Transcript only - delivery may vary
Two weeks ago, the prime minister offered the nation a referendum on whether to remain in the EU – or leave it. He was right to do so.
As a principle, I don't like referenda in a parliamentary system. But this referendum could heal many old sores and have a cleansing effect on politics. It will be healthy to let the electorate re-endorse our membership, or pull us out altogether. At present, we are drifting towards – and possibly through – the European exit. We need a renegotiation – and a referendum endorsement of it. If this is denied, the clamour for it will only grow.
But it is a gamble – for the country and for the Conservative Party. The relationship with Europe has poisoned British politics for too long, distracted parliament from other issues, and come close to destroying the Conservative Party. It is time to resolve the matter.
If the referendum were held now, some polls suggest electors may vote to leave. In 2017, their decision may depend upon the outcome of the negotiations. Success might involve repatriation of powers, opt-outs, reform of existing policies, or safeguards against unwelcome developments. It will, most likely, be a combination of all these – and more. None of this will be easy. On many issues, there will be no natural meeting of minds.
To what the French call the Anglo-Saxon mind, the case for reform is very strong: unanswerable, even. To many Continental minds, there is a very different perception. The French already believe that Sterling has a competitive advantage over the Euro. They now fear the UK will opt out of social and employment provisions to give our economy a further competitive boost. They will not readily concede this.
We need to prepare our own proposals without delay, and negotiate courteously and with understanding. The manner in which these negotiations are conducted is vital.
If we enter them without appreciating the position of each of our European partners, we will fail.
If we enter them without engaging with each of our partners, we will fail.
If we enter them with the aggressive attitude of "give us our way or we quit", we will fail.
We British would regard such an approach from our European partners as a threat, an attempt to bully; and, just as we would take a dim view of that, so would they.
When the end game approaches, the prime minister will need to conduct the negotiations personally – he will find that more concessions will be won in relaxed, personal face-to-face discussion than in formal talks. Before that, much preparatory work must be done, which would not be physically possible for the prime minister to do himself.
I believe he should appoint a lead negotiator who sits in the cabinet. If the Liberal Democrats oppose such an appointment – which is possible, since they oppose the referendum – then the prime minister should over-rule them. On a matter of this importance, the tail must not wag the dog.
It is essential this negotiator is seen as the prime minister's personal emissary. He (or she) must visit and re-visit every European capital to explain our case, seek allies, set out our aims, and – crucially –emphasise the damage to the EU as a whole if negotiations fail and the referendum is lost.
The prime minister cannot afford to neglect the home front. He must carry public opinion with him. In parliament, he will continue to receive unsolicited "advice" about what powers he must repatriate. Some of his colleagues will think this is helpful and that our partners will hear the strength of feeling – and capitulate. That is quite wrong. They will not. Such advice – given publicly – will undermine the prime minister's negotiating position. He will be seen to be acting under political duress, rather than principle and conviction – and his hand will be weakened. I know that because I have been there: advice, yes – that is a proper role for parliamentarians – but the truly well-meaning will give him advice in private.
Many colleagues will be instinctively loyal, but not everyone. Rebellion is addictive, and some members may be getting a taste for it. I learned twenty years ago that the parliamentary party includes irreconcilables who are prepared to bring down any government or any prime minister in support of their opposition to the EU.
Some have softened their views. Others have not. The present parliament contains members whose opposition is fundamental.
Members with Conservative heads and UKIP hearts cannot be placated. Whatever is offered to them will be insufficient. They will demand more. They will only be satisfied by withdrawal. It is, therefore, essential for the prime minister to rally the persuadable majority of the parliamentary party.
If the negotiations fail, the referendum could be lost and we could slip out of the EU in frustration and by default. The prime minister should be prepared for the likelihood that the irreconcilable among his parliamentarians, including ministers, will campaign for a British withdrawal.
I am neither a Eurosceptic nor a Europhile. As prime minister, I vetoed the appointment of the President of the Commission because the candidate – an able man – held views inimical to our national interest.
At Maastricht, I obtained opt-outs from the single currency and the social chapter. I did this by explaining in innumerable private meetings why I could not accept these policies and that, without an opt-out, I would have no choice but to veto the whole treaty.
I judge our membership of the European Union upon one overriding criterion: is it good for Britain?
Is it good for our economic well-being? For competition, and jobs? For our general quality of life? Is it good for our security, our diplomacy and our standing in the world? All of these elements are relevant to the value of our membership. Now, after forty years, the referendum raises new questions:
• What would it cost us to leave?
• What would we lose if we left?
• And, if we stay, how can we carve out a leadership role?
First, some process. We cannot – legally – simply walk out of the EU. We are obligated by treaty to negotiate our exit, and meet liabilities that will crystallise at a later date. The costs could be substantial. No-one yet knows how substantial.
If we left, a swift glance suggests we would be freed of budgetary contributions, regulations, directives, interminable meetings, unwanted lectures and multiple frustration. It sounds attractive. But closer examination returns us to the world of realpolitik.
One presumption from those who advocate leaving the European Union is that we could remain in the single market of 500 million consumers. That is (probably) true: but there would be a price. Norway – as a non-member – pays two-thirds as much per head for access to the single market as the UK pays as a full member. We could expect similar terms, and that price would be likely to rise with every opt-out we achieve that our partners believe would give us a competitive advantage.
Moreover, trade policy is a European Union prerogative: as a non-member we would have no national trade policy in place, and would need to negotiate our own free trade agreements. At worst, this could take years. At best, we might be able to piggy-back on existing EU agreements. Either way, we will face tariffs.
One example will suffice. At present, we export five out of every six cars made in the UK but – as a non-member – we may have to pay a 10% external tariff on exports to the EU, and 5% tariff on components. Would Nissan, I wonder, and BMW, Honda, Toyota and Ford continue to build at Swindon, Deeside, Dagenham, Bridgend or Oxford – or would they relocate and place future investment inside the European Union? Many livelihoods depend upon that answer.
Tariffs are not the only – or worst – threat to competitiveness. Most trade barriers are regulatory and – to continue to sell in Europe – UK exporters would have to conform to their regulations. As a non-member, we would have no input into them.
Would this hurt us? Certainly. In the crucial area of financial services, we can anticipate that regulations could – and would – be designed to undermine UK competitiveness. Many would argue that this is already happening – and I would agree: but, whilst inside the EU, we can mitigate the worst of the excesses. Outside, we could not.
The European Commission is very unpopular in the UK – sometimes, rightly so. It can be insensitive and bullying. But we shouldn't ignore its virtues. In alliance with the Commission, the UK has driven policy on the single market for many years. In negotiation, the Commission may often be our ally. They know that a Europe without Britain would be more vulnerable to a move towards protection – and that would be immensely damaging.
Inward investment may also be at risk. Would companies from around the world who invest over £30 billion a year in the United Kingdom be more – or less – likely to do so without unfettered access to the European market? To me, the answer is self-evident, but any doubters should ask the foreign investors – and then reflect on the half a million jobs they have created in the last decade alone.
The impact of withdrawal goes beyond trade and investment. In a world of global markets, countries are increasingly banding together. It would be a brave decision for Britain to go it alone. I bow to no-one in my pride of our country, but we should see ourselves as others see us. We are 70 million in a world of 7 billion, with nations like China, India, Turkey, Indonesia, Mexico and Russia all rising in economic and political importance. Do we wish to become less relevant in their eyes, or face the future as a leading voice in a block of 500 million people? To leave would be to march against history.
Many who wish us to withdraw from Europe do so on the assumption that we could enhance our relationship with existing allies: most obviously, the United States and the Commonwealth. They are mistaken.
Economically, the United States looks increasingly to the east, where the market is growing. Politically, every American president I have known wishes to see the UK at the heart of Europe, because that is what is in America's own interests. Outside, we would be of far less relevance: we could no longer advance the argument for free trade in Europe or – as recently – help develop sensible rules on data protection, or digital rules that accommodate American counter-terror objectives. Nor could we push for EU sanctions on Iran – a policy largely driven by the UK.
Be certain of this if nothing else: America does not want the UK to cut her ties with Europe. As for the Commonwealth, two facts suffice: we sell more to North Rhine Westphalia than to India, and more to France and Germany than to the whole of the Commonwealth added together. And, overall, we export four times as much to Europe as to the US.
Being inside the EU can often be frustrating; but outside, we would be at a serious competitive disadvantage. The tens of thousands of UK companies who trade with the European Union should think long and hard about the consequences of exit. So should their employees, numbered in millions. To leave, would be a jump into a void.
Of course, the argument is not all one way. The prime minister's negotiating hand is not empty. A British exit would seriously diminish the European Union. It would have suffered its greatest reverse. This reality – well understood by our partners – strengthens our position, but must be deployed with care and sensitivity: clumsily handled, it could be counter-productive.
If we left, Europe would lose one of her biggest economies. Her role as a global power would be diminished. So would her diplomatic reach. Her foremost free marketeer would have gone. Her main bridge with America would be broken. The transatlantic alliance would weaken. Even now, America (rightly) complains that she contributes disproportionately to European defence: without the UK, the continental European contribution – to their own defence – would be pitiful. Departure might be a leap into a void for Britain, but her loss to Europe would be palpable.
None of the risks of separation means the status quo is acceptable. Nor does it mean it cannot be changed. I believe it should be – and can be. What it does mean is that Britain and Europe must work to accommodate one another. With goodwill and tolerance, a deal can be done. At present, the Eurozone is changing its relationship with the rest of the EU: against this background I see no reason why we should not do so, too. It is not anti-European to fight for the British national interest. But we should not over-estimate what can be achieved.
The prime minister can probably deliver safeguards for the City, less regulation, less bureaucracy, no more social legislation, enhancement of the single market and more besides. Beyond that, there are many areas ripe for reform, including a full repeal of the Working Time Directive. We should also focus on tackling the democratic deficit and giving muscle to subsidiarity. Reforms that help Europe will also help the UK.
Other European Union policies – CAP, fisheries, structural funds – are a constant frustration to the UK. But even if the prime minister were able to gain exemptions from these policies – does anyone imagine hard-pressed farmers and fishermen would welcome the loss of subsidy from Europe and not demand its replacement? Does anyone assume we would not need to replace the subsidies lost to poorer regions in our own country?
We know the answer to those questions: I daresay we could improve on EU policies, but the cost gain would be marginal. And whenever we out-competed Europe, they would react to offset our competitive advantage. How do I know this? Because that is precisely what we did when we put tariffs on Norwegian salmon to protect our own industry in Scotland. As we did, so will they. In our negotiations, it would be more productive for us to seek allies to reform core policies, than to seek exemption from them.
We will also improve the outcome if we take a proactive role in developing future policy: it would be fatal to sit on the sidelines sniping. Many in Europe feel we have lost interest in them: we should make it clear we have not. We can – and should – carve out a leadership role.
Some say – how can this be? Sterling is not in the Eurozone, nor likely to join. Nine other nations are not in the Euro nor – although some have ambitions – are many likely to be admitted for many years. Denmark has an opt-out; Sweden and the Czech Republic don't wish to join; others are far less enthusiastic than once they were. Their interests are often our interests. The Eastern Europeans were admitted to the EU because we – together with Germany – championed enlargement. We are a natural ally for their ambitions and the reforms they seek. President Giscard d'Estaing has said our negotiation "opens the way for the indispensible reform of the European machinery". He is right. There is an opportunity here and we should lead it.
We must seek further reform of the budget, where we should have allies in Holland, Denmark and Sweden and, in many areas, could make common cause with Germany.
We should re-engage the argument for completion of the single market. I would like to see us advocate the appointment of a single market commissioner to oversee this work across the full range of services: financial, retail, medical, digital – the list is very long, and the potential gain very large.
We could seek to inter-connect the energy market. We could widen trade agreements. We could try and create a true European venture capital market.
We should work with France to develop policy on the Middle East and the North African rim. Stability in the region – with its trade and investment potential – is crucial to Europe, and Britain and France are well-placed to lead policy. We have had successes with action against Libya and sanctions against Iran, but there are many more options.
I believe a pro-active role in Europe would pay rich dividends in policy and perception – both at home and overseas. It would highlight our value to the EU, and encourage acceptance of our demands. Our case is logical and can change minds, but it will require time and patience and commitment.
What of the future?
Why are so many of the British – especially the English – so cool towards the EU?
Some blame Eurosceptic opinion, and that has been a powerful factor. As pro-Europeans have remained silent, anti-Europeans have become more vocal – and less tolerant.
But that is far from the whole story. Europe is also culpable. Year after year, Continental leaders have told us that Britain is an essential and valued Member of the European project. This is flattering, but their soft words are offset when they pursue policies they know to be anathema to us. For years, continental leaders have denied a federal ambition, while their policies have moved ever closer towards it. They have introduced a single currency, job-destroying legislation and excessive regulation. There has been a wilful refusal to complete the single market. Some have flirted with protection. All these policies are against British advice and interests. If we are frustrated and unreasonable, we have some cause.
Emotion matters too. Our electorate does not like to see us dragged along at the tail of the cart: they wish us to be in the driving seat. I suspect that if Britain were seen to be proactive in policy, it would revolutionise public opinion.
And that is necessary: at present, public frustration is very deep.
We don't know where "more Europe" will end. Or how we can stop an ever-increasing bureaucratic power grab into what Douglas Hurd memorably called "the nooks and crannies of our national life". Will we eventually be submerged in an undemocratic United States of Europe? For most of us, that is simply unacceptable.
We need an end point, and we need to know what that is. And we need to be confident it will not be breached.
Let me summarise.
When we come to the referendum, the public will decide. At present, affection for the EU is minimal. Its virtues are denied, even ridiculed. Its drawbacks are emblazoned in debate. Years of negativity have sunk deep into the British psyche. Ill-feeling between pro and anti factions is worn like a badge of honour. Debate over Europe tends to be conducted at the extremes of opinion, with most of the country uninvolved. A single-issue party, dedicated to withdrawal, has grown in popularity. Public scepticism about Europe feeds on an intense patriotism, and has become a reality our political system cannot ignore.
Some see the referendum as merely a piece of party management – but it is so much more than that.
It can be cathartic.
It can end forty years of political squabbles.
It can allow our parliament, undistracted, to put vital issues – such as the growing underclass and the disregard into which politics has fallen – where they should be: at the very forefront of our national agenda.
It can help reform the EU, and for the better.
It can resolve both justified – and unjustified – fears about our membership.
And it can encourage the UK to take a more positive leadership role in the development of future policy.
All this is possible.
Let me close with a vignette. In 1990, in an attempt to head off a single currency, I advanced the concept of the "hard ecu": a parallel currency that was market-driven and would co-exist with national currencies. Our proposal failed. It was – first – too late; but the more pertinent reason was explained to me by President Mitterrand. His response was simple. "Right policy – wrong country."
All too often, "Right policy – wrong country" sums up how Britain is regarded in Europe. The referendum gives us the opportunity to change that perception. It is in Britain’s interest – and Europe’s – that we do so.