European Union: Recent Developments

Lord Howell of Guildford Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Howell of Guildford]

My Lords, it is a pleasure to follow the noble Lord, Lord Williamson, who understands the complexity of the matters that we are addressing better than most.

In my view, to handle the European Union issue successfully in the light of current developments, our policy framers and advisers, and their critics, need a new mindset. Compiling a wish list of things that we want to grab back from the EU, and then trying to negotiate to stay in the single market, which some less experienced MPs and others seem to think we should be doing, will lead nowhere. We have been round this course before and in the end it does not work. The case needs to be made for greater differentiation within the European Union and this should be put forward as a positive policy for the EU as a whole rather than as a form of special pleading for UK “exceptionalism”.

As the ongoing budget saga has confirmed, we are not alone in wanting new directions for the European Union. We do have allies, both among member state Governments and, I suspect, even more among member state peoples, as recent German popular support for a different Europe has indicated. The isolation or marginalisation argument that we hear so much of is complete nonsense.

A successful approach requires a challenge at its roots to the outdated 20th-century integrationist philosophy inside the EU, commonly called “more Europe”. This challenge should be in the interests of Europe as a whole, not just the British, and, if properly formulated, will have many allies around the Union. The old “more Europe” doctrine is still being attempted with the fiscal pact, as we have already heard today. Time will show that this, too, will no longer work, not least because of the huge and still growing divergences between eurozone economies within the eurozone.

To make the case effectively and profoundly for an alternative path or model for the EU, we need to draw on disciplines far outside the normal confines of diplomacy. Scientists tell us every day that this is now an age not of centralism, top-down plans and blueprints but of self-assembly, self-replication and legitimacy built from the bottom up. The same applies, I suspect, between peoples. As the Prime Minister put it a year or so ago, in today’s world, we need,

“the flexibility of a network, not the rigidity of a bloc”.

As I have said, the key concept that we need in establishing the relationship between member states and the EU institutions is differentiation. The treaties invite us to think of powers and competences in chunks and groups which are frankly out of date. Areas such as social policy and employment policy are 20th-century categories. In today’s world, they can be far more separated and disaggregated in deciding which functions should be of common concern, which should rest at national level—where the subsidiarity concept can be effectively applied, which it has not been in the past —and which should be tackled at a far-wider-than- Europe level. The same could apply to agriculture and environmental policies, which nowadays break down into all sorts of new categories.

I am frankly puzzled by some aspects of the steps being taken towards a banking union within the eurozone countries. They are by no means guaranteed success. This is one more attempt—there will be many to come—to cope with the chronically sick euro system. In fact, a supervised banking union is a classic example of a set of functions that need to be handled globally, not regionally, as our financial experts in the City of London know well. That is why we have had Basel I, II and now III, to police and regulate banking practices the world over. I am glad that we are keeping our own globally-related financial system well clear of this narrow banking union endeavour, although with the appropriate safeguards against discrimination within the single market, as we heard from the Minister.

There is no reason at all why a policy of much more detailed differentiation in the treatment of various functions should lead to a two-tier Europe, as I fear that the present drift of events is leading. On the contrary, detailed unbundling and dissection of blocks of competences could lead to a far more varied and less divisive Europe than we have today. The gurus who keep telling us that there is no alternative either to locking ourselves into the integration process or withdrawing are quite wrong and out of date. I congratulate more clear-thinking experts like Frank Vibert at the London School of Economics for opening our minds to this second front in EU policy development in an age of complexity. We should not be afraid of taking the intellectual lead in EU policy. Many people around the union are waiting for us to do so.

We should not be afraid of showing that the Lisbon treaty was based on a deeply flawed understanding of how the connected world now works, as many of us argued at the time. We should not be afraid of laying the groundwork for a new treaty and calling a new IGC to carry it forward. Nor should we delay while the search for a solution to the problems of the euro goes through endless false starts and unsustainable initiatives. The euro will continue to require constant and very expensive treatment to survive. Meanwhile the European Union needs to be saved, reformed, updated and put on a far more secure basis of legitimacy and political support than it has in its present dysfunctional state. In turn, that will give us in this country, as well as many other states, sensible and sustainable relationships with all our neighbours and friends within the EU and with the EU as a whole. It will also give us a modern and realistically differentiated breakdown between national and supernational powers, bilateral alliances and collectivism in Europe, which will command popular support in any referendum, where we can rely on the shrewd and unconventional wisdom of the British people.

Let us put aside shopping lists and unrealistic want lists and boldly come forward with strong pan-European ideas and proposals for a healthier union in a new global landscape which is taking shape. If, as we are told, treaty changes in the European Union lie ahead anyway, let us ensure that we take the initiative in shaping them and helping to redirect Europe in a sensible, workable and relevant direction to the benefit of all member states, including ourselves.