Speech to the European Convention
First of all, Mr President, I would like to congratulate Klaus Hänsch on his chairmanship of what must have been the most fractious of working groups. Economic issues in general and economic governance specifically go to the very heart of political and ideological debate. Having read the final report, I feel he has done his utmost to accurately reflect the discussions of the group, and I sincerely hope the Praesidium will do likewise following our discussion today.
I would like to make a few comments on a number of issues raised by the report before making some general observations on economic governance.
The working group concluded that "Given the importance of economic policy coordination … economic policy coordination should be reinforced" (4). From a British perspective, I feel we need to take account of the fact that the UK's economic cycle diverges from that of Continental Europe—a point on which both the Official Opposition and the Government agree. [NB: Lord McIntosh of Haringey, Minister for Trade and Industry: "We and the many countries of the European Union have been on a different economic cycle", 4 April 2000]
On the question of who should draw-up our Broad Economic Policy Guidelines, should we have them, I feel that Member States should retain the right of initiative. Were the Commission to make a formal proposal rather than a recommendation, I feel this would set a dangerous precedent with which many British people would feel uncomfortable.
With regard to the question of taxation, I welcome the fact that the working group have ruled out the establishment of unified taxes or European regulations regarding personal and property taxes. My bottom line is that the power to raise taxes must remain with the member states. For this reason, I would be unhappy if the Convention moved in the direction of proposing "minimum standards and tax bases in the areas of indirect and company taxation" (6). Tax competition is no excuse. In fact, tax competition is good because it encourages lower taxes.
Earlier this year I made a speech which attempted to outline how Conservative principles applied to the future of Europe debate. In it, I pointed out that Adam Smith, the great eighteenth century Scottish philosopher and economist, proved that economic freedom goes hand-in-hand with public prosperity. The lesson we should draw from The Wealth of Nations is that a low tax, lightly regulated economy helps both rich and poor alike by inducing entrepreneurship, creating jobs and generating wealth.
This lesson should guide us in our work on the Convention.
First, since the EU started out as a trading bloc we should continue to push for more free trade, particularly between the EU and NAFTA.
Second, in so far as the Single Market promotes free trade, it is to be welcomed; but the imposition of unnecessary regulations must be guarded against.
Third, the gold plating of European legislation by national governments must be tackled, with the introduction of Joint Committees of MPs and MEPs to oversee the transposition of EU legislation into national law.
Perhaps I could finish with a quote from the great French economist Frédéric Bastiat: "By virtue of exchange, one man's prosperity is beneficial to all others." Let this be our motto.