European Union (Amendment) Act 2008

Matt Hancock Excerpts

Wednesday 16th March 2011 Commons Chamber

[Mr David]

I thank the Minister for that clarification, but although there might be extensive post-decision debate, after the implementation of the Bill we will no longer be in a position effectively to give the Prime Minister a mandate. That is a step backwards and a negation of democracy.

[Matthew Hancock (West Suffolk) (Con)]

The hon. Gentleman has just said that he believes it is an error not to have a mandate, but did the previous Government have a mandate when they signed up to the EFSM after losing an election?

[Mr David]

I have already referred to that point. The former Chancellor and Government were facing exceptional circumstances, and my guess is that if the current Government had taken over the reins at that point, they would have done exactly the same thing.

--- Later in debate ---

[Matthew Hancock]

Is the hon. Gentleman therefore suggesting that the Labour party position is that the UK should be a part of the European stability mechanism, and therefore tied into bailing out eurozone countries, or does he agree with the Government’s proposal that the European stability mechanism should be for eurozone countries only?

[Mr David]

If the hon. Gentleman bears with me, I will tell him what I propose.

One sure way to prevent the single market from developing in a way that does not work to Britain’s advantage is for Britain to be involved in the current discussions. It is important for us to have an appropriate involvement in eurozone summits. I understand that countries such as Poland and Sweden, and even the Czech Republic, which has absolutely no intention of ever joining the single currency, have already indicated that they wish to be involved in those discussions. In contrast, Britain has made it clear—so I am told—that it does not want to be involved in any way whatever. I suggest that that is potentially harmful to Britain’s national interest, and therefore urge the Government not to close the door on our eurozone partners.

The second issue is another important and profound one. I have reservations about the economic and political assumptions that underpin this treaty change and the ESM. Let me be clear that the eurozone countries are correct in agreeing a permanent crisis mechanism. To that extent the treaty change is understandable, but my concern is that the ESM is part of a wider economic approach that is completely insufficient to address Europe’s deep-seated economic problems. Austerity, rapid economic retrenchment policies and fiscal consolidation will not of themselves create the kind of growth that the eurozone desperately needs. If all EU countries cut back at the same time, growth is likely to be sluggish at best. The hardest hit countries could find themselves facing stagnation, or even another recession. The risk is low economic growth and high long-term unemployment, with the poorest member states being hit hardest.

Of course, Europe has a 2020 strategy, which is supposed to be a 10-year strategy for jobs and

“smart, sustainable and inclusive growth”.

The stated aim of the strategy is to help Europe to deliver structural reforms and to recover from the crisis. However, although it is full of good intentions, the strategy plays second fiddle to Council and the Commission plans for deep economic retrenchment. It is clear that throughout most of Europe economic recovery is far from strong, and there is little evidence that private sector job growth will be fast enough to compensate for the huge number of jobs lost in the public sector. My concern is that the political and economic philosophy underpinning the treaty change and the ESM will make economic recovery in the eurozone both fragile and uncertain. As I said at the beginning of my speech, that is not in Britain’s best national interests.

These are important and serious reservations, and I hope that our concerns will be listened to carefully. Europe, including Britain, needs a coherent, well-thought-out growth strategy. Without that, the treaty change will fail to deliver the stability and prosperity that we all want.