Euro

Part of the debate – in the House of Lords at 12:02 pm on 23rd June 2005.

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Photo of Lord Biffen Lord Biffen Conservative 12:02 pm, 23rd June 2005

My Lords, this debate is the third this week on Europe, and there is a seamless thread that connects them all. It is greatly to our advantage that we are discussing Europe to the extent that we have devoted ourselves to doing this week, and in a spirit which on the whole has reflected well on this House. It certainly contrasts with the nature of the discussions that took place on the Continent. It seemed to me that the Council meetings on the budget were a classic example of open disagreement openly arrived at, with on the whole a fair degree of ill will all round. I cannot say that that disposes me to believe that these supranational organisations are necessarily the best ways in which to promote fraternity among the nations of Europe. But doubtless we shall see how all these matters proceed.

I was particularly impressed—I say deferentially—by the remarks made the other day by my noble friend Lord Lawson of Blaby. His tour d'horizon of the European situation was masterly and highly realistic. If I had to take a quote for my mini-sermon today, it would be his remark that,

"the pause needs to be prolonged and the reflection profound".—[Hansard, 21/6/05; col. 1550.]

It is one of the most difficult things for a politician to do nothing—to engage in masterly lethargy—yet in some ways that is a tempting prospect for the Prime Minister. But doubtless he feels under an imperative to use his term as president to bring to the European scene panache, vigour, intellectual conviction and all the other terrifying components of public life. It is almost as if he had been attending evening classes at the Chicago school of economics, because he has come with a programme which is really quite daunting in what it purports to do with regard to European public spending and spending on the common agricultural policy—in terms not merely of single payments but in what we spend on the environmental activities of agriculture and animal welfare.

All that, ironically, has happened on the very day that the Commission produced its proposals for sugar, which is supposed to be part of the enhancing relationship between us and the third world, only to have it condemned by Oxfam as being unfair to the Caribbean and African sugar producers. But I leave that as part of the footnotes about which we will argue in the coming time.

However, I wish my Prime Minister every success—I do not like seeing him being savaged by the wrath of Luxembourg. This country deserves to be treated with proper respect and regard. But a period of inactivity would be just as well as a period of activity that could be seen only as us presenting our market view of Europe against the social programme of the French. I take no part in adjudicating which is the superior; all I say is that each country can make its own judgment, having regard to its own national character and heritage. When I hear the noble Lord, Lord Harrison, refer generously to Adam Smith, I realise that there is a bond that unites us that is quite independent of our own politics.

The period of presidency is limited to six months, and—perhaps understandably—the Prime Minister comes to it with the excitement almost of a born-again John Kennedy, and his 100 days of vigorous action. I hope that we survive it without too much damage, and that perhaps he will be able to secure certain reforms and directions. But the reform that I would most welcome is to concentrate on how we could disaggregate the European partnership so that more and more it related to national decisions, reacting to national circumstances and national inheritance, and less and less trying to put on us a continental imprint.

I do not regard that opinion as in any sense reactionary—or, dare I use the word, Euro-sceptic, which is now treated like an outbreak of smallpox. As was argued on Tuesday—not by noble Lords from a Euro-sceptic viewpoint, but from the point of view of Members of this House who have established great European reputations—it is a matter of taking the Lisbon agenda as being more appropriate for the national decision processes, rather than being elevated into an aspect of European policy.

I turn to the very item of today's discussions. I must say how much I appreciate the fact that the Liberal Party has chosen this as a topic, as it rounds off our Euro week. I am very sorry that the noble Lord, Lord Dykes, could not be here to deliver his speech, because I believe that I could truthfully say that of all the Members sitting on the Liberal Benches, he is the one most committed to the concept of a European currency, with all the rigours and fixed rates that that implies. But I welcomed the scholarly analysis made by the noble Lord, Lord Roper.

I shall make three fairly simple points about the currency arrangements and the euro, not from the point of view of someone drawing on economic prejudices but from that of a street politician. The first point is that the euro-zone has very considerable difficulties; I do not believe that one is being unduly partisan to observe that. Those difficulties are represented by the way in which the stabilisation pact must be redrawn and is argued about and disregarded. I am reminded powerfully of an article written not that long ago by the noble Lord, Lord Rees-Mogg, in which he said that, at the end of the day, whatever may be the formal banking constraints, domestic politics will triumph—and domestic politics is showing a pretty good sense of durability.

Whatever will be the success of the euro-zone at the end of the day will depend upon the success of the national governments who comprise the euro-zone in conducting their public spending, borrowing, taxation and the like in a way that is responsible and that is consistent with what are the assumed objectives of policy, and upon their not retreating into rhetoric as an alternative to action. I say that in no sense of hostility to the euro-zone. However, I am puzzled by the whole formula of the stabilisation pact, particularly when my noble and learned friend Lord Howe said in Tuesday's debate:

"Nor . . . is the Stability and Growth Pact an agenda for the Union, because it simply spells out the implications of economic sanity, which the markets will in the end enforce come what may".—[Hansard, 21/6/05; col. 1559.]

I must say if that were a really compelling analysis of the situation—I find it rather elliptical—I wonder what the governments in all these countries are doing if it is all going to happen anyway and they have only to sit on their hands, or perhaps because of their inability to sit on their hands these difficulties are now arising. All I can say is that I have no hostility to the euro-zone.

However, that takes me to my second point which is that I have no desire to see this country within the euro-zone. We have now had a period of experience. Like Abbé Sieyès, we may say at the end of it, "J'ai vecu". We have survived. Here we are. We have our sterling. We are running our own policy, which is controversial. I happen to think that there is an overemphasis on government borrowing, certainly when it is coupled with high levels of private borrowing. None the less we have a formula that has enabled the establishment of a relationship between the Bank of England and the politician. I believe that is enviable. We have been immensely well served by the noble Lord, Lord George, and, currently, by Mervyn King. I admire the way in which the Chancellor has been able to use the relationship in a way that stands us in good stead. I am not sure whether that will always be the case. It will possibly be undermined by unwise political decisions. That is for the future. Here and now I see absolutely no reason to surrender an institution which, so far as I can see, affects beneficially the conduct of policy. When I hear talk of linking together all these things to promote the establishment of a master European currency, which by its very existence will bring about greater prosperity, I believe that we have lost the powers of analysis to the powers of an almost religious assertion.

That brings me to my final point; that is, the vogue for having a single currency is closely related to the idea that a European Union must have a single market. It may have an aspiration to a single market but the pursuit of a single market is leading us into an immense web of bureaucracy, complexity and disillusion. The very aspiration is so gargantuan that it should cause us to check and to reflect on whether that is proceeding in the right direction, and above all, proceeding in the right direction when we are looking forward to the day when Turkey and the Ukraine will be in the wider Europe. All this leads me to think that what we need is a recrudescence of—I recall this cheerfully—the days when Harold Wilson as a domestic trade Minister said that he wanted a bonfire of controls. What we need is to look at the acquis. The acquis is so immense that War and Peace looks like a pocket dictionary compared with it.

There is an overwhelming desire to go back to first principles and to say that we accept movement and flexibility as regards currency but because we disavow the desire to have one single fixed currency we are relieved of some of the more absurd ambitions of the single market. Unless and until we do that, we shall always be struggling in the difficulty in which there is an appalling gap between private instinct and views and public policy. That gap can exist perhaps for decades but sooner or later it will all end in tears.