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European Council

My Lords, I thank the noble Lord for responding to the Statement and for the way in which he did so. He made three substantial points and asked questions. I shall try to answer them but, if I am unable to do so, I shall of course right to him in the normal way. This was an important Council meeting because the issues facing the EU were varied and substantially economic. Some issues were related to the eurozone and the Council took steps to deal with them; and some were related to the budget, which we believed had grown out of control in the past few years. First, the noble Lord made the point—whether or not he was agreeing with me was hard to tell—that the budget was not the victory it looked because the European Parliament had wanted an increase of 5.9 per cent, or whatever it was. The point is that after the last Council the European Parliament voted for—indeed, demanded—6 per cent. The normal way would have been to split the difference between 3 per cent and 6 per cent and ended up at 4.5 per cent. However, with other countries, we stood firm at 2.9 per cent and were right to do so. In a letter that we have agreed with the major net contributors to the EU, we have set a new standard by which future budgets will be judged. I hope that noble Lords opposite will agree that that is good news. Secondly, the noble Lord agreed that there is a requirement for a new permanent mechanism—I think that is absolutely right—but he went on to ask why we should go through the hoops. The hoops, incidentally, are to allow Parliament to have a say, not only in the arrangements that we already have in the House under the terms of the Lisbon Treaty but in new primary legislation. That is not going through the hoops but putting the decision where it should lie—in Parliament—and that is why we are doing it. There is no question of a referendum because there is no question of a transfer of power from the British Parliament to the European Union. On the question of growth, the noble Lord is again right to say that there is a problem; there is a crisis in the eurozone and with the euro. We want the EU to succeed—it is in our vital British interests that it should do so—including countries such as Ireland and others which have found themselves in trouble. We believe that we are on the brink of a substantial, export-led growth but Europe, too, needs a credible growth agenda. As the noble Lord pointed out, the EU’s potential growth is forecast to be just 1.7 per cent in 2014. We believe that each member state needs to carry out its own reforms—that is why the UK Government have launched their own growth review—but there is a strong case for similar determination at the EU level, where Europe 2020 needs to provide a more focused drive towards making progress in areas where there is significant EU value added and can genuinely promote growth. For example, we should focus throughout Europe on a more efficient and competitive single market, especially on increasing productivity and trade in the services sector; we need a more ambitious and open approach to global trade to allow Europe to benefit from growth elsewhere, particularly in Asia; we need a framework for innovation that enables technological change; and we need smarter regulations that will leave enterprise freer to drive the growth that we need. No one underestimates the challenges that face this country and the rest of Europe. However, with some of our enlightened European partners, we believe that with this kind of agenda for growth we can get ourselves out of trouble.