The European Union simply is not working

A Speech by Bill Cash in a House of Commons debate on Section 5 of the European Communities (Amendment) Act 1993, 10 February 2010:

Ian Pearson (Economic Secretary, HM Treasury)

That this House takes note with approval of the Government's assessment as set out in the Pre-Budget Report 2009 for the purposes of section 5 of the European Communities (Amendment) Act 1993.

I welcome the opportunity to debate the information provided to the European Commission under section 5 of the European Communities (Amendment) Act 1993. Each year, the Government report to the Commission on the UK's economic and budgetary position and our main economic policy measures, in line with our commitments under the stability and growth pact, by formally sharing information from the pre-Budget report.”

William Cash: The issue before us goes rather deeper than the pre-Budget statement and the report, (...). I say that because the origin of section 5 has to be observed if we are to know exactly what we are talking about in terms of the British economy in the context of the European Union.

On 4 May 1993, a Labour amendment was moved and then accepted by the then Government, basically in order to do a deal over the Maastricht treaty. Mr. Smith, who was leading for the then Opposition, said that the object of the amendment was, first, to make clear the priority that the Opposition believed should attach to article 2 of the Maastricht treaty in setting the goals of the Community in general; secondly, to deal with the question of the assessment of criteria, particularly convergence; and thirdly, to deal with the question of accountability. It is important to look at what article 2 says, because that goes to the very heart of the crisis that is going on in Greece and the whole practicality of the European Union. It prescribes as follows:

"The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing the common policies...to promote throughout the Community a harmonious and balanced development of economic activities, sustainable and non-inflationary growth respecting the environment, a high degree of convergence of economic performance, a high level of employment and of social protection, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States."

That is what article 2 states, and of course it is now in the Lisbon treaty, which consolidated all the existing treaties.

The Maastricht rebels, for whom I had the honour of leading many of the debates, took a strong position and refused to support the arrangements in question. I am glad to be able to inform the House that Mr. Hain, no less, the current Secretary of State for Wales, made a powerful speech in which he condemned the wishful thinking of the arrangements, and went on to vote against the Maastricht treaty on Third Reading. He was joined by a number of Labour Members, but not enough.

This is not just about history, it is about the present. Based on our predictions, all the Maastricht rebels, including my hon. Friend Mr. Chope, who is sitting next to me today, declined to vote for the proposal on the grounds of the impracticability of what was contained in article 2. Now, as is becoming increasingly obvious in this context and many others, the European Union simply is not working. I refer to what section 5 of the 1993 Act actually states, which is:

"Before submitting the information required in implementing"

the provisions of the treaty that I have just mentioned,

"Her Majesty's Government shall report to Parliament for its approval an assessment of the medium term economic and budgetary position in relation to public investment expenditure and to the social, economic and environmental goals set out in Article 2".

It states that the report will be submitted to the European Council and European Commission in pursuit of their responsibilities under various articles.

Over an extended period, particularly in relation to the Fiscal Responsibility Bill-I referred to it as the fiscal irresponsibility Bill-those of us on the Conservative Benches have made one attack after another not only on the United Kingdom's performance, as set out in the pre-Budget report, but on the performance of the eurozone countries in complying with those provisions. I spoke about that only last week in the debate about financial management in the European Committee. We have also made the point, as I did earlier, about the absurdity of the no-growth, no-stability, no-pact arrangements in the so-called stability and growth pact, which was introduced by my right hon. and learned Friend Mr. Clarke in those heady days.

We are caught up in the failure of the European Community and European Union on their economic policies, which are simply not realistic. We need only examine article 2 to realise how much wishful thinking lies behind it. It does not work, because of the failure of the Lisbon agenda, because of over-regulation and because of the degree to which the report of the European Court of Auditors does not stack up, as I mentioned in Committee the other day.

...

With regard to fiscal stability, the Government have failed woefully. I have said before that they have lied on the question of the actual debt, and that is why Standard & Poor's, PIMCO and other organisations that have great control and influence over both credit ratings and the bond market are looking so nervously at the underlying weakness of the British economy. The plain fact is that we are in serious difficulties and the Government are doing nothing about it. That is part and parcel of the problem that comes from attempting to subscribe to principles laid down in the Maastricht treaty, as endorsed by the Lisbon treaty, that simply do not work.

I have not advocated the idea of outright withdrawal, just like that. However, what is going on in the eurozone at the moment, as evidenced by a number of important articles that have been written over the past few days, has demonstrated the seriousness of the situation. It is simply astonishing that here we are in a virtually empty House, with nobody at all on the Labour Back Benches other than the Parliamentary Private Secretary to the Minister, when the eurozone is in deep trouble and may even be beyond crisis and when an economic summit meeting to deal with the matter is proposed for Thursday.

Wolfgang Münchau stated in the Financial Times in an article written on Monday 8 February that "advocates of an IMF-led bail-out conveniently ignore the disastrous signal that this would send to the financial markets about where the eurozone is heading in the future."

...

"It would be so much better if the eurozone were to sort out its own problems."

That was certainly not what the Prime Minister said at Prime Minister's questions today.

There is deep concern that the International Monetary Fund may be called in to sort out the problem, but equally France and Germany might do so. As I have said repeatedly, it will be yet another prescription for danger in the EU if some counties, including ourselves as a net a contributor, are called upon to bail out others. It will not just be Greece, because as we have seen reported in the newspapers regarding Spain, the next step will be the same as on 16 September 1992. Those of us who had campaigned against the compulsory exchange rate mechanism were proved right when the ERM collapsed, to the serious detriment of the people of this country, including my constituents. Wolfgang Münchau stated that these last few days of February "have reminded me of the speculative attacks on sterling and the Italian lira in September 1992."

He based his whole article on that analogy, and he is right, because it will not just be Greece. Whether or not Greece is bailed out, there will then be Spain, and then Italy, Ireland and Portugal, not even mentioning countries such as Romania and Bulgaria that are outside the eurozone for the time being and should never have been brought into the EU by accession. As everybody outside this place knows, we have a serious crisis for the eurozone as a whole. I do not say that with any great satisfaction or gloating, but I wish people had listened to us back in 1993.

Apart from voting against the mad arrangement that is now creating all the problems, in 1993 I said that we needed to ensure that we did not return to the dark forces of the past, with massive unemployment and the consequences of a failed economic system. That is what we predicted would happen, and we said that it would lead to the rise of the far right. That is exactly what I said in an article that I wrote in 1993, and I stand by it, because next to my constituency in Staffordshire the British National party is beginning to emerge.

There is a particular problem in Germany, because there is still an unemployment rate of more than 20 per cent. in the eastern part. The unity of the Deutschmark and now the euro has not solved the problems of eastern Germany. If the Germans are asked to bail out Greece-that is basically what is happening, because the French are just bystanders in this, and it is just a bit of political fixing-do we seriously believe that Angela Merkel and the German Government, not to mention the German people as a whole, will accept the prospect of bailing out all those other countries as well? That is what is in prospect.

It is precisely because those of us who campaigned against going into the euro won the battle in the Maastricht debates-that was at huge political cost, but necessary in our vital national interest-that we are out of the euro. The Prime Minister has no credit for that whatever. He just kept the debate going because he knew we were right-that is all there is to it. The plain fact is that we were right. Regrettably, we had to fight a Conservative Government over a long period on that issue. If Greece were not in the eurozone, it too could do what the UK can do, which is keep afloat even though that means devaluation-we must recognise that there is an international financial crisis, but it is being made much worse.

In City AM today, Allister Heath, who at one time was the chairman and research director of the European Foundation, which I founded in 1993, says:

"Bailing out Greece is not the answer".

There is another exceptionally good article in that paper as well. The plain fact is that the analysis in the City is clear. There is deep worry, and every reason why people should be worried.

In an article in today's Financial Times, Martin Wolf says that Germans must start buying to save Europe's stragglers. At the end of it, he says that that "requires improved competitiveness and buoyant external demand" “but that "At present, none of this is available."

The point is that in his proposals on the European Union, my right hon. Friend Mr. Cameron has made it clear that his imperative is to increase British competitiveness, and it is absolutely essential that we do so. We need to get rid of unnecessary over-regulation, most of which comes from the EU. We must follow up those proposals, but how will we do it?

That is where there is a serious and important decision to be taken. The decision hinges on my gold-standard-if I may dare to call it that-United Kingdom Parliamentary Sovereignty Bill, which has been debated in the House and which is strongly supported by a significant number of Conservative Members. My right hon. Friend has accepted it in principle, because he has stated that there will be a sovereignty Bill.

What is the relevance of that Bill to this debate? There are economic crises in the Europe and the UK, and we cannot separate the European issue from economic questions. The two things are absolutely interwoven on reacquiring growth and competitiveness, as my right hon. Friend said, and on the applications of the stability and growth pact and the Maastricht criteria, to which I have referred.

Rather than take issue with Conservative Front Benchers on that subject, I will simply say that it would be a great mistake to attempt to deal only with the economy in our manifesto going into the general election. We must deal with the European dimension at the same time. Therefore, we should deal with both the European issue-in spades-as well as the economic issue, because they are interdependent. To achieve that, we must repatriate powers to the UK Parliament, Government and people to ensure that we have a working, stable democracy that achieves for the UK the objectives of stability and competitiveness, to enable us to secure jobs and move forward.

On that basis, my Bill would provide the template to enable us to repatriate powers where there is any conflict between the requirements set out in the old Maastricht treaty and now in the Lisbon treaty, or the requirement for competitiveness-there is a stack of stuff that I will not now go into to deal with that. When it comes to repatriation of powers, we must be in a position to require the judiciary to take note of, follow and obey the Westminster legislation that is needed to override the European legislation. That is the solid template. That is what it is all about.

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