European Union (Approval of Treaty Amendment Decision) Bill [Lords]

Neil Carmichael Excerpts

Monday 3rd September 2012 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

It is a great pleasure to speak in this debate, although I have been thinking about déjà vu situations, not least because we have discussed this subject in some detail in the past, and then I started wondering where the holidays had gone—I am still wondering about that. However, it is an important debate and it is well worth giving the matter further consideration. The Government are absolutely right that we have had a motion but should now also have a belt and braces approach and a Bill to ensure that this is properly embedded in the parliamentary system and that we understand what is being done by passing this legislation.

I want to remind Members, as I have often done, about certain visits I make to meet businesses in my constituency. Many of them trade with the European Union, but they never really mention the problems because they are really quite pleased to have a free market and take it as read that that is a good thing. They are grateful for any improvements we can make to the single market, and I would like to see improvements such as the expansion of the single market to services and energy, for example. The firms I visit are good examples of why we should be concerned about the future of the euro and keen to ensure that the single market and our trade with the European Union continue unabated.

One of the firms is Delphi, which makes injector systems for diesel engines. It imports parts, assembles them and then exports them. They go from Europe to Britain and then back to Europe. It is that kind of relationship that is important and necessary in a world of increasingly complex supply chains and relationships between businesses. It is really important to recognise that that is the bread and butter of what the single market is all about. I heard earlier the worries about the single market and the need to think of it as unimportant, but I completely disagree. Not only is it very important, but it is our responsibility as supporters of the coalition Government to ensure that we press ahead with its expansion, deepening and enhancement.

The euro itself is also an important issue for us. We have to recognise that we are neighbours of 17 EU member states that are in the euro. An unmanaged collapse, or indeed any collapse, would be absolutely catastrophic. It is in our interests as a country to make sure that the euro thrives. We may not like the euro or want to join it, but it is in our interest to ensure that it does not break up. That is at the core of some of the issues raised today; I shall come to them in a minute.

Something else has cropped up in this debate—the good old referendum. I see why people want referendums and why they think that this Chamber should not make all the decisions, but also cast them out to the people. However, the people ask us to make decisions; that is what Parliament is for. I buy the argument that too many referendums are more likely than anything to reduce our influence, as decision makers and members of Governments, in this Chamber. We must be really careful about when we think we should have referendums and when we do not.

There is really no need at all for a referendum on what we are discussing tonight. The last Europe Act that we passed suggested that we should have referendums on the passage of power to the European Union, but which power will we pass to the European Union through this legislation? We will not pass any; actually, we are grabbing some power back.

[Jacob Rees-Mogg]

We are obviously giving the European Union the power to set up a fund. That must be a power, even if it is not worthy of a referendum.

[Neil Carmichael]

I am grateful for that intervention, which goes to the heart of the question. If we are worrying about powers that concern us, the answer to my question is still no. That is the point: the answer is still no, because no powers are being transferred through this legislation from us to the European Union. If anyone can describe a power that is being transferred, I want to know about it, but unless they can the answer is that no powers are being transferred. That point is really important.

I shall go further. The real issue about the legislation is that it effectively removes qualified majority voting from the issues of what we were deciding before. That is why we need not worry; we are saying that there is now a power of veto on the process—so, ironically, there is a further strengthening of the British approach to dealing with the European Union. I question the need for regular referendums because that would reduce the influence of the House and I certainly say that there is no need for a referendum on this item, because at the end of the day there is no evidence of any transfer of power.

That is not the end of the matter. The issue that has been bubbling around this debate is that we do not like the euro so we have to pull out or do something to undermine it. My point is that we are not going to join the euro, but we want to make sure that our interests as a country are properly protected so that we can continue trading with the countries that are in the euro.

Let us face it—those countries are significant traders. As a whole, the European Union still effectively controls a quarter of the world’s gross domestic product. Seventeen members of the eurozone are part of that and they are the bigger part of the EU. In sheer figures, we are talking about a large portion of the world’s gross domestic product. That suggests that we have to be sensible about how the euro is treated. Sensible American policy makers agree; they want Britain to be part of the European Union, exercising appropriate influence in a way that promotes the trade activities that we see in Europe and beyond. That is not true of all Americans; one or two in Tampa during the Republican convention would raise eyebrows. However, American government, in the broadest sense, recognises that having Britain in the European Union is a good thing because it has a good influence on how the EU shapes up. It is important for us to recognise that as politicians, policy makers and administrators.

Poland was mentioned earlier, and I understand why. It is a very interesting country to think about because it is the only one that has not had a problem with growth ever since this crisis started. That is partly because it has always had a relatively sensible approach to borrowing money and deficit management. It has also recognised its close proximity to Germany, which is of course part of the eurozone. It is not surprising that the Polish Government are now wondering exactly what they are going to do about signalling their intentions on joining the euro—a decision that Donald Tusk needs to start to formulate as the months and years go by. Poland is not necessarily going to reject the option of joining the euro, and that is in complete contrast to the usual story about countries leaving the euro. We need to bear that in mind as we deliberate on the future of the euro as a whole.

We do not want to join the euro ourselves; we think that would be a mistake. We are not planning to make any decision that would lead us towards having to do so, but the British Government and the British industrial state need to think very carefully about how the euro situation unfolds. Our relationships with the big players are therefore very important.

[Martin Horwood]

I congratulate the hon. Gentleman on his speech, not least on his points about the importance of European trade to business in Gloucestershire, where both he and I obviously have an interest. He is doing a good job of flying a more positive and realistic flag for the Conservatives’ approach to Europe, and I congratulate him on that as well. Would he go as far as me in saying that until the eurozone returns to economic health it will become increasingly difficult for this country to return to full economic health, and that therefore any small thing that we can do to enable that to happen must be a positive? I am not suggesting that this Bill guarantees that that will happen, but it is perhaps one small step in helping to enable European, particularly eurozone, countries to rebuild their economies.

[Neil Carmichael]

I thank the hon. Gentleman for his intervention; I am very grateful for the level of support. Plenty of Conservatives share my views; he should not think that we are some sort of sect. He is absolutely right to point out that Britain’s best interests are connected with helping the overall economy in Europe, which obviously includes the eurozone.

Several hon. Members have referred to the situation in Germany, which is pivotal. One has to ask what Angela Merkel is really thinking and why she takes the attitude that she does about how the bail-out operations are decided and managed. That goes to heart of something else that has cropped up in this debate—devaluing currencies. The Germans like a robust currency because they believe that it is good for their economy. They have had one for an awfully long time, and in broad terms their economy has benefited from it. They know that the relative strength of the deutschmark before, and the euro now, has been a good thing for economic policy management. They also know that if they dish out bail-outs too prematurely they will not extract the necessary promises from the other nation states to put right the issues that are not so good in those countries.

At the end of the day, it is important that bail-outs lead to a result, namely improved productivity, better debt management and better management of public expenditure. That is what needs to happen in nation states that are in difficulty, which is why the issue of eurobonds is so interesting and is taking such a long time to crystallise into real results. Those countries that understand the need for robust currencies and, effectively, inflation-proof strategies will win a long-term gain, which proves that that is the right way to improve productivity and ensure that economies grow according to robust economic indicators.

It is necessary for the British Government to continue to work with the German Government in that regard, so that it remains possible for us to develop the right kind of relationship with the rest of the eurozone. We have to ensure, first, that we influence the single market to expand into services and energy; secondly, that we get proper discipline over public finances; and thirdly, that we recognise the value of strong currencies.

It is not true that devaluing willy-nilly achieves results—we have seen that so often in our own history and in that of other countries. Remember 1967, when devaluation was argued over ruthlessly by Harold Wilson, Jim Callaghan and others, but what did it actually produce? It did not produce additional productivity or the kind of growth that was anticipated and so desperately needed. Devaluation is not a panacea in complex economic situations in which a lot of trading takes place between complex economies. That is an important marker for our own economic prospects.

In conclusion, I firmly believe that this country needs to deal with its deficit and I recognise the importance of reforming the real economy. I apply the same logic to both of those things in the European Union. Britain should be a positive influence. It should not necessarily be involved in the euro, but it should be able and willing to ensure that the world’s largest single area of economic activity remains a credible force for the future.