on, as countries defaulted and as currencies were allowed to depreciate, there was a rapid bounce back in economic growth. GDP was higher two to three years after the start of the crisis than it was at the beginning, because market forces kicked in, currencies devalued and growth rates picked up because of the greater competitiveness. The Asian crisis moved on and the countries involved are in a much better state than at that time, because their currencies were allowed to depreciate.

What do we have? We have a system by which countries are locked into a single currency and cannot devalue, which prolongs the agony. What Greece needs now, desperately, is to devalue its currency so that it can become more competitive and can grow its way out of its problems. Holidays for British tourists, for example, would be 25% cheaper with a 25% devaluation, which would help the economy. The goods that Greece manufactures would be 25% cheaper, which would help it to export its way out of its problems. However, the euro is sealing its fate in many respects, and prolonging the agony. My concern is that the ESM is part and parcel of the package to preserve the euro and prolong that agony.

[Kelvin Hopkins]

To return to the hon. Gentleman’s earlier point about the Asian crisis, the Asian countries were strongly advised by the International Monetary Fund not to do what they did in the end. They ignored the IMF, did what they thought was right—rightly—and of course they recovered, as he said.

[Mr Baron]

The hon. Gentleman is absolutely right, as he has been so many times; he has a long track record of being fundamentally right on this subject.

Although it can be argued that the ESM does not really affect us, that this is just a treaty change and that we should not get involved, I ask the Minister to reflect on the fact that we are actually playing a small part in prolonging the agony of the euro. We need some fresh thinking on this issue, because, to return to a point made earlier, by not facing reality we risk a very disorderly break-up of the euro, which cannot be good for this country or, indeed, eurozone members generally.

European Council

Debate between John Baron and Kelvin Hopkins

Thursday 8th December 2011 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

First, may I apologise for arriving slightly late for the introductory speech? I congratulate the hon. Member for Harwich and North Essex (Mr Jenkin) on initiating a very important debate at this historic moment. It is important that Government Members and, indeed, the people of this country know that some of us on the left take a strongly critical view of the European Union and what it is doing at the moment, both in democratic terms and on economic grounds. I will not speak for long because many others want to contribute.

As powers have been transferred to the European Union, we have had a consistent erosion of democracy. Within the European Union itself, real power is not with the European Parliament, although it can make a lot of noise; real power is with the Commission. The Commission is a completely undemocratic body run in a secretive way by the Eurocrats who want to govern our lives bureaucratically, rather than democratically. We have already seen the beginnings of bureaucratic government in Greece and, indeed, in Italy. At some point, the people of those countries will react against that, particularly when they have increasing austerity and unemployment rammed down their throats.

I am concerned about how the economy is being run at the moment. The view is expressed in the media and by our politicians and some of our leaders that somehow dismantling the euro would be a total disaster and that we must do everything that we can to save it. That is not true. Some people who occasionally write in our journals say that dismantling the euro would not be that damaging. In fact, we need a controlled deconstruction of the euro for those countries that clearly cannot sustain their membership because their real exchange rate is way out of line with that of Germany and others. We must create a situation whereby those countries can recreate their own currencies, find an appropriate parity and start to reflate their economies behind those currency barriers.

I think that everyone now accepts that Greece will leave the euro at some point, and when that happens, it will re-establish the drachma. Greece will devalue substantially—30% or 50%—and all of a sudden, it will become the cheapest place in Europe to have a holiday. Everyone will go to Greece for their holidays and the Greek economy will recover, as it will do in so many other ways. Greece will not be able to buy as many BMWs and Mercedes from Germany, but it will start to regenerate its internal economy and its people will start to live a decent life again. Other countries that are much bigger than Greece are in a similar position, and so others will need to follow.

I do not agree with the idea that such an approach would be disastrous for us all. If those countries can get out of the euro, re-establish and start reflating their economies, their economies will start to grow. If we insist on their staying in the euro and having increasing austerity, that will mean more unemployment and a fall in demand, and the whole economy of the European Union will start to go into a deep black hole.

I have said this many times: the idea that being critical of the European Union or wanting to re-establish a national currency is being anti-European is nonsense. I see myself as a passionate European. I am European by history and by virtue of where I live. I love everything about Europe. I love the music, the culture, the languages and the people. I also stand shoulder to shoulder with working-class people in Europe. As a socialist, people would expect me to do that. Working-class people will not benefit from the continuation of this stupid system of a single currency. They will benefit only when their countries can re-establish some independence and start to reflate their economies.

Many millions of working people in those countries feel that their leaders have left them behind. Indeed, during the past two weeks, I spent several days in Copenhagen last week and two days in Brussels this week. I have heard people bemoaning the fact that they are drifting away from their politicians and that there is a gulf between the political class and the people. If people in many of those countries were asked what they want, they would probably say that their views are similar to ours.

The Eurobarometer shows that there is increasing Euroscepticism across the European Union. We are run by a bureaucratic elite who want unity at all costs on their terms and who are leaving behind their own people. We must avoid that. At least we have a more serious Eurosceptic voice in Britain from hon. Members on both sides of the Chamber and, indeed, among our electorate. I hope very much that our leaders will recognise that and start to suggest that we should have separate currencies and go back to a world where we perhaps even have pegged currencies at appropriate parities. Each country should be able to manage its own affairs with its own interest rates, its own fiscal policy and its own parity with other currencies. That is the world that worked in the post-war period, and it has been destroyed by those who want to create a country called Europe—or part of Europe, at least.

[Mr John Baron (Basildon and Billericay) (Con)]

To reinforce that point, the hon. Gentleman may want to reflect on the fact that, since 1945, there have been around 80 situations in which countries have left currency unions. In the vast majority of cases, those countries benefited from that devaluation. It is an economic fact that devaluation allows greater competitiveness, and the austerity packages in Italy and Greece would therefore not need to be so severe.

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention. Indeed, he is absolutely right, and the Soviet Union is the best example. Many currencies were created after the break-up of the Soviet Union. When Slovakia broke away from the Czech Republic, it created a currency and that was not a problem. I am sure that both economies—certainly Slovakia’s—benefited from that.

From time to time, we have had to adjust the parity of our currency in relation to other currencies. That has been necessary and beneficial. The Bretton Woods settlement made provision for that in 1944; in fact, Bretton Woods wanted to go further. Keynes and others suggest that some countries ought to be required to revalue if they have a very large trade surplus, as indeed one major country in Europe has with the rest of Europe at the moment. Such countries ought to be required to get some balance within the international economy.