---

Lord Willoughby de Broke: My Lords, I know that it is not the done thing to giggle at a funeral, but you would have to have a heart of stone not to laugh at the efforts of the Eurocrats who tell us that the constitution is not dead but just resting, or, as my noble friend Lady Noakes said, is in some sort of cryogenic deep-frozen suspension waiting to spring into life at an appropriate moment.

Equally laughable are the attempts of the Eurocrats to inform us that the "No" vote was really a "Yes" vote and that the electorate did not understand the question. But were those not the same Eurocrats who told us that a "No" vote in the constitutional referendum would be a "No" to the whole of Europe? I think that that is what
 
21 Jun 2005 : Column 1594
 
some of them said. Was it not an EU commissioner who told us that a "No" vote would mean a return to the gas chambers? Yes, it was: I am afraid that that is right.

Do they still believe that? Apparently, they do. I have bad news for the noble Lord, Lord Waddington. Even today in the Telegraph, Mr Michel, an EU development commissioner—I do not know what development commissioners develop; perhaps photographs—and a former Belgian Foreign Minister, in an interview on Belgian radio, said:

"The British Prime Minister has the upper hand, but to run a good presidency, it's necessary that everyone helps . . . We'll help him, but on condition that it's all heading in the direction of more Europe, and the direction of deeper [integration]".

That is still the mindset. It is almost incredible. What sort of planet do they live on?

As the noble Lord, Lord Stoddart of Swindon, reminded us, the various Euro-transports we were told we should not miss at our peril—planes, trains and boats—have all crashed, pranged and sunk. They still believe we should go on the same journey to God knows where. We do not know.

The only thing about which I can agree with the noble Lord, Lord Maclennan, is that there is a chance to do something different. However, I part radically from his solution. If we are to seize this chance, we must not think of trying to repair the discredited Euro-model that is sitting smoking in the ditch but find a different way of getting to where the people of this country want to go.

Before Mrs Thatcher—the noble Baroness, Lady Thatcher—came into power in 1979, it was the accepted wisdom on all sides that exchange controls were the norm. They were here to stay. When her government proposed to remove exchange controls, they were told, particularly by the orthodox leftist economists, that all sorts of plagues would rain down on us—frogs would appear, locusts would eat our corn, MEPs would stop fiddling their expenses. We were told that all sorts of weird and wonderful things would happen. In the event, we became freer and richer.

As with exchange controls, so with the EU. Again, it seems to be accepted government orthodoxy that our membership of the EU is in some way a good thing and we have to go along with whatever it brings. Why? My noble friend Lord Stevens said that this is a debate worth having, and indeed it is. Why do we have to go along with it? Why is it a good thing to give away £12 billion of British taxpayers' money to the European Union every single year? That is £35 million a day—£3 million or £4 million has been given away just while we have been having this debate. No one has ever told me why that is a good thing. Perhaps someone will.

Why did we ever agree to allow the European Commission to have the sole prerogative of framing EU laws, which now cover more than 60 per cent of all our legislation? Why are we so spineless about that? Why do we let these unelected political retreads tell us how to hold a ladder, what we should do with our land, how many fish we can catch, how many hours we can
 
21 Jun 2005 : Column 1595
 
work? How did we ever agree to make it a crime to sell vegetables, fruit and meat in pounds? It is astonishing. But I remind your Lordships that it was not the people of this country who agreed to that. They were never asked. They have been let down by their political leaders and their inability to tell the truth about where the European project has been leading and how much power we have been giving away.

The people of France and Holland have, mercifully, blown a giant raspberry at the whole European project. The Government must now be open and tell the people of this country what membership of the EU is costing them financially and in terms of financial sovereignty. In financial terms, I repeat that we hand over £12 billion a year to the EU. The British Chambers of Commerce calculated that more than 80 per cent of the regulatory costs on British business are imposed by Brussels. The noble Baroness, Lady Noakes, gave a slightly different figure, which I think referred to the amount of legislation. According to the British Chambers of Commerce, 80 per cent of the total cost of regulation comes from Brussels, whose regulatory grasp is quite astonishing. The noble Lord, Lord Waddington, mentioned some of the areas, and I can add to them. Working time, water quality, food labelling, fire precautions, car tax, parental leave, animal by-products and employment relations are just a few of the areas which are covered by the regulatory animal in Brussels.

The Dutch Government have recently estimated in an official study that the total cost of EU regulations in Holland was 2 per cent of GDP. That is presumably one of the reasons why the Dutch blew their raspberry. If we assume a similar figure for the UK—and I see no reason why we should not; we are both highly developed countries with an industrial base and advanced economies—the cost of EU regulations would be £20 billion a year. That is absolutely outrageous.

This is madness, yet the EU's cheerleaders are still pretending that EU membership is in our national interest. The truth is the very reverse. Our membership of the EU is costing us billions every year and making us ever less competitive in the global economy. The EU is failing; as the Lord President was kind enough to remind us in her opening remarks, it has 19 million people unemployed. It has low growth and a decreasing share of world markets. We have to do things differently.

If the EU is to continue at all—and I think I am supported in this by the noble Lord, Lord Waddington, and my noble friend Lord Blackwell—it should be more of an intergovernmental organisation, whereby sovereign governments, with the agreement and authority of their people, could co-operate on a range of policies agreed between themselves. I do not believe that we would need the European Commission at all, unless it was a very slimmed down version called something like the secretariat, to oversee the implementation of intergovernmental regulations. The European Parliament would, of course, be redundant and would be abolished. All the Euro-paraphernalia, such as flags and anthem, and all the supranational trappings and accretions of power that the European Union has gathered to itself in the acquis should go. The
 
21 Jun 2005 : Column 1596
 
Government and the Prime Minister really ought to welcome this sort of reform and they should fight for it. Many speakers today have said this and I support them.

There should be no more agonised EU summits. How wonderful that would be after the ghastly summit that we have just experienced. There would be no more humiliating horse-trading. Mr Blair would be spared the agony of being polite to Monsieur Chirac and trying to remember the name of the Luxembourg Prime Minister, only to find that he was talking to the Lithuanian cultural attaché.

Above all—this is an extremely important point—Westminster would regain respect through more inter-governmentalism. I am sorry to say that, in parliamentary terms, we have become political eunuchs. Parliament is largely nothing more than a rubber stamp for European directives and regulations. We cannot change them. If we do, we risk fines in the European Court of Justice. It is time that we became, once again, a representative body that is accountable to its electors. As a by-product of being a sovereign parliament, we might even see an increased interest in politics and the political process.

If we do not get that sort of reform, the Prime Minister should simply pick up his telephone, having enabled his Crazy Frog dial tone, and call Monsieur Chirac to say, "I'm sorry, we're leaving, and our £12 billion cheque is leaving with us".

We were told that our abolishing exchange controls would be unthinkable, but, as a result, we became freer and richer. If we were to leave the EU, we would also become freer and richer. The noble Lord, Lord Maclennan, said that Euro-sceptic arguments were largely defeatist. If it is defeatist to be freer and richer, I am a defeatist. We are better off out.

8.16 pm

Lord Inglewood: My Lords, about 10 days ago, I was standing in a queue outside your Lordships' House waiting for a taxi when I found myself next to one of the distinguished ex-Commissioners who are Members of this House. Inevitably, I asked his view of the current developments in the European Union. He replied, "The thing you must remember is that you only get real progress in Europe when you have a crisis". So I very much agree with my noble friend Lord Howell that we must see this crisis as an opportunity.

If there is an opportunity, you must first grab it and then you must exploit it to your advantage. At this point in the game, nobody can say whether what has happened is a good or a bad thing. It is simply too early.

The crisis that we are in is slightly unusual, because the money is not going to run out and the system of governance in the European Union is not going to collapse. We are faced rather with a crisis of confidence and a crisis over direction and what might happen next.
 
21 Jun 2005 : Column 1597
 

In short, in an era when, to an unhealthy extent, political business seems to be dominated by party managers, we have come to a moment of real politics, because nobody knows with any certainty what is going to happen next. I find that rather refreshing.

Where one has a crisis, it is important to try to dig down to find what the underlying cause of the problem might be. In my experience, the European Union is not unpopular per se. People quite like a lot of the ideas that lie underneath it, and they like a lot of the benefits that people have derived from it. The unpopular element is the way in which it works and some of the rather too many, to put it mildly, foolish things that it manages to do. It is not of course the only level of government that does things that are foolish. Folly can be found everywhere where you have human beings.

No doubt a lot of this criticism is unfair, and I dare say that most of it is the function of what you might describe as the tabloid school of journalism, which, either deliberately or inadvertently, simply fails to understand what is going on or takes things out of context. It is not a matter of whinging. The truth of the matter is that that is the position.

This in turn has become the focus of somewhat wider discontent. Wherever one looks around Europe, one is seeing governments being criticised by the electorate. Last year, I was told, for example, about the Spanish general election. It was not the Madrid bomb that led to the departure of the Aznar administration, but the war and a general boredom with that long serving administration.

An interesting instance in this country was the referendum in the north-east last year on regional assemblies. I come from the north-west, I am interested in regional government and am a great believer in increased localism, but I thought that what was being proposed was simply wrong for England.

I heard from my contacts in the Labour Party, in April, that in every likelihood the referendum would be lost. But what was interesting was the scale of that defeat; it was completely unanticipated—a peasants' revolt, to use that word in a technical sense. Of course, this year we have seen the collapse of the German SPD vote in the North Rhine and Westphalia, we have seen what has happened to M. Chirac in France, and we have seen the resurgence of Fortuynism in Holland.

Against such a background, Europe can hardly be said to have helped itself. We have seen excessive and intrusive legislation, transposition is double-banked and gold-plated, the system of legislation is itself arcane and unsympathetic to the elector, and the system of accountancy and financial control is inadequate and not perceived to be up to speed. But, perhaps most importantly of all, you can have a real go at the European aspect of politics, and you do not bring the whole body politic down on your head.

Clearly the constitutional treaty as drafted is dead. But it is both fortuitous and interesting that that has happened at precisely the moment when we have political gridlock over the structure of the European budget, both in the short term, in terms of next year's
 
21 Jun 2005 : Column 1598
 
budget, and in the medium term, in the context of the financial perspective. The latter in particular is fundamentally and intimately linked with the common agricultural policy, which in turn is intimately connected to the debate about the very nature of the European Union itself.

I say that because something that we do not fully appreciate in this country is how for many member states, especially the early members of the Union, the CAP is not merely a policy about agriculture—it is a kind of sacrament that helps to define the very essence of the European Union. In some ways it is rather like the theological debates of the 16th and 17th centuries over consubstantiation and transubstantiation; it was not merely about the chemical composition of bread and wine. The debate itself was about something quite different. For many that is equally true of the debate about the common agricultural policy: it is not merely about farming.

In the context of the CAP, it is important to distinguish between the policy mechanisms inherent in it and the means whereby it is financed. While Commissioner Fischler has brought forward the mid-term review—and a lot of the policies are fundamentally different, albeit still in many ways less than ideal—the basis of the financing of the CAP remains unchanged. Rightly and fairly, it has been described as the French rebate. Of course, given a name like that, it is inevitably the French who are the winners. They have almost become hereditary beneficiaries of a European agricultural policy. It is slightly like inheriting an hereditary peerage, which for some, such as Enoch Powell, was in itself a kind of sacrament. As a previous speaker said, however, the world moves on.

Some may say that this is not an appropriate way in which to look at it, but from a United Kingdom perspective, if you try to trace our national contributions to the European Union budget, you see how year on year we are making a material contribution to French domestic agricultural spending. If we were not used to that situation, and that money was being distributed in the same way to the French health or education system, we would think it completely absurd and would not think twice about saying that it was unacceptable. After all, is there a fundamentally sound rationale for doing it? Increasingly, I and many other people are coming to the conclusion that the answer is "No".

Interestingly, too, however, and speaking as a farmer, we have seen a common agricultural policy which has not done the British farming community many favours over the years. Would that the benefit of the substantial sums of money that had been spent had accrued to commensurate financial benefit to farmers. It has not; but we have seen some important changes from Commissioner Fischler driven forward, and we shall probably have—inevitably in the context of WTO negotiations—to see further changes. But we are shifting away from policy which is based on supporting production to one that is based on the land.

It is worth pausing for a moment to say to ourselves that if—which in all our cases is completely unlikely—we were to be the French Minister of Agriculture, how
 
21 Jun 2005 : Column 1599
 
would we look at this change? Comparing the French to the English countryside, the two countries have roughly the same population and France is four times as big. If you are going to have a system of agricultural support that is based on the amount of land affected, you can see why it is not a prospect that the French Minister of Agriculture is likely to look at with a great deal of equanimity. I think it is important that we have that in our minds when we are trying to think about the problem and to see a way forward.

In many people's thinking on the Continent, second only to the CAP at the sacramental heart of Europe is the so-called social or Rhineland model of the economy, which is contrasted with the Anglo-Saxon one. Like many other speakers, I do not like that distinction because I believe that it is a flawed one. I much prefer to look at it from my own perspective as a one-nation Conservative.

It seems to me axiomatic that our system of economic governance in this country should not be designed solely to enable those who are good at it to make the maximum amount of money in the shortest possible time. There are a whole range of other priorities in a plural society. Nevertheless, I think that it is better for someone to be working in a system that perhaps does not have the highest level of social protection where they actually have a job, and were they to be unfortunate enough to lose the job there is a realistic prospect of getting another, as opposed to the predicament in which many on the Continent seem to be finding themselves, where they are living in a system of very high social protection but where they do not have work and there is not much likelihood of finding any.

It is equally true that we are now in a single globalised world. If we are uncompetitive in that globalised world, it will be an absolutely guaranteed means of rendering the European Union economically destitute, which in turn will drive us all towards our economic nemesis. It is for that reason that I repeat what I said before. I think that the incoming Labour Government, in 1997, made a great mistake in signing up to the Social Chapter. It is not because I am against having decent terms and conditions, but because it locked them into a system which in many ways has tied them down to inappropriate mechanisms.

I should like to think from my experience talking to colleagues, particularly German Christian Democrat colleagues in the European Parliament, that the need for a realistic economic basis of the market within Europe is gaining wider currency.

Since the constitution is dead there is not much point in going over it. At the end, the people of Europe were given a Hobson's choice, and it has been left. It is as simple as that. But the important question that we all have to address, and many others have done, is where do we go from here?

I believe it is very important not to lay out a detailed blueprint for where we should propose to move, for the very simple reason that if the European Union is to remain together—and I believe that it is to all our advantages that it should do so—progress will depend
 
21 Jun 2005 : Column 1600
 
on agreement, and laying out entrenched positions at an early stage is an absolutely guaranteed way of not achieving agreement. Rather, I think that one should identify some core principles which should be the guidelines of our future progress.

I think that the traditional United Kingdom middle-of-the-road view of Europe provides a very good starting place. We do not want a superstate. What we are seeing from the development of the European Union is something sui generis. It is a new way for old countries to work together in an evolving and new kind of world. We want a decentralised Europe which has its political and legal authority derived from the member states of which it is part. We want a Europe that is not harmonised but rather is integrated on the basis of minimum harmonisation and maximum mutual recognition. I think that we ought to give great credit to my noble friend Lord Cockfield for the way in which he developed the concept of mutual recognition in the work that he did on the single market programme.

We want a Europe that is financially small and operated according to systems of proven probity. We want the kind of Europe that operates according to the principle of subsidiarity, and when it is deemed appropriate to act, it then responds in a manner that honours the principle of proportionality. We want a Europe that is democratic rather than technocratic. We want a Europe that is subject to the rule of law, not only in the High Court in London but also in the County Court in Penrith where I live and in their opposite numbers in France, Spain, Greece, the Baltic States and so on, right across Europe. We want a Europe that is subject to proper political and financial accountability and control which in turn involves a substantial element of transparency. We want a market-oriented Europe. We all have to work in a global marketplace. The only way we in the European Union can compete in the global marketplace is if we have a properly functioning domestic market, which in that case means the internal market.

Finally, I make a plea to keep it simple. Perhaps the most obvious criticism of the constitution was simply its scale, its complication and its incomprehensibility. It was complicated not only for the people you would expect to find it complicated, but even people who had to work with it on a daily basis found it complicated. That is a very severe indictment regardless of any other consideration.

If we can win over people's hearts and minds to these ideas—I think that many in Europe agree with us, many are wondering about the matter but there are still many more who need to be convinced of it—we will then win the argument. I do not think that that will happen over night but I believe that it will happen over time. We must recognise that and recognise that this is a long game. There is not a quick fix here. However, this perspective has one great advantage; that is, the intellectual wind is blowing in our direction.

The Prime Minister who, if he adopts the kind of agenda that I have described, will certainly have my support, is on the verge of a great struggle. Like the
 
21 Jun 2005 : Column 1601
 
Duke of Wellington at the Duchess of Richmond's ball, he will know that the morrow will bring either a great victory or a great defeat.

If he gets it right—and I think he can—then great success not only for us in this country but for people all across Europe is there to be won. But let us remember that in order to consolidate success we must also be magnanimous. The way of securing the long-term success of this crisis is to make sure that it receives the long-term acceptance of both the member states and the peoples right across Europe.

8.32 pm

---