EU Referendum: Assessing the Reform Process (EUC Report)

Lord Lawson of Blaby Excerpts

Tuesday 3rd November 2015 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords, I join in the congratulations to my noble friend Lord Boswell and his committee on having produced an interesting report and having elicited a perhaps even more interesting written response from the Government. I must declare some interests. I am a member of the EU Financial Affairs Sub-Committee of the European Affairs Committee now, but I was not when this report was being produced; I am president of Conservatives for Britain; and my home is in France. I think that is all the declarations I need to make now.

The central question that was asked in the report is: what exactly are the Government up to? What are their negotiating demands? What are their requirements? We had a somewhat inadequate response, but a response of sorts, in the Government’s written response to the committee’s report, and we have heard a little bit more today, with the Chancellor of the Exchequer’s speech in Berlin. I have a high regard for the Chancellor of the Exchequer but I found his demands—or requests—in Berlin today disappointingly unambitious. However, what he did reiterate, which the Prime Minister has said on a number of occasions, is that we need an opt-out from ever-closer union. That is certainly necessary. At least since the Solemn Declaration on European Union in Stuttgart in 1983, and probably before, it has been clear that the objective was the creation of a single state—a united states of Europe, albeit of a federal nature—and that is not something that we wish to see; at least, it is certainly not something that we wish the United Kingdom to be part of.

What does an opt-out mean in practice? There are two things at least that are characteristic of a single state. One is that it has its own currency and the other is that it has control of its own borders. In a single state, as in the United States of America, there is free movement of people from the northern United States to the southern states and so on, but the state has control of its own borders.

We have the first of these—control of our own currency—and the Chancellor of the Exchequer may be right to say that the European Union must resile from the claim that the euro is the currency of the European Union. But we do not have control of our own borders and it is necessary that we achieve this. The Prime Minister’s suggestion that this is simply all about welfare benefits is nonsense. The vast majority of people who wish to come to this country, whether from the European Union or outside it, come to work and not to claim benefits. Some do it to claim benefits but they are a tiny minority. We have to achieve not merely securing our own currency, which we have, but control of our own borders. That must be a condition.

There is also a third requirement. Under the spirit of ever-closer union, although it will be presented as bringing economic benefit—not that it will—there will be a continual flow of integrationist legislation and regulation from the European Commission in Brussels, and that is not something which we can block. We have not been able to block it hitherto but, at least technically, we might have assembled a coalition of member states to block some of it. But from next year, the eurozone countries will have an automatic qualifying majority, and since everything requires only a qualifying majority and not, understandably, unanimity, we will not be able to block it. Therefore we have to seek to build on the Luxembourg compromise, to which the French used to attach such importance at the time of General de Gaulle.

We should have an agreement that if we believed anything to be contrary to the fundamental interests of this country, we should not block it—as General De Gaulle wanted to do—but it should not apply to the United Kingdom. This is particularly important in the field of financial services. I noticed that in his speech in Berlin today, the Chancellor of the Exchequer made much reference to the problems of European legislation in this area. Even then, if we secured all these things that I have talked about, we would still be unable to negotiate free-trade agreements with third countries. Even then, there would also still be the democratic deficit or what Andrew Tyrie MP, the chairman of the Treasury Select Committee in another place, has called a crisis of legitimacy—because that is what it is.

In a recent speech in Iceland, the Prime Minister stressed the need for, in his own words, continued access to the single market. That is most misleading. The single market is frequently misunderstood and it is not merely the Prime Minister who gets it wrong. The single market is the single regulatory system. Understandably, when the European market was intended to be a “single market” and there was the common external tariff but no tariffs within the member countries, trade did not flow freely because each country had its own regulatory system, and they were different. The single market initiative simply created a single regulatory system—so “access to the single regulatory system” makes no sense whatever.

The Prime Minister also said that the arrangements that Norway has with the European Union are not good enough for us. Curiously, he failed to mention Switzerland, which has a better arrangement, but he is right about Norway. It is a small country, with a correspondingly small negotiating strength. Just compare these two figures. The exports of goods and services to Norway from the rest of the European Union, apart from this country, amount to £50 billion a year. Exports from the rest of the European Union to the United Kingdom amount to £300 billion a year—about the same, incidentally, as they do to the United States. That suggests that we ought to be able to negotiate an arrangement which is six times as good as Norway has done—and I will settle for that.

I recall that a couple of years ago my old friend and former homologue, as we say in France, Jacques Delors, the father of the euro, said:

“If the British cannot support the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis. I could imagine a form such as a European economic area or a free-trade agreement”.

I will settle for that, too—and so, I believe, would the British people.