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3 Dec 2009 : Column 1346

Mr. Moss: I absolutely agree. However, on a recent Foreign Affairs Committee visit to Paris, Committee members met a junior from the French agricultural ministry and were left in no doubt that the French would give up the CAP most unwillingly. To them, it is not just about the money going into agriculture and directly to their farmers; it is about a whole policy of maintaining populations in the countryside. We will have great problems addressing this issue, given the intransigence of politicians in France.

On the recent appointment of Baroness Ashton as the EU's High Representative on foreign affairs, although I, like many of my colleagues, did not agree with the creation of that post in the first instance, or with that of EU President, I should like to take this opportunity to congratulate the Baroness on her promotion. I also reiterate the shadow Europe Minister's assertion that a future Conservative Government will look forward to working with her.

During the shenanigans surrounding the Lisbon treaty appointments, while the Prime Minister was busy lobbying for Tony Blair to become the new President and while the Foreign and Business Secretaries were busy positioning themselves for the plum job of EU Foreign Minister, who was busy protecting Britain's interests? After the Prime Minister was outsmarted in Europe and was led to accept Baroness Ashton for the Foreign Minister job, the most important post of all was snatched from right under his nose. The Prime Minister, who takes every opportunity to portray himself as the City's knight in shining armour and as an economic messiah ready to lead the country out of recession, has completely sold out Britain for the sake of parachuting his fourth-choice candidate into a non-job.

France secured one of the top economic posts in the new Commission after a former French Minister, Michel Barnier, was named as the new Internal Market Commissioner with responsibility for financial services. The other key economic posts will go to Spain and Finland. It is reasonable to expect that Mr. Barnier, a protectionist who has been openly hostile to the Anglo-Saxon model of capitalism, will seek sweeping regulatory reforms of financial services, most of which are located in our square mile in London. Many have voiced their criticism of Mr. Barnier's appointment, including the major French-I say left-leaning-newspaper Le Monde. In July, it compared giving the internal market post to Barnier with entrusting the surveillance of a chicken coop to a fox.

Nicolas Sarkozy, the French President, has gleefully declared that the English "are the big losers" after the carve-up of EU posts. In a speech a couple of days ago, he asked:

We do not need to have it spelt out any clearer than that. He went on boldly to declare:

The Prime Minister has let himself be completely out-manoeuvred by President Sarkozy and Chancellor Merkel, who, it has become clear, had agreed in private, prior to the meetings in Brussels, to take control of financial services. Barnier's deputy will be the Briton, Jonathan Faull, as has been mentioned by the Liberal
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Democrat spokesman, the hon. Member for Kingston and Surbiton (Mr. Davey). However, it is doubtful whether Faull's appointment will secure Britain's interests, as he has worked for the Commission bureaucracy for more than 30 years and has no experience whatever of the City.

It would be interesting to know whether the Government are still adamant that that carve-up was a "major achievement for Britain", as the Foreign Secretary tried to convince the House on 23 November. It would also be interesting to know what steps the Government will take to ensure that Britain's interests are not bypassed in the EU-apart, of course, from the Chancellor's letter to The Times pleading for mercy, and his failed visit to Brussels yesterday. After Brown's failure in Brussels last month, the Chancellor was fobbed off by Europe's Finance Ministers in Brussels yesterday, which forced the Government to accept more concessions.

Not only will the City be at the mercy of a protectionist Frenchman, but Britain will be able to appeal decisions by the European supervisory authorities only if we secure the support of a majority of members. It seems that every time the Government feebly try to fix things, the more damage they do. As Sarkozy accurately points out, the loser is Britain.

As we all know, the Commission is extremely active in the area of financial regulation and supervision. Current plans include the new directive on alternative investment fund managers, which seeks to create a new pan-EU regulator for financial markets. This is set to be just the first of many blows to the City of London after Barnier's appointment as chief enforcer.

After the European and local elections in June, it was crystal clear that our constituents wanted less intrusion and meddling from Europe. What we will get from having a protectionist Frenchman in the top economic job is yet more regulations that will seriously hamper Britain's road to economic recovery.

3.11 pm

Mr. Austin Mitchell (Great Grimsby) (Lab): I rise to participate in this debate with a certain amount of regret, as it will almost certainly be the last meeting of this Euro Sealed Knot society. We fight over the old battles at regular intervals, but we change uniforms from time to time: the Conservative party used to be so enthusiastic about Europe that it turned Baroness Thatcher out, whereas the Labour party was so unenthusiastic that it stood on a platform of withdrawal in 1983.

Our leader in that election, Michael Foot, did not seem to understand that platform, but I certainly did, and I took it to mean what it said. Our situation was transformed when Neil Kinnock, now Lord Kinnock, stood on the cliffs of Dover, held out his rod, parted the waters of the channel and led the chosen people-that is to say, the Labour party's Front Benchers-over to the other side. I stayed on the cliffs, rather like the character in "The Bridge on the River Kwai" watching the actions of Alec Guinness and saying, "Madness, madness!" I have remained on those cliffs ever since.

People who wanted a career in the Labour party would have been well advised to transfer to the other side, which is what most of them did. On our side of the
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House, Euro-enthusiasm has become almost a matter of religion. Certainly, it has replaced socialism in the biography of the Labour party, so it is a matter for regret that today's skirmish will be the last one before the election.

Mr. Harper: Will the hon. Gentleman give way?

Mr. Mitchell: It was only a joke!

Mr. Harper: I know that it was only a joke, but there is a serious side to what the hon. Gentleman has said about Labour politicians. Perhaps one reason why they are so attracted to Europe is that they can do very nicely out of it. I notice that Baroness Ashton, from her appointment as EU High Representative, will have an annual salary of £270,000, which is significantly more than the Prime Minister of our country gets. The total allowances and perks that she will receive while in the Commission will net her an estimated £4 million-very nice if you can get it!

Mr. Mitchell: I thank the hon. Gentleman for that interjection, because clearly Baroness Ashton deserves the money. She is only following the example of the former leader of the Liberal Democrat party in building up a huge pension plan, which sustained the party for a long period.

I was talking about today's skirmish, in which our side is being led not by the Foreign Secretary but by our hon. Friend the Minister for Europe. He is acting not as the King but as the Rupert in this particular battle, and I must say that he is doing it very well. He is making a brilliant fist of his job, but I wish that his ability and eloquence were applied to a better cause than the Euro-enthusiasm that he has always manifested. He is right in the tradition of first-class Foreign Office minds, in that he now devotes all his effort and attention to developing second-class arguments for the third-class-indeed, third-rate-institution called the European Union. Every defeat must be interpreted as a victory and every loss as a gain, and we must always say that Britain leads, however humiliated Britain is.

The Foreign Office and its Ministers seem to live in a different European Union from the rest of the country. The US Department of Defence has a situation room; the Foreign Office has a fantasy room, where matters European are discussed. There is a naive view of Europe as the Foreign Office would like it to be, not as it actually is: a Europe that is kind to small countries and helpful to poor ones, even while it excludes their agriculture from our markets; a Europe that is of great benefit to the UK, even while it makes enormous demands on us, with a growing deficit and contribution burden; a Europe that defers to British wisdom, even while a new leadership of the European Union emerges as Angela Merkel endeavours, successfully, to interpose herself into the world's greatest love affair of Sarkozy with Sarkozy-it is now in fact a threesome. That is what dominates Europe; we do not, and it is no use pretending that we do.

Another example of such Euro-think is my hon. Friend's interpretation of the latest appointments as a triumph; I think that that is what he said. Personally, I think that it is a shame that Tony Blair did not emerge as the President of Europe. He would have done well in
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that position. He can convince anyone of anything. He might have been able to convince people of the benefits of Europe, given his eloquence. Europe certainly needs someone of his vigour, energy and traffic-stopping ability.

The appointments show what Europe really wants, and it is not the flair of that kind of leader. Europe wants to be a bigger Belgium. That is the European aspiration: to be a bigger Belgium, dominated of course by France and Germany, which is inward-looking, has low growth and high unemployment-it is the black spot of the advanced world-and maintains agricultural protection to keep out the agricultural production of smaller countries. It is true that we have the foreign policy post-

Mr. Harper: Will the hon. Gentleman give way?

Mr. Mitchell: No, I am not listening to another account of the incomes of European Commissioners.

We have the foreign policy post, which escalates in title even as it diminishes in power. It is now High Representative-or perhaps it is Lord High Representative now. It is a job as important as herding cats-a collection of cats that do not particularly want to go in any direction that we might, whether that be into Iraq or into Afghanistan.

In this situation, we have the rather useless foreign policy portfolio of the High Representative, but the French have grabbed the key economic portfolio of the internal market, which the City sees as a terrifying threat. The Chancellor tells us that the City's interests will be safeguarded and that it will not be ruled from Europe, but I am afraid that when we signed the Lisbon treaty that is what we signed up for, and I am sure that that is what will happen.

We can observe all this with great fondness. It is an entertaining spectacle. What is more, it is free to air, like ITV. But we must pay for it in the long run, and that is what I want to talk about today. The costs of Europe to this country are heavy, as the hon. Member for North-East Cambridgeshire (Mr. Moss) said. At a time when we are moving into a climate of cuts, economies and straitened resources, we are paying a heavy price to stay in Europe and contribute to it. For instance, we are paying the increased in connection with the rebate, which I thought was agreed to by Tony Blair while he was Prime Minister as the first down payment on the job of President in the future. Unfortunately, the down payment was taken but the item was not forthcoming in the sales. Thanks to that, our net contribution rose to £6 billion. It rises again with devaluation, which reduces the value of the pound, to about £8 billion.

That is only the budget contribution; we also contribute to other projects, such as Galileo and others. With Galileo, a satellite guidance system is being designed, and we are being charged for it, even though the Americans provide such a system for free. That will cost £2 billion to £3 billion. Then we have the common agricultural policy. The OECD estimates the cost of that-the resource cost, anyway-to be £15 billion. The cost to us of the common fisheries policy, which has not been mentioned but certainly needs to be abolished, is about £3 billion. That is the cost to us in fish from British waters that are landed not in Britain but at other European ports, where they are processed.

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That all represents a huge cost across the exchanges, and we have to finance it with a declining pound. Our balance of trade deficit last year was £48 billion, and the cost of Europe adds up to between £20 billion and £25 billion. In other words, about half our balance of trade deficit goes on financing membership of the European Union. That is not the only cost, because there are other, more internal costs. We have the cost of regulation, which the CBI estimates to be between £20 million and £40 million, and the cost of low growth, because European economies, including ours, have grown about 1.2 per cent. less than other advanced countries outside Europe. The cumulative loss of growth amounts to 0.5 per cent. of GDP a year, which is about another £7 billion, so the total cost of Europe is more than £50 billion-to an economy that will be crippled and straitened by the need for economies and cuts in the years ahead.

What are the British people going to say when they are told that we have to cut the health service, education, and other services or benefits, in order to maintain this large contribution to Europe? Will they be dancing in the streets, as our Government might like, or will they become angry, upset and alienated? It is a tremendous burden to bear for membership of a club that is actually damaging our economy-an economy in which we are running a massive and growing trade deficit.

My hon. Friend the Minister said in his speech that in dealing with the recession, a unity of purpose had emerged. Well, it has not. What has emerged is the propensity of individual countries to do much the same thing, because the obvious thing to do in a deflationary situation is to expand one's spending-to introduce stimulus spending along Keynesian lines. I know that the Conservatives do not want to do that, but it is the obvious and sensible thing to do. The only commonality is that all countries have done so as a matter of individual volition, but Europe has damaged that process, because the euro makes it impossible for countries with a deficit, countries in difficulties or countries that have been hit by recession to devalue their currency as we have devalued ours.

The pound is down by about 25 per cent., and that is good. It is an enormous economic stimulus; we will benefit from it, and manufacturing will grow and improve. Other European countries cannot devalue their currency, however: Ireland cannot do so, and that is why it has plunged deep into recession; Spain cannot do so; Italy cannot do so; and the Greek situation, whereby public sector borrowing is drying up because people want a premium on the interest rate paid, will spread like a contagion to the other euro countries. In that situation the euro becomes a tremendous burden to bear, and thank heavens we do not have to bear that burden. It was very far-sighted of our Prime Minister and the Labour party to keep us out of the euro.

Mr. Bone: Didn't he want us to go in?

Mr. Mitchell: I do not mean the previous Prime Minister, who wanted us to go in, but our current Prime Minister, who kept us out-thank heavens. We benefit from that situation, but it will cripple those other countries, not to mention Hungary and the Baltic states, which have been hit in the same way.

I shall conclude on an important point. We have a growing trade deficit, and the City's contribution, which has helped keep us afloat, is going to be hit. Furthermore,
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the contribution of oil, which has also helped keep us afloat, will decline steadily in the next few years. If we are going to pay our way in the world and provide jobs for our people, the only recourse will be to re-expand, reboost and rebuild manufacturing. As is reported in this morning's Financial Times, manufacturing has shrunk; when we were elected in 1997 it made up 20 per cent. of GDP, but it is at 12 per cent. today. Indeed, it is estimated that it makes up only 11 per cent. of GDP currently, because manufacturing is in a difficult situation as a result of the recession.

Manufacturing has to remain good if we are to pay our way in the world; we cannot go on borrowing from the world to finance a deficit so that we can go on importing. Revivals have been produced in the past-in 1949 and 1967, and in the Tory devaluations of the early '70s and 1992. We now have the opportunity to give the same boost, as long as we keep the pound competitive and keep money cheap, so that we can rebuild manufacturing.

That, however, is a necessary but not a sufficient requirement. To rebuild manufacturing we must also have an industrial policy, channel investment to industry and maintain job clusters and business clusters for development purposes. We have to spend on training and boost industry to facilitate progress. All that is difficult to justify in a European context in which what we can do to invest in domestic industry is strictly controlled. It will all mean competition with Europe, because our main trade deficit is with Europe. We will have to end that deficit and replace it with a surplus, and that will be painful for Europe.

Mr. Drew: Can my hon. Friend remember colleagues of ours who said that ownership did not matter? The reality has been that ownership has migrated to everywhere else in Europe, apart from the UK. The biggest single problem as we try to rebuild manufacturing in this country is that the decisions will be taken not here but in Paris, Bonn, Milan and so on. That weakness is surely part of what my hon. Friend is saying.

Mr. Mitchell: I agree absolutely: that is what has happened, and it makes things more difficult to rebuild. However, we still have to do that. The main cause of that drifting away of jobs has been the overvaluation of sterling until now, as well as our having allowed British industry to be taken over lock, stock and barrel. Even Cadbury, a lynchpin of British industry, is now threatened.

We have to rebuild British industry, but it will be difficult to do that in a European context, given the restraints that Europe places on investment in our industry, our firms and our production, and the fact that those will be highly competitive with their European counterparts. It is time to say to the Foreign Office and the rest of the Government that we have to give up the infatuation with Europe-the romantic-eyed, naive view of Europe-and start carrying out a hard, cold calculation of the costs, which are damaging to our country. It is time to stop the romance and religion, and get on with the business of that cold hard calculation.

3.29 pm

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