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Graham Brady: Can reform happen – and how?

My answer to the question is an emphatic "Yes". The EU has reformed constantly throughout its history - indeed its founding principle of 'ever closer union' implies continuing reform.

The problem is that the 'reform' is (almost) always in the wrong direction - more 'competences', more regulation, more costs. Until 1965 almost all Council decisions were taken by unanimity. Since then Qualified Majority Voting has been extended by almost every treaty amendment. Maastricht added 30 areas to QMV; Amsterdam another 24; Nice, a further 46.

As we know there are moves afoot now - although shelved for the moment- to extend this control into yet more sensitive areas of national life - the areas of justice, policing and criminal law. As this process has gone on, many of the positive benefits that could have been delivered by European states co-operating and trading freely have been lost. Even the Single Market which should have been an engine for growth has delivered disappointing results - with growth and the growth of trade being slower since 1992 than before.

Perhaps even more damaging, the drive to create this excessively integrated bloc is increasingly coming into conflict with the further expansion of the EU - something that has so far produced perhaps the greatest benefit of all by helping to support the development of the fragile new democracies.

The question is, can we turn this around to make sensible reforms that move powers back closer to the people and their democratic structures? Reforms that lift the burdens on business and make it possible for us to compete?

I think we can. Why? Firstly, no-one has ever tried before. Our determination to return social and employment laws to national control would mean a Conservative government would be the first ever elected with a mandate not just to stop ceding powers to the EU but to bring them back - to start unwinding the acquis communautaire. Others have from time to time talked about doing this - Joschka Fischer the former German Foreign Minister for example put this proposition to the SPD national conference in 2001 with particular reference to agriculture and structural policies. But the return of powers to national control has never been brought forward as the policy of a Member State government.

It is also the case that for far too long, those who want to build the EU into a federal state have been given a free run. For the new members coming in over the last few years, it has often seemed that the Constitution and the deeper integration it implies are part of an inevitable process.

We are determined to turn this around and to create a new body of opinion in the EU which will champion reform to achieve a more flexible EU. I would like to pay tribute to the excellent work that Open Europe has been doing towards this end in the UK. This work must now be taken forward across Europe. In July the Conservative Party and the Czech Civic Democrats announced the establishment of a new Movement for European Reform which will bring together reform-minded politicians and opinion formers from across Europe.

This evening David Cameron will officially launch the website of the Movement for European Reform and we are planning the first of a series of seminars and conferences to take place before the end of the year. The creation of this new organisation marks the most proactive commitment that the Conservative Party has ever made to achieving the profound change of direction that the EU needs.

So what levers do we have to make the others agree to changes that would need unanimity? Firstly, the requirement of unanimity works for us as well.

There are those who still want to pursue the 1950s goal of ever closer union, those who want new powers to create a federal union along the lines envisaged in the constitution - with its own foreign minister - its own military - its own taxes - and with harmonised economic policies.

The United Kingdom does not want any of those things.

But if others want to proceed they will need our consent. This is where we can make a deal that is mutually beneficial -------

- The creation of a genuinely flexible EU that allows for different Member States or groups of Member States to have different types and degrees of integration.

- For the UK that would be less than at present - for others it may be more.

Sometimes it is suggested that the others would just respond by throwing us out?

I don't think that this is realistic. The arguments why this would not be in their economic interests are well rehearsed. But over the last couple of years doing my current job, I have come to the view that the political reasons why it would not happen are even greater.

- on one hand there are those like the German CDU who see the UK as a vital ally in restraining the growth of social and employment costs; in fighting for freer markets and against the spread of protectionism .

- and on the other hand there are the conviction federalists who would see the expulsion of Britain as an even more massive blow to the 'European Project' than conceding the principle of flexibility. For them the loss of one of the most important Member States would diminish the stature of the European Union in a way that would be unthinkable.

Taken together these add up to very powerful economic and political cards for a British government committed to achieving reform to play.

The success of a Conservative Government in bringing back control over our social and employment laws will have two massively important implications.

- First, the principle of ever closer union and the one way ratchet of the acquis will have been breached.

- Secondly, once the UK can make more sensible arrangements for lighter regulation and lower costs, the other member states will be forced to confront the implications of their own high cost regime much more directly.

Ironically if we can achieve our objective, it will introduce a competitive pressure within the EU that will force our partners to make a reality of the empty ambitions of the Lisbon agenda.

Not only has Lisbon made no real progress in the last six years - more than half way through a period that was meant to see the EU become the world's most competitive knowledge-based economy - but we can still see it moving backwards. There is increasing speculation that the UK may be forced to surrender our opt-outs from the Working Time Directive and there could be no clearer indication of how completely many of our EU partners have failed to grasp the realities of global competition and the importance of flexible labour markets.

I believe that reform can happen and I believe that a competent British government could seize the opportunity of the next attempt to revise the treaties, or to revive the Constitution but if it does not happen then, if the opportunity is missed once again, we must look at the longer term prospects:

Looking at the question can reform happen in the longer term; we have to look at the long term economic trends and pressures-------

Today, the US represents 25 % of global GDP, the EU accounts for 25% with China on 10 %.

In a couple of decades if current trends continue, we will see the US holding its own at 25%, China moving to 25% and the EU at only half its present importance at 12% of global GDP.

In other words, in 20 years time the average will be European half as well-off as the average American.

It is clear from this not only that reform can happen but that reform must happen because the alternative isn't a prosperous integrated European Union with real weight and influence in the world, it is rather a costly over-regulated backwater of little consequence in the world.

This leads me to the absolute certainty that reform will happen.

But it can happen in one of two ways - the British Conservative way, which means: flexibility, lower costs and doing it in the next few years from choice.

Or - waiting until economic decline and the loss of influence force the EU to confront the folly of its current path and make the necessary changes later from a position of far greater weakness.

Common sense dictates the former option.

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