Show Hide image The Staggers 8 December 2014 Douglas Alexander's speech on why the EU is vital for British business: full text The voice of British business matters. Print HTML It seems commonplace nowadays to claim that Europe will be a big feature of the next election. I don’t disagree. But it’s not because Nigel Farage says it will be. Or even because David Cameron’s back benchers want it to be. It will be decisive in the next election because of the impact it will have on Britain’s prosperity as a nation, now and in the future. The Conservative party’s approach to Europe poses the biggest risk to British national prosperity in a generation. That is why Labour will continue to make the case for reform of Europe and not exit from Europe. But the truth is, this campaign is bigger than any one party. Millions of people across the country know that we simply cannot afford to let David Cameron set Britain on the conveyor belt to exit. This is a campaign that unites all of us who share an interest in keeping Britain strong, keeping Britain working and ensuring the economy is growing. So today I want to speak directly to the quiet majority of concerned British businesses. I want to make a direct appeal to chief executives, employers, business managers and company owners across the UK. The starting gun on the campaign to keep Britain in Europe has already been fired. And Britain now needs you to join in the race. This summer I willingly played my part in the campaign to keep the United Kingdom together. I have fought in many campaigns. None was more important than this. This was reflected in the intensity of debate that saw friends and families on opposing sides and passions running high. The campaign both energized and divided Scotland. But since that historic decision, one aspect of the campaign that has been not often spoken about, was the crucial role that business played in shaping the final weeks and days of the campaign. Jolted into action when a YouGov poll just weeks before the referendum seemed to show that the Scottish public would vote to leave the Union, businesses began to speak up about the risks this could bring. And although business has not been short of controversy - especially the financial services industry – when they voiced genuine concerns about the impact of policies on jobs and investment, people across Scotland listened. I know, from private and public discussions, that many businesses in Scotland had been aware of the risks of separation for a long time. And I do understand why they were reluctant to speak out. They didn’t want to become political targets. But today I want to make the case that we should learn from our experience of that referendum in Scotland. Once again business faces the dilemma of how to face down a populist leader mobilising and an increasingly angry public campaign. Last summer it was about Scotland leaving the UK. Next summer it could be about the UK leaving Europe. I know that some companies may feel that now is not the time to speak up on our membership of the EU. Perhaps they think that this is something that can and should wait until the moment of decision. That was the revealed preference of some businesses in Scotland over the summer. But today I want to urge against this approach. The work begins now. Now is the time to speak out. Now is the time to speak up. Because you know what is most at stake. You know what we have to lose. Your voice must be heard. Because if you wait, it could be too late. Of course, as Labour and the business community, we will not always agree about everything. The next Labour government will reform the way the state works. We will reform the way the economy works. We will reform the way Europe works. Change is not easy. But it is necessary to equip business and young people with skills. Necessary to help entrepreneurs get the access to finance and markets with proper competition in key sectors like energy and banking. And necessary to halt the slide towards British exit from Europe. But this is an issue that should transcend party politics. For business to speak up for Britain’s place in Europe is not about party political advantage, it is about recognising both where our country’s national interest and your business interests lies. It is about patriotic duty. And good business sense. And I hear – from local businesses leaders I meet in my own constituency, as well as Chief Executives based down here in London – that you are increasingly concerned about the risk of exit. And now we can see this being borne out in the data. This month Labour asked YouGov to do a poll of over 700 business leaders across the UK asking whether they thought the prospect of Britain leaving the European Union had gone up or down in the last six months. Nearly 80% thought the prospect of Britain leaving Europe had gone up. Amongst those business leaders in the manufacturing sector, it was closer to 90%. A quarter of all the businesses leaders contacted thought it had gone up significantly. These figures show the mounting concern within the business community. But mounting concern has not yet been matched by increased engagement in the public debate. I know that important work is already being done by organisations like the CBI and others, including The City UK’s latest report on EU reform. But this kind of work is a platform on which individual businesses can build their arguments, not a reason for them to opt out of debate. I don’t deny that in the current circumstances, it can feel tough to be the ones speaking out for Britain’s place in Europe. My colleague, Pat McFadden, has described the Tory Militant Tendency - a sizeable group of MPs who want Cameron’s renegotiation to fail – and who ‘bang on about Europe’, which can turn off business leaders in the same way it can turn off many voters. What makes it even more difficult is that so many of the things that business sees as essential for its success: the single market, enlargement, free movement, are now at the core of the euro-sceptic critique. Making the case for the EU has become harder in recent years than at any other time in the history of the Union. Whereas in the past, the EU was most commonly associated with economic strength, today it is too often associated in the public’s mind with sustained austerity, stagnant growth, currency crises and the failure of national politics to manage migration effectively. Today the EU is blamed for an unprecedented increase in migration which, although it was good for the economy in the aggregate, has driven down wages in certain regions and sectors as well as putting pressure on public services in communities across the country. This has precipitated a decline in public confidence in the EU’s economic foundations unlike any it has experienced in its history. So the political and economic context in which we will be making the case for Britain in Europe at the next election must be – for reasons of both principle and practice - very different to the one that we made in the past. In this changed context, I believe that the task of those advocating Britain’s place in Europe must once again – as at its inception – focus on the economic case for membership. Today, the Europe debate is too often seen as simply a sub-section of the national debate about migration. There is much that we collectively need to do to answer the public’s concern and rebuild confidence in our migration system. But, unless business and politics put these debates into a wider economic context, the British public will be denied a view on the bigger picture. Despite recent setbacks, some of the long term economic benefits of EU membership are as clear today as they were when the UK joined in 1973. The free movement of goods and services stimulates trade. Net trade increases national income and employment. Reaching out to other markets for trade – like the BRICs – is made easier, not harder, by our EU membership. If we left the EU - the US, China, and the EU would be in the negotiating room and we’d be in the waiting room. Because it’s far easier reaching out from within a market of 500 million rather than just 60. Together this helps raise GDP, employment and productivity. According to CBI estimates, the net benefit to UK GDP of membership is around 4-5% - between £62bn and £78bn. Which suggests a household benefit of around £3000 a year – and individual benefit of around £1125. And to those who claim the UK could exist as some kind of European Singapore, it’s not simply that we couldn’t do this. It is also that we shouldn’t. The very qualities that make the UK unique – the English language, our trading heritage, flexible economy and high skilled workforce - are what make us such a key player within the EU and help us exercise leverage over EU affairs. They are not the reasons for Britain to try to go it alone, they are the reasons to work with partners to deliver an EU that can work better for Britain. And yet, all too often, it has felt like the economic case for Europe has not been effectively communicated. We see this in how the economic case for Europe is so strong and subject to widespread consensus by businesses and economists alike - and yet in spite of this such a significant portion of British society still don’t feel that membership benefits them or their families personally. This is self-defeating for progressives trying to make the case for Britain staying at the heart of a reformed EU. Politicians and business must do a better job of articulating the benefits – and develop a policy agenda which strengthens the coalition for Europe by mitigating the problems for the losers. Not least because we understand that rising euroscepticism is in part being driven by the social disaffection which results from an economy where the link between living standards and hard work is broken. There are huge forces of globalisation and new technology driving these changes right around the world. The question is this: how do we respond? And how can we restore the public’s trust in the link between European membership and British national prosperity? The answer is not to panic. Not to posture nor make promises you cannot keep. And not to pander to those who would have Britain turn in on itself. Instead it is to set out clear, credible and concrete ways to address real concerns and bring real change. That is why in recent weeks, Labour has announced the changes we want to see to EU migration, and set out a credible plan for achieving them. Including longer waiting periods for out-of-work benefits, reform so that in-work benefits aren't available until someone has contributed and action to stop Child Benefit being sent abroad. Our country’s social security system was never intended to subsidise and perpetuate low-paid and insecure work. And the European single market should not be about a race to the bottom on working conditions. But as Labour, we know that we don’t need to walk away from Europe to put the principles of work and contribution at the heart of our system. Nor will achieve them by simply threatening to walk off the pitch if others don’t play. No. We can deliver these changes through negotiation, through building alliances, through finding common cause for reform with others. And we will. But this important debate about the impact of immigration should not be allowed to overshadow ongoing discussions around the benefits of membership and the capacity of the EU to promote growth and jobs. That is why Labour will put the economic case for membership at the heart of our EU reform agenda. Labour will set out the economic benefits of membership. But we must also restore the public’s faith in Europe’s ability to deliver them. That means setting out a credible economic reform agenda for the EU. An agenda that helps ensure the EU is focused on key tasks. Delivering the jobs and growth that we need. Encouraging the trade and investment that we rely on. Promoting sustainable prosperity that we depend on. And using the tools of the single market to deal with the cost-of-living crisis. In Opposition, we have already set out a number of reforms that would help the EU deliver on this. Including an EU Growth Commissioner, an EU growth audit on new legislation and further reform of the EU budget. But we know there is more that can be done. In government, Labour’s record of promoting growth at home will help us drive forward an agenda promoting growth in Europe. Protecting the integrity and function of the single market will be a priority for the next Labour government. The single market – of over 500 million people – benefits consumers and businesses here in the UK more than any single aspect of our national industrial policy or bilateral trade policy. Since its inception, FDI flows into the EU have doubled, helping to make the UK a more attractive destination for global investment, with the second largest stock of FDI in the world. It drives competition, attracts investment and creates jobs. According to a BIS study, progress towards a completed Single Market – including on digital and services could add up to seven per cent to UK GDP. That is why in March this year, Ed Miliband announced the CBI has agreed to help us develop proposals on how we complete the single market. But there is also more we can do at a European level to drive this agenda. First, Britain should be pushing for key protections for the single market that can complement rather than necessarily limit, deeper integration among Eurozone states. A new Council of the Single Market should now be established to help ensure deliberations on Single Market issues remain a priority. European leaders have floated the idea. David Cameron hinted at it. A Labour government would act on it. A Labour government would also seek further safeguards for protecting the interests of the single market, specifically in the face of potential further Eurozone integration. That is why we will make the case for non-eurozone Member States to have permanent observer status at Eurogroup meetings. Eurogroup meetings are an important forum for Eurozone members to discuss, implement and agree a new institutional architecture to better protect against the kind of currency crisis that we have witnessed in recent years. But the steps agreed in that group can have a significant impact on those member states not party to the discussions. It is right that, as organisations like the Business for New Europe, Centre for European Reform and The City UK suggest, non-eurozone members should have a seat at the table, not dictating the terms of the debate, but being fully aware of discussions and able to adapt accordingly. Second, European competition policy must serve as a driver of growth, not a prohibited of progress. We know that the proper functioning of the single market requires strong rules and regulations around competition policy and state subsidies. But the rules can seem overly rigid and can end up stopping governments’ being able to provide vital support for firms to cope in times of economic crisis or leave investments for innovation and growth open to challenge in the courts. Here in the UK, in the wake of the global financial crisis, various government schemes designed to support businesses facing sudden economic shocks, including the Labour government’s car scrappage scheme, were subject to lengthy approval processes that delayed their implementation. That needs to change. We welcome the review that the EU has undertaken on proposals to increase the flexibility and exemptions in state aid rules. These new regulations need to be tried and tested and if there is scope for further reform, a Labour government would drive forward this agenda. Necessary progress has been made, but where further reform is needed, the EU must be ready to act. This is not a path to protectionism. It is a legitimate extension of the principle already acknowledged by EU rules that certain exemptions to state aid, such as financing for SMEs and investment in deprived regions, are legitimate and needed. I do believe that today there is both a case for EU reform, and a coalition within the EU to deliver it. But the truth is that David Cameron simply cannot take this agenda forward. Both because he lacks credibility in Brussels and because he lacks strength in Westminster. UKIP is on the march and David Cameron is running. Back in January 2013, the Prime Minister gave what his aides briefed, rather optimistically, would be his last speech on Europe in the parliament. He tried to make 2013 the year that he claimed the mantle of European reform. But it was 2014, not 2013, that turned out to be the year that sealed David Cameron’s fate in Brussels. In the 23 months since his speech on Europe, instead of becoming a beacon of reform in Europe, David Cameron has become a much more marginal figure in Brussels. The effect has been a downgrading of Britain's influence in other European capitals thanks to a Prime Minister more interested in burning bridges than building alliances. During my time as Europe Minister, I worked with Tony Blair and Gordon Brown and represented the United Kingdom in Brussels. I know that the influence you have in the room is dependent on the credibility you maintain with allies outside the room. The capacity to understand the interests of other nations is fundamental to being able to advance the interests of your own. What I learnt in EU Council meetings, David Cameron seems to have unlearnt since entering No 10. Recent polling by TNS shows that public opinion across key EU states – including France, Germany and the Netherlands – is at risk of turning against Britain staying in. With nearly half saying that Britain should leave Europe rather than accommodate Britain’s concerns. The real question is not what does this mean for David Cameron. It is what does this mean for Britain. Labour understands that for businesses to afford pay rises, they need to be able to make more for less. They need access to sources of investment so every worker can benefit from advances in technology which better enable them to do their job more efficiently. And they need access to markets so that there is demand and competition for the goods which they produce. The single market of 500 million people produces and sells one third of the world’s goods and services. It is where British businesses do at least 50 per cent of their trade. Leaving the EU means permanently ending one of our nation’s most long-running economic successes. It means actively choosing an economy with weaker investment, less trade with the rest of the world, poorer productivity and worse living standards. Despite that, a week after his appointment as Foreign Secretary this year, Philip Hammond said he was ready to take Britain out of Europe. For a Foreign Secretary who is reported to have a background in business this appears to be a remarkably irresponsible gamble with Britain’s national interests - putting jobs and investment in the UK at risk. And the real tragedy is that I believe David Cameron, George Osborne, and Philip Hammond know that. They know that leaving the world’s most successful single market for our goods and one of most important drivers of investment in British businesses will only harm our productivity and worsen the cost-of-living crisis. But they are still willing to contemplate it. David Cameron may try to reassure British business that he has their best interests at heart, but the truth is that British business knows that sleepwalking towards exit is not just bad politics, its disastrous economics too. A Prime Minister willing to gamble with Britain’s prosperity for the sake of horse-trading with his own backbenchers simply cannot claim to be committed to building a better Britain and a more prosperous country. David Cameron may speak warm words to business on the one hand, but he is dealing away the prospects of a stable economic future with the other. I believe that the prospect of a second-term Conservative government which will be dominated by a divisive and deeply damaging debate on leaving the EU represents a clear and present danger for British business. So 2015 will be a decisive year for our country. I don’t remember an election in my lifetime that was so unpredictable but also where there was so much at risk. You only have to try and imagine what our country would look like in 2020 if David Cameron was elected in order to understand quite what is at stake. We could be out of Europe. And dealing with a full blown constitutional crisis across the United Kingdom. So although the Conservatives want to claim that a vote for them is a vote for continuity. The truth is that a Conservative government in 2015 would mean breaking not simply with the record of the last government, it would mean breaking with decades of history that have defined the country we are today, how our country is run, and the place we have in the world. That risk is real. And so too is the responsibility on business to now find its voice and to make the case with authority and passion, that the right road for Britain is not exit from Europe but reform within Europe. › Steven Woolfe: “We have to understand that we do want immigrants in this country” Douglas Alexander is the shadow foreign secretary and Labour MP for Paisley and Renfrewshire South. From only £1 a week Subscribe More Related articles How can Britain become a nation of homeowners? The Tories are the zombie party: with an ageing, falling membership, still they stagger on to victory Will George Osborne soften the tax credit cuts for low-earners?