Edward Leigh on the European Council

8th December, 2011, Westminster Hall

Mr Edward Leigh (Gainsborough) (Con):It is a pleasure to serve under your chairmanship, Mr Turner. We are all grateful to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) for the way he has introduced the debate. I do not intend to weary the Chamber with his level of forensic detail. He has made the case, and I subscribe entirely to what he said.

I want to talk about the broad picture, in historical terms, because I think we lose track of history. We are on the cusp of a truly momentous moment in our country, which could reorder our entire relationship with history. I regret that economics is now considered to be the only science that politicians of note should understand, because history is just as important. The fact is that for 300 years this country had one historical imperative, and that historical imperative is born of the fact that we are a maritime and a trading nation. We have strained every sinew and have fought momentous wars to ensure that there is no conglomeration of power on the continent that could either exclude us from continental markets or have an effect on our trade, particularly our maritime trade.

It is a shame that, in our schools—I know quite a lot about education, because I follow what my children are learning—little knowledge is bred into our children about our own history. There is far too much emphasis on 20th century history and Hitler and Stalin, but our history is far longer than that. Virtually everything that we have undertaken for these 400 years has been to ensure that we retain our independence as a trading and maritime nation. In the 16th century, we were prepared to go to war against Spain because they were affecting our trade. We also did so in the 17th century with the Dutch; in the 18th and early 19th centuries with the French; and in the 20th century with the Germans. All along, I believe that, although we have stood on great principles—that is certainly true of 1914 and 1939—our prime motivation has been to retain our independence.

What we are seeing now is a truly frightening conglomeration of power on the continent. If the German Chancellor and the French President succeed in creating fiscal and monetary union tomorrow, we will voluntarily exclude ourselves. Do not think for a moment that this conglomeration of power would not have a decisive and dramatic effect on us. The United Kingdom accounts for 36% of the European Union’s wholesale finance industry and a 61% share of the EU’s net exports of international transactions in financial services. However, under new voting rules that will come into force in 2014, it will possess only 12% of the votes in the Council of Ministers, and 10% of the votes in the European Parliament. In contrast, France accounts for 20% of the EU’s market in agriculture, but enjoys a veto over the EU’s long-term budget and therefore retains substantial control over the sizeable EU subsidies received by its farmers. An express train is coming in the direction of the City of London.

Martin Horwood (Cheltenham) (LD): On that basis, would the hon. Gentleman support a massive increase in Greece’s voting power over maritime matters, since it is a massive contributor to the European maritime economy?

Mr Leigh: To be frank, I do not think that that is a serious point. Everybody knows that the hon. Gentleman is trying to tilt at windmills. Things are getting worse, because the United Kingdom’s level of influence on new financial rules has decreased. Regulation is now geared less towards financial services growth, and more towards curtailing financial market economy. The perception in many continental capitals—there may be a reason for this—is that the so-called Anglo Saxon light-touch capitalism needs to be reined in. In the past, EU politicians and policy makers generally, but not always, felt constrained from imposing financial regulation on the UK, but that has now ceased to be the case. I agree that United Kingdom regulation has moved from the light-touch concept, but its new focus on regulatory judgment looks set to clash with the prevailing rules-based culture at the EU. In addition, the eurozone crisis is increasingly likely to create exceptional needs and political incentives for the euro countries to act in the interests of their own eurozone of 10.

I believe that all those reasons—the new emphasis on qualified majority voting, our inability to use our veto in this marketplace, and the increasing tendency of the European Union to want to interfere in the financial marketplace—are as big a threat to the main motivator of our economy as anything that we have seen in history. What do we do about it? I think that this is a decisive moment for the Prime Minister. He has to say in the conference that he is not prepared to sign any treaty unless he receives cast-iron guarantees that our financial sector will be set free from interference. If he does not get such cast-iron guarantees, I believe that he must be prepared to veto any treaty. If he is then told that the 10 will go ahead and create their own treaty, he must declare that illegal. Although that may sound like a very dramatic thing to do, I have read in today’s papers that German commentators are already talking about even the threat of our Prime Minister standing up for British national interests as being “obnoxious,” but that is precisely what all European countries do. The first lesson of history, as I have said, is the overwhelming imperative on behalf of successive British Governments over the centuries to protect our commercial interests. The second lesson of history is that all Governments in Europe act in their own financial interest—all are determined by their own history.

We need not say much about recent German history, but we know that there is an imperative throughout German history to extend their marketplaces, particularly into the east in the Balkans. We know that there is an imperative on behalf of French Governments to hug Germany close, so the French President and German Chancellor will be acting entirely in their own national interest, which is what we demand of our Prime Minister.

I hope I will be forgiven for saying this, but we have had enough of spin and of reading about British Prime Ministers who, over the past 20 or 30 years, have said in the days preceding a summit that they will stand up for British national interests and ensure that they are protected, only to come back with a Chamberlain-esque piece of paper, saying, “I have negotiated very hard, got an opt-out from this and that, and succeeded in standing up for British interests,” when such guarantees are not worth the piece of paper they are written on. I suspect that agreements have already been made among the sherpas and the miners, and that our Prime Minister will be offered something, but that will not be enough unless it includes cast-iron guarantees that we can all accept and that protect our vital national interests, particularly those in relation to our financial sector.

Emma Reynolds (Wolverhampton North East) (Lab): Does the hon. Gentleman agree that it is not in our national interest that the Government are deeply divided on the issue, and that the Prime Minister is therefore weak and isolated in the European Union and less able to negotiate the sorts of things demanded by the hon. Gentleman?

Mr Leigh: What is in our national interest—we see it in this Chamber today—is that patriotic Members of Parliament are prepared to speak up for the vital national interest. By speaking out this afternoon, we are actually supporting the Prime Minister in his negotiating stance, because I believe that we stand for what the British people want.

Kate Hoey (Vauxhall) (Lab): I would like it to be put on the record that, while not many Opposition Members are present, many of them, as well as many Labour party members and millions of Labour party supporters throughout the country, want to see our Prime Minister standing up for this country and making sure that we get some of those powers back. The most important thing that the country wants, however, is a referendum on the whole question of Europe.

Mr Leigh: I am very grateful to the hon. Lady for that intervention. Her courage, independence and intellect are widely admired throughout Parliament, because hers is a voice that stands up for reason and for democracy. I reiterate what the Secretaries of State for Northern Ireland and for Work and Pensions and many of us have said this week. The creation of true fiscal and monetary union throughout much of Europe, with the ability to compel nation states to, in effect, subscribe to particular levels of debt and taxation, is such a fundamental shift of power, that it would be a dereliction of duty, legalism in its worst form and slippery tactics, to say that that does not demand a referendum. We are talking about such a fundamental shift in our relationship with Europe that it would be an appalling attack on the good name of politicians and politics in general if, once again, we were to use mere legalism to say that a referendum is not needed.

I finish by joining my hon. Friend the Member for Harwich and North Essex and agreeing with what he said when opening the debate. An increasing groundswell of opinion in this country says that we want a renegotiation of our relationship with Europe. We want to concentrate on our traditional strength of having the free trade of goods and people with Europe, which, by the way, is not at risk. It is a complete myth that somehow we will lose that when Europe has a massive balance of trade surplus with us. We want a renegotiation and, having achieved that, let us put the decision to the British people and move forward.