European Council

William Cash Excerpts

Thursday 26th January 2012 Commons Chamber

[Mr William Cash (Stone) (Con)]

I am grateful to the Backbench Business Committee and its Chairman for arranging this debate. I am sorry that the Government did not take note of the unanimous view of the European Scrutiny Committee that such a debate should be held in Government time. However, we now have this opportunity to air our views before the Prime Minister goes to the summit. He is to be congratulated on his use of the veto, which I am bound to say I was glad about because I had suggested its use in my pamphlet “It’s the EU, Stupid”, and in other discussions.

The proposal for fiscal union vitally affects our national interests and our democracy; it is not just about the single market and the City, essential though those matters are. As I said to the Foreign Secretary the other day, once we have crossed the Rubicon we cannot cross it again, and it is imperative that there should be no backsliding at the summit on 30 January. I totally repudiate the attitude of the Deputy Prime Minister that the non-EU treaty of the 26 should eventually be folded into the EU treaties. The Liberal Democrats are an obstruction to our vital national interests. A house divided against itself will fall, and the situation will be worse still if it is built on sand. There are now two Europes, both built on sand, and the situation is not only precarious but dangerous.

What is the root cause of the European crisis? It is not merely a eurozone crisis; it is a crisis of the European Union as a whole. Europe is being destroyed on the altar of ideology. The existing treaties, which cover 70% of our legislation here in the UK, have failed and are the root cause of the crisis in Europe.

[Martin Horwood (Cheltenham) (LD)]

In the light of the hon. Gentleman’s attack on the role of the Liberal Democrats in all this, would he accept that the Deputy Prime Minister’s hosting of the recent summit of European Liberal leaders—including two Prime Ministers, six Deputy Prime Ministers and five European Commissioners —to try to bring together a bilateral plan to support jobs, growth and prosperity across Europe was a positive step?

[Mr Cash]

We are all in favour of growth, but unfortunately the European treaties themselves work against that aim because of the degree of overregulation, and many other matters that I shall come to in a moment.

The lack of growth is contaminating the UK economy. Elsewhere in Europe it is creating civil disorder, with youth unemployment of up to 45% in Greece and Spain, and 30% in Italy. The present European Union is completely undemocratic, and the existing treaties should be sent to a convention so that all the member states could have the opportunity to face one another and decide what kind of Europe they want. In the past, when referendums have been held in France, Holland, Ireland and Denmark, the no vote has been overturned by bribing and threatening the electorate. That kind of behaviour, combined with economic and political crisis, creates a fertile breeding ground for the far right, as I predicted as far back as 1990.

There is no growth in Europe, except in Germany. We cannot grow from a stagnant Europe, and the coalition cannot achieve its main objective of reducing the deficit and achieving growth so long as this paralysis continues. The remedy of the Eurocrats—and, indeed, the leaders of European Government and the Liberal Democrat leadership in this country—is a fatal obstruction to our present and future economic success.

The approach adopted by the Prime Minister today at Davos reflects the view that I expressed in my pamphlet “It’s the EU, Stupid” and the growth paper that has been circulated to all Members of Parliament and the Lords and others, as well as in my remarks to the Minister of State, Cabinet Office, which is that we need to refocus our trade towards the rest of the world and not rely on the fact that we have 40% to 50% of our trade with the EU to provide the mainspring of our economic future.

[Kelvin Hopkins (Luton North) (Lab)]

Emphasis is constantly placed on our trade with the European Union, but it is not always pointed out that we have a massive trade deficit with the EU. Given the austerity measures here and over there—but particularly over there—that is only going to get worse.

[Mr Cash]

Indeed. In 2009 there was a trade deficit of £14 billion in goods and services, but since then it has risen to £51 million. Those figures speak for themselves.

Cuts in public expenditure cannot solve the problem on their own. We need enterprise for small and medium-sized businesses and drastic cuts in overregulation. We need enterprise, not strangulation. Indeed, we must insist on our ability to enter into trade relationships on our own terms, in our own national interests, and not be confined to a single trade policy dictated by the European Commission.

I was deeply alarmed to read in today’s City A.M. that Angela Merkel at Davos is encouraging more integration. She is quoted as saying:

“We have to become used to the European Commission becoming more and more like a government.”

She urges more and more Europe, but that Europe would be both undemocratic and increasingly dominated by Germany itself, as I have repeatedly stated for 20 years, and as The Economist concedes in this week’s edition. It states, following France’s downgrading, that

“the balance of power has long been shifting from the French President to the German Chancellor”,

and a former French economic Minister has said that

“Berlin is alone in the cockpit”.

That is not healthy for Germany or the UK, and certainly not for Europe. It now seems certain that President Sarkozy is on the way out, and Italy and Greece have technocratic Prime Ministers. Democracy is dwindling and diminishing. The Franco-German partnership is now a hollow reminder of German strength and French weakness. This is all the more reason why the UK must insist on leading Europe out of this crisis with Euro-realist policies and an insistence on government by consent. Sadly, Germany believes in government by rule, and is now even proposing the European Commission as the anchor of European government.

There has been much agitated activity in seeking to resolve the Greek bankruptcy, but there has been no result. A few days ago I came across a five-page article written in 1998 setting out exactly why Greece should not be allowed into the European Union, which was of course ignored. Every member state is responsible for this failure of judgment and must bear the consequences. It is a pity that those such as George Soros who are now wringing their hands in Davos did not listen to the Euro-realist arguments instead of condemning and mocking them.

On the draft agreement, we must bear in mind that the issues now being presented to the British electorate and the European Union are more political than legal. There are still fundamental legal problems in the latest draft of the agreement between the 26. There must be no misunderstanding: this deal is flawed in seeking to incorporate the European Commission and the European Court of Justice, which are institutions of the EU, into a non-EU treaty.

Furthermore, what is the basis in the treaty on the functioning of the European Union for the proposed powers, including infringement powers, to be conferred on the European Commission under article 8 of the agreement? Prima facie, that is unlawful, given the prohibition on infringement proceedings under article 126(10) of the treaty. There are serious doubts about the use of article 273 in relation to issues of jurisdiction. There is also the issue of enhanced co-operation under article 10, which bypasses the treaty requirement that enhanced co-operation should be used only as a last resort; the agreement proposes its use “whenever appropriate and necessary”. This could cause serious damage to British national interests in relation to the internal market.

My Committee, the European Scrutiny Committee, will be investigating all these matters with the assistance of evidence from witnesses from all sides of the equation. There is a further problem of whether the treaty to establish the European stability mechanism can come into force before the amendment to the Lisbon treaty, so that member states could allow such a treaty, given that the United Kingdom has not yet ratified it. I would be grateful if the Minister would answer these questions when he responds to the debate; I hope that he is listening to what I am saying. We urgently need to know whether the Government have received the fifth, and presumably final, draft. If not, will he tell us when they will, and when it will be sent to the European Scrutiny Committee?

With regard to article 13, will the UK Parliament be involved in the proposed inter-parliamentary conference? If so, will the European Scrutiny Committee be invited to attend? At present no one knows how that arrangement will work in practice—there are serious question marks over the agreement—but we know that it will be determined by German demands and conditions. I do not blame Germany for its pride and defence of its own national interests, but I do not believe that we the UK should pay one penny to provide funds for an EU bail-out which, if it were done within the European Union itself, would be blatantly unlawful.

Mme Lagarde, who is now head of the International Monetary Fund, openly admitted in September 2010 that to save the euro,

“we violated all the rules”.

It is ironic that she should now be in charge of a further attempt to bypass the rules. That is outrageous, and I am glad that America has quite rightly said that it believes that Europe should sort out its own mess. However, that will be achieved through policies for genuine growth, and not through bail-outs with fictitious money and a refusal to face up to Euro-reality.

We now live in peaceful democratic times, and we must therefore insist on our Westminster democracy as the basis for protecting our national interest. Let us therefore get down to the business of letting the British people have their say, and of saving the United Kingdom from impending disaster and the European Union from itself. We must turn our eyes to the sunlit uplands of enterprise and international trade, earn our way in the world by our own efforts and re-create the foundations of true independence of action and prosperity for our own country.

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

On a point of order, Mr Speaker. I apologise for interrupting the debate, but my attention has been drawn to media reports about the future of RAF Northolt, which is next to my constituency. Apparently, there might be Government plans to develop RAF Northolt as an alternative to the Boris island airport, or as a satellite terminal for Heathrow. That is potentially of huge concern to my constituents, and I wonder whether you have received a statement from the Government setting out their real thinking.

--- Later in debate ---

[Emma Reynolds]

As the right hon. Gentleman knows, the Opposition voted against the IMF contribution last time. I think that he might have been in the Lobby with us. We think that the European central bank should be the lender of last resort and that IMF money should concentrate on countries with severe economic problems outside the eurozone.

The Prime Minister’s walk-out also resulted in risks to foreign direct investment. Businesses investing from the US and Asia have chosen the UK for their operations because it gives them access to European markets. But if the UK’s position in the single market were in doubt, foreign direct investment would also be under threat. Moreover, as the Deputy Prime Minister rightly said on the Sunday after the December Council, if the UK stands tall in Brussels, we stand tall in Washington. It is also true that if we stand tall in Brussels, we also stand tall in Beijing and the other major emerging economies. With economic power moving south and east, to countries the size of continents, it is nostalgic longing for the empire to think that the UK can go it alone. It was the Minister for Europe, in a recent Opposition day debate, who said that

“without the size of the EU behind us, the United Kingdom on its own is unlikely to be able to secure the same deep and ambitious free trade deals with other regions or trading countries around the world.”—[Official Report, 13 December 2011; Vol. 537, c. 724.]

[Mr Cash]

Will the hon. Lady give way?

[Emma Reynolds]

I will in a minute.

The task of Monday’s European Council is both urgent and long term—urgent in that it must address the lack of confidence in European markets, but alongside that the EU must enhance the resilience and capacity of the single market to get back to a sustainable footing in the long term.

We welcome the intention to focus on jobs and growth on Monday, as well as agreeing a fiscal compact. We would prefer the Government, rather than merely commentating on the outcome of the European Council, to be setting the agenda. We hope that their failure in diplomacy will not involve a failure of policy and economics. After all, in the coalition agreement, the Tories and the Liberal Democrats stated that Britain should play a leading role in the EU. The Prime Minister clearly did not have that in mind in December.

[Mr Cash]

Will the hon. Lady give way?

[Emma Reynolds]

When the Minister replies, will he clarify one issue? The Deputy Prime Minister has been organising his own meetings, and in some cases he seems to be running his own parallel foreign policy. While it is right for the Government to be building bridges, it is disappointing that the Deputy Prime Minister has thus far chosen not to report the outcome of the meetings to Parliament. Would the Minister therefore confirm whether the Deputy Prime Minister was speaking for the Government when, at the recent European Liberal forum, he said that:

“We believe—

the treaty—

“should, over time, be folded into the existing EU treaties so you don’t get a permanent two parallel treaties working separately from each other”?

At next Monday’s European Council, the British Government at least have observer status, but that is thanks to Chancellor Merkel and Prime Minister Monti, who want the UK back in the room. They see the UK as a leading member state, advocating an extension of the internal market. It is testament to past British diplomacy and previous Governments that many other member states share the view that, with Britain isolated and excluded from these talks, the push for further liberalisation and reform becomes harder.

[Mr Cash]

Will the hon. Lady give way?

[Emma Reynolds]

The hon. Gentleman is frustrated, but he will understand that because interventions eat into my time I will continue.

Britain’s standing in the world—economically and politically—must be reinforced and strengthened, not weakened. The resolution of the eurozone crisis is manifestly in our national interest. It is also in the national interest for the UK to be at the heart of the EU, a large member state with an open economy, arguing for and securing an extension of the single market, arguing for and securing reform of the EU. The UK now needs to regain that position and start rebuilding bridges.

On Monday the Prime Minister should seek to undo the damage caused by what he did in December, diminishing our standing in Europe and the world. It might not please his Back Benchers, but it would be of benefit to businesses, jobs and employees throughout the country. The Prime Minister must start to put the national interest before his party’s interest.

--- Later in debate ---

[Alistair Burt]

I can make no stronger a case for Honda in Swindon than my hon. Friend has made. He is absolutely right to focus on competitiveness, growth and the agenda that my right hon. Friend the Foreign Secretary will take forward there. I appreciate his comments. This informal European Council will rightly focus on growth and competitiveness, and it is vital that it makes progress ahead of the March European Council, which will also focus on growth.

The UK has played, and will continue to play, a strong and positive role in the EU as we and our European partners face the most pressing task of tackling our shared economic challenges. We are leading the arguments for growth and others continue to look to us for leadership. We have spearheaded the work of 16 member states, some inside the eurozone and some outside, in pressing for reforms to support growth. Together we have over the past year secured positive conclusions from European Councils that reflect our priorities. Action is now being taken, as shown by the Commission agreeing to exempt micro-businesses from EU regulation unless a clear case can be made for their inclusion.

Our diplomatic efforts to build alliances for growth continue in the European Council. The UK has agreed growth priorities for the informal Council with the Netherlands, Sweden, Finland, Ireland and Estonia, which will cover: completing the single market; reducing the regulatory burden; what member states should do to improve labour markets; and reaffirming the importance of the external dimension of the single market.

My right hon. Friend the Prime Minister also spoke to the German Chancellor, Angela Merkel, at the weekend to discuss our shared priorities. They agreed that the steps we should take to strengthen growth and fight unemployment, particularly youth unemployment, in Europe will form the focus of the informal Council on Monday. A number of right hon. and hon. Members spoke about our engagement with Europe. The Prime Minister was very clear today when talking about engagement, as my hon. Friend the Member for Cheltenham (Martin Horwood) made clear. In response to the question the right hon. Member for Leicester East (Keith Vaz) asked on Lisbon, I can tell him that the Prime Minister today said in Davos:

“For all the talk, the Lisbon Strategy has failed to deliver the structural reforms we need.”

It has largely been replaced by Europe 2020, which includes the sorts of benchmark the right hon. Gentleman referred to. The fact remains that we need to be bolder in the structural reforms we pursue to promote growth. The Prime Minister also said:

“Britain has been arguing for a pro-business agenda in Europe… Over the last year we have spearheaded work with 15 other member states across the EU... This weekend Chancellor Merkel joined me in calling for a package of deregulation and liberalisation policies… But we need to be bolder still. Here’s the checklist: all proposed EU measures tested for their impact on growth; a target to reduce the overall burden of EU regulation; and a new proportionality test to prevent needless barriers to trade in services and slash the number of regulated professions in Europe. Together with our international partners, we also need to take decisive action to get trade moving.”

That is what the EU needs, and that is what the informal Council will concentrate on.

[Mr Cash]

Will my hon. Friend give way?

[Alistair Burt]

I have only three minutes remaining, but I will take one further intervention, because my hon. Friend deserves it; we have discussed these matters on many occasions.

[Mr Cash]

Did the Prime Minister agree with Angela Merkel when she said:

“We will have to get used to the fact that the European Commission… will become more and more like a government”?

[Alistair Burt]

Alas, I have not had the opportunity to test that quote with my right hon. Friend the Prime Minister, but I will do so as soon as I have the opportunity.

A number of Members, including the hon. Members for Ilford South (Mike Gapes), for Rhondda (Chris Bryant) and for Wolverhampton North East (Emma Reynolds) and the right hon. Member for Rotherham (Mr MacShane), spoke about engagement in Europe. We are engaged. As my hon. Friend the Member for Cheltenham said, the Deputy Prime Minister hosted a meeting of various liberal European Prime Ministers, Commissioners, Deputy Prime Ministers and Foreign Ministers on 9 January to set out the British vision of greater competitiveness and growth across the European Union, because austerity alone will not fix the eurozone or the European economies. We have to combine fiscal discipline with a plan for more jobs and more growth, and the Deputy Prime Minister was right to say it.

As for lack of engagement and isolation, I am astonished that the presumption of the hon. Member for Wolverhampton North East in bringing to the House a challenge to the Government when the Opposition’s position is distinctly unclear. We will continue to work hard with our many allies in Europe to advance our interests. It is not isolation; it is defending the national interest. We differ from others in that we are not in the euro and do not want to join. We will not proceed with plans for fiscal consolidation if we feel that we are not protected. We will continue to work hard to advance our interests. One thing that would have made Britain weaker was coming home with a treaty change and no safeguards.

If the Opposition want to criticise the Government’s policy, they need to say what they would have done in office, but last month in the space of 10 days they had three different positions: first they refused to say what they would do, then they said that they would have vetoed the treaty, and then they said they would not have done so. They would have some credibility if they had a policy, and a bit of consistency would help.

This useful debate has concentrated not only on engagement and the like, but on the prospects for next Monday. The UK has an ambitious agenda for growth in Europe, and it is one we share with many like-minded states across Europe. It is also an agenda on which we have made much progress already throughout the last year. We will continue to ensure that we put our national interests first and to have a policy from a united party in relation to the UK interests in Europe. We will continue to look for partners who will share that interest, and at the moment the EU is calling for growth, competitiveness and more jobs.