European Union

Lord Dodds of Duncairn Excerpts

Tuesday 13th December 2011 Commons Chamber

[Mr Nigel Dodds (Belfast North) (DUP)]

I beg to move,

That this House commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK; regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK; and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.

Yesterday in the House the Prime Minister referred to a period of great change in Europe. There is a sense arising out of the European Council at the weekend that something very significant has happened in the United Kingdom’s relationship with the European Union. A taboo has been broken. For the first time in living memory, a Prime Minister of the United Kingdom went to an EU summit not only prepared to say no but, in the event, actually used the veto when it became necessary in our national interest. I commend the Prime Minister for sticking to his word and wielding the veto in the circumstances that he outlined in this House last week. I have to say with regret that that is not something that we have come to expect from British Governments. We have been more used to Ministers going to crucial EU meetings in recent years and coming back having to explain why the latest EU regulation or measure is being implemented despite the implications for our national interests.

It is clear that what the Prime Minister has done has gained support from people from right across the political spectrum. That may not be reflected in some of the speeches, interventions and posturing in the House, of course, but it is clear that a large number of people from all backgrounds, whether they are Tory, Labour, Liberal Democrat or support parties in Northern Ireland, agree with what the Prime Minister has done.

[Andrew Percy (Brigg and Goole) (Con)]

May I provide my right hon. Friend with an example of that? Two of my constituents living on the Isle of Axholme wrote to me last night by e-mail to inform me that they had voted Liberal Democrat in the general election but would now vote Conservative because of our Prime Minister’s actions.

[Mr Dodds]

I am sure there will be many such messages flooding in to right hon. and hon. Members over the coming days. There is no doubt that, not for the first time, many Members are out of step with what the people think.

[Mr Denis MacShane (Rotherham) (Lab)]

Very simply, what action did the Prime Minister veto? A veto is imposed to prevent something from happening.

[Mr Dodds]

I will come on to that in detail, but he prevented a treaty from coming into place that did not have sufficient safeguards for the United Kingdom. It is a pity that when the Labour party was in government, it did not take such action to prevent some of the things that happened to this country.

[Mr John Redwood (Wokingham) (Con)]

Of course, the Prime Minister stopped a treaty for the 27. Did the right hon. Gentleman see that the statement that was issued was made only by the 17 euroland Heads of Government? The other nine have not signed up to it. That is very clear in the statement, so it is misleading to say that Britain is isolated when the other nine think it is a lousy treaty as well.

[Mr Dodds]

The right hon. Gentleman is absolutely right, and I will come to that. Even today, we are hearing of issues in Denmark and that Sweden is unlikely to sign up. In Poland, it has been pointed out that two thirds of each House will have to support what has been agreed if the country is to sign up, and it is unlikely to get that. We are hearing similar things in Finland, the Czech Republic and other countries, never mind what is going on in Germany and even France. This is potentially a watershed moment in British politics.

[Mr William Cash (Stone) (Con)]

This is a good moment to place on record the fact that the Democratic Unionist party has played a stalwart role in this whole business from the beginning. That needs to be put on the record, as part of the historic tribute that needs to be paid to that party in this matter.

[Mr Dodds]

I am very grateful to the hon. Gentleman for his kind remarks. Given that he was commended even by the leader of the Labour party in the House yesterday, those words are very welcome coming from someone with such vast experience in fighting these battles over the years.

What happened at the weekend is important not so much for the substance of the matter in itself but for the rebalancing of our relationship with the European Union that it might herald. I refer to that in our motion.

Many people say that because of the action that the Prime Minister has taken, we are now marginalised and isolated. Many of those who say that are, of course, the very same people who at one time not so long ago were urging us to join the euro. They were the people who castigated the euro-realists who dared to point out the in-built defects of the euro project. They made the same dire, doom-laden predictions then. They were wrong then, and they are wrong now.

Being outside arrangements that exist for most of the other EU members is, in any case, nothing new. For instance, the UK is not in the Schengen agreement. We were told by some that that was contrary to the spirit of being good Europeans as part of the EU, but it is absolutely right in the interests of the UK and the protection of our borders.

We heard much yesterday and over the weekend about the damage that the latest developments might do to our country’s standing in the world. For instance, we heard about how the Americans might view us. However, yesterday Hillary Clinton made very clear what she thought, saying that

“our concern has not been over the position that the UK has taken, it’s whether the decisions made by other members of the eurozone countries within the EU will work.”

With respect, that is the nub of the matter. What matters is what will happen to the eurozone.

We have talked about the role of other countries. The right hon. Member for Wokingham (Mr Redwood) referred to other countries that have not signed up, and I mentioned Sweden. It will also be interesting to see what the position is in the Irish Republic when the matter has been considered in detail. It is not so much the text of the proposal as its substance that matters in the decision whether the agreement must go to a referendum. It will be interesting to see the reaction there. It is clear, is it not, that the French Government and others have a clear policy when it comes to corporation tax? Over the years, the Irish Republic has prided itself on attracting foreign direct investment through low rates of corporation tax, and it has built its economic policy around that to a large degree. It will be watching the matter very carefully.

[Mrs Anne Main (St Albans) (Con)]

Does the right hon. Gentleman share my concern about the fact that a French MEP is suggesting this evening that Britain ought to be punished for taking a view that supports the best interests of Britain? Should countries be punished for not behaving themselves?

[Mr Dodds]

The hon. Lady is right to point to some of the vindictive language that is coming out of Europe. Indeed, President Sarkozy was talking today about consequences for the United Kingdom because of the actions that we have taken. We have to recognise that there are dangers—I think the Prime Minister talked about “risks”—in the intergovernmental approach, and I will deal shortly with what that might mean. It is one reason why we cannot let matters sit where they are. We are in an unsatisfactory position, and we need to decide how we will deal with the situation.

In France, the Opposition Socialist contender in the presidential election, François Hollande, has made it clear that if he were elected, he would seek to renegotiate any agreement that was reached, because he opposes the loss of French budgetary sovereignty. The concerns felt in the House are not some isolated, strange, esoteric or unusual position, but are shared across large parts of Europe by many parties, many of which would not be described as naturally Eurosceptic, right wing or anything of the sort. Members would do well to bear that in mind when they talk about the Government being in thrall to a small minority of MPs and others. They should recognise the reality. The idea that there is a united Europe of 26 against the UK is not correct.

Of course, many countries have to put the new euro-plus arrangements to parliamentary approval, at least, if not to a referendum. We will see what happens when they actually consider the implications of having their national budgets supervised by the European Commission, and the fact that strict rules will be imposed on their national Governments’ ability to borrow, with all the implications for sovereignty that that entails.

For all the adverse reaction from some on the Opposition and Liberal Democrat Benches yesterday, the fact is that the Prime Minister’s stance has the overwhelming backing of the people of the United Kingdom.

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

The right hon. Gentleman’s points are absolutely right. May I suggest to him that many Conservative Members believe that the veto should be the start of a process to reset our relationship with the EU, based on free trade, growth and prosperity? We want to move away from political union and dead-weight regulation. That is not some utopian dream—such a relationship already exists. I ask him to reflect on the fact that countries such as Switzerland already enjoy such a relationship with Europe, so there is no reason why we should not.

[Mr Dodds]

The hon. Gentleman is absolutely right, and I will come shortly to how we should rebalance our relationship with Europe. He is right to point to the type of relationship that we should have—one based on free trade and co-operation with our European friends and neighbours, but on a sovereign nation to sovereign nation basis.

There are those who tell us that the Prime Minister has gone against the whole thrust and approach of UK foreign policy for the past 40 to 50 years. I have no doubt that there is much wailing and gnashing of teeth in the bowels of the Foreign Office and elsewhere among the professional mandarins who have seen the EU as almost a sacred cause, to be advanced whatever the wishes of the British people or the views of the temporary occupants—as they would see it—of political office. For the mandarins, the people and those who occupy political office are to be managed and dealt with—although I am sure that that does not apply to the occupants of office in this Government.

[Martin Horwood (Cheltenham) (LD)]

The gnashing of teeth is not just among mandarins, is it? Has the right hon. Gentleman heard from the business analysts at IHS Global Insight? They said that

“the European council statement made clear that a new ‘fiscal stability union’ would seek to deepen the internal market, creating stronger fiscal and economic rules.

‘Outside this union the UK is likely to become increasingly irrelevant and marginalised’”.

Does not such concern on the part of business worry the right hon. Gentleman?

[Mr Dodds]

I have heard all that before. We heard it at the time of the UK’s withdrawal from the exchange rate mechanism and when Britain decided not to join the euro. We have heard time and again the dire warnings of doom and gloom. However, if we reach the position that the hon. Member for Basildon and Billericay (Mr Baron) outlined, of a relationship based on free trade and co-operation, it will free our economy from much of the regulation, red tape, bureaucracy and dead-weight of EU laws that currently hold us back from the true competitiveness and real growth that we need.

We have not just heard from the hon. Member for Cheltenham (Martin Horwood); we have also heard the hysterical reactions of blasts from the past such as Paddy Ashdown, Michael Heseltine and the other usual suspects. It is time the House realised that focusing our foreign policy on the narrow ground of greater Europeanism and ever closer political union in Europe is contrary to the UK’s vital interests.

We make it clear that we must and should work with our European neighbours and friends on a host of economic, political and policy issues. However, let us also recognise the enormous opportunities on the wider scene: our unique position in terms of the Commonwealth, our special relationship with the United States, and our standing in the United Nations. For too long our vision as a country has been dominated by the little Europeanists, who want to take us in only one direction. It is high time that blinkered approach was discarded.

There are those who say that what the Prime Minister did was wrong because we must do all we can to save the euro. However, as was said earlier, in considering the events of last weekend, it has been overlooked that, for all the talk about arrangements to prevent future crises, not a lot was done to instil confidence that the immediate crisis will end any time soon.

[Mr Redwood]

The right hon. Gentleman is making a good point. Did he see that if, for example, Ireland or the United Kingdom joined the so-called stability pact, they would have to make massive cuts in public spending and massive increases in taxes? It is a sort of mutually assured austerity pact.

[Mr Dodds]

Yes. For precisely that reason, I believe that when the peoples of each country—and even some of the politicians, who are currently going around saying that the UK has done a terrible thing—begin to study the detail and realise the restrictions that will now be imposed on their freedom to set their budgets and taxes, to borrow and so on, they will seriously reconsider the proposal. Having caused the greatest economic catastrophe for many decades, by creating the euro and the one-size-fits-all approach, EU leaders have come up with a bizarre answer: no comprehensive solution to deal with the immediate and pressing crisis, and no overarching deal that will properly address the problems that Greece, Italy and Spain face, but a plan to deepen and extend European integration—a plan for more treaty change and more institutional tinkering.

After all the arguments about the Lisbon treaty, we were told that Europe had learnt its lesson and that there would no more institutional debates and treaty changes. Instead, Europe was to get on with the business of trying to create jobs, growth and economic prosperity, yet here they are, at it again. There is a one-track mind among many European federalists about deepening European integration, and political and fiscal union.

[Bob Stewart (Beckenham) (Con)]

When the euro was set up, were there not strict rules on compliance for those joining, which even some of the biggest countries largely ignored? Now there is again talk about strict rules on compliance. Perhaps the boy is crying wolf; I do not believe that those rules can be enforced on countries that have shown in the past that they will not comply. They will not comply in future, either.

[Mr Dodds]

The hon. Gentleman makes a good point. He is right: in the rush to set up the euro, which was a political project from the beginning—it was believed that it would ultimately lead to political and fiscal union—those behind it permitted countries that they knew were not capable of meeting the requirements to join. What they are trying to do now will not succeed in patching the whole thing together.

[Dr Julian Lewis (New Forest East) (Con)]

The right hon. Gentleman is being extraordinarily generous in giving way. To support what he has just said, does he remember Romano Prodi, then President of the European Commission, on that fateful new year’s eve when the euro was brought into effect, being asked, “This is a political project, isn’t it?” and his replying, “It is an entirely political project”? Is that not why those people are so desperate to continue with it, even though it is leading to economic disaster?

[Mr Dodds]

Absolutely. The hon. Gentleman is right to remind the House of Prodi’s words at that time, of the fact that the nature of the project is explicit, and of what lies behind it.

Some people say that the Prime Minister acted to protect the City and the big banks. If it was all about that, I would not be standing here supporting the motion. We need more regulation of the banks and of those who contributed greatly to the mess in which we find ourselves. One of the questions that arises from the Vickers report is how to regulate banks more strictly, and we need to be able to go further, unfettered by the EU. I also believe in the so-called Robin Hood tax—provided that it is applied universally and not targeted mainly at London and the UK to prop up the failing euro, of which we are not part.

[David Morris (Morecambe and Lunesdale) (Con)]

On the Tobin tax, £40 billion would have been taken out of the City. Does the right hon. Gentleman agree that that would equate to £642 in taxation for every man, woman and child in this country?

[Mr Dodds]

The hon. Gentleman is right to point to the effects if the EU had targeted the financial services sector, unfairly penalising the UK. The tax revenues of which he speaks are enormous and the contribution to employment—not just directly—is significant for the UK. There are arguments for measures such as the Tobin tax, but they have to be applied universally. The UK alone should not be picked out.

Some say that the Prime Minister’s action will cost jobs and damage British business, but the EU’s share of world trade is decreasing. Who believes that the EU would want to stop exporting to a market of some 60 million people, or inhibit trade that would cost the jobs of millions of people in the EU? That simply will not happen. All the scaremongering about that, as in the past, is not based on economic reality.

We must guard against the inevitable pressure that will come—and is already coming—behind the scenes from diplomats, mandarins and others who will try to drag the Prime Minister away from his current stance and use the back door to achieve the UK’s acquiescence. The Prime Minister has already hinted at some sort of compromise on the desire of the euro-plus countries to use the EU institutions. He needs to be careful about that. If they want to do that, we need to ask what they are prepared to do for the UK in return. I hope the Prime Minister will not accede to the pressure being exerted to allow that to happen by the back door.

Of course, it is important to recognise the limits of what has happened. As a result of what happened at the Council, 26 countries—or however many it will be in the end—cannot themselves implement agreements on financial services or other things that have an impact on the single market. That must be done through the single market Council. However, therein lies a problem. Yesterday in his statement the Prime Minister alluded a couple of times to the risks involved in the intergovernmental arrangement. As I said in my contribution yesterday, the very real risk is that other EU member states will gang up on the United Kingdom and outvote us through qualified majority voting.

[Mike Gapes (Ilford South) (Lab/Co-op)]

Is not the reality that nothing has changed with regard to financial services? Twenty-six cannot impose qualified majority voting; nor can 27. At the end of the day, therefore, the so-called veto was not a real veto, because 26 have gone ahead. The reality is that we still have the right to block changes in that respect under the Single European Act.

[Mr Dodds]

I do not agree with the hon. Gentleman. The Prime Minister is right to say that it would have been entirely wrong, without sufficient protections, to have a treaty that, as he put it, would have hard-wired the situation into the European Union treaties. The hon. Member for Ilford South (Mike Gapes) alluded to protections, but QMV does not provide the UK with much of a protection. As has been said already in the debate, given some of the vindictive language being used in European capitals at the moment, we must be very careful indeed. It is clear, in my view, that the status quo cannot stand in the medium to long term.

[Mr Cash]

Does the right hon. Gentleman accept that what he is saying is incredibly important in terms of the future path, because the real problems are contained in the existing treaties themselves, which need to be fundamentally changed, along with our relationship with the European Union? That is the real problem. We should not just nibble at the edges.

[Mr Dodds]

The hon. Gentleman is right in that regard. We cannot have a bloc of eurozone countries acting collectively by using its voting power at EU level to force through measures to the detriment of the UK’s national interest.

Even the Deputy Prime Minister has warned against the dangers of a club within a club. The new club will have a common interest and act collectively. The Secretary of State for Northern Ireland pointed that out in a recent article in The Spectator. He said:

“a fiscally united eurozone will spend as a bloc, tax as a bloc…and…vote as a bloc”,

and he is absolutely right.

For that reason and a host of others it is clear, as the hon. Member for Stone (Mr Cash) said, that a fundamental reassessment of our relationship with the EU is required. The Prime Minister’s use of the veto is very welcome. Saying no to Europe has been and remains almost unthinkable for some in the political elite, no matter what the cost in terms of our national interests, but the question now is: where do we go from here?

As things stand we are left with all the old familiar problems with the EU that we had before the European Council. We are left with the huge issues of loss of sovereignty and EU control of vast swathes of UK laws and policies. We are still committed as a country, because of the EU treaties, to “ever closer political union”. We remain subject, for instance, to the common fisheries policy, to the plethora of regulations and directives that stifle competitiveness and growth, and to interference in criminal justice and home affairs. Not least, we are still required to contribute almost £10 billion per year net to the EU at a time when domestic budgets are being slashed, and QMV provisions under the Lisbon treaty have reduced the areas where we can say no to EU intrusion.

[Ian Paisley (North Antrim) (DUP)]

On that £10 billion net that we contribute each year to the European Community, does my right hon. Friend agree that we would be far better exercised in determining how those resources are spent on our own fishermen, our own farmers, our own industrialists and our own banks, rather than letting bureaucrats and eurocrats determine how it is spent?

[Mr Dodds]

My hon. Friend is absolutely right.

I sometimes hear others, particularly elements of the media, and particularly the BBC—this will not be first time that hon. Members have referred to the BBC in that regard—argue the case for Europe by saying, “But look at the vast amounts of money we get.” That has sometimes been stated about Northern Ireland; my hon. Friends will deal more particularly with the situation there later. We are told, “But you’ve benefited from all these initiatives,” and so on and so forth, but the money involved is a small percentage of what we pay into Europe in the first place. In many cases it comes with so many strings and conditions attached that it would be far better if it were disbursed by our own Government or at a regional level.

The Prime Minister said yesterday in the House that

“the balance of powers between Britain and Europe is not right”—[Official Report, 12 December 2011; Vol. 537, c. 530.]

I prefer the use of the term “United Kingdom”, because Northern Ireland is an important part of this, but the Prime Minister is absolutely right. We must therefore build on what has happened.

Many talk about the need to have powers repatriated. I sympathise with their aims and objectives, but repatriation can be limited. We may gain here, but we will lose there. I think we need a more fundamental and simpler approach. We know what the British people want, we know what makes sense for the UK in the long run, and, as we say in our motion before the House, we must rebalance our relationship with our European neighbours.

The relationship must be based on free and mutually beneficial co-operation. It must be about free trade and commerce, to the mutual benefit of businesses and consumers throughout Europe—that is the best way to create growth and prosperity—and it must be about laws being made in this country by democratically elected and accountable representatives of the British people. That is the sort of relationship that people in this country want with Europe. I believe that for too long there has been a determination on the part of the political and diplomatic elites in this country to deny the people of this country any say on Europe. Ultimately, people must be given the opportunity—finally—to have their say through a referendum. I believe that the events of the weekend have brought that day closer, and I commend the motion to the House.

[Several hon. Members]

rose—

--- Later in debate ---

[Mr Bellingham]

No, I will not.

Let me say something about the UK’s influence in Europe. The decision not to proceed with a treaty at 27 has no impact on our status in the European Union. Our role in the EU is safeguarded by the existing treaties. Britain remains a full member of the EU. Our membership is vital to our national interest. We are a great trading nation, and we need the single market for trade, investment and jobs. Contrary to what was said by the hon. Member for Wolverhampton North East, we will remain active and influential in the EU. The European Council does not in any way diminish our role. As was pointed out by the hon. Member for Cheltenham (Martin Horwood) in a wise and sensible speech, this week there will be meetings of the Councils on Transport, Telecommunications and Energy, and Agriculture and Fisheries, and we will be present as full, active members in each of those Council meetings.

I am trying to respond to speeches made by a large number of Members on both sides of the House. As was pointed out by my hon. Friend the Member for Daventry (Chris Heaton-Harris) and the hon. Members for East Londonderry (Mr Campbell), for South Antrim (Dr McCrea), and for Upper Bann (David Simpson), the decision not to be part of the treaty that will be agreed by the eurozone and others does not in any way reduce our influence. The EU is not a monolithic block, and it already contains flexible arrangements.

As the right hon. Member for Belfast North observed, the United Kingdom is not part of the single currency or the Schengen no-borders agreement, but that has not prevented us from leading the way in the EU on a range of issues, from an activist foreign policy to the completion of the single market. As my right hon. Friend the Minister for Europe pointed out, our position is incredibly important in terms of not just the single market but foreign direct investment, 50% of which comes from the EU. As he also pointed out, much foreign direct investment from other parts of the world, such as the BRIC nations—Brazil, Russia, India and China—is due to our membership of the EU.

My hon. Friends the Members for Stone (Mr Cash) and for Stroud referred to the EU institutions. We want the new treaty to work in stabilising the euro. That is in our national interest, because our economy is closely tied to that of our EU partners. I understand why the eurozone member states would want to use the institutions to help to ensure fiscal discipline. We will look constructively at proposals to use the EU institutions with an open mind, but this is new territory which raises important issues.

The right hon. Member for Belfast North was spot on when he said that nothing must be done through the back door. We must ensure that institutions built for 27 continue to operate fairly for all member states, including the UK, and in particular we must ensure that the role played by the EU institutions in safeguarding the single market is not affected. I assure my hon. Friend the Member for Stroud that we will continue to intensify bilateral relations with many different EU countries. Let me assure the hon. Members for Foyle (Mark Durkan) and for South Down (Ms Ritchie) that we will not take the isolationist route.

On the repatriation of powers and the balance of competences, the Government are committed, under the coalition agreement, to examining “the balance” of competences between Britain and the EU. There is a case for doing that—as the right hon. Member for Lagan Valley (Mr Donaldson) pointed out, it is a very strong one. The work on the review has begun and is in its early stages. In taking it forward, we will look at how to engage with our EU partners on individual competences. A change in the balance of competences would require the agreement of all 27 member states on the basis of negotiation and agreement.

I wish to say a few quick words about the working time directive, because it is important at a time of economic uncertainty that we remain focused on job creation and growth. That will require all of Europe to improve its competitive position, including in respect of labour markets. A key part of that will be limiting the barriers to flexibility in the working time directive. The Government are committed in the coalition agreement to limiting

“the application of the Working Time Directive in the United Kingdom.”

Our priority is that the working time directive keeps a secure economy-wide opt-out; working people should be able to work the hours that they choose. We will also be looking to secure more flexibility in the areas of on-call time and compensatory rest.

I pay tribute, once again, to our friends in the Democratic Unionist party, because this very good debate has come at a crucial time for Europe and, throughout, the contributions of DUP Members have been incredibly consistent, solid and reliable. What can we say about the Opposition? I agree with my hon. Friend the Member for Brigg and Goole (Andrew Percy) that we have heard nothing but carping and criticism. The hon. Member for Wolverhampton North East did not tell us whether Labour would have signed the treaty. She said nothing at all in response to two interventions, including one from my hon. Friend the Member for South West Wiltshire (Dr Murrison), asking why Labour gave up Britain’s £7 billion EU rebate when the now shadow Foreign Secretary was Minister for Europe? She also made no attempt to answer the question about why Labour signed the UK up to a euro bail-out mechanism after the general election—on 8 and 9 May 2010, before the coalition agreement was completed. She also failed completely to answer the questions put to her about her leader, who first—

[Mr Dodds]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.