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Effectiveness of the European Union

4.39 pm

Mr. William Cash (Stone) (Con): It is a great pleasure to serve under your chairmanship, Mr. Jones. I am sitting on the Front Bench because we do not seem to have a Front-Bench spokesman, but as I have been speaking from the front on this subject for the past 25 years, I do not see why I should stop. If the best way to keep a secret is to make a speech in the House of Commons, I have been keeping a lot of secrets in the past 25 years, because I have spoken about the European Union on many occasions.

I have chosen to speak about efficiency in the EU, because we need to look at the extent to which the institution has matched up to its promises. The word “effective” means making things work. On any reasonable standard, the EU has failed on the two fundamental tests that I would apply: first, it has failed on democracy and, secondly, it has failed on the economy, especially during the economic crisis that we are experiencing. The EU appears—people have thought this in the past but it has not yet happened—to be breaking up under the tensions.

Bob Spink (Castle Point) (Ind): The hon. Gentleman mentioned two tests on which Europe has failed—democracy and economy—but would he add administration to those failures? If, for 14 years, the EU cannot get its own budget past its own auditors, something is going very drastically wrong. It is not a matter of minor problems or a question of tweaking the accounts; major failures under each of the major budget headings mean that the EU cannot get its accounts audited.

Mr. Cash: In happier days, when the hon. Gentleman spoke with me in debate after debate on the European Court of Auditors report, among other things, I made that very point, as he will remember. The failure of administration is an example of the failure of democracy.

It is quite impossible to deal with this subject in the depth that it deserves in the 20 minutes for which I intend to speak today. I had a debate with Mr. Joschka Fischer last week. He was particularly pessimistic about the present world crisis. He argues for more Europe, but when I demonstrated to him all the reasons why Europe is not working, he became more and more unhappy at the figures and the arguments. Even my Europhile friends, including professors of international relations, former Cabinet members and others—Eurosceptics like me do have Europhile friends—never thought that the arguments made by myself and others in the past 15 or 20 years would be proved so right. I am not here to say, “I told you so”. Rather, the debate is of immense importance to elected people and electors. They are the ones who matter.

I am concerned that the legal framework—the European Court of Justice adjudicates at one end, and an unelected Commission initiates legislation at the other—is creating an impossible situation and a compression chamber. The 27 member states need to act unanimously to overturn an ECJ decision, which is a straitjacket. When things go wrong, such a concrete system is completely unacceptable and unworkable in a democracy. Democracies have to change with the times. Unfortunately, the EU is designed to continue, irrespective of anything else, towards further and deeper integration, whatever the consequences.

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I will give the EU credit on its propaganda machine, which is heavily and brilliantly financed. I will not repeat the debate that we had with the former Minister for Europe—he is now Secretary of State for Transport—on “Plan D” in Standing Committee, but there is no doubt that the money that is made available by the European authorities for argument within the EU always goes in the direction of organisations that are in favour of integration, and not to those with other views. Of course, the question is who is right? More and more, it is becoming obvious that those of us who wanted to come out of the exchange rate mechanism, fought our own Government over the Maastricht treaty, and over the Amsterdam and Nice treaties, and have watched the referendums on the constitutional treaty in places such as France and Holland, were found to be right.

I was in France and in Ireland during referendum campaigns on the Nice treaty. The EU is bullying the Irish again, and I hope that it gets its comeuppance—the way in which the EU has ganged up on the Irish is disgraceful. In denying referendums to countries and by not complying with the decisions taken by ordinary people, it is distancing itself further and further from the people, which is out of kilter with the arrangements prescribed by the Laeken declaration. I did not believe in the declaration, but there we are. It is always theology first, democracy second.

A YouGov poll last week asked people how strongly they felt about 10 issues: immigration, the powers of the European Union, traditional family values, identity cards, prison sentences, taxation reduction, climate change, council tax, grammar schools and public services. Despite the deliberate attempts by all political parties to dumb down the European issue in the past year—I except the debate on the Lisbon treaty—immigration, which is very much an EU-related subject, came top by a very significant margin, and reducing the powers of the EU and increasing the powers of Britain’s Parliament came second. There are serious lessons to be learned from that.

Back in the 1980s, I remember reading the Cecchini report. The Minister might think it a shame that I did not read all 16 volumes. Some 11,000 businesses were interviewed. The conclusion was that the report would trigger a supply-side shock to the Community economy as a whole, leading to lower prices, greater competition, lower Government deficits, reduced inflation and substantial job creation. That was the essence of the economic argument for the European Union’s integration process, but not one of those things has proved to be the case. In fact, on almost every count, exactly the opposite has happened. Take Government deficits, for example: the promises that were made were outrageous. We predicted that it would not work, but the EU has continued down that course. The foreign workers issue, on which I have introduced the Employment Rights Bill to try to get fairness for British workers, is a good example of where the EU has gone wrong. People believe profoundly that there is unfairness in the European Union. That is bad for democracy and for the European Union.

There is also the question of the Lisbon agenda, which has not worked. I do not have time to go into all the details. On over-regulation, as Mr. Verheugen said, massive over-regulation—£100 billion worth a year—is endemic throughout Europe. I have done research on the benefits claimed in the Cecchini report, which were
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estimated at about €300 billion, but even advisers to the European Commission recognise that they have not been realised, as the single market document “Yesterday and Today” by Canoy and others clearly indicates.

On the costs of compliance, the Boyfield and Ambler and Chittenden reports demonstrate that financial regulation is costing the City £23 billion. A letter in the Financial Times only last week discussed the question of extending banking and financial services regulations to supersede our own in the City of London, which must be resisted at all costs. Majority voting will result in other member states imposing on our country, and dictating to it, decisions that belong to us in our Parliament. I have consistently proposed a supremacy of Parliament clause in legislation. My party supported such a measure during debate on the Legislative and Regulatory Reform Act 2006. We lost the vote, but we won the principle within the party. After several Whips’ meetings, they decided to endorse it, and I sincerely trust that they will continue to do so.

We must not only override European legislation but do more. When the voters who have elected us in general elections decide what they want, those wishes and democratic decisions should not be overridden by European legislation. We should exercise the veto where necessary. Where our Parliament, on the basis of our democratic credentials and the fact that we have been elected, wishes to disagree with the European Union, we, in line with a national association of nation states, must assert not only our latest Westminster Act of Parliament but require the judges to obey that Act and not the European Union and the European Court of Justice. That is a fundamental matter of democracy.

Riots are already occurring. That is not scaremongering, as there have been riots in Italy, Greece and Latvia. There are problems with regard to countries such as Bulgaria and Romania. The European Union is being extended and enlarged. As I said to the Minister for Europe the other day, we are enlarging to take in countries such as Macedonia, Kosovo, Bosnia and Herzegovina and Albania, which is a centre for the cocaine trade. That is ridiculous. We do not wish those countries ill by any means, but even from a European integrationist point of view, if we are considering bringing in those weak countries that must mean that we should put a halt to it.

The EU is throwing money at the pre-accession countries as well. I read in The Daily Telegraph the other day that the enlargement strategy is being put on hold, but that is not the impression that I got from debating with the Minister only the day before yesterday. The common agricultural policy is a complete mess. We should enable our farmers to engage in fair, free markets and to earn their own living, not put them on single payment arrangements irrespective of what they do and depending on acreage, not production.

Unemployment figures throughout Europe are critical. In Spain, they are escalating massively. None of the European Union promises—the Lisbon agenda and the economic recovery plan—are working. The arrangement is not efficient or effective, and that is not just because of the United States of America and the sub-prime mortgage crisis. Unemployment is rising, because the system is not working. Europe does not have any answers except to produce more integration, more laws and
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more complications way above the heads of the voters. I fear that the matter is not getting the coverage that it deserves.

The eurozone itself is in crisis. Several countries are said to be on the point of breaking down, and now we hear that Ireland is going to be promised a bail-out by Germany, no doubt to keep the referendum on the right side. At the same time, however, that will happen only on the basis that Ireland abolishes its corporate tax advantages. That is absolutely crazy politics. It is Alice in Wonderland stuff, and very, very dangerous.

What is going on—the turmoil inside that compression chamber as it begins to implode—will bring out substantial instability. The strikes and riots may well continue, and they may end up giving ground to dark forces. We must get ahead of the argument to forestall extremists such as the British National party which, by the way, managed to get two points ahead of the UK Independence party in the most recent YouGov opinion. This is a serious matter. I speak as a Member of Parliament with a constituency adjacent to Stoke-on-Trent, where BNP numbers are significant.

I speak to my own party as well as to others. I am sorry that we do not have a Front-Bench spokesman here today to speak for me, but I will speak for myself. We must keep ahead of the curve. We need to reorganise and radically reform the European Union. I appeal to the Government and to my own party to come up with policies that will change the EU. I am in favour of European trade and co-operation, but not European government. I believe profoundly that it is not anti-European to be pro-democracy. I am not arguing that we should leave the Union, like the hon. Member for Castle Point (Bob Spink), but it may well turn into that. It may become inevitable. The objective will be brought upon us.

Bob Spink: Surely the hon. Gentleman acknowledges, though, that the only way to obtain root-and-branch reform of the CAP and the common fisheries policy and to regain control of our own laws is to renegotiate the European Communities Act 1972, which would effectively mean coming out of the Union and re-forming a trading relationship with the rest of Europe. That is the only way forward.

Mr. Cash: Curiously, I do not disagree, and I have said as much. They put up the deputy leader of UKIP against me in the last general election. He lost his deposit and did not stay very long for the poll, but I had a public debate with him. I believe that the moderate, sensible attitudes that we in the Conservative party can develop towards achieving an association of nation states is the way to go. Trade, not government, should determine how Europe functions.

This is about who governs; it is about voters, elections and freedom of choice in the marketplaces of both the commercial and the political world. That freedom is the essence of a democracy. Both of them work, provided that they operate fairly. We want fair and free trade and fair and free politics. Within that framework, we can sort out the European Union. I am sorry that the media do not give as much attention to the subject as it deserves, because we are in a crisis in Europe—a vortex
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that could turn into a maelstrom if people do not get their act together and start renegotiating seriously for an association of nation states with the characteristics that I have described.

I conclude by saying, as a very wise former Cabinet Minister said to me this morning, that it is also a matter of national identity that we get this right. It is about keeping our nation together. The European Union is not a nation. We play the ridiculous games of majority voting and comparative advantage; we deal with the complications of UKRep, COREPER and the rest of it. The reality is that people want good government, they want stability and they want to know that when they vote in a general election, they will get the Government that they want, who will produce policies and laws that they are prepared to live with and obey. Where it turns out that they do not do that, because the European Union system deliberately prevents it, and we have unelected commissions and courts of justice laying down how people should live, the bottom line is that people will eventually revolt against it.

It may be that we can solve the problem by getting ahead of the curve, but right now we are hearing more and more calls for more and more integration. It is fundamentally undemocratic. As far as I am concerned, the Conservative party has an overriding duty, consistent with its traditions, to trust the people and to provide a model, both after the general election and in the manifesto before it, to assert the supremacy of our Parliament on behalf of the voters and to ensure that we have a referendum, whether or not the Irish vote yes on the second round, when they have been bullied into it. There should be a referendum whether or not there is ratification. We must then sit down and work out with our European neighbours a kind of Europe that will work and that will be democratic and effective, which it certainly is not at the moment.

5 pm

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Gillian Merron): I congratulate the hon. Member for Stone (Mr. Cash) on securing the debate. Of course this is not the first time that he has argued these points, among others, in the House, and I am absolutely certain that it will not be the last. I have listened to his concerns about the EU not being an effective organisation on many fronts and I still have a sneaking suspicion that beneath all that he says lies a hankering to leave the EU, which is not the wish or policy of any mainstream political party, including his own.

It will be helpful to remind hon. Members of where the EU has been effective in the past 50 years in boosting our economy and improving the lives of British people. The hon. Gentleman has said what he thinks this issue is all about; I think it is about the interests of the British people. Perhaps we just about concur on that point, although we come to it from a different place and we set off from it in different directions.

Bob Spink: If the Minister is going to talk about how the EU is boosting the economy, will she explain how a £40 billion trade deficit between this country and the EU has done anything to promote jobs in this country? I expect that she will say that about jobs, but if she believes that, she must believe in the tooth fairy, as well.

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Gillian Merron: Perhaps I do believe in the tooth fairy; it served me well when I was young. On the serious point that the hon. Gentleman raises, EU membership has been a major boost for the British economy in the past 50 years. An estimated 3.5 million British jobs, including jobs in my constituency of Lincoln, are directly and indirectly linked to the export of goods and services to the EU, which is the UK’s main trading partner, with trade worth in excess of £400 billion. That is 52 per cent. of the UK’s total trade in goods and services, so it is impossible to turn away from that.

In 2006, British companies exported about £150 billion-worth of goods to EU countries. Exports from the UK service sector, which is enormously important to us and our economy, were worth more than £45 billion in 2005—an increase from £30 billion in 1995. The single market has raised gross domestic product by an estimated 2.2 per cent. across the EU, bringing an average benefit to every person in the UK of £360 a year. Also, the UK’s EU membership helps to attract a high level of foreign direct investment from non-EU countries, because international companies choose the UK as the gateway to their European operations. There is still work to be done to make the EU even more effective at boosting our economy and the Government take those matters extremely seriously. We work with our partners to simplify and streamline the regulatory burden on business, which I am sure we all agree is necessary.

I am absolutely clear that leaving the EU would be hugely damaging to our economy. It would leave British goods subject to customs controls, we would need export certificates and certificates of origin for our goods, and tariffs would be payable on our goods and agricultural exports. We would still have to accept many of the EU laws that govern the operation of the single market to ensure access to it for our goods and services, but we would not be part of the negotiations that decide on those laws.

Bob Spink: Will the Minister give way?

Gillian Merron: I am going to continue, as I have only five minutes left. I apologise to the hon. Gentleman.

The EU is acting to tackle the present economic and financial crisis, and co-operation across Europe will be crucial to getting us out of recession. The Prime Minister has been at the forefront of EU action. At the October 2008 meeting of the European Council, EU heads agreed on a common approach that is based on guaranteeing bank funding and on recapitalising banks as necessary. In December, member states agreed to act together to boost spending and to accelerate reform, including on employment, skills, energy efficiency and digital infrastructure, in a concerted push to help our economies to recover.

Mr. Cash: Will the Minister give way?

Gillian Merron: I am going to continue. The hon. Gentleman has made some important points, and I must have some opportunity to respond.

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