European Union Membership (Economic Implications) Bill [HL]

Lord Ahmad of Wimbledon Excerpts

Friday 25th November 2011 Lords Chamber

[Lord Ahmad of Wimbledon]

My Lords, yet again the question of Europe is one which we find dominating headlines. Indeed, it is impacting daily lives and for this reason and others, I join in the chorus of approval and tributes being paid to the noble Lord, Lord Pearson of Rannoch, today. His timing of this debate is quite impeccable.

“What we should grasp, however, from the lessons of European history is that, first, there is nothing necessarily benevolent about programmes of European integration; second, the desire to achieve grand utopian plans often poses a grave threat to freedom; and third, European unity has been tried before, and the outcome was far from happy”.

Those are the words of my noble friend Lady Thatcher.

We see the currency born of the European ideal today fighting for its mere survival and economies of Europe that led the world as proud nation states looking across the world, perhaps, to emerging and developing nations with envy at their growth rates and investment levels. Yet as turbulence grips Europe, Britain, as ever a proud nation in Europe, continues to play a pivotal role in seeking to provide assistance, guidance and, most importantly, leadership and financial contribution where and when it can. This is notwithstanding the backdrop of our own economic challenges on the domestic front. We are supporting neighbouring European economies to ensure our treaty commitments.

Therefore I find recent reports of warnings being issued by the President of the European Commission to my right honourable friend the Prime Minister to put the European ideal first and not to think of the UK, particularly with reference to the benefits of the vibrant City of London, quite frankly a ludicrous proposition. Indeed, I should perhaps declare an interest as someone who currently serves in the City of London. Does the President of the European Commission really believe that the argument that we shall be left behind will resonate with our Government and, more importantly, with the British people? It will not.

Economic and monetary union and the birth of the euro brought with them similar cries of: “a two-track Europe”; “Britain will no longer have influence”, which many noble Lords have said; and “Frankfurt will become the economic capital of Europe”. Has any of these propositions come true? No. We were right not to join the euro then, and we are right today to defend the City of London against prohibitive taxes for the benefit not only of the City and what it brings to Britain but of Europe as a whole.

Let me recount the time of the launch of the single currency. I remember talking about this. One concept that was often raised was how we remember who is going in and who is going out. If you throw Greece into the equation, a baffling acronym came about: PIGS. I say no more. Price stability was one qualifying criterion. Others were successful membership of the ERM, interest rate convergence and fiscal prudence—and let us look towards prudence. One of the criteria was a 60 per cent ratio of government debt to GDP. Was this strictly met? You need only look at Belgium at 122 per cent and Italy at 121 per cent. Those criteria were not strictly adhered to.

Then there was the cost of the introduction. One of the elements was fiscal policy spillovers. A European-wide interest rate would mean that EU countries would have to increase their intra-EU transfer payments to help others. How Greece would have loved no competitive devaluations in the current climate. These are no longer downside risks or doomsday scenarios; they are a living reality facing the single currency today. Monetary union without fiscal union was never going to be a sustainable proposition. That has proved correct. There are many in business and in public life now who rather than lecture the country should eat a bit of humble pie.

I turn briefly to the EU’s proposed tax on the City of London. According to some reports it might mean that 80 per cent of the revenue would come from London. The director-general of the CBI said that it is,

“a Brussels revenue-raising exercise, and one that will hit London disproportionately hard”.

The City of London is our jewel in the crown. It has been a big asset for the UK and, indeed, for Europe. If we are asked to be good Europeans, should good European not defend what is good about Europe? The City of London is good about Europe. However, rather than be proud Europeans and proud of this European centre, officials in Brussels are seeking to price the City of London out of the market. It is therefore right that voices are raised and resistance is shown at these blatant attempts to target the heart of our economy.

We are a proud nation with a rich history and a country which has demonstrated on the world stage that it fights for freedom, democracy and the promotion of strong trade. Standing up for Britain does not mean that we are against Europe. The countries of Europe remain among our largest trading partners. However, it is right that we should stand against giving further powers away. I was therefore pleased to support the European Union Bill which passed through your Lordships' House earlier this year, because it called time on the juggernaut of European integration. We need to look at the virtues of a proposal before we forgo any national interests for some perceived general good as conceived by a Brussels bureaucrat. Indeed we need to repatriate powers as the Government are seeking to do. We have also found, perhaps, an unlikely ally in Chancellor Merkel, who only yesterday said that the new Commission proposals on eurozone countries submitting their budgets for approval to Brussels to solve the euro crisis are “extraordinarily inappropriate”.

In conclusion, there should be a simple message to those who seek to move towards greater European political and economic union: you integrate further if you want to; our country is not for further integration. However, that should not mean that we are against Europe. It should be the Government’s role to establish perhaps a third way in Europe where membership of the EU is not a journey to a federalist Europe, but one which seeks to establish the role of nation states in Europe where we stand and play our part as an independent country in Europe, not as a region of an integrated union.