EU Council

Lord Hill of Oareford Excerpts

Monday 28th October 2013 Lords Chamber

[The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)]

My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows.

“In the past 24 hours the country has been hit by one of the worst storms for many years. I know that the thoughts of the whole House will be with the families and friends of the four people we know have lost their lives. I am sure the House will join me in paying tribute to our emergency services and to all those who have been working to clear up the debris and get our transport system moving again. All the agencies involved are working as fast as possible to get things back to normal.

Let me turn to last week’s European Council. The key subjects under discussion were business regulation, competitiveness and monetary union. We also discussed migration policy, following the Lampedusa tragedy, and the importance of the EU’s Eastern Partnership, specifically with respect to Ukraine. So the background to this Council was the state of the European economy.

There is no doubt that the outlook is better than it has been, and particularly here in Britain where Friday’s figures showed the fastest growth for three years. My aim at this Council was to do everything possible to enhance the prospects of a sustained, balanced recovery here in the UK. We made good progress on three areas in particular: cutting red tape; promoting trade and the completion of the single market in digital and services; and protecting British interests as the eurozone integrates further.

Let me briefly say a word about each. First, on cutting red tape, Britain’s Business Task Force produced an excellent report which was endorsed by a hundred European businesses. I chaired a meeting bringing members of the Business Task Force together with President Barroso and the leaders of Germany, Sweden, Italy, Poland, Finland, Estonia and the Netherlands. These countries representing all parts of Europe and all political traditions agreed on the need to make more progress in cutting regulation and helping businesses across Europe to create jobs, and the strong language adopted in the communiqué by all EU member states reflects this. It calls for rapid implementation of REFIT, the Commission’s own bureaucracy-cutting initiative, and a proper scorecard to measure exactly how much regulation is being cut. Deregulation is now part of the EU agenda in a way that it simply has not been before.

Secondly, on trade, we welcomed the conclusion of the EU-Canada trade deal. This new deal could be worth £1.3 billion to the British economy, with estimates suggesting British exports to Canada could go up by as much as a fifth. Last week’s agreement also means we can now move the focus on to the EU-US talks which we began at the G8 in Lough Erne. There were some attempts to link this potential US trade deal with concerns over US intelligence, but the Council rejected this idea.

Turning to the digital single market, once again the commitment was made to complete this by 2015, potentially boosting growth by as much as 4% of the EU’s total GDP. As Britain is a world leader in e-commerce, this is very much in our interests. We made good progress at the Council on issues like portability of data, e-identification, e-invoicing and payment services and an EU-wide copyright regime for the digital age, but we also agreed not to rush ahead with the data protection directive on an artificial timetable because the current draft has disproportionate burdens on small business and they need to be removed. In terms of the services directive, we agreed that it was time to look at a new sector-by-sector approach rather than just trying to remove all the outstanding barriers to free trade in services in one go—a process that has stalled in recent years.

Thirdly, on defending Britain’s interests, as I have argued repeatedly, the European Union is changing and the eurozone needs more integration and co-ordination. But Britain is not in the single currency, and we are not going to be, so we should not have to take part in these additional bits of co-ordination, whether they cover economic or social policy. So while members of the eurozone agreed to even more intrusive policy co-ordination, including on social policy, I was clear that Britain will not take part. This is reflected in the communiqué which says that all changes are voluntary for those countries not in the single currency.

On the tragedy at Lampedusa, we agreed the next stages of the work of Frontex, which is responsible for trying to stop people coming to the EU in the first place, but we rejected the idea that there should be additional burden-sharing for so-called ‘front-line states’, not least because, if you look at the figures, Britain, France, Germany, Belgium and Sweden between us received almost 70% of asylum applications recorded in the EU in the past 12 months. What is most important of all is helping to stop the problems at their source. The UK will continue to play a leading role in this: for example, through support for border security in Libya and the focus of our development assistance on helping countries that are at risk of instability. On the Eastern Partnership we agreed that countries which look towards Europe for support, such as Ukraine, should be free to enter into agreement with us while, of course, continuing to insist on proper standards of governance and justice that such a relationship should entail.

Finally, because of the recent controversies there was much discussion about the role of intelligence agencies. We agreed a statement signed as Heads of Government—because there is no EU competence in this area and nor should there be—that said European countries and America should have a relationship based on trust and that damage had been done by recent revelations. The UK has a very strong, long-standing trust-based relationship with the US, not least as part of the Five Eyes partnership together with Canada, Australia and New Zealand. In terms of our own intelligence services, we have a long-standing tradition that we do not comment on intelligence matters. We have parliamentary scrutiny of our intelligence agencies through the Intelligence and Security Committee and we have strengthened that oversight. Our agencies operate under the law and their work is overseen by Intelligence Commissioners. Of course, as technology develops and the threats we face evolve, so we need to make sure that the scrutiny and frameworks in place remain strong and effective. But we have every reason to be proud of our intelligences services and the way in which they are properly constituted in our country.

Since 2000, we have seen serious attempts at major acts of terrorism in Britain typically once or twice a year and, since 9/11, 330 people have been convicted in our courts—here in the UK—of terrorism-related offences. This year alone, there were major trials related to plots, including plans for a 7/7-style attack with rucksack bombs, two plots to kill soldiers and a failed attempt to attack an English Defence League march using an array of lethal weapons. There were guilty pleas in each case and 24 terrorists were convicted and sentenced to more than 260 years in jail. I quote these figures to demonstrate the scale of terrorist threats still facing this country.

Our intelligence has also allowed us to warn our EU allies about terrorist plots aimed at their people, cyberattacks on their businesses and infrastructure and attempts in their own states illegally to traffick drugs, people, arms and money. Our intelligence officers serve our country without any public recognition. Some have given their lives in this service and yet their names are not known and their loved ones must mourn in secret. We owe them, and every intelligence officer in our country, an enormous debt of gratitude. These silent heroes and heroines are keeping our country safe. They deserve our wholehearted support. I commend this Statement to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Lord Hill of Oareford]

My Lords, I am grateful to the noble Baroness the Leader of the Opposition for her remarks about the efforts being made by the emergency services and various companies to respond to the effects of the storm. I am not able to give her precise figures, but they are working flat out to help people caught out by the storm. I agree very much with what she said about our intelligence services. It is important that there should be rigorous oversight. We have that and it is right that we should do so.

On the subject of timing in relation to trade and Canada, the significant decisions on the deal have been taken so we are not expecting it to take long to resolve the remaining issues. I cannot give a precise timetable for the EU-US talks. The potential benefits of such a deal are, obviously, far greater than the EU-Canada deal. There was some possibility of an attempt to slow down the timetable for the EU-US talks at the European Council. That was resisted and the focus will now switch to trying to make progress on it.

There is a fair bit of detail in the communiqué about what was achieved on digital services. The real impetus of the Council was in terms of the digital single market, on which a number of conclusions were reached. It is very much in our interests that we make progress on that. We have a very active e-commerce sector which we need to capitalise on. There was a restatement of the timetables and an agreement to refocus efforts to make progress.

On the data protection directive, as the noble Baroness said, it is clearly the case that proper concerns about data protection must be addressed. There was no agreement to the earlier timetable which we sought because of concern about the cost which might be inflicted, particularly on small businesses—estimated at up to £300 million—by the over-early implementation of such a directive before the details were thrashed out. The position reached was to work on that—not to resile from it but to try and make sure that, when it is introduced, we do not have an unforeseen effect on small business.

There was significant progress made on regulation, not just here but reflecting a continuing process whereby the UK, working with its allies, is trying to shift the emphasis in a more deregulatory direction. This relates, in a way, to the noble Baroness’s final question about what difference this summit has made. The work of our own business task force contributes to that, as does the work the Commission itself is doing through the REFIT initiative, working in tandem with it.

As the noble Baroness says, there is good regulation which can increase competition, and there is regulation which harms prospects for employment or growth. We all agree that the urgent priority at the moment is to make sure we have economic growth across Europe so that more people can benefit from it, particularly the young. I know that the noble Baroness is concerned about youth unemployment. We all want to see much faster progress but, since the general election, the total number of young unemployed people has fallen by nearly 80,000. Our level is below the EU average and below that of France and of Italy. We have been creating more training opportunities, which are part of the solution. The noble Baroness will know that the number of apprenticeships has grown enormously: we have doubled the number and this is also part of the solution. The 1.4 million private sector jobs created since the general election are also helping. Altogether, the number of NEETs is now the lowest it has been for a decade. There is obviously an awful lot more work to do and ultimately the process starts with what goes on in schools, where we must try and make sure our young people have the skills they need to equip themselves for the growing number of available jobs.

[Lord Alderdice (LD)]

My Lords, I would like to identify these Benches with the condolences to those who have been bereaved, the sympathy for the injured and the appreciation of the tremendous efforts being made by the emergency services in dealing with results of the storm.

I thank my noble friend for repeating the Statement made in another place by the Prime Minister. Much of it encourages me. I am encouraged to see improvements in our own economy and more widely. Thoughtful and appropriate deregulation is a useful step forward, although we have to be careful. Wider trade deals are bound to be very welcome, and that with Canada, with which we have such a long and friendly relationship, is particularly so, both for itself and for what it may lead to in the rest of North America.

I am also encouraged by developments on the e-commerce front although, as the Statement made clear, we have to be careful as it also opens opportunities for e-crime. I rather suspect that your Lordships’ House will have to face rather complex legislation over the next few years to deal with many aspects of this. It will not be easy because it will be a challenge for all of us to know exactly what we are legislating about in this area and to keep up with the changes.

I am encouraged by the clear statement that the way to deal with immigration problems is not to create a fortress Europe but to address the needs and problems of the countries from which people flee. They do not come because they are happy in their own countries: they come because they do not have a good future there. We have to try to help them improve on that.

Coming from my part of the United Kingdom, I have a particular perspective and a deep appreciation of the work that the intelligence services have done for us over many years in ensuring that our community did not fall apart and that we were able to engage later in a peace process. The intelligence services do important work for us and it is silent work at its best.

However, one part of the Statement gave me a little cause for concern. It was what the Prime Minister said in respect of countries outside the European Union and the eastern partnership. He said that we continue,

“to insist on proper standards of governance and justice that such a relationship should entail”.

Our right honourable friend the Prime Minister is right about that but in one country within the EU, Hungary, those standards of governance and justice simply do not apply any more, and it has been getting worse for a number of years. Sadly, this has been happening under the prime ministership of Viktor Orban. I knew him many years ago when he was, as he still is, the leader of Fidesz—in those days the young liberals. He was, like me, a vice-president of Liberal International and we served together on the officers’ board. I well remember the first thing that he did. Fidesz, because it consisted of young liberals, had a rule whereby when you were over 30 you had to resign and join the Alliance of Free Democrats. What did Viktor do? When he reached 30 he changed the rules, which has been and still represents one of his characteristics. When the rules tend to take away some of his power, he simply changes the rules. I remember well a meeting of the committee of Liberal International when he walked out and said that he was going to join a more conservative group. That is what he did and he has produced a more authoritarian country. My concern is that the Prime Minister entertained him in Downing Street this month before the European Council and friendly photographs are being used by Mr Orban in Hungary to show that this country is supportive of him. I seek a reassurance from my noble friend that the Prime Minister is pressing Mr Orban to address the real problems of authoritarianism, anti-immigration and the destruction of European values in that important part of the European Union.

[Lord Hill of Oareford]

My Lords, I shall not resist the temptation to say that my noble friend has highlighted some of the dangers of joining the young liberals. I know that he makes a serious point about his concerns.

I am grateful for his support for the Statement more generally. I am sure that many will have heard his remarks about Hungary. As with all EU member states, Hungary is subject to clear obligations and has to adhere fully to the laws and values of the Union. I am sure my noble friend knows that earlier this year the Commission launched a detailed review to ensure that newly introduced legislation in Hungary was brought into line with accepted EU standards. I understand that Hungary has engaged with the Commission on that review and is making changes to its constitution that have addressed many of the concerns. We welcome Hungary’s engagement with the Commission on areas that fall within EU competence.

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Alderdice, quite rightly was given a lot of scope because what he said about Hungary was well said. The progress on deregulation at the summit and the decision not artificially to hold up the progress of the US-EU trade negotiations are welcome. They will of course take a long time anyway. Is the noble Lord aware of any member state other than the United Kingdom which has made a public statement that on a permanent basis it will not join the banking union that is being put together? Is he aware of the substantial evidence presented to your Lordships’ Sub-Committee A by a series of witnesses and experts to the effect that if we remain outside the banking union our financial services industry will have an increasing handicap competitively over a number of years and we will end up paying a significant economic price for doing that?

[Lord Hill of Oareford]

I am grateful to the noble Lord for what he said about progress on regulation. We keep chipping away at this and there has been progress. The fact that seven countries joined the UK in lending support to the report produced by the British Business Task Force shows that there has been a shift. The Prime Minister has been working hard in that respect, particularly with Chancellor Merkel. I am also grateful to the noble Lord for what he said about how vital the EU-US talks are. I understand the noble Lord’s views on banking union. Obviously, the Government take a different view and their position has not changed as a result of the recent European Council.

[Lord Tugendhat (Con)]

My Lords, I, too, associate myself with what has been said about the emergency services and the intelligence services. I was encouraged by what my noble friend said about the deregulation agenda. In particular, I noted that the Prime Minister had chaired a meeting that brought together the leaders of a number of countries with President Barroso. There is of course a big difference between countries agreeing on the need for deregulation in general and agreeing on what precisely should be deregulated. Can my noble friend enlighten the House—if he cannot do so now, perhaps he can in some other way—as to the degree of agreement on the range of regulations and directives that ought to be repealed?

[Lord Hill of Oareford]

I am not sure that I can enlighten the House on a huge amount of detail but there are two strands to what the Prime Minister and those who agree with him in the EU are seeking to achieve. One is that the Commission has its own process under the REFIT programme that my noble friend will know about, which is coming up with a series of regulations, measures and so on that it thinks could be repealed, not introduced or otherwise revised. That is a Commission-led process. Alongside that, the Prime Minister has been working with British business, and the British Business Task Force has been working with European businesses, to come up with suggestions from a business perspective regarding further changes that could be made. A twin-track process is going on. One track is led by the Commission and, in the other, Britain with its allies is trying to take forward this issue of how one can have the right amount of regulation that will not hold back economic growth, which is our priority, and get that balance right.

[Lord Deben (Con)]

Does my noble friend agree that the opposition Front Bench was a little curmudgeonly in the second part of its response on youth unemployment, given that this Government have done remarkably well on unemployment during a very difficult time? Was it not also true that his Statement showed just how important it is for Britain to be a full member of the European Union? None of these things would have happened in the way they have and to the degree they have had not the Prime Minister taken an active part. Is it not time that people stopped complaining about the European Union and in fact spent their time improving it in the way in which the Prime Minister is clearly doing?

[Lord Hill of Oareford]

My Lords, I would never—although perhaps I might occasionally—accuse the noble Baroness, Lady Royall, of being curmudgeonly. My noble friend is quite right about what has been achieved in terms of generating jobs generally and the improving trend of economic figures that we are beginning to see. There is much more to do but there has definitely been progress. He is also right about what has been done to tackle youth unemployment. On his broader point, the Prime Minister has demonstrated that it is possible both to argue strongly for Britain’s national interests and to build alliances with other similar-minded countries in Europe to bring about change for the common good. The issue is sometimes presented as a false dichotomy, whereby if you argue for Britain’s national interests you jeopardise your influence within Europe and you either have to go with the consensus or become an outist. The Prime Minister has set out that one can argue very strongly from within the EU for what is in the interests of the whole of Europe as well as Britain.

[Lord Phillips of Sudbury (LD)]

My Lords, will my noble friend say a word more about trust in politics as he very wisely referred to it early on in the Statement. It seems to many here today that there is a slow but very worrying creep of disaffection across Europe with democratic politics. There can be no more signal demonstration of the cynicism that exists in some parts of the political establishment at the very highest levels than the bugging of the phone of Angela Merkel. I suspect that tens of millions of people will have noticed that who do not notice much else—good things—about the world they live in.

My question is this—I apologise if it is a question that cannot elicit a direct reply. Is there any consequence to that extraordinary event? It must have been a criminal offence in Germany and in the United States. Is there any accountability for what happened?

[Lord Hill of Oareford]

My Lords, I will make two points in response. First, my noble friend is right to point to a growing disaffection across Europe with the institutions and processes of the European Union. One of the things that many people are trying to work for is to bring the work of the Union more into contact with the everyday concerns of the citizens of Europe and overcome this growing democratic deficit as people call it. That is something that my right honourable friend the Prime Minister would say he is seeking to pursue by arguing against measures that would affect British businesses, choke off growth and all the rest of it.

Regarding the point about telephones, as my noble friend knows, he will not tempt me to comment in any detail on the work of our intelligence services. The leaders at the Council issued a statement after a great deal of thought in connection with the issue he raised and that has set out a way and a process in which the French and the Germans will talk to the Americans about what may or may not have gone on.

[Lord Brooke of Sutton Mandeville (Con)]

My Lords, paragraph 10 of the European Council conclusions that accompanied this Statement stated that the EU was in 2011 faced with 300,000 unfilled vacancies in the ICT sector. It added that if this trend was not checked there could be 900,000 unfilled vacancies in the sector by 2015. Could my noble friend contemplate covering a domestic omission in this Statement by putting in the Library a breakdown of the UK’s statistics within these EU-wide figures?

[Lord Hill of Oareford]

I am afraid, my Lords, I do not know the basis for the calculation made by the EU and whether it was based on data drawn from individual member states. If there are any data I can find I will, of course, let my noble friend have them, but I cannot say with any certainty what the basis of that calculation was.

[Lord Flight (Con)]

My Lords, I cannot entirely agree with the comment of the noble Lord, Lord Davies, that Sub-Committee A was of the view that the UK would suffer if it did not join the banking union. The point was surely that the body to which the ECB is accountable has a voting structure and if virtually all EU members did end up joining the banking union, theoretically it would then be possible for it to tell the UK what to do. In the negotiations over the banking union this country should ensure that the independence of banking policy is safe.

[Lord Hill of Oareford]

I completely understand the points that my noble friend makes. Those are very alive in the minds of our Ministers and officials negotiating this because they are keen to safeguard the position that my noble friend sets out very clearly.

[Lord Marlesford (Con)]

My Lords, I was very glad to see in the Statement the sentence:

“Deregulation is now part of the EU agenda in a way that it simply has not been before”.

I noted the distinguished membership of the meeting chaired by the Prime Minister on the Business Task Force report, including President Barroso and the leading countries in Europe. There was a startling and very prominent absence from that list of countries, which was France. Would I be right in thinking that part of the reason for France’s absence is that it does not share our approach on this matter at all? The biggest single bit of business regulation—and I would argue the most unjustified—that the French go in for is the 35-hour week, which is policed by a mixture of inspection and denunciation, which must be very bad for the business sector in France. Perhaps, in that sense, a bit of schadenfreude might be in order, but I do not express it. I say that it is wrong that the EU, if it means anything on these matters, should have such an example of business regulation.

[Lord Hill of Oareford]

My noble friend is right that the French approach things differently from us. When he talks of schadenfreude, the point to which I would refer him is the fact the Germans were there at the Prime Minister’s launch. Those who have, like my noble friend, studied the dynamic within Europe over a very long period of time would recognise the relationship between the UK and Germany. The work that my right honourable friend the Prime Minister has put into trying to strengthen that relationship is an important part of helping to counterbalance some of the views held by other member states to which my noble friend refers.

[Baroness Royall of Blaisdon]

With the permission of the House, perhaps I may ask the noble Lord to comment on the contrast between the search for deregulation in the business sector, which in many ways we welcome, and the imposition of bureaucracy and red tape on charities, trade unions and the voluntary sector in the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill?

[Lord Hill of Oareford]

As the noble Baroness would expect me to say, these are different matters. I refute her point that the proposals on charities in the Bill would be as intrusive and destructive as the kinds of regulatory burdens that are operating in some ways within Europe, which we seek to remove. Like the noble Baroness, what one always wants is a proportionate approach in all areas.