European Union Membership (Economic Implications) Bill [HL]

Lord Watson of Invergowrie Excerpts

Friday 25th November 2011 Lords Chamber

[Lord Watson of Invergowrie]

My Lords, my noble friend Lord Desai mentioned the 1975 referendum on what was then the EEC. I voted no, against continued membership. Like many in the Labour Party, I was concerned at the restrictions that it might place on a future Labour Government introducing socialist policies, not least in the industrial sector. Of course, there was wide division in the party. But things have moved on. Were there to be a referendum tomorrow, I would vote yes to stay in and I would campaign strongly for that position.

I welcome the Bill introduced by the noble Lord, Lord Pearson. Indeed, I say “Bring it on” as regards the committee because, like my noble friend Lord Davies of Stamford, I am confident that the position of those in favour would prevail. However, I am slightly puzzled as to the wording of the Bill—not just the Title but also the Long Title, which refers to,

“a Committee of Inquiry into the economic implications”.

Clause 1 is entitled “Committee of Inquiry into withdrawal from the European Union”. That will not come as a surprise to anyone who knows anything about the noble Lord, Lord Pearson, or UKIP. None the less, it is inconsistent.

I should like to say something about the way in which the European Union has developed over the years in terms of achieving its social agenda, particularly in terms of the high level of employment, social protection, improved living, working conditions and economic and social cohesion. The adoption of legislation setting minimum requirements has improved labour standards. It certainly strengthened workers’ rights, which I say from my background in the trade union movement. It thus improved economic efficiency and, as such, is surely one of the European Union’s main achievements in the field of social policy.

EU protection issues such as transfer of undertakings, part-time workers, fixed-term contracts and the working time directive, to which the noble Lord, Lord Kakkar, referred, have been resisted by UK Governments at one time or another. But those are rights that we would not enjoy in the UK were we not under the umbrella of the European Union. I regard that as a positive aspect of our membership.

Those who oppose EU legislation in these spheres—legislation that essentially aims to protect people’s health and well-being—should consider that, apart from the suffering caused to individuals and their families, poor working conditions represent a huge cost for the EU economy. Originally, EC—as it was then—employment law was designed with the aim of ensuring that the creation of the single market did not lead to a lowering of labour standards or distortions in competition. Today, employment law also has a key role in ensuring that a high level of employment and sustained economic growth is accompanied by continuous improvement in the living and working conditions throughout the European Union. The coalition Government should bear that in mind, not least in respect of the proposals outlined by Mr Cable two days ago. Reducing protection for people at work will not save or create a single job. It is not employment law that is holding firms back: it is the tough economic climate and the problems many SMEs are still having in getting the banks to lend to them. Research from the OECD shows that there is no link between regulation and economic output. German employees have much more protection at work than ours, yet its economy is the strongest in Europe. I believe that the UK’s best interests are served by playing as active a role as possible in the decisions which influence the future direction of the Union and its member states.

In respect of this Bill, many economic benefits of EU membership can be highlighted—this view is based not on my individual opinion but on figures produced by the coalition Government. The EU is a bigger trading area that the US and Japan combined and accounts for more than half of all UK trade in goods and services. According to an Answer given in July this year by the BIS Minister Ed Davey, 3.5 million jobs are reliant on the EU single market, which is one in 10 of all UK jobs. The latest available estimates show that the greater level of trade liberalisation achieved through the single market leaves EU countries to trade twice as much with each other as they would do otherwise. As a result, the single market has contributed to income gains in the UK between 2 per cent and 6 per cent; that is about 1,100 to 3,300 per year per British household. Again, those are figures quoted in an Answer by Mr Davey.

Another BIS Minister, Mark Prisk, also stated in an Answer this year that more than 50 per cent of foreign direct investment to the UK comes from other EU member states and is worth £350 billion a year to this country. This investment flows from our full access to the single market, because the level of trade liberalisation in the EU is unparalleled anywhere in the world.

EU competition and consumer rights laws have driven down prices, opened up markets for smaller businesses and boosted consumer protections. For example, thanks to the European Union, British families and businesses now enjoy vastly reduced mobile phone roaming charges, cheaper flights and proper compensation when flights are delayed or cancelled. In terms of global trade, the UK gets the best deal through the EU. The Union is a force multiplier for the UK, because this country contributes to common positions which then carry the weight of the world’s largest trading bloc. For example, in 2003, the USA was forced to back off and lift tariffs on UK steel producers by the World Trade Organisation, which authorised the EU to impose countertariffs on US products if the USA ignored the WTO’s ruling. The EU-South Korea Free Trade Agreement, the EU's first trade deal with an Asian country, came into operation in July this year and will be of great benefit to the EU as a whole and the UK in particular.

It should also be stated that British business supports our EU Membership: 74 per cent of business leaders polled by Business for New Europe and Ipsos MORI last year believed that the UK’s withdrawal from the EU would be damaging compared to 22 per cent who did not. Every mainstream political party supports UK membership, with only UKIP and the BNP opposed.

Being either outside or on the periphery of the EU while other member states discuss the crucial issues and take the major decisions has never been a positive or even tenable position for the UK. Those who advocate either withdrawal or our retrenchment within a reformed EU need to work harder on overcoming this country’s geographical relationship with Europe. No man or woman, it is said, is an island. It has never been more accurate to say that, in these critical economic times, no country is an island.