Relaunching the Single Market: EUC Report

Lord Liddle Excerpts

Tuesday 13th September 2011 Grand Committee

[Lord Liddle]

My Lords, this has been a short debate but an excellent one. At least, the three speeches that we have heard so far have been excellent. I hope I shall not ruin the record. I have had three separate goes at this report. When I was first introduced to the House, the noble Baroness, Lady O’Cathain, kindly invited me to give evidence to the committee. I was then put on the Select Committee, on which I was delighted to serve. We discussed the report’s content, or some of its themes at any rate. Now it is my job to speak for the Opposition in this debate, so I have seen a lot of this report. I think it is excellent and applaud the committee for its work.

Sometimes we may think that the work of the European Union Select Committee does not get as much attention—the big attendances for debates in the House—as it perhaps should. However, from my experience I can certainly testify that outside the House—in the Civil Service and in Brussels—the reports are read with attention. This report will have a desirable impact in influential quarters.

Of course, the Labour Party supports the single market and wants to see it reinvigorated. The noble Baroness, Lady O’Cathain, was absolutely right; this is particularly relevant for the UK now, when we are in a very difficult economic situation. We all agree that we have to rebalance our economy and that we need more exports and investment. That needs a prosperous single market. There is no alternative to that. We cannot gloat at Europe’s difficulties. We must make the European Union, of which we are a part, an economic success if we are to succeed in our objectives for our own country. In this room we all agree on that.

The strengthening of the single market is also essential for our own interests. It gives our companies a huge home market from which they can tackle the challenges of globalisation. The noble Lord, Lord Hannay, was absolutely right that the single market is the cornerstone of the structural reform agenda that the member states, particularly in southern Europe—the Greeks, the Spaniards and the Italians—need to take forward if they are successfully to remain members of the euro. That is how they can improve their competitiveness and economic growth potential. The Spanish Government have certainly got that message, so I shall not join in making rude jokes about Spaniards. However, the Greeks and the Italians have some way to go.

I also agree very strongly with the noble Lord, Lord Bradshaw. If you are serious about the single market, you have to recognise that it is much more than a free trade area. It is an area of deep economic integration, which is underpinned by the supranational institutions, particularly the Commission and the Court of Justice. Britain needs, in its national interest, a strong Commission that will police the single market. It needs an effective Court of Justice that will come rapidly to decisions on the single market. Therefore, when some members of the Conservative Party attack the Commission and the Court of Justice, they undermine the very instruments that would lead to the success of their own ambitions for single market liberalisation.

Where are we on the single market? Formally we are making quite a lot of progress. The Monti report was excellent and set out an agenda for the future. The Commission is preparing a comprehensive single market Act, which is about to start on its way through the legislative procedures of the Union. However, my friends in Brussels tell me that the outlook for progress is not very good. In the Council there is essentially a deadlock between the northern liberals, of whom I suppose we count ourselves as part, and the southern protectionists.

If I have one disagreement with the noble Baroness’s committee’s report and its recommendations, it is that we as Brits should recognise more that you get somewhere in the EU only if you are prepared to contemplate a package deal. It is no good just saying, “I want this and I’m not going to give you what you want”. You have to be prepared to build alliances. That is why the Government should look favourably—if the Minister cannot respond to me now, perhaps she could do so in a letter to me later on the Government’s attitude—on the Mario Monti recommendations and the things that have been suggested, like amending the posted workers directive, that might produce a more balanced package that would ensure that the European Parliament was prepared to look again at toughening up the services directive. There are elements of the Single Market Act that could achieve what the noble Lord, Lord Hannay, wants, but they will not go through unless they are part of some package deal.

That brings me to other, wider questions of alliance-building, which are important. One group of countries who are potentially allies of the United Kingdom on single-market matters is the new member states of central and eastern Europe, particularly the Poles, who hold the presidency now. I was in Warsaw in June and I am afraid to say that the Polish Government are very upset with the British Government because of their attitude to the EU budget. I am a disciplinarian with regard to the EU budget—I am not in favour of huge increases in it—but when Britain puts forward its position of the EU budget, it must recognise that the plans for the future of Poland and other new member states in that region assume that they will have available for investment the money that they have been getting through the structural funds of the EU budget. If we go around making statements about the budget that give the impression that we think this vital infrastructure money that they are due to get will be cut off because of the British Government, that is seriously bad news for us in terms of our political influence. I urge the Government to bear this point in mind. I understand the point about budget discipline but this is important if we want to build allies.

Another point about alliance-building was made by the noble Lord, Lord Hannay. If you want to be influential in the EU, you have to be there in the room, engaged in the debate. Personally, I think it was a mistake for the British Government to steer clear of the euro-plus pact. I did not like a lot of what was in it—it is rather draconian in its approach to austerity, and I would be prepared to have a debate about that—but we should seek every opportunity to put forward our views about Europe’s future, including the need for the structural reforms to be promoted through single-market liberalisation. Therefore, I think that staying away from the euro-plus pact was a mistake. In itself, it probably does not matter that much but, if it is part of a trend, it could matter a great deal.

I am very interested in what the right honourable gentleman the Chancellor of the Exchequer has to say about the European Union. He is saying some rather interesting things. He is saying that he wants to see eurozone governance strengthened, but he recognises that this potentially puts us in a difficult position on matters to do with the single market, where in any future deals we would want to remain an equal partner with the eurozone.

That is a crucial issue for Britain. We cannot get ourselves into a position where the eurozone effectively determines its policy for the single market and then goes along to the Council saying, “This is what we’ve agreed. Under majority voting, that’s what you have to accept”. There is a real risk of that happening, and that risk is heightened if Britain adopts an approach to Europe which is unconstructive, which gloats over the eurozone’s difficulties and where people at home talk about what concessions they can screw out of the European Union as a result of its difficulties in order to loosen Britain’s relationship with Europe. That is not the way to win our objectives in Europe for a stronger, more effective single market, and I hope that we will hear from the Minister that that will never be the policy of the British Government.