European Union Fiscal Union

Kelvin Hopkins Excerpts

Wednesday 14th September 2011 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

On the Eurosceptic fringe, the fact is that, on many occasions when referendums have been held, the majority have voted in a Eurosceptic way, so it is possible that there is a Eurosceptic majority in the European Union.

[Mr Cash]

Opinion polls in this country have regularly indicated that 70% want a referendum and, moreover, would vote yes against the idea of the continuation of our present relationship with the European Union. People want renegotiation and if they do not get it, they want to leave. That is the position.

We are confronted with an incredibly serious situation that is getting worse. There will be a telephone conference this afternoon—it might already be in progress, at the very moment when we are debating this question—between Monsieur Sarkozy, Angela Merkel and Papandreou, because the system has failed. If, however, we raise the question of its failure, the response is, “We don’t want less Europe; we want more,” so they want more integration, not less.

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[Kelvin Hopkins (Luton North) (Lab)]

I am grateful to have an opportunity to speak in the debate and to support the hon. Member for Stone (Mr Cash) in his concerns about fiscal union.

The issue has been raised because the eurozone is in deep trouble and is starting seriously to fall apart. A fiscal union would mean that one had substantial redistribution between the wealthy parts and the poor parts of an area. That would be acceptable in a democratic member state with a meaningful polity, but the European Union is not one. I suspect the German people would have something to say about such a proposal, if it ever went ahead. As we have seen, the German representative on the European Central Bank has already resigned because he knows that such a proposal will cause serious problems for Germany and is completely unacceptable.

I have something of track record on this issue. Thirty-two years ago, I did not think I would be speaking in such a debate. At that time, I wrote a brief for the general secretary of the union I worked for—the National and Local Government Officers Association. Economic policy was one of my areas, and I wrote a brief urging him to suggest to the TUC that we should not join the European monetary system, or the snake, which was a forerunner of the exchange rate mechanism and the single currency. He took my brief to the TUC, banged the table and demanded that the TUC take that line, which it did. The TUC then went along to see Denis Healey and banged the table, and he did not join the snake. I do not say it was all down to my brief, but at least I was on the same side, and we got the right answer. Unfortunately we joined the exchange rate mechanism a little later, and that was a mistake, but I could see the direction of travel then, and that it would be a disaster for both democracy and economics.

My hon. Friend the Member for Blackley and Broughton (Graham Stringer), who is no longer in his place, raised the question of democracy. It must have certain features: not just votes, but votes for people who will have power—Governments and representatives who can make decisions on voters’ behalf, and make the votes meaningful. If the vote has no meaning at all—if it is just a declaration and power is held by other people—that is not a true democracy.

Another feature of democracy is the ability to change Governments, as we have just done. The change we made was not to my taste, but nevertheless that is democracy. The way to keep the far right, and extremists of all kinds, away is to have a meaningful democracy, in which Governments can be changed, and where they have power over the lives of the people they represent. If they have no power there is no point, which is when street politics takes over. We do not want street politics. The things that happened on the extreme right and left before the second world war made for a very unpleasant time, which led to the war. We do not want that to happen again.

[Mr MacShane]

Does my hon. Friend take comfort from the fact that the most dramatic rise of the far right has been in Sweden, while the most dramatic and horrible single incident associated with it was the terrible slaughter in Norway? There was also the anti-Muslim referendum in Switzerland on places of worship, sponsored by the hard-right nationalist SVP. Does my hon. Friend take comfort from all those countries either being outside the European Union or not using the euro?

[Kelvin Hopkins]

With the far right we need to look at each individual case; I think that in Norway it was just one lunatic—an obsessive. Of course the far right attracts people who I would suggest are not entirely sane. Nevertheless, the far right in general has not taken hold in post-war Europe because we have had meaningful democracies; but I think those meaningful democracies are starting to fade. Fiscal union would, again, mean democracy taking more of a back seat.

It is clear that the founding fathers and mothers of the European Union in the 1950s wanted a world in which electors did not have the power to change Governments; they wanted power safely in the hands of a stable body. That is why the Commission was set up—to make sure that we do not have distasteful changes of politics and Government. However, changes of Government mean that people believe in democracy and work for it. They know that they will have a chance of getting their party into power next time. I shall certainly work hard next time to make sure that our party comes back into power; and no doubt our Conservative and Liberal Democrat colleagues will do the same. That is why democracy means something: we know it matters because those elected have power, and because it is possible to change the Government. That cannot be done with the European Union.

We are in a European crisis. The hon. Member for Stone constantly refers to Europe, but I refer to the European Union. The European Union is not Europe: they are two concepts. Europe is a wonderful continent full of fabulous people and great culture, history, music, art, languages, and literature; but the European Union is a political construct imposed on some of the countries of Europe. I fully support the idea of a different kind of European Union—a loose association of democratic member states co-operating for mutual benefit. I do not support a bureaucratic and anti-democratic machine that controls our lives and makes our votes decreasingly meaningful at national level.

The polity over which a Government govern must also be meaningful. If national boundaries are dissolved, and other structures are imposed—especially if those are not democratically controlled—that is not democracy. The great thing about democracy is that it is accepted these days that it will govern a national state. I am an internationalist, but I think that internationalism is about good relations between states, not the abolition of states, national boundaries or national entities. We get on extremely well with other states around the world because we co-operate across national boundaries, but we do not want them to disappear completely. We have culture, language and history that unite us in particular polities. That is why Germany, for example, could unite its east and west and spend a vast amount of money rebuilding East Germany. It was accepted that it was part of Germany. I doubt whether it would have spent so much money rebuilding, say, Greece—because Greece is not part of Germany but a separate country.

I think that many people would be upset if the same kind of money that went into rebuilding East Germany went into helping Greece. Greece now has the opportunity to get out of the euro, recreate the drachma and devalue. Suddenly, Greece would become the cheapest place in Europe for people to holiday, and the tourist industry would take off like nobody’s business. Greece would recover, because that is what it will be good at. It is a beautiful place, where people go on holiday. That is the logic for Greece.

The problem, of course, is that banks—and particularly French banks—have lent vast sums of money to Greece, and will be in trouble if that happens. However, as was said in a good discussion on “Newsnight” last night, either the euro will collapse and there will be a crisis with many people losing their money, or we will deconstruct the euro in a progressive and managed way, and some banks will have problems. Then Governments will have to step in and no doubt recapitalise those banks, if they choose to keep them alive. That is a difficult choice, but the logic is for countries that cannot sustain membership of the eurozone to get out, recreate their own currencies and devalue.

Ireland’s major economic partner is Britain. The British isles is not a single economy, but we are close. The fact that we are not in the euro and have depreciated our currency substantially means that the poor Irish, who are stuck in the euro, are massively over-valued relative to Britain, and so have a trading problem with Britain. I have suggested to Irish friends that they should recreate the punt, depreciate and rejoin the sterling zone, which is where they belong, instead of remaining in the eurozone, where they do not. I have not had any positive answer to that suggestion, but that is the logic of where we should be going.

I could speak for much longer, but others want to speak and I have probably said enough for the time being. I support the hon. Member for Stone in arguing the strong case against fiscal union.

[Annette Brooke (in the Chair)]

After the next speech, by the hon. Member for Northampton South (Mr Binley), I would like to call the hon. Member for Witham (Priti Patel), and I know that there are others who want to speak. The winding-up speeches will begin at 3.40pm.