European Union Economic Governance

Michael Connarty Excerpts

Wednesday 10th November 2010 Commons Chamber

[Mr Hoban]

I know that that paragraph has caused some interest, but many people stop reading after

“by a new legal framework”.

I am grateful that my hon. Friend did not fall into that trap. The provision is based on existing treaties, and it is about macro-economic surveillance. A number of organisations conduct macro-economic surveillance of the UK economy, and there is nothing new in that.

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

I hope that the Financial Secretary realises that we are here to support him in a sensible approach to economic surveillance. Does it not seem rather silly for people to say that a country that is in partnership with many other countries should not be interested if any of those countries are profligate? Clearly, good surveillance and good economic policies throughout the partnership are good for the UK.

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[Mr Hoban]

Given that the process is very straightforward, I begin to wonder why it is causing so much excitement. The reality is that the information is already available and the recommendations do not apply to us. The enforcement mechanism applies to eurozone states; they are subject to sanctions, but we have a carve-out from that because of protocol 15.

[Michael Connarty]

May I suggest to the Minister that one of the attractions of the new procedure is that every country in Europe will have to carry this out? They would find out well before any crisis—as we saw in Greece, for example—that they were in trouble. It is a little bit of information to give and a lot to get back. I think that the “Euro-loony party” contingent should leave the Conservative party, so that people with some common sense can deal with Europe sensibly.

[Mr Hoban]

I am not going to go down that route, but it is important that information be available. Over the course of the financial crisis—not just in the EU, but globally—we have seen the importance of understanding structural imbalances and their impact on other economies. This is an important strand of debate and it will be continued when the G20 meets later this week. It was certainly an important strand in the G20 Finance Ministers’ meeting last month, and, indeed, in the IMF’s annual meeting in October. There is nothing new in discussing these issues.

There is an existing mechanism for surveillance in place through the broad economic policy guidelines, but the warning mechanism has been used only twice: it was used for Ireland in 2001, and Greece received a warning in February this year. An improved mechanism would help towards achieving greater economic stability and it is particularly important for the eurozone, where the effects of imbalances and instability have a greater impact on its members, as has been apparent in recent months. That is why eurozone member states support a sanctions regime, penalising eurozone members whose economic policies undermine the stability of the currency and the eurozone economy. The sanctions do not apply to us, as I have said. I give way—

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

First, I wish to put on record what we are supposed to be debating, because Members have wandered all over the place. We are debating a series of six documents sent to the Government by the European Scrutiny Committee, on which the Government have now taken a position. Four are about the stability and growth pact—our Committee reference numbers for them are 32036, 32043, 32044 and 32047. The other two relate to the excessive imbalances procedure—documents 32045 and 32046.

In the main, those documents make no difference whatever to procedures that the UK has to carry out. However, a lot of heat has been made about the fact that they affect other countries, and that if the conspiracy theory of the hon. Member for Hertsmere (Mr Clappison) is borne out, they may affect our Government, who will have to give up their fiscal veto. The same was said in the exchanges on the recent urgent question asked by the hon. Member for Stone (Mr Cash). However, we are quite clearly protected in the Lisbon treaty and do not have to go down that road.

The documents will not have any effect on us, because we are not a member of the eurozone. They can be read in detail, and Members will find that the coercive measures set out in them do not relate to anyone outside the eurozone. The Government’s position is therefore to note the documents.

On 27 October, the Government made their position clear in response to the hon. Gentleman’s urgent question. The Financial Secretary quoted the report of the taskforce on strengthening economic governance in the EU, which has been referred to today as though it were a conspiracy document. It states that

“strengthened enforcement measures need to be implemented for all EU Member States, except the UK as a consequence of protocol 15 of the Treaty”.

That is quite clear. The hon. Gentleman reiterated that

“we will not agree to any changes to EU treaties that move more powers from this country to the EU. The UK’s exemption from the sanctions proposal will be explicit, and there will be no shift of sovereignty from Westminster to Brussels.”—[Official Report, 27 October 2010; Vol. 517, c. 319.]

It is important that we are clear about what we are trying to do.

We should be sensible in our debates, and I say to Members to whom the EU is anathema, or who are Eurosceptic to a great degree, that they should not diminish what they have to say about important matters relating to the Government’s position on the EU by arguing that somehow we are selling out if we do what is asked in document 32047, which is about the surveillance mechanism in the reporting regime. If we do not know what 26 of the 27 countries are doing in their budgets, we must agree on a proposal for everyone to put in information, so that both we and the Commission know what other Governments are doing. If we had done that we would have known how badly Greece’s economy was faring when it was suddenly found not to be putting accurate figures in to the European Commission.

[Mr Jenkin]

Just for the convenience of the House, will the hon. Gentleman explain why the numbers of the documents that he has read out do not correspond with the numbers in the Government’s motion, because those are the documents that we are scrutinising?

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[Michael Connarty]

The Government use the nomenclature of the EC reference and I am giving the Committee reference. When people want to find things, it is much easier to look at what the European Scrutiny Committee does under its numbers than to try to find it in EU documentation. They are, in fact, the same documents.

There is a very good advert on television—“Calm down, dear, it’s only an advert.” To people who try to say that this motion is a major sell-out by the Government, I say, “Calm down, dear, it’s only an information exchange.” Frankly, if there is a vote tonight, I will be voting with the Government. I will not be voting for any of the absurd amendments that have been tabled. The Government are doing the right thing. I am not out to score points on behalf of my party against another party. Our relationship with the other 27 countries with which we do most of our trade is far too serious for that. We must not kid people. The hon. Member for Hertsmere, with whom I sit in the European Scrutiny Committee, did not complete his quote from paragraph 34, page 8 of the taskforce report, which said:

“taking into account the specificity of the euro area.”

Paragraph 35 talks about the Commission conducting in-depth analysis and surveillance missions

“in liaison with the ECB for euro area…states.”

It is quite clear that these documents are about the eurozone. I know that there are problems in the eurozone, but when signing up to the euro one takes on such responsibilities.

[Mr Clappison]

rose—

[Michael Connarty]

Given that we are trying to let people speak, I will not give way.

Let us be sensible. To give and exchange information is sensible, as is surveillance. Without any wish to criticise anyone in this or the previous Government, I say that when comments were being made about our imbalances, perhaps our Government should have listened, and then we would not be living in such straitened times.