EU: Reform

Lord Howell of Guildford Excerpts

Thursday 9th January 2014 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I thank my noble friend Lord Dykes for initiating this debate on European priorities. The right place to start is indeed from the famous Bloomberg speech by my right honourable friend the Prime Minister on 23 January 2013, which I strongly believe set the right agenda and pointed in the right direction. However, follow-up is now needed. The reform agenda will not solve itself; it must be vigorously pursued. Indeed, as the excellent pro-European organisation Open Europe puts it:

“Sweeping European reform is fully possible but … Downing Street must seriously raise its game”.

Of course, it is not only Downing Street. This should be above parties if that is possible, but certainly it should mobilise the best brains in this country.

Two essential strategic requirements follow from the agenda-setting of the famous 23 January speech. The first is obvious. It is that allies must be secured if there is to be European reform. It must be European reform, not just reform of the narrow issue of Britain’s relations with the rest of the European Union. There is definite progress on this. Mr Cameron, the Prime Minister, is gathering support for European reform on a scale frankly not dreamed of and, no doubt, longed for by previous Prime Ministers from both major political parties. Support for reform is coming quite strongly from the Netherlands, Sweden, the Czech Republic, Slovakia, Hungary, the Baltic states and, of course the Club Med countries. Although they are arguing for reform for very different reasons, as we know, related to the difficulties of the eurozone, they are also looking for a reformed system. We should also have Poland with us as a friend and in the reform programme—for the different kind of EU for the 21st century—but, frankly, present differences are not exactly helping that. However, I believe that the underlying interests are the same and point in the same direction.

In my view, there is no question of the UK being somehow marginalised or isolated, as some of the gurus and commentariat keep insisting. Even if we were alone in this EU reform programme, and we are not, in our modern networked world interdependence is guaranteed to every responsible nation. We are linked to all our neighbours in Europe and, indeed, with the wider world and the developing world far more closely today than ever before. We are caught up in an international system of connectivity and joint responsibility as never before in the history of the world. The intensity of communication is instant and deep, and that completely changes the interface between all nations.

It is not just a question of Governments in Europe supporting or being in favour of different aspects of European reform. There are also powerful interests that support them and which are shifting very visibly and very clearly. There is growing scepticism among German business leaders, who say that the doctrine of ever closer union has failed; that is frequently reported in the Frankfurter Allgemeine Zeitung and other bodies. We have the CSU in Munich calling very loudly for more localism and less centralism and regulation. We have the German association of family businesses, which are really the beating heart of the German economy, demanding that the treaties be “fundamentally recalibrated”. Frankly, the call is coming from countless quarters all over the European Union for the political class to rethink its hard-line 20th century dogmatic position, whether in France, Spain, Germany or any of the countries I have mentioned. That is the first requirement that flows from the 23 January agenda and the need to mobilise political support behind it.

The second essential element is the development of a really profound intellectual case against the outdated 20th century doctrine of integration and against what many countries regard as—as quoted in this morning’s papers—“federalist hyperbole”. The centralist model is simply no longer relevant in an age when all the disciplines, from scientists and engineers to physicists, are telling us about self-assembly, flexibility and building from the bottom up. This demands a different relationship internationally, and you can see it developing, perhaps away from the media somewhat, at every level in our different societies.

As many have pointed out—many people of strongly pro-European inclination—Europe today is not working. Unemployment is miserably high at 12%. Youth unemployment is frankly appalling; the figures are unbelievable. The euro problem is not solved. It has gone underground for the time being, but those who think it is solved are living in cloud-cuckoo-land.

In looking at decentralisation and the balance of competences, as our Foreign and Commonwealth Office is now doing, we should be especially wary of overambitious European energy policy, which is currently a catastrophe and of which the outcome is, horrifically, much more coal burning. Europe is burning more coal than ever. Germany is building 10 new coal-fired stations. There are sky-high energy prices in Europe, which are damaging our industry and competition, losing jobs and creating more fuel poverty. Oddly enough, this is an area in which, in some senses, you need more Europe. We need more physical connections of gas and electricity interconnectors to make our market work, but we also need much less administrative interference from Brussels in our national energy policies. More Europe and less Europe go together there.

Generally, we should not only assess but unpick and reallocate some of the competences that are now no longer valid and were conceived in a different, pre-internet, age. Equally important is that there is no real single market in services. There, too, we need fundamental change. I am not against a detailed shopping list of things that it would be nice for the different countries of Europe to have, including this country; that is perfectly reasonable. Of course, the whole subsidiarity principle needs to be boosted. National parliaments should be given a red-card role. Then there is the working time directive, tighter budgets and the common fishery policies—we have been over these things a thousand times. As long as these aims are widely supported, and are not just British special pleading, I am all for putting maximum force behind them. However, that is frankly not enough.

The fundamental case for change to bring the European Union into the 21st century, which people really want, needs advancing. I agree with Mrs Merkel—incidentally, I am sure that we all wish her well in her recovery from her recent skiing accident—that Europe is no longer the right model. An utterly transformed world has now emerged. New patterns of modernisation are now unfolding in Africa and Asia, which are not the same as the European modernisation experience at all. The growth markets we must penetrate are outside Europe and the West. Power has not just shifted east and south but has fragmented into a thousand pressures, sources, cells and groups in the global digital network, with both good and, frankly, very bad outcomes, as the Arab so-called spring—and now autumn and winter—reminds us.

Our priority is not so much to lead because, in the networked world, leadership is an out of date concept. It is working with, rather than leading, other partners in honest and realistic EU reform in the face of these totally new conditions. We need to turn the European Union into a positive force to meet this new world. We are ideally placed to do that, so let us get on with it.

--- Later in debate ---

[Lord Giddens (Lab)]

My Lords, I, too, congratulate the noble Lord, Lord Dykes, on having initiated this debate. As he said, it is a useful preface to the mega-exercise of tomorrow. I wish the noble Baroness—genuinely—good luck in keeping awake during the 750,000 speeches, or 75 speeches, that will be given tomorrow. Perhaps I should not say this, but I have just written a book on the future of Europe and I have had the occasion to travel quite widely debating it, during which travels I have met a range of European political leaders past and present. I always greatly respect the speeches of the noble Lord, Lord Howell, and quite often agree with him. In this case I have to say that I disagree with quite a chunk of what he had to say in assessing European political opinion about the current position of Britain.

I think that the UK still stands at fundamental risk of being isolated and finding itself in a marginal position in Europe, and it is in the process of alienating some of its best allies in eastern Europe because of the current debate about migration. One only has to look at Viviane Reding’s comments yesterday, reported today in the Times, to see the current of opinion in Europe about some of these policies.

When the Prime Minister gave his Bloomberg speech, European leaders were at one in saying that Europe à la carte is not an option. Having talked to quite a few of them I know that that view is strongly held today. The Prime Minister wants an open and flexible Europe. Everyone wants a more open and flexible Europe, and many reforms are being pushed through to try to achieve this. However, it is absurd to identify flexibility with cherry picking. Flexibility often means, for example, enhanced leadership. In the case of the eurozone, for example, as the noble Lord, Lord Dykes, mentioned, we need more leadership and more capability to respond quickly. That is not achieved by a version of fragmentation.

It is easy to see what would happen if the government approach was generalised and every country wanted the benefits of being in the EU without the commitments. The whole enterprise would become unworkable. It is for that reason that when I travelled around I found a response to the UK’s position that sees it as a mixture of special pleading and blackmail. I fully agree with my noble friend that the Government must surely seek to cut through this and break away from it.

Although it has not been mentioned, this discussion is about the British review of competences. One should begin by saying that there are substantial differences between our review and that being carried out in the Netherlands, which is often thought of as being a similar exercise. The Dutch approach is not based on the idea of securing treaty change—as our approach seems to be—rejects an approach based on opt-outs, and is concerned with subsidiarity as such. I have read the literature on our review of competences and a lot of interesting ideas are developed in it, but I feel strongly that we should make a contribution to the Commission’s attempts in the REFIT programme to produce a more flexible and proactive Europe. That programme is for doing precisely that. It has already reached a sophisticated level.

The idea that the UK has a special view on the need for flexibility and clear leadership in Europe is totally false. All European leaders are conscious of this. One of the things on which I agreed with the noble Lord, Lord Howell, is that we have lived in a world of fantastic transformation, dominated by technology, throughout most of our lives. All states, not just the European Union as a collection of states, are stumbling in their attempts to deal with this new world. It is completely false to suppose that the major European leaders are not conscious of the need to do so and do not have in play programmes striving to do just that.

I should like to have a go at asking the noble Baroness four questions about this matter. When I tried to do so in previous debates, she did not always seem inclined to answer those questions. I suppose that I will be sympathetic, given her situation of being squeezed between the two debates, if she does not answer them today. However, they are questions that the Government should address.

Point 1 is that I read the first batch of reviews of competences, which seemed to contain a lot of interesting discussion. However, in those that have been published—those that I know of, anyway—I do not see any basis for renegotiation at all. If the Government do see one, I should like to hear it. A group of authors produced a detailed study of the first publication of the review of competences, which concluded that the,

“first set of … reviews reveals no grounds in the assessments of British stakeholders for any large repatriation of competences, nor for further opt-outs”.

The study was based on consulting major stakeholders in the relevant areas. I would like the noble Baroness to comment on this if she has enough stamina to do so, but she may be saving it all up for tomorrow—which would perhaps be a wise strategy.

Secondly, are the Government really serious about getting EU-wide agreement for proposals to place significant restrictions on immigrants from new entrant countries to the EU in the future? I have seen that mooted in the press but I do not see it as a feasible or desirable strategy. We clearly need treaty change. Is there not a contradiction between, on the one hand, the Government’s endorsement of the single market—which is, after all, the centre point of the whole Bloomberg speech—and, on the other, the apparent desire to block free mobility of labour? We cannot have a well functioning single market without free mobility of labour. It is arguable that we actually need more mobility of labour than we have at the moment for economic efficiency in Europe. In the United States, for example, mobility of labour is at something like twice the level that it is in Europe, and this is generally seen by all economists as contributing to the efficiency of the American economy.

[Lord Howell of Guildford]

As usual, the noble Lord is making a fascinating speech, but is there not a difference between mobility of labour for work, bringing the single market further success and action, and mobility of people and migrants for benefit purposes?

[Lord Giddens]

Of course there is a difference but there is now a lot of evidence which indicates that no more than a tiny sliver of migrants in the EU have come benefit-seeking over the past few years. There is no evidence for what the noble Lord suggests. The European Commission has carried out a systematic study of this, and personally I do not think that that point holds.

My third question to the noble Baroness is as follows. Everyone agrees that one of the UK’s major contributions to Europe in the past has been to support enlargement, it being the driving force behind part of the European Union’s success. We had a war in Europe in which 100,000 died. In my view, it will be crucial that the Balkan countries—Serbia, Kosovo and Albania—are incorporated into the European Union. Are the Government seriously threatening to block accession, as reported in the press, as part of a sort of blackmail tactic? Is there any truth in that assertion? Surely that would be wrong. We need those countries in the European Union. There is still the possibility of conflict in that area, and the UK has always supported such a process in the past. Is it now going to try to throw up a roadblock? I certainly hope not, and I hope that the noble Baroness will agree with that.

Fourthly and finally, it is pretty clear that the most that Britain is likely to get from the other 27 partners in this enterprise is a kind of patched-up, face-saving deal, because to a substantial degree it is based on special pleading. I have asked the noble Baroness this question twice before but I would still like to see whether she is willing to venture an answer. Following the Prime Minister’s Bloomberg speech, if the Government are still in power and if sufficient forms of response from Europe are not achieved, is there a situation in which the PM would actively campaign for the UK’s exit from the European Union?