European Union: Recent Developments

Lord Pearson of Rannoch Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Pearson of Rannoch]

My Lords, as the noble Lord, Lord Liddle, mentioned this phenomenon as well, and turned and wagged his finger at me with great energy when he said that millions of people want to join the European Union, do those noble Lords agree that that wish is guided by the political classes in those countries far more than by the people? It is, of course, the political classes who stand to get at least 10 times their present salaries on the EU pay scale either at home or in Brussels?

[Lord Roper]

As we have been constrained to keep to seven minutes, I shall say no more than that in almost all of the countries that have acceded recently, there have been referendums and that, therefore, the people of those countries have given their consent to the process of accession.

Turning to the Prime Minister’s Statement, which we heard earlier, the agreement in ECOFIN and then in the December European Council on the method of guaranteeing the interests of the non-members of the eurozone as the banking union develops, is, I believe, very satisfactory, and suggests that it will be possible to find effective arrangements for those member states outside the eurozone as economic and monetary union develops to preserve the integrity of the internal market in financial services. On the other hand, it must be said that the progress towards achieving an effective road map at the European Council to develop such an economic and monetary union was very limited, and suggested that it will take rather longer than expected.

We are approaching the 40th anniversary of British accession to the European Union, and we should, I believe, be celebrating the contributions of the UK Commissioners and officials from the UK who have played a part in that development. We have heard from one, and we will hear from another shortly. Instead, we are being exposed to competing proposals for less or more repatriation of competences to London from Brussels. This was referred to in only general terms by the Prime Minister in his press conference on Friday, but may be made more explicit in his much awaited European speech.

It is difficult, on one level, to equate such proposals with the view frequently stated in this country that we should operate on a level playing field, because this seems to be an attempt to make the playing field not level. Even before President Hollande’s categorical remarks on Friday, it is very difficult to see that they would be acceptable to the other member states. Indeed, President Hollande echoed remarks made earlier this year by the German ambassador. The idea that the United Kingdom could bargain such repatriation against our support for the constitutional changes needed for full economic and monetary union and putative political union is not plausible. The other members would follow the precedent of last December and proceed with a treaty among themselves.

This is not to say that there are not many unsatisfactory aspects of the current operation of the European Union and that there is not considerable validity in many of the criticisms of it. However, we need to find other ways to implement a reform agenda. I believe that the way is to work within the union to make changes that would then apply to all member states. The coalition Government have already had some success in this and should pursue it.

For instance, we strongly supported the proposals of Commissioner Damanaki, first considered in July this year, which, when implemented, will fundamentally overhaul the common fisheries policy. Incidentally, they follow very closely the proposals in your Lordships’ European Union Committee’s report on the common fisheries policy, which was produced in July 2008. They would involve devolving powers over the design of sustainable fisheries to a regional and national level, so that they can design innovative and tailored policies for their seas within the overall CFP.

In another example, when he was a Minister in BIS, my right honourable friend Ed Davey, working with a group of like-minded countries, negotiated the first exemption for small businesses from European Union accounting rules, saving small businesses £400 million a year. This has led to an EU commitment to exempt small businesses from all new EU regulations wherever possible. More recently, my right honourable friend Vince Cable has put forward, together with 12 other member states, a 10-point plan for smarter regulation.

The same approach can be seen in, for example, making changes to the working time directive. These examples demonstrate the opportunities for working within the European Union to deal with problems, rather than seeking unilateral repatriation.

Finally, the balance of competences review which the coalition Government have set up may discover examples where the principles of subsidiarity and proportionality have not been followed in the past. In these cases it would seem very useful to raise them within the various institutions, with a view to changing the European Union legislation concerned. We have significant opportunities for effective reform within the Union, but not by unilateral repatriation.

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[Lord Pearson of Rannoch]

My Lords, I hope your Lordships will not consider me ungracious if I point out that of the 19 previous speakers, at least 13, and perhaps more, were strong and vociferous supporters of this country joining the euro. We can all now see that it has been the disaster that some of us forecast it would be, yet we have heard not a word of apology or repentance from any of them. I hope that we will do so from the seven noble and europhile Lords who are yet to speak. In the mean time, I will just ask why we should pay heed to their wisdom about the EU’s future when they got its past so wrong.

I think we can take it that there will soon be a referendum in this country to decide whether we wish to stay in or get out of the EU. The Prime Minister apparently wants the choice to be between leaving and staying in a reformed EU, with powers being returned to Westminster from Brussels. But I trust that Monsieur Hollande, the French President, put him right on the possibility of reform last week. As I have said to your Lordships many times over recent years, to change a comma in the treaties of Rome, let alone to retrieve a power, would require unanimity among all its member states—28 of them now—and a new treaty to be ratified in all of them. I fear that that is not going to happen for any worthwhile powers.

I suggest that the referendum, when we come to it, will turn on one word: jobs. I suppose we can assume that the other great fallacy of the EU project—that it has brought peace to Europe and is essential to maintain peace in future—will not feature much. The historian Antony Beevor puts this rather well in an article entitled “Europe’s Long Shadow” in this month’s edition of Prospect, which I recommend to all noble and still europhile Lords. I quote:

“The argument that it was European unification which prevented another war on the continent was always a completely false one … Democracies do not fight each other. The key question is therefore the inverse: will a dramatic increase in the democratic deficit lead to unrest and even conflict as Europe ‘tears itself apart,’ in the controversial phrase of the governor of the Bank of England?”.

I would just repeat that the employment, misery, and civil unrest already sweeping Europe are entirely caused by the project of European integration and its euro. What is the eurocrats’, and our political leaders’, reaction to this obvious fact? Why, more Europe of course. I quote from Mr Beevor again: the eurodreamers,

“should perhaps remember that both in war and in peace, reinforcing failure through obstinacy has always tended to turn a crisis into a catastrophe”.

Have the Government given any thought to the contention that the disasters caused by the euro, with worse to come, can be solved only by getting rid of it? Could not all 17 finance ministers meet and declare the obvious—that the euro has failed—and go back to their national currencies at initial exchange and interest rates, to be agreed in one weekend? Of course it would be messy, but I understand that much of the work has already been done. Changing a currency costs only about 4% of GDP, which may turn out to be a small price to pay against what has already been wasted in keeping the euro going and what may lie in store. I fear that it will not happen, of course, but I thought that I would just ask, if only for the pleasure of saying “I told you so” when the tumbrils come to collect us. I look forward to the Government’s reply.

I go back to trade and jobs, on which the forthcoming referendum will turn. The Government and other europhiles will, no doubt, still intone the falsity that we must stay imprisoned in the EU because 40% of our trade and 3 million jobs depend on or are linked to the single market. I hardly dare repeat it again, but there are 4.5 million jobs in the EU that depend on their trade with us; we are their largest client, so we will be in the driving seat when we have voted to leave. The EU has, or is concluding, free trade agreements with 38 other countries, according to a government Answer to me on 19 November. It is inconceivable that we could not have trading and other arrangements at least as good as those enjoyed by Switzerland.

We have never said that we want to be in the European Economic Area like Norway, a fax democracy obeying the EU rules without taking part in their making. A number of noble Lords have made that point today, but we have never said so. I hope that we do not have to hear the Norwegian comparison again. We could have our own arrangements, and it would not matter that we no longer wasted so much time in Brussels, agreeing all the regulations that are steadily sinking the single market in the great ocean of the new markets of the future.

The US and China, and all the other countries that export to clients in the EU, do not do so either. We do not make the rules for exporting to the United States of America, but it helps to put the steering wheel on the left if you want to sell a car there. So of course we would obey the rules if exporting to the EU, as does everyone else. However, none of our exports to the EU, nor the jobs that deliver them, would be lost if we left the political construct of the treaties of Rome. The truth of this is underlined in Hansard for 14 December, at column 263, in a Written Answer to the noble Lord, Lord Stoddart, from the noble Lord, Lord Green of Hurstpierpoint. This confirms that there really is no difference between a free trade agreement and membership of a single market. I trust that my noble friend will quote the Answer in full when he comes to speak later.

As I have often said before, only 9%, and falling, of our GDP goes in trade with the EU anyway; 11%, and rising, goes to the rest of the world; while 80% stays right here in our domestic economy—yet Brussels diktats smother 100% of our economy. It is madness, really, when you look at it like that.

I hope that the Government are slowly beginning to understand some of these points. The noble Lord, Lord Strathclyde, the Leader of the House, told me on 21 November that,

“the noble Lord may wish to take heart that, despite tough conditions, British exports of goods have increased in the past two years to China by 72%, to India by 94% and to Russia by 109%”.—[Offical Report, 21/11/12; col. 46.]

If that is so, could we not make the conditions less tough by negotiating our own free trade arrangements with those countries? There is also the rest of the Commonwealth, and the whole world outside the sclerotic EU.

So, millions of new jobs indeed depend on the EU—they depend on our leaving it. Anyone who doubts this should read the briefing notes on the globalbritain.org website, where it is all set out in succinct form. I ask again whether anyone in the Foreign Office or the Treasury has actually read that store of unanswerable wisdom. What do they think of it, if they have? I look forward to the meeting offered by the noble Baroness, Lady Warsi, in Questions on 26 November, when she offered to give me,

“a briefing on the economic importance of our continued membership of the EU”.—[Official Report, 26/11/12; col. 10.]

I have written to her saying, “Yes please”, and I await the date with fervent anticipation.

When we have voted to leave the EU, by what method will we do so? Will we simply repeal the 1972 Act, which we were always promised, at the time of Maastricht and before, was the way of leaving the EU and retrieving our sovereignty, if that was what we wanted to do? Does that promise still stand or will the Government feel constrained to follow Article 50 of the Lisbon treaty, which sets out an expensive process that can last two years, with Brussels in control of the terms of our departure? I trust that it is still the former: we repeal the 1972 Act and then all its subsequent amendments—the Single European Act, Maastricht, Amsterdam, Nice and Lisbon—fall with it, including Article 50 of the latter. I look forward to the Government’s answer to that one.

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[Lord Davies of Stamford]

My Lords, this is not the first occasion when I have had the pleasure of following the noble Lord, Lord Dobbs, in a European debate. As he rightly anticipated, I did not agree with him this time any more than I have done on previous occasions, though he said his piece with his usual charm.

It has been a stimulating and worthwhile debate, but it is essential that we have another debate when the Prime Minister has made his long-awaited speech. Can I urge the Government that when that happens we have the whole day for the debate, and that the Government do not reduce the time by introducing Statements or debates on matters that, however fascinating they may be to some people, do not have quite the same potential historical significance as this one.

I may be a bit old-fashioned but I still have the idea that a debate should try to make progress, so I want to take advantage of being put rather low in the batting order this afternoon, not to make a prepared speech but to comment on some of the remarks that have already been made, particularly those that appear to be most memorable.

I am delighted to see the noble Lord, Lord Taverne, come in at this very moment, because the first speech that I want to refer to is his. He made a masterly analysis of the justice and home affairs issue. He demonstrated clearly and conclusively that there are no pragmatics about the Government’s attitude to this; the national interest is completely irrelevant. The Government are simply playing politics with the national interest. A bone—a very important bone, sadly—is being thrown to the Eurosceptics for purely party political reasons. This is a disgraceful state of affairs.

I also to pay tribute to my noble friend Lord Monks, who made an excellent speech about the Social Chapter, based on a unique degree of experience in these matters. I would like to add something about that issue. I am not known to be timid about attacking the modern Tory party or for being particularly indulgent to it. However, I wonder whether even the modern Tory party would seriously go about repealing the limited government measures that have gone through under the Social Chapter, to which my noble friend referred: the parental leave directive, part-time or agency workers’ directive and the four weeks’ paid leave directive. The one thing that Mr Cameron cares about is votes, and I do not think that he would get any if he legislated along those lines. No doubt the Institute of Directors, some right-wing think tanks and a lot of Eurosceptics would be delirious with pleasure; but I do not think that that would help him at the next election. So I anticipate that the Tory party is much more likely to say, “We want to pull out of the Social Chapter for ideological reasons, but we won’t actually repeal the measures that have gone through”.

If you think about it, though, that is the worst of all possible worlds. If we are going to have these measures—which are costly, of course, but essential in a humane society, to which we all want to be committed, and which are supported by all reasonable employers—it must be in our interests to ensure that they are part of the Social Chapter, and that there is no one else within the single market who can conduct their business without these kind of costs. Otherwise we would be damaging our own competitiveness within the single market, which would be a self-destructive thing to do. The Government pretend to care about the national interest, but an important aspect of the issue has not been taken into account at all.

Now I turn to the Government and to the noble Baroness, Lady Warsi. In a most excellent speech, my noble friend, Lord Liddle, quoted the Prime Minister as saying that, for him, Europe and referenda went together. I cannot think of another sentence that a Prime Minister could have pronounced which more obviously, immediately and dramatically would create uncertainty about our position and future in the European Union. Yet we had the noble Baroness, Lady Warsi—and, before her earlier today, the noble Lord the Leader of the House—saying, “Oh no, there’s no uncertainty at all; the Government are quite committed to our membership of the European Union and we haven’t created any uncertainty”. That is really quite a fatuous remark. The Government have gratuitously created a lot of uncertainty; as the noble Lord, Lord Pearson, said, a large number of people in this country believe that we are set on a course that will lead us to leaving the European Union in the next Parliament. Not only a lot of people in this country believe that and work on that basis, but a lot of our partners, sadly, believe that and will be working on that basis, which will mean a reduction in our bargaining power with them on many issues. Worst of all, many investors believe that, are working on that basis and therefore will not invest in this country. Whether they are British-domiciled or foreign-domiciled, they will invest somewhere else in the single market if they want their operation to be certain to continue to be in the single market and in a country that has a full weight in the decision-making process of that market so it can protect their interest.

I turn to the noble Lord, Lord Pearson of Rannoch. I do not want him to think that this is a personal attack. In fact, I have a high personal regard for him; I admire his courage and persistence in continuing to voice views that I think are completely misconceived but he does so very lucidly. Since he has set out so lucidly today what is the standard narrative of Eurosceptics, both in UKIP and the Tory party, I hope that he will not mind if I make him the object of my final remarks.

The problem that all Eurosceptics, whether UKIP or Tory, have in this country is that you just cannot make a credible economic case for leaving the European Union. There is no way that anyone can argue—I have not seen anyone even pretend to do so—that the mere fact of leaving the European Union will add one job to our national economy or one basis point to our GDP. Of course it will not; the argument is entirely the other way. The argument is about how many jobs it will destroy and how many basis points, or, indeed, percentage points of GDP, it will remove and over how long. That is how the argument is conducted—on whether it is hundreds of thousands of jobs we will lose, or millions. Generally, people recognise that if we were left with no access to the single market altogether, it would be more in the millions than in the hundreds of thousands.

Faced with that fact, what do you do if you are a Eurosceptic? I am afraid that you go in for some pretty evasive and disingenuous arguments, which we hear the whole time, and I am sorry to have to say to the noble Lord that we heard them from him this evening. We hear people say in the same speech, “We can negotiate continuing access to the single market”, and, almost in the same breath or sentence, that what is all wrong with this thing is the regulatory burden that we face, which is why we must leave the European Union. Yet if you continue to have access to the single market you continue to have the same regulatory framework, to which you are committed. That is the case with Switzerland and Norway, and it would be the case under all circumstances if we negotiated continuing access to the single market.

The difference, and it is a very important one, is that you are no longer part of the decision-making structure. You have no influence on the evolution of that regulatory regime, on the new regulations or on changes to them. You have no opportunity to propose a reduction of regulations, if you think that is the right thing to do. You are out of the dialogue—

[Lord Pearson of Rannoch]

Would the noble Lord give way?

[Lord Davies of Stamford]

I do not want to speak for too long. I am afraid I cannot give way because we have had imposed on us an unofficial time limitation, because the Government have preferred to do other things.

[Lord Pearson of Rannoch]

My Lords—

[Lord Davies of Stamford]

I am afraid I must insist. I am very sorry. I would love to give way to the noble Lord. I believe in debate in that sense, but we cannot do it consistent with having a time limit imposed on us.

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[Lord Pearson of Rannoch]

Before the noble Lord sits down, will he therefore tell us how every other country in the world manages to trade perfectly satisfactorily with the single market without having its ridiculous rules?

[Lord Davies of Stamford]

We have much greater penetration into the single market than other industrialised countries such as the United States or Japan, and we have that by virtue of being part of the single market. A great many businesses have been set up in this country, both by British-domiciled investors and by foreign investors—including, importantly, by Japanese and American investors—in order to have access to the single market. That is where we have gained enormously; we are part of the market itself. That is a priceless advantage and I think that the noble Lord implicitly accepted it when earlier on, slightly in contradiction to the question he has just asked me, he recognised that we must negotiate some continuing access to the single market or we shall face the most appalling economic losses.

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[Lord Lea of Crondall]

NATO has majority voting in its own way. What about the UN? Is there any comment from UKIP about that?

[Lord Pearson of Rannoch]

My Lords—

[Lord Lea of Crondall]

No, obviously not.

[Lord Pearson of Rannoch]

Yes, my Lords.

[Lord Lea of Crondall]

They have no comment because their case is demolished.

[Lord Pearson of Rannoch]

I am doing my best.

[Lord Lea of Crondall]

It is healthy to—

[Lord Pearson of Rannoch]

Would the noble Lord please not go on asking questions to which he does not want answers because they are too uncomfortable for him? We are happy to be in the United Nations because we could withdraw—

[Lord Wallace of Saltaire]

This is a Second Reading debate. Given the lateness of the hour, we should really have one speech after the other rather than general exchanges. Perhaps the noble Lord who is speaking could bear that in mind.