European Union Committee: 2012-13 (EUC Report)

Tuesday 30th July 2013 Lords Chamber

Motion to Take Note

12:30

Moved By

[Lord Boswell of Aynho]

That this House takes note of the Report of the European Union Committee on its work in 2012–13 (1st Report, HL Paper 15).

[Lord Boswell of Aynho]

My Lords, this Motion invites the House to take note of the report of your Lordships’ European Union Committee, which I have the privilege of chairing, on that committee’s work in the 2012-13 Session. I am pleased that this round-up of our committee’s important work has been given valuable time on the Floor of the House as its work has been recognised, not least by Sir Jon Cunliffe, the present UK permanent representative to the EU, as,

“enormously influential in Brussels and on Government thinking”.

I recognise that many in the Chamber today are very familiar with our work, but we are anxious to encourage a wider understanding of it among all Members of the House. For the benefit of those who are perhaps less au fait with it, I shall summarise the Committee’s role. It scrutinises EU policies and proposed EU laws, seeking to influence their development; holds Her Majesty’s Government to account for their actions in, and connected to, the EU; and represents the House in its dealings with the EU institutions, and other member states and their national parliaments. Much of this work is carried out by the six EU sub-committees, and we will be hearing from a representative of each sub-committee during the course of this afternoon’s debate.

I will mention a few highlights from this past Session, but before doing so I wish to pay tribute to the sub-committees’ hard work and meticulous efforts. A rigorous approach to detail is what this House is well known for and we apply that principle to the scrutiny of EU affairs. We seek at all times, and I hope that normally we succeed, to act in a non-party-political way to advise the House neutrally on EU matters. Given the current rather fetid political climate, it is essential that we continue in that vein, and I have no doubt that we will continue to rise to that challenge. I am deeply and genuinely grateful to each of the chairmen, the members of all the committees and, by no means least, the expert staff team that supports them so ably.

My committee and its sub-committees have undertaken an extraordinary level of work this year. We have scrutinised over 270 EU documents and proposals, sent 653 letters to Ministers examining the Government’s position and putting forward the committee’s own views, heard from over 210 witnesses in person, considered around 270 pieces of written evidence and published 16 reports—all this at a time when, in accordance with the House’s wishes, we have reconfigured our sub-committee system.

I shall now mention a few of the most significant pieces of work we have done during the Session. The Select Committee itself regularly conducts one-off hearings with the Minister for Europe regarding the outcomes of European Council meetings. During the 2012-13 Session there were three such hearings, covering topics as diverse as the G20 growth and jobs action programme, the situation in Mali and the EU’s neighbourhood policy. In addition, we followed up our inquiry into the multiannual financial framework and conducted and completed a new inquiry into the future of European Union enlargement. That report emphasised the importance of enlargement to securing stability and economic prosperity for the European Union itself and its neighbourhood. It analysed the way in which the enlargement process was conducted by the Commission and the Council, and made recommendations about how to make the process more transparent and better understood by European citizens.

I turn to the sub-committees. The Economic and Financial Affairs Sub-Committee has carried out a range of important work but I want to highlight two aspects. First, it has conducted regular evidence sessions following up on the euro area crisis report of 2012, which highlighted concerns about the future of the euro area, raised further questions about the desirability and efficacy of eurobonds and set out how the democratic legitimacy of solutions to the crisis could be ensured. Secondly, the sub-committee undertook a significant piece of work considering the consequences for the United Kingdom of proposals for a European banking union, as well as, of course, other work.

The Sub-Committee on Internal Market, Infrastructure and Employment undertook a timely inquiry into a proposal to set Europe-wide gender quotas for company boards. The committee urged the Commission to bring forward a system for monitoring the numbers of women in senior positions, but warned against quotas as they failed to address the root causes of inequality. It further questioned the Commission’s assertion that national measures to improve gender balance on boards were not working and, following a debate in the House, a reasoned opinion was issued raising concerns about subsidiarity.

The External Affairs Sub-Committee continued to operate at considerable pace, dealing with a wide range of proposals on foreign affairs, development, defence and international trade. During the Session it conducted an inquiry into the EU’s External Action Service, the EEAS, which concluded that the service had been successful in a number of areas, such as developing a comprehensive approach to countries and regions like the Horn of Africa and the Sahel, and in calming the relations between Serbia and Kosovo. However, the committee also highlighted challenges for the EEAS.

The Sub-Committee on Agriculture, Fisheries, Environment and Energy undertook a noteworthy inquiry considering whether the EU’s energy policy met, and would continue to meet, Europe’s basic requirements for energy. The committee expressed some alarm at the uncertainty, complacency and inertia surrounding the need to secure an affordable supply of low-carbon energy, and highlighted concerns about where the necessary investment in energy infrastructure could be found. This report, like several others that I have mentioned, received considerable press interest, but the unreported, perhaps seemingly unexciting yet essential and detailed work of our committees is also vital to ensure that the Government are properly held to account and that Parliament is well informed about EU matters.

The Justice, Institutions and Consumer Protection Sub-Committee completed a high-profile inquiry into fraud against the EU budget. The inquiry report highlighted that the European Union’s antifraud system had a number of weaknesses and that the Commission’s estimates of the cost of fraud to the EU budget in its annual reports were significant underestimates. That sub-committee also undertook an important piece of work in an innovative partnership with the Home Affairs, Health and Education Sub-Committee regarding the block opt-out decision under Protocol 36, which has been the subject of great debate recently in the House. The report of this inquiry has been recognised as a dispassionate, sound analytical tool to aid the Government and Parliament in forming views on the desirability of the opt-out.

Separately, the Home Affairs, Health and Education Sub-Committee examined the operation of the Commission’s global approach to migration and mobility, GAMM, and the implications of the UK’s partial participation in the European Union’s asylum and immigration policies. The committee concluded that the control of immigration from third countries was rightly the responsibility of individual member states, but that a co-ordinated approach by the European Union and its member states was imperative. The committee called for the GAMM to take a more focused approach in future and for the Commission to have a more prominent role internationally, particularly in forums such as the Global Forum on Migration and Development.

Noble Lords will no doubt wish to focus on the work of each sub-committee in greater detail but I want to record again my thanks to the sub-committee chairmen and members, and in particular to thank the noble Lords, Lord Teverson, Lord Carter of Coles and Lord Bowness, the outgoing chairmen of sub-committees C, D and E respectively, and welcome the new chairmen of those committees—the noble Lord, Lord Tugendhat, and the noble Baronesses, Lady Scott of Needham Market and Lady Corston.

The work of our committee and its sub-committees depends on the necessary information being provided in a timely manner by the Government, in accordance with its obligations. Although several departments produce excellent Explanatory Memoranda well within agreed deadlines, I regret that Her Majesty’s Treasury has repeatedly fallen short of the expected level of openness and helpfulness to Parliament—a matter which I am, once again, pursuing with Ministers. In addition, we are disappointed to have observed a gradual decline in the quality of the Explanatory Memorandums being produced by a range of departments. To quote one of my own straplines, an Explanatory Memorandum is not much use if it does not explain itself. We do all we can to support departments, and so we should, and yet we can only carry out our role effectively if given the right tools. I have no wish to be pompous but I do need to be firm about it. Despite the current pressures on civil service departments, the necessary resources must be given to these tasks as European Union matters affect the people, business and other organisations of this country in many different ways. In any case, as a matter of principle, government departments should meet the obligations into which they have entered.

Our committees continue to make significant contributions to interparliamentary conferences and work. I am most grateful for the work of COSAC—the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union. It is not the easiest acronym and not always the easiest organisation but it is one which I think is beginning to feel its feet. COSAC meets twice a year in plenary form and is a crucial, if little known, formal mechanism for interparliamentary co-operation.

Furthermore, we continue to benefit enormously from good links with the chairs of the EU scrutiny committees in the other place and the devolved Administrations, not least through our twice-yearly EC-UK meetings. There are also regular tripartite meetings bringing together members of our committee, the European Scrutiny Committee in the other place, and United Kingdom Members of the European Parliament. We met twice during the 2012-13 Session. These meetings raise important issues and allow for an exchange of views and understanding of each other’s work that might otherwise be lacking. Finally, our excellent EU liaison officer and the National Parliament Office provide a valuable link to Brussels and help to build effective relationships with other national parliaments and parliamentarians.

To conclude, what does the current Session hold? As usual, we will be engaging with a wide range of issues in inquiries—including, at Select Committee level, the role of national Parliaments in the European Union, and, among the sub-committees, youth unemployment, genuine economic and monetary union, the Transatlantic Trade and Investment Partnership, and the continuing discussion about the block opt-out—while maintaining our routine scrutiny function.

At a time of ongoing discussions about the European Union and the United Kingdom’s future relationship with it, it is even more important than ever that the House retains its ability to understand, impartially examine, challenge and influence the European policies of Her Majesty’s Government, and the development of European Union policy and law across the whole union. The family of EU committees, which I have the honour to head, is an important mechanism for that, and I commend this report of its work in the Session 2012-13 to the House. I beg to move.

12:44

[Baroness Corston]

My Lords, I am very grateful for the opportunity to speak in this debate and to follow the noble Lord, Lord Boswell of Aynho, who chairs the main European Union Select Committee of your Lordships’ House with the utmost diligence and courtesy. I want also to place on record that for the majority of the 2012-13 Session Sub-Committee E—the committee on justice, institutions and consumer protection—was chaired by the noble Lord, Lord Bowness. He certainly handed on to me a very well-oiled machine.

It reminds me somewhat of an exchange with the then clerk of the Joint Committee on Human Rights, when I was its founding chair more than 12 years ago. He told me that he had previously been clerk of the Defence Committee, which he described as like Inspector Morse’s Jaguar. It was a classic, needed a little light touch on the tiller and the accelerator, had regular servicing and caused very little trouble, whereas, he said, the Joint Committee on Human Rights was a kit car with the instructions in Hungarian. The committee handed on by the noble Lord, Lord Bowness, was much more like Inspector Morse’s Jaguar and I am very grateful for that.

In the previous Session there was more than enough work for Sub-Committee E. In addition to very substantial scrutiny work, the sub-committee carried out one full inquiry, a joint inquiry together with Sub-Committee F, and a follow-up inquiry. I shall briefly describe each. We conducted an inquiry on combating fraud against the European Union’s finances. It was launched in July 2012. It was timed, in part, to coincide with the publication by the Commission of its proposed directive designed to protect the EU’s financial interests via the criminal law. Evidence was taken from a range of parties, including academics, the United Kingdom police, government agencies, the relevant European Union Commissioner and, after some reluctance, the Exchequer Secretary, Mr David Gauke. I will say at this point how surprised we were that the Government refused permission for us to take evidence from Her Majesty’s Revenue and Customs and it took quite a lot of prodding for the Minister to appear before us at all. In addition, members of the committee travelled to Brussels to take evidence from, among others, MEPs, Eurojust, and OLAF, the European Union’s anti-fraud body. In total, the sub-committee held 13 evidence sessions with more than 30 individual witnesses.

Our subsequent report identified a number of weaknesses in the EU’s current anti-fraud system, including a lack of enthusiasm among the member states in taking their responsibilities to combat EU fraud seriously, weaknesses in the ability of OLAF to fulfil its remit to protect the EU’s financial interests, and a considerable mismatch between the known levels of fraud perpetrated against the EU’s finances. The Commission’s figure of €404 million for 2011 and the committee’s own estimate in the region of €5 billion are at variance to say the least. In their response to the report the Government stated that,

“no amount of fraud should or will be tolerated”.

While they recognise that in some areas the EU’s anti-fraud system needs improvement, overall, however, the Government believe that the system is “on the right track”.

In the course of the inquiry, we were unable to ascertain whether any government department or agency in the UK takes overall responsibility for fraud against the EU’s finances. No one was able to tell us with any confidence how much known EU fraud is perpetrated from within these shores, despite the fact that the individual member states are required to tell the relevant EU authorities when they uncover these offences. In our report, we called for a single government department or agency to take responsibility for fraud against the EU’s finances. However, the Government rejected this recommendation on the grounds that any move designed to place responsibility for the matter on to what they called a “single UK department or agency” would create duplication and slow the process down.

On the sub-committee’s estimate that the level of fraud against the EU’s finances is more likely to be €5 billion as opposed to the €404 million that the Commission estimates, the Government say merely that they are “concerned” by this figure, but that it,

“is not a figure that is recognised”.

They do not say who it is not recognised by, and the response may be somewhat perfunctory.

Finally, in relation to the upcoming proposals for the creation of a European public prosecutor’s office—the EPPO—the Government state that the creation of another EU body is not the answer to the problem of EU fraud. The Government recognise that the current system is “not perfect” but suggest that it works and continues to improve, and that, as far as the UK is concerned, the anti-EU fraud position is “strong”. The Government have stated that the best way of ensuring that the decision to prosecute remains a national matter is not to participate in any EPPO. They also point out that the treaty envisages a system whereby the EPPO will be empowered to,

“investigate, prosecute and bring to judgement”,

those responsible for committing EU fraud, which is a role that conflicts with the UK system where the investigation and prosecution functions are kept entirely separate. The proposals to create the EPPO were published last week and the sub-committee intends to launch an inquiry into these proposals in the autumn.

I now turn to the workload of the Court of Justice of the European Union. The sub-committee carried out a follow-up inquiry into this matter in the later part of the Session. We sent a call for evidence to all those who provided evidence during the original inquiry and also took oral evidence from the Minister for Europe. In our report, we expressed concern that the number of cases pending before the Court of Justice continues to rise year on year and we called for the right balance to be struck between the length of time it takes for the court to dispense with a case and the quality of its judgments in order to preserve its credibility. We also found that although the latest statistics from the general court indicate a reduction in the number of pending cases, the number of new cases has more than doubled between 2000 and 2010. Those cases are of great interest, principally to business in this country. We therefore reiterated that there is still a very strong case for increasing the number of judges in the general court and urged member states without delay to find a system for appointing additional judges to safeguard the stability of the court and the quality of the judiciary.

In their response, the Government agree with most of the report’s conclusions. They appear to have shifted their position a little in that they are being more positive about appointing additional judges to the general court as a means to deal with the court’s backlog of cases. Also, the Government now appear to favour a merit-based selection process to appoint additional judges to the general court instead of a rotating system of appointment. The sub-committee hopes that progress will be made soon on resolving the general court’s excessive workload and it will follow developments in this area with interest.

I now turn to the 2014 opt-out decision on Protocol 36 to the Lisbon treaty. I do not intend to go into any of the detail on this inquiry. I will leave that to the noble Lord, Lord Hannay of Chiswick, when he addresses the House. Suffice it to say that on 9 July this year the Home Secretary made a Statement that provided more information about the Government’s approach to the opt-out decision. At the same time, the Government published Command Paper 8671—not the easiest of documents to digest—which sets out a list of 35 measures that the UK will seek to rejoin if the opt-out is exercised and includes Explanatory Memoranda that cover the 130 measures falling within the scope of the opt-out decision. The first debate was held in the House on 23 July and a vote took place on the opt-out decision. The House supported the Government’s decision to opt-out and endorsed the list of 35 measures they would seek to rejoin. A second vote on the final package of measures will take place in due course, following the conclusion of the negotiations with the Commission and the Council.

Sub-Committees E and F have agreed to reopen their inquiry and report to the House on the 35 measures that the Government wish to rejoin. The call for evidence for the reopening of the inquiry was published on 18 July and the deadline for submitting evidence is 11 September. Oral evidence will be taken from Ministers on 9 October. The sub-committee is looking forward to continuing working on this issue, together with the Home Affairs Sub-Committee.

As to the reform of Eurojust, last week the Commission published proposals for a regulation on the European Union Agency for Criminal Justice Co-operation—known as Eurojust. The UK opt-in applies to these proposals and the sub-committee will consider them in September.

I turn to our enhanced scrutiny work. At the beginning of the previous Session, the sub-committee took over responsibility for consumer protection and culture from the now defunct Sub-Committee G. In this regard, we scrutinised the European Consumer Agenda and proposals for a common sales law. The sub-committee held an informal briefing with the consumer rights campaigning organisation Which? in October and heard oral evidence from Jo Swinson MP, Minister for Employment Relations, Consumer and Postal Affairs, on the alternative dispute resolution for consumer disputes. More recently, the sub-committee held a private briefing from Ofcom on the Commission’s Green Paper Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values. The sub-committee may continue work in this area in the autumn.

The sub-committee is also conducting enhanced scrutiny on the Commission’s package of proposals on trade mark reform. To this end, the sub-committee has sought comments from the Institute of Trade Mark Attorneys on the proposals, and further activities may continue in the autumn. The sub-committee has been interested for some time in the work of the Fundamental Rights Agency and the possible overlap with the work undertaken by the Council of Europe. Accordingly, the sub-committee will invite the Fundamental Rights Agency to give evidence on its role and the work it carries out. That is expected to take place in late October.

Finally, those noble Lords who were involved in the European Union Select Committee acknowledge that this committee represents and does some of the most important work done in your Lordships’ House. To scrutinise all European Union legislation is an extraordinarily important function. I am proud that this House does it so well and I am grateful for the opportunity to take part.

12:57

[Baroness Scott of Needham Market]

My Lords, I will speak on the work of Sub-Committee D which, for the uninitiated, deals with agriculture, fisheries, environment and energy. I have had the honour to chair it since the start of this Session in May, but all credit for the past year’s work must go, of course, to my predecessor, the noble Lord, Lord Carter of Coles. I extend my thanks to him and to his committee during that session; he has set a remarkably high bar. I also note that since May, without the benefit of quotas, we now have 50% female and 50% male chairs of the EU sub-committees.

The obvious feature of the past Session for Sub-Committee D was the addition of energy policy to the remit following the reduction in the number of sub-committees. While this was a substantial new policy area, it was very well aligned with the committee’s existing responsibility for climate change policies. As one might expect, the sub-committee approached its new remit with great enthusiasm and, as we have heard, chose to focus on EU energy policy for its principal inquiry during the previous Session.

The energy report was debated only yesterday in Grand Committee, so I will not dwell on content. However, I am pleased that many noble Lords made reference to our report during the debate in Committee on the Energy Bill. It is pleasing that an EU committee report has served the House in its wider context of scrutinising UK legislation—which helps to emphasise the obvious point, that UK legislation cannot be scrutinised in isolation from EU legislation, and vice versa.

Our energy report received widespread press coverage in the UK and beyond and has been referred to by the members of the parliaments of many other member states. Our report was primarily timed to feed into discussions at EU level on its future energy and climate change policy framework. It is pleasing that the report was published in good time to do that. I know that the Commission has been drawing on some of the material and phrases from our report in its consideration of future policy options. Our phrase “the energy trilemma”, to describe the balance between affordability, sustainability and security of supply, is now coming into common parlance.

Beyond the inquiry, the sub-committee’s scrutiny focused on major reforms to the common agricultural policy and the common fisheries policies. Both have demonstrated the long-term added value of the work that we do in this House on EU scrutiny. In the case of fisheries reform, for example, the thrust of the new package very much reflected the sub-committee’s 2008 report. In the case of agricultural reform, the new rural development policy reflects several of the recommendations that the sub-committee made in its Innovation in EU Agriculture report some years ago. While EU decision-making is slow, and it is difficult sometimes to show immediate policy impact, I think that we can demonstrate the long-term beneficial effects of examining policy areas at an early stage of their development.

Not content to just leave these issues as they lie, the sub-committee is undertaking short pieces of work on how these reforms will be implemented. In fisheries, we have recently held evidence sessions to examine issues relating to the new ban on discards of over-quota fish. In agriculture, we will hold several sessions with stakeholders in the autumn to have a look at implementation issues and concerns on CAP reform.

Turning to the sub-committee’s plans for the new Session, we are about to launch a new inquiry into food waste prevention, examining how EU policies can assist rather than hinder attempts to prevent food wastage, and how local, national and EU initiatives can be harnessed most effectively. This will build on previous work that we have done on agricultural innovation and fisheries discards. We hope that this will feed into work being done by the European Commission on food waste and on waste policy more generally. In particular, it is our aim to produce a piece of work that will be helpful to the incoming European Parliament and the Commission next year; it is an attempt to build a “coalition of the willing” with other member state parliaments.

The noble Lord, Lord Carter, and I have been very fortunate to have an enthusiastic and knowledgeable committee backed by a skilled and dedicated secretariat. They absorbed the new area of energy policy with great enthusiasm. However, I flag up my strong belief that any further attempts to reduce EU scrutiny committees should be resisted. From my experience on Sub-Committee B previously and now Sub-Committee D, I do not believe that either could take on a new major policy area without the quality of the work suffering in some way.

The Minister for Europe and the Foreign Secretary have recently flagged up the importance of national parliament scrutiny of EU legislation, and they are right to do that. However, if we are to do such work, it needs to be properly resourced and supported, not just in this House. Frankly, I am dismayed at how much time my small team of three has to spend chasing up government departments which do not provide information on time and within deadlines, or which produce explanatory memoranda that are neither explanatory nor particularly helpful. Above all, we must be very cautious not to see the important issue of national parliament scrutiny of the EU obscuring the need for effective scrutiny of government action within the EU. That is a very important part of the scrutiny role of this House and it is one that we must hold on to.

13:04

[Lord Hannay of Chiswick]

My Lords, this is a very good and very necessary time for the House to debate the work of its EU Select Committee during the previous Session. Whatever view one takes of the future role of the EU, and of the UK’s role within it, it is surely a debate worth having ahead of what is likely to become an exceptionally intense period of debate about the UK’s continued membership of that Union.

Moreover, it is a time when the role of national parliaments in shaping and influencing EU legislation is coming into sharper focus than ever before. As the noble Lord, Lord Boswell, mentioned in his contribution to this debate, the Select Committee is on the verge of undertaking an inquiry into the role of national parliaments. I suggest that we need to subject our own performance to the very closest scrutiny. I welcome particularly the contribution of our distinguished and effective chair during the period in question, the noble Lord, Lord Boswell, who moved this debate. He has made a major contribution over the period since he took up the chairmanship and I am convinced that he will continue to do so.

This debate also marks the end of the first Session after the reduction in the number of EU sub-committees, to which several previous speakers have referred. The number of sub-committees, which conduct the majority of the Select Committee’s business, was reduced from seven to six. This allowed the House to create new committee activities in other policy areas. While I, like many others, was rather unhappy with that decision, we have nevertheless done our best to make it work. The abolition of Sub-Committee G resulted in the reallocation of its remit among the remaining sub-committees, my own included, expanding their respective workloads accordingly. Despite that, the six sub-committees have taken on and discharged their new roles effectively, as is being highlighted in the contributions to this debate. However, I join the noble Baroness, Lady Scott, in saying that I think that it would be a gross error if any attempt were made to reduce further the number of sub-committees. The elastic is being stretched pretty tight and the burden on our extremely able staff has become greater in the past year. It would be frankly irresponsible to increase it further.

I will focus first on the work of the Sub-Committee on Home Affairs, Health and Education, which I have the honour to chair, and to pay tribute to its members both past and present, some of whom are here today, for their hard work and effective contributions. During the period in question, the sub-committee produced two major thematic reports, one on the EU’s global approach to migration and mobility, normally known as the GAMM, of which more later, and one on the UK’s 2014 justice and home affairs block opt-out decision, which, as the noble Baroness, Lady Corston, indicated, I will say a bit about.

This report was produced jointly with the Sub-Committee on Justice, Institutions and Consumer Protection, first under the able chairmanship of the noble Lord, Lord Bowness, and now under the chairmanship of the noble Baroness, Lady Corston. Incidentally, joint work by two sub-committees of the sort that we did—every single one of our meetings and all our evidence sessions were held jointly—is an extremely unusual occurrence and is not without its logistical difficulties. I believe that its success in this instance is a testament to the flexibility and adaptability of the system and, above all, to the willingness of the members of the two sub-committees to work together as a single team. I must mention that the report that we adopted, which I think was quite influential and will continue to be so, was adopted by unanimity—by people from all three main parties and from none. This was certainly something of an achievement. That joint report appeared in April of this year. We recently reopened the inquiry following the Home Secretary’s Statement of 9 July. A supplementary report to the House will be produced by the end of October, as the Government have proposed.

A third thematic report, on the EU’s next five-year justice and home affairs programme—likely to be known as the Rome programme as it is likely to be adopted under the Italian presidency in the second half of 2014—was announced by the committee yesterday. However, as this deals with matters falling within the present Session, I will make no further reference to it in this debate.

With respect to the report The EU’s Global Approach to Migration and Mobility—the GAMM—when the sub-committee conducted its inquiry into this matter, it was conscious that debates about migration, like migration itself, are not new. However, recently the tone has sharpened and there is a risk that a rational and measured discussion of complex issues will be drowned out by cries of populist outrage, riding on the back of stress caused by the recession.

Our report sought to avoid falling into that trap. The committee’s view was that, given the current and prospective demographic challenges facing Europe, member states, in particular those with skills shortages, will need to be flexible in the operation of legal migration from third countries in order to secure the economic growth and competitiveness that they desperately need. At the same time, we also recognise, rightly in my view, that member states retain the primary decision-making responsibilities in this area, including determining the number of third-country migrants they choose to admit to their territory. We did not suggest that there should be any change to that, and nor did any of our interlocutors, including the Commission and the European Parliament.

The report also focused on a specifically UK policy choice: the Government’s inclusion of international students in their current policy objective of reducing net migration to the UK by 2015 to the tens of thousands per year. My committee was one of five Select Committees of the Lords and Commons, the chairs of which wrote to the Prime Minister last January to argue that it made no sense at all to include genuine international students within the public policy scope of the Government’s immigration policy, and that by so doing the Government were risking serious damage to what is, after all, one of the UK’s most valuable, successful and vibrant invisible exports. I have not yet heard a single convincing argument in support of that policy, and I ask the Minister to address this matter when he winds up the debate.

I agree that yesterday’s announcement of an international education strategy by the Minister for Science and the Business Secretary was a step in the right direction. However, a good deal more than warm words will be needed if the higher education sector’s contribution to our involvement in the global race is not to be undermined by the Government’s immigration policy. I noted that the Secretary of State for Business, in an interview at the weekend, said what I believe: namely, that regarding students as immigrants is absurd.

I return to the important matter of the block opt-out. I will not revisit the complex arguments for and against it, nor delve into the byzantine complexity of the issue’s component parts, which the House had ample opportunity to debate as recently as 23 July, and will no doubt return to again before the end of the Session. Instead, I will focus on the process. On parliamentary engagement and handling, the Government’s approach to the opt-out decision has thus far been notable in a number of respects—but, alas, for all wrong reasons. Since the Home Secretary made her initial statement to Parliament about the matter last October, the committee has been persistently denied official information to aid its scrutiny of this important matter. Deadlines have continually slipped, and attempts to elucidate a coherent government position and rationale have proved elusive.

As noble Lords will be aware, the situation finally improved only on 9 July, when the Home Secretary made a further Statement about the Government’s intentions in this area. However, any feeling of welcome was again undermined by the extraordinarily short period allowed to this House before we were asked to debate and vote on exercising the opt-out. I admit that we were allowed a bit longer than the House of Commons, but not much. That was compounded by the Government’s decision to respond to the committee’s April report more than a month late, and only hours before the debate that took place on 23 July. I hope that the Minister will give an assurance of more punctilious behaviour in the future handling of this matter. I ask him to undertake in particular to keep the House regularly informed of the progress of negotiations with the Commission and the other member states once they formally begin in early November.

In addition to these two major inquiries, my sub-committee also conducted enhanced scrutiny of the Commission’s proposal for a revised tobacco products directive. This involved taking oral evidence from pro and anti-smoking organisations and from Public Health Minister Anna Soubry MP, as well as receiving a large volume of written evidence. While public debate in the UK has focused on the contentious matter of plain packaging, I remind the House that provision for this does not feature in the proposed directive. It will be left as a matter for individual member states to decide.

The output of the process of enhanced scrutiny was a detailed and well received letter to the Minister, outlining the sub-committee’s position on the proposal, which was broadly supportive. This work has been followed up in the current Session with another round of enhanced scrutiny of the Commission’s related proposal for an EU cigarette-smuggling strategy, on which oral evidence has been heard from officials at the EU’s anti-fraud agency, OLAF, and at Her Majesty’s Revenue & Customs. I will say, in advance of our taking that further, that what the noble Baroness, Lady Corston, said about her sub-committee’s inquiry into OLAF showed again how difficult it is to co-ordinate all parts of the British Government that have an input into this area. I am sure that we will address that when we write to Ministers after the recess.

In conclusion, I turn briefly to a matter that falls outside the purview of my sub-committee, and which relates to the Government’s balance of competences review—a matter dear to the heart of the Minister who will reply to this debate. While the EU Committee as a whole, and its sub-committees, have not engaged directly with this review, my sub-committee has made recommendations relevant to the review in both its recent reports: the one on the GAMM and the one on the block opt-out. It expects these to be taken into account by the review’s current second semester, which will include a report on free movement, which was covered in our GAMM report, and in the forthcoming third semester, which will include a report on policing and criminal justice. I hope that those will both be taken on board, and I hope that the Minister will give an assurance that that will be done.

On free movement, the committee’s GAMM report, which I discussed earlier, concluded that the free movement of persons is fundamental to the structure of the EU and is an integral part of the single market, with revision of its terms in the treaty being neither desirable nor feasible. The logic of producing the review’s report on police and criminal justice matters after the Government had made their decision to opt out of a number of existing pre-Lisbon policing and criminal justice measures totally eludes me. After all, both the block opt-out decision and the decision to seek to rejoin 35 measures are precisely designed to determine the balance of competences in this area—so why on earth did we not conduct the review before attempting to take the decision?

13:18

[Baroness O'Cathain]

My Lords, I am grateful that the occasion of this debate on the European Union Committee’s 2012-13 report gives me two opportunities. The first opportunity is to pay tribute to the work of the European Union Committee chairman, the noble Lord, Lord Boswell, for the important work of scrutiny of EU legislation. The fact that so much of our legislation is directed from the European Union—from Brussels—or amended in response to the deliberations of the European Parliament makes it essential that we keep a watching eye on all that goes on.

The European Union Committee does a great job, mainly behind the scenes, in ensuring that all EU proposals, directives, regulations, information—usually called “superinformation documents”—and the rest are scrutinised. The noble Lord, Lord Boswell, has a very tough responsibility, but he is ably supported by the clerk, Jake Vaughan, by legal advisers and by staff, who prevent anything slipping through the net—or the “sift”, as it is commonly called. The House owes them all a great debt of gratitude.

As the noble Lord, Lord Boswell, described, the scrutiny process is carried out by six sub-committees. Today’s debate therefore also gives me the opportunity to enlighten Members of the House about what goes on behind the scenes in one of those six sub-committees. I act as chairman of EU Sub-Committee B, whose remit is the internal market, infrastructure and employment. I am pleased to have the opportunity of sharing with the House the highlights of the 2012-13 Session.

Before doing so, I must thank all current and past members of the sub-committee who have worked so hard, week after week—and we do meet weekly—and all of whom have contributed greatly to our work in this Session. Due to them we have accomplished much, enjoyed our Monday afternoons, and developed a great atmosphere of mutual respect. That may seem too good to be true but believe me that it is so. Attendance is excellent and even yesterday there were minor regrets—I have to say minor—that we were not meeting again for many weeks. I think we all feel that we need this break and are looking forward to buckets, spades, sandcastles and paddling as well as a well earned break from the wave after wave of directives, regulations, and other documents which pile up each week awaiting scrutiny.

We were sad to say au revoir to the noble Baroness, Lady Buscombe, the noble Lord, Lord Elton, and the noble Baroness, Lady Scott, who is now chairman of Sub-Committee D. I thank them all. We gladly welcomed the noble Lords, Lord Cotter and Lord Freeman. The noble Lord, Lord Freeman, previously chaired Sub-Committee B but has never said, “In my time we did x, y, and z”, although I am sure that he has been tempted to do so. We also gladly welcomed the noble Baroness, Lady Hooper, who came to us from Sub-Committee A. As an aside, the newcomers—bringing specific, most valuable experience and expertise—seem to have moved seamlessly into our work patterns and schedule.

Of course, without our clerk, policy analyst and committee assistant we could not have coped. All three were new to us but, yet again, the powers that be managed to appoint exactly the right persons for each of these critical roles. I can safely say that without each of them our work output would be well below that which we have achieved and they are universally brilliant in guiding us, working indefatigably, anticipating our needs, filling in the gaps of our knowledge on the workings of the EU, and ever ready to go that extra mile. They do all that plus they are so nice and, at times, funny. Yes, we are a happy, productive, determined team and I feel deeply honoured to be their chairman.

During the year we completed two new inquiries and published the subsequent reports. The first inquiry was on women on boards, and we published our report on 9 November last year. This subject has been debated several times in this House and, indeed, it seldom seems to be off the business and other pages in the press. We regard it as unfinished business as we are now told that the final decision will not be taken until November this year. This is quite strange because there was a delay in coming clean about what the directive was going to be in November of last year, so it indicates that there is quite a lot of disagreement both in the Commission and in the Parliament. Behind the limelight, however, we continue to encourage other member states to take our line—namely, no quotas—while suggesting that the Commission bring forward an EU-wide system for monitoring progress.

What did we learn from this inquiry? We certainly developed better engagement with other parliaments, greater use of video conferencing, establishing links with the Commission, all of which were most satisfactory. Time spent in deepening understanding and making and keeping alive contacts is time well spent and—with the greater use of modern technological developments—does not necessarily entail expensive time-wasting travel. Similarly we have initiated and maintained mutually respected links with officials in Whitehall in the various departments who are responsible for the sectors of our very wide remit. Our dealings with departmental heads and the coal face have led to much greater understanding and are a terrific help in adding to the ultimate value of our scrutiny role. The subject of Explanatory Memoranda has come up already in this debate and this has been a deeply discussed issue. Certainly one or two departments are already beginning to produce documents that we can understand, so they are Explanatory Memoranda.

The second inquiry was on the effectiveness of EU research and innovation proposals, and we published our report on 30 April. We highlighted the fact that the EU’s competitiveness has been, and is, increasingly threatened by the emphasis placed, and work undertaken, in emerging economies. We focused on the ability of the EU to compete and retain its reputation and leadership in this sector. It was a short inquiry but we received a great deal of interesting evidence from a very wide range of witnesses including those from the SME sector—the sector on which are pinned the hopes of so many of us for growth and job creation. This is ongoing. The Government response has been received and we hope to receive the response from the Commission before we debate the report in the autumn.

What did we learn from this inquiry? It was very challenging for the committee. It dealt with an important and broad subject in a relatively short time—three and a half months between the call for evidence and publication of the report. I have to say that it was a steep learning curve for those of us who feel scientifically challenged. However, we had strong help from certain members of our committee who are leading lights in this area. This is a great example of the very wide breadth of expertise which is available in this House.

I now turn to other work. The committee believes that it is most important to revisit our previous work. For example, we had a meeting with the incumbent Minister of Transport to address the lack of government engagement in our previous report on the Channel Tunnel—another item that is back in the news. We also had informal, information-gathering talks with Deutsche Bahn and Eurotunnel. Revisiting work is scheduled for the Women on Boards report as it continues through the EU legislative process. We are still inclined to participate in the debate, following the developments since the publication of our report.

During the Session the committee made history, publishing two subsidiarity reports under the reasoned opinion mechanism introduced in 2009 by the Lisbon treaty. Incidentally, in the four years since 2009 only four such reports have been published by the UK. We had two of them in the space of about three months— on aid for the most deprived and gender balance on boards. The issue of subsidiarity has provoked much discussion and debate in the committee, and in the House, about the meaning of this difficult concept. One example is the Oral Question on subsidiarity asked by the noble Lord, Lord Kakkar, on 5 March 2013.

What about current and future work? We plan enhanced scrutiny on EU migrants. The Minister, Mark Harper MP, gave us valuable evidence a week ago. Our next big inquiry will be on youth unemployment. We shall launch a call for evidence in September, and we had a scoping meeting yesterday to discuss the shape of the inquiry and the potential witnesses.

To conclude, I am sure that we are no exception to the other sub-committees in that we take our work very seriously. We are committed to ensuring that the quality of our work is beyond reproach. We are dedicated to providing the best scrutiny to assist our Government to play a leading, constructive role in the EU and to work for the best outcomes, not only for the over 500 million inhabitants of the 28 member states but, particularly, for the citizens of the UK within the EU. Last but by no means least, we will continue to maintain the high reputation of the House of Lords EU Committee in EU circles and elsewhere.

13:28

[Lord Harrison]

My Lords, I, too, pay tribute to the noble Lord, Lord Boswell of Aynho, for his excellent stewardship of the Select Committee, and for his encouragement for us to think outside the box sometimes, in ensuring that our work is mirrored in the work of the House as a whole. I say to both our Front Benches—I give an example of the Tyrie commission on banking that was recently published—that we are going to see the advent of the Liikanen proposals that will come before us from the European Union, and are not always sure that things done on the European scene in the single market are matched in the way that they should be by the work in this House. I hope that we in the Select Committee can promote that process even more urgently.

Some of the important elements of the Economic and Financial Affairs Sub-Committee of the European Union Committee that I chair include the European banking union, on which we published a major report in December 2012, led by the President of the European Council, Herman Van Rompuy in his four presidents’ report, backed up by the European Commission’s blueprint.

Suggestions were for a proposed three-pillared approach; that is, a single supervisory framework, a single resolution mechanism which was recently published, and a single deposit insurance mechanism. However, the last of those three was quickly dropped under German pressure and progress on the second, as I have said, has been recently published. As such, the proposals initially were set out only in relation to the first pillar, the single supervisory framework. The committee’s report reflected on those proposals as well as on the further steps towards banking union that were required. We undertook a very deep inquiry which included evidence from the President of the Council, Herman Van Rompuy; the Commissioner for Internal Market and Services, Michel Barnier; the vice-president of the European Central Bank, Vitor Constâncio; and the chairman of the European Banking Authority, Andrea Enria. I should also say that when we were in Brussels we took advice on the European Banking Union from Sir John Cunliffe. He, of course, has now been nominated as the new Deputy Governor of the Bank of England.

The committee found that a European banking union was urgently required to restore credibility to the euro area banking system and to break the vicious circle between banks and sovereigns. Although the UK has stated that it would not participate, the consequences for this country could be enormous. The committee warned of the significant risk that the UK could be marginalised as banking union participants moved towards ever-closer integration. This, in turn, threatened to fracture the single market as the authority of EU’s 27 bodies, such as the European Banking Authority, came under threat. The committee warned that the Government’s assurances about the impact on the City may prove to be misplaced. It called for the Government to ensure that London’s pre-eminence as a financial market was not imperilled and that the integrity of the single market was retained. UK isolation in such debates would be disastrous.

The committee also expressed regret that the three-pillared approach was so quickly undermined under political pressure. However, it welcomed the single supervisory mechanism proposals as a significant first step. It agreed that the ECB should take on supervisory responsibility over euro area banks but warned that the concentration of so much power in one institution meant that powerful safeguards needed to be put in place, and that there should be no conflict between the European Central Bank’s supervisory and separate monetary policy tasks. Indeed, the ECB should be accountable to the European Parliament and to national Parliaments in the exercise of its supervisory powers, and there should be equality in the decision-making process within the ECB between the euro area and the non-euro area participants and the role of the European Banking Authority in representing the 27 member states must not be undermined. It now represents the 28 member states.

The committee has not rested on its laurels since publication of the report. It has engaged in several rounds of correspondence with the Financial Secretary to the Treasury as a deal on the single supervisory mechanism emerged, which, in spite of some of our concerns about the bail-in deal, is in itself an undoubted achievement. We have given particular consideration to changes to the voting arrangements in the EBA and the so-called non-discrimination clause, which the Minister argued would be a significant achievement and safeguards against any restriction of the UK’s role as a financial centre of the single market. However, we were concerned that such safeguards were not as watertight as thought. There will be a review of voting arrangements if and when there are four or fewer non-participating member states. As recent developments with Latvia remind us, all but two member states are under a legal obligation to join the single currency.

We examined banking union in the context of the Commission’s broader proposals to strengthen fiscal, economic and political union in our new inquiry into genuine economic and monetary union and its implications for the United Kingdom. One notable recent development is the publication of the Commission’s proposal for the second pillar of banking union, the single resolution mechanism. We will continue taking evidence on these important subjects. We have meetings lined up with the Commission’s Vice-President, Olli Rehn, who recently said that that vicious circle between the banks and sovereigns was to be diluted rather than broken. We shall quiz him on that. In Frankfurt, we shall meet Dr Constâncio who we have interviewed previously on these important issues.

The committee published an important report on markets in financial instruments regulations and directives, MiFID II: Getting it Right for the City and the EU Financial Services Industry. We highlighted the threat to the City of London by trying to block off third countries coming into the single market of 28 members; the dangers of the pre-trade transparency that was originally there which threatened to undermine proper competition within these trading instruments; and the algorithmic or high-frequency trading, an issue to which we will have to return under a different title.

We also highlighted the financial transaction tax. At the end of the 2011-12 Session, we published our report, Towards a Financial Transaction Tax?. The committee’s report was highly critical of the Commission’s proposal for an FTT. We argued that it would not fulfil any of the Commission’s five stated objectives and that there was a significant risk that financial institutions would relocate to avoid the tax. The UK had made clear that it would not participate. Yet we warned that an FTT would nevertheless have a significant effect on the United Kingdom, not least because of the obligation placed on UK authorities to collect the tax under EU mutual assistance agreements or under the provisions of joint and several liability.

Follow-up work to that report has consumed much of the committee’s attention during the 2012-13 Session and at the start of the current Session. We criticised the Government and the City for what seemed to us to be an entirely complacent attitude, assuming that such a flawed proposal could never survive, but this seriously underestimated the political will behind the proposal in Brussels. While the Commission’s original proposal was ditched in late 2012, 11 member states, led by Germany and France, announced their intention to implement the FTT under the enhanced co-operation procedure, whereby a smaller number of member states may pursue a proposal, so long as the rights of non-participating member states are not infringed. When the new proposals were published, they included a new provision, the so-called “issuance principle”, whereby financial institutions located outside the European Union would also be obliged to pay the financial transaction tax if they traded securities originally issued within the EU; for example, a trade in Volkswagen shares between London and New York would be caught. This raised concerns about the potential extraterritoriality of the tax and added to the committee’s concerns about the potential deleterious effect on the United Kingdom.

In light of this, we undertook a follow-up piece of work early this year when we urged the Government to consider a legal challenge against the proposal. This finally did the trick and awoke the Treasury from its slumber. Sure enough, the United Kingdom has since launched a legal challenge. Indeed, the Minister has acknowledged,

“that the grounds on which the Government has challenged the authorising decision are all points on which your Committee has previously flagged concerns”.

It is also becoming clear that participating member states are growing increasingly nervous about the impact of the financial transaction tax. Informed observers have predicted that, given the political capital invested in the project, an FTT will survive in some form, but that it will be significantly watered down, possibly to mirror UK stamp duty. We wait to see and, of course, the committee will continue to keep a close eye on developments.

Finally, the euro area crisis: amid these complex legislative proposals the committee has also sought to remain informed on the political and economic context in which the eurozone and the European Union as a whole operates. During the 2012-13 Session we continued with our twice-yearly updates on the eurozone crisis. In January and February 2013, we held a seminar on the effects of the austerity agenda on the EU, which was attended by academics, campaigners, think tanks and a number of EU member state ambassadors.

At that time, EU leaders were suggesting that the worst of the crisis was over. In that context, we warned that the biggest enemy in the worst of the crisis was to suggest that the worst of the crisis was over. Complacency is a danger that we must guard against, especially as it can affect the United Kingdom and the integrity of the single market. Your Lordships will be pleased to hear that the committee has not let up on its examination of these issues. Even this morning I have hot-footed it straight from a meeting of Sub-Committee A, where we agreed our latest letter on the crisis, in which we set out our views that the EU tendency to muddle through the crisis may not be enough.

I conclude with this: as others have expressed, we, too, have been disappointed by our relationship with the Treasury and, in particular, the Financial Secretary to the Treasury, Mr Greg Clark. We have been disappointed both by the tardiness of receiving explanatory memoranda and the lack of quality that we should expect from the Government. When he was before us last week, we were so angry with these failures that I threatened from the chair the meeting’s conclusion that we would bind up all his explanatory memoranda in a leather-bound document to be presented to him when he left so he could take them away on his summer holidays and read some of the poor quality explanatory memoranda that we received from Government. Whether he is keen to have that happen, I do not know.

Finally, perhaps I may say that it is a joy to have chaired the committee. I am particularly pleased that Stuart Stoner and Rose Crabtree have been working so hard—as all the members of the sub-committees have expressed. We really are blessed with the very best of help from the young men and women who attend to us.

13:43

[Lord Bowness]

My Lords, I too thank the noble Lord, Lord Boswell of Aynho, for so comprehensively introducing this report and for his leadership of the Select Committee during this past session. I am delighted, too, that this is the second year running that we are debating the committee’s annual report. I am pleased that it is not purely historic on this occasion, but includes a chapter setting out the future work that the committee and sub-committees will undertake.

I hope that this practice will continue, that the debate on this report will become a major occasion in your Lordships’ House for debating European Union matters and that Ministers will want to contribute. Indeed, I hope that the usual channels might find another time, when the minds of Members are on other things, rather than the fact that this is the last day—and almost the last hours—of the Session before the Summer Recess.

I do not wish to repeat what has already been said, so perhaps noble Lords will forgive me if I make some personal observations on this report and pose some questions. I particularly want to underline the importance of our participation in the inter-parliamentary meetings, and of building relationships with members of the European Parliament and the Commission. This gives us an opportunity to make our views known and find out what other people are thinking: not just members of the European Parliament from the United Kingdom, but those within the Parliament who occupy important positions in the particular committees. It gives us an opportunity to do that and it is particularly important in the codecision process.

I am also grateful to the noble Baroness, Lady Corston, for her review of the work of Sub-Committee C and her kind comments to me. I wish the noble Baroness, my successor as chairman of the sub-committee, well for the coming Session and thank those members who served with me in the past, as well as the staff for their considerable assistance. The noble Baroness referred to the three reports that were carried out in the past Session. I will make one or two brief comments on each. On the follow-up report on the workload of the Court of Justice, I am delighted that the Government have now been persuaded of our view that additional judges are needed in the general court.

We know that it has stalled because agreement cannot be reached on how to determine which countries have more than one judge; but I hope that the Minister will assure us that the Government are keeping this very much at the top of the agenda. Equally, I hope that if cash—money, lest I be misunderstood—seeks to intrude on this matter, a Written Statement made to the House on 2 July by my noble friend Lady Warsi will be borne in mind. While the amount that the UK contributes to the budget of the Court of Justice of the European Union is not clear, on the basis that we meet some 11.5% of the cost of the European Union, our share of the court’s budget would be £32 million. According to that statement, we put £25 million into a variety of other international justice organisations, including the International Criminal Court and the International Criminal Tribunal for the Former Yugoslavia, and made voluntary contributions to a lot of other international tribunals. Given the importance of the Court of Justice, I feel that this puts its relative cost into perspective.

The other inquiry dealt with preventing fraud against EU finances. As the noble Baroness, Lady Corston, said, we were particularly disappointed with the apparent lack of engagement by both the Government and Her Majesty’s Revenue and Customs. I particularly regret the rejection of the suggestion that one department, or one office within Government, should be responsible for our efforts against fraud on European finances. More contentiously and on a personal note, I regret the outright rejection of a European prosecutor’s office even before any proposal had been made. That seemed to me somewhat ill judged. It now looks as though this may form part of the revised Eurojust proposal; and although separate from the proposal for a European prosecutor’s office, to which the noble Baroness, Lady Corston, referred, there are likely to be close links. I ask the Minister: will this lead to the Government not opting in to the new Eurojust proposal? Eurojust has been identified by the Government as being very important, as shown by their desire to reapply to rejoin in the present format. How workable will rejoining in the present format be if we do not join in the revised Eurojust?

The other important inquiry that was carried out has already been mentioned. I refer to the joint inquiry carried out by the home affairs sub-committee under the chairmanship of the noble Lord, Lord Hannay. I do not propose to rerun last week’s debate. Suffice it to say that it was the failure of the Government, I am sorry to say, to consult on timing and the form of the Motion as promised which led to the difficulties—which, I am glad to say, were solved by my noble friends Lord McNally and Lord Taylor of Holbeach and their revised Motion. However, the status of that Motion and what difference a Motion in your Lordships’ House and one passed in the other place makes to the mandate and the decision-making process is far from clear.

The Explanatory Memorandum which formed the Command Paper is also far from clear. It must be an outstanding candidate for an award for being the least helpful and most confusing Explanatory Memorandum ever produced. However, having said that, the Motion that came before the House did not solve the problem for those of us who wished to express a deeply held belief that it is a mistake to opt-out but wanted to make it quite clear that, if we did, we should rejoin at least the 35 measures that were listed. It was a dilemma I could resolve only by not voting.

With this in mind, the European Union Select Committee was quite correct in not becoming directly involved with the Government’s competence exercise. Let the committee comment when the deeds have been done by government or in the course of an inquiry when relevant. The interests of government and Parliament are not always the same even if the same words are frequently used. For Governments, parliamentary co-operation tends to be the support of the Executive by Parliament on a whipped vote. That is not the tradition of the evidence-based, considered reports on which we in this House act.

I also note, from an exchange at Questions yesterday, that my noble friend Lady Warsi, in her Answer to a Question by the noble Lord, Lord Barnett, said that,

“the Prime Minister regularly discusses a range of EU issues with his counterparts, including changes needed to make the EU more competitive, flexible and democratically accountable. These discussions include the substance of reforms and the means to achieve them, which range from legislation to treaty changes”.—[Official Report, 29/1/13; col. 1533.]

This must inevitably raise the question of how these discussions are taking place before we have seen the publication and the results of the competence review. On what basis are these discussions taking place? I do not expect the Minister to tell us but it is a question that inevitably forms in our minds.

I appeal to the Minister to confirm that, as it is the stated desire of my noble friend the Prime Minister for us to remain a member of the European Union, there will be a major drive on the part of Ministers to emphasise the benefits and desirability of remaining a member, and that this message will be made just as clear as the message that the public are to be given a chance to decide whether or not to stay in the European Union.

13:54

[Lord Davies of Stamford]

My Lords, I declare my membership of Sub-Committee A, which handles economic and financial issues in the European Union. I have been on that sub-committee for only two months and can take no credit whatever for the fine reports that my noble friend Lord Harrison has outlined. I pay tribute to him as a very effective chairman of that committee. The reports have received a good response—not just here but on the continent—and have been acknowledged by the Government as having contained early warnings, which unfortunately in many cases they decided not to take. Like others, I pay tribute to the leadership of the noble Lord, Lord Boswell. In the two months that I have been a part of the system, as it were, I have seen that he provides extremely vigorous and effective leadership to this very important structure.

It is a pleasure to follow the noble Lord, Lord Bowness. In the debate we had last week on justice and home affairs, I paid tribute to the distinguished report that he, jointly with the committee of the noble Lord, Lord Hannay, produced on the subject and which was the background to that debate. That is where I want to start because we had the most extraordinary debate last week from which it was absolutely clear that the Government had been faced with 135, or thereabouts, potential home affairs and justice measures. They looked at them all very carefully and found that not one of them was against the national interest. Some were otiose and some were obsolete, but none of them was harmful. The Government selected the 35 measures which were clearly the most valuable to us, some of which were absolutely vital to the conduct of justice in this country. They decided that we could not avoid being a part of these measures without serious damage to the country and so they decided to opt back into them.

However, they opted out of the remainder when it was not logical to do so. There was no harm in the remainder, which added up to a positive element for the national interest on the Government’s own assessment. During the debate last week I read out several quotations from the Government’s own documents on the subject. There is no doubt that the whole of the 135 measures contains greater value than simply the 35, and yet the Government decided not to opt back into about 100 of them. There was no logical reason behind that decision. What is more, it has set at risk our getting back into the 35 measures because there are always doubts about these complicated procedures and the Government are incurring additional, unnecessary administrative and other costs through this complicated procedure—not to mention the costs in terms of good will. We are exasperating our partners by this extraordinary and utterly irrational conduct.

We all know that the reason for it is that the Government had to find a sop to give to their Eurosceptics. The Tory Party is desperately worried about people voting UKIP and wants to draw back into its fold the UKIP voters. We all know what the reasons are—they are pretty squalid party politics—and they have made it impossible for the Government to come to what any rational human being would have seen as the right functional decision to take in this case.

A situation in this country where the Government cannot take rational decisions on a European subject is a very serious matter. The question arises as to what we do and to whom we look for some kind of dispassionate and thorough cost-benefit analysis of measures that come forward in an EU context so that we can be reasonably confident that we are doing the right job for the British public in the decisions that we take. There is no better or other obvious mechanism than the committee structure we have in this place. We all know that the House of Commons does not engage in a systematic way in these deep and thorough reports on European legislative proposals. We have this extremely valuable instrument, which is made even more valuable and vital by the circumstances I have just described.

There are other irrationalities. The noble Lord, Lord Bowness, has just referred to the decision to opt out of the European prosecutor’s office proposal even before it was made. That is clearly a party political decision. Was it in the interests of the country? I have no idea. I have not looked at the matter in detail or read the report of the sub-committee but, nevertheless, it is quite clear that the Government did not make a rational decision on this matter. Someone ought to tell the British public about the pluses and minuses for the country as a whole of doing that.

There are other important issues pending. My noble friend Lord Harrison referred to the issue of the European banking union. The Government decided that we should not be part of the European banking union. Is that the right decision? I do not know. I was not on the committee when it reported on that subject. It is clearly a moving feast. It was only a week or two ago that the Commission produced its second directive on the resolution and recovery aspect. It has already produced a directive on the European supervisory mechanism and we hope that it will produce the third element before too long, which is a directive on retail deposit insurance in the European banking union.

This is not a proposal which is entirely clear or concrete, but we shall have to take a decision on it. It is important that we take the right decision. I have no confidence in the ability of the Government to take a dispassionate decision on this matter, any more than on any of the other issues that I have just talked about. It is important that we look at that.

We have already had some evidence that there will be increasing costs to our not being part of the banking union. It will be increasingly difficult to protect our interests. We have had witnesses in my time on the committee over the past two months who have said, in the context of other things, that over the medium or long term it is probably inconsistent with our being the largest financial centre in the European Union for us not to be a part of the banking union. All these things have to be taken very seriously.

Another big issue that it is quite impossible to expect the Government to take a rational view on is the issue of Schengen. At first sight, there must be great advantages to this country joining Schengen—the convenience and amenity for us all in being able to travel without a passport through more than 28 countries, as some non EU members have joined Schengen. The benefit would be particularly great for two very different categories of our citizens: the very poor and some probably rather rich. With regard to the very poor, there are a lot of people in this country who have never travelled abroad. Some get to retirement age and they have still never travelled abroad and have never had a passport. They hope to visit Paris, Italy or see the Alps before the end of their lives and they are going to have only a few hundred pounds at most to finance that trip. Therefore, the cost of a passport is quite a significant factor and deterrent, and we should think about people like that.

At the other end of the income spectrum, there are the international businessmen. These people are incredibly important when it comes to taking business decisions on location—where do you place your corporate headquarters in the EU? There are international businessmen who travel quite a lot and travel outside the EU to places where they need visas. Their passports often have to be with embassies or consulates for the issuing of visas. If they suddenly want to make a trip to Brussels or Frankfurt, they cannot do it. We are one of the very few countries that provide second passports for businessmen who ask for them for that sort of reason. Therefore, that is a significant issue, although perhaps not a vital issue, in terms of business decisions on location and it is something that we all feel strongly about.

There are other arguments about Schengen. One argument for joining would be that it would involve a lot of savings and would relieve the pressure on the border agency. We know the pressures it has been under and the real problems it has been having. The Government say they are interested in making administrative savings. There would certainly be administrative savings there.

The big argument on Schengen is that we are losing hundreds of thousands at least but probably millions of tourists a year. For people from the Far East, China and elsewhere who come to Europe, mostly on organised trips, it is simply not worth the money or the time for the travel agency to apply for a second visa. They apply for a Schengen visa and they offer people a European tour which takes them to Paris, Amsterdam, down the Rhine, and then to Florence, Rome, Madrid and Seville, and they do not come to the United Kingdom at all. They do not come because they have to get an extra visa at extra cost. It is quite clear that we are now talking in terms of hundreds of thousands, but it might be millions, of lost visitors to this country every year as a result of that.

Why do we not join Schengen? On the other side of the argument, some people would say “Good God, you couldn’t possibly do such a thing. You’d have millions of people pouring across the Thracian border into Greece who a day or two later would appear in London, Birmingham and Bradford as illegal immigrants here”. We have to think about that. Is it true that the French, Germans and the Dutch have a much worse problem controlling illegal immigration than we do? Is it true that sophisticated countries such as Switzerland and Norway, which are not members of the EU, have actually chosen to join Schengen when it is so hopeless at actually filtering people through the common external frontier? We need at least to ask that sort of question.

Some people will say “It’s a principle that you must always control your frontiers. You have only your own citizens controlling the frontier”. That cannot be an absolute principle because we have officials in the Republic of Ireland taking decisions about who should come into the United Kingdom. It is certainly not an absolute principle. Some will say that it is all to do with sovereignty. People get very excited about sovereignty. Before 1914 you could go to Victoria station and buy yourself a ticket to Paris, Berlin, Rome or Madrid and go without a passport. It was not until you got to the Russian frontier, the frontier of the Russian empire, that you had to produce a passport. Whatever the nations of Europe were suffering from before 1914, I do not think that it was an insufficiency of sovereignty.

All of these arguments need to be probed. Who is going to look at them? Not the Government. If you suggested joining Schengen the Eurosceptics would go berserk. They would go barmy and get hysterical. The Eurosceptic press—the Murdoch press and the Rothermere press—would get completely hysterical as well. There is no chance of a cool, calm, measured and calculated cost-benefit analysis being done by the Government on a subject like that. It is all the more important that we have instruments of the kind we do in the form of committees in this House which are able to give the country some of that element of analysis of these issues.

14:05

[Lord Howell of Guildford]

My Lords, I join others in warmly congratulating my noble friend Lord Boswell, and indeed his fellow chairs of the committees and all the committee members on their work. I pay tribute to it because it is immensely detailed and clear. I am not myself a member of the EU Committee system, so I hope that that is acceptable. A decade ago I was chairman of Sub-Committee C so I hope that makes me accepted as part of the old alumni of the EU Committee system.

I will concentrate on a section of the committee’s report on its forward look, on the way in which it is affected by and looks at future policy and scrutiny work—matters already referred to by my noble friend Lord Bowness. I do so against a background of widespread debate and shifting perceptions throughout the European Union itself concerning its procedures and aims. That, of course, is over and above the equally significant changes in the whole pattern and character of international relations, generally in a world that is now almost totally connected, with governmental and non-governmental networks increasingly melding together in a completely novel way. It is important, is it not, that your Lordships should remain well ahead of the game, as indeed we are in so many other fields? One has to realistically say that, whatever else is going to happen in the coming year, the forward-look things will not be as usual; things will be very different all the time.

I draw evidence for this view of change from the clear and increasing resistance to integration and ever-closer union as guiding EU principles which we have seen from the Netherlands Government, from Italy, and from the obvious German resistance; from the all round and outright resistance to more centralisation of power in attempts to repair the euro; and from a clear call for a return to what has been called deliberative intergovernmentalism. I also refer to a remarkable paper issued by the organisation Policy Network, which is a body of impeccable pro-EU credentials chaired by the noble Lord, Lord Liddle, who is sitting there on the Opposition Front Bench. This paper, Coordination in place of integration? Economic governance in a non-federal EU, is by Professor Renaud Thillaye, a senior researcher of Policy Network. Its message is simple: we have reached the end of member-state tolerance for one-size-fits-all measures and demands for more central power. Instead, the professor advocates the kind of sensible dialogue which leads much more to practical open-method co-ordination, and therefore to a substantial alteration in the size and nature of the flow of Commission-inspired EU proposals, directives and all the rest with which the committee has to struggle so nobly. However, it is undoubtedly, in its own words, “somewhat burdensome”.

Professor Thillaye points to the deep deficiencies in the present EU model and its outcomes, such as stagnation in research spending, the waste of skills, increased poverty in southern European countries and the appalling levels of unemployment. He refers to,

“the sense of a ‘diminished democracy’”,

and cites the EU scholars who claim that,

“the EU Single Market and the EMU restrict greatly ‘the capacity of member states to realise self-defined socio-political goals’”.

Instead, he wants to see an “enriched dialogue” between member states—and, of course, Parliaments—and concludes that:

“The EU should avoid imposing specific measures from above”.

My own conclusion from all this for the work of our own committee is that, in addition to being concerned with two specific principles, as the report we are debating today outlines, it should add a third principle, governing both its scrutiny work and its policy work in the future.

The two principles mentioned in the report, which are familiar to us, of course, are subsidiarity—whether something is to be done at the right level; and proportionality—whether it can be done less onerously. I would like to see a third principle added to the committee’s future work; namely, flexibility—whether something is better done through co-ordination than through centrally conceived law-making regulations and proposals.

Is it not perfectly clear that in this digital age of instant hyperconnectivity on every issue, the advantages of well focused co-ordination on specific issues, rather than centrally imposed instruments handled by cumbersome hierarchies, are greatly increased and can speed up decision-making instead of delaying it? It is obvious that the committee’s valiantly performed task in holding the Government to account is not at all helped by the endless, enormous stream of Commission proposals, all requiring Explanatory Memoranda from the Government, the quality of which—as we have heard in this debate and as the report confirms—is getting weaker and not stronger, I am afraid.

Of course, if we are looking at ways of halting or checking some of the less desirable elements of instruments and proposals, there is the yellow-card procedure. However, I think that most people—on all sides, without bias—have agreed that this is an utterly feeble instrument. The requirement of nine member states to make it work is ridiculously high. My right honourable friend the Secretary of State for Foreign and Commonwealth Affairs is right to urge that we move to a tougher reformed red card procedure, although that would have to be on the basis of far fewer national Parliaments objecting to make it realistic. Of course, that is precisely what some of us argued for in this very House at the time of the Lisbon treaty but it was rejected outright by the Labour Party and indeed—dare I say it?—by the Liberal Democrats.

Generally, if more ad hoc and e-enabled co-ordination is now to replace EU imposition and integrationist zealotry, a much better dialogue about competences, how things should be done, by whom and in what way is also required between member-state Parliaments and the Commission itself. Sadly, there, too, the Select Committee report speaks of “short and unspecific” responses from the Commission, often coming months late. This just will not do. This is not a state of affairs that those concerned with the welfare of this country or of Europe should accept. The whole balance is wrong and it is leading to increasingly bad results for the peoples of Europe.

I hope that in this House we will be able to debate in the autumn, as soon as we come back, some reports from the Cabinet Office and the Foreign and Commonwealth Office on the balance of competences, to which my noble friend Lord Bowness has referred. I am not sure how much we will learn from them about the burning need for change—although the need is there. Frankly, to judge by the first batch, which has already appeared, we are not going to learn much. They seem disappointingly shallow.

It is clear that the people drafting these documents—at least, the foreign policy paper that I have read carefully—have not understood that in the age of global connectivity, tasks and powers have changed, patterns and methods of trade and exchange have changed and the ways in which states relate to each other and negotiate have changed. Except for one brief mention, to which I direct your Lordships’ attention, on page 92 of the foreign policy review, there is no sign of awareness that digital networks change everything and that new alliances and networks must urgently be built if we are to prosper and protect our interests in this country, both as good members of the European Union and in relation to our growing interests in the outside world.

Above all, in the EU context, the old categories of so-called competences have now all been called into question and need unbundling and re-sorting. They were put together in another age. When it comes to actually getting things done, co-ordination between member states looks increasingly preferable to packaged- up EU competences and the capricious judgments of the politicised European Court of Justice. The balance of competences review sees an increasing blur between domestic and foreign policy but does not recognise an equally increasing blur between governmental and non-governmental agencies.

For example, if I may take an excellent report that came from EU Sub-Committee C of this House, there is the structure and role of the European External Action Service. I say excellent; I am not sure that I quite agree with the report’s conclusions on this venture because diplomacy through collective structures was never a great success and the issue now in the digital age is whether it is even necessary. Collective European aims in overseas theatres can now increasingly be achieved by swift co-ordination and alliance for specific tasks rather than by permanent and expensive new bureaucratic structures. The authors of this balance of competences review miss the point about the genius of the digital age: that instant and ad hoc co-ordination can be far more flexible, quicker, more efficient and better tailored to the particular mission in hand than heavy and complicated new treaty-empowered hierarchies of the kind set out in numbing and labyrinthine detail—if anyone wants to follow them—on pages 19 and 23 of the foreign policy review.

The age of vast, cumbersome, all-embracing and permanent treaties cascading measures from the central bureaucracies, with which our noble committees have had to struggle, is well and truly over—rather like the age of the vast, vulnerable battleships of the past. The age of more agile and practical co-ordination between states, focused on well defined common purposes, far more democratically accountable and closer to the people, is now upon us. Nowadays, Governments can come together and co-ordinate actions at the click of a button and then return to the pursuit of their national and local priorities and needs. This is the true path to democracy in Europe and to bringing Europe closer to its peoples. Communities no longer need to be built on massive central power. That was the doctrine of the previous century.

I hope that our committee, with all its excellent work and so well led by my noble friend Lord Boswell, will be able to recognise these changes and follow some of these guidelines in its future work. As I said, your Lordships must be ahead of the game in a totally transformed set of international conditions. If we are not, who will be?

14:18

[Lord Maclennan of Rogart]

My Lords, I have had the privilege of serving on four sub-committees of the European Union Select Committee. I have listened with great interest to the current chairmen of six of the EU committees describing the work of the current Session, which is of course what this debate is primarily about, but it would be a mistake to follow their lead in going over the detailed business that these committees have engaged in.

However, I would like to say at the beginning how very much I have appreciated the leadership of the chairman of the Select Committee, the noble Lord, Lord Boswell of Aynho, and pay tribute to his fresh thinking about how these committees should work. I also feel it is appropriate to express strong gratitude to the staff who have serviced these committees. They are not large in number and they have to work extraordinarily hard to produce the advice and drafts on which we focus.

The European Union Select Committee is one of the most important functions of the House of Lords. It currently engages, I believe, 74 Members of this House. The noble Lord, Lord Boswell, indicated that Sir John Cunliffe stated how much influence we have brought to bear on Brussels and Governments. I disagree very strongly with the previous speaker, my noble friend Lord Howell, in his summation of the way in which the Union ought to operate by way of co-ordination, rather than the open legislative process and the open parliamentary process that we have. I cannot see how what he has recommended is in the least conformable with democratic thinking in a modern conglomeration of 28 nations. How could the detail be co-ordinated effectively so that the disagreements are properly vented and properly answered and consensus is arrived at? It is not a matter of modern technology; it is a matter of openness that we have to embrace if this Union of ours is to enjoy the support that it deserves having kept this continent at peace for an unprecedented length of time.

I did not mean to divert down that route, but I wanted to indicate my belief that the work of these committees is invaluable in ventilating issues that need to be raised with the Government, the European Commission, the European Parliament and the Council. There is not much doubt that the work of these committees has made a significant impact. It is unusual for a clash of mighty opposites to occur, such as we had over the opt-out from justice and home affairs. None the less, it ventilated the arguments and enabled many members of the public, who were certainly not as well informed as they might have been, to grasp some of the issues and it got significant coverage in the national press.

I would like to open a thought that is not entirely about the influence that we can have on government, but rather the influence that we might have with the public. It seems to me that because we are doing studies of great depth and importance, and we are engaging with witnesses who are knowledgeable, engaged and interested, we produce significantly sophisticated reports. However, despite getting our message out to many newspapers and some broadcasts—the report talks about 35 million opportunities for people to understand what is being said in dialogue—I none the less think that we might, within our terms of reference, contemplate how we could gain more public understanding of the work that we do and get the public almost to help to promote some of our studies.

We are, of course, engaged largely in scrutiny of decision-making in the process of its being decided, but the third term of reference set out in Appendix 1 to the annual report is:

“To represent the House as appropriate in interparliamentary co-operation within the European Union”.

That is a very broad mandate and we have certainly used it to engage through COSAC and other bilateral meetings with Governments and parliaments of other countries. But it seems to me that that is not enough. We have only two full meetings of COSAC in the course of the year. We do not have as many meetings as we might have with other parliamentary bodies or with our own European parliamentarians—we have three meetings a year in the House of Commons. However, that does not seem to me sufficiently to embrace the public. I should like to speculate and suggest that we might communicate with the public to find out which issues give rise to the greatest concern. A body such as YouGov, chaired by Peter Kellner, the spouse of the noble Baroness, Lady Ashton, might be able to identify and prioritise the public’s real concerns and consequently we could engage in a debate. We could have a special meeting open to stakeholders who are particularly exercised by what they understand to be the problem with Europe or the way the Union is moving. We could then include these thoughts in our scrutiny and researches, however unfocused they may be, and we could answer them directly and possibly engage in a continuing dialogue.

The way in which we put out our invitations is very reasonable, but it is nearly always sparked off by a proposal from government or from the European Union. My view is that, if we are to exemplify the effectiveness of our work comprehensibly, we must endeavour to engage more directly with the public.

14:28

[Lord Tugendhat]

My Lords, I speak as another new member of the Select Committee and as the new chairman of Sub-Committee C on External Affairs. I cannot believe my good fortune. I find both roles absolutely fascinating and it gives me great pleasure to join other noble Lords in paying tribute to the chairmanship of the noble Lord, Lord Boswell, and to my predecessor as chairman of the sub-committee, the noble Lord, Lord Teverson. I share, too, the good opinion expressed by a number of noble Lords of the clerks who served the committee. They are few in number and do an outstanding job.

I shall not go into the subjects dealt with by my two noble friends Lord Maclennan and Lord Howell but shall stick much more, as others have done, to reporting on the work of the sub-committee, most of which was done during the period when the noble Lord, Lord Teverson, was chairman. I am not sure that my voice will hold out to the end, so I shall be brief.

The committee followed up on its earlier inquiry into Operation Atalanta, the CSDP anti-piracy mission in May and June of 2012. The committee has noted the successes of the mission and welcomed the EU’s comprehensive approach to the region. The committee recommended that the EU’s anti-piracy mission should be accompanied by an equal focus on the political process and on supporting security sector reform in Somalia. As part of its interest in Atalanta, the committee visited the operational headquarters in Northwood and noted that the new system for tracking ships in the sea was now in place. The report was debated in Grand Committee in 2013. Since then, the committee has kept a watching brief on the issue.

The noble Lord, Lord Boswell, has already referred to the report on the European External Action Service, so I need say little about that. It was designed to feed into the two-year review undertaken by the high representative and has received a comprehensive response from the Government.

The main conclusions of the report were that the post of the high representative is overloaded, and the committee laid out some of the recommendations that we heard from witnesses to ease this situation. We believe that the EEAS delegations can play a more important and engaged role in forming and delivering EU foreign policy. The committee noted that many smaller member states wanted the delegations to take on consular activities and it recommended that this be an area that the review should consider. However, the Government have put forward some quite substantial objections to that proposition.

The committee noted, too, that while the EU special representatives play an important role in EU foreign policy, their remuneration rate looks at first glance—and maybe there is more to come—rather high. The report was debated in Grand Committee in June 2013.

Since I have been chairman, we have had a short inquiry into the EU’s development assistance for drinking-water supply and basic sanitation in sub-Saharan Africa, which goes under the acronym of WASH. This work is based on a critical report from the European Court of Auditors on which the sub-committee had corresponded with the Government and which it wished to pursue further. Our report has been published in the form of a letter to the Commission with a covering note to the Government. It was based on extensive evidence taken from a number of NGOs over a short period. We also spoke to the Commission and the Court of Auditors, and I must say that what we learnt was extremely disappointing. The whole WASH programme casts doubt on the much larger aid programmes, and I hope that the Commission will provide a satisfactory response to the report that we have sent it. We are also sending the report to the relevant committees in the European Parliament, because it is important that it, too, should be seized of this issue.

Our next big inquiry will be into the Transatlantic Trade and Investment Partnership. The call for evidence on that has gone out and the formal evidence sessions will begin in the autumn. I hope, too, that we will have a seminar and take the views of a wide range of interested parties.

Our scrutiny work has also continued at a high level in relation to the Middle East and in particular to Syria, where we have expressed concerns about the security of arms and been worried by the recent decision taken at the Foreign Affairs Council. The sub-committee has received an informal briefing on the extension of the mandates of the EU’s regional and thematic special representatives, which came under scrutiny on 27 June. We have expressed our concern that the process of renewing the budgets and mandates of the EUSRs is too rushed to allow proper parliamentary scrutiny. On the role itself, the committee has expressed concern that the mandates of the EUSRs are not always clearly defined and that EUSRs can sometimes duplicate the work of other international actors on the ground. In particular, we put the mandate of the EUSR for Sudan and South Sudan under scrutiny, as it was not clear to us that the political situation and the conditions on the ground justified ending an enhanced EU role to the region.

We have raised an exhaustive list of scrutiny issues with the Government, covering such subjects as child labour; the EU Voluntary Humanitarian Aid Corps; the EU Border Assistance Mission for the Rafah Crossing Point; the EU integrated rule of law mission for Iraq; women in the Afghan national police force; the role of the EU at the Food and Agriculture Organization; EU sanctions in Syria, Somalia and Myanmar and EU’s defence instruments; and a protocol amending the agreement on government procurement.

The committee has also undertaken enhanced scrutiny on EULEX Kosovo, the EU’s rule of law mission in Kosovo and there, too, on the basis of a critical European Court of Auditors report. The committee heard evidence from the Minister for Europe, David Lidington, as well as from the Court of Auditors. In addition to all this, there have been a great number of informal briefings from ambassadors in the countries to which they were accredited, and the committee will continue with that aspect of its work in September.

It has therefore been a very busy programme. I cannot claim credit for very much of it. I pay tribute to the noble Lord, Lord Teverson, and to the previous members of the committee. I very much look forward to carrying the committee’s work forward during the next 12 months.

14:37

[Lord Judd]

My Lords, it is good to follow the noble Lord, Lord Tugendhat. He brings to his chairmanship of Sub-Committee C a lifetime in politics and of experience in international affairs, and from across the Floor I have always found him particularly well informed and enlightened. He also brings his considerable experience as a Commissioner of the European Union. He referred to his good fortune; I think that the committee is certainly fortunate to have him in the chair. While I mention the noble Lord, Lord Tugendhat, I want to join others in paying tribute to the chairmanship of all our committees, and of course to the noble Lord, Lord Boswell, for his supreme chairmanship, to which he brings not only an ability that is desperately needed but a commitment which is very challenging. I think that we all deeply appreciate that. I want in personal terms to put on record my appreciation as a member of Sub-Committee F of the outstanding leadership and chairmanship that we consistently have in the noble Lord, Lord Hannay. I have known him for many years. He, too, brings vast experience of the world and international affairs, which again illustrates just how well served Parliament is by their leadership in committees and by the experience that that leadership brings.

In thanking the noble Lord, Lord Hannay, I would like to say how much I have appreciated the joint work between Sub-Committees F and E the chairmanship of the noble Lord, Lord Bowness. He provides again to the House a real example of integrity and political courage. He speaks for what he believes, and does so not only with passion and emotion, but always on the basis of sound analysis and detailed knowledge. I think that the House should be grateful. I wish my long-standing friend the noble Baroness, Lady Corston, well in her chairmanship. She will have a tough challenge following the noble Lord, Lord Bowness, but I know that she will more than live up to it. I have had the good fortune of serving under her on the Joint Committee on Human Rights and know what a very effective chairman she too can be. I am sure that we all wish her well.

There is another group of people whom we ought to bear in mind and thank in our deliberations. These are the witnesses who provide so much valuable evidence to the committees as the basis for their work. We would not be able to produce our reports unless many people had a put great deal of time into preparing submissions and appearing before the committees, and sharing their insights, experiences and thoughts.

This brings me to something about which the noble Lord, Lord Maclennan, was talking. There is one gigantic challenge with the European Union and our approach to it. To the majority of people in the country, certainly a wide cross-section, the European Union is a remote and closed world. It speaks with great deliberation and experience to itself. It is very well informed about the work with which it deals, but to some extent it has lost contact with those who are dependent upon it and have to respond to its initiatives. That underlies a lot of the public anxiety about it and needs to be challenged. It is something to which in our work we could all make an important contribution.

When we are assembling lists of witnesses it is important not to fall into the trap of taking evidence just from those who are already informed about the European Community. We must develop the ability to seek out people who are coping with the consequences of European Union policy, or who have a great deal to say about the challenges to which the European Union should be responding, and to hear their views as well. These are people in the front line of the work with which we deal. When we were doing our report on migration in Sub-Committee F, I was struck by some of the witnesses from this front line, dealing with the issues of migration in our society. As we develop our work we should take this very seriously.

As I understand it, one of the issues with which the Government are concerned in our future relationships with the European Union is that it should be opened up and become more flexible and closer to people. It should be more accountable to the nation and people as a whole. That is a laudable objective. If it is to be fulfilled it is incumbent on the Government to live by example and not just theory. Even after a week, what happened last week was nothing short of a parliamentary disgrace. Here were two committees that had done tremendously detailed work on the implications of opting out and taken evidence from a wide cross-section of witnesses, who had put a great deal of effort and time into what they had to say to the committees. These two committees had listened to those in the front line of work in the context of justice, security and the rest. But what happened? Just hours before the debate on the same day, the Government’s response appeared. How is that opening up the matters of the European Union to the public as a whole? How is that enabling Parliament to do its job as it should? We should all have had time to consider in depth the Government’s response and prepare ourselves for a sensible debate in that context.

We should not hesitate in calling for the Government to do far better on this in the future. At the moment they are not serving the cause of enlightening our country at all by behaving in this way. It is not a totally isolated indication. We must understand what lies behind it and one of the difficulties is that we all know that there is a huge debate going on within the ranks of the coalition. It is not simply between the two formal parties that form the coalition, but even within the ranks of the Conservative Party. I have friends in the Conservative Party with whom it would be very difficult to get a thin sheet of paper regarding their views and mine on Europe. But there are others in the Conservative Party who are very different, committed to a xenophobic, insular and narrow view of where Britain’s future lies, and that is certainly not within the sphere of the European Union, nor even on too many occasions, I fear to say, of international co-operation as a whole.

That will always be a complication when the Government are getting their case together, but it in no way excuses what happened last week. I have been disturbed at the way in which we are repeatedly entertained to what, if it was not so grimly serious, is a charade of on the one hand senior government voices whipping up the sceptics and the critics of the concept of the European Union, and on the other those who are trying to keep the whole show on the rails. I suspect that that includes the Prime Minister.

One of the contentious issues in which emotion has obscured reality is the repatriation of criminals who have completed their sentences and are not British subjects. There is too much evidence that some in the senior ranks of government, who should know better, have been whipping up a view that this is somehow the fault of the European Union or of the European court. If that were case, it would be a very serious matter. Let us establish how great the problem is. In that context, I put down a Question on 3 June, asking on how many occasions in 2012 the Government were prevented from deporting criminals, who were not United Kingdom citizens, following the completion of their sentences by rulings of the United Kingdom courts citing Article 8 of the European Convention on Human Rights.

I drew the House’s attention to this last week. I have had approaches from Ministers, who have protested how sorry they are that I have not had a reply and that I must of course have one. I hope he will forgive me, as he is not in the House, but because this is so serious I must say that last night I sent an e-mail to the noble Lord, Lord McNally. I pointed out that today was the last day before the recess. A week had gone by and I had still had no reply.

I was very touched that the noble Lord sits so assiduously by his iPad, because within minutes, I had a reply in which he said that he was shocked that I had not had a reply. I would like to think that that is just innocent incompetence, the machine just not getting a reply together, but I cannot help being concerned lest that reveals something much deeper: that the Home Office is in no hurry to answer the question because the facts might not conveniently fit with the rhetoric and the playing to the gallery, to put it bluntly, which has gone on.

As we consider the future of the European Union, these matters are very grave indeed. We must have a Government displaying to us openly, fairly and straightforwardly the matters central to the issue. That, of course, starts with the Select Committees. I come back to the issue of how totally unsatisfactory—that is putting it in mild language—how totally wrong and insulting it was to produce a report only hours before the debate took place.

I want to say what a great privilege I find it to serve on Select Committees and how much I appreciate all those who make that work possible and so effective. A real tribute must go to the clerks and their support staff, who do a fantastic job for us all. I hope that they will get a decent break this summer, although I fear that in the case of Sub-Committees E and F, that will not be as simple as it sounds because we are going to meet during the recess. That shows the commitment to those issues by a large number of people. Again, I give real thanks to the noble Lord, Lord Boswell, for his terrific leadership in this operation.

14:51

[Lord Kerr of Kinlochard]

My Lords, I started to take the reports of the Select Committee seriously 22 years ago. I discovered that I had to. I then lived in Brussels, and it was the habit of the then President of the Commission, Jacques Delors, to read House of Lords reports on Sunday afternoons. When he discovered something that he did not understand or did not like, it was his habit to telephone the permanent representative. I discovered that these conversations went slightly better if I had read the reports beforehand.

I was therefore delighted when I came here to have a spell on the Select Committee and on three sub-committees, and I now sit on Sub-Committee A under the polymathic chairmanship of the noble Lord, Lord Harrison, whose habit it is to greet witnesses from far and wide in their native tongue, to the consternation of his colleagues and, sometimes, the witnesses. He is an admirable chairman, as he has again displayed today in his speech.

The standard of the big reports from the Select Committee, which attracted a lot of admiration in Brussels 20 years ago, is undiminished. It is still very high. I think particularly of Bowness-Hannay on the Protocol 36 opt-out. Sub-Committee A’s MiFID II report was good, and I think that its report on the financial transaction tax hit on a point which, at that time, the Government had failed to or did not wish to recognise: that the obnoxious tax would cost us because we would have to collect it even if we did not ourselves go along with it.

The big reports are very good indeed. However, compared to 20 years ago, I think that the standard of everyday scrutiny of the legislative workload has diminished. It is not as good as it used to be. I think that the principal reason for that—the Minister may disagree with me but he will have heard the feeling of the House from the noble Lords, Lord Boswell, Lord Hannay, Lord Bowness, and Lord Judd—is that the Government do not take the process as seriously as they used to. That is my impression too.

The noble Lord, Lord Boswell, spoke of the perpetual lateness and inadequacy of Explanatory Memoranda. Aficionados will have followed with interest the increasingly irate correspondence in the previous Session between him and the Financial Secretary to the Treasury over the 2012, 2013 and 2014 Budgets, various measures of financial services and banking legislation and the infamous financial transaction tax. The common theme to all those letters was delays, missed deadlines, superficial analysis and unanswered questions. I know that the Treasury suffers from staff cuts and a high turnover—I read the figure of 20% a year turnover in the press the other day. I cannot believe that, but perhaps the Minister will enlighten us. If it is true, it is extremely alarming. The Permanent Secretary to the Treasury came to answer a friendly call from Sub-Committee A and assured us that performance will improve. I hope it will; we wait to see.

There is a particular reason why delayed Explanatory Memoranda are not just discourteous and in breach of the rules but actually dangerous. I attach some importance to the subsidiarity mechanism. There is a deadline of eight weeks for the use of the yellow card. This morning, in Sub-Committee A, we looked at a proposal which, to my amateur eye, seemed to raise a question of subsidiarity. Whether or not I was right is completely academic, because the proposal was dated very early in June, but it came to the committee this morning, so there is no way in which, if I were right and the committee and the chairman agreed with me, we could use the yellow card, purely because of delays that occurred in London. The Government need to take seriously the rules which are clearly set out in Cabinet Office guidance to the whole of Whitehall, and which used to be enforced quite fiercely by Permanent Secretaries—I can give a personal assurance that that used to be the case.

Of course, there are also objective reasons why the scrutiny process has got more difficult, why we have to run harder to stay still. We have to catch up with co-decision. The Council is now only the co-equal legislator with the European Parliament. I am not convinced that we in this Parliament or the Government are yet doing enough to try to influence the European Parliament in the European Union interest and the UK interest. The problem is exacerbated by the Conservative Party having left the EPP. It is quite difficult even for distinguished senior Conservative Members of the European Parliament to have as much influence as their predecessors. I pay tribute to Malcolm Harbour, who is a sterling exception to what I just said: he proves that what I am saying is not true in all cases. I pay tribute to Sharon Bowles, but I think that the West Lothian question—let us call it the Westphalian question—will impose itself on the next European Parliament in relation to the chairmanship of committees. Sharon Bowles has put in a sterling performance as chairman of one of the key committees of the European Parliament. She has done extraordinarily well but she has hung on to her job by the skin of her teeth because, for a large number of members of her own grouping in Strasbourg, it is difficult to see why, when the United Kingdom has stood aside from fiscal union, banking union and bailouts—from the core business of the Parliament on economic matters—a UK MEP can be the chairman of its key economic committee. I hope that she survives, as she does a great deal of good in the European interest and the UK interest, but I am not sure that she can.

The European Parliament has also drifted away from national Parliaments a bit. On the multiannual financial framework, I did not see much recognition in the European Parliament, with its insistence that the totals were too low, of the need for painful belt-tightening being felt in member state Parliaments. On the financial transactions tax, I was shocked by some of the arguments advanced in the European Parliament, where the greatest enthusiasm came from those who thought that the financial sector needed to be punished for its crimes in the financial crisis and that throwing grit in the wheels of the capital markets was a good idea, per se. I did not see many arguing that having a great international financial centre inside the EU is a huge EU asset and that the City of London needs to be listened to, and that the FTT therefore needs to be rejected. Those who want to make such arguments in the Parliament could be assisted in making them by people like us, so I have three very modest proposals.

First, is there perhaps a case for inviting key United Kingdom Members of the European Parliament to participate in certain subject-specific Select Committee meetings, not as witnesses but as country members sitting on our side of the table and talking with us about how best to affect the EU outcome? Secondly, should our chairmen regularly meet the chairs of the European Parliament committees and, thirdly, could we even consider—a daring suggestion—a joint committee of members of the Select Committee of this House with UK Members of the European Parliament? It could perhaps have fluctuating membership, depending on the issue of the day. I am not saying that these meetings should be the kind which happens for form’s sake, with very long agendas, or on a regular basis. I see them as ad hoc, and called to deal with a particular big issue, such as the seven-year financial framework this spring, or the financial transactions tax. If, as I hear, the Select Committee is to consider the role of national Parliaments, I hope that it might consider looking into these suggestions.

I have one other suggestion, which I also put to the noble Lord, Lord Boswell, with a certain degree of trepidation. We have to acknowledge that the performance of our own committee could be improved. We do very well but I think we could do better. The Commission sends to this House, electronically and instantly, every legislative proposal that it puts forward at the moment when it is sent to the Council. They are here before they are read by Sir Jon Cunliffe in Brussels. What do we do with them? We actually do very little because since we joined the European Union, it has been our practice to wait. In those days, we would have waited for the carrier pigeon to arrive with the paper from Brussels. We wait until the Government send us along a copy, telling us what they think of it. Why do we wait for the Government? We could be self-starters and form our own view by considering the most contentious proposals—the ones where, say, subsidiarity confers real importance on deadlines and efficiency.

There would be resource consequences from such a change. It would have costs for this House. But if we cannot get the Government to perform as they used to, it seems to me that we will have no choice but to kick the process off ourselves if we are to retain the standards of scrutiny that we used to have and, I hope, improve them—and we should be improving them.

The Prime Minister was quite right when he said on 23 January:

“It is national parliaments, which are, and will remain, the true source of real democratic legitimacy and accountability in the EU”.

I agree and I think that most Brussels insiders—even some Members of the European Parliament—would agree, although some are clearly a bit puzzled that six months on, he still has not produced any specifics as to what he means and what his improved national parliamentary accountability would look like or how it would work. The Prime Minister talked about it as if it were a matter for treaty change. I really cannot see that at all. We could look again at Articles 10 and 12 of the treaty, which could be expanded, but they are deliberately unspecific—correctly, I think. It would be wrong in principle that an EU treaty should purport to lay down how member state Parliaments should control the business of the European Union. This is entirely a matter for us.

Our system, which used to be almost as good as the Danish system but now is definitely not, being some way behind, is still better than the system in some other countries. However, before we preach too loudly, “Physician, heal thyself”, the answer to the problem which the Prime Minister rightly describes is at least partly in our own hands. If we were to improve it, by catching up with co-decision and technology, we would improve democratic accountability in this country and be better placed to encourage others to follow our example.

00:00

[Lord Hodgson of Astley Abbotts]

My Lords, it is a great privilege to follow the noble Lord, Lord Kerr of Kinlochard. A lifetime at the diplomatic coalface has given him analysis and perspective that I cannot hope to match, and I listened with great interest to his suggestions.

I am just an ordinary member, now of Sub-Committee E and previously of Sub-Committee F. This has given me the opportunity to study in detail four very different chairmen: my noble friends Lord Jopling and Lord Bowness, the noble Baroness, Lady Corston, and, previously, the noble Lord, Lord Hannay. Each has been extremely effective and has been able to corral their potentially recalcitrant flocks with humour and good sense. It has been a pleasure to serve under them all. The other group to whom I add my thanks are the clerks, who do such terrific preparatory work and manage to turn the meanderings of the committees into a coherent whole. In my view, the country and the House owe a great debt of gratitude to both these groups.

As a member of Sub-Committee E, I served on the joint Select Committee considering the opt-out decision but I am not proposing to cover that issue now. The House has debated it at length and I agree with the noble Lords, Lord Judd and Lord Hannay, that the delivery of the Government’s response was unacceptably late. However, we have had a good chew of that and candidly, if I am honest, I am suffering a bit from opt-out or opt-in fatigue, at least for the time being. We will no doubt return to that issue in the autumn.

Instead, I will focus first on another of Sub-Committee E’s reports: that on The Fight against Fraud on the EU’s Finances. The evidence that the sub-committee received indicated that the official figure of fraud—which, as we have been told, was £404 million—was a woeful underestimate and that the real figure could be as much as 12 times higher: around £5 billion.

We also received evidence that OLAF, the European agency charged with fighting fraud, did not always receive the full-hearted national co-operation that it deserved. In these circumstances, the Government’s participation in our inquiry, or perhaps I should say their non-participation, is disappointing. Further, the Government’s response to the sub-committee’s report, received only recently, did not seek to rebut the sub-committee’s suggestion that EU fraud could be as high as £5 billion, merely recording, as the noble Baroness, Lady Corston, said, that it was not a figure that they recognised. This smacks of a good deal of complacency. Fraud is theft—theft from the taxpayer, whose interests every Government in the EU ought to be protecting. Moreover, fraud, if not investigated and prosecuted with vigour, has an unhappy habit of spreading. I hope for a more vigorous approach by the Government on this topic in future.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. Does he agree that, given the importance of fraud—I think that the whole House will be with him on everything that he said on that—it might have been a good idea if the Government had decided to join in with the initiative of setting up a European prosecutor’s office with a specific remit of pursuing fraud cases in the EU?

[Lord Hodgson of Astley Abbotts]

As always, the noble Lord, Lord Davies, has a seductive tone to his voice, but of course that is a completely different issue. We are trying to ensure that OLAF, which is the European fraud investigative committee, operates effectively. That is what we need to concentrate on first rather than, as my noble friend Lord Howell has said, superimposing yet another body that will be out of touch with the reality on the ground.

I shall focus the rest of my remarks on Chapter 10, the future look. I have written to the noble Lord, Lord Boswell, to give him some advance warning of what I wish to raise and what I would like the EU Committee to look at in future: the implications for this country of the continued free movement of labour within the EU—one of the pillars, as the noble Lord, Lord Hannay, firmly pointed out, on which the whole EU structure rests. However, I fear that the UK, uniquely, is already facing some strains from this free movement, strains that I fear will almost certainly become more severe and increase over the next 10 to 20 years.

A couple of figures may help to illustrate the point. England, not the United Kingdom, has now overtaken the Netherlands as Europe’s most densely populated country, with some 400 people per square kilometre. By comparison, France has 125 people per square kilometre, which is one-third or one-quarter as densely populated, and Germany has 260 per square kilometre—about two-thirds as populated. That is today, but over the next 15 years to 2027, if you believe the mid-projection by the Office for National Statistics, the UK’s population—here I am talking about the UK, not England—will increase by 7 million people, from 63 million today to 70 million then. What does this mean in comparable statistics? Last year, the UK’s population grew by just short of 1,100 people per day—a small village every week; a parliamentary constituency every three months or so. By contrast, Italy’s, France’s and Germany’s populations are falling, and on present projections the UK will overtake Germany to become the most populous country in Europe by the early 2030s.

Should we worry about this? Before answering that question, one needs to make it clear that race, colour and creed play no part in the debate. Indeed the social strains, if social strains there be, are likely to be felt most harshly in the minority communities. So should we worry? Physically, we can certainly fit the people in. Bangladesh has 1,400 people per square kilometre compared to England’s 400. However, it will be up to wiser minds than mine as to whether we wish to reproduce Bangladeshi living conditions in the UK.

Concerns revolve around two specific issues. First, there is the impact on our environment—the pressure on the green belt around our cities, the impact on our countryside, especially in the south-east, and so forth. These are important to me but are not the critical issues. For me, the critical issue is the potential crowding out of our native-born population—please note that I say, and I mean, “native-born”; that is not another word for white but, rather, means anyone and everyone who was born here—and the consequences of that crowding-out on our social structure. If the default option for British industry and commerce is to call for more immigration as opposed to upskilling our own population, we run the risk of creating a sullen, disconnected, unemployed and in due course no doubt unemployable underclass—an underclass that, in the minority communities, may well find extremist activities attractive. That is not good for us as a country or as taxpayers.

I shall give the House a practical example. I have a house on the Shropshire/Herefordshire border. As I speak here today, there are about 4,000 people from eastern Europe picking fruit. They are here legally, they behave well, they work hard and at the end of the season all, or at least most, of them will go home. However, there are unemployed locals in Herefordshire and south Shropshire. Talk to the fruit farmers and they will tell you that the locals will not work hard enough, are not reliable and turn up once and do not come again. Talk to the locals and they will tell you that they cannot get the farmers to recruit them because they prefer to recruit in bulk from eastern Europe in the hundreds. Where does the truth lie? I have no idea, but there is an issue here that at some point we have to address.

An argument often advanced for increasing immigration is the need to provide additional people to look after, and compensate for, our ageing population. This has extremely superficial attractions but it ignores the inexorable laws of ageing and compound interest. Today’s increased number of young people leads inevitably to tomorrow’s increased number of old people, who will in turn require still further increases of young people to compensate. Indeed, it has been calculated that if we wish to keep the same number of workers to pensioners as at present—it is about 3.5 to 1—we will already need an extra 27 million more workers by 2050: a 40% increase in our population.

To conclude, while free movement of labour within the EU is only part of the challenge, it is an important part and one which an EU committee will be uniquely well placed to address because it can do so in the non-partisan, equable, evidence-based way at which it excels and which this subject, above all, demands. I take a fairly hard-nosed approach to this country’s relationship with the EU but I do not doubt that at root it has been of great benefit to the United Kingdom. The 900,000 or so graves in France and Belgium are mute witnesses to that fact. However, outside the M25 in particular, the apparently inexorable rise in our population is causing concern. We need to reassure any concerned people that Parliament is aware of those concerns and prepared to investigate them fully, no matter how sensitive they may be.

Martin Wolf, the FT economics commentator, wrote:

“Society cannot function without a majority willing to play by the rules, without individuals demonstrating on a minute-by-minute basis their trustworthiness, reliability, courtesy and self-reliance”.

We need to ensure that we do not stretch these qualities to breaking point.

15:18

[Lord Liddle]

My Lords, I join the chorus of thanks to the noble Lord, Lord Boswell, and to the formidable array of committee chairs and retired chairs who have spoken. I thank them for their hard work, and for the rigour and objectivity of that work, which makes a tremendous contribution to the European debate in Britain.

I want to make three points in a brief speech. First, this work is essential and therefore I agree with the noble Lord, Lord Hannay, and the noble Baroness, Lady Scott, that there should be no further cutbacks to it in this House. Secondly, it can work properly only if all parts of the Government take it seriously. I have a lot of sympathy with the strictures on the Treasury that I have heard from various quarters in this debate. When I worked in 10 Downing Street the Treasury would not even tell No. 10 what was going on. That was not so much because of the personalities at the top but rather because of an institutional arrogance: they believe they are guardians of the state unaccountable to anyone else. This attitude has to change.

If I may make an aside, I am somewhat alarmed by the fact that at present the two key posts in the management of European business—in the European Secretariat and at UKRep in Brussels—are held by people from the Treasury. I congratulate Sir Jon Cunliffe, who is a very able man, on his appointment as Deputy Governor of the Bank of England but I hope this Treasury grip will not be maintained.

The third point is about the future work of the committee. Here I rather agree with the noble Lord, Lord Howell—and not just because of the very nice compliment that he paid my think tank—that the committee could take a more ambitious view of its role beyond scrutiny. We have to recognise that a big debate has been started about Britain’s future in the European Union and the committee can make a very valuable contribution to it, particularly in two areas where it is extremely well, if not uniquely well, qualified. One is the question of competences and the whole debate about subsidiarity and proportionality. The second is the debate about the need for an enhanced role for national parliaments.

A good starting point would be the Government’s balance of competences review. My fears about this have been somewhat allayed by the tone of the first reports, as they show an objectivity of approach. There has certainly been a bit of Lib Dem influence there, which is possibly more effective in this area than on many coalition policies. I also think there is a sense in parts of the Conservative Party that it is simply not going to follow the kind of bar-room prejudices of Nigel Farage in setting its future European agenda—at least, I hope so. I detect—I would like to know what the Minister says about this—that the Government are shifting from what started off as a Conservative manifesto commitment to the repatriation of powers to a sensible debate about the need for multilateral reform of the way the European Union exercises its competences. If that is the case, it would be quite an important shift, which on this side of the House we would very strongly support. The committee could help that debate along, particularly if it carried out a detailed examination of how there can be better enforcement of subsidiarity and proportionality and what role national Parliaments can play.

I am sure that the noble Lord, Lord Kerr, is right to say that the work of the committee could be even better. Certainly, the role of national parliaments in the system could be strengthened without treaty change. We have to look, at a much earlier stage in the policy-making process than at present, at how national parliaments hold Ministers to account. We should seek to beef up the role of COSAC—the body that brings together the parliaments in Brussels—so that the yellow card procedure is used more effectively. Of course, there are all sorts of other ways in which the role of national parliaments could be strengthened through future treaty change, but I suspect that that is some way away.

Therefore, the Select Committee does excellent work, but it could do even more if it made a contribution to this crucial debate about reform of the European Union, and in that way helped us to remain effective members.

15:25

[Lord Wallace of Saltaire]

My Lords, I am conscious that I now stand between noble Lords and what the noble Baroness, Lady O’Cathain, called their buckets and spades, although in my case it is my punnet and hoe. I failed to pick rather too many of our raspberries and a large quantity of our blackcurrants last weekend, so I look forward to getting back as soon as possible to provide my wife with them to process.

I declare an interest as a former member of the House of Lords EU Committee and a former chair of one of one of its sub-committees. I had thought that perhaps when I step down from government, it would be very pleasant to sit on the committee again. However, what I have heard today suggests that it is all extremely hard work, which is the last thing my wife would want me to do when I have finished working absurdly hard in government. We appreciate how much extremely valuable work the Lords EU Committee and its sub-committees do. The Government certainly have no intention to reduce the number of sub-committees. I remind Members that the number of sub-committees and the allocation of committee resources in this House is a matter for this House and its authorities, not for the Government.

The committee will have seen the Government’s written response to this report and the Minister for Europe welcomed it.

[Lord Davies of Stamford]

On the very important point of the allocation of resources to permit the committees to do their work, we have, of course, recently been subject to reductions in our travel budget. That is bizarre, because the work requires us to keep in close touch with our continental partners and in particular with the institutions in Brussels. Do the Government have a view on the matter of the resources that should be allocated or the reduction in resources that is being imposed on the committees here?

[Lord Wallace of Saltaire]

My Lords, I am simply not briefed on that. However, I can assure the noble Lord that as a Minister I travel with Ryanair and easyJet to various places around the outer fringes of the European Union. We also do our best to economise where we can. I remind the noble Lord that this is the leanest Government that Britain has had for many years because we have cut the government car pool very substantially—we have to walk everywhere.

This is a very timely debate. I recall our previous debate on the annual report, which took place rather later than this one, and in the Moses Room, although we are now here in the Chamber. I also recall it because the noble Baroness, Lady O’Cathain, criticised me very sharply on that occasion for not having read every single report that the committee had produced in the previous year. I can assure her that I have read at least the summary of every report that the committee has produced this year.

There are, of course, many examples of the way in which the committee has fed into the Brussels process and the work of other Governments, as well into the debate within Britain. We are concerned at the criticisms that the committee has made of the untimely provision of Explanatory Memoranda, and in particular of the role of the Treasury. We very much take on board what the noble Lord, Lord Kerr, said about the importance of timeliness in terms of subsidiarity. I will take all the points back, and we will discuss them in the Cabinet Office, the Foreign Office and various parliamentary branches of the relevant departments, to make sure that they are fully taken on board. I am an enthusiast for the development of the use of the yellow card mechanism. We have to make sure that we are given all the resources we can manage so that we will be able to use that to its best ability.

I have been heavily involved in the balance of competences review for six months, about which various comments have been made. Perhaps I may stress that those reports were not intended to have policy recommendations at the end. They were intended very much to feed into a better informed debate in the United Kingdom. I hope that the first six reports have done so. I look forward—although perhaps not entirely—to three more rounds of very careful assimilation of a large amount of evidence presented into another collection of reports.

I say to the noble Lord, Lord Hannay, that the balance of competences exercise is very much in parallel to other aspects of what is going on in government. We have welcomed his committee’s report on the justice and home affairs opt-out. The balance of competences exercise is proceeding in parallel with a whole range of other negotiations and the order of reports was drawn up some time ago, with other dimensions in mind.

We are attempting, both within the balance of competences exercise and in the work of this and other committees, to provide space for a reasoned debate within the European Union about our interaction with the European Union. We all recognise that over the next nine to 12 months that debate may be constricted in some ways as we move towards the next European elections. We are also conscious, particularly so over the past week, that the press is not always favourable to a reasoned debate. The Leveson report remarked that in press coverage of the European Union—as with press comment on women, minorities and Muslims—its attitude is that it is quite acceptable to invent stories without any source whatever.

I was very struck to see this story in the Mail the other day:

“Revealed: The shadowy lobbyists waging war to keep Britain in Europe”,

I read it with great interest, only to discover that it was actually talking about British Influence, which is an entirely public body. I think that the Mail had lifted this story from a Eurosceptic blog, which said that British Influence was a deeply dangerous organisation funded by the secretive Bilderberg Group. Oddly enough, the Mail did not include that bit.

I was also quite worried by the article by Peter Oborne in the Telegraph last week, saying that:

“The 1975 referendum was a fair poll in the same sense that the elections due to be held in Zimbabwe next Wednesday will be fair … The sense has lingered that we were hustled, against our will, by an anti-democratic elite, into an organisation whose true aims and nature were hidden from us until too late”.

The BBC, of course, was playing a role in the deceitful agenda.

On Saturday, the Telegraph’s Brussels correspondent, Bruno Waterfield, told us that,

“the European Union is planning to ‘own and operate’ spy drones, surveillance satellites and aircraft”,

under the control of the noble Baroness, Lady Ashton, in,

“a major move towards creating an independent EU military body with its own equipment and operations”.

I was therefore very pleased to receive this morning an invitation from King’s College London to a debate in October on how to ensure that we have impartial reporting on the European Union, at which Bruno Waterfield will be one of the speakers.

I say this partly to demonstrate that getting reasoned debate based on evidence about Britain’s involvement in the European Union is not easy and that this committee plays an immensely valuable role in helping to widen that debate. I hope that noble Lords have read the balance of competences review papers so far and I hope that they feel that they have drawn in evidence-based policy with which perhaps to counter the emotion-based policy, the prejudice-based policy and the conspiracy-oriented allegations which so often cloud out rational debate in Britain. All parties must contribute to this effort.

I say to the noble Lord, Lord Judd, that I very much look forward to hearing a speech from the Labour leadership comparable to the speech made by the Prime Minister in January. The leader of my party, the Deputy Prime Minister, will make a major speech on the European Union in October. I very much hope that we will hear a constructive Labour contribution to an EU reform agenda that keeps Britain in the European Union. This is what the Prime Minister was talking about, and I confirm to the noble Lord, Lord Liddle, that that is what the coalition Government are pursuing, rather than unilateral repatriation intended to lead to an exit, which is what the Telegraph, the Mail and a number of others on the fringes of conventional politics very much want us to pursue.

I turn to various issues that were raised in the debate. The sub-committee on foreign affairs produced a very valuable report on common security and defence policy. I have noted that on scrutiny we have shifted very often from major reports to follow-on reports and continued scrutiny. As we approach the December European Council, which will have European defence very much on its agenda, I trust that the sub-committee will continue to monitor the way in which the British Government and others approach this. As everyone knows, there is a tension between those who are interested in institution building and others who are interested in practical conflict prevention and conflict resolution under that dossier.

Similarly, on banking union, it would be immensely valuable if the sub-committee responsible for that continues to monitor the ongoing debate. Having read its report and various other—mainly German—documents, I think that I understand the various different definitions of banking union that are floating around. However, because there are so many different definitions of banking union—with maximum, minimum et cetera—clearly we need to contribute to the debate. As the noble Lord, Lord Harrison, and others rightly said, we need to think also about where in the debate the interests of Britain and of Britain’s financial centres are at stake.

On the workload of the European Court of Justice, I take on board what has been said. We have now moved on the question of—

[Lord Kerr of Kinlochard]

Advocates-General.

[Lord Wallace of Saltaire]

Advocates-General. The question of more judges is now about to come up.

On the question of students and migration, I will write to the noble Lord, Lord Hannay. However, I will say now that the government line is that students who stay here for three to four years are not necessarily temporary visitors. That is one reason why the question of what role they play in the statistics is important. As the father of a student who went to the United States seven years ago and who I hope will come back to the United Kingdom one day, I am very conscious of the tensions.

[Lord Hannay of Chiswick]

I would like to save the Minister from sending an unnecessary letter in the Recess. This is not about statistics. I have said it an awful lot of times. Others, including the noble Lord, Lord MacGregor, in the debate that he initiated, also said it. It is about government policy and the impact of that policy on immigration and on our higher education sector. That was what the senior member of his party who is a member of the Cabinet referred to. I ask him to send me a letter not about statistics but about how the Government will give effect to the international education strategy that was put out by David Willetts yesterday and which, I am afraid, is not totally consistent with the Government’s immigration policy.

[Lord Wallace of Saltaire]

My Lords, I guarantee that I will look at the strategy of the Minister for higher education and will consult further.

The noble Lord, Lord Bowness, asked about a Eurojust opt-in. The Government are now consulting on the new Eurojust proposal, which was published on 17 July as part of a package, alongside a proposal for a European public prosecutor’s office. We have been clear that the UK will not participate in the establishment of a European public prosecutor’s office, so we are now considering how to respond to that.

One thing that I hope the committee will focus on in the coming year is the area of European data protection. This applies to domestic legislation in Britain—we may have a data-sharing Bill in the next Session—and applies also at European level. When it comes to negotiation with the United States, data protection and data-sharing are becoming—as we all know and see from the German elections—a highly sensitive area in which the expertise and expert contribution of the Lords European Union Committee could be extremely valuable. A number of noble Lords have talked about democratic accountability—

[Lord Hannay of Chiswick]

My Lords, I am sorry to interrupt again, but I have to tell the noble Lord that the Select Committee did, in fact, recommend that the Government opt in to the data protection directive currently under negotiation in Brussels. Mirabile dictum, the Government did opt in.

[Lord Wallace of Saltaire]

My Lords, the final shape of the data protection directive is by no means clear. We are a very long way from a final text. I merely wish to insist that it needs to be kept very well under review.

I move on to democratic accountability. The role of national parliaments and closer co-operation among national parliaments, of the sort that the noble Lord, Lord Kerr, and others talked about, is very much a direction in which we should be moving. The yellow card mechanism is developing. I do not agree with the noble Lord, Lord Howell, that it is not a workable mechanism. Closer co-operation between national parliaments; better use of the Brussels office, which we have and share with others; rapid provision of Explanatory Memorandums; and, as the noble Lord, Lord Kerr, also said, closer co-operation with British Members of the European Parliament should help us demonstrate to our publics that we are actively engaged in scrutinising the necessary involvement of the United Kingdom in a whole range of regulations at the European level, but also to make sure that we are feeding into the Brussels bubble the active concerns about subsidiarity that we and many other publics have.

This has been a very wide debate, and I simply want to end by pointing out that Her Majesty’s Government are committed to staying within a reformed European Union. We are working with others to promote that agenda. I was very pleased yesterday to read from the Foreign Office a number of telegrams about the positive reaction of other member Governments to the first balance of competences papers. We are already talking to a number of other Governments about how we might share an agenda for reform. That, I hope, has the support of all members of party and non-party groups in this House. I very much look forward to the further valuable contributions that the European Union Committee of this House will continue to make. I will do my utmost within government to ensure that members of the Government—even the Treasury—co-operate as fully and as promptly as possible with the continuing of the committee.

15:42

[Lord Boswell of Aynho]

My Lords, given my position as the concluding speaker in the debate, I very much hope that it will not be a matter of the theme, “Apres moi le deluge”. We are all about to go on our holidays and I do not intend to prolong the agony. However, I would like to say first how much I appreciate the contribution of all those who have participated in the debate and the Minister’s response. I am particularly grateful to those who have expressed very generous—even if unmerited—remarks to me personally. Before the cynics get at it, perhaps I should say, by no prior arrangement, that I would like in turn to express my gratitude to all the sub-committee chairs and former members of our committee—including the Minister, as he reminded us—who have participated in this debate. It has shown the depth of expertise that the House can deploy and, in what I hope will be a golden summer of England cricket, that we can bat all the way down the order with great success.

If I were to select a single word to encapsulate the nature of our discussion, and probably the way in which our committees work, it would be workmanlike—but not, I hope, pedestrian. We do a proper job of work. We do it seriously but we try to have regard to the wider context as we do it. In a way, that has been brought out by the debate, because we have shown a constant tension between concern about procedural issues and substantive issues. Perhaps I may select in particular the remarks of the noble Lord, Lord Judd, who felt strongly about both. I think we all understand that there is a European people out there, not all of whom are very happy with the course of events and who feel tensions about how the system is not necessarily expressing their views as it should.

There is also concern as to whether we are having the right dialogue with Her Majesty’s Government and the right degree of compliance with the scrutiny reserves and the other obligations that they have undertaken. I remind the House that it is entirely for the Government to meet their obligations. We will do our best to help and we do not wish to be unreasonable. It really is not sufficiently good enough, on their behalf, to say, “Well, we did our best”, when clearly in certain cases that has not happened. We will not go away from that issue, nor should we do so.

However, I would reflect that there is a danger—we see this even in some of the material that we get, for example, from the European Parliament commenting on our involvement in European affairs—that because we have a documents-heavy and scrutiny-intense activity, there is a feeling that somehow that is all that we do. Of course it is not the case that everything is done formally by the process of scrutiny, holding things under scrutiny or even grumbling about the conduct of Her Majesty’s Government. There is a much more numinous process of policy formulation and discussion.

Perhaps I may come to points of substance. First, there is a certain regret in my heart that no explicitly Eurosceptic contribution has been made today. As I have said on previous occasions, any discussion of European policy matters is not a binary one where everyone immediately agrees or disagrees to the suggestion you have made after your detailed inquiry. It is very much more a process of evolving. One of our important roles, which I think has been touched on, involves our ability to go further back in the decision-making process and to respond as the Commission has a bright idea or wishes to develop themes, and not simply to wait until the last minute when we can say, “We are not happy with this as it’s turned out”, “It raises a subsidiarity issue”, or whatever.

Another point raised—for which we are indebted to the noble Lord, Lord Howell of Guildford, as we are for others—is that it is now a very complex process. As for his comments on the contribution of the electronic dialogue, although I can e-mail my colleagues in COSAC, for example, which is the sort of thing we should be doing more than we do, that might not be the answer to every situation. We do not simply have a central authoritarian system to which we have to respond rather late in the day, we also need to be involved in a much more networked policy formulation and discussion.

In that context, yes, of course we want our dialogue, and yes, we are not complacent about having got it perfectly right—I say in response to the comments of the noble Lord, Lord Kerr of Kinlochard—just because Jacques Delors, the European Commission or the current Commissioners have our reports on their shelves. We can always do better. I am sensitive also to the point made by the noble Lord, Lord Hodgson of Astley Abbotts, about migration issues. Indeed, I hope that the House will not land everything with even the remotest relevance to Europe on our shores. However, we do have a dialogue. Two of our sub-committees have looked at some of the issues and we have corresponded about them. We are open to doing more in this respect just as we are open to doing more on procedural issues.

I hope that I can assure your Lordships’ House that we do our best to do an objective job. We do not have closed minds about how it should work. We do some things that do not always appear even in the tomes of annual reports. In the context of our national parliamentary inquiry, I have written well over 100 letters to various people, including national parliaments and ambassadors in London and otherwise, to alert them to what we are doing and to invite them actively to participate. We will take any part in the dialogue that they are prepared to have with us.

In conclusion, I should like to express my gratitude for the way in which our report has been received and to emphasise that, whatever we do in the future, we will be guarded by the lodestars of quality and objectivity. We will make no compromises about that.

Motion agreed.