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Lord Pearson of Rannoch: My Lords, perhaps I may come back later to one or two of the points that the noble Baroness is making. However, the one that she has just made is really so naughty. Is she really suggesting that those jobs would be lost if we left the European Union and maintained our free trade arrangements?

Baroness Ludford: My Lords, I am indeed saying that. I shall deal with the point later. What needs to be absolutely clear is what kind of alternative you think you could secure in leaving the EU. I think that one speaker today said that the EU needs Britain more than Britain needs the EU. We would put that proposition very much to the test in any renegotiation, and I think that we might come off the worse.

Lord Pearson of Rannoch: My Lords—

Baroness Ludford: My Lords, would the noble Lord mind if I continued?

Lord Pearson of Rannoch: I will not interrupt again, my Lords. However, the inquiry would, of course, bring all that into the open.

Baroness Ludford: As I said, my Lords, I do not think that there is a need; there have already been

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numerous studies, particularly by the National Institute for Economic and Social Research, I think. It really would be a waste of taxpayers' money to repeat all of that.

Lord Stoddart of Swindon: My Lords, before the noble Baroness leaves this point on the 3.5 million jobs, I really would like to get this straight. Is she saying that if we left the European Union, 3.5 million jobs would be lost and that those 3.5 million people would be on the dole? If that is what she is saying, may I remind her that we have an enormous annual deficit with the European Union? As they would be erecting barriers against our trade, which we would reciprocate, would they not lose a lot more than 3.5 million jobs? We would have to do that work in this country, thereby creating new jobs.

Baroness Ludford: My Lords, I am saying that it would be great folly to test the proposition. I am also saying that those jobs depend on our membership of the EU. In the 20 years to 1999, Britain received almost 30 per cent of foreign direct investment in the EU, and 2 million people work for those firms alone. Some 7,000 American and Japanese firms have been established in the UK. If they did not have the kind of tariff-free access and, crucially, the single market and our influence in making the rules of the single market, then I fear that those jobs would be very much at risk.

Lord Stoddart of Swindon: My Lords—

Baroness Ludford: My Lords, I am sorry but I really must move on.

Baroness Crawley: My Lords, noble Lords have had an opportunity to say what they feel about the Bill. I believe that this is the first time that the noble Baroness, Lady Ludford, has had an opportunity. So I would ask noble Lords to be patient.

Baroness Ludford: My Lords, I am grateful to the noble Baroness.

Clearly there is room for economic reform in the EU. I am glad to say that the UK-backed economic reform agenda is now the agenda for Europe to get more dynamism, competition and liberalisation, which is already having an impact. For example, the cost of our telephone calls has decreased by half because of competition and liberalisation in the EU. We get all the benefits of the EU for a net cost of 3 billion a year. The chief European economist at J P Morgan has said:

    "In the great scheme of things, our net contributions are so small as to be trivial . . . the net benefit of membership of the EU is many orders of magnitude above our net contribution to the EU budget".

Speakers this morning have advocated other options than pure withdrawal. They would, would they not, because studies show that withdrawal would mean that our GDP would decline by 2.25 per cent and wages would have to decrease for people to stay in jobs. I shall not dwell on the sometimes touted option

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of the North American Free Trade Agreement. My noble friend Lord Wallace of Saltaire effectively demonstrated with his intervention the colonial status that UK membership of NAFTA would entail—like Hong Kong in China, according to the noble Earl, Lord Liverpool. I really do not think that that is a status which British citizens would want.

The noble Lord, Lord Pearson, wants the same status as Switzerland, with a pure free-trade agreement. However, Switzerland has already recognised the weakness of this situation. The Swiss Government are in favour of joining the EU by 2010 because, they argue, Switzerland is already affected and has to follow EU developments relating not only to the single market but also in the field of internal security, foreign policy, immigration and asylum over which they have no say whatever. The Swiss believe that only full EU membership will give Switzerland a say in the decision-making process that is shaping the political, economic and cultural future of Europe. I think that that puts paid to the Swiss model.

Some advocate a Norwegian-style status. Norway participates as a member of the EEA in the single market. Again, however, it has no say in how those laws are made; it just has to implement them. Indeed, this situation is known in Norway as the "fax democracy" because they introduce EU directives and regulations as soon as they come across on the fax machine. They have implemented 4,000 pieces of EU legislation with no Norwegian influence over them in the Council or the European Parliament. If I may say so, our status under such models would be like that of a lady member of a gentlemen's club forced to use the back stairs, or like that of a lady member of a golf club allowed to play only on weekday mornings. Our ability to govern ourselves would decrease, not increase. Our real sovereignty would actually decline.

I turn to the question of our influence in foreign and security policy. The key issue is that if Britain were to leave the EU, we would lose influence on both sides of the Atlantic. Our lack of clout in Europe would make us a less important ally for America. Numerous previous American ambassadors to Britain have affirmed that position.

Recently British citizens gave remarkable responses in the Euro-barometer survey. The figure that received a lot of publicity was the 52 per cent in favour of the constitution, but equally remarkable were the responses on the common foreign and security policy. Some 71 per cent of people believe that the EU should have a rapid military reaction force that can be sent quickly to trouble spots when an international crisis occurs. When such a crisis occurs, 72 per cent of Britons believe that the EU member states should agree a common position; that is, over 70 per cent support a common foreign policy. Half believe the EU should have its own seat on the UN Security Council and that the EU should have its own foreign Minister. I believe that puts paid to the idea that British people do not support a common policy for Europe in the world.

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I sum up. There may be around one-quarter of British people who think that EU membership is a bad thing. Around 30 per cent are firmly against the euro. So the Eurosceptic case resonates with a maximum of three out of 10 people. Seventy per cent of the British people believe that the EU is a good thing, or they remain to be unconvinced, but they are certainly not in the firm Eurosceptic camp. There is plenty of scope for persuasion and to demonstrate the benefits.

I am very glad to say that 20 years ago, perhaps this month, the Labour Party abandoned its policy of withdrawal. Sadly, this Government have been in power for six years and still we have no date for a referendum on the euro, but when that happens—soon, I hope—it will provide an opportunity for the pro-Europeans to beat the Eurosceptics hollow by two or three to one. We have done it before and we shall do it again.

Baroness Cox: My Lords, before the noble Baroness sits down, did she imply that those of us who have some doubts about Europe are against values such as cultural diversity? If that is the case, I hope that she will withdraw that in due course or prove her point because I for one and, I believe many others, take grave exception to such an allegation.

Baroness Ludford: My Lords, I shall take the opportunity to read the noble Baroness's remarks in Hansard, if I may, rather than delay the debate further by responding now.

Lord Monson: My Lords, before the noble Baroness sits down for the second time, is she aware that, with the exception of Malta, turnout in the various referendums in accession countries on whether to accept EU membership was extremely low? In no country, with the possible exception of Slovenia—I have not had time to check that—did more than 50 per cent of registered voters vote in favour of accession. The enthusiasm in these countries is very much less than the noble Baroness suggested.

Baroness Ludford: My Lords, we live in democracies and what matters is those people who vote. Unfortunately, turnout is too low in many elections. I was present at by-elections in the London Borough of Islington last night where the turnout was 20 per cent. Turnouts are too low and we have to work on that, but the fact is that the results were absolutely conclusive.

1.44 p.m.

Baroness Rawlings: My Lords, I, too, thank my noble friend Lord Pearson of Rannoch for having instituted the debate through the introduction of his Bill. There is one point on which I agree with him; this country deserves to have the fullest possible debate about an issue that will affect its future more than anything else we discuss in this Parliament.

I turn to the Bill and comment briefly on the proposed committee. The Bill is a recipe for what one might describe as total stalemate. I am not against a

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committee to consider the implications of withdrawal. That would probably benefit those who argue strongly for staying in the European Union. However, I fear that the Bill as it stands would introduce a procedure which could go no further.

As regards whether the United Kingdom is part of a globalised world, influencing it, helping to lead it and bringing its best traditions to bear upon it, I fear that withdrawal from the European Union would constitute a decision to stop the world and try to get off. It is unrealistic in today's world, a world in which we see time and again countries agreeing on how to allow a part of their sovereignty to be pooled in an international body.

From studying the speeches in the previous debate on this subject, I must confess to being not at all surprised at the way in which the debate developed today. Despite all the speeches from these Benches, we on this side of the House are good Europeans. Let me be quite clear. The Conservative Party policy is not to leave the European Union; it regards such thinking as defeatist. Indeed, this is a very exciting time for Britain to be involved in the debate on the future of Europe.

The European Union is going through a period of great change at the moment, not least due to its expansion with the upcoming accession of the new member states and soon that of further countries such as Bulgaria. My right honourable friend the Leader of Her Majesty's Opposition has on numerous occasions repeated our commitment to continued membership and has made it quite clear that any accusation otherwise is simply a lie. We have always believed that the European Union should move forward. However, that commitment to our membership of the European Union does not relieve us of our responsibility to debate legitimate questions with regard to its scope and purpose.

We want the European Union to go ahead but not along old-fashioned, centralist, bureaucratic, or, more recently, sadly, anti-American lines. Nor, might I add, do most of the people of Europe. The European Union has always been an evolving organisation and we must continuously debate its direction.

The political and economic scope of the European Union is by no means settled, particularly as it continues to expand, taking in new members with new opinions and new ideas. I hope that noble Lords on all sides agree with me when I say that the European Union and its organisations are not, and should never be, beyond criticism, as we have heard from the noble Lord, Lord Moran. We have a duty to question them and to hold them to account, just as we do with the Government of this country.

There is an inevitable pooling of sovereignty, as there is when joining any club. We frequently speak about the European Union as if it were unique in that respect but unquestionably some pooling of sovereignty—as we heard from the noble Lord, Lord Griffiths—is also involved in membership of NATO, an organisation supported by Members in all parts of the House. Unquestionably, a considerable sacrifice of sovereignty is involved in membership of

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the World Trade Organisation, of which this country is a member and which many other countries seek to join. There is obviously some sacrifice of sovereignty in trying to establish a world which observes human rights, which I believe most Members of this House and of the other place powerfully support, and of which my noble friend Lady Cox is such a brave protagonist. All sides agreed last night, in our very good debate on Cuba, on that point. You cannot establish a world of law, human respect and civilisation unless you are prepared to accept the existence and strengthening of global institutions.

The European Union is a broad church and encompasses many shades of opinion, which in a democracy is welcome. As with any discussion, there is always a perfectly sensible course between pandering to the integrationists and super-state builders—merely drifting along nonchalantly with their ideas—and turning our backs completely on a continent with which we have been intimately involved for more than a thousand years.

We are quite clear on what that means in an ever-evolving union. The sensible approach is to ensure that the Union becomes a flexible network of friendly states, working closely together in some areas, but acting independently in others. With enlargement, which we debate next week, Britain now has plenty of friends who share that view, and we should have the confidence to push it more vigorously than the Government do. Post-Iraq, combined with American views that are held towards old Europe, and with the new Europe evolving, the time has never been better for reform—surely not abandonment—of the Union.

Setting up another independent committee to judge the tides of history and interest is a strange way to proceed. I am sure that my noble friend Lord Pearson of Rannoch would agree that the famous tests by endless economists on whether to join the euro are trying to decide on issues far larger than narrow economics can handle. It is absurd to think that some independent gurus can decide how we should operate in Europe and how to weigh up all the pros and cons. Those are political matters for political judgment.

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