Our inquiry into Government policy on the future of the European Union was triggered by the Prime Minister's veto of EU Treaty change at the December 2011 meeting of the European Council. We felt that the episode might mark a defining moment in the UK's EU policy and place in the EU. Our Report examines the key overarching principles of Government policy for the UK's place in the EU, for as long as the UK may remain a Member State. It also starts to explore some of the implications of the Prime Minister's major EU speech of January 2013, in which he committed any Conservative Government elected in the 2015 General Election to holding an 'in/out' referendum on the UK's continued EU membership by the end of 2017. Our Report is not an examination of whether the UK should remain in the EU or withdraw. As a Committee we have expressed no view on the 'in/out' question as part of our inquiry. We intend our Report to help inform the public debate on the UK's EU policy in coming years.
We commend the Prime Minister for launching an ambitious agenda for EU reform. There is support for some of Mr Cameron's reform ideas around the EU, and there is significant scope for further progress on some of them. Beyond this, given that the Prime Minister has not spelled out in any detail the content of the "new settlement" that a Conservative Government elected in the 2015 General Election might seek for the UK in the EU, and given that it is over a year, at least, before any major EU Treaty reform process seems likely to get underway, it is impossible to assess the likelihood of him securing the kind of "new settlement" for the UK in the EU that he might seek. However, we are clear that UK proposals for pan-EU reforms are likely to find a more favourable reception than requests for further 'special treatment' for the UK. We are sceptical that other Member States would renegotiate existing EU law so as to allow the UK alone to reduce its degree of integration, particularly where this could be seen as undermining the integrity of the Single Market. The Government must reckon with the fact that the body of existing EU law is a collective product in which 27 countries have invested. Our sense is that other Member States want the UK to remain an EU Member. However, we do not think that a UK Government could successfully demand 'any price' from other Member States for promising to try to keep the UK in the Union.
In Europe's current institutional architecture, any UK decision as to whether the country should remain in the EU would to a significant extent be a decision about whether it should remain in the Single Market. We agree with the Government that the current arrangements for relations with the Single Market and the EU that are maintained by Norway or Switzerland would not be appropriate for the UK if it were to leave the EU. If it is in the UK's interest to remain in the Single Market, the UK should either remain in the EU, or launch an effort for radical institutional change in Europe to give decision-making rights in the Single Market to all its participating states.
Inside the EU, in the face of more far-reaching Eurozone integration, it could be difficult for the UK and other non-Eurozone Member States to preserve their capacity to shape decisions affecting the Single Market. The Government is correct to have identified this risk for the UK and to have adopted a strategy of seeking to mitigate it by protecting the rights of non-Eurozone states. However, tighter integration in the Eurozone is far from rendering the UK's position in the EU impossible or worthless. The Eurozone is not a homogenous bloc, and Member State alliances around the EU continue to vary from issue to issue and to straddle the boundary between the Eurozone and the rest.
We have not found that, by itself, the Prime Minister's veto of EU Treaty change at the December 2011 European Council has so far had a decisive overall effect, either way, on the UK's ability to exercise influence in day-to-day policy-making in the EU. However, when the issue comes onto the agenda, the UK Government should support the incorporation of the provisions of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG) (the 'fiscal compact' treaty) into the EU legal framework, including through EU Treaty change if necessary, assuming that this could be achieved as part of an overall Treaty amendment package that includes appropriate safeguards for the UK. Among other possible benefits, supporting the incorporation of the TSCG might open the way to an EU Treaty renegotiation process.
Arguments about the extent of UK influence in the EU, and how it might best be maintained and strengthened, ran throughout our inquiry. The Government's tone, language and overall approach can have a major impact in sustaining UK influence in the EU. The Government should frame its approach and language in pan-EU rather than UK-only terms, and should remain constructive, positive and engaged.