The debt-ridden EU stares bankruptcy in the face

Wherever we now look at the EU, its affairs seem to be in an astonishing mess

All the EU crises go back to the most widely misunderstood of all the treaties, the Single European Act, which Margaret Thatcher was ambushed into accepting in 1985

By Christopher Booker

Shouldn’t it be making more headlines than it has that the European Union is today insolvent – since its astronomic debt in unpaid bills is nearly twice as large as its annual income? Such is the crisis lately highlighted by its parliament’s budget committee, which finds that the EU now owes 217 billion euros, or £182 billion, as compared with its current year’s income of just £108 billion. Much of this represents “cohesion funding” relating to Eastern Europe, in contracts agreed under the EU’s current budgetary arrangements. But when, at the end of this year, those arrangements come to an end, the rules strictly prohibit the EU from rolling forward its debts from one period to the next. So, in eight months’ time, it will lurch into bankruptcy.

Wherever we now look at the EU, its affairs seem to be in an astonishing mess. There is the ongoing slow-motion train crash of the euro. There is rising panic over the policy of unrestricted immigration, which threatens at the year’s end to flood richer countries such as Britain with millions of Romanians and Bulgarians. As Europe’s economies stagnate or shrink, the EU’s environmental policies fall apart, with the growing refusal of many countries, led by Poland and Germany, to accept curbs on fossil fuels.

What all these signs of breakdown have in common is that the policies giving rise to them all go back to the most widely misunderstood of all the European treaties, the Single European Act, which Margaret Thatcher was ambushed into accepting in 1985. This was the treaty she said was not necessary, because initially she thought all it was about was making the workings of the original Common Market more effective under the existing rules.

What she didn’t realise, because she was not properly briefed by her officials, was that it was always intended to be about very much more than just a “single market”. As its name indicated – and as Richard North and I for the first time set out in detail in our book The Great Deception – the Single European Act was always planned, by Jacques Delors, François Mitterrand, Helmut Kohl and the other European leaders who ganged up against her, to be the first of two treaties that would take the old “Community” a further giant step forwards to being a “Single Europe”. The other, the Treaty on European Union, was to be agreed at Maastricht five years later.

The Single European Act was the treaty that set in train the plan to create a single currency (which was why, up to the last minute, Mrs Thatcher considered vetoing it). It opened the door to unrestricted immigration by turning Europe into “a space without frontiers”. It created that Cohesion Fund, and it was the treaty that gave the EU the power to dictate environmental policy, under which, as early as 1991, it drew up its Strategy to Limit Carbon Dioxide Emissions in response to the panic over global warming.

It was because Mrs Thatcher was so misled about these wider purposes that she herself never explained to the British people that it was about so much more than the “Single Market” – although even this was to produce that unprecedented avalanche of directives which, far from boosting Europe’s prosperity, has left it the least dynamic economic bloc in the world.

Only now can we see the real price being paid for so much that the treaty set in train: the shambles brought about by the euro, the debts run up, which there is scarcely enough money in all Europe to repay; the rising alarm over unrestricted immigration; the chaos into which we are now being plunged by the EU’s self-deceiving policies on energy and climate change; the seemingly insoluble mess in which the EU itself has been landed by a Cohesion Fund now threatening it with bankruptcy.

Yet even now, under the fond illusion that this treaty was only about the “single market” – and that it was one of Mrs Thatcher’s finest achievements – none of our politicians will explain to us where all these disasters stemmed from. The sad truth is that scarcely any of them know.

MEPs’ vote leaves Britain alone to face soaring electricity bills

Two events last week again highlighted how ludicrously Britain’s energy policy is going off the rails. The first was a shock vote in the European Parliament, carried by Tory MEPs in defiance of David Cameron’s orders, further exposing a massive miscalculation by George Osborne that puts British industry at a huge disadvantage against its European competitors and will eventually double the bill we all pay for electricity.

On Tuesday, by just 19 votes, MEPs threw out a European Commission bid to save the EU’s Emissions Trading System (ETS), the world’s largest “carbon market”, which since 2005 has forced electricity users to pay hundreds of billions of pounds for the carbon dioxide they emit. When, back in 2010, Mr Osborne announced that, on top of this, Britain’s electricity companies would, from this month, have to pay an additional “carbon tax”, increasing the cost of emissions to a “floor price” of £16 a ton, rising to £70 by 2030, he assumed that the ETS price would also be racing upwards. So the additional cost of his “carbon tax” would not be very great.

Since then, however, the ETS market has collapsed. Last Tuesday’s vote, just after Mr Osborne’s tax had come into force, sent the price per ton plummeting to a record low of just £2.25, meaning that Britain’s electricity users must now pay far more for “carbon emissions” than anyone else in Europe. And this is a gap due to widen rapidly, to nearly £30 by 2020 and £70 thereafter. On the basis of the CO2 emitted by Britain’s coal- and gas-fired power stations, this alone will eventually almost double our electricity bills.

So what is the Government’s game in imposing such a crippling tax on those fossil-fuel power stations that currently provide more than two thirds of our electricity? According to the verbiage emitted by the Government, it is to incentivise a massive switch to “low carbon” energy sources, such as wind farms and nuclear power.

But these are already so much more expensive than energy from fossil fuels that no one would build them without colossal subsidies. The French state-owned company EDF insists that it will only build two nuclear reactors in Somerset if it is guaranteed nearly double the current market price for their electricity. The only reason largely foreign-owned firms are pouring billions into the 32,000 wind turbines the Government wants to see built is that they are given subsidies that almost double – in the case of offshore wind, treble – the price of the power they so unreliably generate.

And now, as last week’s other piece of news, we also learn that the German-owned nPower has paid no corporation tax at all on its recent £766 million profits in the UK, because all this can be offset against the money they are shovelling into wind farms to milk that ever-rising flood of subsidies.

So, in every direction, the rest of us must pay to support a policy designed to double our bills and drive millions more households into fuel poverty. And all this supposedly to “save the planet”, when, as Peter Lilley pointed out in a superb speech in Westminster Hall on Thursday, the increase in China’s CO2 emissions alone in 2011 was 200 million tons more than the total emitted by the UK. As Mr Lilley reminded his fellow MPs, locked in their sad little bubble of make-believe, “those whom the gods wish to destroy, they first make mad”.

Warmist Tories belie Lady Thatcher

How telling was the eagerness of our Tory warmists in the week of Lady Thatcher’s funeral to recall how, in 1988, she had been the first world leader to champion their cause. Tim Yeo, Lord Deben (formerly John Gummer) and energy minister Greg Barker all piled in to claim that she would be right behind their present policies, as did William (now Lord) Waldegrave in The Times.

None, of course, wanted to mention her last book, Statecraft, in which, as I reminded my readers last week, she could not have more comprehensively recanted on her earlier position. Having clearly read up on the science, she became the most trenchant “climate sceptic” imaginable.

Dismissing whatever she might have said “if anything, in her long retirement”, Lord Waldegrave’s insinuation that her change of view amounted to no more than the senile ramblings of an old woman was not worthy of him, and said much about the nature of the cause he was seeking to defend.