Labour has warned the coalition government against trying to renegotiate an "a la carte" UK role in the European Union.
Speaking during a general debate on recent developments in the EU on 17 December 2012, opposition spokesman Lord Liddle warned against the UK gaining an "unfair competitive advantage" against other member states by scrapping regulation and cutting costs.
"Who seriously believes that a credible growth strategy for Britain in this global race can be pursued on the basis of cheap labour, bad safety standards and environmentally shoddy goods," he told peers.
Lord Liddle added: "We need to take the high road to competitiveness".
Lord Liddle said the UK's role in Europe should be based on reform not renegotiation and questioned whether the UK could expect to maintain access to the single market and "negotiate an a la carte Europe at the same time".
Foreign Office minister Baroness Warsi said the government remained committed to being a "key player" in the EU.
But she added: "Our relationship with the EU is not an unquestioning one. We need to protect UK interests while supporting our neighbours and allies across the continent to achieve their own aims."
Conservative former Foreign Office minister Lord Howell of Guildford said the UK was "not at all alone" in wanting a new direction for Europe, but called for policymakers and their critics to adopt a "new mindset".
He said: "Compiling a wish list of things we want to grab back from the EU and then trying to negotiate to stay in the single market, as some less experienced members of the Commons seem to think we should be doing, would in fact lead nowhere."
Liberal Democrat Baroness Falkner of Margravine hit out at people who thought calling for an in-out referendum was enhancing the UK's negotiating position.
She told peers: "In their book is the naive proposition that other European countries will be so cowed by the mere prospect of the UK departing that they will put up no resistance whatsoever in granting the UK exceptions that will undermine their own country's interests."
Lady Falkner added it was a "cynical and dangerous game and prone to failure" and accused Labour of "legitimising" the strategy in debates over the budget renegotiations.
As part of the debate, peers also addressed their remarks to two European Union bills which were being considered at
The European Union (Croatian Accession and Irish Protocol) Bill makes provisions in UK law concerning the treaty on the accession of Croatia to the European Union, signed at Brussels on 9 December 2011, and concerning the entitlement of Croatian nationals to enter or reside in the UK as workers.
The bill also allows for approval of the Irish Protocol on the concerns of the Irish people on the Treaty of Lisbon, adopted at Brussels on 16 May 2012.
Peers also considered the European Union (Approvals) Bill at second reading.
To view the second part of the debate click