I am pleased to be here. I’d like to thank the European Policy Centre for inviting me and EPC Chief Executive, Fabian Zuleeg, for his introduction and kind words.
I have just come from Justus Lipsius, where we had a useful discussion in the General Affairs Council on the June European Council, including on our shared priorities around growth, energy and home affairs. There was also, you’ll be shocked to hear, plenty of discussions on who will get which job and so on.
But I wanted to take the opportunity this afternoon to lift our eyes above the immediate albeit enjoyable gossip and look at what we think the Commission and the EU as a whole ought to focus on, and seek to deliver, over the next mandate.
I have been reflecting on this a lot recently. Partly because of the European electoral calendar, but also partly because I think the Ukraine crisis has been a wake-up call for us to remember the shared values that caused our nations to work together in the first place.
In my previous incarnation in the British Foreign Office as a political adviser to Douglas Hurd, Foreign Secretary at the time, my formative experience was of Europe at the collapse of Communism, the reunification of Germany – and the beginnings of the reunification of Europe… I was moved to mark ten years of that reunification with my colleagues today.
That was a moment when Europe pulled together, recognised the gravity of the challenges before it and took the bold decisions which were then needed.
Today, looking to the next five years, I think we face a comparable moment, though with different challenges, and we need that kind of courage and decisiveness if we are to build an EU that works for all of our countries.
What does that mean? I’ll come to the specific priorities in a moment. But let me first outline the principles which I believe should underpin them.
First – Being honest with ourselves about the scale of the challenges which we face. And I think it is a generational challenge –a challenge of how to address the growing decline in Europe’s competitiveness, and in the trust and support of our voters for the way in which European decisions are taken.
We can only respond to this kind of challenge if we recognise it for what it is, and embark on a scale of reforms that are needed to address such challenges.
If I may be excused a moment of self congratulation, I think there’s an analogy here with the difficult, and yes painful, decisions the UK Government and other Governments around Europe have had to make to get the UK economy back on track. Cutting the deficit by a third was never designed to win a popularity contest. But without that kind of long-term thinking, the UK would not be expected to be the fastest-growing economy in the G7 this year.
I think that clarity of vision is what we need as we work together at the European level.
That takes me to my second principle - focus. To address the challenges that face us, we need to avoid the temptation to launch a thousand new initiatives which confuse citizens and - whatever the best intentions - burden business.
The new Commission’s report card should not list the number of regulations adopted or directives enforced as a means of judging performance or achievement, but rather whether what has been done has created more jobs and made the EU more responsive to our citizens.
I rather like President Barroso’s approach to this: Europe must be “big on the big things, and small on the small things”. And my Dutch colleague Frans Timmermans has a habit of insisting on “Europe where necessary, national where possible”. Above all that means setting and sticking to clear priorities.
So what should the priorities be?
Agenda for the New Commission
First, and if the new Commission does nothing else it must do this, it must focus on growth and address the slide in Europe’s relative competitiveness. Partly this is about the rise of emerging economies and a change of the economic order over the next 50 years – the Commission’s own figures show that 90% of the world’s growth in coming years will come from outside Europe.
But, and perhaps more worryingly, Europe is also slipping further and further behind the rest of the developed world, including the United States of America.
We cannot afford to let this trend continue. The new Commission President should ensure that ‘Europe’ becomes part of the solution, where currently it can be seen by European businesses as part of the problem.
Now, I’m not arguing that nothing has been done. The current Commission has done well in pushing ambitious new trade deals with Singapore, South Korea and, fingers crossed, Canada. And the REFIT programme has made most welcome progress in scrapping pointless legislation.
But there are still too many barriers which hold back Europe’s businesses. We need a further step change in the next five years:
- We should be aiming to radically alter the Commission’s approach to new legislation so that burdens on business are kept to an absolute minimum;
- Complete the TTIP negotiations with the US which on their own would bring in €119bn a year;
- We need to liberalise the single market in services and digital in the way we did with goods 25 years ago.
The challenge before us is considerable. The truth is that if Europe can’t take dramatic and swift action, the next generation of Europeans won’t be able to afford the same social protections or standards of living that we have grown used to. This would have not simply economic but serious social and political consequences.
Second, and I know this will ring alarm bells for some in this room, we need to restore popular trust in freedom of movement across the EU.
I want to be clear about this. Free movement has been one of the major benefits of the EU, and one which over a million British nationals use to live in other Member States.
But freedom of movement should be about freedom to work and not freedom to claim benefits.
So we’ve started to do our bit by looking at our domestic legislation and making changes – mostly to bring us into line with other Member States. I think it’s clear that the previous British Government didn’t do enough in this area.
But we need also to look at the European level and work out how we balance the right to work across the EU with the clear responsibility set out in the treaties of each Member State for its own welfare system.
These will be difficult discussions, but sticking our heads in the sand and hope that public discontent in many Member States on this issue will go away is simply not a credible option.
Third, I think most of us expect further steps in the coming years to integrate the Eurozone. That is understandable, and we in the UK, while not taking part in the project, support the efforts of our partners to restore stability and return to growth.
But in doing so, we need to work out an architecture for Europe that respects the fact that the EU is made up of 28 Member States, and ensure that the interests of all 28 are respected. We will look to the new Commission – the guardian of the EU at 28 – to ensure that this is the case.
I know some in this town think that this is a theoretical debate. But I want to disabuse you of that. It is fundamental to the future viability and integrity of the EU.
So I was glad to see the hard-won agreements on the Single Supervisory Mechanism and the Single Resolution Mechanism demonstrate what can be done to make this work for all, and the growing recognition of the issue, including in a recent joint article by Chancellor Osborne and German Finance Minister Schauble which underlined the need to avoid discrimination between euro-ins and euro-outs.
That is the spirit we will need to show as we work together over the next five years.
4.Learning the lessons of Ukraine
Fourth, we need to learn the lessons of Ukraine for our energy policy. This has profound implications, in part for our energy policy and above all our energy security. We should be prepared to diversify future sources of natural gas and means of its distribution, boost investment in interconnections, and will need to develop indigenous European energy supplies, such as shale gas, renewable, nuclear, clean coal. There can’t be one model for all countries as they each have their own circumstances. Each Member State will have their own priorities. It would also mean working with neighbouring countries to liberalise and grow their own markets to create a broader range and more stable supply of energy.
I know the Commission are already working hard on this and look forward to their report. There are no easy fixes – frankly speaking, I think we will need sustained effort not just from the next Commission but from the one after that to see this delivered. But we have to do it, and need to have commitment from Heads of State level now.
Fifth, and finally, we need to address the crisis in the Union’s democratic accountability.
The fact is, and this is true right across the EU, that Brussels is often seen as the problem rather than the solution. In virtually every Member State, trust in the EU Institutions is at an all-time low – today’s Pew research shows that 71% of voters believe their voices do not count in the EU.
That is a serious indictment of the status quo. We shouldn’t be surprised though. As President Barroso said, where decisions are taken far from voters, a “legitimacy gap” develops.
The European Policy Centre itself looked into the question of the role of national parliaments earlier this year. Their findings suggest that national parliaments could work more closely together, and could explore new forms of cooperation.
It was the Dutch who originally put forward the idea of strengthening the “yellow card” to ensure that the principle of subsidiarity is better respected. We agree.
We also agree that there should be a “red card” by which national parliaments working together could block Commission proposals outright. And we would think that the Council of Ministers should be able to work with the Commission to set the strategic direction of what the Commission proposes as legislation.
Again, I know many here will find this heretical, and argue that the European Parliament is the only Parliament that should have a say in EU business. But again, I would argue that we need to face facts.
The EP has many committed members, and they do important work. But turnout is far, far below that of national elections, and successive attempts to address the EU’s democratic deficit by strengthening its powers have palpably failed. It is a simple fact that voters identify more with national parliaments and national governments. We should work with the grain of that fact.
So to wrap up, when the new Commission President takes up office, I think that these five priorities should be at the top of his or her in tray, and be the guiding principles over their term.
Now. I do occasionally hear of rumours in the corridors and cafes of this town of something called the “British problem”. And I agree that making British voters comfortable with the EU should also be a priority for the new Commission.
I also agree very much with what President Barroso said last week about the interests of both the UK and the EU being in continued UK membership in a reformed EU.
But as I hope I have outlined, this problem is not unique to the UK.
Addressing the crises in competitiveness and democratic support is essential for all member states and we need to address these challenges together.
Of course, if we can make the kind of radical progress I have outlined, I believe that will make the British people feel that the EU works better for them, and make them more comfortable in the Union.
That is in all of our interests.
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We are confident that this agenda is the right one, for Britain and the EU, and we are confident that it is practicable and deliverable.
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