European Council Decision: EUC Report

Lord Newby Excerpts

Monday 21st March 2011 Lords Chamber

To conclude, I submit that it is really not in this country’s interest to prop up the euro. The quicker it disintegrates the better, with countries that cannot afford to be part of it going back to their national currencies. Only then will they be able to start trading their way out of the colossal debts into which the euro and the project of European integration have led them. Mr Van Rompuy has just said that the EU will collapse if the euro fails. I fear he may be wrong and that the juggernaut of European integration could continue without the euro and would indeed do so, but if he turns out to be right, what a pleasant prospect greets us: no Commission, no Committee of Permanent Representatives, no Council of Ministers, no European Court of so-called Justice, no EU Parliament, none of the colossal fraud, waste and overregulation which weigh us down at home and in our competition and trade with the rest of the world. We would be left with a Europe of democratic nations freely trading and collaborating. It is to those sunlit uplands that the Government should be leading this country and the rest of Europe. That is where the national interest lies, not in this grubby instrument of doubtful legality.

[Lord Newby]

My Lords, it is always a great pleasure to follow the noble Lord, Lord Pearson of Rannoch, because I always think that debates in your Lordships' House are much better when we are not all agreeing with each other. He wants the euro to fail. We on these Benches want it to succeed, and therefore we support the Motion before us this evening. Without having a huge discussion on the history of the euro, it is perhaps worth reminding ourselves that the euro has survived the worst financial crisis certainly in our lifetimes, and has survived many naysayers over the past two or three years who very confidently and regularly predicted that it was about to collapse. It is quite clear that the euro is not going to collapse and that the eurozone is going to continue. Indeed, it is likely to be strengthened as a result of the decisions which are currently being finalised.

It is one of the long-standing features of our view of the EU and the euro that at every point they were about to collapse and, indeed, that the European venture was about to stall, and at every point it has moved forward in its peculiar but almost inevitable way. There was a typical example of this attitude just last week when the FT, reporting on the eurozone summit on this mechanism, had as its headline “Leaders cut surprise deal on key reforms”. The history of European development has been leaders predictably cutting surprise deals when nearing a deadline, which is exactly what has happened here.

I do not intend to attempt to dissect the speech of the noble Lord, Lord Pearson, in great detail, but I point out to him that member states are not donating anything to anyone via this mechanism. The Irish are paying 6 per cent on these loans and are grumbling mightily about them, so just as the British Government are getting a good return on the loans that they are making, member states that are making loans under this mechanism will be getting a pretty good return.

[Lord Pearson of Rannoch]

My Lords, I did not suggest that this Government were donating to any other member state through this mechanism; I merely pointed out that we donate generally to the coffers of the European Union—to the tune this year of £17.6 billion gross and £8.3 billion net. That is net cash that we are sending to Brussels and that goes down the drain there—a figure, I might say, that we are struggling to cut from our own public expenditure.

[Lord Newby]

My Lords, I apologise to the noble Lord. I misheard him. I distinctly wrote down that he said that a donation was involved in this process.

My one question to the Minister springs from my concern about the way in which the eurozone is developing, which is simply that the UK’s role in relation to it is extremely strange. We are obviously not part of it, so we are not in many of the meetings. Yet from time to time we are allowed to have a say. What worries me is that with the passage of time that say gets less and less over a whole raft of economic decisions across the EU. In the current exercise, we were allowed to help in the design of the ESM, which presumably means that Treasury officials went to meetings to talk about how it was going to work. What worries me is that, once it is established, those Treasury officials will be told that they have been extremely helpful, that their advice has been most valuable and that they can now go back to London and let the rest of the eurozone implement the policy. As the noble Lord, Lord Lamont, has pointed out, there are a whole raft of secondary consequences for the competitiveness pact, which will undoubtedly have an impact on the UK and on which, as far as I understand it, we will have no say at all in the future.

Will the Minister explain whether, once the ESM is established, there will be any further role for the UK Government and their officials in the design of the conditions that might be required or suggested from time to time to apply in particular cases when member states are being bailed out? These changes could be extremely worrying, not necessarily because they or the conditions are bad in themselves but because, although we are affected by them, we will have had no say in the way in which they are put together.

[Lord Stoddart of Swindon]

I suppose I could just say that I agree with everything that the noble Lord, Lord Pearson, has said and sit down, but I will not do that.

I thank the noble Lord, Lord Howell, for explaining very complicated legislation to us. I think I understand it a bit better now that he has explained it. Nevertheless, I believe that it is a serious matter that we are discussing. I think I am right in saying that, during debates on the Lisbon treaty, the then Official Opposition considered Article 48(6)to be an unnecessary and perhaps dangerous measure that could be used to extend European Union power without proper parliamentary scrutiny. I feel that that was their position at the time. Now, even though they have been in power for only 10 months, they are using this provision to extend the power of the eurozone. I do not know what has happened. Perhaps the Liberal part of the coalition is having more influence than it should.

There has not been an IGC, which has been pointed out already. The Motion received only one and a half hour’s debate in the House of Commons and a dinner hour debate in this House. We are not really having the sort of discussion that we should have before the Prime Minister goes to Europe to make a decision. It may be that we will have further discussions in due course but this Motion is to give the Prime Minister the power to act under Article 48(6). It is the first time that that has been done and it is therefore a serious matter. Although we are not at present members of the eurozone and ESM will not affect us, it will nevertheless become part of the European Union’s powers across the board. If this country should join the eurozone, this provision would automatically apply to us. That surely is right. If it is not right, perhaps the noble Lord will say that it is not right and why it is not right.

Furthermore, this first use of the simplified revision procedures is likely to be the thin end of the wedge. This will not be the first time that it will be used. Once a provision is used, it sets a precedent and it will be much easier to use it on other occasions in the future. It is claimed that when the European Union Bill, which we will discuss tomorrow, becomes law, it will prevent Article 48(6) from being misused. But can we be certain of that? Will the noble Lord say that there will never be any conditions under which Article 48(6) cannot be used without parliamentary procedure or perhaps even a referendum? Since the measure has to be agreed by a unanimous vote, the United Kingdom at present has a veto.

During the election, the Conservatives said that they wanted to repatriate to this country a range of measures which they believed were inimical to the best interests of the United Kingdom. Why then are the Government not using this factor—the fact that they have a veto over this provision being discussed tonight—to renegotiate parts of the treaties which are inimical to British interests, especially those relating to industry and commerce? I am also puzzled as to why the eurozone nations cannot agree a system of control that does not involve a treaty change. Is it perhaps because Germany wishes to use this procedure to strengthen its position as leader of the European Union?

The Government state that maintaining the eurozone as a stable and fully functioning entity is in the United Kingdom’s interest and the European Union Committee endorses that view. I do not believe that that is necessarily so. I am not at all sure that the eurozone is necessary for this country to prosper. Indeed, I could probably, if there was time, produce an argument to show that the eurozone works against this country’s interests. It should be no part of this country’s policy to maintain the eurozone in being no matter what the circumstances are.

Let us not forget that the experience of the eurozone so far has not been a happy one. At least four of its members are in dire financial and economic trouble, needing massive tranches—that is what this debate is about—of bail-out money. Interest rates in the eurozone have been kept at an artificially high rate, thus resulting in lower growth in many of its member states and very high unemployment. That is something this country should deplore, wherever it occurs.

Being in the eurozone does not affect our trade in the way that the Minister outlined. The fact is that we are in Europe and we are part of the single market, and whether the eurozone exists or not, the single market will still be there, as it was there before we joined the eurozone. What I believe is that being within the European Union and within the single market in fact damages our ability to export to the much wider world than the European Union represents. Already we see the Chinese and the Indians making great inroads into markets in Africa and elsewhere which, untrammelled by the European Union, this country could be exploiting. I have some doubts about this measure, although I suppose it is going to go through. But I hope that the assurances which have been given by the Minister will be carried out.