Commission Work Programme 2014

William Bain Excerpts

Wednesday 22nd January 2014 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

This debate matters to all our constituents, given the significance of the issues involved in the work programme. Those issues affect our economy because our largest single export market is in the rest of the European Union, and because of the priority attached to completing the single market—particularly in relation to energy and telecommunications—promoting greater access to justice, and redoubling the European Union’s efforts to offer hope and jobs to the millions of young people across the EU who are without work.

At a time when events remain very precariously balanced in Ukraine, we should also reflect on the Commission’s continuing role in overseeing the EU’s enlargement strategy. Negotiations with Serbia began this week, and association agreements with third countries are still being negotiated. The EU’s neighbourhood policy remains a great force for good in the world.

The Minister and other Government Members spoke of the risk of the United Kingdom’s being left behind, but today in The Guardian the head of Unilever spoke of the risk of its being left out altogether. We increasingly hear the voice of business in strong support of the UK’s remaining in the EU in order to enjoy the benefits that it brings to business and workers in this country.

[Graham Stringer]

Is my hon. Friend aware that BASF and Monsanto have already removed their research facilities from this country and from Europe because of European regulation relating to genetically modified foods, and that the REACH regulations—the EU regulations on the registration, evaluation and authorisation of chemicals—are in the process of destroying heavy industry in the north-west of England? This is a complicated issue, and my hon. Friend should be presenting a more balanced argument.

[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.

[Steve Baker (Wycombe) (Con)]

It is wonderful to hear a Labour Member advocating the benefits of free trade. Does he agree that the whole world should be a single market, and will he therefore join me in lamenting the existence of so many barriers to free trade across the EU customs union?

[Mr Bain]

That is a very interesting intervention. The main issue is what influence we can have over the shaping of the rules. As people in Norway and Switzerland have discovered, the only way to have influence is to be in the organisation. Those who are not full members cannot expect a full say.

[Jacob Rees-Mogg]

The way we would influence things would be by being a member of the World Trade Organisation, of which we would be a single voting member, rather than being one of 28 in an organisation that then subscribes to the WTO. New Zealand has more influence in the WTO than we do.

[Mr Bain]

That would be all very well if we did not look at the actual voting strength that the European Union has as a bloc. How can we best maximise our influence in the WTO? It is by pooling our sovereignty and having that greater voting strength. That is what gives us the best chance of seeing the free trade agreements that will benefit businesses and employees in this country.

The EU also has to look at the nature of the growth that is being generated in our economy. It has to invest more in science and innovation—look at countries such as South Korea that have done that over an extended period. It must focus on skills, to increase employment and as a driver of future wage growth.

Thirdly, on justice and security co-operation, recent tragedies in the Mediterranean have shown the strong need for deeper joint working to prevent accidents and fatalities at sea, and to target would-be people traffickers. It is perplexing that when the rest of the EU is seeking ever closer co-operation on enforcing common standards, the UK is moving in the opposite direction, with its blanket opt-out and opaque, limited opt-in to the justice and home affairs area.

Fourthly, on the EU’s external strategy, it is worth noting that the queue of countries seeking to apply to join the European Union is far longer than that seeking or contemplating the possibility of exit from it. That must count for something, and the reasons are clear—unimpeded access to the single market, a rules-based system governed by the rule of law, and an influence in shaping common provisions. States such as Serbia, Turkey and Moldova recognise the greater influence in the world that the EU’s common foreign policy provides, the additional strength when negotiating trade rules at the WTO, and the sense that they can have another identity without ceding their own national identity. That same motivation has driven millions of people in Ukraine to urge their Government to sign the association agreement with the EU, which would do a great deal to boost that country’s economy.

The tragedy is that this Government are distracted from playing the fullest possible role in achieving these goals by their futile attempt to appease their own Back Benchers, who will not be content until the destinies of the United Kingdom and the European Union are on separate paths. For the sake of the future of 3.5 million jobs in our country, of our future prosperity and of our sense of who we are in the world, the Government should understand a little less, and condemn a little more, those whose policy for a British exit would diminish our imprint on the world, not increase it.

[Several hon. Members]

rose—