European Council

Lord Strathclyde Excerpts

Monday 5th March 2012 Lords Chamber

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, this may be a convenient time to repeat a Statement on the European Council made in the House of Commons earlier this afternoon by my right honourable friend the Prime Minister. The Statement was as follows:

“This Council focused on the measures needed to address the growth crisis in Europe and complete the single market. It also reached important conclusions on Somalia, Serbia and Syria. Let me take each in turn.

First, growth and jobs. This was the first European Council for some months not completely overshadowed by the air of crisis surrounding the eurozone. The problems in the eurozone are far from resolved and we need continued and determined action to deal with them. But the biggest challenge for Europe’s long-term future is to secure sustainable growth and jobs.

Ahead of this Council, Britain, along with 11 other EU member states, set out in a letter our action plan for growth and jobs in Europe. This was an unprecedented alliance involving countries from all across Europe, representing over half the EU population and a quarter of a billion people. It included our traditional partners on this agenda in northern Europe but it also included countries such as Poland, one of the largest in the EU, and countries such as Spain and Italy in the south of Europe, which previously had not prioritised this agenda.

Over the past year, we have frequently succeeded in inserting references to the single market and competitiveness into Council conclusions, and the Commission’s proposals have begun to reflect that. But what was encouraging at this Council was that an EU growth agenda, based around free trade, deregulation and completing the single market, received stronger and broader political support from Heads of State and Government than ever before. A whole series of concrete commitments to actions and dates by which those actions need to be taken were inserted into the final communiqué. Now it is vital that these commitments are fulfilled.

The reason why Britain so strongly insists on the completion of the single market is because of its huge potential for growth and jobs at home. The single market is the biggest marketplace in the world, with 500 million consumers. Removing barriers to trade in products has had a huge impact and, with one of the largest manufacturing sectors in Europe, Britain has benefited from that.

But the benefit can be even greater if the single market is completed in other areas where Britain has also great strengths. The first of these is services. Full implementation of the services directive could add 2.8 per cent to EU GDP within 10 years. Britain would stand to be one of the prime beneficiaries because, from financial services to legal services to accountancy, Britain has some of the leading companies in the world.

The Council also agreed to complete the digital single market by 2015. This could boost EU GDP by as much as €110 billion every year. Again, this could particularly help Britain with our strengths in digital technology and all forms of creative content, including film, television and online media.

The Council agreed a specific deadline to complete the single market in energy by 2014. This could add 0.8 per cent to EU GDP and create 5 million jobs. Again, many of these jobs will be in Britain, because we are a major producer and exporter of energy with the most liberalised market in Europe. The Council agreed there will be a special focus on trade, including trade deals with fast-growing parts of the world, at the next Council in June. Completing all open bilateral trade deals could add €90 billion to the EU economy, and a deal with the US would be bigger than all the others put together. Britain is one of the most open trading nations in Europe and that is why trade deals have a particular importance for us.

On deregulation, for the first time we got a specific commitment to analyse the costs of regulation sector by sector and a repetition of our call for a moratorium on new regulations for those businesses with fewer than 10 employees. Taken together, these measures represent a clear and specific plan for growth and jobs at the EU level and we must now ensure that Europe sticks to it.

Turning to wider international issues, on Somalia the Council welcomed the conference held in London last month and the important conclusions that we reached, cracking down on piracy and terrorism and supporting a Somali-led process for a new representative and accountable Government.

On Serbia, Britain has always been a strong supporter of enlargement of the European Union from eastern Europe to the countries of the western Balkans. This policy has clearly demonstrated success in embedding support for democracy, the rule of law and human rights across the continent, so I was particularly pleased that the Council granted Serbia candidate status. I have no doubt this decision would not have been possible without the courageous leadership of President Tadic. It was he who secured the arrest of Ratko Mladic, closing one of the darkest chapters in Serbian history. And it was he who took the brave decision to engage in a dialogue with the Kosovans.

It is also right to mention the leadership of the Kosovan Prime Minster, Hashim Thaçi. He, too, has been prepared to enter into constructive dialogue with Serbia. That decision has rightly been rewarded by the European Commission starting the process which can lead to a new contract between the European Union and Kosovo. This is the first important milestone on the long road for Kosovo to join the European Union.

Let me turn to the grave situation in Syria. I know the whole House will join me in welcoming the safe return of British photographer Paul Conroy, who escaped from Baba Amr last week. I spoke to him this morning and he described vividly the barbarity he had witnessed in that city. The history of Homs is being written in the blood of its citizens. Britain is playing a leading role in helping to forge an international coalition to do three things: first, to make sure there is humanitarian assistance for those who are suffering; secondly, to hold those responsible for this appalling slaughter to account; and, thirdly, to bring about the political transition which will put a stop to the killing. We must pursue all these goals at the same time.

On humanitarian assistance, Britain has already provided an extra £2 million to agencies operating on the ground to help deliver emergency medical supplies and basic food rations for over 20,000 people. But the real problem is getting that aid into the affected areas. Now that the Syrian Government have occupied Baba Amr, they have a duty to allow humanitarian access to alleviate the suffering they have caused. Britain will be working this week to secure a UNSC resolution which demands an end to violence and immediate humanitarian access. The longer access is denied, the more the world will believe that the Syrian regime is determined to cover up the extent of the horror it has brought to bear on Baba Amr.

Secondly, we are working to make sure that those responsible for crimes are held to account. The European Council agreed that there must be a day of reckoning for those who are responsible. Britain and its European partners are working together to help document the evidence of these atrocities so that evidence can be used at a later date. International justice has a long reach and a long memory.

Thirdly, we are working for a political transition to bring the violence to an end. The European Council was clear that President Assad should step aside for the sake of the Syrian people and supported the efforts of Kofi Annan to work for a peaceful process of political transition.

Syria’s tragedy is that those who are clinging to Assad for the sake of stability are in fact helping to ensure the complete opposite. Far from being a force for stability, Assad’s continued presence makes a future of all-out civil war ever more likely. What can still save Syria is for those who are still supporting and accommodating Assad’s criminal clique to come to their senses and turn their back on the regime.

It is still possible that Syria’s national institutions can be saved and play their part in opening a path to an inclusive, peaceful and decent transition. We will deploy every tool we can—sanctions, aid and the pressure of diplomacy—reaching out to the opposition in Syria and beyond. We will work with anyone who is ready to build a stable, inclusive, non-sectarian, open and democratic Syria for all Syrians. That is the choice that is still open to those in authority in Syria. Now is the time to make that choice, before it is too late.

Finally, on Friday morning 25 member states signed the intergovernmental agreement on the fiscal compact. This binds countries in the eurozone to a budget deficit of no more than 0.5 per cent, and it involves countries giving up the power to write their own budget if they go beyond it. Britain is not signing this agreement. Britain is not in the euro and it is not going to join the euro, so it is right that we are not involved. But it is important that we continue to ensure that vital issues such as the single market are discussed by all 27 members. That is exactly what happened at this Council. Far from not being included in the vital discussion that affects our national interests, Britain helped to set the agenda at this European Council and Britain helped ensure its success. I commend this Statement to the House”.

--- Later in debate ---

[Lord Strathclyde]

Oh dear, my Lords, I was hoping for something rather more positive from the noble Baroness. It would help if the party in Opposition were to rethink its policies on Europe and try to answer some of the questions that she herself has posed. I shall return to that in a moment.

First, I echo her words on Syria and welcome them. Of course, an enormous amount is being done on the ground in that benighted part of the world. It is clear to anyone reading the newspapers and watching television that it is a fast-moving situation which is likely to continue over the course of the next few weeks.

What are we doing about it? Our top priority is to make sure that the humanitarian situation is improved on the ground. The International Development Secretary is planning to speak to the noble Baroness, Lady Amos, today. We believe that she is flying from New York to the region today, expecting to get access to Syria, even though her efforts last week were halted. Our permanent representative to the UN is speaking to the IRCR in New York today. I am sure that my right honourable friend the Prime Minister, who hopes to speak to President Putin—indeed, he may have done so—will raise the issue with him if he has the opportunity.

Obviously, this was a Council meeting that concentrated on the issue of growth and employment. I thought that the noble Baroness was unusually carping about my right honourable friend when she talked about the eurozone agreement that had been signed by the 25. The history of that is well known. She and I have debated this across the Dispatch Box but we still do not know whether, if the Leader of the Opposition had been leading for Britain in the December Council, Mr Miliband would have signed the agreement or not. Increasingly, we believe that he would not have signed it, but we do not know.

[Baroness Royall of Blaisdon]

My Lords, my right honourable friend the Leader of the Opposition would have ensured that there was a better deal on the table in the first place. He would not have left an empty chair at all these important Council tables.

[Lord Strathclyde]

My Lords, we have ended up with the best deal for Britain. We have safeguarded Britain’s interests and allowed the countries of Europe to try to solve the problems of the eurozone. We very much support them, not least because we have an absolute interest in their success. We want the euro area to sort out its problems and achieve the stability and growth that all of Europe needs, and we very much welcome the progress that has been made. The European Central Bank has provided extensive additional support to banks, and many euro area countries are taking difficult decisions to address their deficits, and giving up a degree of sovereignty over the future governance of their economies. They also agreed to set up a firewall, and it is entirely right that they should do so. If the noble Baroness regards that as the Prime Minister somehow being isolated in Europe, we shall have to agree to differ, because the safeguards are clearly there.

Some doubt was expressed also on the conclusions of the European Council. The noble Baroness asked whether I could confirm that measures on the energy market, trade, growth and micro-enterprises were all announced at previous EU Councils. That was a perfectly fair and appropriate question, but the fact that they were announced in the past does not mean that it was not necessary to mention them again in this Council. These are all important issues that of course were discussed at previous Councils; but this time the content is more concrete. A year ago, the conclusions talked of the importance of the issues, but not the detail of what was to be agreed. It is now even more urgent, and we have secured more concrete language to put pressure on the Commission.

Of course, the issues of growth and innovation come up every year, and it is a tradition to discuss them at the spring Council. However, the letter that Britain organised and sent to the President of the Commission was last year signed by nine countries and this year by 12, including Italy and Spain. This year’s letter also goes further and discusses financial services and trade. Some similar issues are addressed; for example, the digital single market was included because there has not yet been enough action on that. The conclusions of the Council this time reference all eight of our action points, and there will be a more concrete follow-up.

The background to this Council is extremely well known. It is one of the most economically unstable backgrounds that the European Union has ever faced, and nobody thinks that we are yet out of the woods. However, we seem to be in a period of relative stability, and it was entirely correct that in the Council we should concentrate on improving our competitiveness, employment and growth.

[Lord Dholakia]

My Lords, I thank my noble friend for repeating the Statement and will make a positive response. We certainly welcome the emphasis on growth, competitiveness and completion of the single market. We also welcome the collaboration between the United Kingdom and other heads of state and Governments in shaping Europe’s strategy on jobs and growth. Does this not show that we get better results when we work together closely with our European partners, and that a strategy of positive engagement in Europe works to our benefit?

On enlargement, we welcome candidate status being accorded to Serbia, with a view to opening accession negotiations. We also welcome the Council’s intention to launch a stabilisation and association process with Kosovo. How will the British Government support these processes, and what is their view of the prospects of continuing progress?

[Lord Strathclyde]

My Lords, I am very grateful to my noble friend, who of course is quite right that it is good to concentrate on jobs, growth and competitiveness. It is also important that we should work together. Britain is very much in the lead on this co-operation, working closely with other countries. The Statement is very clear not only about the British interest but also the wider European interest. That is why we have sought to complete the single market in services, the digital single market and also the energy single market, which we believe will be a substantial force in reducing prices overall and raising living standards throughout Europe. It is our intention to continue working together on these important issues at a European and bilateral level. We can see from the letter that was agreed by 12 of our partners that there is a good deal of co-operation.

[Lord Williamson of Horton]

My Lords, I, too, welcome the Government's Statement, and in particular the front-line role given to the statement that the biggest challenge for Europe's long-term future is to secure sustainable growth and jobs. I note that in its conclusions, the European Council states that it will concentrate on the implementation of reforms and pay particular attention to measures that have a short-term effect on jobs and growth. That is long overdue and I am very pleased to see it.

I am one of the Members of the House who reads all 45 paragraphs of the conclusions, not just the Statement. I will make one comment and then pose two questions or invitations to the noble Lord. My comment is that I am very pleased to see, in the section on action at a national level, that inter alia all member states are invited to remove barriers to the creation of new jobs. I make this point because it is important to realise that in the single market it is not just the EU institutions and the UK Government but the prosperity of the whole Union that matters. That is a very important point that could ultimately be advantageous to UK growth.

My first invitation is that the Leader of the House should spend a day and night giving priority to two points in particular. I say that because long experience has taught me that conclusions always have masses of things in them, and that if one wants to get anywhere one has to concentrate on one or two major points. The two points that strike me as very important are well known and come from the text of the conclusions. The first is that,

“efforts will continue in order to … reduce the administrative and regulatory burdens at EU and national level”.

Personally, I would like to have seen a stronger word than “continue”. I would like to have seen something like “be stepped up”. However, it is extremely important for the United Kingdom to keep the emphasis on this point, even if it irritates some people, because we need action.

My second point concerns paragraph 18, which states that,

“efforts must be stepped up”—

I am glad that this time it says “stepped up”—

“with a view to … creating the best possible environment for entrepreneurs to commercialise their ideas and create jobs and putting demand-led innovation as a main driver of Europe's research and development policy”.

This is not referred to in the government Statement, but it is important. There is great potential for Britain in using European research and development policy to drive action at a commercial level as well. Over time it could be highly beneficial. Therefore, I invite the noble Lord to spend a day and a night concentrating on those two points with his colleagues.

[Lord Strathclyde]

My Lords, I very much welcome what the noble Lord said. He is not alone but part of a small and very keen group of Peers who read and study the conclusions and then ask me questions on them. Fortunately, I, too, am one of those who read them. That does not mean that the noble Lord will never catch me out. However, my eye was drawn to these two conclusions—particularly the one that mentioned taking steps to remove administrative and bureaucratic burdens. This is something the Prime Minister spent a great deal of time talking about at the Council, one of the reasons being that very often Council conclusions will talk about these measures and about growth and employment measures but the Council does nothing about them. It is very important that we get into a process where the Council and the Commission do something about them.

Secondly, on more innovation, I very much admire the noble Lord for bringing this one out. Innovation is going to be the engine of growth within the whole of Europe, as he rightly pointed out, and I very much welcomed his earlier remarks about this Council being on sustainable growth and jobs. The key to all this is, of course, implementing these high sounding phrases. The noble Lord was correct in pointing out that this is not just about doing these things at a European level or, indeed, a British level. It is for every country in Europe to play a role. Within our own parliamentary system, we need to be part of that process that pushes down on regulation. We try to remove barriers to trade wherever we find them. The history of post-war Britain is that where we remove these barriers, we increase growth and employment prospects for all.

[Baroness Falkner of Margravine]

My Lords, while the time may not be nigh to recall that the United Kingdom has obligations under the “responsibility to protect” norm and under the genocide convention in terms of Syria, will the Minister reflect on those responsibilities and tell us whether in the interim, for the time being, now, the UK Government will consider on their own or as a coalition of the willing doing just three things: cutting diplomatic ties with Syria; banning its commercial flights landing at our airports and, in a coalition of the willing, at other European airports; and naming the 100 or so members of the Syrian regime as subjects for future indictments at the International Criminal Court?

[Lord Strathclyde]

My Lords, my noble friend encourages us to act unilaterally on the list of subjects that she offered. I am aware that we are moving forward on some of them, perhaps more tentatively than my noble friend would like. On others, we are not doing so. Perhaps I can check the situation when I get back to my desk, and if I can offer her any more concrete examples, I shall write to her.

[Lord Brooke of Sutton Mandeville]

My Lords, on the previous occasion that my noble friend delivered the Prime Minister’s Commons Statement on a prior European Council, did he notice the coincidence in the accompanying conclusions communiqué that the number of SMEs in the European Union is 23 million and that the number of unemployed in the EU is, give or take thousands, almost precisely the same number? Without expecting my noble friend to have the same UK statistics to hand, does he find it attractive that British SMEs should seek to provide one extra job each, carrying the double advantage of creating an example of hope to the rest of Europe at large and simultaneously highlighting the desirability of reducing regulations on companies with fewer than 10 people?

[Lord Strathclyde]

My Lords, my noble friend has a well earned reputation for finding these sorts of statistics that have passed so many others by, including me. He is right on the figure of 23 million small firms and 23 million unemployed. One each has an extra job, and that sweeps up unemployment. Of course, that is one of the reasons why, at last, many other European countries are joining us on deregulating and are accepting the case that what are called microenterprises—those that employ fewer than 10 people—are one of the basic engines for growth and employment. I am very grateful to my noble friend for pointing that out.

[Lord Kerr of Kinlochard]

I thank the noble Lord for repeating the Statement, and I agree with him about the importance of deregulation. I think it was in 1988 that I first wrote in one of these post-European Council prime ministerial Statements the sentence on deregulation. For the first time, we got a specific commitment. I am a little cynical about these European Councils. Of course, I think it is a wonderful idea that they should have talked about growth and the single market, but if you read the conclusions as avidly as my noble friend Lord Williamson, you discover that there is a sort of shopping list containing all the proposals that anybody ever had, including all those the Commission has had. For example, when we agreed the conclusions we appear to have agreed that work should be carried forward on the financial transactions tax, which seems to me to be one of the silliest proposals on the table now. I cannot think why we do not say, “Let’s just stop it”, because we can. It is on the legal basis of unanimity, and we can say that we are not going to agree. I think the conclusions are interesting, and it is good that the right subjects are being discussed, but they are a little bit of a ragbag.

I want to ask the Leader a completely different question. It is not about why we did not sign up to the treaty of 25, although the Statement is possibly a little suggestio falsi eye on that, in that it points out that the obligations apply only to the eurozone countries but does not point out that the Poles, the Swedes and six other member states thought it worth being in the room, at least, and are not committed to the obligations. I want to ask about Kosovo. I am sure the Leader is a great expert on Kosovo. I am not, but I see that the Statement speaks of a,

“process which can lead to a new contract between the European Union and Kosovo”.

Have all member states of the European Union recognised Kosovo? If they have not yet recognised Kosovo, how will this process work? Why do those who have not yet recognised Kosovo resist the independence of Kosovo? Could it be because they do not like secession movements, for example, in their own countries? Is this a point that the noble Lord will draw to the attention of his countrymen and mine?

[Lord Strathclyde]

My Lords, the noble Lord always speaks here with the voice of experience and knowledge, not least as an author of EU conclusions. I think that he said, in this rather empty House, that he is just a little bit cynical about these conclusions. It is easy to become cynical when you read these conclusions and you see the same words and phrases coming up again. I shall resist the temptation to join the Prime Minister in saying that this is a new dawn. However, the Prime Minister is very keen that when the EU says it is going to do something, it should do so. That is why he has very much been at the vanguard of making the arguments that he has, and I know that he will hold the Commission to account over the months and years ahead. Incidentally, I agree with the noble Lord about being a little bit cynical; I agree with him about the financial transaction tax. We are doing well today.

What about Kosovo? The noble Lord made a point that will be endlessly discussed over the next few years vis-à-vis the situation within the United Kingdom. I have not got an answer as to whether all the countries of the EU have recognised Kosovo. At the moment we are seeking to encourage both Serbia and Kosovo to maintain their constructive approach to further dialogue. This is crucial to the EU futures of both Serbia and Kosovo, and to stability in the region and improving the lives of its people.

One thing that came out, of course, was that the General Affairs Council gave impetus to Kosovo’s EU future this week—but I do not think that was necessarily the point the noble Lord was making, which was infinitely more subtle and will require a little bit more homework from my point of view. However, I am sure that other parts of the EU seeking to secede from their mother countries will want to see not only what is developing in Kosovo but in other parts of the EU as well.

[Lord Marlesford]

My Lords, can my noble friend the Leader expand a little on paragraph 26 of the Council conclusions on contributions to the IMF funds? I think I am right in saying that the G20 agreed that the amount of funds for the IMF should be reviewed; that the review came up with the need to double them and that this doubling would cost Britain about £10 billion, but that this £10 billion does not count as part of public spending because it is merely a guarantee rather than a cash payment.

Am I right in thinking that HMG will be favourably disposed to playing their part—the part I have just described—in the increase in the IMF funds, assuming that 70 per cent minimum collaboration is achieved, but that if there was a special fund to rescue the eurozone by producing funds through the IMF, as is slightly referred to in paragraph 26, Britain would not contribute to that?

[Lord Strathclyde]

My Lords, my noble friend knows that we are a founding member of the IMF and we are very much supporters of a well funded IMF. It is one of the most creditworthy institutions in the world, which can draw on resources from all its 187 members to fulfil its role. There are no firm proposals on the table yet. However, I can confirm to my noble friend that we have been clear, consistently, and will continue to be clear that the IMF cannot lend money to support a currency.