The Minister for Europe (Mr David Lidington)
I beg to move,
That this House takes note of draft European Council decision EUCO 33/10 (to amend Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro) and, in accordance with section 6 of the European Union (Amendment) Act 2008, approves Her Majesty’s Government’s intention to support the adoption of draft European Council decision EUCO 33/10.
Under the terms of the European Union (Amendment) Act 2008, the House should approve this motion on the proposed change to the European treaties so that the Prime Minister can then support the adoption of the draft European Council decision to amend article 136 of the treaty on the functioning of the European Union at the European Council scheduled for 24 and 25 March. It is my belief that agreement to this, which is about the narrow change brought forward to enable the countries that use the euro as their currency to establish a permanent stability mechanism from 2013 onwards, is profoundly in the interests of the United Kingdom.
Mr Philip Hollobone (Kettering) (Con)
Will my right hon. Friend confirm that this is the first time that the passerelle mechanism—in other words, a fast-track treaty amendment without an intergovernmental conference—is being used? Is this the first time that such a passerelle clause has been brought before the House?
Mr Lidington
We can debate whether or not it is a passerelle. It is certainly the first time that the provisions under the Lisbon treaty for a simplified revision procedure, rather than the full-scale procedure to which my hon. Friend alluded, has been employed.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Can we be absolutely clear what we are doing here? It used to take months, even years, to change a European treaty. Tonight, we are going to debate this motion for 90 minutes and then the Government will go to the European Council and agree to that change in the treaty. That is correct, is it not, because the next time this comes back for scrutiny it will be a fait accompli?
Mr Lidington
No, I do not share my hon. Friend’s analysis of the procedures that lie ahead of us, and I think he underestimates the further opportunities there will be for the House to consider this proposed treaty amendment. I will come on to that in a little more detail later.
First, however, I want to make it clear why the Government believe that agreement to this treaty change is in the interests of this country. As my right hon. Friend the Prime Minister made clear to the House in his statement following the European Council held in December last year, no one should doubt that stability in the eurozone is in the interests of the United Kingdom. Nearly half our trade is with the eurozone, and London is Europe’s international financial centre. It is precisely because of this interrelationship that the UK’s financial institutions and companies, both big and small, have huge exposure to the banks and businesses based throughout the eurozone. Worsening stability, let alone a further and prolonged economic and financial crisis, would pose a real threat to the UK economy and to jobs and prosperity in this country.
Kelvin Hopkins (Luton North) (Lab)
Would it not be more appropriate for an intergovernmental agreement to be reached among the member states of the eurozone, rather than have some change to the treaty on the functioning of the European Union?
Mr Lidington
It would have been possible for the member states of the eurozone to have come to such an intergovernmental agreement, but they chose not to do so. In addition, a number of the other member states which have not joined the euro but aspire to do so and which have an obligation in their accession treaties to do so in due course would prefer any necessary treaty change to be agreed by 27 states, rather than dealt with on an intergovernmental basis alone.
Mr John Baron (Basildon and Billericay) (Con)
Given that this vote will have to be unanimous and we therefore have veto, is this not an ideal opportunity at least to try to extract concessions from the EU? We could take such an approach on, for example, the working time agreement, in line with the coalition agreement.
Mr Lidington
As I hope to demonstrate to my hon. Friend’s satisfaction later in my speech, my right hon. Friend the Prime Minister secured an extremely good bargain for this country when he took part in the negotiations that produced this amendment. First, however, I wish to deal with the points raised by my hon. Friends the Members for Kettering (Mr Hollobone) and for Harwich and North Essex (Mr Jenkin).
This kind of motion has not been debated in this place before and should the European Union Bill, which this House agreed without Division on Third Reading last week, become law, we will not have this particular procedure here in the future. I want to give a firm assurance to the House that, in particular because of the provisions in that Bill, this evening is only the first opportunity for the House to have its say on the proposed treaty change; a second opportunity will be provided through the process of ratification.
I have to say to the House that the previous Government left this country with a system of both popular and parliamentary control over treaty change that was grossly inadequate. Under the inherited arrangements, this motion would have been all that was required by way of parliamentary approval, at least in terms of an affirmative resolution. If the European Union Bill were not to become law, a motion of this type leading to the adoption of a proposal for treaty change would, on ratification, still have to come back to Parliament and be laid before both Houses, but it would then be for Parliament to pray against the provision which had been laid before the House. Obviously the usual problems are involved in terms of what amounts to a negative resolution procedure in giving effect to an understandable desire for full and effective parliamentary scrutiny. However, as I have said, the Government, through the new legislation that we are taking through Parliament at the moment, want to provide a much stronger assurance for the future that this particular proposal and any others that might conceivably come forward will be given much greater and more rigorous parliamentary scrutiny.
Mr David Nuttall (Bury North) (Con)
Let us be clear about what will change if that Bill becomes an Act, as I am sure it will in due course. Is it the case that the sort of debate we are able to have tonight will not be possible in future because we will have post-decision debates, in that decisions will have already been taken before that Act, as it will be then, kicks in?
Mr Lidington
I hope that I can give my hon. Friend the reassurance he seeks. First, I will make a bit of progress and describe how the provisions in the European Union Bill will bite on this measure and any future measures that are modelled on it.
Mr Wayne David (Caerphilly) (Lab)
A very important question has just been asked by a Back Bencher and the Minister has made no attempt to respond to it. Would it not be technically possible to have the new procedures introduced by the European Union Bill as well as the current procedures? One is post and the other is pre.
Mr Lidington
I had better invite the hon. Gentleman to read the Hansard record of the debates on the European Union Bill in which he took part—both in Committee and on Report. If he does read them, he will see that the Government introduced an amendment precisely to make explicit the requirement for this proposed treaty change to be subject to more rigorous parliamentary scrutiny than would have been permitted if the current statutory procedures under the Constitutional Reform and Governance Act 2010 had been allowed to stand and to suffice. I hope that he was not asleep when we debated that amendment. If he examines Hansard, he will find that we have covered that point in some detail.
The previous Government left the country with a system of control that was grossly inadequate. Section 6 of the European Union (Amendment) Act 2008 requires that when a draft decision under the simplified revision procedure—under article 48(6) of the treaty on European Union—is proposed, a Minister must introduce a motion and have it passed by both Houses without amendment before the Prime Minister can signal his agreement to its adoption at a subsequent European Council. That is the point in the decision-making process that we have reached tonight.
There is an option, under the 2008 Act, for the Government of the day to insert a disapplication provision into this type of motion. Such a provision would enable the Government to agree to subsequent amendments to the draft decision to amend the treaty without having to come back to the House for approval. The options were put before me by my officials and I was absolutely clear from the moment I read the papers that to introduce a disapplication provision of that kind would be completely unacceptable and would give Parliament absurdly little control over such an important matter. For that reason, there is no such provision in the motion.
Let me make it clear: if the House approves the motion, it is authorising the Prime Minister to agree to this draft decision—this text alone—at the European Council. Should there be any suggestion of amending the draft decision at the European Council—there is no such suggestion from any quarter at present—the Prime Minister could not legally agree to it at the European Council without first coming back to this House and the other place for additional approval after a further debate. The draft decision that is referred to in the motion will be the version that is agreed at the Council and there can be no other version of the treaty change without the further approval of the House in a debate such as this.
The European Scrutiny Committee has rightly assessed the draft decision as politically important and has recommended it for debate on the Floor of the House. We are scrutinising the draft decision, as the Committee has requested, and debating whether the Prime Minister may signal his support for its adoption at the Council on 24 and 25 March.
Mr William Cash (Stone) (Con)
My right hon. Friend is going through all the procedures and the technical side of things, but, as he knows, that is not really what the treaty is about. I hope he will agree that it represents a huge change in the relationship between the United Kingdom and the European Union. Anyone who cares to look back at what those of us who have argued this case before have said, and to look in particular at The Economist this week, will know that the treaty is a hybrid one that is being devised, driven and pressed forward by Germany and those countries that wish to acquiesce in Germany’s dictated terms. Does he agree?
Mr Lidington
No, I am afraid I do not agree with my hon. Friend on that point. As I have said, it is in the interests of the United Kingdom for there to be stability in the eurozone. To some extent, the measures that the eurozone countries are now taking are a response to the kind of critique that he and other Members of this House made 10 or 11 years ago when the euro was first created. They—I was very much in this camp—argued that it would cause huge difficulties to create a currency union involving a single interest rate and single monetary policy that did not have some way of reconciling very different rates of growth, inflation and unemployment in the countries in that single currency area.
I want to finish on the procedural points and then move on to the content. If the draft decision is adopted by the European Council, all 27 member states will have to approve the treaty change and ratify it in accordance with their respective constitutional requirements before the decision enters into force. The treaty amendment cannot come into effect until we—and everybody else—ratify the adopted decision.
My right hon. Friend the Foreign Secretary and I have already given an assurance at this Dispatch Box that this and every other future treaty change will be considered in accordance with the terms of the European Union Bill, once that enters into force. That Bill will require Ministers to lay a statement before Parliament within two months of the commencement of part 1 of the Bill, explaining whether the treaty change would fall within clause 4 of the Bill—namely, whether it would involve a transfer of competence or power from the United Kingdom to the European Union.
The treaty change will then have to be ratified by primary legislation—a full Act of Parliament—before the United Kingdom is able to say formally that it has completed the ratification process, so even when we get to that stage, the final version, agreed by all 27 Heads of Government, has to come back to Parliament for ratification and will be debated in all the stages of primary legislation. Tonight is therefore not the only opportunity that my hon. Friends will have to debate the measure.
Mark Reckless (Rochester and Strood) (Con)
Surely the key point about this debate is that we have a veto, and that gives us a lever? Most people in this country feel that EU integration has already gone far too far. Is it not the case that the Minister’s refusal to use that lever can only mean that our relationship with the EU will, sooner or later, have to be resolved through an in/out referendum?
Mr Lidington
I will reply to my hon. Friend the Member for Rochester and Strood (Mark Reckless), but first I give way to my hon. Friend the Member for Wellingborough (Mr Bone).
Mr Lidington
It is obviously for those countries and their legal and constitutional systems to say how they will go about ratification, but when the proposal was discussed at General Affairs and External Relations Council meetings, at which I represented the United Kingdom, there was great concern among the member states that have provision for referendums in their constitutional arrangements to ensure that the agreed wording was such that it made it possible for them to ratify without triggering a referendum. I can remember Ministers from a couple of countries making those points very firmly. The president of the European Council, the Commission and the German Government who, it is no secret, had been promoting the need for a treaty change, accepted that. The language that we have is narrow in its scope and provides only for provisions affecting the countries that have the euro as their currency. It is for Ireland, the Netherlands and other countries to decide whether they need a referendum. My understanding is that those Governments think that that is not required.
Mr Lidington
It will come as no surprise to my hon. Friend the Member for Rochester and Strood to know that I disagree with him about the need for an in/out referendum. We debated that at some length the other day in proceedings on the European Union Bill. The Government believe that it is in the interests of the United Kingdom to remain an active and positive player in the European Union. That does not mean that we like everything it does or everything about the way the current arrangements have been established, but we believe that it is in the interests of our country to engage, campaign and fight for our interests within the European Union and not to turn our backs on it.
Mr Lidington
I shall give way to my hon. Friend the Member for Harlow (Robert Halfon), then I shall make progress.
Robert Halfon
As the veto has been mentioned, perhaps it could be waved in front of the EU countries that are so against implementing a no-fly zone over Libya.
Mr Lidington
My hon. Friend makes an important argument, which is probably somewhat outside the scope of the treaty change that we are debating today, but it will have been noted by those he wished to hear his comments.
Mrs Anne Main (St Albans) (Con)
We have touched on whether or not the Minister thinks our membership of the EU is a good thing, but we should ask the people whether they believe we should be in Europe. That is a question which, I am sorry to say, he has not answered.
Mr Lidington
The Prime Minister made it clear in answer to questions last week that he believes it is in the United Kingdom’s interest to remain part of Europe. One of the things that my hon. Friend the Member for St Albans (Mrs Main) needs to say, in the hypothetical choice she advocates, is what the United Kingdom should leave the European Union in order to join. I will not stray beyond the confines of the motion this evening; I merely pose that question to my hon. Friend.
I shall give way to my hon. Friend the Member for Gainsborough (Mr Leigh); then I will make progress and not give way for a while.
Mr Edward Leigh (Gainsborough) (Con)
The Minister argues that we should be part of the process, but is there not a logical absurdity in what he is saying? When the real decisions were taken, our Prime Minister was kicked out. We are like a cork bobbing in their wake. We have no real power over the eurozone. That is why many people now think the time has come for a referendum on whether to stay in or get out.
Mr Lidington
My hon. Friend, uncharacteristically, underestimates the influence of our right hon. Friend the Prime Minister. When we look at how he has managed to assemble and lead a coalition of countries committed to greater budgetary discipline—something that would not have happened without his initiative—and when we look at the work that he is leading at a European level on the need for growth, competitiveness and deregulation, we can see that the influence of the Prime Minister and of the United Kingdom is being felt. I would encourage—
Mr Lidington
I am not giving way further.
I would encourage my hon. Friend the Member for Gainsborough to visit more EU member countries and talk to representatives of their Governments, and I think he will find that our right hon. Friend has in 10 brief months attained considerable respect and a high standing among the partner countries with which he deals and negotiates.
Let me turn to the proposed treaty change and how it came about. It originates from the need for a permanent mechanism to be established by the member states of the euro area to safeguard the financial stability of the euro area as a whole. As the House knows, in May last year the EU established two emergency instruments to respond to financial crises—the European financial stability facility and the European financial stability mechanism. Many hon. Members have expressed their unhappiness at the EFSM arrangements, to which, because of a decision taken in the dying days of the previous Government, this country is a party. That unhappiness is wholly shared by this Government. It is yet another mess that we have inherited and must seek to clean up.
Against that backdrop and the continued uncertainty in the financial markets, the members of the European Council agreed last December to amend article 136 of the treaty on the functioning of the European Union to provide that member states of the eurozone may establish a permanent stability mechanism. That will provide a necessary means for dealing with cases that pose a risk to the financial stability of the euro area as a whole, something that is important to us given the extent of our trade and other economic connections with the eurozone even though we are outside it and intend to remain so.
The proposed amendment contained in the draft decision adds the following paragraph to article 136:
“The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”
By providing for eurozone members to establish a permanent mechanism, the European Council is making absolutely clear the responsibilities of all members of the euro area to each other and to the overall stability of the euro area. The proposed new paragraph will be added to treaty provisions that apply—I stress this point—only to member states whose currency is the euro. It does not apply to non-euro area member states and cannot confer any obligations upon them. We believe that financial problems within the euro area should be resolved primarily by euro area members.
The details of how the ESM will operate are being discussed in Brussels. In accordance with the conclusions of the December European Council, member states whose currency is not the euro can be involved on a voluntary basis in finalising work on what will be an intergovernmental arrangement to set up the ESM under the authority given by this proposed amendment to the treaties. My hon. Friend the Financial Secretary to the Treasury is responsible for overseeing UK input to those discussions.
I want to stress that while we are involved on a voluntary basis in the design of the mechanism—it is in our interests to be so—we cannot and will not be part of the mechanism. In fact, we could not be part of the ESM unless the UK first joined the euro area, and as the whole House is already aware, the Government have declared their intention not to join or to prepare to join the euro. Furthermore, under the terms of the European Union Bill, if any future Government were so foolish as to wish to do so, they could join only with parliamentary approval by Act of Parliament and the consent of the British people in a referendum.
Mr Baron
Will my right hon. Friend return to the power of the veto that we have? I accept that the matter will come back to this place and that we will discuss it again, but surely we should now be trying to extract concessions in return for not using our veto. I ask him again, because he uncharacteristically did not address the point last time, whether we could be using our veto to extract concessions on the working time agreement—an aim that was, after all, in the coalition agreement.
Mr Lidington
On the working time directive, I completely share my hon. Friend’s objectives. Work is going on involving, in particular, my right hon. Friends the Secretaries of State for Business, Innovation and Skills and for Health. We judge that the appropriate time to seek to give effect to the objectives set out in the coalition programme for government will be when the Commission comes forward with its own proposals to change the terms of the working time directive, which we expect will be some time in the next 12 months. That is the moment that will give us the opportunity to do this. However those changes to the working time directive might be given effect, there will have to be a legislative procedure involving not only the Council of Ministers but the European Parliament. It is at that time that we will need to deal with the matter.
Martin Horwood (Cheltenham) (LD)
Does the Minister agree that the stability mechanism is a test of our willingness to engage positively with Europe and to act responsibly, using the existing procedures of the House and those laid down in the European Union Bill? After all, we have no interest in further weakness or instability in the eurozone; it is positively in Britain’s interest to engage responsibly with the process, rather than to talk of vetoes or of extracting concessions on issues quite unrelated to the stability mechanism.
Mr Lidington
My hon. Friend makes good points. It is in our interests that the euro succeeds. Many in the House still doubt whether that is possible, but I can say only that, in discussions with my counterparts throughout the European Union, I recognise that those countries that have chosen the euro as their currency retain an incredibly powerful political commitment to the project, and I simply do not think it realistic to talk about shaking them from that and trying somehow to bring about some eurozone Gotterdammerung in the near future. The converse would be true: that sort of outcome—the disintegration of the eurozone—would cause enormous damage to jobs and to prosperity in the United Kingdom, precisely because of the interrelationship between the economy of this country and the economies of our chief trading partners.
Mr Lidington
No, I am not giving way again at the moment.
A number of my hon. Friends were also keen to be reassured that the proposed treaty change does not and will not transfer any competence or power from the United Kingdom to the European Union, and I want to reassure them now. As I have mentioned, the treaty change involves an amendment to one of the provisions that applies only to member states whose currency is the euro, not to others. Therefore, we cannot be part of the ESM without joining the euro itself.
The change is also being undertaken using article 48(6) of the treaty of the European Union, which explicitly states in its provisions that it
“shall not increase the competences conferred on the Union in the Treaties”.
All member states are agreed on that point and stated so, in terms, in paragraph 6 of the recitals to the draft decision. The opinion of the European Commission, dated 22 February, reaffirms that the proposed treaty change does not affect the competences conferred upon the Union.
Some hon. Members have questioned whether the Government should be required to hold a referendum even when the United Kingdom is not directly affected, and this starts to address the point that my hon. Friend the Member for Stone (Mr Cash) made in an intervention. As I highlighted earlier, the European Union Bill, after our seven days of debate on it, will ensure that any treaty changes constituting a transfer of competence or power from this country to Brussels will be subject to a referendum. But this treaty change will enable no such thing, and it does not make sense to try to insist on a referendum on agreements that concern only other member states. It makes sense no more than it would have made sense for Germany to hold a referendum on the recent defence treaty between the United Kingdom and France.
The treaty change under discussion is in our national interests, but on top of that, to come to the point that my hon. Friend the Member for Basildon and Billericay (Mr Baron) made, the Prime Minster during the course of the negotiations achieved two further important objectives. First, as the conclusions of the December European Council and, more importantly, the preamble—the recitals, as they are known—to the draft decision itself confirm, once the ESM is established to safeguard the stability of the euro area, article 122(2), on which basis the European financial stability mechanism was established, will no longer be used for such purposes. Therefore, our liability—bequeathed by the previous Government—for helping to bail out the euro area through EU borrowing backed by the EU budget, under the EFSM, will cease. That was an important achievement for British interests.
Mr Cash
As my right hon. Friend will know, according to Reuters and many other news agencies Portugal is on the brink of needing a bail-out because its economy is imploding. Does he accept that, as this debate continues, we will be exposed under the EFSM to the tune of up to whatever is the proportion that we should contribute under the proposals until 2013, and that we should have insisted that that was repealed and revoked when the other arrangement was entered into? That is the concession that we should have got, and the Government did not even seek to achieve it.
Mr Lidington
We inherited from our predecessors a legislative measure that was brought in under an existing competence and treaty base and that was, from that time, legally binding. My hon. Friend will understand that I am not going to be drawn into speculating about the position of other individual member states. My understanding, on the basis of the most recent information that I have, is that no other member state has been asking the EU authorities for additional financial help.
As the Prime Minister has made clear many times in this House, securing a tight and disciplined budget for the future is the highest priority for the European Union. At the last European Council meeting, Britain led an alliance of member states to unprecedented success in limiting the 2011 EU budget increase to 2.91%—a very marked improvement on our predecessors’ performance in the previous year. Crucially, in moving forwards, working alongside key partners such as France, Germany, Netherlands and Finland, we are committed to a real-terms freeze in the EU budget in the new perspective, which we expect to run from 2014 to 2020, and we have written collectively to the President of the European Commission setting out our position.
Mr Lidington
That is no secret. It is a matter of public record that we would have preferred a complete freeze on the 2011 budget, and we voted for that in the Council of Ministers. I regret that we were one country short of achieving the blocking minority. [Interruption.] That kind of protest from the shadow Minister is rank double standards. The Labour Government not only conceded increases in the annual budget that went way ahead of anything like 2.91% but, even more significantly, negotiated an agreement on the current multi-annual financial framework in which they agreed to give up a significant slice of this country’s hard-won rebate from the EU budget in return for no more than a half-promise of a review of agricultural policy, and they did not even manage to get that at the end of the day. We know that they were dysfunctional. According to the memoirs of the then Prime Minister’s chief of staff, the Prime Minister and Chancellor of the Exchequer could so little stand the sight of one another that they refused even to share the figures that they were using in parallel negotiations about an EU budget, the settlement of which was absolutely central to the interests of the United Kingdom. Having let down this country so badly in the past, it ill behoves the Labour spokesman to come and lecture us this evening.
Should this House not approve the motion unamended, I have to say to my hon. Friends that the consequences could be serious and damaging for Britain. The Prime Minster would not be able to signal support for the draft decision in March, and since the decision cannot be adopted without unanimity, it would fall. That would mean, for example, that this country would remain, for the indefinite future, indirectly liable for eurozone bail-outs through the EFSM since there would be no ESM to replace it.
Mr Lidington
I will give way for a last time before completing my remarks so that other hon. Members can make their speeches.
Mr Nuttall
Have we not missed an opportunity to include a specific provision to exclude the EFSM under article 122 of the treaty on the functioning of the European Union to prevent it from being misused, as it was previously? The article specifies providing financial assistance in the case of “natural disasters” or “exceptional occurrences”. We should have spelt it out—it was our opportunity to do that.
Mr Lidington
Article 122(2) was interpreted by the then Governments of all 27 member states as capable of being used as a proper legal basis for the EFSM and we inherited that binding measure.
Martin Horwood
Article 122 mentions
“natural disaster or exceptional circumstances”,
and the position certainly merits the word “exceptional”.
Mr Lidington
We can debate whether that interpretation of article 122 was justified. However, the reality is that the mechanism had been established. I ask my hon. Friend the Member for Bury North (Mr Nuttall) to consider not only the fact that we inherited something that was legally binding, but that, if there had been some renunciation by the European Union of a mechanism, which, for all its imperfections, had given a measure of reassurance to the markets, there could well have been adverse consequences for eurozone countries, which would have had adverse consequences for United Kingdom companies and financial institutions with exposure and investments in those eurozone member states.
If we refuse to agree to the draft decision, the effect on our trading partners in the eurozone would not be helpful. I do not wish to speculate too much, but it is safe to assume that the markets would not view favourably a failure by the EU to establish a permanent support mechanism, especially when all 27 Heads of State had publicly set themselves a timetable that would conclude at the March European Council. The consequences for many economies that are already under pressure could be severe. The knock-on effect on the prospects for jobs, investment, growth and prosperity in the UK would also be severe.
I therefore believe that the case for approving the motion without amendment is clear. By supporting the adoption of this treaty change, the UK will support the members of the eurozone to establish a permanent mechanism, and thereby make clear the responsibilities of all members of the eurozone to each other and to the overall stability of the euro area.
We will ensure through our agreement that our current indirect liability for eurozone bail-outs ends in 2013, and because the mechanism is established using the treaty provisions specific to members of the euro area, it does not apply to us or other non-euro-area member states and cannot confer any obligations or duties on them. We will not be part of the ESM, and the treaty change does not therefore involve a transfer of competence or power from the UK to the EU. However, as I said earlier, I can pledge to the House that hon. Members will have the opportunity to scrutinise the decision in still greater detail, as the EU Bill requires parliamentary approval by primary legislation before the UK can ratify the measure.
Mr David
I would indeed welcome clarification on that subject. Indeed, I intervened on the Minister earlier and received no clarification. It is my understanding that the new procedure will supersede the procedure that we are using this evening, and that the procedure will be post-decision rather than pre-decision. I invite the Minister to clarify that.
Mr Lidington
I am happy to provide clarification. The present decision is unique, in that it is being handled under the 2008 arrangements but will also become subject to the arrangements in the European Union Bill—assuming that it becomes law. The Bill, which we debated for seven days, will extinguish the 2008 arrangements, but it will ensure that after the adoption of the decision, in order for ratification to take place, the text agreed by Heads of State and Government at their final adoption meeting must go through all stages of primary legislation in both Houses.
Mr David
I thank the Minister for that clarification, but although there might be extensive post-decision debate, after the implementation of the Bill we will no longer be in a position effectively to give the Prime Minister a mandate. That is a step backwards and a negation of democracy.
Mr Lidington
The idea that the new system that will be introduced in the Bill is somehow weaker than the current one is laughable. An Act of Parliament is a much tougher form of scrutiny and accountability than a single vote before the initial decision is taken. Under the 2008 Act there would be no need for primary legislation before ratification took place. Furthermore, in extinguishing the 2008 provisions the Bill will extinguish the possibility of a disapplication procedure, which exists under the 2008 Act and would allow the Government of the day, by means of a motion such as the one before us this evening, to decide that its Head of Government could agree a change to a text without ever coming back to Parliament to give it a further opportunity to comment.
Mr Lidington
What my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) said is absolutely true.
Mr David
I am glad that for once there is unanimity on the Conservative Benches.
I have two concerns that I should like to dwell upon related to the broader situation in which we find ourselves. The first is the fact that the countries of the eurozone have apparently established a new decision-making structure. The reasons they have done that are perfectly understandable, but it is worrying that the Government do not acknowledge that decisions taken by the eurozone countries could have profound implications for the UK. Take, for example, the issue of the single market. The development and completion of the market is of critical importance to Britain, but we have to be aware that there could be a temptation for the eurozone countries to see the single market in eurozone terms only.
In fairness, the conclusions of the Heads of State and Government of the euro area summit last week state that the new pact for competitiveness and convergence will respect the integrity of the single market in the euro area and the EU as a whole, and the involvement of the European Commission in the work of the euro area group should be a safeguard.
Steve Baker (Wycombe) (Con)
First, I wish to associate myself with the remarks of my hon. Friend the Member for Harwich and North Essex (Mr Jenkin). Too often, when addressing questions such as the one under discussion we get bogged down either in procedural matters or, matters that verge on the nationalistic, but this evening he has transcended that old territory and talked about what is good for the UK and Europe in broader terms. I shall attempt to add to his remarks.
If we wish to say something about what is going on in Europe today, we must talk about the broader sweep of political economy, and I therefore also refer to the remarks of my hon. Friend the Member for Stone (Mr Cash). We must say something about the EU, and I say this:
“It is the last gasp of an outdated ideology, a philosophy that has no place in our new world of freedom, a world which demands that we fight this bureaucratic over-reach and lead Europe into the hope and potential of a new, post-bureaucratic age.”
That is how the BBC reported the remarks my right hon. Friend the Prime Minister made in Prague in November 2007, which, coincidentally, was the month when I joined the Conservative party and approached my right hon. Friend the Minister for Europe to discuss becoming a Member of Parliament.
Steve Baker
I see that my right hon. Friend remembers that, but I suspect he regrets giving me the reference.
Steve Baker
I am most grateful for that.
We have talked about political economy, and great matters are at stake. It seems to me that there have always been two visions for Europe: a classical liberal vision and a vision of a so-called social Europe—an interventionist Europe. A classical liberal Europe would enable free movement of people, services and goods, all of which are to be applauded because we know that human flourishing depends on free trade and peace. The big question is: when did Europe become a social Europe, a socialist Europe and an interventionist Europe? Is it right that we put our faith in the omnipotence of government to solve all our problems and to deliver stability and prosperity?
With this measure, the European Union becomes explicitly a transfer union and is explicitly moving money and wealth around from one member state to another, and I suspect that Germany has very nearly had enough of it. We should not persuade ourselves that this is an entirely new phenomenon. I was most grateful to my hon. Friend the Member for Stone for giving me the opportunity to write in his European journal with a colleague and friend of mine, Professor Philipp Bagus, a German economist at a Spanish university. We explained how the European Union is inherently a monetary transfer union. By monetising their debts, profligate countries have been able to appropriate for themselves wealth from the productive nations such as Germany. This has been going on in a way that very few people understand for a very long time, and I believe that it has substantially contributed to the crisis that we are in. Having lived with this principle of redistribution by subtle means for a long time, we now seem to be explicitly adopting the notion of fiscal transfer union and direct economic governance.