Commission Work Programme 2014

William Cash Excerpts

Wednesday 22nd January 2014 Commons Chamber

[The Minister for Europe (Mr David Lidington)]

I beg to move,

That this House takes note of European Union Document No. 15521/13 and Addendum, a Commission Communication: Commission Work Programme 2014; agrees that this document is a useful tool for planning the Government’s and Parliament’s engagement with the EU in 2014; and supports the Government’s view that measures which promote growth and jobs in the EU, including measures towards completing the Single Market, are the top priority.

This year’s work programme is the last for the current European Commission. It covers what the Commission is giving priority to in the final months of its mandate as well as some new initiatives and, of course, it does not cover everything that the European Union and its institutions are doing.

In last year’s debate on the annual work programme, right hon. and hon. Members focused in particular on the process of our scrutiny of European legislation. Prior to this year’s debate, the House’s European Scrutiny Committee published a report on reforming scrutiny in this place. I want to give the House an assurance that the Government are considering that report with the seriousness that it would expect and we will publish our response as soon as we can.

[Mr William Cash (Stone) (Con)]

As the Minister has referred to the report and to the formal response that the Government must give to it under the conventions of the House, I think it might be appropriate to mention the reactions of some members of the Government—I will not say everybody—to the proposals. They were described as “unrealistic” by one Minister and “unworkable” by another. That is not entirely consistent with the formalities of the convention that applies, but I think we will find that we will get a good response, as the Government have also said that it is a very important study.

[Mr Lidington]

This is an important study, which makes a large number of recommendations. The recommendations in my hon. Friend’s report have a bearing on business, which is the responsibility of pretty much every Government Department. The discussions that we are having at both official and ministerial level reflect the breadth of the areas of policy covered by my hon. Friend’s Committee.

The Committee noted, in its report recommending today’s debate, that—

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[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I welcome the opportunity to discuss the European Commission’s work programme for 2014. I thank the European Scrutiny Committee for its useful report. The Committee suggested that a debate before Christmas would be timely, and given the thinness of the Government’s agenda for this House, it is surprising that this debate has not taken place earlier.

The work programme published on 22 October is shorter than usual, not least because European Parliament elections are coming up in May and because the new college of commissioners will take office later this year. Our ability to influence the work programme’s direction to achieve UK objectives and protect our national interest depends in no small part on having good relationships with our allies in Europe. Yet, instead of defending our interests in Europe, the Prime Minister all too often puts party before country, opting for policy positions and language that appease Eurosceptic Back Benchers and alienate allies in Europe.

The result is that the Prime Minister finds himself in an increasingly isolated position in Europe. Indeed, the Prime Minister has been attracting an increasing number of openly hostile comments from crucial European allies. Germany, Poland, France and Bulgaria are our allies in Europe, and yet senior figures in their Governments—most recently the German Foreign Minister, Mr Steinmeier—have given briefings on their profound disagreement with our Prime Minister’s views. The political weight of the people in those countries who have made their disagreement with the Prime Minister known and the tone in which they have done so are concerning. Once again, the Conservative party is pushing Britain into the isolated corner that John Major’s Government left us in.

The Prime Minister has promised to renegotiate the terms of Britain’s membership of the European Union. He said that treaty change will deliver important opportunities to repatriate a series of powers that are apparently held by the EU and which he thinks ought to be back with the United Kingdom. Having looked at the work programme, I confess that I cannot see a major treaty change in preparation. It is far from clear that the treaty change on which the Conservative party is banking is likely to happen soon. If the Minister were to be honest with the House about that, I suspect that he would say that he is starting to realise that the game is up. The Chancellor’s recent plaintive call for treaty change in the context of banking union gave the impression that he knows that the possibility of such treaty change is retreating. Even if we assume that treaty change will happen, we still have absolutely no idea which powers the Conservative party wants to repatriate. The Minister has once again failed to tell us today.

The work programme priorities for 2014—economic and monetary union; smart, sustainable and inclusive growth; justice and security; and external action—are critical to the UK. In particular, a strong and stable economy in Europe is crucial to British jobs, security and prosperity. As the UK continues to battle through the Government’s cost of living crisis, with falling wages, rising prices and stagnating growth, our continued membership of and active engagement in the European Union are crucial to Britain’s economic prosperity. Almost half the UK’s trade and foreign investments come from the European Union. More than 3.5 million jobs in the UK depend on our membership of the EU.

[Mr Cash]

The hon. Gentleman knows perfectly well that the figure of 3 million jobs is a monumental myth. It came out 10 years ago and was denied by the National Institute of Economic and Social Research, which described it as Goebbels propaganda.

[Mr Thomas]

The information that I gave was confirmed as recently as 2011 in a written parliamentary answer from the Foreign Secretary. Who am I not to believe the Foreign Secretary on a matter of such importance? If the Foreign Secretary’s view is not good enough for the Chairman of the European Scrutiny Committee, perhaps I could point him towards recent research by the CBI, which estimates that our membership of the EU is worth between £62 billion and £78 billion, which equates to about 4% to 5% of the country’s total economic output or about £3,000 per UK household per year.

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[Mr Brian Binley (Northampton South) (Con)]

It is important that the House considers the European Commission’s work programme, as we have done before.

The Greek presidency has the potential to make a major difference to the EU at this critical time, and we should have every hope that it will attempt to make those changes, bearing in mind the recent history of the Greek Government. Greece is arguably one of the greatest victims of the bungled “integration at any price” agenda of those behind the European project and should be well placed to showcase the dangers of recent approaches. This was an opportunity for European integration to change course, but the message from the programme of the Greek presidency is that that process of political integration and state building continues apace regardless. This document and agenda do little to address the very real concerns of ordinary voters across the EU and convey that detached superiority of a complacent unaccountable elite. At a time when Europe teeters on the brink, this work programme presents an agenda for ever-more integration, justified in language that would cause even the most cynical to take note.

We are promised that the Greek presidency will

“reverse the current trend of youth unemployment”

as part of the effort on economic growth and job creation, but it seems that the main output is to

“enhance the implementation of the Compact for Growth and Jobs”,

whose relevance is worthy, to say the least, of deep scrutiny. If we want to reverse the trend of youth unemployment as well as put right many of the wider ailments of the European economy, we need to revisit the entire economic model on which the European project is based. Instead of a burdensome, overbearing single market driven by a social model that is neither desirable nor affordable, we need a much lighter, more flexible and trade-focused agenda for wealth creation and prosperity.

That is not, however, the priority of the Commission. Instead, we are promised a further push on the integration of the EU and the eurozone. The work programme undertakes to push hard on banking union, and promises to

“create a well coordinated Economic and Monetary Union with a view to ending the instability and uncertainty observed in particular in the ‘periphery’.”

Are they talking about the fastest-growing economy in the world when they talk about the periphery? One wonders whether that is how they see Britain.

Perhaps of the greatest concern is that we are promised

“a particular focus on the social dimension”

of European monetary union,

“which, for the first time, will be integrated into the European Semester cycle”.

[Mr Cash]

My hon. Friend refers to banking union. For the last two and a half days, I have attended a conference in Brussels, in which it was explicitly said, over and over again, that it was crucial to get the banking union proposals through. They pleaded with national Governments to get those proposals through before the European elections, because they fear that if they do not get them through before then, they will never get them through.

[Mr Binley]

My hon. Friend is, of course, right. We know that banking union was proposed as a last-ditch effort to give some confidence to the market, but I doubt whether these are the key economic promises for businesses across the EU—that is the truth of the matter. They are a long way from where voters would like the political emphasis to be placed—especially, if I may say so, in this country.

It is difficult to reconcile these priorities with the economic realities, particularly within the eurozone. As we emerge tentatively from recession, alongside the United States, the eurozone continues to face a crisis of existential proportions. The promising picture in Ireland and Spain, as well as improved confidence, is more than offset by the risk of a widespread deflationary spiral and the worrying travails of the French economy, which, being socialist-driven, frightens most of the people in most of the countries across Europe.

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[Mr Bain]

I am grateful for that intervention, but I remember that major employers such as Hitachi established themselves in the north of England precisely because we are in the EU and have access to the single market as a result. Many investors have said that if we were no longer part of the single market, many jobs in this country would be put at risk. I simply ask my hon. Friend to reflect on that point.

[Mr Cash]

If the hon. Gentleman were to read not only The Guardian but also The Daily Telegraph today, he would see references to what the chairman of Unilever said. His comments were much more in line with the arguments made from the Government Benches because he was saying that reform was needed and that far more concern was being expressed about that reform than was necessary.

[Mr Bain]

I am conscious that other Members wish to speak and I do not want to do a survey of all of today’s British newspapers, but I simply say to the hon. Gentleman that the main story on the front page of the Financial Times this morning was headlined “City warns UK over loss of EU influence”, so I think we are hearing precisely the voices of business, who want to promote job creation and who are expressing the view that isolating ourselves in the way that the Government are trying to do, in a vain attempt to placate the hon. Gentleman, is simply not going to work in our long-term interests.

There are several points I want to develop in the remainder of my remarks. First, on economic and monetary union, yesterday the International Monetary Fund’s world economic outlook predicted growth in the eurozone for this year at a mere 1% and for next year at an only slightly higher 1.4%. At the same time, there are 26.5 million people out of work across the EU28, and 5.6 million of them are under the age of 25. That is a youth unemployment rate of nearly 24%. That should shame all of us. It should represent a call to action for every politician who has influence to shape the EU’s priorities to focus on job creation for the next few years.

Over the year to last November our trade deficit with the EU rose to £3.2 billion and the continued low growth in the eurozone area was one of the main contributory factors to dampened demand for our manufacturing exports. By contrast, our trade in services, including financial services, is in surplus. So it is in the interests of business and workers here in the UK to see the fault-lines in economic and monetary union repaired by putting in place a strong set of common institutions such as a single resolution mechanism and processes to allow for the resolution of distressed banks in the eurozone area. The question of whether there should be a common deposit insurance guarantee, or commonly issued debt, is certainly a more divisive issue among the eurozone members, but now that a new coalition is in place in Berlin, we should at least begin to have greater certainty about Germany’s intentions on both those fronts.

We should also welcome the fact that, contrary to many expectations—not least from Members on the Opposition Benches—the eurozone has not broken up. Indeed, Latvia became its 18th member this month. Nevertheless, in this work programme the Commission has acted on the widespread sense among peoples in Spain, Portugal, Greece, Cyprus and Ireland that monetary union lacked a sufficiently social or democratic dimension, with little regard being given to the effects on inequality, wages and, most devastatingly of all, youth unemployment in some of the programmes imposed upon those member states in the name of deficit reduction. It is interesting to note that the Commission’s work programme refers to the further priority for work in this area in the coming 12 months.

As Commissioner Andor’s report today makes clear—this certainly was covered in The Daily Telegraph, to which the hon. Member for Stone (Mr Cash) referred earlier—eurozone members should not be left with the only options being internal devaluations or wage cuts as the means of escape from any future downturns. The price for that would simply be paid by ordinary working people with substantially lower living standards. A eurozone with a strong fiscal union component will help to avoid that possibility in the future.

When Government Members visited Brussels in October last year we heard from the office of President Van Rompuy that eurozone member states now recognise that sharing a currency and a common interest rate was not enough to avoid the effects produced by the economic shock of the great recession. So plans are now being developed to establish limited pooled resources that could help share out or equalise economic demand when some states suffer a severe dent in their output. We should welcome that. It has also been proposed that a revision of some of the terms of the fiscal pact could allow eurozone states greater flexibility to boost demand through fiscal policy in times of economic trouble. We should also welcome those proposals.

In common with weak lending to small and medium enterprises in this country, the Commission should also focus in much greater depth on how the European Investment Bank increases lending to businesses in the coming months, so that Europe’s growth rate can be expanded. In that sense, there are real parallels between the debate on the flaws of monetary union in the eurozone and the debate that will take place in my constituency and the 58 other constituencies in Scotland on the future of the economic, political and fiscal union that is the United Kingdom, which will have its resolution this September. There is a strong recognition that a properly functioning currency union requires both fiscal and political union too.

Secondly, on markets for trade and future growth, the work programme refers to the potential for a second Single European Act to complete the free movement of goods and services in areas such as energy and telecommunications. This is vital so that the EU can establish a proper digital single market.

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[Mr William Cash (Stone) (Con)]

Having listened to what the hon. Member for Glasgow North East (Mr Bain) has just said, I think he really needs to take into account the fact that we have a Queen’s Speech every year at about the time the work programme comes out. That Queen’s Speech is put forward on behalf of an elected Government; it contains Government proposals that come from a democratic process. We are discussing a work programme that comes from an unelected bureaucratic organisation that lays out its priorities and expects people to respond to them. There is a serious difference in character between the two. Many of the proposals in the work programme—some of which are not legislative proposals but initiatives—are brought into effect by regulation or directive.

The proposals in the Queen’s Speech, being democratically driven and debated in the House, are brought into effect by Bills of Parliament. Those Bills have Second Readings, they are amended and they have a Report stage. They go through both Houses of Parliament. However, a single paragraph in a regulation or directive could have the most profound effect on us in this country. The provision would almost certainly be driven through by a qualified majority vote. That could involve our being pushed into a consensus or being outvoted; it could also involve a co-decision with the European Parliament. We have less and less control over what goes on.

The Commission programme is, as a matter of principle, based on undemocratic systems. That is why the European Scrutiny Committee report, which has received quite a lot of attention recently, has put forward proposals relating to those provisions that could, in the national interest, be considered for disapplication or—in the case of the proposals that we do not want—subjected to a veto.

In regard to the Minister’s opening remarks, I should point out that the Government are resolutely against several provisions in the work programme, including those relating to the European public prosecutor’s office, and to the single resolution mechanism, in which we will not participate. That Government also oppose the provisions on free movement rights, to which they will not subscribe, and to those relating to the European anti-fraud office. All those matters will still be produced by the work programme, however, and we will be unable to prevent them from happening. The hon. Member for Glasgow North East is perfectly entitled to say that he would like to have the single resolution mechanism—in fact, I recall him saying that he thought we should have it. However, I can assure him that that is not the view in the City of London, and it is not the view of many people who have a great deal of knowledge of these matters.

A serious constitutional question lies in the difference between the Commission work programme and legislation that originates in this House, based on manifestos. The work programme is completely different in character and consequence for the voters we represent, in a way that is profoundly undemocratic. That is point No. 1. As Chairman of the European Scrutiny Committee, I know that our job is to look at all these matters—and point No. 2 is that we do. We do that diligently throughout the year. Let us leave aside the disapplication and veto matters to which I have just referred. When I was in Brussels yesterday, I was told by very senior members of other national assemblies, “We would give our intense support to anything that would enable us in our own countries to have flexibility to prevent the imposition of legislation on banking union and so on.” Their list is endless, but they just cannot do it because of the way their constitutions are tied in. Our report recommends that the departmental Select Committees could be brought in to make assessments—

[Mr Lidington]

indicated assent.

[Mr Cash]

I am glad to see the Minister nodding, because we believe our constructive suggestion will help to make more sense of the proposals in this work programme. Not only would each Select Committee have a rapporteur who is a specialist in European matters, if that were agreed by the House, the Procedure Committee, the Liaison Committee and so on, but the generality of departmental Select Committees would consider whether they wanted to prioritise proposals that came out of the work programme and make their own political judgment on whether they thought it was in the interests of the United Kingdom to go along with those proposals. They might even absorb some of the ideas and say they were good. The bottom line is that there should be a proper democratic discussion about it all, as that would be very helpful.

The Minister has referred to a number of initiatives, but I wish to say one thing about the repeal of legislation. This relates to actions under the regulatory fitness and performance—REFIT—programme where we must be realistic. There is far too much of a burden on British business and, indeed, on businesses in the European Union as a whole. I hear that view from all my colleagues in the other national Parliaments when I visit them. I shall be going back to see them in Athens this weekend, having just come back from Brussels. They all say the same thing: they want small businesses to be much more effective; they want more opportunities for entrepreneurship; they want to have more free trade; and they want there to be the opportunity to make money, so that the taxation can be provided for public expenditure. If not, they find that they have terrible problems with their economises.

Finally, we must all be very pleased about today’s employment figures. It is a great tribute to the Government that we have seen this dramatic increase in employment. I just add, however, that a great deal of it comes from our expansion of non-EU trade. We see that in the premium selling points of Jaguar Land Rover and the companies where the money is really being made internationally. We have a deficit on current account transactions, trade and services, and imports and exports—the golden criteria. On that principle, we run a deficit with the other 27 member states of £49 billion a year. We had a surplus in the figures for the last accounts of £12 billion, but the figures for the two quarters for the beginning of the next projected flow are £5.6 billion and £6.1 billion. If that continues, as I think it will, by the end of this year we could find that, in one year, business, with the assistance of the Government—I give them credit for this, because they have been listening—will have doubled our non-EU surplus with the rest of the world. That is where the machinery for more employment and the drive for prosperity for this country will come from, which is why I am so pleased to have the opportunity to congratulate the Government on the figures. At the same time, I issue one small word of caution: we should not put all our eggs in the European basket.