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EU: UK Isolation

Volume 744: debated on Monday 22 April 2013

Question for Short Debate

Asked by

To ask Her Majesty’s Government what steps they will take to avoid increasing United Kingdom isolation in the European Union.

My Lords, I am most grateful to the usual channels for the opportunity of launching this vital debate today. Sadly, I have to say at once that the rather controversial and rather expensive funeral event last Wednesday provides a sombre memorial to this theme, recalling to all of us the negative attitudes towards Europe of someone who was—again, I feel sad about saying this—one of the most rebarbative Prime Ministers in Britain’s post-war history.

The present Prime Minister, however, was obliged to call off visits to EU capitals to discuss some changes in our links to the rest of the member states. It is very self-defeating if leading Tory Ministers and politicians refer to the over-repeated phrase “British national interest” as if that were wholly different from our membership of the Union and totally different from that of all the other members. At least the late-interred Prime Minister ended up usually agreeing with the others on treaty changes, despite all the Sturm und Drang in those days of shrill arguments. Mr Cameron, however, is now in danger of launching a risky plan which is designed to appease his wilder anti-EU MP colleagues, and which could quickly get out of control.

It also looks somewhat hilarious if a British politician starts trying to educate our German friends on the goals of economic and mercantile efficiency, bearing in mind the huge gulf in our economic performance. We have a UK trade deficit of around £100 billion, despite a quarter fall in the value of sterling over the past four years. Germany’s trade surplus is the other way round, but even bigger. We should all be grateful to the German ambassador for his polite but riveting comments at Bloomberg’s last July on the dangers inherent in irresponsible isolation and to Dr. Rudolph Adam, the plenipotentiary at the moment. He complained to William Hague’s assistant last October that Britain’s refusal to take a lead in Europe meant that we would just see the red lights of the train that has already left the station.

Indeed, we have heard the same complaints from our own citizens, now alarmed at this possible Cameron demarche. I refer to very prominent business leaders such as Richard Branson, Martin Sorrell and Sir Roger Carr. Incidentally, the US Government intervened collectively and individually to say, “Please do not go down this path”. Former EU and US British envoys such as Sir Nigel Sheinwald have taken this approach. Indeed, in one of our debates on 17 December 2012, the noble Lord, Lord Kerr of Kinlochard, who was originally speaking in this debate, said:

“As the Prime Minister prepares … I really hope he will avoid the temptation to hold out a false prospectus. One should not talk about ‘new deals’ unless one is sure that they are realistic”.—[Official Report, 17/12/12; col. 1391.]

It is never a weakness for any country, struggling as we are with our economic problems in an exposed position, to pay attention to what others think of us. Sadly, we have to recall, painfully, the derision which many mainland Europeans felt when we were first driven out of the exchange rate mechanism on 16 September 1992 as the Treasury was unable to keep the pound from falling below the agreed minimum level. We then became so scared at the huge obligation and discipline involved in a single currency that we effectively decided not to join at all, despite Tony Blair’s pretences.

We have to recall, therefore, the huge disappointment of the other members in other areas. We received the unique budget rebate but did not then become more co-operative on other areas of European endeavour, despite that unusual privilege. We have to recall the irritation, too, when we sought the biggest number of opt-outs and exclusions when Maastricht and the later treaties, including Lisbon, came along.

The irritation we now cause when a UK Minister arrives for a Council of Ministers meeting is palpable. We have become the bad member of the club, whingeing and moaning about European things again and again. One of the dottiest reasons for this irrational behaviour is because an unusually large number of old-fashioned nationalist Tory MPs are the only politicians I know—apart from some of the scallywags in UKIP, many of whom benefit from the PR system for the European Parliament—who have a notion of national sovereignty which is, literally, at least 100 years out of date.

How many times do positive Europeans have to remind such people that pooling sovereignty by way of signing unanimous treaties, achieved by consensus, is not a loss of real sovereignty, it is an increase? We have done it in other treaties, to no ill effect, all over the world. It is quite extraordinary and myopic that a false pride in our so-called special relationship and so-called hyperbolic link with the US can induce British leaders such as Mr Blair, Mr Brown and, indeed, the present Prime Minister, to go into rather questionable military adventures—which we usually later regret—but also cause us to suffer hot flushes when confronted with a perfectly sensible measure of EU co-operation such as a new financial support system between the central banks. They were watching our reactions very closely at that time.

At the same time, as if to emphasise the muddle, Mr Cameron seeks to remind us that he wants after all to stay in the Union. Before we irritate the others to the extent that they muse again about the Lisbon treaty provisions allowing for recalcitrant member states to leave if they wish, we really need some clarification on these vital—indeed, existential—matters. What relationship would replace the present one? As Peter Ludlow, the well known EU analyst based in Brussels, said in January,

“The argument that the rest of Europe will simply acquiesce in whatever kind or arrangement (we) opt for, because ... our partners need us ... more than the UK needs them, is a total illusion”.

Furthermore, when you use the microscope on repatriation, you soon realise that it is the grand illusion and pretence of all time, especially when you see that we already have more opt-outs, exceptions, derogations and exclusions than any other country.

I am therefore extremely grateful to my noble friend the Senior Minister of State at the Foreign Office, Lady Warsi, for coming to answer this debate today— I wish her well in her response—and, indeed, for all the previous occasions when she has dealt with a vast number of questions and debates on these matters with great care and attention to detail. Now she has the precious opportunity to enlighten us all so that we can leave this discussion with a spring in our step.

A few weeks after the PM sadly refused to attend the Nobel Peace Prize award to the European Community in Oslo, I had the chance to ask my noble friend what further opt-outs we would now seek in Brussels. She very kindly stated that,

“the Government always seek outcomes that are in the national interest … our priorities include … the single market and … fair competition”.

When I pressed for more specific answers to try to,

“avoid needless opt-outs of a chauvinistic or nationalistic nature”,

she added that HMG should be,

“putting a case … that the European Union is improved but, within that, we also get a good deal”.—[Official Report, 4/2/13; col. 9.].

I hope that she will not consider it discourteous to suggest that this is all rather vague and generalised.

I live in France as well and have the opportunity to observe public life and politics there at close quarters. It is interesting that such a proud—indeed, sometimes very nationalistic—country sees absolutely no contradiction between its own direct interests and those of the Union. They coincide symbolically too—as in Berlin and Madrid, and most other capitals, the EU flag flies proudly alongside the national tricolour. They do not feel the one cancels out the other. The UK is the only major member state where government buildings never, ever fly the European flag. Why are we so nervous about Europe? Why are we so immature?

Let us return to the need for detail on policies. For example can the Minister guide us on what list of opt-outs we will determine for inclusion and exclusion in the JHA review? My impression is that the Government have not got a clue what to do. My noble friend will know of the report of sub-committees E and F of the EU Select Committee showing the huge weight of non-political evidence that abandoning the JHA provisions, or the principal ones, in most of the specific policy areas such as EAW, would be a monumental disaster. I will refrain from commenting too much on what Kenneth Clarke said at the end of January on these matters. How the Prime Minister must now regret the way in which the Government, including when they were in opposition, have encouraged the most Europhobic MPs to fuel this anti-EU strategy with the business community outside—although not many leading businessmen are now still involved—to the extent that it is even becoming part of future leadership moves by some ambitious new Tory MPs. The bitterness felt by the EPP in Brussels and Strasbourg about the Tory withdrawal in the European Parliament still lingers.

Can the Minister help us today about what kind of referendum will be constructed after so-called renegotiations have run their course, especially since the Business Secretary reminded us again recently that it will scare off investors and hit the economy?

The other area where we need meticulous care by the Government is in responding to the widespread dismay about the City of London market culture which is expressed here so stridently. The City—and I am a City person myself—is indeed a very precious asset which we are proud of and fortunate to possess, but the market crash of 2007-08, the way in which the banks behaved and the speculative spivery background of some people in the City offend some of our continental friends, and that needs to be acknowledged. Although I shall not quote from them, I commend in this context the lengthy but convincing last two paragraphs of the speech by the noble Lord, Lord Liddle, the chief Opposition spokesperson on Europe in this House, in the debate on the EUC report on banking union in Grand Committee on 26 March. He set out very clearly what our responsibilities should be.

Another area where the UK needs to respond sensitively to our partners is in their anxieties about tax havens, where our overseas territories are a particular preoccupation. Above all, we need to remember the chilling reality that, apart from the natural courtesy of a vague response, not a single other member state agrees with our peculiar attitudes, these initiatives that have recently been promulgated, not even the newest member states, not even Poland, very little in the Czech Republic, not at all in Spain or Italy and certainly not in Croatia. The Tory party needs to show the courage and enthusiasm for Europe that Mrs Thatcher showed in 1975.

I look forward to my noble friend helping us today with some encouraging responses about how these strange negotiations will reduce our isolation.

For pretty well all of our 40-year membership of the Union, successive British Governments have sought to maintain a position of strength for this country at the top table of the European Union politics. Whatever opportunities may have been missed and whatever mistakes might have been made, a common thread throughout the period has been that consistently Prime Ministers and Foreign Secretaries attempted to avoid the development of anything approaching a two-speed Europe. We have accepted opt-outs and derogations in specific cases, but we have never allowed Britain to lose its place at the heart of EU decision-making, although we have been sliding away from the centre.

One of David Cameron’s first acts as Prime Minister was to decline to attend eurozone summits, whereas his predecessor, Gordon Brown, not exactly a noted euro-enthusiast, fought tenaciously to ensure that he was always invited. Our absence has made it more difficult to articulate Britain’s voice on some of the key decisions in the eurozone debt crisis. I do not need to spell out at great length my anxiety about the imminent shift in responsibility for banking supervision, for example, from the traditional EU institutions in Brussels to the European Central Bank in Frankfurt, based on a new banking union from which we seem determined to exclude ourselves. It is worth recalling that when the EU Bill was debated here at Westminster, two years ago, we were assured that it would have no operational effect in this Parliament, yet we now know that fear of the need for the passage of an Act of Parliament helps to explain why the Prime Minister vetoed the EU treaty change that Mrs Merkel wanted in December 2011.

The net effect is not just that we are throwing up unnecessary political obstacles in the way of our own involvement; we are beginning to stand in the way of others moving ahead. In fact, the real terms of British membership of the Union have sadly already been redefined; instead of seeking to continue leading in Europe, the Government are in danger of gradually locking us all into the defensive mentality of a country reconciled to life on the margins, as support for European membership declines and Euroscepticism becomes increasingly dominant.

If the Prime Minister is serious about obtaining what he calls “fresh consent” for our membership of the Union in a referendum that he presumably hopes to win, he must begin now to set out a more realistic account and a more positive vision of why the European Union should feature as part of the future of this country, and how and why we can play an important role in helping to shape the future of our continent, as well.

My Lords, I congratulate the noble Lord on securing this debate. He has consistently advocated the importance of close relations between ourselves and our European partners and has always argued for making Britain’s membership a success, as has the noble and learned Lord, Lord Howe of Aberavon, whom it is a pleasure to follow.

I am not opposed at all to a Government arguing for change within the European Union, nor am I opposed to wide public debate about that issue, providing that it is well informed and open, because there is no doubt that Europe is changing and has to respond to a large number of challenges. However, I have great concerns about the Government’s goals and the lack of clarity surrounding them. I also have concerns about the timing of recent government initiatives, which are sometimes unhelpful, particularly as they come at a time when the eurozone countries are, quite understandably, concentrating on trying to resolve current difficulties. I also have concern about the Government’s approach to alliance-building, both with other Governments and in the context of the European Parliament, where the Government seem sadly to have cut themselves off from the European mainstream.

In the short time that I have available, I would like to question the Government about their goals. There is a lot of talk within the Government, and within the Conservative Party particularly, about having a looser relationship with the European Union. The more I read about this, the less I understand exactly what is meant by it, and I would like some clarification of what is in the Government’s mind. For example, what does it mean for environmental policy, an area that has become very important in EU work in recent years? What involvement do the Government expect to have in that very important area of policy in future? What about economic policy? It is not just about the euro but about many other things. How are the Government going to approach this? For example, I was disappointed recently that they managed to get themselves in a minority of one over the bankers’ bonuses issue, even though it is an issue that is of concern to citizens across the European Union. What does it mean for development policy? Will we be involved in development policy in future, in the Government’s view, or is that something that they want to see left to national Governments? What about the extent of foreign policy co-operation, an increasingly important area within the European Union’s work?

Furthermore, we know that the Government said a lot of things in opposition to social policy, which was a part of the EEC from the outset—so it is not a dangerous additional add-on. I remember, when I was first in Parliament, the warnings that the Government gave about what they called the job-destroying social chapter, even though, after the Labour Government signed it, employment was at the highest ever recorded level and their fears seemed to be completely unfounded.

In approaching those things, I urge the Government not to oppose those policies capable of attracting our citizens and electors. I refer to the excellent brief provided to us by the Law Society, which says:

“The EU has taken significant steps towards ensuring equal treatment; in particular in the work place through initiatives such as the Equality Directive and Equal Pay Directive. The Society is keen to ensure that UK works alongside other Member States as the EU continues to protect and uphold such rights whilst respecting differing legal traditions”.

The noble Lord, Lord Dykes, mentioned justice and home affairs co-operation. That has been a welcome area of co-operation in terms of practical results, but it is not at all clear what the Government’s approach will be to that in the future.

My final plea is that I hope the Government will take some of their arguments out to the public so that we can all join in. It would be good if next year’s European elections were about European issues rather than a referendum on national government policies. Perhaps that would be a better opportunity than a referendum at some vague time in the future.

We thank the noble Lord, Lord Dykes, for allowing us to debate this highly pertinent issue. I have previously praised the Prime Minister’s speech on Europe as a cogent and elegant statement of all the reasons why it is in our interest to remain part of a reformed EU. He set out a positive vision, but I think his speech has created a significant problem for us.

In the past few months, going about my daily business in Europe and countries beyond, I have encountered, as I am sure others here have, senior officials and politicians from some of Europe’s major countries as well as many of the world's leading investors and some substantial business heads who can make investment choices about this country. To a person, they have concluded that the Prime Minister’s announcement of a referendum is the first step in a determined process on the part of the UK to extricate itself from the European Union.

I do not believe that to be the case. I routinely inquire, “Have you read the whole speech?” but, frankly, no one I have spoken to—and I am talking about many people over the past couple of months—has ever read the whole of the Prime Minister’s speech. That should not surprise us. In busy lives, people settle for the summary report, perhaps online, or skim-read and form a quick impression. I have no doubt—again, I am sure that this view will be shared by others here—that all the major players in Europe want us to stay part of the European Union and to engage, not least to help the present and continuing crisis. But in the short term, other major countries doubt our commitment. In the wider world, we risk being seen by major global investors as detaching ourselves eventually from the single European market. I am sure that this will be common ground among us, but we can ill afford an investment pause in the UK for the next four years.

The Prime Minister has now begun his sadly interrupted tour of major European capitals. I have no doubt that he will have conveyed a nuanced picture of our true position to his senior colleagues in Europe. But beyond that, I hope that he will fully engage the global media, which I do not think he has yet done, and seek to counter the damaging perception that has been formed about our true position. I hope that the Prime Minister will put over what I think is his essential message: that reform and commitment, not obstruction and exit, are the UK’s preference and intention.

My Lords, it may be thought that the Church of England does not have a particularly European perspective, but that is far from being the case. Through its diocese in Europe it is present in all the member states of the EU. It has effective links with other churches throughout Europe and is active in the Conference of European Churches. Together with our partner churches, we are also deeply aware of some of the roots of the EU and the vision of its founders in Catholic social teaching.

It is from this broad base that the Church of England engages with the EU itself through its own representation and structures. Also, in March 2012, it made a submission to the House of Commons Foreign Affairs Select Committee on this very question of the UK’s relationship with the EU.

That submission started from the basis that for the Church the primary purpose of politics, even European politics, is the promotion of human flourishing and the conditions that are necessary to make this happen. This includes economic, social, ethical, cultural and legal conditions. Here, the value of the EU as a single market is not to be ignored. While growth is, of course, not to be treated as an absolute idol, poverty is the enemy of the good life and so of the common good. Thus, regularly over the past 40 years the General Synod has affirmed that, while it has reservations over certain characteristics of European integration—not least its demographic deficit—our propensity as human beings created in the image of God to be creative, productive and generous beings has been enhanced by pooling certain elements of national sovereignty in a common European project. This project, it is worth remembering, has deep spiritual roots. The treaty of Rome is peppered with aspirational phrases such as:

“Determined to lay the foundations of an ever-closer union among the peoples of Europe”,

and:

“Intending to confirm the solidarity which binds Europe and [other] countries and desiring to ensure … their prosperity”,

as well as:

“Resolved … to preserve and strengthen peace”.

One of its founding fathers, Robert Schuman, wrote:

“Democracy owes its existence to Christianity. It was born the day man was called to realize in his daily commitment the dignity of the human person in his individual freedom, in the respect of the rights of everyone, and in the practice of brotherly love towards all”.

It is against this background that we also responded to the Prime Minister’s recent Bloomberg speech, in which he set out a vision and an agenda for European reform. On that occasion, he was certainly right to say that much in the EU needs to change, that the Union should accept the principle that powers can flow not only from member states to institutions but the other way too, and that national parliaments should become more closely involved in EU decision-making. However, there remains a lingering doubt as to whether the Government’s agenda is one of reform for the good of Europe as a whole or a more narrow focus on the repatriation of powers in response to political pressure nearer to home. It would be good to have some clarification about that today.

The value of this debate is that it is a reminder of how much need there is for a more informed public and political debate that might shape both a renewed vision for Europe and our own understanding of how we might best realise it. The churches of Europe see themselves as very much part of that debate and with much to contribute to it. They are deeply embedded in European culture and, although we are distinct, it is still possible and right to think of the family of churches in Europe in terms of the historical embrace of a single faith. Even perhaps particularly as Europe becomes increasingly characterised by the diversity of faiths within it, our own long experience of interfaith dialogue and co-operation has a valuable contribution to make to the pursuit of that founding vision grounded in the common good.

Finally, in this context, it is perhaps especially good to recall an observation of the Chief Rabbi, the noble Lord, Lord Sacks. In an address in Rome last year, he said that,

“the future health of Europe, politically, economically and culturally, has a spiritual dimension. Lose that and we will lose much else besides”.

He went on:

“To paraphrase a famous Christian text: what will it profit Europe if it gains the whole world yet loses its soul?”.

I hope that the failure of successive British Governments to articulate a coherent and constructive policy towards our European partners and to manage to take public opinion along with this will not contribute to that loss of the European soul.

My Lords, today a statement was signed by business leaders, and I was one of the signatories for Business for Britain. The statement was very simple:

“As business leaders and entrepreneurs responsible for millions of British jobs, we believe that the Government is right to seek a new deal for the EU and for the UK’s role in Europe. Far from being a threat to our economic interests, a flexible, competitive Europe, with more powers devolved from Brussels, is essential for growth, jobs and access to markets. We therefore welcome the launch of Business for Britain’s campaign for real change in the EU and urge all political parties to join in committing themselves to a national drive to renegotiate the terms of Britain’s membership of the EU”.

After signing that, I was accosted by many people today saying, “This means you are anti-Europe”. I am not anti-Europe in any way whatever—in fact, quite the contrary. A week ago, before this statement, the British Chambers of Commerce released its survey on Europe. The BCC’s European Union business barometer of more than 4,000 businesses shows support for renegotiation with Europe. A week before this statement came out, John Longworth, the director-general said:

“Companies believe that re-negotiation, rather than further integration or outright withdrawal, is most likely to deliver business and economic benefit to the UK”.

This is the first major survey of British business following the Prime Minister’s policy speech on Europe in January, and it has revealed broad support by business for renegotiation of Britain’s relationship with the European Union. In fact, the results were staggering, such as:

“Remain in the European Union, but with specific powers transferred back from Brussels to Westminster received the highest positive impact rating, with 64% … the lowest negative impact rating, with 11% … Full withdrawal from the European Union received the highest negative impact rating, with 60%”.

Businesses do not want to withdraw from Europe. Another result was:

“Remain in the European Union with no change to current relationship received the lowest positive impact rating, with 15%”.

This is business speaking. Do we want to listen to business or do we want to live in a Utopian world?

I thank the noble Lord, Lord Dykes, for bringing forward this really important issue. The Prime Minister’s speech has raised an important matter. Whether to have a referendum is a debatable issue but the reality is that we are against the financial transaction tax. After everything that has happened with the financial crisis, the City of London is still the number one financial centre. On the idea of a “veto” last year with the Prime Minister walking away from the table, I do not necessarily agree that that was the right thing to do. People said that that means that we will not be at the top table of Europe any more. Well, when it came to the budget negotiations the Prime Minister was very much at the top table in encouraging the budget to be cut.

We have MEPs with no representation. Nobody in this country knows who their MEP is; MEPs do not even know their constituents. We have a Parliament that moves between Brussels and Strasbourg. We have billions of euros of waste. We have free trade agreements that are taking years. Will the Minister tell me when the European Union-India free trade agreement will be finalised? We also have the euro, which has been an utter failure.

There is no question that Europe is our biggest trading partner—more than 50%. There is no question that 2.3 million European Union citizens live here and that almost 1 million British citizens live in the European Union. We want the free movement of goods and people but global institutions need to evolve. The UN needs to evolve; the World Bank needs to evolve and the IMF needs to evolve. The EU has evolved, but the euro was a bridge too far. Thank God we did not join the euro but so many people pushed to do so.

Right now we make up less than 1% of the population of the world but we are still at the top table. We are still a permanent member of the Security Council, a member of the G7, the G8, the G20, and we are still at the top table of Europe. The solution is not to cherry pick but for us to sit down together in Europe and remember our priorities—free trade, free movement of people and, most importantly, the maintenance of peace. That peace is priceless and worth much more than the billions we contribute to the European Union every year.

My Lords, I thank my noble friend Lord Dykes for posing this timely question, which should concern everybody who wants to see the UK remain a member of the European Union. That, of course, includes my right honourable friend the Prime Minister who sought to make that clear when he indicated his intention to attempt a renegotiation of our relationship with Europe, to be followed by a referendum on the outcome.

Whether intentionally or not, that has put on the table the possibility of the UK leaving the European Union with all the uncertainty that that creates in people’s minds and the regrettable boost which has been given to UKIP and its fellow travellers. Leaving to one side the question of a referendum, which I personally regret, the UK has to have a twin-track approach if there is to be anything approaching a successful outcome of any negotiation and subsequent referendum. To achieve the first, we have to be clear and realistic about what it is we seek to change. The Government’s review of competences will not be complete until the autumn of 2014. There have been press reports that at least two member states—France and Germany—have refused to contribute to the process. Is that correct? I do not expect my noble friend to disclose details of the observations of individual member states but can she indicate whether there have been any responses from anyone and, if so, the nature of those responses?

The Prime Minister is reported to have discussed the question informally with the German Chancellor. Have we already formed a view about what we seek to change prior to the outcome of the competences review and, if so, what is the point of the competences review? Are Ministers looking at matters which could be dealt with by an amendment of existing European legislation? This may be a more productive route and likely to find us more friends among other member states as opposed to treaty change. If we seek treaty change for our benefit, shamelessly exploiting the possible need for eurozone members to make changes for the economic governance of the eurozone, how will we prevent the other member states raising their own particular issues and how many will welcome that process being turned into a wholesale treaty review? Might they not prefer to come to their own arrangements not involving treaty change and, therefore, maybe not involving the United Kingdom? If substantial treaty change is in mind, how do the Government intend to achieve this between 2015 and 2017—the date of the promised referendum—bearing in mind the Lisbon treaty provisions regarding substantial changes?

For us to have influence within the European Union, whether in the Prime Minister’s promised renegotiation or generally, the atmosphere has to change. We must sound as if we want to remain members, recognise negotiations are negotiations, and bring an end to what I have previously described as the current attitude of preferred disengagement. Language and tone for those to whom it is directed and the climate it creates are extremely important.

We have talked of actively discouraging citizens of Romania and Bulgaria from coming here when they become legally entitled so to do. We have thereby created a climate whereby the desirability of having admitted citizens from other EU member states after 2004 is now called into question. Such careless language, which we would not use in respect of nationals of other countries outside the EU, does not win allies, especially when it appears to question one of the four fundamental freedoms of the Union. Can my noble friend state categorically that none of these freedoms is questioned?

The second track, which we must follow if we are to succeed in convincing our partners that we are in the Union for the long run and to win any referendum subsequent to renegotiation, is to put the case for membership unambiguously, enthusiastically and now. The Conservative Party must make it clear that we are not going to dance to UKIP’s tune. UKIP policy on Europe is not the policy of the Conservative Party. The Tory party must not allow itself to become an umbrella under which the otherwise unelectable articulate UKIP views. In passing, would it not be a good thing to change the system of election from closed lists to open lists so that voters who wish to vote Conservative may do so without having to vote for candidates who display Tory colours but UKIP tendencies?

If we are seen to put the case for Europe without threats of withdrawal, there may be a chance of achieving some successes and reforms that might resonate with other member states, and of winning a referendum. Failure to show our desire to be fully involved now and in the future can only reduce our influence to our own detriment.

My Lords, I congratulate the noble Lord, Lord Dykes, on securing this debate. He has been committed to this cause in all the long years that I have known him. He has shown great energy, commitment and often great courage in pursuing that cause. I have great pleasure in paying tribute to him today.

The most interesting thing about this afternoon’s debate is the people who are taking part. Where are all the leading Eurosceptics? Not one of them has turned up. We had a debate in this Chamber about a year ago and all of them turned up. I distinctly remember the noble Lords, Lord Lawson, Lord Lamont and Lord Flight, telling us how the euro was about to collapse and that they had been right all along because they had been saying for years that it was bound to collapse. I remember replying that they slightly reminded me of the Marxists of the earlier 20th century who, every time there was a recession said, “We were right all along; this is the final crisis of capitalism”. I am not sure they appreciated that analogy. They are not here this afternoon, which must be a very good sign as to progress in the European Union.

Of course, there is no disaster to gloat over. The latest news is actually rather encouraging. I am quite convinced that both the EU and the eurozone are emerging strengthened from the crisis. It has been very positive to get the growth and stability pact and to achieve the banking union. The handling of the Cyprus banking crisis has been extremely successful. We have established the principle now that there should be no bailout without a bail-in. We have established the principle that anybody who has more than €100,000 and wants to keep it all in one bank has some responsibility to take a view on the creditworthiness of that bank and, equally, that people who have less than €100,000 in deposits should be protected by public guarantees. All that has been very positive.

Of course, some of these things could and should have been determined well in advance, calmly, because rationally they were the sensible thing to do. But we all know that in human affairs people often only take the right decisions in a crisis. It is difficult to get people to make difficult decisions when things seem to be going well. These structural changes are a permanent legacy and a positive outcome of this crisis.

None of us has very much time to speak, but I do not think that there is an alternative to the EU for achieving what we need to achieve in this country on so many fronts—the environmental, economic, foreign policy and defence fronts. This is an area at which we desperately need to look very carefully now, because budgets are so constrained throughout the European Union: how can we best save money through greater degrees of co-operation, including defence specialisation? That is a very complicated matter and we must return to it on another occasion.

All parties like to say that they are taking a cool, calm, objective view of the national interest. But we must do so without prejudice. We must not reject a particular solution if it is actually in the national interest simply because it has the word “European” or “EU” attached to it. There is too much of that emotional counterreaction on the part of the Government at the present time.

I leave the noble Lord with one thought this afternoon. It is time for us to look pragmatically, coolly and calmly, without hysteria, at the possible advantages to us of joining the Schengen agreement. It would not merely remove a lot of the existing burden on the UK Border Agency, which we have seen so much of in the past few months, but it would address a much more serious problem. This country is losing hundreds of thousands of pounds, perhaps even millions of pounds a year, in tourism particularly from visitors from the Far East who tend to travel in groups. Their travel agents arrange a Schengen visa for them. They come to Europe and visit Amsterdam, they go down the Rhine and visit Paris, Rome and Madrid. They have a lovely time, but they never come here because we are not part of the Schengen system. It would involve additional delays and costs to get visas.

This is a major economic problem. The Government have always excluded even looking at Schengen simply because it is European. But if it happens to be the right pragmatic solution on the basis of the national interest, we should go along with it.

My Lords, I, too, join other noble Lords in congratulating the noble Lord, Lord Dykes, on securing this important debate. I wish to confine my comments to an area where there have been unintended consequences of European legislation—in the delivery of healthcare here in our own country. This is a vital issue. As we move forward, there may be an opportunity for British people to become isolated because they feel that there is an impact on the delivery of healthcare that was unintended and is having a detrimental effect. Before doing so, I declare my own interest as Professor of Surgery at University College London, and as a member of the General Medical Council.

A number of issues have been raised with regard to European legislation and directives that relate specifically to healthcare. They relate to the area of professional qualifications and the free movement of labour within the European Union. There has been important progress with the issue of language testing. The General Medical Council, it is proposed, will now be allowed to test the language skills of all doctors who wish to be registered by the council in the future, including those who come from the European Union. That is an important achievement.

However, there is still concern about the ability to test professional qualifications and the nature and structure of the postgraduate training that has been delivered to healthcare professionals throughout the Union. This is an important issue because doctors coming from other parts of the world are subject to that kind of rigorous testing before they are allowed to join the register.

The issue that I would like to focus on is the European working time regulation. In 2010, when the coalition Government was formed, the then Health Secretary committed to begin negotiations with the European Union on ensuring that working time regulations could be applied in a more flexible fashion with regard to working in our hospitals to reflect the fact that the nature of the delivery of healthcare—the structure of our hospitals and broader healthcare environments—is somewhat different from other European countries, and a degree of flexibility would be important. I recall that the then Health Secretary and the Business Secretary were to commence discussions in January 2011 on this matter, but all seems to have gone quiet because of the broader review of competences that is currently taking place.

We need to be very sensitive to this issue. Recently we have started to see coroners’ narrative verdicts starting to cite European working time regulations as a contributory factor in patient death. We have seen in the Francis report into the problems that were experienced at Mid Staffordshire hospital that the working time regulation was identified as a potential contributor to an inability to provide continuity of care within the hospital system. These kinds of descriptions in coroners’ verdicts and in important reports, such as the Francis report, can cause unnecessary anxiety.

With increasing pressure in the healthcare system, we need to be sensitive to problems identified by, for instance, the Royal College of Surgeons, which estimates that 400,000 surgical hours a month are lost from the healthcare system as a result of the application of the working time regulation to surgical rotas and that some £750 million a year is now spent on locums to ensure that locum doctors can fill gaps in those rotas. Equally, the Royal College of Physicians has identified this whole area as a major issue for the delivery of healthcare.

Therefore, I should like to ask the Minister what progress is being made with regard to the discussion about the working time regulation. This was identified as important on the basis of patient safety and the need to ensure continuity of training to a high standard for our trainees, who will lead the healthcare system in the future. It seems to have become mixed up in the broader question of competences and of bringing them back from Europe. If this issue is not addressed, there could be major problems in the future that will be attributed to it and this could have a detrimental impact on the public perception of Europe, because health was never an issue of competence and this matter is specific to the delivery of healthcare in the United Kingdom. Is the Minister able to guarantee that this important discussion, which started long before, will be continued in a timely fashion?

My Lords, one of the underlying causes of the UK’s isolation in the EU is our lack, as a nation, of the foreign language skills to enable us to participate fully and to derive the full economic, cultural and educational benefits from membership. I declare an interest as chair of the all-party group on modern languages.

There are three main ways in which our language skills deficit is damaging. The first is in terms of influence. The Foreign Office itself has noted that a shortage of British staff in international institutions is detrimental to the national interest and undermines our policy influence. UK nationals make up only 5% of the European Civil Service, although we are more than 12% of the population. In 2011, a mere 2.6% of applicants were from the UK—fewer than from any other member state—and a key reason for this was that English-speaking applicants must offer either French or German as a second language.

Secondly, poor or non-existent language skills prevent UK nationals taking advantage of labour mobility within the single market, while of course leaving them open to competition from incomers. UK employers are dissatisfied with the language skills of British graduates and end up recruiting far more multilingual graduates from other EU countries than employers from any other member state. Although this shows that the single market is working well in terms of the free movement of people, British workers are limited in their ability to take advantage of this freedom in the opposite direction.

This is, of course, linked to export growth. The Department for Business, Innovation and Skills noted recently that the proportion of the UK’s exports to the other 26 member states is falling and now stands at less than 50%. A considerable body of evidence now links export growth to languages. Business leaders say that it is language availability that drives export decisions, not market strategy.

Finally, UK participation in EU mobility programmes is worryingly low, yet this is what equips people with the skills to work across borders. In 2011, more than twice as many French and nearly four times as many Germans took part in work experience placements within the EU. UK university placements under the Erasmus programme are around one-third of those of France and Germany.

To sum up, we are barely present in the EU administration, our students are keeping themselves to themselves, and trade with other member states is in decline.

While I warmly welcome the fact that the Foreign Office has recognised the importance of languages in diplomacy by increasing its budget for language training and the number of posts for which languages are now regarded officially as an absolute requirement, I should like to ask the Minister two questions. First, what specific action will be taken to increase the number of UK nationals able to compete successfully for positions in the European Civil Service? Secondly, given that our language deficit is the concern of so many different government departments, will she undertake to discuss with colleagues and with No. 10 the value of appointing a single government Minister to have cross-departmental responsibility for a co-ordinated policy on foreign languages? Without a step change in our language skills, we will continue to compound our isolation within the EU and be unable to play a full role in the formulation of strategy and policy.

My Lords, like noble Lords here present, I have been travelling widely across Europe over the past few months and talking to a range of political leaders and academics. My reading of the situation with regard to the UK is a bit different from that of other noble Lords who have spoken because I think it is much more serious and difficult for Britain than we imply from the speeches that have been given hitherto. Being an academic, I shall express this in terms of a number of steps of reasoning and ask the Minister to say where the flaw in the argument lies because I do not see one.

It goes in seven quick steps: first, the economy of the UK is heavily dependent on that of the wider European Union and there is no chance of diminishing that dependency in the short term. Secondly, saving the euro and returning the eurozone to prosperity is of key importance to a stable future for the EU and hence to the UK’s economic fortunes. The collapse of the euro would have catastrophic consequences for all of us. Thirdly, the euro cannot be saved without greater European integration, including, at a minimum, some form of banking union in the eurozone and, almost certainly, some sort of loose federation for the EU as a whole down the line. Fourthly, you cannot have greater integration and variable geometry at the same time because they are mutually exclusive. This is the reason why our normal allies, such as the Danes, gave such a tepid response to the Prime Minister’s speech in January. Fifthly, the chances of treaty change along the lines the Prime Minister wants to produce are therefore, to my mind, pretty close to zero. The main reason is that they are simply in the opposite direction to that in which Europe has to travel if the eurozone is to be saved, and the eurozone must be saved; at least, it must be stabilised in the short term as a minimum. Sixthly, hence, if by some miraculous happenstance the Government win the next election, the Prime Minister will be forced, when a referendum is called, to campaign for a no vote. Seventhly, since the Prime Minister says that he wants the UK to stay in Europe, this outcome can be described in Shakespearian jargon as:

“Hoist with his own petard”.

My Lords, it is difficult to follow that. The question of this debate takes as its premise that UK isolation is a bad thing, but is that the case? In my role as chief executive of London First, I talk to many business people who have given serious thought to how a UK that is not part of the EU might fare. Some point to our historic success factors—an open business culture, our time zone, English law and the English language—none of which comes from Europe. They question whether our membership really makes it easier to do business in Europe than with, say, Norway. Further, they argue that our focus should be on the emerging economies. Others challenge the assumption that leaving the EU would damage London’s role as a financial centre. Supposing the EU were, in effect, to shrink to the eurozone, a new European financial centre would almost certainly emerge, but with an inward-looking focus, and meanwhile the UK would expand its global financial role.

However, it seems to me that these views merely represent pragmatic ways of dealing with a situation that few would actually welcome. Certainly, business people complain about red tape and employment law emanating from Brussels, but of those multinational companies that I speak to, not one has advocated divergent regulation within Europe. Furthermore, they understand the logic of negotiating global free trade agreements from a base of 500 million people rather than 60 million. While the need to shore up the euro necessitates reviewing relationships in Europe, I have yet to meet a senior business figure who would actively have sought a referendum at this time.

Continental Europe remains a major trading partner for the UK. We must value and respect that relationship. Let us not forget that for many companies, whether British, Asian or American owned, London is the location of their European head office. Any suggestion that the host country is at odds with other countries in the region is clearly unhelpful.

In financial services, what Europe needs is a financial centre which is competitive with the Americas and Asia. What the UK needs is friends to make that point, rather than enemies who resent the Anglo-Saxon business model. This is about tactics in Europe as much as whether one is a Europhobe or a Europhile. Some countries may wish to see London lose its position but there are also European firms and member states that value having globally competitive capital markets within our time zone. Certainly, tactically, it is not clever for the Chancellor to be voted down 26 to 1 on bankers’ pay, whatever way you look at it.

Therefore, my plea to government is not to risk vital relationships with political posturing. The only way to improve the relationship with Europe is to put two feet firmly inside the tent, identify allies and commit wholeheartedly to making the Union work for everyone’s benefit.

My Lords, the noble Lord, Lord Dykes, serves us well and may he long continue to do so.

The first reality for all of us in Britain is our total interdependence with the world as a whole. We fail the electorate, we fail our children and we lamentably fail our grandchildren unless we take every opportunity to bring that home. Since we last debated this issue, the realities of interdependence have become more underlined than ever. The economic crisis continues, the euro crisis—with all its implications for us as well as for everybody else—is still there, and of course this is complicated by the emergence of south Asia and China as increasingly significant economic realities.

Global security is challenging. There is Syria, the Arab spring with all its implications, the Korean peninsula and more besides; there is climate change, which is not unrelated to the issues of migration, which are immense; and then, of course, there are crime and terrorism. One of the things that we all have to face is that significant crime and significant terrorism are, by definition, international in character. None of these issues can be satisfactorily resolved for the British people by Britain on her own. They all require constant, growing and effective co-operation.

Sub-Committees E and F will produce their report this week. I declare an interest as a member of Sub-Committee F but I commend the report to all members and take this opportunity to thank the noble Lords, Lord Hannay and Lord Bowness, for their outstanding leadership in chairing those two committees. I also commend the evidence because there has been a real attempt to keep the report of those committees evidence-based. One should read that evidence. All the people involved in the front line in fighting international terrorism and crime are saying that it would be madness at this stage to pull out from the closest possible co-operation which is developing so well within Europe.

I conclude by simply making this point. In the aftermath of the Second World War, in those very difficult situations our leaders across the political divide recognised that our future lay in the future of the world, and they became central to the building of viable, relevant international institutions. This was as true of the Conservative leadership at that time as it was of the leadership of my own party. What has happened that we have lost sight of that reality? The challenges today demand that same vision. Of course, there are weaknesses and huge flaws within the European Union, but those are best tackled by a Britain that is seen to be relentlessly committed to its involvement and belonging to the international and European community, not by a Britain that neurotically and negatively constantly undermines the European cause. I thank the noble Lord, Lord Dykes, most warmly and hope that he will continue to keep us up to the mark on scrutiny on this issue.

My Lords, it would be idle to pretend that Britain’s always turbulent relationship with the other member states of the EU is not currently going through a more than usually troubled phase, and for that reason, I thank the noble Lord, Lord Dykes, for his initiative. The misguided attempt to veto a fiscal union treaty in December 2011, the balance of competence review, whose purpose often seems obscure to its authors, let alone to most of the other member states which treat it with deep suspicion, and the Prime Minister’s reckless commitment, in my view, to an in/out referendum in 2017 all contribute to a negotiating climate that could easily end up negating the objective of establishing a more settled relationship for a Britain firmly engaged as a full and fully participating member of the European Union.

How is such an outcome, which would be so damaging to Britain’s national interest, to be avoided? First, we certainly cannot afford to sit around waiting until we see the result of the 2015 general election before embarking on a process of reform. Nor can we afford to found such a process on the entirely false premise that the other member states, particularly the members of the eurozone, are poised to embark on an overall rewrite of the treaties, which would provide the opportunity for us to put forward a wish list of our own. That will simply not happen any time soon, and certainly not in the timescale envisaged by the Prime Minister. Nor can any such process of reform afford to be based on a purely British list of vetoes, red lines, no-go areas, items for repatriation or renegotiation. We need a positive reform agenda which takes proper account of the wishes and interests of other member states, and thus has some chance of enlisting their support. That positive agenda needs to enlist cross-party support in Britain; it must not be a ragbag of items designed to appease the unappeasable in UKIP and the wilder shores of Euroscepticism, neither of which forces has the slightest interest in an approach that would leave Britain inside the European Union.

Can such a reform agenda be put together? I believe that it can but it would need to move beyond the comfort zone of Britain’s traditional EU agenda—completion of the single market, with stronger provisions on services and a digital market, further enlargement and freer and fairer world trade, valuable though those components continue to be. It will need to include a more wholehearted embrace of a common foreign and security policy and it should surely include, too, some strengthening of the common security and defence policy to face up to the impact of austerity on defence budgets. It should be focused on policy reform rather than on institutional reform. There will, of course, need to be some areas of increased flexibility in the operation of an EU moving beyond the soon-to-be 28 member states. Variable geometry is alive and well—here I rather disagree with the noble Lord, Lord Giddens —and has been operated successfully in Brussels since the end of the 1980s. We need only look at Schengen, the eurozone, justice and home affairs opt ins and opt outs. There will probably need to be more of that as the eurozone moves to a more integrated economic and monetary union within a European Union where there is still likely to be a substantial number of member states not yet within the eurozone, nor likely to be so in the near future. What needs to be avoided is making such a variable geometry the main operating principle of the European Union—that would be to sound the death knell of the single market; and to avoid, too, any fixed group of inner and outer circles of member states, which would be inherently unstable and unsustainable. It makes no practical sense anyway, as Britain is an essential leading player in any strengthening of common foreign security and common defence policy.

If I had one immediate plea, it would be for the Government to jettison their silly and untrue slogan of wanting less Europe—untrue because the Government’s policy is for more single market, more European trade agreements, and more new members of the European Union. Who are they kidding? The slogan is silly and counterproductive because it separates us from our natural allies in Germany, Sweden, the Netherlands, and in central and eastern Europe, who will never march into battle under the banner of “less Europe”. Shaping and beginning to negotiate with our partners and with the Commission over such a positive reform agenda is the right way ahead, and a far better option than preparing to play a game of Russian roulette in 2017.

My Lords, it is perhaps worth remembering that the EU has three great achievements to its credit: it brought cohesion to western Europe after World War 2; it provided east and central Europe with a democratic home after the collapse of the Soviet Union; and it has created an almost but not yet complete single market of some 500 million people. All those greatly benefit Britain and the rest of the EU. The second and third of those owe a great deal to the influence exerted by successive British Prime Ministers and Governments, including on enlargement, and here I differ slightly from the view of the noble Lord, Lord Dykes and of Lady Thatcher.

The EU now has no such great forward-looking project. Indeed, in creating the euro, it has created huge, although not—and I agree with the noble Baroness, Lady Valentine—insurmountable problems for itself, brought on and exacerbated by the financial crisis. I believe we were right not to join the euro, but we also benefit hugely from the single market of 27 member states. Therefore, our interest as a nation surely lies in the maintenance of a coherent European Union of 27 or 28, with the euro at its core and the single market intact. That is easy to say but it is not a straightforward goal to achieve. There are strains between the eurozone and the rest, and within the eurozone, not least at present between Germany and France. Achieving that goal, crucial to our interest, will require patience, determination, tough negotiations and compromise, because negotiations always do require that. It will, above all, require maximising our influence, which we should never underestimate.

I do not believe that the noble Lord, Lord Birt, and I can be alone in hearing from business colleagues and others in Paris and elsewhere in the EU that Britain’s traditions of a liberal market economy, an international outlook and democratic strength are really needed in the EU, and the more the EU is in difficulty, the more, frankly, those qualities are needed. I fear, however, that we are also not alone in sensing that some at least in the EU seem increasingly to have given up on us, sensing that there is no longer a commitment in Britain to the European Union at a time when our contribution in our own interest, as well as in the interest of the European Union, is so important. That conclusion is wrong but I understand why they have come to it.

I end by looking on the bright side. I was delighted to see the Prime Minister and family spending time with Chancellor Merkel. I am delighted to see too that the Chancellor of the Exchequer played down the rhetoric of his opposition to the financial transaction tax, focusing instead on the British interest in opposing it. That, surely, is the way to promote our influence and our interests: state clearly our commitment to an EU of 27; establish close links, including at a personal level, with the key member states; and in that framework fight hard for British interests. As it is sometimes said, if you are not at the table, you tend to be on the menu. I know which I would rather be.

A lot of the speeches we have heard in this excellent debate seem to make an assumption that David Cameron is going to be Prime Minister after 2015, and that therefore the referendum promised for 2017 is going to take place. In my four minutes, I shall briefly set out what I think a Labour-led Government should do.

One assumption lying behind our present predicament is that, because of the euro crisis and the presumed strengthening of integration that has to go with it, Britain is condemned to be on the fringes of a much more integrated eurozone and therefore can no longer aspire, as Tony Blair’s Government certainly aspired, to play as leading a role in Europe as France and Germany. I think that that assumption is flawed. I am sceptical about whether the steps necessary to save the euro require the creation of an inner core federal Europe. That argument is overdone. I also believe that there are policies that a Labour Government could advocate which would put it right at the core of Europe.

The key thing is that we present a positive vision for the future of the EU, as the noble Lord, Lord Hannay, and others, have said, which suits our national interests but can win support from our partners. There are three key elements to this. One is to have a plan for growth, so that it is pro-reform and pro the single market—and we have talked about extending it in digital and services—but also anti-austerity, and trying to get out of the trap of collective austerity in which Europe has put itself. There is an instrument, for instance, in the European Investment Bank, which could be greatly expanded to deal with that problem.

Second is the need to demonstrate the role of the European Union in tackling the big long-term challenges that all our European societies face, including innovation, climate change, demography and inequality. On innovation, we should be pressing for more co-operative research. On climate change, there is an urgent need to do something about the minimum carbon price. The failure in the European Parliament last week was extremely significant. We cannot have a credible national climate change policy without a complementary European policy. On demography, we should be talking about how we manage the challenges of migration, rather than making cheap points about benefits to Britain. On inequality, we should look again at how we use European legislation to strengthen a more Germanic model of responsible capitalism.

Thirdly, there is the crucial role that the EU can play in the world. We heard a lot in the aftermath of Margaret Thatcher’s death about how she put the “Great” back into Britain. But given that we account in our changing world for about 2% of world GDP, which will be our position in about 10 years’ time, the idea that Great Britain can on its own influence the world is for the birds. We have to do it through the European Union; that is the only way in which we can protect our essential values and interests, and that is what I believe a Labour Government would try to do.

Along with that would have to be sensible institutional reforms. A belief in a stronger EU in some areas is not an argument for a more centralised EU. Powers should flow in both directions—the Prime Minister is right about that—and we should look at the present acquis to see what can be got rid of, as well as arguing for political reform that makes Brussels more accountable both to the European Parliament and to national Parliaments. But the fundamental point is that this has to be an agenda of reform, not of unilateral negotiation of some special deal for Britain, which is really a blind alley.

I shall finish by asking the Minister two questions. Will she take this opportunity to rule out once and for all on behalf of the Government that there are any conceivable circumstances, if they should be in power after the next election, in which they would recommend withdrawal from the EU in a referendum? Do they agree that the task is to forge an agenda of reform with our partners and not to draw up a list of unilateral demands?

My Lords, I congratulate the noble Lord, Lord Dykes, on securing this important debate. Our discussions on this subject are timely as the Government continue to work effectively with partners across the EU to agree on practical, pragmatic reforms that are good for the UK and the European Union. I hope that the noble Lord, Lord Liddle, realises that in that statement I have probably answered his second question.

My noble and learned friend Lord Howe of Aberavon is right to say that the UK needs a positive vision. I believe that we have one. The Prime Minister has set out his vision for keeping the UK at the heart of a reformed EU. It is a vision of a more competitive, adaptable and flexible EU with a strong mandate from the citizens of the EU. I thank the noble Lord, Lord Birt, for his positive comments and assure him that the Prime Minister’s approach is one of reform and commitment, not of obstruction and exit. Unfortunately I disagree with much of what the noble Lord, Lord Hannay, said, but I can assure him that policy reform is a key element of the Prime Minister’s speech, and I agree that the European Union is about much more than just a single market. There is more that we can do to make the common foreign and security policy more effective and to step up the agenda on enlargement, trade development and other matters.

The noble Lord, Lord Jay, referred specifically to a coherent EU of 27 members. I believe that the Prime Minister has set out his vision that tries to address that, based on boosting the competitiveness of the EU as a whole and ensuring fairness for those inside the eurozone and also for those outside it.

I shall return to the original question raised by the noble Lord, Lord Dykes. His question is quite clear; I want to be equally clear in my response. The UK has not been, and is not, isolated in the European Union. The proposals the Prime Minister has set out for reforming the EU ensure that this remains the case. This view is shared by others. The responses of many of our European partners to the Prime Minister’s speech in January acknowledged the key role the UK plays in the life of the EU.

Many also agree on the need for reforms: countries such as Portugal, Sweden, Austria and Estonia have all said so recently. The Netherlands, Finland, Hungary, Portugal, Belgium and the Czech Republic have all said that they too want a more flexible, diverse and democratic European Union. The Prime Minister of Italy at the time, Mario Monti, said he shared the Prime Minister’s opinion that prosperity and growth must be Europe’s priority. Noble Lords can see that the idea of the UK being isolated from partners such as these who are on the record as agreeing with the importance of our reform agenda does not stand up to scrutiny.

The supportive words of our European partners are valuable, but I want to talk about actions, not words. I ask noble Lords whether an isolated member of the EU could achieve the scale of progress we have recently achieved in reform-focused decisions across so many EU policy areas. The Government have, as usual, been busy, influential and successful. Let me share with you some examples. The noble Baroness, Lady Quin, asked specific questions on policy areas, and I hope that some of these examples will answer those questions. Last December, we worked with partners such as France and Germany to secure an agreement on banking union which preserved the integrity of the single market. In February this year, we led efforts to finalise a deal on a unified patent court which will reduce costs for businesses and encourage innovation. Just last month, we worked with other states including Denmark, Germany, Sweden and the Netherlands to abolish the policy of discarding caught fish as part of a wholesale reform of the common fisheries policy.

We delivered the first ever cut in the multiannual financial framework. This is an excellent example of how we have worked with our European partners. Few were happy with the idea of reducing the budget when we started negotiations, but we worked hard to form a coalition and persuaded all member states to agree a good deal for European taxpayers. In the European Union, you cannot reach agreements like those with 26 partners if you are unsupported and isolated.

The EU and the US recently announced their decision to pursue negotiations on a free trade agreement. It is influential member states such as the UK which drive this process behind the scenes. Such agreements are of critical importance to growth and prosperity across Europe and the United Kingdom.

In 2011, we concluded a free trade agreement with South Korea. Last year, we reached agreement with Singapore. This year, the UK is continuing to play its usual leading role as we come close to concluding talks with Canada. If we completed all of the negotiations on agreements currently on the table, it would be worth an additional €60 billion for the EU every year, according to the European Commission. From free trade to fisheries reform, from banking union to bailout rules, we continue to agree sensible changes to benefit the UK and the European Union.

The noble Baroness, Lady Quin, raised the specific issue of banking union, as did other noble Lords. Our key objective is to gain member states’ support that no banking union measures harm the unity and operational integrity of the single market. Banking union is a single currency and not a single market issue. As the UK is not a member of the eurozone, we have been clear that the UK will not participate in the sharing of eurozone risk or the new supervisory system. However, while it is for those who will join the banking union to design the framework, the UK will continue to play an active role during negotiations to ensure that the operational integrity of the single market is protected.

The noble Baroness also raised concerns that the Government are in the minority on the issue of bankers’ bonuses. This is clearly a very politically sensitive issue within the European Union at the moment. This made the debate very difficult. We voted against Capital Requirements Directive IV. Obviously we are not satisfied with the outcome. We have argued that the agreement on remuneration will have an adverse effect on financial stability. But this should not obscure the fact that many aspects of the agreement represent a positive achievement for the UK such as on higher prudential standards and the treatment of investment firms.

The right reverend Prelate the Bishop of Exeter asked, “Is this reform or repatriation?” as detailed in the Prime Minister’s speech. I can assure him very clearly that this is reform. The Prime Minister’s speech does not mention the word “repatriation”. We all need to help re-engage what the European Union means to European citizens and what citizens want. He also spoke about the common good and not to lose the soul of Europe, but I am sure he would agree that we will lose the soul of Europe if the current democratic deficit is not addressed. I hope that he and the church will feed into the balance of competences review.

My noble friend Lord Bowness referred to the balance of competences and to France and Germany’s contribution. The balance of competences review will give us an informed and objective analysis of the UK’s relationship with the European Union. Several foreign partners have already responded in the first semester along with a number of international organisations. Ultimately, the analysis will be focused on what the EU means for the UK and our national interest. We have already received 500 pieces of evidence and we will publish the full list of those who have fed into the review when the first reports are published in the summer, later this year.

The noble Lord also raised issues about UKIP and Conservative candidate selection. My views on both are on record from when I was party chairman.

The noble Lord, Lord Kakkar, raised some very specific issues in the area of health. I hope that he, too, feeds into the first semester of the balance of competences review, which reports in summer later this year. But in relation to the specific issue about the working time directive, the coalition Government have committed to seek to limit the application of the working time rules. We are continuing to work with EU partners whose votes we need to bring this about.

A question was raised in relation to Schengen. The UK already participates in some parts of the Schengen acquis where it makes sense, such as co-operation in managing borders. However, I can assure noble Lords that in 2012 more than 31 million people visited the UK, according to VisitBritain. The noble Lord, Lord Bilimoria, referred to the Business for Britain campaign, which called for a national drive to renegotiate the terms of Britain’s membership of the European Union. I welcome his contribution and the contribution of that campaign on how the UK can continue to be an active member of a reformed European Union. The voice of business is essential to that debate.

The noble Lord, Lord Dykes, referred to our opt-outs on the JHA in 2014. Discussions are ongoing and we have committed to a vote in both Houses, which will take place in good time. Of course, the national interest will be a key factor in deciding which measures we agree to rejoin. The noble Baroness, Lady Coussins, referred to foreign languages. This has been a longstanding issue and we recognise the importance of increasing UK nationals in EU institutions. We have reintroduced language training and indeed, the language school at the Foreign and Commonwealth Office. We have also supported the European fast-stream work and foreign languages in curriculums in schools.

The noble Lord, Lord Giddens, set what seemed like a series of undergraduate questions. He was clearly back in academic mode and I quickly went into undergraduate mode, with sweaty palms, and realised that I had not crammed enough to answer his questions, but I will try to answer them in writing. The noble Baroness, Lady Valentine, stressed the importance of EU free-trade agreements and trade with Europe. The Prime Minister has been very clear that the UK’s national interest is best served as an active member of a reformed EU. We seek reform of the EU for the benefit of all member states, and many European partners agree with us. I fully agree with the noble Baroness on the importance of the EU concluding free-trade agreements, and the Government are actively supporting an ambitious programme.

The noble Lord, Lord Judd, raised the issue of common security and defence policy. The UK has successfully driven common security and defence policy in the EU and we have made it a useful tool for delivering British objectives, whether in the Horn of Africa or the West Bank, and whether it was to improve policing in Palestine, Kosovo or in Georgia, British personnel were in key positions of influence and multinational efforts to help local populations deal with the legacies of conflict. The noble Lord, Lord Judd, also realises that there are flaws and weaknesses in the system, and it is those that we are attempting to deal with, and what the Prime Minister attempted to deal with in his speech.

This has been a thoroughly interesting debate and I thank the noble Lord, Lord Dykes, for giving us the opportunity to examine the issues once again. I thank all noble Lords who have contributed from across the House. As with all matters on Europe there is a full spectrum of views and opinions about the fundamental principles of the debate, but the noble Lord, Lord Dykes, talked about steps taken. In the snapshot of the most recent events I have given today, I hope that the facts speak for themselves, but this is not just about what the European Union is doing now; it is about what the EU wants to do as part of the future. The Prime Minister started the debate in January and it has aroused healthy discussions. We do not deny that there is a range of views across Europe; it would be odd if there were not, but I hope that I have made it clear that this Government dispute any notion of UK isolation. We will continue to put the case to our partners and continue to deliver changes to encourage growth now. We will continue to lead the wider debate on reform to secure long-term prosperity in the United Kingdom and the European Union.

Before the noble Baroness finishes, I have two specific questions which she did not deal with. Will she repudiate the policy advocated by UKIP of leaving the European Union and will she commit the Government to a categorical support of the four freedoms, to which I referred in my speech?

On the question asked by the noble Lord, Lord Bowness, the primary supposition is very clear. It is very apparent that the Conservative Party’s policy is one of renegotiation. In my last job I spent many hours touring the country speaking to Conservative members. When I asked them whether they wanted out, in as it is now or renegotiation, more than 90% always went for renegotiation. That is the Prime Minister’s position and I hope that it is clear.