Eurozone Crisis

My Lords, thanks to the efforts of the noble Lord, Lord Lamont, we have heard some fascinating insights into what has gone wrong in the eurozone. I share the views of my noble friend Lord Lawson that this was a fatally flawed project. The fault lines were there from the start. It was only a matter of time before it fractured. The challenge now is to try to ensure that the mess that this causes is limited. Efforts to glue it all back together seem to me to be doomed. What is required is an orderly restructuring, and I believe that in the end we will have a much smaller core eurozone. However tempting it may be to rejoice that Britain is not in the euro, as noble Lords have said this afternoon it is in our interests that that restructuring should be accomplished as smoothly as possible and that we play our part. The pain we feel at having to contribute to paying for the failed ambitions of others is understandable, but our economy is too closely linked to Europe for us to be able to turn our backs. However, we should not need to go on indefinitely paying for others’ profligacy. So I want to address my remarks today to the need for a new economic discipline in Europe. It will not make me a contender for the generous prize of the noble Lord, Lord Wolfson—I take this opportunity to congratulate him on his maiden speech—but it is relevant, because it shows the mindset that has bedevilled the euro project and our economy, too. While the bitter chill of austerity has blown across the continent, it seems to have bypassed Brussels. It will not have escaped the attention of noble Lords that last month, after a long weekend of deliberations, the European Union’s decision-makers decided that the EU’s budget should rise by 2 per cent next year. This was seen as something of a victory for prudence. After all, MEPs, who obviously forget about the realities of life as soon as they board the train to Brussels, thought that 5.23 per cent would have been appropriate. The bureaucrats at the Commission were only slightly less spendthrift, aiming for 4.9 per cent. So a mere 2 per cent increase may be seen in EU terms as penny-pinching. It is not. It means that countries that are having to impose drastic cuts on the pay and pensions of their people are being asked to fund an EU budget of €129 billion for next year. And it will not stop there. There is a projected €550 million overspend from this year’s budget. Remembering that Brussels is a city where surrealism flourished, I point out that the allowed spending commitment for next year is almost €20 billion more than the agreed budget. We know that a significant amount of this money will be misspent. Last month, as the noble Lord, Lord Pearson, is fond of reminding us, the European Court of Auditors reported for the 17th year in a row that the payments made by the EU were, "““still affected by material error””." It is little consolation to learn that in most areas of spending, the error rate is ““stable””. Overall, it has increased from 3.3 per cent in 2009 to 3.7 per cent last year. That amounts to €4.5 billion. I know that this is a time when debts are measured in trillions, but to me that is still a sizeable sum to go astray. It is not just the money that goes to subsidise non-existent farms and the like that should cause concern. In this age of austerity, we should surely be querying every aspect of the way that Brussels spends cash. It is time to ask whether there really is a need, for instance, for the EBBAs. No doubt many noble Lords are familiar with the work of Donkeyboy and Mumford & Sons, but for those who are not—I confess that I was not—I shall explain that Donkeyboy, from Norway, and Mumford & Sons, from the UK, are both winners of the 2011 EBBAs, the European Border Breakers Awards. These are not handed out to those who successfully evaded passport checks; they are for musicians whose work sells outside their own countries. The European Music Office labours mightily to decide who should deserve such an honour and then stages a big celebratory concert. There is no shortage of music awards ceremonies. I contend that, in today’s climate, we could cope without the EBBAs. The EU’s extravagances have, in the past, caused amusement. Spending €411,000 on an innovative project to provide a canine hydrotherapy centre that would, "““improve the lifestyle and living standard of dogs””," was a prize 2009 example. But it is trifling, of course, compared with the billions currently being spent on the Galileo project. This satellite scheme is now many years behind schedule and, at the last count, destined to cost €5 billion against an original budget of €1.8 billion. Surely it is time for us to ask if, apart from the 3.7 per cent of our money which goes astray, the rest is being well spent. The European Court of Auditors clearly has doubts. It says in its latest report: "““The Court observed that the differences between planned targets and achievements were often not analysed … and that the framework for reporting on effectiveness did not cover economy and efficiency of the spending””." An effectiveness review that does not involve finance is surely as useful as a book review that concentrates solely on the cover. In this age of austerity we need to know that our money is being spent effectively, so the Commission’s reporting on its activities has to improve. We should also demand independent audits of some projects to highlight failings and procedures and produce blueprints for change. That would be money well spent. But we must go further. We should question whether we really want the European Commission to continue to extend its remit. Is what it does worth while? Do the member states themselves, facing years of cutbacks, have to continue funding the type of projects that Brussels embraces? That is not to say that we should withdraw from Europe, but we want a Europe that works—potentially, a smaller Europe. Britain should lead the way in demanding a review of what is being achieved by the high-spending bureaucrats, several of whom continue to be paid by the EU when they have left and found other employment. That is something that we might take a closer look at. As a starting point, I suggest one obvious saving that could be made. The travelling circus that goes each month from Brussels to Strasbourg is a nonsense and is estimated to cost more than €200 million a year. It is hugely time-consuming and environmentally unfriendly. The travelling circus is a great generator of CO2 emissions. Even if there merit in the move, which the majority of MEPs now question, we simply cannot afford it. The problems of the eurozone will not be solved more easily in Strasbourg than they will in Brussels, and the new age of austerity through which we are living has to start hitting Brussels too.