Michael Heseltine - Political managers: In Europe, our self-interest rules - By working in concert with its European neighbours, Britain will have real influence and is more likely to meet its own long-term needs

Michael Heseltine - Political managers: In Europe, our self-interest rules - By working in concert with its European neighbours, Britain will have real influence and is more likely to meet its own long-term needs - The proverbial bottle is either half ful

Last Updated: 31 Aug 2010

The proverbial bottle is either half full or half empty. My instinct is to plump for the former. It's the riskier stance; optimism pushes you ahead of the game, with the inevitable risk that you will be cut off from base. Pessimism is safe but less fun: deprived of opportunity, failure becomes apparent more slowly.

June was an interesting month for Europe. Take three examples: the tragedy of the suffocated Chinese illegal immigrants, the decision over the withholding tax and the promise by the Conservative Party to 'revisit' the issue of metric price tags.

The death of 58 young people in any circumstances is a human tragedy.

That said, the political issue centres around the political sovereignty of our national frontier and its relationship with those of our European neighbours. I do not believe that Britain should have signed up to the Schengen Agreement, which opened the frontiers of 13 European countries and removed passport controls. But our immigration and asylum problems are much influenced by the effectiveness of our European neighbours in controlling their own access.

The pessimist will dismiss their controls as ineffective and retreat behind our national frontiers to defend an island fortress. It doesn't work particularly well. The numbers trying to get in are too large, the rackets to enable them to do so too profitable and well organised. So the alternative is to recognise the need for more effective controls around western Europe.

The hard politics centre on the extent to which nation states will share the defence of their frontiers with their neighbours. Would a British presence in such an effort, tackling the flow across the Mediterranean and from Central Europe, better serve our own interests, even if it meant that other nationals joined our policing arrangements? For me, the answer is not one of principle but of self-interest. That could be best served if we were able to extend our standards of administration across a wider Europe.

The withholding tax presents a similar argument. German self-interest and national politics understandably demanded action to tax its wealthy savers, who by investing through the City of London could avoid German tax liabilities. The pessimist goes to the first stage of the problem and demands a tax deduction at source. It's a hopeless idea. The investment flow would simply divert elsewhere, to the loss of the City but with no gain to the German Exchequer.

The Government, backed by powerful voices in the media and the City, dug in. They looked at the problem in the round, acknowledging the ability of the well-advised rich to shelter their income in a motley array of tax havens. Britain alone could do nothing to challenge this, but Britain within Europe, doing what its self-interest demanded and what a wider world needs, persuaded the Europeans to go for the big picture. It will take longer and an ingenious tax avoidance industry will frustrate every turn. But the approach is right.

As this century unfolds, it is inconceivable that increasingly sophisticated democracies will continue to allow the mega-rich to make virtually no contribution to the societies from which they draw their wealth. Britain in Europe has real influence, as last month's approach shows. Europe together has enough clout to negotiate a world consensus on this issue.

In the third example, the Conservatives have suggested that they will revisit (whatever that means) the obligation accepted by the last Conservative government to price loose foods in metric as well as imperial units. That is just plain silly. The overriding need is to get our wealth creators to focus on the significance of a single European currency, to prepare for the massive trading scale of this new giant on our doorstep, to anticipate the millions of tourists that will come here knowing no other currency, and to calculate the degree of competition about to hit us.

In or out, the euro is here to stay. I believe we should be in as soon as conditions permit, but to pander to the least imaginative of our small businessmen with political gimmicks is a disservice to British competitiveness, on which we all depend.

Saving the pound has an undeniable political ring. But if the cost of doing so is higher interest rates, exchange rate uncertainty and added costs for our companies, you are saving a symbol at the expense of jobs, investment and wealth creation. The price cannot be justified.

A casual glance at today's headlines makes clear that Europe is on the threshold of further integration. That is the Franco-German agenda.

What is Britain's agenda? The easiest agenda to concoct is the Eurosceptic one by parading a list of objectives that sound well enough on this side of the channel but have no relevance on the other. It's called opposition.

This does nothing to serve our national self-interest. That is best served by clear, attainable objectives for the sort of Europe we want, coupled with an understanding that, to achieve the more efficient deregulated open market economy, we must trade compromises with other nations whose priorities are different.

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