Lord Triesman
My Lords, it may dismay the House, but I will pick up from the point where this argument has arrived. Like the noble Lord, Lord Hannay, when I looked at the proposal put forward by my noble friend Lord Davies of Stamford, it did not seem to me that the consequence of it was that there would be an immediate move without any further ado to qualified majority voting. Instead, there would be a very substantial process before anybody got there, even if they had the desire to get there. It seemed that whatever difficulties and barriers were raised by those who thought it best to have a closed-market system rather than an open-market system in the defence industry, it would be harder in the middle and long term for them to sustain the restriction on free markets were they to be deprived of the veto as the automatic response. In short, over a period of time—I am sure that it would be over a period of time if it happened at all—it might be possible through a different mechanism to change from this restriction to a free-market solution.
It may be thought curious that from this opposition Bench I argue trenchantly for free markets in Europe. However, it does not seem odd to me; I have held this view consistently for a very long time. Like my noble friend Lord Davies, it appears to me that when we take a serious and hard view of the areas in our manufacturing industry where we might be very successful, among them are the products of our defence industries. They are very fine industries; they are hallmarked by exceptional research and development; they are among the industries that co-operate most successfully and most frequently with the best of our university departments that are working in the same areas of research and development; they manage to do it on a large scale; and they manage to create extremely valuable intellectual properties of a kind that we cannot always achieve in many other parts of our manufacturing life.
As a former Minister responsible for intellectual property, I frequently came at this from a different ministerial portfolio from that of my noble friend Lord Davies, but none the less I was frequently full of admiration for the high quality of patents that were created in that industry and very well aware of the value that they could inject into free-market circumstances. It is very easy to see why, even when there is a concrete commercial rationale for this country, there will be others who will seek protectionism because they are fearful that their industries cannot compete in industries of this kind, particularly where those industries are so driven by outstanding research and development and by their links with the university research world. It is a tough environment to compete in—that is for sure—but that does not seem to me to be a reason to protect those kinds of industries in other countries any more than somebody could argue that we should simply protect them in our country from any difficult winds and buffeting of international competition in a fully commercial sense.
I can also understand the argument that some of those countries will be looking at industries—as we have in defence in the past—as being of considerable strategic importance and we have been cautious about whether that strategic importance should be so lightly set aside. Westland helicopters and so on have been examples of it. However, broadly speaking, we have been at our best as a country when we have been prepared in free markets to compete where we can and to achieve results on the basis of the excellence of what some of our manufacturing industries can do with freedom to operate properly in markets.
In summary, I return to the point that the noble Lord, Lord Davies, has made, that the noble Lord, Lord Hannay, was making and that I made at the beginning of my remarks. Nothing in this proposal moves us with any suddenness onto a different trajectory. I am loath to believe that the House and the general sentiment in this House would be against the possibility of the full operation of free markets and the benefit to United Kingdom industry of competition in a free market, especially where we believe that we can succeed way beyond many of our competitors in that market. It is a very strong argument and I hope that it will appeal to any free marketer looking at the benefits of the European Union in free market terms, which, many noble Lords have urged, were among the founding reasons that they could see for the rationale of the EU in the first place. I support this amendment and I believe that, on free market arguments alone, it should succeed.
Lord Howell of Guildford
My Lords, this amendment seeks to remove Article 346(2) of the Treaty on the Functioning of the European Union from Schedule 1 to the Bill. The article has appeared verbatim in every European treaty since 1957, so it is not new on the scene. At present, unanimity is required for changes made to the list of military products for which single market provisions do not apply. Under the Bill, a proposal to move to QMV would require approval by Act and by referendum. The noble Lord, Lord Hannay, and others are correct that it does not immediately mean that the veto is removed. It merely means that the move would require approval by Act and by referendum. The amendment of the noble Lord, Lord Davies, would remove that requirement.
The noble Lord, Lord Davies, spoke at length on this issue during day six in Committee, and he has spoken again now. Of course, he has considerable experience as Minister for Defence Equipment and Support, and in my view he has made the case extremely well that there could be some benefits to the UK from a move to QMV in this area. Having conceded that point, I hope that he and other noble Lords will excuse me if I now at least set out the other side of the argument, particularly as the noble Lord, Lord Davies, has just said that there is no guarantee that his proposal would work. Why is that so? It is because a move to QMV would also come at considerable cost to the UK, which a responsible Government have to consider. We must remember that this article is sensitive, as it applies to national security and defence. It is one of the wires that feeds directly into the red lines that all parties in the United Kingdom and other member states have always maintained during treaty change negotiations. Obviously that applies to previous Governments as well as this one.
The noble Lord, Lord Davies, said with some passion that Article 346 of the TFEU is a protectionist measure and he portrayed the Government as,
“using a referendum to block the removal of a derogation from the single market legislation”.—[Official Report, 17/5/11; col. 1364.]
The noble Lord, Lord Triesman, has spoken in the same vein just now. I have to point out that the UK’s veto could be used also to block any proposals to extend the protectionist measures with which the noble Lord understandably takes issue. A qualified majority could push through decisions which would favour greater national discretion and protection. The list, which has been unchanged—
Lord Kerr of Kinlochard
I thank the Minister for letting me intervene. The point that he is making is absolutely right—it could work either way—but the trouble is that the list is very long now. The UK interest is to have the list reduced. The list is very long because particular countries have particular little defence industries which they are keen to protect. The chances of it being possible to reduce the list are therefore low but would be enhanced if there were qualified majority voting on the composition of the list. We are starting from a bad place. It is unlikely to get worse; it is difficult to get it better; but you cannot get it better without qualified majority voting.
Lord Howell of Guildford
It is unlikely to be shortened, but I do not think that any of us can be sure. Protectionist pressures operate all the time, particularly in the defence industries. as the noble Lord, Lord Davies, knows better than all of us, and will continue to do so. The noble Lord said that the position is unlikely to get worse, but I think that we have to guard against that. A qualified majority could push through decisions which favoured greater national discretion and those pressures exist. The list has been unchanged since 1958 and can be expanded as well as contracted. I have before me the list as it is at present; it is a long list. It could certainly be expanded, so keeping the veto is as much, if not more than, a guard against protectionism as a barrier to liberalism, much as one believes, as I believe very strongly, in liberal free markets. The noble Lord’s zest for liberalism, which is certainly equalled by mine, could end up the opposite way round.
Lord Kerr of Kinlochard
The Minister is now making a general argument against the Single European Act and against having qualified majority voting on any area of the single market because it might go the wrong way and in a protectionist direction. All history suggests that the Single European Act was a good bargain. On the whole, it got us a more open market. It was a good, Conservative, market-driven measure which worked pretty well. The exception of defence goods is there because it was there before we joined the European Union. We have to my knowledge always argued against applying single market disciplines, which we believe in, to all sectors of the economy. That is the argument for the amendment.
Lord Howell of Guildford
I am not a Latin scholar, but I have a feeling that there is a Latin phrase to describe what the noble Lord is doing, which is projecting from a particular area which has its particular features and qualities, with which we are all quite familiar, on to the general case for free markets and expansion of trade, which we all seek, as we have done throughout the history of our membership of the European Union and will continue to do. I suppose that the noble Lord’s proposition is that the interweaving of political pressures and the defence and security industries operates just the same as everything else. I do not believe that it does; I just have to disagree with him. In this case, we are dealing with different pressures which are evident to those who examine these patterns. There are dangers as well as gains.
Retaining unanimity does not prevent product list changes, but it ensures that we can oppose any decisions that seek to install greater, inappropriate levels of protectionism for products—weapons, equipment, trucks, APVs and all the rest—that we feel should not be exempt from single market provisions. This allows us to take decisions on the basis of what would be best for the effectiveness of the single market and our own defence industry. Unanimity enables us to oppose removal of any products in the list where that would have unwelcome consequences for the UK and might prevent us from acting quickly to secure the right equipment for our troops in times of urgent need. I reassure noble Lords that, despite the doubts that have been expressed, the Government fully support the goal of better value for money through collective arrangements for identifying gaps and procuring equipment, pooling our multinational capabilities and forces wherever we can.
Baroness Williams of Crosby
I will always take instructions from my former colleague, the noble Lord on the other Benches. I commend him on the pressure that he has brought to bear on the issue, which is of immense importance.
Lord Howell of Guildford
My Lords, when my noble friend Lady Williams speaks about the need for strengthening the teaching in schools and in citizenship classes of Britain's role in, and relationship with, Europe—and dare I say in the Commonwealth generally and in the new landscape that is building around us—it strikes a chord with me. She is absolutely right that the quality of teaching needs a considerable uplift in this area.
I will begin with a tiny bit of propaganda for the Foreign and Commonwealth Office. We have supported the Hansard Society in producing a new booklet to help citizenship teachers teach secondary school pupils about the European Union and our role—our very effective role, despite some minor criticism in the European Union and in Europe generally. We are taking action to improve the resources available, as citizenship teachers asked us to do. That is the kind of way forward that we should all work towards instead of spending a lot of time sitting around talking down our nation and its extraordinary talents and abilities to adjust to the new world situation.
I wish I could say such enthusiastic things about this amendment. It strikes me as a bit curious because it seeks to place a statutory requirement on the new Bill that, during a referendum held under the provisions of the Clauses 2, 3 and 6, or in implementing any of the other provisions of this legislation, the Government of the day should have regard to the benefits of the UK’s continued membership of the European Union. This sounds as though there is a desire to switch on a light at this particular moment rather than concentrate on the broader issues reflected in the observations of the noble Baroness, Lady Williams, and of the noble Lord, Lord Radice, that these matters cannot just be switched on and off but require sustained and effective narrative—not propaganda but an effective story to show how we fit into, how we contribute to and how we are able to draw strength from associations in the European Union and elsewhere.
As the noble Lord, Lord Triesman, candidly admitted, the past record has not been too brilliant, to put it mildly. If one just looks at those who have been in government over the last decade—which happens to be one party—one can see that they have not achieved a dazzling success in uplifting public support for, or even public awareness of, the role that this country has played, is playing and is capable of playing in the future in the European Union. When we discussed this amendment in Committee, the noble Lord, Lord Radice, said that the EU Bill was,
“based on the wrong premise about our membership",
and that instead,
“we should recognise that the sharing of responsibilities with our partners has been good for Britain and good for Europe”.
We have no difficulty with that. As I tried to make clear in Committee, we fully recognise the benefits of EU membership and the flow both ways of advantage of our being a key member of the European Union. This Bill does nothing whatever to alter our current commitments within the European Union, nor our current active engagement within the existing powers and competences of the EU, which are very extensive, nor indeed our positioning to reform and equip the EU for the 21st-century challenges that lie ahead, because, just as we are trying to adjust the position of this country to the new landscape, so everyone recognises that the European Union as a whole needs to do the same.
The noble Lord, Lord Radice, also said,
“according to public opinion polls, the British remain reluctant Europeans and fairly ill informed about the EU”.—[Official Report, 23/6/11; cols. 1626-27.]
That just about sums up the key concern that this Bill has been crafted to focus on. It is that reluctance that the Bill seeks to address by making clear to the public that they will have their say over any future transfers of power and competence and that a future Government will have to make the case as to why such changes are in the national interest. That is the aspiration of this Government for the future. It is nonsense to say that it binds future Parliaments, which we cannot do, but that is our aspiration. This is a construction, an architecture that will be sustained and built to help the EU in the future.
Let me remind noble Lords that for a referendum to be held under the terms of this Bill, both the Government and Parliament have to be in favour of the proposed treaty, as many of my noble friends and indeed almost every speaker have recognised. That is the starting point for any referendum activity. Otherwise, if the Government did not like the measure, they could block it at the European Council, or Parliament could simply legislate against it. Parliament would be fully in control. Therefore, the change in question would have to be considered by the Government to be in the national interest before it could be put to Parliament. That would be the necessity, the sine qua non. While the referenda provisions will help address the reluctance that exists in Britain and that must be faced, no one is claiming that they are sufficient to address the general lack of information on, understanding of and enthusiasm for the European Union. Clearly, that cannot be done just when action under the Bill is needed. The oddity of the amendment is that it so inadvertently implies that action is switched on only when there is activity under the Bill, not least because the EU Bill focuses on future changes to the treaties and does not call into question our membership of the European Union.