The Second Reading debate of the European Union (Approval of Treaty Amendment Decision) Bill took place yesterday. Bill Cash made the following speech and interventions:
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague): I beg to move, That the Bill be now read a Second time.
As the House will know, the reason for the treaty change that the Bill approves is the crisis in the eurozone. That crisis was predictable and, in fact, predicted by some present in the House. The existence of monetary union without fiscal or economic union has led to severe economic strains in a number of eurozone countries and permitted the build-up of excessive debts by some members to an unsustainable level.
I have always opposed Britain’s membership of the euro, as Opposition Members will no doubt recall, not only because of the single currency’s flawed design, but because of the limitations that it would impose on our national democracy. I think that there is now near-national consensus that we are better off with our own currency; I say “near” because the Leader of the Opposition has said that Britain could join the euro if he were Prime Minister for long enough—a pretty good reason for not allowing him to become Prime Minister at all.
None the less, there are solid majorities in every national Parliament in the eurozone that wish to retain their membership of the single currency and see it restored to stability. They have their reasons for that, and we should respect them. Obviously, it is also crucially in our interests for the eurozone crisis to be resolved. As the—
Mr William Cash (Stone) (Con): Will my right hon. Friend give way?
Mr Hague: It is a little early, even for my hon. Friend. In a few paragraphs, I will of course give way to him—probably more than once, I should imagine.
The Governor of the Bank of England has said that the crisis is casting a black cloud of uncertainty over our economy. Eurozone countries could take a number of measures to bring about a resolution, and the decision about which are the right ones is for them. One measure that has been decided is the European stability mechanism, a permanent financial assistance mechanism established by the eurozone for the eurozone, to help eurozone countries that get into difficulties. The amendment to article 136 of the treaty on the functioning of the European Union confirms the ability of the eurozone countries to do that. The simple purpose of the Bill is to approve that decision.
Mr Cash rose—
Mr Hague: I shall now give way to my hon. Friend.
Mr Cash: I am most grateful to the Foreign Secretary. Why in his own judgment and opinion is he prepared to invoke the exemption arrangements, the effect of which is to say that the matter does not really affect United Kingdom businesses, as was set out in the explanatory notes to the European Union Act 2011? Plainly, the implosion in Europe does affect us, and this failed attempt to put a sticking plaster on an increasingly impossible situation is simply making the position worse.
Mr Hague: Clearly, the economic crisis in the eurozone—“implosion”, as my hon. Friend terms it—affects us enormously, but so do many other things in the world such as the deficit of the United States and the economic policies of China. What we are dealing with is the approval of one change to article 136—a change that concerns eurozone countries and gives certainty to the creation of a treaty purely for those countries. It has an additional benefit for the United Kingdom, to which I shall come in the course of my speech.
I do not pretend for a moment that the ratification of the decision or the establishment of the ESM alone will solve the eurozone crisis. As the present situation shows, many other things are needed for that solution. For the long term, sustainable public finances and globally competitive economies in all the eurozone’s member states are needed. Those tasks are vital not just for eurozone countries to succeed but for the United Kingdom as well, and are at the heart of this Government’s programme.
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Mr David Nuttall (Bury North) (Con): I am extremely grateful to my right hon. Friend for giving way, because we have come to the crux of the matter. Will he please confirm that if the Bill goes through and reaches the statute book, this country will have no further liability whatsoever under the European financial stabilisation mechanism and will not be called on to contribute any further?
Mr Hague: That is what has been agreed. I am going to examine, in what my hon. Friend or other hon. Members might find painstaking detail—[ Interruption. ] Actually, I can see that some of my hon. Friends will not find it painstaking. I will go through this in detail to give full, frank and maximum assurance to my hon. Friend and others.
Not only does the new mechanism, the ESM, which is limited to eurozone countries, supersede the EFSM; crucially, the decision that the Bill approves and which is being ratified by all other EU countries reflects in its recitals, or preamble, an agreement that article 122
“will no longer be needed for such purposes”,
The Heads of State or Government have therefore agreed that it should not be used for such purposes. Therefore, when this decision is ratified, our liability for future euro area financial assistance programmes under the EU budget will be removed. That is a great gain for British taxpayers and, because it fetters the use of article 122, a shift of a power from the European Union to the United Kingdom.
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Mr Jenkin: My right hon. Friend is in something of a Catch-22, which he is skilfully trying to obscure from us. If the article basis for the May 2010 mechanism was illegal or questionable, why do we need this legislation to get out of it and why did we not challenge it? If it was not illegal, why is it necessary to amend the treaty to legalise a different mechanism? The very fact that the European Commission and the other member states have agreed to the treaty amendment, which effectively does away with the no bail-out clause that was so central to the passage of the Maastricht treaty, means that they admit implicitly that the original mechanism had an illegal treaty base.
Mr Hague: I do not agree with my hon. Friend. The reason we do not challenge that and want to proceed with the process is that we have secured something very important in parallel with it that is potentially enormously beneficial to this country and its taxpayers.
Mr Jenkin: Which is what?
Mr Hague: I can go over that again. It is that article 122 will no longer be used for eurozone bail-outs. It may be my hon. Friend who faces a Catch-22 here, because he just cannot bear the idea that a Bill that says “European something” on it might be good for the country. This Bill is good for the country. Even those of us, like him and me, who are very sceptical about many aspects of the European Union have to admit that securing an agreement that means that we are no longer liable for eurozone bail-outs and that does not harm the country in any other way is, in the words of our noble Friend Lord Flight in the other place, a “no-brainer” to support. That is why I hope that the House will support the Bill.
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Mr Cash: On the claimed virtues of the single market, does the shadow Foreign Secretary accept that we have in fact run up the most monumental deficit with the other 26 member states of the EU, to an extent that it is now damaging our economy and thereby preventing this country from achieving growth?
Mr Alexander: I can assure the hon. Gentleman that if I were to draw up a list of what is damaging the economy of the United Kingdom at the moment, many items would stand above a recognition that the single market has provided British businesses with European markets constituting 500 million consumers. It would be perverse logic to suggest, at a time when we are struggling to secure growth in the British economy, that it would be to the advantage of British exporters or British businesses more generally to shrink the UK’s home single market from 500 million consumers to just 60 million.
A mechanism with sufficient firepower to restructure and recapitalise weak banks, and to bail out Governments who can temporarily no longer access the bond markets to finance their borrowing and debt, is a necessary part of bringing stability back to the eurozone, and a permanent bail-out fund is one key part of making that happen. However, the burden of responsibility for delivering that growth and prosperity must be taken by eurozone members themselves. In the establishment of the ESM, the European Council is making it clear that ultimate responsibility for ensuring the overall stability of the euro area rests with eurozone members. It will be a fund by the eurozone for the eurozone. That is clearly in the UK’s national interest, and we will not vote against a Bill that will allow the ESM to be established.
Mr Jenkin: Why, then, was the previous Government’s parting act to agree that the UK should be liable under the stability mechanism that they approved?
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Mr Cash: On the role of the ECB, Mr Draghi and the proposals on bail-outs, does the right hon. Gentleman agree with the president of the Bundesbank, Mr Weidmann, or with Angela Merkel?
Mr Alexander: I would not wish to intrude on the constitutional differences between the Chancellor of Germany and the governor of the Bundesbank. President Draghi bears a heavy burden of responsibility on Thursday to add detail to the terms of the guarantees that he was judged to have offered on the basis of his rhetoric at the previous press conference in the summer.(…)
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Mr William Cash (Stone) (Con): The Bill is living proof of the Alice in Wonderland Euro-fantasy that permeates every nook and cranny of the failed European project.
Decisions, which were taken as long ago as 25 March 2011, when we last debated the issue—shortly afterwards, several of us voted against the proposals on a deferred Division—cannot and do not work. It is as simple as that. There is simply not the money to go round, as I said when I had the opportunity of cross-examining the Prime Minister at the Liaison Committee well over a year ago.
It may be very fine to provide a quack remedy to make the Euro-integrationists feel that something is being done, but the proposal, which Mr Rompuy and the European Council described as
“ensuring the stability of the euro area”
is as effective as taking a dose of snake oil to hold off the consequences of an economic earthquake.
A Harris opinion poll this week on whether the measures will deal with the debt crisis in the eurozone showed that only 15% in the United Kingdom were confident that they would have any effect. That applied to only 25% in France, 33% in Italy, 20% in Spain and 24% in Germany. That is the most recent opinion poll on the effect of the proposals in the eyes of the voters, not the Governments, élite or establishment in each of those countries, let alone many others.
Of course, we all know that Germany holds the key to the eurozone. As I said in interventions on the Foreign Secretary and the shadow Foreign Secretary, Jens Weidmann, the increasingly realistic and sceptical president of the Bundesbank, stated only a few days ago that, as I have often said, intervening in the bond market is effectively breaking the no bail-out rule, which was set up under Maastricht—I foretold that it would not work—and prohibits the ECB from financing Governments and states. He said that if the Governments of the eurozone become dependent on the power of the ECB, they will never do anything for themselves, that it would be like pouring money into a black hole and that it
“can become addictive like a drug”.
The use of article 122, which the Foreign Secretary attempted to argue around—somewhat disingenuously, I say with respect—breaks the law. The European Scrutiny Committee said that, to all intents and purposes, its use was illegal—not that it was not needed, but that it was illegal. It is there for dealing with natural disasters and earthquakes, not economic problems.
Martin Horwood (Cheltenham) (LD): The hon. Gentleman is making his usual case that the use of article 122 was illegal. That may be his view, but it was clearly being used for the European financial stabilisation mechanism and therefore posed a liability for this country. Surely he must welcome a Bill mechanism that allows a treaty that reduces our liability. The new ESM will not include Britain, and we will not have that same liability. As a good Europhobe, he should support the Bill.
Mr Cash: As a Euro-realist, I am glad we will no longer be liable under the European financial stabilisation mechanism, but that does not exonerate the arrangements that were made by the then Labour Chancellor of the Exchequer, and by the current Chancellor, not to mention the Business, Innovation and Skills Secretary. In May 2010, as the former Chancellor makes clear in his book, they were all involved in endorsing the decision on the transitional arrangements between the outgoing Government and the current one. The illegality is shared by all members of the previous and current Governments.
Mark Reckless: My hon. Friend ascribes responsibility to a number of politicians, but what about the role of Sir Jon Cunliffe, our permanent representative in Brussels at that time? He had a key role in the matter, and since that time has been promoted.
Mr Cash: My hon. Friend and others have pursued that relentlessly and still have no real answers. The truth of the matter is that a number of things were done at or around that time that many people now rather regret—let us put it that way. The fact that the EFSM is now described as “not needed” is disingenuous because people know perfectly well that it was illegal. That is not just my opinion—I make this comment to the hon. Member for Cheltenham (Martin Horwood)—but the one reached by members of the European Scrutiny Committee as a whole in the light of what we heard.
The Minister for Europe (Mr David Lidington): May I make a plea to my hon. Friend and to my hon. Friend the Member for Rochester and Strood (Mark Reckless)? It is one thing to criticise Ministers or Government policy on the European Union, but will they please not direct criticism directly at named officials, who serve Labour, Conservative and Liberal Democrat Ministers loyally and to the best of their ability in the impartial tradition of the British civil service?
Mr Cash: I am delighted that my right hon. Friend makes that point and I endorse it as a general principle, but instances occur periodically that require a certain amount of investigation and analysis. I did not entirely endorse the remarks made by my hon. Friend the Member for Rochester and Strood (Mark Reckless) in as many words, but I agree with him—and with others—that, at the time in question, decisions were taken that people now regret. I am glad that we have moved on from article 122 to the present European stability mechanism.
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Mr Cash: I would rather get on with my speech than continue to dwell on the outrageous decision taken, but I will certainly give way to the shadow Foreign Secretary.
Mr Alexander: First, may I identify myself with both the spirit and substance of the remarks offered by the Minister for Europe? Secondly, before the hon. Gentleman proceeds with his speech, does he accept that, notwithstanding his demand for continued investigations, one of his colleagues has perhaps fallen into error in suggesting that the named individual was the permanent representative in Brussels at that time? I think, in fact, that his predecessor was in post at the time when the decisions that are being discussed were reached.
Mr Cash: I cannot possibly comment, as they say, on that particular point because I am not aware of all the circumstances. Although mistakes were made, the point regarding the ESM is far more important. I accept that the EFSM is now in the past, but it was an unfortunate incident and all parties involved were culpable of allowing it to be endorsed as a proposal—it remained effective for far too long, with obligations on the United Kingdom and its taxpayers.
Mark Reckless: The individual concerned was a senior official in the Treasury at the time—I was referring to his current position. The Europe Minister and the shadow Foreign Secretary have supported what their senior officials in a number of positions say, but if the House had had the chance to scrutinise the individual concerned, and if either the European Scrutiny Committee or the Foreign Affairs Committee had been able to determine his appointment, we might be in a different position.
Mr Cash: We have probably gone through that in as much detail as is required or necessary on this occasion. My point is that it is not the case, as the Foreign Secretary and the papers to which he is religiously sticking state, that article 122 arrangements for the EFSM are no longer needed. That is not only disingenuous, but verging on something much worse. It is not just a question of them not being needed, but I will leave it at that for the time being.
The real question is on the problems that will emerge in practice from the continuous stream of payments and bailouts, putting heads in the sand and the complete abnegation of reality. It is clear—the most recent edition of The Economist indicates as much—that the euro will turn into a soft currency with high inflation. The general secretary of the CSU, the Bavarian party that makes up part of the coalition in Germany, accuses the European Central Bank—this is a far worse accusation than any regarding the EFSM—of becoming
“the currency forger of Europe”.
There are profound reasons for that accusation, which is made by one of the most senior members of the German coalition. I could spend a fair amount of time going through technical and legal points on the European Act 2011, the exemption conditions and the opinion of the Foreign Secretary, but the issue is much more serious than treading through the maze of legalities created by the Act. This is about the substance of the manner in which the European Union functions and fails.
I shall come to the attitudes of German voters later, but it is important that people throughout Europe recall, as Germans do, what happened in the 1930s and subsequently. The economy’s implosion and high inflation—evidence that the economy was completely out of kilter with reality—ultimately led to disaster and the emergence of Hitler from the Weimar republic. Those things are brought to mind by the CSU general secretary’s accusation that the ECB is becoming
“the currency forger of Europe”
to provide the scale of bailouts contemplated under the Bill and the treaty. Massively high inflation is caused by printing money when a country does not have it on the basis of how it runs its economy. No wonder only 24% of more than 1,000 German voters polled had confidence in the short-termism that such measures represent.
Angela Merkel is certainly bidding for a new European treaty—it has not been received with enthusiasm, but the treaty issue has not gone away. In December, there is a fair chance that she will come back for a new treaty that will effectively create yet another step towards political union. We know perfectly well—it is no longer taboo, although I have been saying it for the best part of 25 years and it is now reality—that Germany is now moving further and further towards political union, which it will largely dominate, although more and more Germans are against the bail-outs, even to the point at which, as The Economist suggested last week, Mr Viedman is now seen increasingly as Angela Merkel’s Thomas à Becket, having been one of her most loyal supporters. This is a very serious matter, but the shadow Foreign Secretary simply does not see it. I asked him whether he agrees with Angela Merkel or with Mr Viedman because that is what is at the heart of this Bill.
The worst of it is that in fact it is not going to work anyway. Mrs Angela Merkel knows that Mr Viedman is right on economics, but she has her own agenda of political union as the centrepiece for the destiny of Germany, as she has repeatedly argued. It is not just Germany. Spain is rapidly following Greece over the euro cliff, with Italy not far behind, not to mention the continuing problems in Portugal, Ireland, Cyprus and a stack of other countries. It is even now becoming a problem in respect of the individual provinces in Spain—Catalonia, Valencia, Murcia and other regions are lining up while Spain dives into a double-dip recession. There simply is not the money to pay for the catastrophe that the European economic system has created.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): Does the hon. Gentleman not think it odd that we should lecture the eurozone about double-dip recessions when we are in one ourselves, created by the Government whom he purports to support?
Mr Cash: That is a very nice little intervention, because the reason we are in a double-dip recession—in so far as we are—is, first, the massive deficit that the hon. Gentleman’s Government left us with. Secondly, for reasons that I will explain, it is because of the massive deficit—as I said to both the Foreign Secretary and the shadow Foreign Secretary—that the European Union has with us. We are in such incredible deficit with the other 26 member states that it will be impossible for us to gain out of the 50% of our trade with them the growth that is needed to enable us to come out of recession and grow our economy.
I was disappointed, to say the least, that the problems with the eurozone were not even touched on in the exchanges between the Chancellor of the Exchequer and Andrew Marr yesterday, when everybody knows that the failure of the UK economy is partly because of the deficit we inherited, but also because we cannot grow with a bankrupt European Union, with the exception of Germany. Indeed, half of our deficit with the other 26 member states is our deficit with Germany alone. So we have to be conscious that this is a real problem that needs to be resolved, and this Bill will do almost nothing except damage our economy.
Greece is currently in the throes of an EU-IMF economic investigation. One can almost hear the words of endorsement from the EU and the IMF before they have reported. I will be very surprised if they do not try to find some way to muddle through. As with the Bill and, I am afraid to say, the Government’s policy on Europe, real EU reform is off the agenda, as is a referendum.
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Martin Horwood: I beg your pardon, Mr Deputy Speaker. I will try to do better.
The hon. Gentleman is free with his criticism of the IMF and the EU and everyone else, but may I ask him a basic economic question? If not this, what? Does he advocate the chaotic disintegration of the eurozone? Does he ask the Germans not to seek guarantees for the finance they are providing for other European economies? Does he suggest that there should be no legal framework behind the necessary steps to tackle structural deficits in the eurozone countries? I can think of nothing that would more surely damn the whole European economy, including ours, than a chaotic disintegration of the eurozone.
Mr Cash: Again, I am grateful for the intervention because back in the 1990s during the passage of the Maastricht treaty—and I say this without any sense of self-satisfaction—I predicted that this is where we would end up. Massively high unemployment, riots in the streets, the rise of the far right and the implosion of the European economic system were all predicted in the Maastricht treaty debates. It is there in black and white. It is no good now saying that because those of us who took that position and made those predictions then were right that, somehow or other, we should say,
“Well, that is just the past. Let us not worry about the present.”
We are looking towards the future and we need to have an association of nation states based on the principle of consent by the voters, who have already expressed their views in repeated opinion polls and are denied referendums.
Mr James Clappison (Hertsmere) (Con): Does my hon. Friend recall that almost exactly the same lines of argument and descriptions were applied back in 1990 to the same prophecies about the UK exit from the exchange rate mechanism?
Mr Cash: My hon. Friend is right. Those of us who argued that we should come out of the ERM were laughed at. But on that famous date, 15 September—
Kelvin Hopkins: Golden Wednesday.
Mr Cash: Indeed, although it is known by others as Black Wednesday. However it is described, it saved our economy then.
To come back to the unemployment that has been inflicted by treaties that are not meant to be changed—the single currency is regarded as irrevocable—the youth unemployment level in Spain has moved beyond 52%, as it has in Greece. Other countries are moving in the same direction and the quack remedy contained in these bail-out provisions does not have enough snake oil in the bottle to make it even half realistic.
There are those, such as the coalition Government, who claim that under the arcane procedures of section 4(4) of the European Union Act 2011, we should vote for this arrangement because it will solve the euro crisis and—miracle of miracles—will not affect us. That is but a harrowing indication of the pain of hopelessness in the face of proven experience. There have been at least 20 economic summits in the past 24 months and not one has come up with a rational solution. All they ever do is promise more and more money that they do not have, with the implicit assumption that if they do not have it they will print it, and break the rule of law—the law laid down through the European Union that we implement under the European Communities Act 1972. Although we are not members of the eurozone, it certainly affects us, and it certainly affects the other European countries.
The explanatory memorandum to the 2011 Act, which I and many other colleagues here voted against, put down amendments to and did everything in our power to prevent from passing, because it simply was not going to work, stated that
“an Article 48(6) decision does not apply to the UK merely”—
I repeat “merely”—
“because it may have consequences for individuals or organisations within the UK, such as UK businesses.”
Believe it or not, that is given as a reason why a referendum is not required—because it would “merely” have an effect on UK businesses. That is on the astonishing grounds that although it has consequences for the daily lives of our voters and their small and medium-sized businesses, it is a mere detail that under the 2011 Act the Government can swat away with reference to “the opinion of the Foreign Secretary”. And that opinion cannot be properly challenged. Anyone who knows anything about administrative law knows that where an Act of Parliament states, “In the opinion of”, it effectively bars challenge in judicial review. I would be extremely surprised, therefore, if it was possible to set up a judicial review—I noted that the Foreign Secretary said that none had been forthcoming. People might well assume that because those words are in the Bill—it has not been enacted yet—there is no point in seeking to upset it because it will only have effect when it becomes an Act of Parliament.
The legislation goes further. Clause 1(3) explicitly states that the decision taken by the European Council on 25 March 2011 does not warrant a referendum, on the spurious grounds that it is the view of the Foreign Secretary, whose opinion once given cannot be effectively challenged, irrespective of the consequences for voters and UK businesses. I certainly concede that we are not part of the eurozone or directly contributing to the bail-out, but what is happening is having a devastating impact on our growth.
As I said in reply to an intervention a few moments ago and as I clearly demonstrated in an article I wrote for The Daily Telegraph on 14 August, I simply do not subscribe to the view that changes in planning law and ever-more Keynesian attempts to boost public spending will do anything if we do not sought out the problems with the single market. We are trading a monumental deficit with the EU, and it is doing immense damage to our economy. Trading with the EU is now like trading with a bankrupt company. The Bill will allow the drug of continual bail-outs, so heavily criticised by the President of the Bundesbank, with the involvement of the ECB, to drag Europe into an ever-deeper maelstrom. To then pretend that it does not affect us, when 50% of our trade is with the EU, is economic and political nonsense on stilts, which is why I voted against the proposals in 2011. Since then the situation has got worse and worse.
Jacob Rees-Mogg (North East Somerset) (Con): I am grateful to my hon. Friend, with whom I nearly always agree, for giving way. However, if Europe is determined to follow an economic policy for the eurozone that is completely idiotic, there is no referendum in this country that could stop it. So I do not see what a referendum on this subject would do.
Mr Cash: I am merely arguing that, given the consequences of the mistakes being made and the damage they are causing to our economy, in the light of the 50% trading, we need to renegotiate the economic governance of Europe. The consequences of our not doing so would take us into the same kind of deep black hole that it is already in. I did not say, at this juncture of my speech, that I thought that a referendum on this issue would necessarily produce all the answers to that question. I am committed to the idea of a referendum on more general terms—with respect to the EU as a whole—but I take my hon. Friend’s point on that particular issue. I insist, however, that the European project needs to be renegotiated into an association of nation states, not unlike the European Free Trade Association in the EU, based on the principle of consent. That issue should be the subject of a referendum on the broader landscape of the direction in which the EU is taking us.
The explanatory notes to the Bill state that the exemption condition is met if the Bill, as enacted, states that the decision is not within section 4 of the 2011 Act. In other words, under the Bill, everything is fine, whatever the consequences, if Parliament is foolish enough to state in the Bill that what is patently absurd can possibly benefit the voters of the UK. I have pressed the Foreign Secretary, the Prime Minister and the Minister for Europe for about 18 months on the proposals in the Bill. It is impossible for me to understand why a referendum on the broader landscape of the EU is not provided for, and I cannot understand why the Prime Minister continually reaffirms his commitment to this failing, unreformed EU project. I know that many other Members agree with me.
By the same token, as the UK appeases the EU and Germany, so Germany pushes up the ante of a radical vision of deep fiscal and political union for the EU as a whole, while the ESM evolves into a full European monetary fund. That is why I argued in my article that we must refocus our trading relationship. The shadow Foreign Secretary referred to the single market as the answer to our questions, although I admit that he qualified that by saying that other things needed to be done, but, among those things, as I said in a pamphlet I wrote last year called, “It’s the EU, Stupid”, we have to refocus our trading relationship with the rest of the world, given the massive deficit that exists between us and the member states, half of which is with Germany itself. We have real options for trading with the Commonwealth and the Americas. Indeed, last year alone we ran a surplus of £36 billion with the Americas, yet the Bill re-endorses the nonsensical view of Europe adopted by the Euro-elite, and our acquiescence in the Bill is part of our failure.
Only recently, 41% of German voters indicated to YouGov that they wanted to return to the deutschmark, and similar indications are growing in other countries, but with them are also growing dangerous moves towards the far right, which I constantly warned would be the consequence of breaking the rule of law in Europe and of creating the kind of situation we now face. Europe is in the throes of a massive schizophrenia, and at stake is not only the stability of democracy in Europe but of the stability of our democracy. In Germany and Ireland, the ESM is being taken to the courts—to the German constitutional court at Karlsruhe and to the European Court of Justice in respect of Ireland. I have to say, however, that past references of this kind give us little confidence that the legal route will solve the problem.
The rule of law, on which this whole edifice is based, is constantly being broken, not only on the article 122-EFSM basis but in respect of the stability and growth pact, which was broken by Germany and France in 2003. This is a challenge not only to the interests of the UK and other member states but to the rule of law in Europe as a whole. I most strongly urge the Government not to proceed with this Bill, and as it proceeds I will strongly urge all Members of Parliament to vote against it.
The treaty should have been vetoed, just as the Prime Minister rightly vetoed the fiscal compact. The figure of €500 billion or so that is being proposed has simply been plucked out of the air. Most serious commentators believe that the current crisis in Spain, Italy, Greece and elsewhere would need at least €2 trillion, and probably much more, yet it is simply not there. Given the evidence of the continually evolving euro crisis in those countries, €500 billion-plus—some suggest that the figure could be €700 billion—is peanuts compared with the billions that are wasted and is inadequate to deal with the problem that this failed European economic governance has created. It is about time that we put our foot down in this Parliament, because the issue affects those whom we represent in their daily lives and we increasingly gain so little from our deficit with the single market. In pursuit of their failed ideology, the euro integrationists call for more and more Europe, however much the problem lurches from one disaster to another. That is not remorseless logic; it is a remorseless path to disaster.
It is said that under the European Union Act 2011 a referendum is not required unless it involves a new power or competence affecting the UK. What does it take to hold a referendum when a Bill actively encourages the European Union to implode, with dreadful consequences not only for Europe, but for the United Kingdom?
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George Eustice: I would simply say to my hon. Friend that Britain is not bound by the ESM; it is very clear that only eurozone member states will be affected. Is it proportionate for us to stand in the way of those countries that are wrestling with and trying to decide what is going to happen with the euro? Is it proportionate for us to block that particular tweak to that treaty? I just do not feel that it is. I agree with him in that I want renegotiation and I want it, at some future point, to be put to a referendum. However, we need to pick our battles and pick our moments, and I think it is wrong to nit-pick over what I would regard as a small change.
Mr Cash: My hon. Friend was kind enough to say that he agreed with my general analysis of the problems that have led, through the treaties, to the difficulties that the European Union as a whole now represents. That explains why giving more money to this particular fund and doing it in this manner is likely to exacerbate the deep black hole that has already been created. That is why it affects us; it is because we trade so much with the European Union.
George Eustice: My hon. Friend makes a point that I was going to deal with. I simply return to what my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) said, as I do not think that by blocking this Bill we are going to stop the ESM. Other countries will continue, because they have decided that they need to do so to try to save the euro.
We also need to give the Government and the Prime Minister credit when they achieve things and make progress. My hon. Friend the Member for Stone and I would like to see faster progress made and a renegotiation sooner rather than later, but we should give the Government credit where they safeguard British interests and improve on the situation we inherited. We should not blame our own Government for the mistakes the previous Labour Government made. They engaged in sloppy negotiation, and, as a result, we ended up with the former arrangements in the EFSM. The situation has now been improved with the ESM and we should support that.
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George Eustice: I would hope that my hon. Friend would agree that it was right to use the veto. We need a bit of a culture change in the Foreign Office, as has been alluded to. Historically, there has been too much of a sense that we need to have a seat at the table at all costs. That has been a mistake, it has been the wrong approach and using the veto in that instance was right. I return to what I said about a veto not being proportionate in this case. As I said, my conclusion is probably and, given the subject, extraordinarily, closer to that of the hon. Member for Cheltenham (Martin Horwood)—this is a step forward from the position that we inherited from Labour and we should recognise that.
It is encouraging that the European Union Act 2011 has had an effect for the first time, as the proposal we are dealing with requires an Act of Parliament. My hon. Friend the Member for Stone made some comments about that legislation, but again we need to give credit where credit is due. It is a major step forward, as it puts the UK on a similar footing to countries such as Ireland and Denmark, in that it will trigger a referendum automatically where there are any transfers of power. None of the Maastricht, Nice and Amsterdam treaties would have been able to go through without triggering a referendum. Perhaps Conservative Members are sometimes guilty of underestimating the significance of that, because it is a major step forward and likely to force what my hon. Friend and I want, which is, at some point, a proper renegotiation of Britain’s relationship with Europe and a new settlement. I say that for the simple reason that other countries are pulling in a direction that we will not follow and the British public’s chance for the first time to say, “We will not follow” will force a new settlement and the sorts of negotiations that we want but that have eluded us for far too long.
Mr Cash: I might have agreed with my hon. Friend that the general sense of direction would lead to the conclusions he has drawn, but is he not conscious of the fact that Angela Merkel is now proposing a new union treaty—full political union and all the panoply that goes with that—which is likely to come forward in December?
(…)
Mr Cash: If I may make just a short observation about my right hon. Friend’s remarks, it is, fundamentally, that in my judgment Germany is very concerned about government by rule, whereas we in the United Kingdom are much more concerned about government by consent. The fundamental problem is one of democracy, as illustrated by the fact that about 99% of the Bundestag agreed to all the arrangements, yet we know from opinion polls what percentage of the German people take a different view. It is that dichotomy which causes concern, and there are other factors in relation to Angela Merkel’s agenda.
Mr Lidington: I do not want to get drawn into a detailed debate about a comparative political analysis between the British and German approaches. Let me say briefly to my hon. Friend, first, that when Germany looks at her history, she has good reasons for looking to firm rules and strong institutions, such as the constitutional court. Secondly, it is not completely unknown for the House of Commons to vote by a large majority in favour of something that every opinion poll tells it the majority of the British public opposes, so I do not think we should get too hung up on there being some vast difference in democratic interpretation between the two nations.
(…)
Mr Cash: I appreciate that my right hon. Friend is in a labyrinth and that it will take more than the minotaur to get him out of it. The problem is that, as the Bill’s explanatory notes clearly state, the exemption condition, which is what we are talking about,
“is met if the Act”—
the Bill, as enacted—
“providing for the approval of the decision states that the decision does not fall within section 4 of the Act.”
The bottom line is that the Government’s ultimate defence that they have got the process right is that under the Act the very decision that is taken is endorsed by Parliament when it passes the Bill; it is not about whether or not the provisions have been complied with. Clause 1(3) states that the
“decision does not fall within section 4 of the European Union Act 2011”.
In other words, we are being told, “Do not argue with me Back Benchers, because in this Act, when it goes through, that is final.” That is the bottom line of this provision.
Mr Lidington: That part of the Bill is included because it is a requirement of the 2011 Act that we bring this to Parliament to ask it to ratify formally the Government’s judgment as to whether or not a referendum is required. However, that judgment by the Government—that opinion embodied in the statement by my right hon. Friend the Foreign Secretary—followed a very careful analysis of the treaty amendment in the light of the provisions of the 2011 Act.
Obviously I regret bitterly that I have clearly been unsuccessful in playing the role of Ariadne to guide my hon. Friend out of a labyrinth, but I somewhat suspect that he is not that keen to extract himself from it. The one thing he has not challenged me on is whether the treaty amendment contains any of the transfers of power or competence to the European Union from the United Kingdom specified in sections 4(1)
to 4(3) of the 2011 Act. I am sure that we will have the delightful opportunity of pursuing those points further in Committee.
(…)
Question put and agreed to .
Bill accordingly read a Second time .
