Mr. David Lidington:

I thank the Chairman for the invitation and opportunity to come to give evidence to the committee. It is hard to overstate how collaborative and productive the relationship between the UK and Ireland has now become.

Bilaterally, we are working more closely than ever before across a whole range of issues, from a joint visa arrangement for the common travel area to an agreement on trading renewable energy. British and Irish trainers are working side by side in Mali in support of the EU training mission. Our common membership of the EU is, of course, one of the cornerstones of that relationship.

I congratulate the Irish Presidency for the smooth and effective running of the EU’s affairs during its six months in the chair. I want to focus my comments today on the future and talk about EU reform. I hope, also, to dispel some of the misconceptions which have arisen about what the British Government is and is not seeking in Europe.

In January, as the Chairman said, the Prime Minister, David Cameron, set out what he and the coalition Government in London sees as the greatest challenges facing the EU. These include the crisis in the eurozone; enhancing competitiveness; and the need to address the EU’s lack of democratic accountability. We think that to meet these challenges will require the EU to demonstrate greater flexibility, to raise its game on competitiveness and to address the disconnection so many Europeans feel from the EU, its decisions and its institutions. I will say a few words about each principle.

On flexibility, we believe the eurozone needs to take the steps it needs to have the right governance and structures to secure a successful currency for the long term. The UK is not part of the eurozone and will not join it, but we share its interest in finding a sustainable solution to the crisis as quickly as possible. One only has to look at the importance of our economies to one another to see why that should need to be the case. Ireland’s 4.5 million consumers constitute the fifth largest export market for British goods and, in return, the UK remains Ireland’s largest export destination. We reckon some €50 billion of goods and services flow across the Irish Sea each year.

It is also important that, as the eurozone integrates more closely in terms of its fiscal and economic policy arrangements, we ensure the rights and interests of those member states of the European Union which remain outside the eurozone are properly protected. For as far ahead as I can see, there will be some EU states which are part of the single currency and others, not just the UK, which will remain outside. That means eurozone integration needs to go hand in hand with preserving the integrity of the Single Market and ensuring the institutions continue to represent the interests of all member states, not just a particular subsection. This requires a flexible solution to accommodate the needs and interests of all.

All countries are different and EU member states are no exception. It is through flexibility that the EU reflects the diversity of Europe and stands the best chance of retaining the support of its citizens. A more effective EU does not have to mean a more expensive or centralised EU. Too many people feel the EU is a one-way process and more and more decision making is being taken from national parliaments to the European level and everything is decided in Brussels. That needs to change. If we cannot show that decision making can also flow back to national parliaments, the system will become democratically unsustainable.

On competitiveness, the European economy faces unprecedented competition from across the world. We are seeing an historic shift of economic power to the emerging economies of Asia and Latin America. At the same time, we are seeing the United States open up a gap which had appeared to be closing and becoming more competitive, relatively speaking, than the EU.

I will be frank with the committee. Unless Europe can raise its game, and do so fairly dramatically, the next generation of European citizens will not be able to afford the living standards, social protection or public services we have come to take for granted today. That means we need to stimulate growth by expanding and deepening the Single Market in services, digital technology and energy. I hope the UK and Ireland can continue to work together to enhance the potential of those sectors.

The EU should also accelerate progress in concluding free trade agreements. Our estimate is that if we completed all the negotiations on the agreements currently on the table, it would be worth an additional €60 billion for the EU every year. Those figures come from the European Commission. We look forward, in particular, to the launch of EU-US trade negotiations by the end of the Irish Presidency. It is as important a goal for us as for Ireland and has the possibility to be a game changer in terms of global economic advantage.

On the question of democratic accountability, we have seen declining public consent for Europe demonstrated in different ways at different times, from “No” votes in referendums, to unrest on the streets, to pitifully low turnouts in elections for the European Parliament. Britain has much to learn from Ireland’s experience of referendums and about the centrality of allowing citizens the chance to have their say on significant developments such as treaty changes.

We want to ensure voters can, and feel they can, hold to account those who make the decisions. Our belief is that national parliaments should play a bigger role in EU decision making, which is something we might want to explore in a little more detail. It is not something which is being discussed in the UK alone, rather, I have found from talking to Europe committees in a number of national parliaments that it is an agenda in which they are very interested.

I welcome the Oireachtas inquiry into the future of Europe, including the focus on Britain’s relationship with the EU. The House of Commons foreign affairs committee is conducting a similar inquiry. I would like to see the interest of national parliaments in EU-related issues mirrored by a greater role for national parliaments in the Brussels process.

The response to the speech by my Prime Minister has been extensive. It resonated and we saw an intensive and very interesting debate sparked across the EU. I want to put straight a couple of misunderstandings. The Prime Minister made clear that the next Conservative Party manifesto in 2015 would include a commitment to a referendum on staying in a reformed EU or leaving. He was also very clear that he believed membership of a reformed EU was and is in the national interest of the UK, and explicitly rejected the Norwegian and Swiss models as attractive alternatives.

I want to address the rather tired, hackneyed phrase “cherry picking”. We in the EU need to embrace and mobilise the huge cultural, political and economic diversity of 27, soon to be 28, different countries. Our objective is not special exceptions, rather it is reform of the EU for the benefit of every member state. In Britain we also need to understand what EU membership actually means for us at the moment.

That is why last summer we launched the balance of competencies review to give us an informed and evidence-based analysis of the impact of EU membership on the UK. Officials will produce 32 reports over the next two years, looking at everything the EU does and how it affects the UK, from the environment, to education, to enlargement policy. To do this as thoroughly as possible we are seeking evidence from the widest possible range of experts and interests groups in the UK and beyond, from business, think-tanks, civil society groups and others.

The purpose of the review is not to make specific policy recommendations, rather, it will provide, through its reports, a summary of what we expect to be a wealth of evidence and objective analysis to inform a constructive and serious debate in the UK and Europe. From that evidence and those reports, the individual UK political parties will, no doubt, wish to adopt particular proposals to include in their respective election platforms.

We want constructive and serious debate in the UK and in Europe as a whole and are keen to hear about these issues from others in the EU. Addressing the challenges we all face in this century and coming up with solutions that work for all will call for the sharpest analysis we can muster.

I am aware of the concerns in Ireland over the 2014 decision on pre-Lisbon justice and home affairs measures on which under the Lisbon treaty we are required to take a decision by the deadline of 2014. There is understandable concern about the possible impact of that decision on North-South Border co-operation. The United Kingdom Home Secretary, Justice Secretary, Immigration Minister and Security Minister, have all met their Irish counterparts on numerous occasions to discuss this decision. The Prime Minister and the Taoiseach discussed the matter at their meeting in March this year. We will continue to work very closely with Ireland on this matter.

Finally, there have been questions about what role treaty change will play in our reform agenda. Before we talk about re-opening the treaties, there is a great deal that we want to do, that we can do and that we are getting on with now. Recent examples such as finalising a deal on a unified Patent Court, the long-overdue reforms of the Common Fisheries Policy, to what is now being proposed on competitiveness, the Single Market, trade and regulation, these all demonstrate the UK's commitment to a positive spirit of European reform. Many around Europe, including my Prime Minister, but also the European Commission President, have highlighted the need for treaty change at some stage in the next few years to take forward the establishment of a genuine economic and monetary union. This is not going to happen tomorrow and there is much we can do to reform the EU for the better in the meantime. However, in my view, it seems sensible to have laid the ground for that future review and re-opening of the treaties by thorough and informed discussions before that time actually arrives.