6.44 pm

EU: UK Membership — Motion to Take Note – in the House of Lords at 6:39 pm on 25th November 2014.

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Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords) 6:39 pm, 25th November 2014

My Lords, during the short break last week, I read a book by a Swedish journalist named Göran Rosenberg. The book, A Brief Stop on the Road from Auschwitz, described a journey that he had recently made, following in his father’s footsteps from the ghetto in Lodz, Poland to Auschwitz, to a slave labour camp in Germany, to a Red Cross resettlement camp and ending up in a small town in Sweden. At the same time as I was reading this book, there were events going on to mark the centenary of the outbreak of the First World War, which reminded us of all those horrors, as the noble Baroness, Lady Ludford, told us. At the same time, there were some mean-minded nationalistic politics going on, both here and in Europe. All that reminded me why I have been a committed supporter of our membership of the European Union since its birth. It is a means of ensuring a civilised, decent life for our children and grandchildren instead of the poisonous and divisive Europe that our parents and grandparents knew. This view may have gone out of fashion, but it will be back, just as extreme politics comes back.

In my case for Europe, therefore, I make no apologies for putting the human and political arguments first and the economic arguments second. Economics is a means to an end, not an end in itself, as the right reverend Prelate the Bishop of Coventry put it. Looked at from this perspective, the EU is a good deal. The figures from the noble Lord, Lord Stoddart, are misleading. It costs us about 1% of our annual spend of taxpayers’ money. For this we get access to a huge single market and all the benefits of inward investment and trade that it brings, as other noble Lords have explained. It helps us to compete in today’s global economic environment where you must have allies. This is a world in which you cannot go it alone unless you have a portfolio of successful companies creating goods and services that are competitive with the best in the world and that are welcomed and not discriminated against.

This logic is so powerful that its detractors, particularly in the press and in the blogosphere, resort to misstatements. They are cheerfully pedalled again and again, sometimes even with a glass of beer in their spokesmen’s hands. Eventually, these misstatements develop a life of their own, with claims such as loss of sovereignty because 75% of our laws are made in Brussels. The House of Commons Library tells us that the true figure is 25%. There has also been the claim that EU membership stands in the way of our trade with the Commonwealth and Asia. I say to the noble Lord, Lord Empey, that it does not.

Another claim is that the cost is high, but 1% of our government spend is marginal. Another is that we are being overrun by immigrants from new members of the EU. My noble friend Lord Liddle replied to that. In reality, we should be protecting the integrity of our benefits, healthcare and education systems rather than blaming the immigrants from the EU who help service them.

Playing games with our EU membership has dangerous consequences. As multilateral institutions like the World Trade Organization weaken, and as the nature of trade changes, as the noble Lord, Lord Howell, explained, it becomes even more critical for a country like ours to be aligned economically with the EU rather than going it alone in a globalised world. More important, however, is the risk of losing the civilising influence of co-operation, the risk of taking us back to inflicting the terrible journeys and experiences that European nationalism inflicted on our parents and grandparents.

Photo of Lord Maclennan of Rogart Lord Maclennan of Rogart Liberal Democrat 6:49 pm, 25th November 2014

My Lords, we must all be grateful to the noble Lord, Lord Liddle, for initiating this debate. It is an opportunity to state the positive about the European Union, which most of the media have resigned from doing. They have largely focused on splits, rows and, sometimes, failures to achieve objectives. I feel that the European Union is essential to the prosperity and peace of the continent. In my earliest memories, during the bombing of Glasgow in 1941, my grandmother was blown from one end of the kitchen to another, so it is a great achievement to have the almost 70 years of peace that we have had in the European Union. We have also seen democracy growing in the additions to the early Union in eastern Europe. Poland is growing in strength and democracy. It is interesting that its former Prime Minister Tusk is now seen as a leader of the European Union.

Our trade with Europe constitutes some 48% of what we export. That seems an enormously powerful stimulator of manufacturing and organising for a wide population of 510 million. We heard from other noble Lords about the influence that we can exert over the decision-making in the rest of the world—and of course in Europe itself. We in this country have about 1% of the world’s population and about 3% of its GDP. How would we seek to hold the ears of other Governments if we did not operate as a collective unified voice? China and the United States would regard us as trivial. I do not agree with the noble Lord, Lord Stoddart, that we can pretend in this day and age that we are still an imperial power.

A great deal has been said about immigration in recent months and weeks. The fact is that 2.2 million people from this country live in the European Union. If we were to expel the 2.3 million immigrants who live here, or make it more difficult for them, we could see barriers erected against our own citizens who have chosen to live, work and retire abroad. Some 79% of the citizens of Europe who come here are in employment, according to the Eurostat figures. The average age of those people is 34. Some 32% of them have university degrees. They come here with skills. They are not sucking away public money; they contribute tax. That is a huge benefit.

I do not believe that the European Union is incapable of improvement. I would like to see the European capital markets union grow so that the City of London could become a centre for the whole of the European

Union’s finances; I would like to see greater liberalisation of services adding to the GDP of this country; and I would like to see the negotiations going on with China and the United States bring greater benefits through equally prosperous integration.

Photo of Lord Birt Lord Birt Crossbench 6:55 pm, 25th November 2014

My Lords, the case for the UK remaining in the EU has rarely been better made than by the Prime Minister in his landmark speech of just two years ago, which I reread over the weekend—though the powerful and compelling introduction to this debate by the noble Lord, Lord Liddle, was a close contender. At the conclusion of his speech, the Prime Minister observed:

“You will not always get what you want. But that does not mean we should leave … Britain’s national interest is best served in a flexible, adaptable and open European Union”.

I do not seriously doubt that the Prime Minister continues to believe that. A former Prime Minister, the sagacious Sir John Major, concurred with that when he spoke in Berlin earlier this month. He said:

“I have not a shred of doubt that the UK is far better off inside the EU as an active member”.

Now, the single currency was misconceived. The eurozone is stagnating. Subsidiarity was agreed at Maastricht but not wholly enacted—there is no good reason why the working hours of British doctors should be set in Brussels. The single market is incomplete. Some sectors remain closed to British service providers. While freedom of movement is in every way in our interest, it must be manageable. Unique in Europe, a 7% growth in the UK’s population in a single decade places an enormous strain on our public services. These are all legitimate matters for any British Government to pursue, and to do so alongside our natural allies in Europe—of which there are many. We have strong, principled arguments and we are very likely one day to win them. However, I do not agree that we should negotiate with the EU under the shadow of an axe. As Herman Van Rompuy colourfully put it,

“How do you convince a room full of people, when you keep your hand on the door handle?”.

Our country is in an ill temper. That is no surprise: we have experienced the worst ever global economic crisis. Real wages in the UK fell 8% in the five years from 2008. We have all seen how polarising the Scottish referendum was. In a referendum on Europe, we risk a bad-tempered, irreversible decision, scapegoating Europe ludicrously for all our ills. In the process, we further risk being distracted from the critical but hard and thankless task of reducing our enormous deficit and our still accumulating burden of debt. The UK is at heart an internationalist not a nationalist nation—a key and enthusiastic participant in the UN, NATO and the EU, pressing for peace, promoting prosperity, and at the forefront of fighting Ebola, poverty and climate change. We must press for economically liberal and progressive reform in Europe, but it is preposterous to think that we would be better off as a nation outside Europe, standing alone.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour 7:00 pm, 25th November 2014

My Lords, I begin with the interesting contribution made by my noble friend Lord Robertson of Port Ellen. Taking the analogy of what we have been watching north of the border, I think that there is a scenario where our leaving the EU would rather strengthen the likelihood that Scotland would be in the EU as an independent country and we would no longer be Great Britain. I do not know where UKIP would be if we no longer had Great Britain, but it would be Little England plus Wales. I do not even know how this would affect Northern Ireland. Certainly the notion that our leaving the EU would have no domestic consequences is a point that my noble friend has provoked in the debate.

There are one or two fallacies in the debate that are not helped by the prism of the Daily Mail,from which a lot of people get their information. We cannot do much about that—at least, there could be things to do about it, but they would not go down well with Thomas Paine or John Stuart Mill, given freedom of the press, although some people would describe that in different terms, as I think William Cobbett would do. The first fallacy is that our great companies are in Europe and—I say this to the noble Lord, Lord Howell of Guildford—it is our great companies in Europe that are exporting to the rest of the world. This dichotomy or antithesis between selling to Europe and selling to the rest of the world is ridiculous.

On Monday of this week, I was part of meeting with senior representatives at Congress House on European works councils. All the great companies of Europe have European works councils. They look at world market share and try to get some minimum standards agreed between them. The idea that Europe is not interested in exporting to Latin America or Africa is a ludicrous fallacy. It is food for thought for those people who are not in day-to-day contact with how industry actually works—they used to be the Conservative Party. I know that the City of London may have its own reasons for making these fallacies the standard belief, but we ought to be clear about the facts.

The second fallacy at the present time is that we are the most successful economy in Europe and therefore we do not need Europe. We have a bigger growth rate at the moment because we dug the biggest hole. I have the latest GDP figures—the actual level of production and output—for the last complete year. Europe equals 100, Britain is 106, Sweden is 127, the Netherlands are 127, Germany is 124 and Denmark is 125. That is the measure of success of an economy, not some propaganda put from Downing Street to the Daily Mail.

The evolution of Labour Party policy was touched on by the Liberal Democrat Peer, the noble Lord, Lord Rodgers, and by the noble Baroness, Lady Smith of Newnham—I, too, congratulate her on her maiden speech. It is true that Jim Callaghan said what he said in the earlier period, but I remember an afternoon with Helmut Kohl, Jack Jones and Alan Bullock in Bonn in 1976 when we were on the Bullock committee. Jim Callaghan was clearly seeing the opening for the Labour Party to change its policy, which came to fruition in 1988. The reason why it came to fruition—apropos the weekend’s press, as if the concept of the working class had just been invented by somebody—was that, because Europe was increasing workers’ rights, we got the Labour Party overwhelmingly to change and to become pro-Europe. No historian is going to challenge that. I will have to stop there.

Photo of Lord Inglewood Lord Inglewood Chair, Extradition Law Committee 7:05 pm, 25th November 2014

My Lords, I preface my remarks with the fact that I have recently become an unpaid director of Full Fact, which is a fact-checking organisation. I do not think that it is a declaration that I need to make, but I would rather do so because it bears on some of the things that I am going to say.

This afternoon, I would like to follow up some remarks that I made last week in the debate about whether this country should opt back in to the European arrest warrant, in which I was principally speaking as chairman of the Select Committee on Extradition Law. It seems to me that the political controversy around the warrant is a microcosm of the debate that would surround any possible referendum on EU membership, although I think that the recent suggestion that we might go down the route offered by Article 50 of the Treaty on the Functioning of the European Union is foolish, since it appears to give a veto to the EU over whether we would be to remain in it.

The interesting findings of the committee’s special report on extradition law were in paragraph 19, which says:

“Alternatives to the EAW were discussed but the Committee notes that there are credible and substantive legal and political questions about their viability. It may be that these questions could be satisfactorily answered but so far it is unclear whether the proposed alternatives are legally, let alone politically, achievable”.

This is an extremely complicated and esoteric topic and a long way from most people’s ordinary lives. Certainly anyone to whom I talked about it over the weekend—outside the House, away from London, away from Westminster—seems to have been entirely bemused. The arguments on each side hardly seem to touch each other and the proposals as far as they were concerned might have been made in different languages. The smell of snake oil hung in the air.

Whether my own private view—and I supported the Government on this—is correct does not really matter or gainsay my point, because I may be wrong, as my immediate family frequently tell me I am. The underlying reality is, as we all know, that everyone, whatever side of the debate they are on about the future of European Union membership, thinks that it is a very important matter for the country. As I said in the debate on the European referendum Bill earlier this year or last year, I have been concerned for some time that the public must be able to handle the goods before they buy. It seems to me that there is an overriding need in this debate for misleading advertising puff to be identified for what it is. Almost certainly we shall see that it is to be found on both sides of the argument.

The character of the debate around whether to opt back in to the European arrest warrant clearly left the wider public little, if at all, the wiser since, as I said, the protagonists might as well have been speaking different languages, both of which were quite different from ordinary English. This is a recipe for snake-oil salesmen on whatever side of the argument. The rules of consumer protection in this country put the vendor of physical snake oil into the courts. Are the Government concerned about political snake oil and what do they propose to do to protect the electorate from it? After all, if you take and drink real snake oil, it certainly does not do what is on the bottle and it may do you positive harm.

Photo of Lord Lennie Lord Lennie Labour 7:08 pm, 25th November 2014

My Lords, I add my congratulations to the noble Lord, Lord Liddle, on bringing this debate to the House and on his passionate contribution and persuasive case for our remaining within Europe.

One of the most puzzling aspects of the British debate over the European Union is how often our arguments on this subject are disconnected from our major national challenges of economic growth, recovery and creating prosperity. We debate Europe’s responsibility for intrusive regulation, but not its creation of export potential. We decry Europe’s responsibility for migration to Britain, but take for granted its investment in Britain. In the so-called metric martyrs case that dominated my native north-east for years, we looked on in disbelief as “Europe” tried to force market traders to use kilograms, but we paid no mind at all to the infrastructure investment coming our way.

In the north-east, the live debate on European membership has real dangers. We are a region hungry for growth. We desire investment and we are keen to attract employers and to retain the ones that we have. What would it benefit us to turn away from our closest and biggest trading partners? We can see what being in Europe has achieved for the north-east over the past 30 years. In Nissan, we have a major exporter and employer whose success is based on access to European markets. Six thousand are directly employed, the same number again is employed in the automotive sector in Sunderland alone and many thousands more are employed across the region. What does Nissan have to say about the possibility of our leaving the EU? The chief executive says that it would,

“reconsider our strategy and our investments for the future”.

Across the region, exports are crucial to the north-east. The excellent review by my noble friend Lord Adonis on growing the north-east economy points out:

“The export of goods accounts for a larger proportion of GVA in the North East than any other UK region, some 29% of total GVA in 2010”.

The north-east is often the only region with a positive balance of trade. We have 1,500 exporting companies and half of that trade is with Europe. This focus on trade helps to explain why inward investment has created 5,000 jobs a year in the north-east. This is where the debate really needs to be.

I do not suggest that all investment in Britain would halt and all exports would cease if we detached ourselves from Europe, but if business investment looked a little riskier and if opportunities for export were reduced, that would have real consequences for jobs, families and the whole of the north-east region. The hard-won gains that we have made, helped by investment from NSK, Hitachi and our 1,500 exporters, would be put at risk. The growth that we need for the future and the 20% increase in foreign investment that the North East Local Enterprise Partnership is targeting would be that much harder to achieve.

In the north-east, we have been watching the debate carefully. For the past year, businesses and trade groups have quietly spoken of the risks of leaving a Union that supports trade, exports and investment. Those who believe in national independence over co-operative union have derided those warnings and said that they were fantasy or self-interested propaganda. They were no such thing and it would be unforgivable to ignore them now.

Photo of Lord Taverne Lord Taverne Liberal Democrat 7:12 pm, 25th November 2014

My Lords, I, too, congratulate my noble friend Lady Smith on her excellent maiden speech. She is clearly going to be a great asset to this House. I especially want to congratulate the noble Lord, Lord Liddle, on a magnificent speech. I hope that his think tank, Policy Network, will give it the widest possible circulation.

I, too, was going to quote the occasional warm words that the Prime Minister has issued, especially in his Bloomberg speech. I was going to quote the same words, but I will add one other quotation. He said:

“There is no doubt that we are more powerful in Washington, in Beijing, in Delhi because we are a powerful player in the European Union. That matters for British jobs and British security”.

He added that the status of an outsider, like Norway or Switzerland, was no alternative. He then set out the areas in which he said the Union needs reform: competitiveness; flexibility; greater subsidiarity; and democratic accountability through a greater role for national parliaments. Subsequently this agenda was adopted by the European Council, so what more could he ask for? But that is no longer enough.

I agree that if Mr Cameron should become Prime Minister again after May, the odds are getting stronger by the day that he will take Britain out of the European Union. His speeches have become more and more Eurosceptic. He has apparently licensed his Cabinet colleagues to indicate their preference for Brexit and he appointed a declared Europhobe as Foreign Secretary. Why has he changed course and what is his real policy? It is appeasement of UKIP and his Europhobe Back-Benchers. As the Financial Times observed in a recent editorial, he has placed the interests of his party and his own survival as Prime Minister before the interests of the country.

The central issue is now immigration, which was not even on the Bloomberg list. We do not yet know what he will say in the long-trailed, great speech, but the Prime Minister has recently talked of quotas, caps and emergency breaks. With his concentration on rhetoric rather than diplomacy, which Sir John Major wisely advised him to abandon, he boasts:

“I will not take no for an answer”.

Both the leaders of the Nordic countries at the Helsinki conference and Angela Merkel have made it clear that caps and quotas are non-starters, as they contradict a basic principle of the single market. However, encouraged by his speeches and his actions, what Europhobes now expect from renegotiation is a British opt-out from the treaty commitment to the free movement of labour. Anything less will be seen as only a cosmetic change.

What if Mr Cameron is Prime Minister again after May, perhaps as the head of a minority Government supported by a substantial UKIP presence, the DUP and perhaps an assortment of allies on particular issues? He has pledged to conclude renegotiations before the referendum in 2017. What if there is no deal by then? It is not inconceivable. There would have to be a deal not for Britain especially but for the EU as a whole and many other countries want different changes. It will be no quick and easy negotiation. The date does not help, as there will be federal elections in Germany and the presidential election in France. Would he still recommend a stay-in vote without a deal? His party would never let him and, if he tried, he would be replaced. Anyway, he has declared that to recommend a stay-in vote without a deal is out of the question. Suppose he gets a deal. What if his party rejects it as cosmetic? There would be a new Conservative leader and the Conservative Government would then passionately argue in the referendum for out. A 2017 referendum, with a public mood of widespread xenophobia and anti-immigration feeling, nurtured by a significant UKIP presence in Parliament and a stridently anti-European press, would be a very different campaign from that of 1975.

Consider what Brexit would mean for British influence in the world. It would break up the United Kingdom. Why should a pro-EU Scotland want to stay in a Britain that was no longer in the EU? Even if the United Kingdom survives, Britain’s voice would no longer count, as the Prime Minister has admitted, in the United States, the Commonwealth or China. If Mr Cameron becomes Prime Minister again, the course on which he has set would make him the Prime Minister who did more to destroy British influence in the world than any of his predecessors in history.

Photo of Lord Bowness Lord Bowness Conservative 7:17 pm, 25th November 2014

My Lords, I congratulate the noble Lord, Lord Liddle, on introducing this debate and making the case for our membership of the European Union. I hope that the Minister will feel able to endorse the need to make the case without qualification because, whatever we seek in renegotiation, it is important that our wish to remain a member is without qualification. This is particularly important as exit is now openly discussed as a possible, if not preferred, option, and some members of the Government seem openly to contemplate the possibility of campaigning for a no vote if in their view the negotiations are unsuccessful.

A former member of the Government has suggested that we invoke the provisions of Article 50, giving notice to leave at the commencement of negotiations. Will my noble friend confirm that this procedure would in fact be a decision to exit with or without a replacement agreement within a maximum of two years and without reference to the British people?

We welcomed the states of eastern and central Europe as members. We accepted their immigrants’ contribution to our economy, but now we refer to that as if it had all been a great mistake and one which we will not repeat. That is not a way to win allies in the European Union. We are ready to accept doctors and other professionals trained and educated at the expense of other poorer member states but would consider denying less skilled working men and women working benefits. Until the rules change for everyone, that would be discrimination against—if I may use the phrase—hard-working EU citizens.

Policies are not always popular with voters, and we have to give a lead. Foreign aid is a case in point. But my right honourable friend the Prime Minister has declared it to be his proudest achievement in office, and it has a budget coincidentally very similar to the net contribution of the UK to the EU. We have come a long way, since the Prime Minister rejected the idea of a referendum, to voluntarily donning a straitjacket and pledging an “in or out” vote by the end of 2017, despite the fact that it will be extremely difficult to complete negotiations—including, as has been mentioned tonight, an IGC involving treaty change—within the timescale. That will be particularly difficult since we have chosen to leave the European People’s Party, depriving us of friends with any influence.

What do we want that involves treaty change? Competiveness and less regulation do not require treaty change or an “in or out” vote. So what are we seeking? Some change to the status of Norway or Switzerland, which is effectively a decision to leave? Or changes to fundamentals such as the freedom of movement? I beg my noble friends on the Front Bench to realise that we have to stop playing to the prejudices of those whose only agenda is for Britain to leave the European Union. It has not been successful so far—it has taken us to Clacton and Rochester, and it may take us further down a road we do not want to go.

The European Union has been the most successful voluntary union that the world has seen, and the United Kingdom should be playing a leading role, whether for example in promoting energy security and alternative sources of energy or ensuring that the combined military resources of the member states are used to the greatest effect. However, I do not intend to take time arguing the economic case.

There is, however, another case—what I could perhaps describe as the moral case—and that is the desirability and need for a strong united European Union including the United Kingdom. Some argue that the European Union founded to ensure peace in Europe is no longer relevant and that war between any of the 28 member states is unthinkable. But we are seeing the unthinkable very close to our borders. Nationalistic tendencies are to be found in a number of member states and, it is reported in today’s press, are funded perhaps by Russia. Peace and stability in the Balkans owes much to the prospect of membership, where it remains a spur for reform; and reform, stability and democracy on our borders are very much in our interest.

There are not likely to be many, if any, new accessions in the next five years but the negotiations must go on. There may be transitional arrangements, including free movement, but the basic principles must remain, and we must not kill the hopes and aspirations of those countries that seek membership. To have transitional provisions which are dependent on a country achieving comparable levels of GDP before migration is permitted is to deny people the opportunities others enjoy.

A UK exit would be a major blow, not for us only but for the European Union. However, we may be deluding ourselves if we believe that the 27 other member states will agree anything merely to retain our membership. Let us remember that we have been fortunate in recent times not to experience invasion, occupation or dictatorship. For those who have, the ideals of freedom of expression, movement, democracy and much more are the hallmarks of the EU and the institutions which guarantee it. It is time for us to have the humility to recognise this, to make our case for membership with our own British people and to work with our friends, not treating them as our opponents.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Liberal Democrat 7:23 pm, 25th November 2014

My Lords, in the light of what I am going to say, I should make clear that I am strongly in favour of our continued membership of the European Union. In the 1970 general election, the first one I fought, in Clacton, I was in favour of it. I was in favour of it in the referendum of 1975, I fought the first European elections in 1979 and I have always been strongly in favour of it. But the European project is in crisis. If we carry on as we are, we will find that the people of this country have ceased to support our continued membership, and that will not be confined to this country. The recent by-elections and the rise of UKIP here—and to some extent of the Scots Nats in Scotland—are very clear writing on the wall.

You may say, “What has that got to do with it?”. I spent a day in Clacton canvassing, partly for old times’ sake. I was shattered by the degree of hostility not so much to Europe or immigration but to the whole state of politics in this country. Millions upon millions of our fellow citizens feel that they are in some way outside the political tent. They feel virtually anonymous, civically speaking. They feel overlooked, ignored and anonymous. There is a terrible feeling outside London of the metro-centric nature of our modern society. Whether you are talking about this place, or the media, or big business, there is a feeling in the country—and it is evident in a hundred polls, and in a hundred perceptive pieces of research—that the ordinary person in the ordinary community is of no account, until someone wants something from them.

That is certainly the impression I got across the doorsteps of Clacton. I emphasise that it was not racist stuff. It was not anti-EU stuff, except occasionally. It was a sense of rejection, disaffection and disconnection. Unless we do something about this—and it is not easy to know quite what to do—and unless we attack this citizen ignorance and disaffection, I believe that the European project will become unsustainable. In a democracy, if the majority of those who are democrats cease to connect with a central tenet of their society and their democratic culture, then it is not sustainable.

I read the other day that the total membership of our political parties is under 1%. There are fewer members of all our political parties than there are members of the Royal Society for the Protection of Birds. In the Hansard Society’s most recent democratic audit, its single most powerful point was the sense of powerlessness on the part of our fellow country people. Of the 18 to 25 year-olds, in another recent poll—I think it might have been for the Hansard Society—only 23% felt fairly involved or connected with any political party. Under a quarter of 18 to 25 year-olds now vote. We have 3 million people who are not registered to vote. All in all, I believe that the health of our beloved country, and its democratic institutions, has not been as bad as this certainly in living memory but going back, I suspect, a long way.

I will add just one more point, which is something that we could and should do now, and that is citizenship education. Our society is inexorably complex. We know what complexity is in this place. Many of us cannot cope with the legislation we are supposed to deal with. Think of ordinary 16 and 17 year-olds. How are they supposed to relate to all of this? We do not help them. Citizenship education is collapsing, and so, too, Europe is perhaps the most ignored aspect of all. I hope we will take this issue and deal with it.

Photo of Lord Pearson of Rannoch Lord Pearson of Rannoch UKIP 7:28 pm, 25th November 2014

My Lords, those who favour our membership of the European Union tend to do so, as we have heard, because they believe it has brought peace to Europe, because it enhances our position in the world, and because it is good for trade and thus prosperity. Those of us who want to leave it do not believe any of that.

I start with peace. The EU can take no credit for peace in Europe, which was, of course, secured entirely by NATO. Furthermore, the EU is largely responsible for the present bloodshed in Ukraine. While the Prime Minister and other Europhiles were voicing their dream of the EU stretching from the Atlantic to the Urals, Russia made it plain that she could not tolerate Crimea passing under Brussels and eventually NATO. In the spirit of compromise in 2010, Mr Putin offered a free trade deal from Lisbon to Vladivostok but the EU responded by offering its own trade and association agreements to Georgia, Moldova, Armenia and Ukraine. The EU also spent €496 million funding some 200 front organisations, largely in Crimea and eastern Ukraine, to promote closer co-operation with Brussels. I accept that Russia’s annexation of Crimea was illegal under international law but Crimea has a largely Russian population and was given to Ukraine only in 1954 by Khrushchev. I ask the Minister this question. Was Russia’s annexation of Crimea that much more illegal than our own invasion of Iraq, which has had such catastrophic consequences? Does she think that Ukraine would be in its present tragic position if the EU had not tried to absorb it?

Another fallacy about our membership is that we depend on it for trade, and that millions of jobs would be at stake if we left, as we heard from the noble Lord, Lord Liddle, who threatened us with a 10% levy on our car industry. German, French and other EU manufacturers dominate car manufacturing. They, not politicians, will ensure that the UK-EU trade in cars in both directions continues to be tariff free after we leave the EU. The UK imports twice as many cars from the EU as it exports to it, with 1.4 million imported and 0.6 million exported. Of the total 1.7 million cars imported to the UK in 2011, 83%—1.4 million—were from the EU and EU manufacturers have a 53% share of the UK market. It just is not going to happen. If we leave the stifling, failed political project of the EU, we would continue to enjoy the free trade upon which some 9% of our jobs depend. We are the EU’s largest client, so it needs our free trade much more than we need its. As the world’s seventh largest economy, we could also have our own free trade agreements with the rest of the world—the Commonwealth, the Anglosphere and the markets of the future.

In this respect, I draw your Lordships’ attention to a groundbreaking new study published recently by Civitas, entitled Where’s The Insider Advantage?. This finds that we have not actually benefited from our membership of the single market at all, either for our exports or for inward investment. This new study reminds us of one published in 2006 by the French think tank, the Conseil d’Analyse Économique et Social, which reports to the French President and which came to the same conclusion for France—there was no advantage from the single market in exports or in inward investment. The French think tank’s solution was, of course, “more Europe” whereas ours is “no Europe”.

I come to my last question for the Minister. I have asked it before but have not so far received an answer. Why does this planet need the EU at all? I can understand that other international bodies have an ostensible purpose—the United Nations, NATO, the World Trade Organisation and so on—but what is the EU now for? It is pointless or damaging for peace. Its diplomacy is expensive and irrelevant. Its euro is a disaster. Its economy is stagnant and will get worse. And it interferes in every aspect of our lives. I can see the point for its 80,000 vastly overpaid bureaucrats but what is the point of it for the rest of us? Has it not just become an emperor without clothes? I look forward to the Minister’s elucidation.

Photo of Lord Howarth of Newport Lord Howarth of Newport Labour 7:33 pm, 25th November 2014

My Lords, the Prime Minister’s proposal to hold a referendum on Europe in 2017 has nothing to do with any foreseeable state of affairs in the European Union at that date and everything to do with the intractability of Europe in British politics. If the British people do vote on Europe in 2017, it is improbable that they will take their decision in a calmly reflective frame of mind. Europe is so emotive. For Europhiles, membership of the European Union is an article of faith; for Eurosceptics, membership of the European Union is a continuing source of irritation and not infrequently of anger. They resent the pooling of sovereignty and they resent being ruled, as they see it, from Brussels.

Unless the bread-and-butter case for Britain’s continuing membership of the European Union is clear and compelling, which it is not, as has been lucidly and rationally explained by Roger Bootle in his book, The Trouble With Europe, it is entirely possible that a majority of our compatriots would vote to come out. The establishment would, with the possible exception of one of the major party leaders, no doubt advise the British people to stay in. However, there is no longer the habit of deference that caused the British people to overcome their misgivings in 1975 and vote yes. It is quite possible that a majority of Britons will, echoing Churchill, say they are for the open seas.

Free movement of people is a great preoccupation at present but I suspect that there will be concessions on that because other countries have problems with this issue. The crucial issue is the euro. Britain opted out of the single currency but it cannot escape the consequences of the single currency. The deflationary bias, the catastrophic consequences of a single monetary policy across so many disparate economies and chronic banking and government debt crises are all dragging down the economic performance of the European Union and that of the United Kingdom. As the 18 member countries of the eurozone meet separately to determine their stance on major economic issues, Britain is increasingly marginalised within the EU and yet has to live with the consequences of decisions in which we have had no part. We have found ourselves in a situation which it was a cardinal principle of British diplomacy for hundreds of years to avoid where the major continental powers combine in their own interests regardless of the interests of Britain.

It is hard to foresee that the minority of non-eurozone countries will be able to combine to counterbalance the power of the eurozone while maintaining a coherent European Union of 28 countries. It is hard to foresee that the countries of the eurozone itself will be able to resolve their political tensions simultaneously to satisfy the requirements of Germany for fiscal rigour and its reluctance to pay for the costs of fiscal laxity elsewhere while easing social hardship and averting baleful political pathologies. Can we foresee that there can be a viable European Union in which all the member states agree on issues of trade, the environment, crime, migration and defence while financial and fiscal issues and associated political issues are decided by the eurozone countries in a deepening political union?

Damage limitation will mean that there is no answer to that question by 2017, nor will Britain by that date, with or without the other non-eurozone countries, have devised an alternative strategy or found a “better ‘ole” to go to. It would be wiser not to cut short the diplomacy by that date by having an in or out referendum.

What is clear is that Britain will not join the single currency. However, for the single currency ultimately to survive, the eurozone will have to move to political integration and a federal state. The European Union will continue to be dominated by the eurozone. The political leaders of the eurozone countries have invested so much in that project that they will maintain the single currency for some years to come. If British policy is to be more than passivity and drift, Britain will have to establish new terms of membership in a substantially reformed European Union—that is Mr Cameron’s policy but it is hard to see how meaningful reform can be achieved given the requirement for unanimity for treaty change—or find a way to split the European Union into two separate unions—we have no allies for that—or leave altogether. Perhaps a looser association will be possible but we should ask ourselves what pattern of engagements will make sense for Britain in a globalised world in which the European Union is a diminishing force.

Photo of Lord Willoughby de Broke Lord Willoughby de Broke UKIP 7:39 pm, 25th November 2014

My Lords, the noble Lord, Lord Inglewood, will remember that in our debate on Monday a week ago the noble Lord, Lord Hannay, accused us Eurorealists of being ideologues and went on to say that Europe is not a religion. You could have fooled me. The noble Lord, Lord Howarth, who has just spoken, said quite rightly that for some Europhiles the EU is an article of faith. The high priests of this quasi-religion, the Commission and the Brussels Eurocracy, press on with their dangerous project regardless of the damage it is doing to the peoples of Europe. They are sacrificing the future of millions of Europeans on the altar of the EU and the euro.

You have only to look at Italy, Spain, Portugal and Greece, where unemployment is at 25%. Far worse than that is the youth unemployment; it is anything between 40% and 50%, depending on the country. What does that mean for this generation of school leavers and university leavers? It means that they have no future. I suppose that the high priests will say to them, “At least you need not worry about the work-life balance because there will not be any work”, but the Eurochickens now are coming home to roost. All over the EU, political parties have sprung up to oppose the notion of the central priesthood in the EU, the notion of ever-increasing centralisation and of further unity. Let us look at all the countries: in Finland they have the True Finns; in Italy, the Five Star Movement; in Greece, Syriza; in Spain, Podemos—a very new party which is leading the polls there; in France, Marine Le Pen; and even Germany, the motor of the European Union, has the Alternative für Deutschland.

That may all be very unpalatable to the Europhiles but those are the facts. In addition, of course, I have mentioned UKIP, my own party, which won the European elections and just got its second MP in Rochester. Talking of Rochester, I must congratulate the Liberal Democrat Party on its performance in defeating the Monster Raving Loony Party by some 200 votes; it must be very satisfied with that. I am afraid that we have tied ourselves into an outdated and failing EU trade bloc. While the rest of the world is growing, the EU is failing. It is shrinking. It seems odd that our future should lie in this failing organisation. The idea is totally bizarre. I am grateful to the noble Lord, Lord Stoddart, for reminding the House—no one else did—that one of the principal reasons why we believe we should get out is that we would regain the right to make our own laws and to rule ourselves. Parliament would once again be sovereign, not Brussels.

My noble friend Lord Pearson asked what is the point of the EU. Surely the point of the EU is our strong voice in Europe. Let us look at the results of our strong voice in Europe recently. The Prime Minister was slapped down this summer by Angela Merkel and François Hollande on immigration; Jean-Claude Juncker was elected as president of the European Commission over the Prime Minister’s objections; we have recently been slapped with a £1.7 billion fine on top of our already enormous £20 billion annual contribution to the EU; and most recently we had the humiliating judgment by the European Court of Justice that the salaries of our bankers should be decided in Brussels, not in Britain.

I will finish by reminding your Lordships that there are 193 members of the United Nations and 165 of them seem to manage very well without being in the EU. Sometimes I wonder how they do it. The ice is cracking under the EU and the ship is sinking. We should get off it before it sinks completely.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (Wales) 7:44 pm, 25th November 2014

My Lords, it has been a fascinating debate and I thank my noble friend Lord Liddle for introducing it. This debate has been stimulated by some careful, moderate and intelligent thought to contrast with the uninformed hysteria that we have been hearing in recent months—and in recent minutes. I have one clear message for those who might be tempted to pander to anti-EU rhetoric—the same message given by my noble friend Lord Liddle: you will never beat UKIP on Euroscepticism, so you would do much better to take a stand and make the idealistic, pragmatic and self-interested case for the UK’s continued membership of the EU.

We must not lose sight of the idealistic reason for the establishment of the EU and how, despite the fact that my generation has no memory of war directly affecting our country, it is undoubtedly true that our membership of the EU has helped to keep the peace in what was once the bloodiest continent on the planet. There is no one better to remind us of that than the right reverend Prelate the Bishop of Coventry.

The EU is a bedrock for the preservation of human rights, respect for law and for a basic level of the provision of social justice. Although I agree with the right reverend Prelate that we need to make an idealistic case for the EU, and I agree with the noble Lord, Lord Robertson, that we need to make an emotional case, in our ever increasing materialistic and atomised society, people also want to know how the EU is going to benefit them directly, and an appeal to the high ideals of the EU is simply not going to cut it with many of the general public. We need to step back, look at the direction in which the world is travelling and identify how the UK can maintain any semblance of influence in our fast-changing world.

We are undergoing the most profound geo-economic reordering of our generation. The economic crisis has sped up a shift of power from West to East. It is not just economics that is driving this but population growth and demographics. By 2050 projections indicate that the population of Europe will be only 7% of the global total. The population of the UK will be a mere 0.8%—even lower than that quoted by the noble Lord, Lord Maclennan. I will be 83—if I am lucky to live that long—so this matters. We must ask ourselves seriously how we in the UK intend to make our voice heard in a world where such a profound shift is happening.

How do we maintain the European social model that is so highly respected in other parts of the world when we have an ageing population—a model that needs to be paid for in the face of global shifts? As the noble Lord, Lord Dobbs, indicated, the Pope today described the European continent as a grandmother, no longer fertile and vibrant. But I would argue that grandmothers can provide experience, instil values and provide leadership. The Eurosceptics’ answer is to put up the barriers and retreat into a protectionist model, isolating ourselves from our nearest neighbours. They argue that we can still have a relationship with our continental colleagues through membership of the EEA, and also through negotiating with each country throughout the world individually. Do they really think that little Britain could negotiate a stronger trade agreement with the USA by ourselves, rather than singing in a chorus of the EU with the powerful bargaining mandate of the largest single market in the world pressing the case on our behalf? Can they not see that to pay for our social model our best chance is to pool our intellectual ability across the continent in order to produce innovative products here in Europe that we can sell across the globe and that will help to fund the lifestyle that we have learnt to enjoy?

The EU research funding that the noble Baroness, Lady Smith of Newnham, talked about in her maiden speech, on which I congratulate her, is critical to the development and rollout of these innovative products. R&D spending in the EU is around 1.9% of GDP. In the US it is 2.9%. However, China is catching up fast and has leapt from spending 0.9% to 1.7% of its GDP on R&D in recent years. There is no question that our international influence would be curtailed without our membership of the EU. We need to speak to China, India and Russia with one voice to exert maximum negotiating pressure.

The first priority of Government must be the protection of its citizens. However, due to the interconnected world in which we live, we need to understand the inadequacy of our traditional notions of how we protect our people. We cannot hope to stop terrorist attacks without co-operating with intelligence services elsewhere. It would also be madness to desist from involvement with the European arrest warrant. This has led to the swift return to Britain of fugitives from justice, including 49 of the 65 most wanted fugitives on the run in Spain. We talked earlier today about preventing Iran from developing a nuclear weapon capability. It is the EU and our British representative that have taken the lead in this negotiation. That would be impossible if we were outside the EU.

We cannot simply cross our fingers and hope that the Ebola virus will not reach our shores. We need to tackle the problem where it is happening, ideally again through pooling our energies with other EU member states and NGOs so that we do not have 28 member states all establishing their own administrative networks in the developing world, but channel these resources through one route. We cannot tackle climate change without a global commitment to cut carbon emissions. This, again, is being led by the EU. Common Europe-wide laws to protect the environment, as mentioned by the noble Lord, Lord Smith, and cut carbon are more effective than separate national policies, as pollution does not stop at boundaries. EU laws have forced manufacturers to meet standards that cut carbon emissions—from cars to TV sets. UKIP and the Tory Eurosceptics are deluded in talking about traditional notions of sovereignty. Security, public health and the environment are all issues that can no longer be addressed from within the boundaries of any individual member state.

Two other major themes are dominating the European debate—the economy and immigration. EU membership gives us access to and influence in the biggest trading bloc in the world, with a market of more than 500 million citizens. Leaving the EU would pose the biggest threat to the prosperity of this country. It is simply not in our economic self-interest to leave.

If we want a serious debate about whether it is beneficial to be a member of the EU, we have to have a serious debate about what the alternative is and what our relationship with our prime export market would look like from outside the EU. People who advocate that we leave the EU cite Norway and Switzerland as examples of what our relationship might look like. Norway is about the 10th highest contributor to the EU budget, paying around €340 million a year, despite not being a member. Therefore, outside the EU, the UK would probably still need to contribute around €2 billion a year to the budget, while having no say on the rules and regulations that we would have to follow to access the single market.

Photo of Lord Pearson of Rannoch Lord Pearson of Rannoch UKIP

Perhaps I can put on the record, just for once in your Lordships’ House, that we have never advocated being like the European Economic Area. We have never advocated being like Norway. We favour our own free-trade agreement with the world, under the World Trade Organisation—possibly more along the lines of EFTA—but not the EEA or the “fax democracy”, or whatever it is called.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (Wales)

That is even madder than I thought, then.

What we have to think about is the importance of the EU in protecting consumers and restricting unfettered capitalism, which has allowed bankers’ bonuses to spin out of control. If we are not doing it in this country, I am glad that someone else is doing it. A common competition policy has protected consumers from monopolies and multinational companies. This has been seen most visibly in the airline market, which has enabled millions across Europe to enjoy cheaper flights.

It is EU laws which have allowed social protection for the workers in the EU, including a minimum of four weeks’ paid holidays for full-time workers, a right to parental leave, extended maternity leave, a new right to request flexible working and the same protection for part-time workers as for full-time workers.

Labour wants to tackle immigration head on, and we have put forward clear ideas about how we would like to see reform in this area.

The Government’s promise of a referendum following a renegotiation by 2017 is random and has caused severe uncertainty, as emphasised by my noble friend Lord Howarth. As my noble friend Lord Lennie outlined, Nissan’s future in the UK, along with that of other manufacturers, depends to a large extent on EU membership.

The Prime Minister does not seem to have grasped the fact that there is a need for unanimity in order to change the treaty. He still has not told us what he wants in a reformed EU. It is irresponsible to put the interests of party above those of the country. That is the only point on which I agree with the noble Lord, Lord Stoddart.

Photo of Baroness Ludford Baroness Ludford Liberal Democrat

The noble Baroness talked about party. Can I emphasise that Mr Cameron is speaking as leader of the Conservative Party, not as Prime Minister?

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (Wales)

Thank you. At a time when we have been told that the recovery is brittle at best, the constant agonising over our long-term future in the EU is extremely damaging. It is time for the Government to act and behave in the best interests of the nation and to commit to our long-term membership of the EU.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Minister of State, Deputy Speaker (Lords) 7:55 pm, 25th November 2014

My Lords, I also join other noble Lords in congratulating the noble Lord, Lord Liddle, on introducing this debate. I particularly congratulate my noble friend Lady Smith of Newnham on her excellent maiden speech.

The debate of the noble Lord, Lord Liddle, has proved again that the question of the United Kingdom’s membership of the European Union remains one of the most important and divisive issues in British politics. There has been passion, commitment and enlightenment —by some definition. Others might disagree on the definition, but I have seen enlightenment. However, that has led to very different conclusions. There is an election next May and I suspect that we will see a lot more of that debate to come.

We have heard noble Lords such as my noble friend Lord Phillips of Sudbury and the noble Lord, Lord Howarth of Newport, but particularly my noble friend Lord Inglewood, posing the question of how we make sure that the electorate can make up their mind correctly. My noble friend Lord Inglewood asked what we in the Government were going to do to protect the electorate from political snake oil. Let us not talk down to the electorate but respect them and listen to them. Let us keep to our principles and say what we really mean. Noble Lords today have certainly said what they really mean, which is refreshing.

As the Prime Minister outlined in his speech to Bloomberg in October last year—to which the noble Lord, Lord Liddle, referred in part—the world is changing and the EU must respond and reform. We have made it clear as a Government throughout—my right honourable friend the Prime Minister continually makes it clear—that we have achieved much without treaty change. There is much more that we can and must do without treaty change. We have work ahead. We need change to ensure: that the EU becomes more competitive in international markets, through smarter regulation, a deepened single market and more free trade agreements; that the EU becomes more democratically accountable by strengthening the role of national Parliaments in EU legislation and ensuring that the European Council sets the strategic agenda; and that the EU does more to protect the interests and the rights of member states, both inside and outside the eurozone.

We have made already progress by reducing the EU’s seven-year budget for the first time in the EU’s history, reforming the common fisheries policy and exempting the smallest businesses from EU red tape. My noble friend Lord Howell asked how reform will come about. We must be bold. My noble friend Lady Smith of Newnham made clear that we must form alliances, just as my noble friend Lord Howell said.

Indeed, the Government are not alone in seeing a need for reform. Many other European Governments agree, as do many representatives of industry. We have been engaging in those alliances. My right honourable friend Philip Hammond has been spending a lot of time this summer and last week on finding a way forward, travelling throughout Europe, meeting his counterparts and making alliances, out of which come practical, pragmatic changes.

Let me quote a couple of EU heads of government. The Italian Prime Minister Matteo Renzi said:

“We want better Europe, not more Europe … A very balanced Europe, against the red tape of bureaucracy”.

As my noble friend quoted, the Dutch Prime Minister Mark Rutte has called for:

“Europe where necessary, national where possible”.

We agree. As my right honourable friend the Foreign Secretary has travelled through Europe, he has been building a strong coalition, which we need to continue to build.

My noble friend Lord Bowness posed a question against the background of what is happing now, both within government, Parliament and some think tanks—not one of the think tanks of the noble Lord, Lord Liddle, I hasten to say. I am sure that an article in the press yesterday spurred my noble friend to ask: “What about Article 50?”—the treaty of Europe. He wanted to know what the Government thought about that and what the implications were. Whatever others say, they do so in a personal capacity and there will be a lot more of that from every single political party—and from none—as we go forward to the next election. The Government are not considering invoking Article 50. We are clear that Europe must change to be more competitive, flexible and democratically accountable, and we believe that we can work with our EU partners to achieve those reforms—so Article 50 does not come into it.

The noble Lord, Lord Liddle, was very clear, as were others around the House, in putting the economic case for membership of the European Union. Of course, I know that the noble Lords, Lord Stoddart, Lord Pearson of Rannoch and Lord Willoughby de Broke, totally disagree with the way in which those figures have been produced. I agree with the noble Lord, Lord Liddle. The EU is the world’s largest and wealthiest common market. Through our membership of the EU, British businesses have free access to this market, its goods and its skilled labour. Some 40% of UK exports go to European markets and four of our top five export destinations are EU member states. The other is the US, with whom the EU is currently negotiating a free trade agreement. TTIP would not be negotiated now were it not through the EU. Around the world, the UK is seen as the gateway to Europe where we are the top destination in the EU for foreign direct investment.

I agree with my noble friend Lady Ludford about the advantages that membership of the EU gives to the UK with regard to global influence. The noble Lord, Lord Radice, kindly referred to David Lidington. I was grateful for that. He was right to quote him and I appreciate the work that my right honourable friend is doing.

I agree entirely that remaining a member of an EU with 28 member states gives the UK a stronger voice in international affairs. It gives us, for example, more influence when negotiating free trade agreements with key international markets such as India, China and the US, to which I have already referred. I agree with the noble Baroness, Lady Morgan of Ely, that it gives us a stronger voice when we are talking about security and matters such as the fight against Ebola, which is not only a threat to millions of people and their security in west Africa, but elsewhere in the world.

My noble friend Lord Maclennan of Rogart, along with the right reverend Prelate the Bishop of Coventry, made a point of reminding us of the importance of the EU. Every day we think of the EU it reminds us that its birth was after a period of conflagration in the early part of the last century. Since then we have been working together and arguing. Boy can we argue, and why not? We do that in Parliament so why not in Europe? We can argue and come to sensible, pragmatic decisions where we can make concessions to each other. We can go on working together without raising a gun. That is what is important.

It is important for us to stand together in defence of our democracy and the rule of law. It is vital that we do so, for example, in the cases of Ukraine and Syria. I heard what the noble Lord, Lord Pearson of Rannoch, said and I fundamentally disagree with him over Ukraine.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Minister of State, Deputy Speaker (Lords)

I will not take any response to that. I need time to get through this. I find the noble Lord’s allegations that the EU is in any way responsible for the action that Russia took in Ukraine simply unacceptable.

The noble Lord, Lord Liddle, recognised the need for fairness, but the Government believe that the EU must focus on the areas where it can add the most value, such as increasing competitiveness, reducing the democratic deficit and ensuring fairness both in and out of the eurozone. I know that we will have disagreements about some of the implications of that; I listened very carefully to noble Lords. I will take competitiveness first; here, the EU needs to do more to facilitate jobs and growth. We know this because we have undertaken the largest ever analysis of the impact of EU membership on a member state. The balance of competences review was an enormous undertaking and I pay tribute to all those who took part, including someone who is sitting very close to me.

This review, due to be published by the end of the year, highlights the concerns of businesses and Governments across the EU that it is not doing enough to ensure smarter regulation. Through the balance of competences review, stakeholders across Europe told us that the EU needs to change and improve its regulatory processes. My noble friend Lady Ludford referred to the need for better regulation and the noble Lord, Lord Smith of Finsbury, made the point that not all regulation is bad: it depends on how it is framed, how it affects you and also, as we have seen from the Deregulation Bill currently before Parliament, how you change it when you know that it is out of date or having the wrong effect.

Of course, we have all read newspaper stories about EU red tape—a burden that is felt most by small and medium-sized enterprises. After all, SMEs employ two out of every three members of the EU workforce. We cannot forget them. The fact is that a 25% reduction in EU administrative burdens on businesses could lead to an estimated increase of 1.4% in EU GDP—equivalent to €150 billion. Smarter regulation helps us all.

We also need to strengthen the common market. For example, the services sector accounts for 70% of EU GDP and over 90% of new jobs, but it makes up just over 20% of intra-EU trade. We need to ensure that British businesses online are able to access customers in all 28 member states without facing legislative or regulatory obstacles.

My noble friend Lord King was absolutely right to draw attention to the fact that the number of members has changed over the years. As we now reach 28, with others seeking accession—I will turn to the question asked about accession by the noble Lord, Lord Giddens, in a moment—we need to ensure that our systems are not only robust for now but for the future. We need to ensure that British citizens can use their skills and qualifications when moving to another member state. I will also refer to migration in a little while.

In addition to strengthening the common market, the EU must continue to negotiate free trade agreements such as the Transatlantic Trade and Investment Partnership to benefit businesses in all member states by giving them access to other important global markets. But as I have mentioned, alongside the need to increase competitiveness, there is a need to redress the growing democratic deficit at EU level.

While the European Parliament has a legislative role, it cannot recreate national accountability at a European level. National Parliaments play a crucial role in holding their Governments to account, with systems of parliamentary scrutiny based on their individual democratic models and traditions. In her maiden speech, my noble friend Lady Smith of Newnham drew attention to that. We must remain true to the principle of subsidiarity. Whenever possible, action should be left to individual member states and their national Governments and Parliaments—giving them a stronger say in EU legislation.

Against the background of all this work that we need to do to reform the existing EU of 28 member states, the noble Lord, Lord Giddens, asked a pertinent question—was the UK in favour of further EU enlargement? He will know that I have been asked questions at this Dispatch Box over the last few weeks about the background to previous enlargements, and how previous Conservative Governments have worked with that; how we welcomed new members on the basis that we update the EU practices in order to reflect what they can bring to the EU and how they can work effectively within the EU. We must address the concern that many citizens in the UK currently have—and not just here but around the EU—about the impact of enlargement or we risk losing public consent.

I meet people from across the boundaries and beyond the EU who dream of joining the European Union. It is important that if their dream comes true it does not become a nightmare because we have failed to explain the case to the British public or, more importantly, failed to reform the EU to make it possible for enlargement to take place in a way that does not damage the interests of any country. We are therefore proposing reforms to the transitional controls, which need to be addressed ahead of any further accessions that might well take place.

Much mention has been made of migration, which has been discussed strongly, not only in this House but in the press and across the media. It has been raised by many noble Lords today, including the noble Lord, Lord Empey, and my noble friend Lord Maclennan of Rogart. I have already answered questions at the Dispatch Box regarding work that the Government are undertaking, in negotiation with their partners in Europe, to ensure that we can have a more robust system that will not prevent free movement or undermine the principle of free movement, but recognises that free movement is not and has never been a right without responsibilities and conditions. It has never been a completely unconditional right. It has been linked to the right to move to work.

The noble Baroness, Lady Morgan, referred to Labour Party policy. Over the last week the Government have looked to the Dano judgment regarding the German position on benefits that may or may not be claimed. We are looking very carefully at all the technical details before we fully announce what changes might be possible that are not already being undertaken. We believe that the option of living and working in other EU member states is a clear benefit of EU membership for UK nationals. However, we need to ensure that it is not used merely as a way to claim benefits. That underpins the work that has taken place both in Germany and here.

The Prime Minister set out a number of domestic measures that we are taking across government to ensure that we maintain free movement in the way that it was originally intended, but also to ensure that our controls on accessing benefits and services—including the NHS and social housing—are robust. That includes measures to prevent EU jobseekers and involuntarily unemployed EU workers from claiming jobseeker’s allowance for longer than three months unless they have a genuine prospect of work, and measures to ensure that EU jobseekers will be unable to access jobseeker’s allowance until they have been resident in the UK for three months. In July that restriction was applied to those seeking to claim child benefit and child tax credit.

The measures also include: strengthening the habitual residence test, which all migrants have to satisfy to claim income-related benefits; introducing an earnings threshold to trigger an assessment of whether an EU national has work that can be treated as meaningful and effective; amending regulations so that new EU jobseekers are unable to access housing benefit, even if they are in receipt of income-based jobseeker’s allowance; and quadrupling the maximum fine on employers for not paying the minimum wage from £5,000 to £20,000.

The Government are taking action. We believe that membership of a reformed EU is in the UK’s national interest—but reform there must be. The EU needs to become more competitive and needs to continue to sign free trade agreements with key international partners. It needs to draft smarter regulations that support, instead of hinder, SMEs. It must consolidate the common market, especially in new areas, such as the digital field. We have not done that properly yet. It needs to remain flexible and embrace our continent’s diversity and individuality, and it needs to respect and protect the democratic mandate of our national Parliaments. All those changes would be beneficial for this country. It is in our national interest and in the interest of our security, but it is also in the interest of all 28 states.

Photo of Lord Liddle Lord Liddle Labour 8:14 pm, 25th November 2014

My Lords, I thank the noble Baroness for her very comprehensive, robust and intelligent response. She might be surprised by how much I agree with what she said. I also thank the noble Baroness, Lady Smith, for her excellent maiden speech. I am sure that we shall have many debates on this key issue of our times and that she will make a notable contribution to them.

I also emphasise that my passion for making the case for Europe and for remaining a member of the EU, which I think is shared by many Members on this side of the House—not all, but many—does not blind me to the need for reform. There are fundamental problems of divergence, of legitimacy and of economic performance—mind you, we have some of those same problems in our country as well. It is as the noble Lord, Lord Phillips, said: there is a crisis in politics. That is not just about the EU, but it affects many EU member states. There are profound structural reasons for it that we do not properly understand. We have to debate all these things.

I will make two points of substance. First, I do not believe that the way we get reform in the EU is by making threats. That is where I think the whole UKIP approach is completely wrong. Secondly, the Government would do well to listen to what was said by the noble Lord, Lord Rodgers of Quarry Bank. The best thing the Prime Minister could do, if he wants to have influence in the EU, is to make it clear that he thinks that we must remain a member, even though reforms are necessary. He could do a lot worse than repeat the words of Sir John Major: although lots of reforms are needed and there are lots of problems and frustrations with the EU, it is in Britain’s national interest that we remain a member.

Motion agreed.