:00:20. > :00:23.session. -- 18-hour. Now, time for Welcome to HARDtalk. Britain's
:00:23. > :00:28.Conservative Party is deeply sceptical about the EU. This is not
:00:28. > :00:34.news. What is novel is the readiness of some of the party's
:00:34. > :00:37.grandest members to call for a British exit. One of them, Lord
:00:37. > :00:41.Lawson, Margaret Thatcher's former Chancellor of the Exchequer,
:00:41. > :00:45.recently labelled the EU a bureaucratic monstrosity past its
:00:45. > :00:48.sell-by date. That intervention embarrassed Prime Minister David
:00:48. > :00:53.Cameron and deep under the impression of a Tory party
:00:53. > :01:03.dangerously divided. -- and furthered the impression. Why did
:01:03. > :01:23.
:01:23. > :01:26.he do it? Lord Lawson, welcome to HARDtalk. Thank you.It seems that
:01:26. > :01:30.over the cause of a long political career, you have made an
:01:30. > :01:34.extraordinary U-turn from being a strong advocate of Britain's
:01:34. > :01:43.membership of the EU to now becoming quite clear-cut in your
:01:43. > :01:48.wish to see Britain leave. The EU has changed over that time. The EU
:01:48. > :01:52.- it was then called the European economic Community in the beginning
:01:52. > :01:56.- had a very clear political objective. It has always been
:01:57. > :02:02.political. The political objective was to make Europe safe from
:02:02. > :02:09.another European war, a third world war. To be blunt, it was to put to
:02:09. > :02:13.the German Tiger in the European cage. So that there should be no
:02:13. > :02:19.resumption of German militarism, which have done so much damage in
:02:19. > :02:29.the 20th century. And that was a very sensible aspiration - whether
:02:29. > :02:30.
:02:30. > :02:34.it was necessary to do it to be safe, it made a great deal of
:02:34. > :02:38.servants. I no longer believe there is a German militaristic for it. It
:02:38. > :02:43.is done and done. That was the major purpose? That was the major
:02:43. > :02:47.purpose. At the same time, Europe has changed with the coming of the
:02:47. > :02:53.common currency -- common currency, the hero, of which the UK is not a
:02:53. > :02:57.part and quite rightly so. And the eurozone countries are having
:02:57. > :03:05.terrible economic problems as a result. And the only way - and they
:03:05. > :03:10.know this and they say this - they can move to solve the economic
:03:10. > :03:14.problems is that if they accompany the monetary union with full-
:03:14. > :03:18.blooded fiscal union, a single finance ministry, a single Finance
:03:18. > :03:23.Minister, single taxes, a single benefit systems, which basically
:03:23. > :03:26.means political union. The United States of Europe? The United States
:03:26. > :03:31.of Europe. And that is not something Britain has ever wished
:03:31. > :03:35.to be part of. You are saying that as far less you are concerned now,
:03:35. > :03:41.there is only one possible outcome for the European Union, and that is
:03:41. > :03:45.the full-blooded, full scale Federated United States of Europe?
:03:45. > :03:49.There is another possibility. They could abandon the single currency
:03:49. > :03:53.but I do not believe they will do that. Anyhow, it is profoundly
:03:53. > :03:58.unsatisfactory for Britain at the present time, particularly because
:03:58. > :04:01.as the eurozone consolidates, there will be a eurozone voting bloc, a
:04:02. > :04:09.solid block which will have to be in existence, which will determine
:04:09. > :04:12.things and the British vote will always be outnumbered. David
:04:12. > :04:18.Cameron recognises that it is unsatisfactory at this present time,
:04:18. > :04:22.which is why he is saying that he will renegotiate the terms. I am
:04:23. > :04:27.going to renegotiate a different kind of EU. A new relationship
:04:27. > :04:30.between Britain and Brussels? unclear whether it is a new
:04:30. > :04:35.relationship with Britain and Brussels or a new relationship
:04:35. > :04:38.between the individual that -- individual member states
:04:38. > :04:42.collectively with Brussels. seems that no matter what the
:04:42. > :04:47.others do, he is determined that Britain's standing with Europe will
:04:47. > :04:51.change. That is right. That is what he is declaring to do. And then, he
:04:51. > :04:58.said that there will be a referendum on the basis of whatever
:04:58. > :05:02.he is able to renegotiate. Exactly. And it will be in or out. And this
:05:02. > :05:07.is where I have to be quizzing you quite closely. You chose at a very
:05:07. > :05:10.sensitive political moment when David Cameron had just seen the
:05:10. > :05:13.Conservatives do extraordinarily badly in a set of local elections,
:05:13. > :05:17.you chose to come out in public and say that his approach to Europe,
:05:17. > :05:22.this idea that yes he wants a referendum, he will give a
:05:22. > :05:25.referendum if he is Prime Minister in 2017, but in the meantime he
:05:25. > :05:27.will renegotiate, and I promise you that this renegotiation will
:05:27. > :05:34.produce something much better for Britain which I would like you to
:05:34. > :05:38.vote upon in a positive way, you dismissed that as absolutely
:05:38. > :05:43.incredible. You said that it was impossible to imagine a
:05:43. > :05:48.renegotiation being removal and delivering what Britain needs. Her
:05:48. > :05:52.-- being meaningful. You under my door Prime Minister. I did not and
:05:52. > :05:58.I wish him well. My judgement, which is not based on prejudice...
:05:58. > :06:01.First of all, we have been through this before... It is highly
:06:01. > :06:08.prejudicial. He said any negotiation will be inconsequential.
:06:08. > :06:14.Let me finish the sentence. Harold Wilson. When he came to power in
:06:14. > :06:18.1974 said precisely the same and he tried to do a renegotiation. And he
:06:18. > :06:22.got absolutely next to nothing in return. An he then had this
:06:22. > :06:30.referendum in 1975 and to pretend that he had achieved something but
:06:30. > :06:36.he had achieved nothing. And we voted and I voted to stay in
:06:36. > :06:40.because I thought we should stadium, on balance, in 1975. I knew the EU
:06:40. > :06:46.pretty well because all the time I was a minister, whenever that was,
:06:46. > :06:49.the best part of ten years, and dealing with my counterparts,
:06:49. > :06:56.dealing with the Brussels bureaucracy, I knew then very well.
:06:56. > :07:00.I had many friends there. And they are not going to agree to any
:07:00. > :07:03.significant change. There is no way they will agree to any significant
:07:03. > :07:07.change and even if one or two of they would like to, they have to
:07:07. > :07:11.get the agreement of all of them and that will not happen. David
:07:11. > :07:15.Cameron is plain wrong, is he? think I would like to see him
:07:15. > :07:19.succeed but I don't think he will. So we will have to have a
:07:19. > :07:23.referendum. Therefore, in answer to your question, the reason why I
:07:23. > :07:26.spoke out is because it is such a momentous issue, an issue of such
:07:26. > :07:31.importance for the United Kingdom that there has to be a full and
:07:31. > :07:36.proper debate. The whole issue has to be thrashed out. And that is why
:07:36. > :07:40.I set out my feelings as to why of the present basis, because I don't
:07:40. > :07:44.believe even though he would like to, I don't believe he is totally
:07:44. > :07:47.sincere, even though he would like to negotiate a new relationship, I
:07:47. > :07:51.don't think that will be possible, and therefore I think that we have
:07:51. > :08:00.to understand what the issues are. And there are always arguments on
:08:00. > :08:04.both sides. We should understand where the balance of advantage lies
:08:04. > :08:08.and we should understand why there is nothing to be afraid of him
:08:08. > :08:10.leaving. One of your former Cabinet colleagues in the Conservative
:08:10. > :08:18.administration, Sir Malcolm Rifkind, said that your intervention was
:08:18. > :08:24.akin to throwing a hand grenade into a small building. Well, I like
:08:24. > :08:29.Malcolm and he was for a time a colleague of mine in government.
:08:29. > :08:33.But it is scarcely a hand grenade. If we are told we will have a
:08:33. > :08:37.referendum if we do not say -- if we say let us discuss the issues.
:08:38. > :08:44.The is ludicrous to say that the issue cannot be discussed. And I
:08:44. > :08:50.discuss them in a very careful, not extravagant, lot of call and
:08:50. > :08:56.reasoned way. The Tory party, your party, I think you would accept is
:08:56. > :09:01.deeply divided on this. There are some dumb -- there are some - not
:09:01. > :09:04.many - who are broadly in favour of Europe. And then there are sceptics,
:09:04. > :09:08.some of whom say renegotiation is the key to this. David Cameron
:09:08. > :09:12.would be one of those. And there are some who say that getting out
:09:12. > :09:16.is the only solution. What you have done with your intervention is a to
:09:16. > :09:20.those who believe in renegotiation led by the Prime Minister that
:09:20. > :09:24.their position has no credibility, does not reflect the facts and
:09:24. > :09:28.shows no understanding of the way the EU works, and that is a pretty
:09:28. > :09:32.grave charge to lay at the door of the Prime Minister. First of all, I
:09:32. > :09:38.believe he is perfectly sincere. I have not out at him, nor have I
:09:38. > :09:41.stated... Understood. You just think he is wrong. I think he is...
:09:41. > :09:45.I think he means to get a fundamental change in relationship.
:09:46. > :09:50.I don't believe that is on. And therefore, one has to say, where
:09:50. > :09:55.does that leave us and what should we do? When you say the
:09:55. > :09:59.Conservative Party is divided on this, as you also say, it is quite
:09:59. > :10:03.clear where the majority of the party now lies. But it is not just
:10:03. > :10:09.the Conservative Party that is divided. The Labour Party is
:10:09. > :10:13.divided. One of them must hobble donors -- one of their most
:10:13. > :10:18.powerful owners has called for Labour to go for the referendum as
:10:18. > :10:23.well. He has said that we should leave as well. This is not a party
:10:23. > :10:28.issue, the whole nation is divided on this. The problem, I suppose, is
:10:28. > :10:31.that in British politics right now, one of the most serious threats to
:10:32. > :10:35.the Conservative position is the rise of the UKIP, his position is
:10:35. > :10:39.quite clear. They say they are against the EU, they want Britain
:10:39. > :10:45.to get out as soon as possible, which is pretty much all position
:10:45. > :10:49.as well. And the leader of the UKIP, Nigel Farage, was the one man who
:10:49. > :10:53.truly, warmly welcomed and celebrated your intervention. He
:10:53. > :10:57.said that if you feel like a Nigel Lawson, one of the biggest people
:10:57. > :11:04.in the Tory party, that of European Union is bad for Britain, the only
:11:04. > :11:07.party that clearly expresses that view is minor - the UKIP. The UK
:11:08. > :11:14.Independence Party, which is a very small party even though they did
:11:14. > :11:19.well... In the opinion polls, it is over 20%. But it is not one of the
:11:19. > :11:25.major parties in the country. The UKIP gets, I think, most people
:11:25. > :11:31.agree, most of its support on an anti-immigrant platform. This is
:11:31. > :11:38.not the issue we are talking about. We are talking about Europe. And
:11:39. > :11:42.the fact of the matter is that I am far from alone. After I made my day
:11:42. > :11:47.Marsh, a number of other senior Conservatives came out to basically
:11:47. > :11:56.agree. Michael Gove, for example, the Secretary of State for
:11:57. > :12:00.Education, indicated that he would vote on leaving the EU. And he is
:12:00. > :12:04.someone who David Cameron greatly values. I think that we need to
:12:04. > :12:08.think not in terms of party politics. We need to think of what
:12:08. > :12:13.is in the interests of the UK and that is what drives me. That us
:12:14. > :12:20.talk a little bit about that. There are a whole bunch of leading
:12:20. > :12:26.British businessmen who have written collected the EU and action
:12:26. > :12:33.-- access to the single market is around two �90 billion per year to
:12:33. > :12:37.the UK economy. Richard Branson, Martin Sorrell... Many others. They
:12:37. > :12:42.say that in economic terms, it is fundamentally wrong and deeply
:12:42. > :12:46.mistaken to think that the British economy can do well outside of the
:12:46. > :12:51.EU. I know that there are these Sufi years but they are ludicrous
:12:51. > :12:57.and economically illiterate. -- there are these concerns. I went to
:12:57. > :13:01.some length in my article. We have to be brave about it because we do
:13:01. > :13:04.not have a lot of time. No, we don't! But I am amazed that the
:13:04. > :13:07.people who run these companies in Britain are economically
:13:07. > :13:11.illiterate! They are very good. People who run companies
:13:11. > :13:14.successfully, on the whole, what they are good at, his mining
:13:15. > :13:19.company successfully. He does not mean they are good at everything.
:13:19. > :13:25.You only have to look at the US exports to the EU. Or to the UK,
:13:25. > :13:30.which is part of the EU. Or Chinese exports to the EU including the UK.
:13:30. > :13:34.You don't have to be in the EU to trade with the EU. Yes, but none of
:13:34. > :13:39.those other countries have 50% of exports going to Europe. It is
:13:39. > :13:43.closer to 40% and we should have more going to Europe and will go
:13:43. > :13:50.into the growth areas of the world. The growth areas of the world today
:13:50. > :13:54.are not in Europe. They are the emerging world countries. In Asia,
:13:54. > :13:58.particularly - China and the other Eastern countries. And also in
:13:58. > :14:01.Latin America. That is where we should be focusing our export
:14:01. > :14:06.potential. But does it give you pause when you hear the Americans,
:14:06. > :14:11.Barack Obama, talking about the UK's membership of the EU being in
:14:11. > :14:14.his words an expression of the UK's influence and role in the world?
:14:14. > :14:18.And when other US officials told the newspapers that if the UK
:14:18. > :14:21.thinks it can negotiate a trade deal with the US just as the EU is
:14:21. > :14:25.doing right now, which David Cameron support, they have another
:14:25. > :14:29.think coming. They say there is no appetite for signing a separate
:14:29. > :14:34.trade deal. I will tell you between ourselves what the American action
:14:34. > :14:38.is all about. Of course we will be able to negotiate a trade deal of
:14:38. > :14:42.some kind because it will be in our mutual interest. If you say that,
:14:42. > :14:46.but Washington says something different. I will tell you why. I
:14:46. > :14:53.know the Americans very well, I have nothing against them. America
:14:53. > :14:59.has always been concerned that the EU will become anti-American. There
:14:59. > :15:03.is a strong strand within Europe, particularly in France now, and Air
:15:03. > :15:07.France very well, of jealousy and anti-Americanism in France. And the
:15:07. > :15:13.Americans always believed that so long as the UK was in the EU, that
:15:13. > :15:17.would prevent the EU from turning anti-American. And that is why it
:15:17. > :15:27.is in the US interest for us to be there. That does not mean it is in
:15:27. > :15:42.
:15:42. > :15:45.I have a set, might consider an opinion is that unless there is a
:15:45. > :15:50.transformation of the relationship between Britain and the European
:15:50. > :15:55.Union - which I do not think is possible to negotiate, we should
:15:55. > :16:01.leave. That is how I will be voting when the referendum comes. I have
:16:01. > :16:11.also pointed out that the problems for Britain are likely to get more
:16:11. > :16:12.
:16:12. > :16:17.and more acute that it -- as it evolves into a political union. As
:16:17. > :16:23.you may or may not know, I have interests in other issues. I have
:16:23. > :16:28.expressed issues on those as well. I do want to get your views of on
:16:28. > :16:36.other issues. You have been sitting on this parliamentary commission on
:16:36. > :16:41.banking standards. It is partly tied to the European Union. You say
:16:41. > :16:46.one of the most dangerous elements is the frenzy of regulatory
:16:46. > :16:52.activism coming from Brussels coming, in your view, trying to cut
:16:52. > :16:59.down to size the City of London and its financial importance. When it
:16:59. > :17:03.comes to learning the lessons of 2008 and the financial meltdown, do
:17:03. > :17:09.you think there is evidence the British government and system has
:17:09. > :17:15.truly learned the lessons? I hope so. I think some people have. The
:17:15. > :17:18.Bank of England, which now has the responsibility of supervising and
:17:19. > :17:25.regulating the banking system of the CD, I think they have learnt a
:17:25. > :17:32.lot. I have out commission on banking standards will be able to
:17:32. > :17:37.help move on. The position is, There are only two major financial
:17:37. > :17:41.centres in the world. They are New York and London. We are the only
:17:42. > :17:47.one in the European time zone which is tremendously important. I want
:17:47. > :17:52.us to continue to be a major global financial centre. The main thing
:17:52. > :17:57.necessary to that is to clean up the banking system in this country.
:17:57. > :18:03.Which is what the commission of which I am a member is about. We
:18:03. > :18:08.will be making various recommendations. There will be a
:18:08. > :18:13.slave of recommendations - some quite radical. There is another
:18:13. > :18:18.thing, the cleaning up is the most important thing but also, we must
:18:18. > :18:25.not allow ourselves - this is the connection between the two issues
:18:25. > :18:32.which you rightly point out - we must not allow ourselves to be
:18:32. > :18:40.governed by misconceived, misguided, foggy European regulations which in
:18:40. > :18:46.fact damaged London as a global centre. Hang on. May I stop you? It
:18:46. > :18:50.is a global centre but it has problems of his cissy. The European
:18:50. > :18:54.Union has taken actions in the last few months which would put
:18:54. > :19:01.stringent controls on bankers pay, for example - limiting the size of
:19:01. > :19:08.any bonus to 100% of base salary - that is something which in London,
:19:08. > :19:14.pay and remuneration, has been a huge issue. Especially from the
:19:14. > :19:18.public. A Usain that is wrong? think the renumeration is an
:19:18. > :19:22.important issue. You are absolutely right but this is a classic example
:19:22. > :19:32.of where the European Union is going wrong. The effect of what
:19:32. > :19:32.
:19:32. > :19:37.they've done is the bonuses cannot be more than a certain proportion
:19:37. > :19:43.of the fixed salary. So what you do? You put up the fixed salary.
:19:43. > :19:48.What good is that? EU the problem worse. Do you actually believe
:19:48. > :19:52.David Cameron and George was one barb going to take any advice from
:19:52. > :19:56.your commission? Using to be clear in your mind that as a result of
:19:56. > :20:01.the terrible damage done to the Royal Bank of Scotland which is now
:20:01. > :20:07.80% in public ownership, you think the only viable solution is to
:20:07. > :20:11.break that back up into two - aback -- a bad bank with the long-term
:20:11. > :20:15.debts and free up a good back to become a key player in the banking
:20:15. > :20:21.system for the future. Fully privatise. You have said that is
:20:21. > :20:31.what you want but it seems that is what Cameron and Osborne and do not
:20:31. > :20:33.
:20:33. > :20:39.want. As a member of the Commission and someone with some experience of
:20:39. > :20:42.banking, but, I am sure the government will listen, whether
:20:42. > :20:47.they will do what recommend we shall see. All we can do is
:20:47. > :20:53.recommend what we think is the best thing. This split is not something
:20:53. > :20:58.that the commission has thought up by its are ?I ? by its are -
:20:58. > :21:02.known to any student of banking. It is what the Swedes did when they
:21:02. > :21:07.had their banking crisis in the 1990s. To some extent this is what
:21:07. > :21:13.the US dip successfully today because they had a banking disaster
:21:13. > :21:19.as well. To be clear about the future, you want RBS - this is an
:21:19. > :21:24.important issue because it is 80% in public ownership - you want it
:21:24. > :21:28.to be rebuilt in a way that the government at the moment is not
:21:28. > :21:34.prepared to countenance. One of the problems with the economy at the
:21:34. > :21:39.present time - I'm glad to say the right increasing signs that we are
:21:39. > :21:45.gradually - it has taken a long time - a recovery is on the way.
:21:45. > :21:50.Not at the great praise... We can argue for a long time about the
:21:50. > :21:55.figures. Nevertheless, one of the things holding us back is a lack of
:21:55. > :21:59.lending to small to medium-sized businesses who are not being
:22:00. > :22:05.finance. One of the reasons why they find it difficult to get back
:22:05. > :22:10.finance finances, is that they have bad debt which they are not owning
:22:10. > :22:15.up to any Nexen terrified of any new lending. In case that goes back.
:22:15. > :22:19.If you had the separation - good bank and bad bank - the good bank
:22:19. > :22:22.would be in a stronger position to lend to small and medium-sized
:22:22. > :22:27.businesses and that would be excellent for the British economy
:22:27. > :22:32.an obviously good for the taxpayers as well. We have a incompetence,
:22:32. > :22:36.mismanagement, manipulation of markets in the libel scandal, we
:22:36. > :22:39.have had the chairman of your commission not of him that a few
:22:39. > :22:45.bad apples but large numbers of people who over long periods of
:22:45. > :22:48.time conducted abuses, malpractices, what I would call fraud and it
:22:49. > :22:54.sticks in the court that these are serious offences have yet not seen
:22:54. > :22:58.anybody emerge with a prison jumpsuit up on their bodies. What
:22:58. > :23:02.he seems to be saying is that for all the talk here in London,
:23:03. > :23:09.actually, the government has not acted in a way the public needs it
:23:09. > :23:15.to act to change the mindset and practices of the City of London.
:23:15. > :23:21.One of the reasons - the main reason - why the government set up
:23:21. > :23:26.this commission are indeed the Labour Party was opposed to it,
:23:26. > :23:30.they thought we should be a judicial enquiry with a High Court
:23:31. > :23:36.judge in charge of it. Everybody agree something had to be done.
:23:36. > :23:41.Anyway, the government, I think was right to set up this kind of
:23:41. > :23:45.parliamentary commission. They set it up because they realise that
:23:45. > :23:51.there are a number of things that went badly wrong and they want to
:23:51. > :23:55.see the recommendations. You will hold their feet to the fire?
:23:55. > :24:00.will not be afraid to say what we think needs to be done. And if they
:24:00. > :24:04.do not do it? That will be debated in the House of Commons and the
:24:04. > :24:08.House of Lords. Can your recommendations ensure that the
:24:08. > :24:15.meltdown we saw, not least in the City of London in 2008, can never
:24:15. > :24:18.happen again? And would never use the word never but I would hope
:24:18. > :24:24.that if these recommendations are accepted, it would be highly
:24:24. > :24:28.unlikely. A further point - very poor and to establish that if there