Rt Hon Lord Lilley

    Date of Proceeding: 06.02.2008
    Reference: 471 c1073-5
    Member: Lilley, Peter
    Title: European Union (Amendment) Bill
    Description: It is always a privilege to follow the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who brings enormous knowledge to these matters. He focused on the way in which the single market works and, unlike the other Labour Members who have spoken, he did not try very hard to portray the amendments as being fundamentally opposed to the single market.

    Conservative Members are not fundamentally opposed to the single market. We have always believed in it, and even my hon. Friend the Member for Stone (Mr. Cash) has confessed that he voted for it. I was moved to look up some of the speeches that I made when I was a Minister. When I was still Financial Secretary to the Treasury, I said that Britain had been a most enthusiastic and consistent supporter of the single market, and that we led in implementing the single programme. I added that the philosophy of the single market was very much compatible with Britain’s vision of the future of the European Community.

    In 1992, I was Secretary of State for Trade and Industry, with responsibility for supervising the introduction of the single market and the response to it. I said that the single market programme had been a success, in part thanks to our enthusiastic and consistent support. I added that we had fought successfully to keep the single market open to the rest of the world rather than building a fortress Europe, and noted that we had seen off proposals to refuse foreign banks licences in Europe if they did not reciprocate to European banks. I also said that we had argued successfully against giving favours to certain firms as Euro champions.

    We were somewhat over-optimistic in those days. The European Commission’s Cecchini report forecast that the single market alone would add a minimum of 4 per cent. and a maximum of 7 per cent. to Europe’s gross domestic product. I looked on the internet for reviews of how the Cecchini report had worked in practice. Reviews showed that there was no sign of any impact on the growth rate across Europe, and certainly no sign of growth of the magnitude forecast in the report.

    I do not say that the single market has been a failure. It has not been as successful as we hoped, but it has made a contribution. However, we must ask why it did not make as much of a contribution as the European Community, the European Commission and optimists such as I hoped it would. That bears heavily on the amendments before us. There are a number of answers to the question. First, the single market was over-hyped. That is fair enough; people always over-hype things, and I think that we can forgive that, in retrospect. Secondly, sadly, we did not foresee the over-regulation of the single market. Far from being a purely deregulatory removal of barriers and borders between countries, it became a mechanism through which the European Commission could regulate, harmonise and introduce new burdens on business. That has offset many of the gains that we hoped would result from the removal of barriers to business.

    Thirdly, we overstated the size and scale of barriers to business between countries. The barriers had already been removed through the general agreement on tariffs and trade and successive trade reforms, so there was not much gain to be made. I can demonstrate that by referring to a speech that I did not give. When I was Secretary of State for Trade and Industry, I planned to give a speech emphasising the benefits that British companies had gained from the introduction of the single market. I asked my officials for specific examples of what British companies were doing as a result of the introduction of the single market that they had not been able to do previously.

    My officials came up with lots of examples of things that British companies were doing that they had not done previously, but on inspection it was found that the companies could have done them earlier. It was not the single market programme that had opened up the possibility of doing those things. I said, “Well, let’s get lots of businesses in and ask them, so that I’ll have examples to put in this speech.” We asked businesses from the service industries, where we hoped the greatest gains would be made, the privatised utilities and other sectors. I am afraid that none of them was able to give a single example of anything that they were doing that they had not been able to do before. However, lots of them were doing things that they had not done before, so the psychological impact of the single market was wholly beneficial. It gave British companies the aspiration and the vision to see that there were opportunities on the continent that they could take, but the actual measures were not as beneficial as we hoped.

    It would be sad if the single market had taken people’s eyes off the other markets in the world that offered greater opportunities. As my hon. Friend the Member for Stone said, one of the sad things about today’s debate is how few, if any, references there have been-apart from those made by the hon. Member for Forest of Dean (Mr. Harper)-to India and China, the really big markets on which our industries ought to focus, as they are fast-growing and offer enormous opportunities.

    It has been suggested that if the amendment is made, it will have no effect. It is claimed that if we persist with it until the bitter end, it will lead to us not ratifying the Lisbon treaty; the treaty will therefore fall, and we will gain nothing. However, the impact of making and persisting with the amendment, thereby not ratifying the Lisbon treaty, would be much the same as the impact made by the French and Dutch people’s rejection of the constitution. They won major changes. I know that they are major, because the Government say that there are major differences between the constitution and the treaty. Funnily enough, they have resulted in major improvements for Britain, although the Dutch and the French wanted to make changes that take us in the opposite direction to that which we tend to want to take. Or are the Government saying that negligible gains resulted from the rejection of the constitution, and that we would therefore get negligible gains and improvements if we sent our negotiators back to gain improvements?

    The Government cannot have it both ways. They cannot say that when the Dutch and the French were given a referendum and rejected the original constitution they secured major improvements, but that if we, through the House passing amendments to the Bill, were to cause the Lisbon treaty not to be ratified, we would not in the subsequent renegotiations be able to get significant improvements to the single market and other aspects of the Bill.

    I hope the House will take seriously the amendments tabled by my hon. Friends and the amendment tabled by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), and that it will have no compunction about passing them, amending the Bill and amending the treaty. That can only lead to an improvement in what is still the European constitution implemented by other means, and it would be our duty and, above all, the duty of Government Members, who promised a referendum. If there is to be no referendum, the very least they can do is amend and send the treaty back for renegotiation.