European Affairs

Michael Connarty Excerpts

Thursday 3rd June 2010 Commons Chamber

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I may be anticipating what the Foreign Secretary will say, but at the moment, many items are available as opt-ins, particularly on criminal law and so on. There will be many cases over the next few years in which the choice will be either to opt-in or to withdraw from a whole section of a treaty. Will those be dealt with so that the House is given a vote on whether the Government should opt in or opt out?

[Mr Hague]

They will certainly demand a lot of examination in the House. In the coalition agreement, we have committed to approaching further criminal justice legislation on a case-by-case basis. The UK has the right to decide whether to participate in new EU justice and home affairs measures, so we will give careful consideration to whether to opt-in to new measures in those areas while at the same time ensuring that the UK’s security is maintained and our civil liberties are protected, and that the integrity of our criminal justice system is preserved.

We recognise the importance of Parliament having adequate time to scrutinise those opt-in decisions. In all but the most exceptional cases, that means that we will not opt-in to any new measure in the first eight weeks following its publication, to give Parliament time to give a considered opinion. The hon. Gentleman will know that we are looking at how to improve parliamentary scrutiny of decision-making in Europe, and the positions that this Government or any future Government take at European councils. Indeed, we would welcome his views, as a distinguished former Chairman of the European Scrutiny Committee, on how those procedures can be improved. I know that my right hon. Friend the Leader of the House would welcome hearing from the hon. Gentleman.

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[Mr Hague]

I very much agree. It cannot be taken for granted that the problems have been solved. The 5+2 conditions necessary for the closure of the office of the High Representative have not yet been satisfied. As I have often said, I believe that European nations will have to be more forceful about this, and we will have to be prepared to push as well as pull some people in the western Balkans towards EU membership.

[Michael Connarty]

Will the Foreign Secretary give way?

[Mr Hague]

I have given way for the last time: I owe it to the House to allow the shadow Foreign Secretary and others to speak.

We continue to support the negotiations to re-unify the island of Cyprus—I am pleased that they restarted last week. Although we do not underestimate the difficulties, it would be very greatly in the interest of both communities on the island for those talks to succeed.

The House will also want to know about the institutional aspect of the EU’s external relations, the establishment of the European External Action Service. As the House will know, my party did not support the creation of the External Action Service, but it is now a fact. We warned that its creation would not necessarily lead to greater inter-institutional harmony in Brussels and that has unfortunately proved to be the case so far. It is now our task to ensure that the service is both useful to the nations of Europe and respects the role of national diplomatic services. The European Parliament has made its suggestions on how the service is to be organised, and there are discussions on the matter with the High Representative and the Spanish presidency. I hope that the European Parliament will recognise that the service will be a success only if it commands the confidence of member states. That is a crucial consideration.

The High Representative has made a good start to her very challenging role. We wished her well when she embarked on the task, and we look forward to working with her closely in the future.

The last Conservative Government left a considerable legacy in the European Union: the creation of the single market; the enlargement from nine to 15 members; and the setting in train of further eastwards enlargement. I will not take away from the last Government their achievement in helping to complete that enlargement, but in other respects their legacy is to be regretted: the alienation of the British public from the EU; the failure to stand up for Britain’s interests on the budget, and so on. The new Government have started as we mean to continue—with activity and energy in European affairs. We will play our role with enthusiasm, while vigorously advancing our country’s interests and never taking the British people for granted.

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[David Miliband]

The hon. Gentleman says, from a sedentary position, that we should reduce them, but he will know that the 2004-05 budget deal agreed for the first time that British and French net contributions should be more or less equal. That had never been achieved before under any previous Government.

[Michael Connarty]

Is it not true that not only did it allow the accession of the A8 countries, plus Malta and Cyprus, because they had problems with the budget proposed before that, but it changed fundamentally the basis of the common agricultural policy, so that we did not continue to plough money into the agricultural surpluses, but put the money into development in the countries joining? It was a fundamental change that was necessary for Europe, and one that was beneficial in the long run to the UK.

[David Miliband]

My hon. Friend speaks with all the authority of a former Chair of the European Scrutiny Committee. Of course, the change was twofold: first, the shift in industrial and infrastructure support into the A8 countries and, secondly, the creation for the first time of the second pillar of the CAP—the pillar devoted not to agricultural subsidy, but to rural development. The previous Government set out a clear plan for how the CAP should be reformed, so that there was spending on rural development and rural support, notably with an environmental, green and climate change focus. The market-distorting aspects of the CAP—the so-called first pillar—were reduced. So I am grateful to my hon. Friend for his intervention.

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[David Miliband]

It is important to point out that there is now a net outflow of European workers from the UK, according to the latest figures, which were published at the end of last month. That reflects quite a lot about our economy. It is also important to say that other European citizens are required to work and pay taxes for 12 months in the UK before they are entitled to claim benefits. That is an important part of the compact. I accept that there are rights, but it is important not to forget that there are also responsibilities attendant on migration within the European Union.

[Michael Connarty]

It is also worth putting on record that the Single European Act, signed by Margaret Thatcher, gave people the right to travel and work within the European Union. That changed the fundamental structure in which people now operate in the EU. It was not the Labour Government who decided that; it was decided long before we came to power.

[David Miliband]

My hon. Friend makes an important point. I want to refer back to the exchange between my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) and the Foreign Secretary. It is not often that he is stalled in his stride, but my hon. Friend managed to stall him by pointing out that his new-found enthusiasm for referendums on any transfer of competence, however small, stands in stark contrast to his loyal vote for the Maastricht treaty under his then Government. It also stands in stark contrast to all those Conservative Members who were in the House during the passage of the Single European Act and who loyally stuck to British parliamentary convention. That is, that we are a parliamentary democracy and that when there are fundamental transfers of power around the euro, for example, there should, of course, be a referendum, as all parties have agreed. It is the job of this Parliament, however, to scrutinise, debate and to vote on any other matters.

Although I shall not devote a long section of my speech to this subject today, we look forward to long debates about how the Foreign Secretary will justify spending £80 million to £100 million on referendums, for example, on a change in the organisation of the pension committee of the European Parliament, which is one consequence of the new-found policy adopted by the Government. We will have particular fun in asking the hon. Member for Bermondsey and Old Southwark (Simon Hughes), who has long stood for a high degree of European integration, to explain why that is a good use of taxpayers’ money.

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[Mr Robert Walter (North Dorset) (Con)]

I welcome the Foreign Secretary and the Minister for Europe to the Front Bench. I think that I speak for the whole House—or certainly for this side of the House—in saying that we now have a very strong team at the Foreign Office which will stand up for the United Kingdom’s interest in Europe as well as the UK’s interest in the wider world. It is with some sadness that I say I am speaking probably for the last time with you in the Chair, Sir Alan. We will miss you in that particular position, but I am sure that we will none the less see a lot of you around the House, which we look forward to in the future.

The Foreign Secretary spoke at some length about democracy and what could be described as a democratic deficit in European affairs, particularly in the European Union. I want to speak a little about what I see as a democratic deficit in common security and defence policy in the EU. There are a lot of good words on the role of national Parliaments in the Lisbon treaty, but there is little substance or structure on that subject. Sadly, one of the last dying acts of the previous Government—on the last day that this House sat before the general election was declared—was the announcement that they were signing the death warrant of an organisation called the Western European Union, and with it parliamentary scrutiny of European security and defence policy and common foreign and security policy.

Let me take a few moments to explain to colleagues what the Western European Union was, as it was the forerunner of the European Union. Its history dates back to 1948. The Brussels treaty was modified in 1954 to make the WEU an effective defence pact, and it participated in the early stages of the Balkans and Gulf wars. Then, 10 years ago, the European Union decided that it would transfer the functions of the WEU to the European Union, including the transfer of its military staff and its satellite centre, and the Western European Armaments Group effectively became the European Defence Agency. That is not what I want to talk about, however.

[Michael Connarty]

I thought that the hon. Gentleman might move on to make the simple suggestion that the scrutiny process carried out by the Western European Union should be remitted to the European Scrutiny Committee of this House, because at this moment decisions on those matters are not subject to scrutiny by that Committee.

[Mr Walter]

I thank the hon. Gentleman for his intervention, and I shall come on to the role of European scrutiny committees in that respect. He may know that his colleagues in the French Parliament have already suggested that something similar to COSAC—the Conference of European Affairs Committees—of which the hon. Gentleman has been a member, should be involved in the process.

The Assembly of the WEU has brought together members of national Parliaments from across the European Union and also involved the non-European Union NATO members. Two years ago, the Assembly formally changed its charter to make all 27 national Parliaments and the now five non-EU members of NATO members of its Assembly. The WEU has been providing parliamentary oversight of European security and defence policy as well as wider European defence issues and, more particularly, the use of taxpayers’ money on European collective defence procurement.

As I said, in a written statement on 30 March, the former Foreign Secretary announced that the UK was intending to give 12 months’ notice that it wanted to withdraw from the organisation. The following day, all the other signatory states to treaty announced that they would do likewise on the basis of what can only be described as a cost-cutting exercise. We all want to save money, of course, but there is a danger when it comes to democracy of throwing the baby out with the bathwater.

As seen in the Government’s statement, the statement of the WEU Permanent Council—the ambassadors in Brussels—and the recent motion in the French Parliament, to which I referred in my response to the intervention, and at the recent meeting of EU Speakers and at the EU Foreign Affairs Council in April, scrutiny is a role for national Parliaments and not for the European Parliament. They all made that clear.

The European Parliament, however, is ready, willing and able to step into the gap. In a resolution passed back in March, it claimed that the Assembly of the WEU—the European security and defence Assembly—had misappropriated its role in acting on behalf of national Parliaments, and that the European Parliament was the only competent body. That flies in the face of the Lisbon treaty, which states that this area of policy is intergovernmental and should remain so, and that there will be no further competences for the European Parliament.

It is national Parliaments and national Governments who authorise the use of our armed forces, whether it takes place on a European Union mission or on any other type of collective mission. It is national Parliaments and national Governments who pay for those deployments. It is national Parliaments and national Governments who pay for the equipment used by those armed forces, and it is national Parliaments and national Governments who decide on the terms of engagement.

The House of Commons Library contains an excellent research paper, which is currently sitting in the international affairs section, entitled “Parliamentary approval for deploying the armed forces: an introduction to the Issues”. Nowhere does that document, which makes very good reading, mention that the European Parliament has any armed forces whatsoever to deploy, or that it should in any way be involved in decisions about the deployment of our armed forces.

The decision made by the last Government—who have now been joined by other Governments—to abolish the Western European Union and wind up the treaty of Brussels abolishes parliamentary democracy, and nothing has been provided to replace that parliamentary democracy and oversight. Those Governments have provided no mechanism to implement all the rhetoric that they have produced in the Foreign Affairs Council and in their own statements by creating a new structure that would bring together national Parliaments to perform that role.

There are a number of options on the table. The simplest is for the current Assembly to transfer itself in order to become a European Union body. Plenty of precedents are provided by previous structures. The Foreign Affairs Council, which will meet in a week or so and which the Foreign Secretary will attend, may have an opportunity to move the discussion forward. What is proposed is a steering group that could draw up plans over the next six months or so, so that before the end of the life of the WEU and its Assembly we would have a structure that could exercise parliamentary democracy on behalf of all our national Parliaments and Governments.

I believe there is a real danger that if there is inactivity—if we all say that that is a good idea, but do nothing about it—the European Parliament will move into the void immediately. It has the money, the resources and the time to act in that way. We must now look to that Foreign Affairs Council meeting, and hopefully even the European Council meeting, to put some meat on the bones of the declaration of the last Foreign Affairs Council and start to create the structures that can take this form of parliamentary democracy forward. Otherwise, I fear that there will be another centralising drift in the European Union, which none of us wants.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I am pleased to follow the hon. Member for North Dorset (Mr Walter), and to make some comments that are relevant to what he had to say. First, however, let me welcome the Foreign Secretary to his post. He need not stay; he can do a Member for Glasgow South West on me if he wishes. I welcome the Minister for Europe to his post as well.

Let me begin with a quotation from an article in yesterday’s Financial Times by Charles Kupchan, professor of international affairs at Georgetown university. It is entitled “Britain is no longer America’s bridge to Europe”. Professor Kupchan writes that the present Government

“seems bent on pursuing a traditional Conservative foreign policy: cosy up to the US while giving Europe short shrift.”

In his view, that would

“leave Britain in a geopolitical no-man’s land and marginalise its international influence.”

He gives three reasons. The first is that the United States does not require us to do that any more. The second is that the United States has shifted its focus from the Atlantic zone to the middle east and Asia,

“leaving Washington keenly sensitive to Europe’s ability to share global burdens.”

The third is that

“Europe needs Britain as much as Britain needs Europe… British leadership is sorely needed to help lead the EU out of its doldrums.”

I entirely agree with that analysis.

The United Kingdom needs a strong eurozone. Members should be deeply concerned by the concerted attacks on the euro by the speculators in the money markets, who make nothing but trouble. As the Foreign Secretary generously pointed out, all that that does is weaken our market—the important market that is the European Union.

The process of fiscal consolidation and deficit reduction is very important. It is nonsensical for some Members in other parties, and the public press, to compare the situation in Greece to that in the United Kingdom, or to compare the troubles of Portugal and Spain to the situation facing the UK. The UK concentrated on building its supply side, and on education, training and research and development. As Chair of the European Scrutiny Committee for the past four years, I went to Portugal and Spain, and noted that they concentrated on major infrastructure projects rather than building up the talents of their young people or their manufacturing bases. Unemployment in Spain is nearly 40% among those aged 25 and under, and its national unemployment is 18%. We do not have those problems.

I welcome the paper by Mario Monti. It is important to focus on the new Lisbon 2020 strategy. It is true that growth is anaemic in the European Union, and it is not helped by currency speculation. We should recall the damage done repeatedly to our country and to sterling in past decades by currency speculators, and realise that what the eurozone countries have—whether they wanted it or not—is a commitment to stand together or fall together. Sadly, if we were attacked alone again, we would have to turn to those countries for support, because we do not have the strength that they have through their unanimity.

We need a strong EU climate change and energy programme. The UK’s 2% contribution can make little difference to the carbon footprint of the world without an EU programme. We—the UK and the world—need a focused EU international aid strategy. I pay tribute to Lady Kinnock for working so hard in the EU, when she was a Member of the European Parliament, to secure a strategy that focused on countries and Governments rather than project-by-project commitments. As we heard from my hon. Friend the Member for Ilford South (Mike Gapes), the former Chair of the Foreign Affairs Committee, it is all too easy for national Governments to cut their international development budgets, and it is important that the stability and growth pact is not used by countries to abandon the poor of the world.

Let me now turn to a matter that concerns me particularly. Members have mentioned the European Council that will take place in two weeks’ time, but some may not be aware that five European subject Councils have taken place since the Government came to office. Those who take an interest in what is happening in Europe should note that the activities of two of them were reported in yesterday’s Hansard. There was a meeting of ECOFIN on 9 May, after the Government had come to power but before the current Parliament was formed, but there has been no scrutiny of that or of the subject Councils, because no European Scrutiny Committee is up and running. There has been no written ministerial statement on the 9 May ECOFIN meeting, to which there was a reference in the ECOFIN statement of 18 May, although it dealt with some extremely important matters. There has been a press release from the European Council and a communication from the European Commission, but nothing from our own Government. Very important matters that we should be concerned about were discussed. Those are to do with the consolidation of the financial markets, but there was no scrutiny of that, and no report. The follow-up report

“underlined the need to make rapid progress on financial market regulation and supervision, in particular with regard to derivative markets”

and the role of credit rating agencies, and went on to discuss the excessive deficit procedure for Spain and Portugal. That was widely reported in the press, but nothing came through the processes of this Parliament.

On the Government’s approach and commitments, in what is now the coalition agreement there is the clear statement that

“there should be no further transfer of sovereignty or powers”—

I stress “or powers”—

“over the course of the next Parliament.”

We have heard from the Foreign Secretary about the methods by which that can be done. One of them, obviously, is treaties, but if I heard the Foreign Secretary correctly—perhaps the Minister for Europe can confirm this—he said that that excluded accession treaties: they would not be subject to a referendum, therefore. People will be concerned about the accession of other countries, and we know that there will be amendments attached to those accession treaties clarifying matters in respect of the Lisbon treaty, yet we have just been told that there will be no referendums on them. There is already smoke and mirrors from the Government, therefore. I do not know whether that is because they are influenced by their new Liberal Democrat partners, or perhaps the major Government party have chosen to do that themselves.

We have been told about the use of the passerelle clause, which can change the voting method on any issue from unanimity to qualified majority voting. If the UK Government decide in Council to give up their veto, the passerelle clause will be subject to a referendum or primary legislation, but the Government have to decide in the Council to give that up, because they already have a veto in Council. Therefore, the idea that we will be asked about that after the event is very worrying, as the Government will already have decided—and, I presume, will have discussed the matter with the coalition partners—that they will give up the veto before they put it to the House. They will then, of course, whip in Members in order to effect the dumping of the veto. Again, therefore, this is smoke and mirrors.

I asked about the opt-ins. We currently have opt-outs in many areas. If measures are amended, we can decide to opt in or opt out completely. In the European Scrutiny Committee, there was in the past unanimous concern that this process was not open enough for Parliament to have a say, and that many things were going through because that was suitable to the Government of the time. That is not what the Government that is now in power promised us. There has been mention of the issue of sovereignty or powers being transferred, and I wish to hear how they will deal with that.

Although its publications are not usually my favourite reading, Open Europe has a very good briefing on these subjects, which people might want to take a look at. I see that the former shadow Minister for Europe, the hon. Member for Rayleigh and Wickford (Mr Francois), is smiling from the Government Front Bench. It is important that I pay tribute to him for the role he played on the Opposition Benches during the last Government’s term in office. I have always said I am not a Eurosceptic, but I am a Government sceptic, regardless of which Government.

Many parts of the Lisbon treaty are now being interpreted as denying the right of scrutiny to Parliaments—this Parliament and other Parliaments. We must try to deal with these matters sensibly. There are many articles in the Lisbon treaty that say they are not legislative Acts, and therefore, as such, the European institutions have said they are not subject to protocol 1, which gives Parliaments eight weeks in which to look at them, and protocol 2, under which they can be challenged using the orange and yellow cards or challenged in the courts. It is also very important that the draft conclusion of the Council is tabled, so that it can be dealt with in the ESC before going on to the Council. I hope the Government will allow that to happen.

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[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

It is a great pleasure to follow the maiden speech of the hon. Member for Wyre Forest (Mark Garnier), not least because I still fondly remember having a photograph taken in 1997 with David Lock, the then Labour Member for Wyre Forest. We all had red balloons and we travelled down to Westminster together. I am glad to say that, apart from David Lock, all of those in the photograph are still in the House. I wish the hon. Gentleman well. I am sure that people in his local carpet industry would have had one or two things to say if it had been forced to “go metric” on the weaving shuttles; I am sure that he will have one or two particular points that he wishes to bring to the House.

I wanted to speak today because Europe is facing a political and economic crisis which, although it has been brewing for a considerable time, is, in some ways, being denied both here and abroad. It is a political elite that is in denial, and in some sense that does not surprise me, because I still bear the scars of spending 18 months in Brussels attempting to write a European constitution. The democratic mandate was ignored then, too, and a political elite essentially rode roughshod over the wishes of the electorate.

Frankly, no party here has much to be proud of on the issue of referendums, nor do the Governments in the countries across Europe whose people said no when asked—and were simply ignored, as happened in Holland and France. Ireland’s people were simply asked twice; they were asked until they came up with the right answer. So there is something wrong going on in the house of Europe, and at the moment, that shows itself in terms of economics and the single currency.

Those who have warned against some of the problems of the single currency take little pleasure in being tempted to say, “I told you so”. People need to face up to what is happening at the moment, because this is not a question of one member of the eurozone having a financial crisis from which they can simply be bailed out. A bail-out is not the answer to the problem, nor is it in the current treaty provisions. The central issue in Greece is not associated with the pubic finances, although those are a problem. The real question is what happens when a country in the current monetary union loses competitiveness and cannot regain it. In essence, we are asking Greece to implement what amounts to two thirds of a traditional IMF package, which usually involves raising taxes and cutting public expenditure. However, the third and crucial element that always comes with recovery is depreciation of the currency, and that adjustment is not happening.

What the European monetary union calls “internal depreciation” has to replace a currency depreciation, but that is nothing other than a polite phrase for debt deflation. The programme currently recommended for Greece will crush output and increase both unemployment and private sector default. It will reduce Government revenues still further, and make public sector default and national bankruptcy even more likely.

Some people in countries such as Germany think that every country in Europe should behave like the Germans. As someone born in that country, I think that that is a perfectly reasonable expectation—but it is not the answer, as we cannot answer our economic problems by requiring every country to run a trade surplus. To be fair to Germany, it got out of its own economic crisis of the late 1990s and the first years of this century only at the expense of some of the other countries in the EMU.

So what are we going to do? Two solutions offer themselves. One is to transfer funds from countries with a current account surplus—in effect, those in the German bloc—but that assumes that a one-off payment is the answer. It is not. What is really required are year-on-year transfers, equivalent to what West Germany paid to the old East Germany. Let us be clear about this, however. Just for Greece, such a year-on-year transfer would amount to something like €35 billion to €40 billion a year. If we were talking about the default for Spain and Portugal, we would be looking at something like €100 billion a year, and that would wreck not only the German economy but its public finances as well.

The second solution would involve a massive devaluation of the euro.

[Michael Connarty]

I hope that my hon. Friend does not mind me intervening, but it seems that, having put down a set of rails, she is going to go all the way along until she crashes. Is there not a possibility that the fundamental flaws lie in how the failed economies acted? For example, Spain and Portugal put money into infrastructure and not education, with the result that people left school and built houses instead of educating themselves and creating a new economy. In Greece, the question centres on how much of the tax take that is due has been paid. Should we not concentrate on changing those economies so that they are stronger? Should we not use the 2020 strategy to rebuild growing economies, and not just bail them out?

[Ms Stuart]

That is a perfectly fair point, but there are two problems. The first goes back to the claim that we would have trade surpluses if only every country were like Germany, but things do not work that way. The second problem is how such a strategy would be policed.

There is a third difficulty, too. Every successful single currency requires significant transfers from the centre to deal with asymmetric economic shocks, and those transfers would be of the order of between 20% and 30% of the overall tax take. In Europe, that would require a European economic and political Government. The approach could not work in any other way, because we cannot expect countries to behave like that in the absence of any mechanisms for policing or transfer that would compensate them for their loss of competitiveness.

The problem in Greece is that it could become competitive again by devaluing its currency, but it is not allowed to do so. As a result, the approach outlined by my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) does not address the problem.