Economic Governance (EU)

John Bercow Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr William Cash (Stone) (Con)]

(Urgent Question): I have an urgent question for the Prime Minister, which is being answered in the name of the Chancellor of the Exchequer, as to what negotiating position the Government intend to adopt on the conclusion of the taskforce on strengthening economic governance in the European Union that was presented to the European Council on 21 October with the claim that the endorsement—[Interruption.]

[Mr Speaker]

Order. First, I appeal to right hon. and hon. Members who are leaving the Chamber to do so quickly and quietly. Secondly, may I say to the hon. Member for Stone (Mr Cash), who has 26 years’ experience in the House, that this is not the point at which he is supposed to dilate? He will have his opportunity. He has said what the substance of the matter is, and we look forward to the Minister responding.

[Mr Cash]

rose—

[Mr Speaker]

Order. The hon. Gentleman must not get too excited: he will have his opportunity. I have granted him his chance, and he should not worry: we will come to him in due course.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I am very grateful for the opportunity to update the House on the conclusion of the taskforce on strengthening the economic governance of the European Union, and to report on the UK’s position on the taskforce. In particular, I wish to restate that the UK is exempt from the current and future sanctions regime.

Heads of State and Heads of Government commissioned the President of the European Council, Herman Van Rompuy, to produce a report on EU economic governance and report back to the October Economic Council. Mr Van Rompuy chaired a taskforce meeting consisting of EU Finance Ministers, and the Chancellor represented the UK on the taskforce. The report has been agreed by the taskforce, and the European Council is expected to endorse it tomorrow. Copies of the report, along with the Chancellor’s submission to the taskforce, have been placed in the Library of the House this morning.

The report concludes that the EU should take steps to reinforce fiscal discipline and that the euro area in particular must face tougher surveillance of its fiscal policies, with sanctions for non-compliance with the pact where appropriate. It also recommends measures to improve EU-level co-ordination of macro-economic policies. That will ensure that any harmful macro-economic imbalances between member states can be identified and corrective action taken. Finally, the report notes that there should be a permanent crisis resolution mechanism for the euro area. The UK supports its conclusions.

A strong and stable euro area is firmly in the UK’s own economic interests, given the high level of UK exports to those countries and our close economic ties. In the years before the crisis, fiscal discipline was absent, and not just in states in the eurozone. High levels of debt have exacerbated the problems that some member states face during the economic downturn. The taskforce recommends that there should be greater focus on member states’ public debt levels in future, and the Government agree with that approach.

I am pleased to note that the report explicitly states that sanctions cannot be applied to the UK under the stability and growth pact. Domestic fiscal frameworks play a crucial role in ensuring that member states act responsibly. EU surveillance is useful, but as the House knows, national Parliaments and national institutions must hold Governments to account for their economic and budgetary policies.

Let us be absolutely clear: yes, we want to see a strong and stable eurozone. That is in our interests just as much as those of our neighbours. The UK has led the way on economic governance. Multi-year budgets and independent statistics and forecasting have already been introduced, and we have a clear fiscal mandate to eliminate our structural deficit. We are leading the eurozone, and our high standards have already received international endorsement. We will examine any proposals to help the eurozone overcome its problems.

However, as the Prime Minister has just said, 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. The report makes that clear, agreeing 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”.

While we are looking at problems in the EU, I should like to say that we have serious concerns about the proposed size of the 2011 EU budget. I was shocked to see that on the day of the spending review, the vast majority of Labour MEPs voted against a freeze in the EU budget. When countries across Europe are taking tough decisions to put their public finances in order, it would be wrong—unjust, even—to have a 6% rise in next year’s EU budget, as has been suggested. We cannot accept that and will fight it hard. We are protecting British interests in the EU and doing what is right for our country and our people, and the Prime Minister will update the House next week.

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[Several hon. Members]

rose—

[Mr Speaker]

Order. I would remind the House that if I am to accommodate a reasonable number of colleagues within the very limited time frame available, brevity in both questions and answers is essential.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

Can the Minister confirm that even if the proposed treaty concerns only and exclusively the member states of the eurozone, it would still require the support of the British Government to go ahead? Can he assure me that that support will not be given without obtaining concessions in return, such as the return of powers to this country that were unnecessarily given? Can he assure me that we will not give that support without demanding a price? This is the ideal opportunity to obtain that price.

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[Mr Hoban]

The coalition is at its best when all Members are united behind it.

[Mr Speaker]

I reserve judgment at this stage as to whether the expression “duff over” constitutes parliamentary language, but the hon. Member for Wellingborough (Mr Bone) has got away with it on this occasion.