European Union Committee: Report on 2013-14 (EUC Report)

Thursday 24th July 2014 Lords Chamber

Motion to Take Note

17:24

Moved by

[Lord Boswell of Aynho]

To move that this House takes note of the report of the European Union Committee on 2013-14 (1st Report, HL Paper 6)

[Lord Boswell of Aynho (Non-Afl)]

My Lords, the report on the 2013-14 Session details the work of your Lordships’ European Union Committee, which I have the privilege of chairing. I am pleased to be discussing the work of our committee on the Floor of the House, especially as the committee has just passed the significant milestone of its 40th anniversary. I note that the late Lord Diamond—the first chairman of the Select Committee—when reporting to the House in 1974 on the first three months of its work and its members’ contribution thereto, stated that,

“your Lordships’ House is a veritable storehouse of wisdom, skills, and talents of a kind unimaginable”.—[Official Report, 7/11/74; col. 600.]

I can report with some confidence that that is still the case some four decades on. I personally express the debt of gratitude that I owe to members of the committee and the sub-committees, who contributed their skills and talents to our work over the past Session, and to those who continue to do so in this one. Alongside them I add the names of their admirable and expert staff, to whom we are very grateful.

The committee’s role is to scrutinise EU policies and proposed EU laws, seeking to influence their development, to hold the Government to account for their actions in and connected to the EU, and to represent the House in its dealings with the EU institutions, other member states and their national parliaments. Many will know that the bulk of that work is done by six sub-committees.

The Select Committee itself and its sub-committees have undertaken an extraordinary level of work this year. We have scrutinised more than 250 EU documents and proposals, and corresponded at length with Ministers in order to examine the Government’s position and to put forward the committee’s own view. We have published 14 substantive reports on a diverse range of topics. While our primary task is to inform the House as a whole, we also engage actively with the outside world. I was gratified that the Financial Times described the committee’s reports as,

“the sort of calm, balanced report that ought to inform public debate”.

The Select Committee itself regularly conducts one-off hearings with the Minister for Europe, as well as with other key figures. The committee’s main focus in the year in question was our inquiry into the role of national parliaments in the EU. We emphasised national parliaments as a vital source of democratic legitimacy across the EU and supported the case for greater co-operation between national parliaments and early engagement by them with the EU Commission and other European institutions, including the European Parliament, so as to maximise their joint influence.

I will not rehearse our arguments in detail since there will be a full debate on the report in due course. I welcome the fact that although the Government’s response was late, it has now been received and it appears extremely positive. We look forward to pressing on with our efforts to promote the role of national parliaments by a range of means in the coming months.

I turn now to the sub-committees. They have all undertaken a range of important work, but I have time only to highlight a few key points for each. The Economic and Financial Affairs sub-committee examined in detail the financial transaction tax proposal and genuine economic and monetary union and its implications for the UK, and published substantive reports on both policy areas. This sub-committee produced an innovative report on the euro area crisis, incorporating the outputs of a series of six-monthly mini-inquiries, by which they have followed the crisis blow by blow for two years. The sub-committee did excellent work in its scrutiny of the 2014 EU annual budget and of the European semester—the term for the cycle of economic and fiscal policy co-ordination within the EU—which all amounts to a wide range of other scrutiny work.

The Internal Markets, Infrastructure and Employment sub-committee undertook an important inquiry into the issue of youth unemployment in the EU. That is a pressing issue affecting the UK and all member states. Its report recognised that,

“the responsibility for dealing with youth unemployment rests primarily with Member States”,

and that the key measures to address the issue should be concentrated and implemented at national level. But it was a timely and considered contribution to an EU-wide issue that will require attention for a long time to come, sadly.

The Sub-Committee on External Affairs was typically busy, dealing with a wide range of issues on foreign affairs, development, defence and international trade. In particular, it conducted an exhaustive inquiry into the Transatlantic Trade and Investment Partnership—TTIP—in prospect between the USA and the European Union. This report concluded that as,

“the most ambitious trade and investment pact ever attempted”,

TTIP could,

“set the template for a new generation of 21st century trade and investment agreements”.

We urge member states to promote the TTIP initiative and to address public concerns over the prospect of a deal. The United Kingdom Government should seek to explain how TTIP is relevant, not just to large multinational companies but to consumers and small businesses. TTIP negotiations continue and we will follow developments with interest.

The Sub-Committee on Agriculture, Fisheries, Environment and Energy undertook an inquiry into food waste prevention in the European Union, which attracted a significant and thoroughly well deserved amount of media and public attention. This report called for greater collaboration and shared financial responsibility along the supply chain so that, for example, retailers work more closely with farmers and consumers to reduce food waste. It also called for the Government and the European Commission to assess how the redistribution of unsold food for human consumption might be encouraged through appropriate fiscal incentives. The report’s impact is only just beginning to be felt but it will, we are sure, continue to inform and influence public debate.

The Justice, Institutions and Consumer Protection Sub-Committee presented a reasoned opinion challenging the proposal to establish the European Public Prosecutor’s Office on grounds of subsidiarity. This opinion was agreed by the House on 28 October last year. The committee considered that the EPPO, as proposed by the Commission, would create,

“a very significant and disruptive incursion into the sensitive criminal law systems of the Member States”.

The sub-committee continues to examine the impact the EPPO will have on the United Kingdom.

The sub-committee also conducted a joint follow-up inquiry with the Home Affairs, Health and Education Sub-Committee on the UK’s block opt-out decision relating to pre-Lisbon police and criminal justice measures. This issue was debated last week on the Floor of the House and will be revisited again before the final decision is made by the Government. Both sub-committees maintain a keen interest in this.

Separately, the Home Affairs, Health and Education Sub-Committee examined the strategic guidelines for the European Union’s next justice and home affairs programme, concluding that,

“evaluation must be at the heart of the next programme”,

and recommending reviews of,

“efficacy, transposition and implementation of all existing JHA legislation”.

The committee urged that,

“robust mechanisms must be put in place to review any future legislation or activities”.

This inquiry is a clear demonstration of the technical and considered contribution that the committee is in a position to make and in which it leads the debate, for which it is held in such high regard in Europe.

At this point I record personally my particular thanks to the noble Lord, Lord Hannay of Chiswick, who chaired the home affairs sub-committee so authoritatively. I welcome and look forward to working with his successor, the noble Baroness, Lady Prashar.

The work of the European Union Committee and its sub-committees depends on the necessary information being provided in a timely manner by Her Majesty’s Government in accordance with their obligations to Parliament. I have to give one bit of good news, which is that the provision of this information has noticeably improved and the number of scrutiny overrides continues to fall. However, the quality of the explanatory memoranda can still vary across departments. This element of inconsistency can cause issues for the work of the committees if it raises more questions than it is meant to answer. Explanatory memoranda have a duty to explain.

Our committees also continue to make a significant contribution to interparliamentary relations and work. Some of the work is undertaken through the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union, known by the not particularly easy acronym as COSAC. It is certainly not a perfect institution and it does have issues that need to be addressed, but it provides the best framework for formal interparliamentary co-operation. Meanwhile, and less formally, our excellent national parliament representative in Brussels provides help to colleagues and other Members of the House to build effective relationships with other national parliaments and parliamentarians. We have increasingly close relations with like-minded members of committees in a number of other national parliaments. We benefit from a strong working relationship with the chair of the European Scrutiny Committee in another place as well as with those of the devolved Administrations. We meet formally twice a year and informally far more often.

To conclude, the pace of work has not dropped off. The sub-committees are looking forward and launching inquiries into topics such as regulatory reform, the use of civilian drones, the relationship between Russia and the EU, regional maritime strategy, the Government’s policy in opting into international agreements in the area of freedom, security and justice and, finally, an alcohol strategy. A short and very timely report on European Union data protection law, the so-called “right to be forgotten”, will be published next week. At the same time, our regular scrutiny work continues week on week. There is also a significant amount of institutional change in the European Union—a change of face and perhaps a change of style—and we will seek to build on our relationships with the institutions and individuals over the coming Session.

This House is known for keeping an eye on the small print, and that meticulous approach is never more apparent than in the way the committee tackles European Union affairs. We seek at all times, and I think we generally succeed, without closed minds and without complacency, to act in a non-partisan way and to give, as we are required to, well informed and neutral advice to the House on European Union matters. It is not always easy for us to perform and to communicate that vital function, and frankly it will not become any easier as we approach the 2015 election and whatever lies beyond, but I take great pride in heading this team of European Union committees. With those comments, I commend to the House our report on the work of the 2013-14 Session.

17:38

[Lord Tugendhat (Con)]

My Lords, as the first speaker after the presentation of the report by the noble Lord, Lord Boswell, I would like to say a few words in praise of him. Being the chairman of this committee is a very formidable undertaking. It means being the ringmaster of a multi-ring circus, but he manages to pay equal attention, as far as I can see, to the work of all the various sub-committees. He says that most of the work of the committee is done by the sub-committees, which certainly may be true, but he is involved in all of them, and that is a very considerable burden.

I also pay tribute to one particular report produced by the main European Union Committee, and that is the report entitled, The Role of National Parliaments in the European Union. Not only was it a very good report, but it is a timely issue and something which the whole European Union would do well to study and consider. I think that, to some extent, we can fairly claim to have been the thought leader in that respect. It has also had the very beneficial spin-off of enabling us to get closer to a number of other parliaments, as well as to the European Parliament. That too has been a great advantage.

I speak as chairman of Sub-Committee C, which deals with external affairs. The noble Lord, Lord Boswell, has already mentioned much of what we do, so I can be very brief. Our main task has, of course, been our report on the Transatlantic Trade and Investment Partnership, which is the most ambitious undertaking of its kind the world has ever seen and one with enormous potential to benefit economic growth on both sides of the Atlantic. I have been very gratified by the response both of this House and of the Government; my committee shares that view. The report was debated very shortly after its publication on the Floor of the House and the Minister on that occasion provided a very full response to our debate on behalf of the Government. As he is the noble Lord, Lord Livingston of Parkhead, I hope he is enjoying all the activities currently taking place at Parkhead. In both that response and the Government’s formal written response, which arrived last week, we have been very gratified by the extent to which the Government have accepted our proposals and agreed with our recommendations. I will not go into detail, but basically they have accepted pretty much all of them in a very comprehensive and considered reply.

I want to make only one comment, or caveat, perhaps. While I am very pleased that the Government accept our need for a more positive, cross-departmental communications strategy, I should like to see rather more evidence of that being brought into effect. The debate on TTIP is quite an uphill task in this country, but more particularly in some others, such as the United States, France and Germany. The Government’s support for a more vigorous strategy is certainly very welcome and I look forward to its being put into effect.

I also pay tribute to the Commission. We were very impressed by both Commissioner De Gucht and the negotiator, Mr Garcia Bercero. The openness with which the Commission conducts this negotiation, and the way in which it seeks to remain in contact with interested parties in the member states, is very impressive. Given the size of the European Union now, that in itself is an achievement. Of course, we do not know who Commissioner De Gucht’s successor will be, but it is one of the most important portfolios in the Commission. I hope a heavyweight and well qualified Commissioner will be put in charge of that portfolio in the Juncker Commission.

As the noble Lord, Lord Boswell, said, we have now embarked on a study into EU-Russia relations. We are at only the very earliest stages and would be hard-pressed to finish it in the time available, given the length of the Recess and the need to finish early in the new year. However, I can already say we are very concerned by the EU’s lack of shared analysis and common purpose and its inability to reach timely agreement on responses and objectives. We intend to come up with proposals to address these issues after taking evidence not just in this country and from other member states in the Commission, but in Russia, we hope.

In connection with that, we believe it is very important to secure and convey, in our report, a better understanding of how Russia sees its relationship with Europe and how it thinks that might be put on a better footing. We will focus on what happens in the EU, but it is very important that we should hear what the Russians have to say and form a judgment on the approach that they take. We will also consider the EU’s relations with those other states that lie between us and Russia which need to have a good relationship with Russia but which certainly need to have a good relationship with the EU.

Finally, I want to say how much we appreciate the help that we have received throughout the year from the Foreign and Commonwealth Office. By that, I mean not just from officials in London but, in the course of our travels, from posts in Brussels and Washington. We have received great assistance of a practical nature. I am certainly conscious of the fact that, given the enormous number of documents that are processed, the speed with which we have, generally speaking, received responses has been impressive.

I raise just one caveat. I think that sometimes the Foreign Office—and this is obviously a matter for Ministers rather than for officials—is reluctant to allow officials to speak on the record. I can understand why that should be, because the matters are often delicate and often controversial. It is very helpful for the committee to receive off-the-record briefings, which are frequently very interesting and perhaps sometimes more interesting than on-the-record evidence, but when we are producing reports, we can take account only of what we hear on the record. Sometimes it would be helpful for gaining a better understanding of the attitude of Her Majesty’s Government if the Foreign Office could be a little less restrictive in that respect.

That said, I feel that, in general, the approach of the Foreign Office to our work, and responses to our reports and what we have to say when we write letters and so forth, is very encouraging and helpful. I have great pleasure in supporting the proposal of the noble Lord, Lord Boswell.

17:46

[Lord Harrison (Lab)]

My Lords, I speak as a second steed, with flaring nostrils, under the whip of the noble Lord, Lord Boswell, as our ringmaster for the six sub-committees reporting to him. Perhaps I may add to the praise given by the noble Lord, Lord Tugendhat, and say that the strategies that the noble Lord, Lord Boswell, deploys include having a large range of anecdotage from which he chooses appropriate anecdotes for the various six sub-committees to calm our nerves and to encourage us.

Perhaps I may pick up one point that the noble Lord has made, about the worth of the examinations made by the sub-committees of his European Union Select Committee. They are of a very high standard. We are regularly told that they are read throughout Europe and the United Kingdom, and I may say that they present a sharp contrast to the poor, low and risible level of examination of items important to the United Kingdom which is performed at the other end of this Palace. I say so because the noble Lord, Lord Boswell, has made reference to the tripartite meetings whereby British Members of the European Parliament meet MPs from the other end and your Lordships. It is quite clear there that the conversation is between your Lordships, who have a grasp of the important European items, and those who hold dossiers in the European Parliament—and there is a third and absent partner.

I offer an apology to the noble Lord, Lord Boswell, for the fact that, through an accident which was partly of my making, he was excluded from the debate which we held last night on the euro area financial crisis. I feel this all the more tellingly because he it was who in 2010 asked Sub-Committee A to report back to the Select Committee on “What did you do in the financial crisis?” I believe we have done well in reporting and having six-monthly looks at the developing problems, which have now, fortunately, subsided. I am extremely sorry that he was not able to attend last night and I put that on record.

I will try to abbreviate some of the things I have said. One of the important items was the financial transaction tax. We thoroughly examined and re-examined the threat to this country, and particularly to the City of London, which we have highlighted in terms of that tax. It could be really quite an unfortunate tax that works adversely in the European Union and to the detriment of financial services in this country. I recently met with the Prime Minister of Slovenia and the central bank governor of Slovenia, who was in Parliament this Monday, to ask them why Slovenia has withdrawn from being one of the 11 countries going forward with the financial transaction tax. That takes it down to 10; getting near to the nine where enhanced co-operation can be permitted to proceed. I will not say any more on the FTT, which has had much interest in this House.

Regarding ‘Genuine Economic and Monetary Union’ and the Implications for the UK, we heard evidence between May and November 2013 from a wide range of witnesses across the EU. We collected valuable evidence on visits to Brussels, Berlin and Frankfurt—where we visited the European Central Bank and the Bundesbank. Our report was published in 2014 and found that genuine economic and monetary union was highly contentious yet banking union was vital to tackling the effects of the financial crisis. However, what had been agreed at that time was insufficient to break the vicious cycle linking banking and sovereign debt. We also noted the strong case for some fiscal transfers and debt mutualisation, but concluded that the proposals for an integrated budgetary and economic policy faced widespread political opposition. Although the full vision remains a distant prospect, the eurozone is on the road towards greater integration already. The implications for the United Kingdom are immense. A strong and prosperous eurozone is in the interests of all EU members, as is a strong and engaged United Kingdom.

After the report was published, the co-legislators reached agreement on the next leg of banking union—the single resolution mechanism. In correspondence with the Minister, the sub-committee noted that the deal went some way towards addressing the concerns it had set out in its report, including the shorter mutualisation period for the single resolution fund and a somewhat more streamlined decision-making process. However, the sub-committee warned that the resolution process remained complex and there was a risk that funding, at €55 billion, would be inadequate to deal with the scale of bank failures witnessed in recent years. This report was debated in the House on 2 July, and I was gratified that Members of the House from beyond the sub-committee, including the noble Lords, Lord Lamont and Lord Jay of Ewelme, participated.

As I have mentioned, our summary of the euro area crisis has been developed over the years. We heard most recently from the former Prime Minister of Italy, Mario Monti, Erkki Liikanen, not only a former Commissioner himself but now governor of the Bank of Finland, Sir Jon Cunliffe, our man in Brussels who is now the deputy governor for financial stability at the Bank of England, and Gerard Lyons who is the City’s—Boris Johnson’s—economic expert. The sub-committee found that there were indeed welcome signs that the crisis had eased, but it would nevertheless be unwise to conclude that the storm has entirely passed. As I have said, we had a debate on it last night and colleagues will be interested to consult that.

There were other significant pieces of work, including on shadow banking. The sub-committee undertook detailed scrutiny of the Commission’s documents, which I will not list here. We heard further evidence from the European Commission—we previously heard from an absolutely outstanding Spanish lady who was a veritable expert on budgetary matters—and from the CBI on the proposals. We sent an extensive letter to the Government in April, asking for their views on defining shadow banking, the size of the shadow banking sector, the benefits and risks of shadow banking and the global regulatory response. It is something to which we will have to return.

Towards the end of the 2013-14 Session, the sub-committee commenced its examination of the European Commission’s proposals for banking structural reform, contained in the regulation on structural measures improving the resilience of EU credit institutions. The sub-committee heard evidence during April and May from the European Commission and senior banking sector representatives. It continues to scrutinise these important proposals in the new Session, and has exchanged correspondence with Ministers on issues such as the ban on proprietary trading, the structural separation of banks, and the impact on the UK and the derogation provision.

We have also been dealing with the 2015 draft budget and the draft amending budget for 2014. Again, a huge backlog of outstanding payments to member states has accumulated: €23 billion which the Commission is required to pay, including €1.3 billion relating to the UK. The front-loading or prioritisation of payments for certain EU programmes leading to undue pressure in later years has been another of our concerns, as has the use of an emergency pot of funds called the contingency margin to make ends meet in the mean time. Again, we will have to return to this.

Finally, we have embarked upon a new inquiry into the EU financial regulatory framework. The majority of the reforms having been introduced within the EU, it is an apposite time to step back and assess the strengths and weaknesses of the new regulatory frameworks that have been introduced since the outbreak of the financial crisis. The inquiry will seek to identify any overlaps, contradictions, inconsistencies and gaps in the regulatory landscape. It will also focus particularly on the implications of the regulatory agenda for the United Kingdom, and the extent to which its interests have been impinged upon or enhanced. The sub-committee began its evidence programme on 22 July, earlier this week, when Sharon Bowles, the outstanding former MEP and chair of the European Parliament’s ECON committee came before us and gave us a flying start to what will prove to be an interesting inquiry, with which we hope to leave a message in the bottle for a future committee to take up the work after the general election.

I want to bring to the attention of the noble Lord, Lord Wallace, something that has come up not only during the discussion with Sharon Bowles on Tuesday but also today. One question we asked of Sharon Bowles was what relationships we have with the pivotal euro group—the 18 member states that are members of the euro and meet together to discuss matters that are relevant to the euro in particular. It has been the hallmark of my committee that we have asked each Economic Secretary and Financial Secretary whether they engage with the euro group and we have been told repeatedly, “No, other than that we meet them in the corridor”. The reason why I bring that up is that Sharon Bowles gave evidence to the effect that the United Kingdom was offered a place to attend in a privileged position in the euro group, which was of course at one time the backyard of the incoming Commission President, Jean-Claude Juncker. I seek to find whether that is the case.

When I attended a session this morning in the City, I was told that not only had this been done historically but it was offered to our own Chancellor of the Exchequer to be able to sit in—or for his representative to sit in—with the other 18 members of the euro group. Is that true, and is there evidence that we have had that offer and declined that offer? If it is the case that the United Kingdom, especially given its expertise in financial and regulatory matters, has spurned the opportunity to sit there next to the 18 members of the euro group as they construct and deal with the development of the regulatory framework, that would be such a huge dereliction of duty that I thought it appropriate to bring it to the attention of the House in this afternoon’s debate. We need that clarified, and I hope that the noble Lord, Lord Wallace, will pursue the matter and give us an answer that satisfies our repeated call for us to stay outside the euro—as we will for some time—but, for the purposes of the financial and economic structures being built in Europe now, to remain close and interested and integrated into that process for the benefit of the United Kingdom and the broader Europe.

18:02

[Baroness O'Cathain (Con)]

My Lords, follow that! What a thunderbolt—or at least it was one to me.

I believe that it is a duty but first of all a pleasure to thank the chairman of the EU Select Committee, the noble Lord, Lord Boswell, for all his support, humour and encouragement during the year, as well as for introducing this debate on the work of the EU Select Committee and its sub-committees in the 2013-14 Session.

I have the privilege of being chairman of Sub-Committee B. Our remit is to scrutinise proposed or actual legislation in the areas of the internal market, infrastructure and employment. I also sit on the main EU Select Committee. The highlights of the sub-committee’s year are already outlined in the annual report, so I shall use this debate for a few of my own reflections on some of the interesting moments in the sub-committee’s work this Session.

The pre and post-European election atmosphere in Brussels resulted in proposals coming to a conclusion that the committee has been scrutinising in the long term. Sometimes it feels that some of the work that we do has little relevance to the 500 million people who live in the 28 member states. Those feelings persist when I get a sheaf of paper, all written in bureaucratic, turgid prose. However, part of the joy of the job is when our attention is drawn by our clerk and policy analyst to the likely impact of the content of this turgidity, if there is such a word, which can or could be of benefit to everyone.

To a man and a woman—more than one woman—we get enthusiastic about an issue like universal high-speed broadband. We examined the Commission’s proposal for a regulation aiming to reduce the overall cost of the new superfast superstructure for a new entrant operator involving better co-ordination of street works and by network operators. However, we felt that a directive would be a better instrument than the regulation, as it would enable the Government to implement the measures more flexibly. In the end, this became a success story and I am afraid that we have to update page 31, paragraph 115, of the annual report of the Select Committee, because we actually have sorted out the final legislation. It is sound and it is in the form of a directive, so that is one minor feather in our cap.

This is a positive example, however, that the views of national Governments and parliaments can have a real impact. The study on the national impact of national parliaments has already been referred to several times. I commend it to every Member of the House, because the EU is going to become of ever increasing importance between now and pre-election and, indeed, post-election. We really should be as up to speed as possible because we are always going to be questioned by the chattering classes outside.

We hope that the proposal on superfast broadband will help the 500 million people, at least half of whom are involved, connect to the internet, and ensure minimal disruption by street work. The whole point of the digital agenda is that it is creating bigger and bigger divides and that has to be tackled. That is not part of our agreement, but it is part of our concentration on where the House of Lords can bring matters to the attention of Government.

As noted in the report, in tackling this, we had informal one-off meetings with BIS officials. We have found it very useful to speak to officials in person, rather than via correspondence and found out exactly what was happening in the negotiations. I think that the more we can do of this, the speedier can be the response to Brussels. It will ensure a deeper understanding for everybody involved. Building up a good relationship with officials and the Executive is so much better than tending to deal with them at arm’s length.

The posting of workers directive was the most interesting case, allowing companies to employ their own staff on projects in other member states on home country terms. The proposal attempted to improve existing provisions and to avoid social dumping. Another very topical and difficult issue was the situation of the rights of migrant workers, an EU document to strengthen workers’ rights. We held two formal evidence sessions, one with NGOs and academics and then with the Minister for Immigration. The Commission argued that the rights were not being properly enforced by some law enforcement officers and employers. The committee got tough and agreed with the Government that we did not need even more legislation but that the EU should show courage to use the existing structures. For example, the EU should use enforcement proceedings against offending member states.

As it happened, the committee’s work in this case was set against an interesting backdrop. On 30 May 2013 the Commission announced it was launching infringement proceedings against the UK for its approach to benefits for EU nationals from other member states in the UK. The Government had written to the Commission indicating that cities were under strain due to migrant benefit tourism. The committee asked the Government to provide more robust data to back up these claims. They did not provide robust data. The committee was not satisfied. After the Summer Recess the committee will consider the Government’s Balance of Competencies Review on Free Movement Rights published on Tuesday 22 July.

I shall turn to inquiries. The noble Lord, Lord Boswell, has already referred to the youth employment report. The debate was on 17 June and was lively, with a variety of Members participating. It has created quite a few waves and we are constantly trying to encourage more people to think positively of what we can do in the local area, much more so than trying to get big schemes which will take the whole of the UK and forget the differences between them.

We used Twitter to ask the public what Members should ask the Minister for Employment and the Minister for Skills and Enterprise. This was a novel tool for our committee. Perhaps the House should reflect on the potential benefit of using it. It might make people realise that we do want their views. We had useful evidence sessions with young people at the Prince’s Trust Centre in Liverpool and at Birmingham City Council. It was great to get very straightforward views—my delicate ears were subjected to rather earthy language—from young people trying to get into the jobs market and to link the debates about funding at EU level with the practical reality of youth unemployment on the ground.

As a committee, we firmly believe in the necessity of follow-up work. Following our women on boards inquiry, which reported in 2012, we heard from the Government, the shadow rapporteur on the Women’s Rights and Gender Equality Committee in the European Parliament, which drafted its “own initiative” report on women on boards, and the Secretary of State for Business, Innovation and Skills. The excellent session with the right honourable Dr Vince Cable occurred recently. I shall quote verbatim from the transcript. Dr Cable stated:

“What has come across to me, more strongly than in many of my other conversations, is the way in which you are very much on top of what is happening with the European Union dimension and the way things can move quite quickly and in a different way from what we experience, and that we need to do some balanced thinking about how we would manage that”.

That was not about me; it was about the committee. However, it was very gratifying to hear that because sometimes there is a huge gap between members of Select Committees and the Ministers who have the final say on any matter. We hope that that will lead to a greater meeting of minds.

The issue of subsidiarity seems to come up at every meeting. In fact, I believe that we have real experts on the subject on our sub-committee. Subsidiarity means that action should be taken at EU level only where it is appropriate. It is a very important issue. We closely scrutinise all proposals from the EU under the subsidiarity magnifying glass—for example, the occupational retirement pension funds directive, which deals with the governance and transparency of the operation of these types of pension fund schemes in the EU. The vast majority of these schemes are located in just four of the 28 member states, including the UK. Because of this, the committee felt that the issues the proposal aims to address would be better actioned at national level. We are keeping a close eye on the proposal as negotiations progress and have written to the Commission and the Government outlining our concerns. We do not drag our feet. I do not think that we are different from any other sub-committee but we are very proud of ours.

I pay tribute to all members of the committee, all of whom are lively, interested and work very hard. I know that all of them in turn agree that without the support and direction of our clerk, Nicole Mason, and our policy analyst, Paul Dowling, and the ability to have really good specialist advisers and backroom staff—I must not forget them—we would be lost.

18:14

[Baroness Scott of Needham Market (LD)]

My Lords, I wish to focus my remarks on the work of Sub-Committee D, which I have had the honour to chair since May last year. This is not in any way to downplay the important work undertaken by the Select Committee itself. Our report into the role of national parliaments is a timely and valuable contribution to a growing debate across Europe and reflects the leadership shown by my noble friend Lord Boswell, whom I thank for his personal support for my work. In my work on the sub-committee, I try very hard to reflect the principles outlined in the report on the role of national parliaments —namely, that of engagement with counterparts and officials from across the EU and looking at policy before it reaches its final legislative form.

Our work this year was dominated by the topic of food waste, to which I shall return in a moment. Some of our scrutiny work followed up on the excellent work undertaken by my predecessors, the noble Lords, Lord Carter of Coles and Lord Sewel, and it shows, I believe, the value of well considered inquiries undertaken early in the policy-making process. This is a hallmark of much of the work across the sub-committees and it is something that we do well.

In 2008, the committee published a report on reform of the common fisheries policy. Five years down the line, I am delighted to say that the work came to fruition. Regulations to reform the CFP were adopted that strongly reflected the key themes of our committee’s 2008 report, including the decentralisation of decision-making and the introduction of a discard ban. Last summer, when the deal was done, the committee turned to the practical implementation of these policies, particularly the discard ban. It remains one that we should be watching.

The second major dossier that reached its end point last year was the reform of the common agricultural policy—although, of course, it never reaches an end; it is like painting the Forth Bridge. Under the chairmanship of the noble Lord, Lord Carter of Coles, the sub-committee had undertaken an inquiry into innovation in EU agriculture. Redirecting the juggernaut of the CAP is no small task, but incremental steps have been taken along the lines proposed by the committee in its report, and I am pleased to say that the committee continues to press the important themes of research and knowledge transfer as the process of implementation returns. It has also clearly become more of a priority for the Government because this week they have announced new investment in agricultural research.

One way in which we pressed those themes was through our recent report into the prevention of food waste in the EU. On-farm innovation is a very important element of tackling food waste at the initial stages of the food chain. The press and public interest that our report drew surprised even us; the press office tells me that it received more coverage than any House of Lords report it could ever remember. I want to trade anecdotes with my noble friend Lady O’Cathain and the noble Lord, Lord Boswell. The Independent described our committee as a “true adornment” of your Lordships’ House.

It is very important now for us to follow up this work. The European Commission recently produced amendments to its waste legislation that very strongly reflect the recommendations that we made in our report to have an aspirational food waste reduction target—not legislatively binding—and to work on standard definitions across the EU. We are awaiting more information from the Commission and a non-legislative communication from it in the autumn. We will also hold a seminar to look at the practical barriers to redistribution of surplus food. I am now constantly being briefed by organisations and businesses across the country and, indeed, Europe on the work that it is doing to reduce food waste. I think that demonstrates that we are regarded as leaders in this thinking.

I turn briefly to some other work. We are currently in the midst of a very intensive period of work, within the EU and internationally, on future approaches to energy and climate policy. It was very pleasing that messages in our report last year with regard to EU energy policy have been reflected in the Commission's proposed policy for energy and climate change through to 2030. This relates particularly to the importance of creating a stable environment to support long-term investment. I am also very pleased that, as the Energy Bill was making its way through this House, noble Lords made a number of references to the work that we had done in our committee. This shows that there is a crossover between the work that we do in the European scrutiny context and in the wider work of the House. Work on energy and climate change will be at the headlines of our next inquiry, into EU regional marine co-operation, which we launched at the beginning of this week. We are trying to bring a number of these things together, such as fisheries, energy interconnectivity and knowledge transfer. I hope that what I have said gives a sense of the work that we have been doing and that we plan to do, and demonstrates that we continue to seek to build and follow up on previous work.

There is a further point that I wish to make. It is a matter not for the Government but for this House. The new rotation rules that have now been introduced for the European committees will result in a two-thirds change of membership of my committee and that of a number of others next year. I suggest that a two-thirds change really runs completely counter to the principles of gathering experience and ensuring the effective running of the committee. As if that were not bad enough, after I had thought about it, I realised that the changes will mean that, every third year, two-thirds of the committee will disappear. I hope that the House will rethink that because it will make our work very difficult indeed.

I am grateful to all members of my committee, who are a joy to work with. They contribute a huge amount of their time, their experience, their expertise and, above all, their enthusiasm to make us successful. I should like to pay particular tribute this evening to Lord Lewis of Newnham, who died earlier this month after a long illness. His interest in all aspects of our work, coupled with his immense knowledge of chemistry, made his contribution invaluable. We miss his deceptively gentle, incisive questioning and his kindness.

Finally, we would not be so effective if it were not for the work of our staff. I put on record my thanks to our committee assistant Mark Gladwell, our clerk Patrick Milner, his predecessor Aaron Speer and our policy analyst Alistair Dillon, whose encyclopaedic knowledge of the range of work we cover is always truly astonishing.

18:21

[The Earl of Caithness (Con)]

My Lords, I am the new boy to the European Union Committee, having joined it in May, so it is not for me to sing the praises of what the committee does. I will leave that to the words of Maroš Šefcovic, the Commissioner for Inter-Institutional Relations, when he stated in evidence to the committee, quoted at paragraph 1 of our report, that,

“the House of Lords is one of the most active chambers we have in the European Union”.

I wish the other countries did the same as we do. In the same paragraph, we quote the Financial Times describing our reports as,

“the sort of calm, balanced report that ought to inform public debate”.

They do, and I will come on to that in a moment.

I regret being unable to take part in the debate we had yesterday on the euro area crisis, which my chairman on Sub-Committee A, the noble Lord, Lord Harrison, referred to. Like him, I will refer to another piece of work we did, on the financial transaction tax. One of our duties, which is highlighted in paragraph 40, is to hold,

“the UK Government to account for its actions on the European stage”.

When we took evidence, it became clear to the committee that the Government had not been as proactive as we would have liked them to have been. Quite rightly, as we say in paragraph 95,

“we criticised the UK Government for its diffident approach to the FTT, and its reluctance over several months to take seriously our concerns”.

It is quite right that, as committees, we can criticise our Governments. Equally, it is quite right that, as committees, we ought to be able to criticise the Commission too, which we do in paragraph 52:

“We were disappointed that the Commission’s responses have been uneven in quality and have not always engaged the substance of the political dialogue”.

I hope that is noted in Brussels, because it is important that this is a two-way exercise. I want to major a little on that and take a personal perspective.

When I was on Sub-Committee D, which the noble Baroness, Lady Scott of Needham Market, who has just spoken, now chairs, it had just finished a report on the common fisheries policy. That work was so good and so highly regarded that it influenced a major part of the Commission’s thinking on the common fisheries policy. As a result, the laws have been changed. We took a proactive, reasoned approach. We took exactly the same proactive, reasoned approach when it came to reform of the common agricultural policy. Alas, the Commission did not follow that, and there has been no reform of the common agricultural policy.

I think it is worth pausing for a moment to think of the huge share of EU resources that the common agricultural policy takes up, despite the small reduction in the budget that has been achieved. If we could have reduced the common agricultural policy budget, how much more could we have done for important things such as growth and youth unemployment, which is more than 50% in Spain and Greece, that cannot be tackled because of this large common agricultural policy budget? That is a problem in Europe, one that Mr Juncker has to face and get a grip on if the EU is going fulfil its potential.

We also took evidence from Sir Jon Cunliffe. He gave us very wise advice. He told Sub-Committee A that we should have contacts with the euro group, ensure its meetings took place in the context of other EU meetings and be ready to offer technical advice without lecturing or providing unwanted counsel. That was very wise advice. We must not stand and berate Europe; we must participate fully in the negotiations, as the noble Lord, Lord Harrison, said earlier. Again, that is a two-way street. I was deeply saddened by what the President-elect of the European Commission said in his five points. His fifth point was that it is one of his priorities to solve the British problem. There is no British problem; there is an EU problem of which Britain is part. We take evidence around Europe because we are a proactive member of the EU. My concern is that if the impression is given that we are a problem, we might not get the quality of evidence that we have had before, and if we do not have the quality of evidence that we have had to date our reports will not be as good as they have been to date, and that would be detrimental not just to the UK but to the whole of Europe. Therefore, I regret his remarks. I hope that they are not taken in the wrong way.

This is something that we should be able to solve together. We have a very busy schedule—my noble friend Lord Tugendhat said that we have a condensed Session—so we have to do a lot of work in a short time. We are hugely privileged to be part of an EU Committee at this time of our history. We are in a moment of intense change and challenge. How lucky we are to be part of it. How lucky we are to be able to write reports that other people read. Like other noble Lords, I thank our staff for all their help because without them we could not do it.

18:24

[Lord Hannay of Chiswick (CB)]

My Lords, annual reports such as the one we are debating today are all too easily dismissed as routine matters going over familiar ground. In this case at least, that would be a considerable error because the report we are considering reveals that your Lordships’ EU Select Committee has been breaking some interesting new ground, and has produced a report on the role of national parliaments in the shaping of EU policies and legislation which addresses an issue of major topical concern right across Europe and provides elements for reform that could be of real value in months and years ahead.

I begin by paying tribute to our chair, the noble Lord, Lord Boswell of Aynho, whose patient and perceptive leadership contributed so much to the work of the committee in the period we are discussing, and to my former colleagues on the committee, from which I stood down in May.

I shall say a short word about the new ground. We have all become aware through our work on EU issues that too often the valuable scrutiny work of national parliaments comes too late to have much influence on the final outcome. Too frequently, the proposals on which we comment are pretty well set in concrete by the time our views are known. To be fair to the Commission—not an entirely fashionable thing to be on this side of the channel—it has been saying for some time that it wishes that national parliaments would intervene more upstream of it making formal proposals. Vice-President Šefcovic said that to COSAC last autumn. We agree and we have begun to do that, for example, in a report that my sub-committee produced on the strategic objectives for justice and home affairs, which we debated on 22 July to reasonably good effect, since the decisions reached by the European Council on 27 June bore a striking resemblance to the recommendations that we made. Another example of new ground being broken is instances where we question whether the European Union is taking seriously a really important Europe-wide challenge. In this case, I refer to the report on food waste, which the noble Baroness, Lady Scott, produced and to which she referred. Let us hope that all EU institutions will study that report with care and will draw some conclusions on how best to reduce that shameful waste.

I want to concentrate most of my remarks today on our report on the role of national parliaments, an issue that I am glad to say figured on the strategic agenda for the European Union’s next five years, which was adopted by the European Council on 27 June. It said that the credibility of the Union will benefit from greater involvement of national parliaments. That is precisely what we said in our report. Now they need to get down to it and do it. Our report contains a large menu of possible reforms to that effect, which would not require the complexities and pitfalls of treaty change. I will discuss a few examples.

First, there is the yellow card system, under which national parliaments can submit reasoned opinions that argue that a Commission proposal has not met the subsidiarity criteria in the treaty. That is clearly not working as well as it should. It is not hard to see why. The eight weeks provided for the submission of reasoned opinions is grossly inadequate—neither the Commission, the Parliament, nor the Council operates within such a short timeframe. Why on earth, then, do they think that national parliaments can and should? One of our suggestions is that the Commission should change the time limit to 12 or 16 weeks. That would enable national parliaments to consult each other and concert their views, which is virtually impossible under the present eight-week cut-off.

Secondly, there is clear evidence that the outgoing Commission has not been treating the yellow card procedure with respect and seriousness. The first time the yellow card was triggered over the Monti II proposal, the Commission withdrew its proposal but explicitly went out of its way to say that it was not doing so because the yellow card had been invoked. The second time it was triggered, over the proposed European Public Prosecutor’s Office, it resubmitted its proposal within three weeks, unchanged, and did not explain why it was doing so to the national parliaments, which had introduced reasoned opinions, until several months later. Presumably it took that time to work out why it had done what it had done within three weeks—not, frankly, a good way to handle things. It simply will not do. The new Commission, when it takes office in November, should make it clear that when a yellow card is triggered it will either withdraw the proposal or amend it substantially.

Thirdly, the Commission should make clear that it will, in future, accept that reasoned opinions can address the issue of the treaty-based principle of proportionality as well as the arguments about subsidiarity. The current distinction between the treatment of these two criteria is neither logical nor defensible.

There are plenty of other ideas in the menu we set out in our report on national parliaments: the possibility for national parliaments to initiate proposals—the so-called green card; ways in which COSAC could help national parliaments strengthen their scrutiny of draft EU legislation while respecting every parliament’s different procedures based on constitutional differences in each member state; the strengthening of links between national parliaments and the committees of the European Parliament, which often simultaneously consider the same Commission proposals; and the need for the new Commission to engage closely with national parliaments and be ready to give evidence to them.

The Government have certainly not hastened to respond to this report. They overran the two-month limit several times and were in fact two additional months behind earlier this week when they finally produced their response. Clearly, they did not find it easy to make up their mind. However, this issue of the role of national parliaments is a crucial part of the positive reform agenda which the EU as a whole needs to grasp and press forward. Perhaps the Minister when he replies to this debate will be able to throw some light on the Government’s thinking and how they intend to carry the matter forward. In any case, we will in due course be able to debate the matter fully on the basis of the EU Select Committee’s report on national parliaments and the Government’s somewhat belated response.

This evening, I will make only one remark about the Government’s response, which can perhaps be regarded as a taster for the full debate to come. In their introductory response, the Government stated flatly that,

“the real source of democratic legitimacy in the EU lies with national parliaments and national governments”.

Throwing down the gauntlet to the European Parliament in this way is tactically crass and strategically wrong. How on earth can one say that a parliament elected by universal suffrage is not a—I do not suggest it is “the”—real source of democratic legitimacy? Your Lordships’ Select Committee made no such claim. Indeed, we made it clear that in our view national parliaments and the European Parliament shared the task of shaping EU legislation. If the Government wish to ensure that any proposals they make for strengthening the role of national parliaments are dead on arrival, I can think of no better way of doing that than organising a food fight between national parliaments and the European Parliament. There is, after all, no good argument than cannot be spoiled by exaggeration.

18:37

[Baroness Hooper (Con)]

My Lords, as another new member of the European Union Committee, I have listened with interest to the contributions to this debate, in particular to that of the other new boy, my noble friend Lord Caithness. After all, it is necessary not only to hold the Government and European Union institutions to account, but to account for our own work. This annual report—and the debate—do that very well.

Although I may be new to the main EU Committee, I previously served as a member of Sub-Committee A and now enjoy all the work on Sub-Committee B. I well remember, too, as a Member of the first directly elected European Parliament way back in the early 1980s, that House of Lords reports were—even then—referred to and quoted. That was done not just by British Members but by German, Italian and French Members, too, in spite of the fact that the reports are not—as far as I am aware—translated into any other language.

[Lord Boswell of Aynho]

We do consider in the Select Committee—there will be occasions when we are producing another report—whether to make translations available. If it is appropriate, we do not close our mind to doing so.

[Baroness Hooper]

I was not aware of that. The fact that the House of Lords European Union Committee reports are so widely respected and referred to is due to their being well researched and clearly written. Although I struggled at times with the technicalities and detail of financial and banking regulation when I served on EU Sub-Committee A under the noble Lord, Lord Harrison, the reports, when published, made it all comprehensible. We are fortunate in having excellent and high-calibre staff, and their work contributes to that as well.

I recently attended a meeting of COSAC, to which the noble Lord, Lord Boswell, referred at the outset. That, together with the committee’s report on the role of national parliaments, has confirmed my view that to understand the thinking behind a number of the proposals that come out of Brussels and the procedures that they advocate, it is necessary for us all to understand each other’s systems and procedures. It is not only the fact that a common-law approach to legislation is different from the civil law approach, which applies in most other EU countries; it is that here in the UK, in our parliamentary democracy, we are used to the Prime Minister and all Ministers being Members of Parliament and therefore immediately and regularly accountable to Parliament. That is different from a presidential system where the President and his appointed Ministers may rarely attend their parliament, assemblée or congress.

The European Parliament is based more on the presidential system, with the Council of Ministers taking the role of President, than on ours. I fear that many commentators and press reports do not understand that or take it into account. It is therefore necessary to have regular contact and communication between members of national parliaments so that we are aware of those differences and can find a way to make progress in spite of them. Parliaments are, after all, ever-changing bodies and so those contacts must be kept up to renew and update the message regularly.

Having said that, it is of the utmost importance to understand and maintain contact with the European Parliament itself, particularly with British MEPs, again so that we realise why they go about things in a different way. That is especially important at this moment in the aftermath of the European elections and the appointment of a new Commission. We need to work with them to achieve the best possible results not only for our own population but for the whole of Europe.

That is my message for today. I am delighted to add my thanks and congratulations to the noble Lord, Lord Boswell, as chairman of the Select Committee, and support his Motion.

18:43

[Baroness Valentine (CB)]

My Lords, before I begin, I declare that I am chief executive of London First, a not-for-profit business membership organisation.

I congratulate the noble Lord, Lord Boswell, on securing the debate. I am pleased to serve as a member of Lords EU Select Committee Sub-Committee B. We are tasked with investigating matters relating to the internal market, infrastructure and employment—three areas of critical importance to our future competitiveness. I want to reflect on those issues in relation to the EU, and particularly on the committee’s recent investigation into youth unemployment.

We are not here today to debate the UK’s membership of the EU. That question will undoubtedly continue to exercise the Chamber for many years to come. However, it is worth reflecting on the opportunities that membership provides. It provides access to the largest economic bloc in the world. The GDP of the EU is worth around $18 trillion compared with the US economy of $16 trillion, and is more than twice the size of China’s $8 trillion. Particularly in services, where the UK is exceptionally strong, there is a further upside to come from completion of the single market. It is estimated that the completion of the digital market alone would provide a 4% uplift to European GDP.

British citizens have the freedom to work in other European countries—from a student working as a barista in Barcelona to a financial analyst working in Frankfurt. Of course, this freedom of movement works in both directions. The quid pro quo is that citizens across the EU can work in the UK. While this adds to the pool of talent available to make our companies more competitive, it also provides a challenge to those with lower skills. But from a pan-European perspective, the fact that people can move around to look for jobs is healthy both economically and for the individuals concerned.

Our report identified large parts of Europe that face chronic and persistent levels of youth unemployment. In Greece, almost 60% of people aged 15-24 are unemployed; in Spain the figure is 54% and in Cyprus 40.4%. In the UK, youth unemployment is lower but, at around 22%, is still more than double the rate recorded in Germany and the Netherlands.

Behind those statistics lie human stories of wasted talent, unfulfilled potential and fear for the future. The impacts of such endemic unemployment cannot be underestimated. At worst, it can fuel social unrest and, at the least, young people across the continent risk missing out on the psychological and economic benefits of being in work, learning new skills and being independent. As George Orwell wrote, unemployment for humans is the equivalent of shackling a dog to a chain. I have as much sympathy for the unemployed in Athens as I do for those in London. The solution for the UK is not to put up barriers but to improve skills and education provision.

Are there ways that Europe can work more effectively to help us get young people into work? I believe there are. First, Europe can provide robust analysis of effective interventions across the Union. The UK should learn from best practice in other member states and not arrogantly dismiss ideas and methods that work elsewhere on the continent. One such example is the UK’s refusal to follow the majority of member states in introducing a youth guarantee, with funding provided by the European Social Fund. This would require the British Government to ensure that all young people find suitable work, training or further education opportunities within four months of being unemployed. At the very least, the Government should pilot the guarantee in areas most blighted by youth unemployment and measure its success.

Secondly, the UK should learn from the approach to training in the very best EU countries. I am told by those who follow sporting matters that the German football team has been the toast of Europe this summer, while England were found wanting. The German success reflects a wider facet of their culture; in particular, a serious, long-term approach to training. Indeed, its dual system of vocational education and training has been a major factor in Germany’s economic success and low levels of youth unemployment.

Vocational training is a term that still carries stigma in Britain. We tend to look down our noses at people who work with their hands. But other European countries —Germany and the Netherlands in particular—have reaped substantial rewards from building a partnership between business and government that links study and practical experience. Put simply, the UK needs to upskill its own learning skills.

18:48

[Lord Bowness (Con)]

My Lords, I thank the noble Lord, Lord Boswell of Aynho, for his introduction of this report and for his chairmanship during the year in question, when I was still a member of the Select Committee. I am very pleased not to have severed all connections and to have the pleasure of serving on Sub-Committee D under the chairmanship of the noble Baroness, Lady Scott of Needham Market.

I will begin by making two points, which I suspect ought to be addressed to the mysterious usual channels, not the Minister. When the Select Committee first decided that its annual report should be put down for debate and not merely published, it was hoped that the debate would provide the focus and opportunity for a wide debate on European Union matters, to be answered by Ministers as well as providing a window on the activities of the committee itself. While we have had a full and wide-ranging debate with many valuable contributions from all the noble Lords who have spoken before me, the graveyard slot of a hot summer Thursday in July is not conducive to drawing in a wider range of Members other than members of the EU Committee and its sub-committees. I am sure that there are difficulties in timetabling, but given the breadth of subjects covered in the report, which shows just how much European Union matters are in fact part of mainstream politics, in future a means should be found of getting a better and more substantial billing for this annual report, which it deserves. Moreover, if I may say so as a coda to that comment, so do the Select Committee reports which are offered similar slots despite the time and work that has gone into them and the public interest expressed.

The chairmanships of the noble Lords, Lord Tordoff, Lord Grenfell and Lord Roper, and now the noble Lord, Lord Boswell, have indeed ensured the enviable status which the committee enjoys, if not in this House then across the European Union and other national parliaments. This is because of the leadership shown by our successive chairmen and the thoroughness and objectivity of the reports, which in turn owe something to the expertise brought to bear on the subjects by Members who have been involved with European Union affairs through the medium of the Select Committee and its sub-committees. My noble friend Lady Scott of Needham Market has already referred to the changes which have been made to the rules on sub-committee membership. I will say no more than this. Even if it was right to limit membership to three Sessions with no return for two, the retrospective element and the decision to treat the European Union Select Committee and its sub-committees as one is a matter that the usual channels—because undoubtedly they control these matters whatever the formalities of the decision-making process—should revisit urgently and quickly if value and expertise are not to be decimated.

The report looks forward as well as looking back, and one of the important activities of the committee will continue to be the sessions held with the ambassador of the incoming presidency and with the Minister for Europe. I suggest that that is an opportunity where the committee, on behalf of the whole House, is able not just to react to Government and the European Union, but to press for action in particular areas. Perhaps I may outline three of the areas which I would like to mention.

The first is that enlargement to include the states of the western Balkans—I was told at the OSCE Parliamentary Assembly meeting that south-eastern Europe is how they prefer to be referred to—must be kept high on the agenda. We should be applying our efforts to resolve the Macedonia situation, to advance its candidature, and to ensure that the normalisation of relations between Serbia and Kosovo continues. We need to confirm our continued enthusiasm for eventual membership of these countries and the others of that area. I would say to the Minister that we should not link the enlargement agenda with our own possible attempts by the United Kingdom to renegotiate its place in Europe, as initially we tried to do with Albania, and our doubts about freedom of movement. If we do that we will undoubtedly create uncertainty in those countries about our true intentions, and once that happens, the reforms will falter and the countries will start to look elsewhere.

Membership for none of these states is an immediate prospect, but the steady advance in that direction should not be stopped, and the growth of substantial Russian investment in the region, reported to be some €5 billion over five years in Serbia alone—a candidate country—should in itself be sufficient motive to ensure that we put our efforts behind maintaining the European direction of travel. These countries will have an added importance given the routes of proposed schemes such as the trans-Adriatic pipeline, which would help to reduce member states’ dependence on Russia. Reliance on Russian energy and that policy should have a priority in the present circumstances. The United Kingdom should be prepared to lead in that respect and not just leave it to others, because we have only a limited dependence on Russia for our energy.

The events of this year have emphasised the desirability of the European Union acting together in matters of defence and foreign policy, and underlined the folly expressed by some recently of taking peace and prosperity in Europe for granted. This is not the time to seek selective disengagement. The United Kingdom used to be somewhat reluctant to espouse the cause of a united foreign and defence policy, so it has been interesting to see the Prime Minister pressing member states for united and strong action against Russia. However, I believe that we will find the way forward only in discussion and give and take.

All member states have different sensitivities, priorities and concerns. Some will have worries about threats to energy supply. The proceeds of sale of a warship may be as important to France as the benefit we derive from the City of London, which was described in Tuesday’s Times as the “haven for Russian Capital”. If we are to find a united way forward we all have to be prepared to sacrifice something to achieve the common good. I hope, in winding up, the Minister may find it possible to comment on these points.

I return to the report. The European Union Committee has a role to play in questioning and holding the Government to account in their dealings with the European Union, and raising the kinds of issues to which I have referred. If I may say so, the report shows how comprehensively it does this and I am sure that the story in next year’s report will be no different. I support the Motion.

18:57

[Lord Bach (Lab)]

My Lords, I thank the noble Lord, Lord Boswell, for moving this take note debate. Much more than that, though, on behalf of the Opposition I congratulate the noble Lord and all his colleagues on another year’s work well done. The House, the country beyond and the EU as a whole owe a large debt of gratitude to all members of the EU Committee and its sub-committees. It is obvious that a huge amount of works takes place—not least the scrutiny of EU documents every week by the chairman and the committee’s legal adviser—all of which is to improve our understanding of the European Union and, in particular, of the Commission. Whether it is scrutiny, inquiries, holding Her Majesty’s Government to account, or any other of its myriad responsibilities, the committee and its sub-committees are rightly praised at home and abroad.

I have little to ask the noble Lord, Lord Boswell, about the year covered in the report. The important points have been mentioned by other noble Lords very clearly and with great expertise during the debate. What particularly interested me was paragraph 122 in chapter 5 on the rights of EU migrant workers. What the noble Baroness, Lady O’Cathain, had to say was extremely helpful here, as her sub-committee debated this issue. Paragraph 125 of the report explains that the Government’s report on abuse of free movement rights was shared with the sub-committee in January 2014. My simple question is: is it possible for others to see the report that the Government shared with the sub-committee? It would make interesting reading for some of us who are interested in this subject. The noble Baroness referred to the balances of competences initiative and said that it was just the other day that the sub-committee received the Government’s review. That is a long way after September 2013 and January 2014, and I wonder what explained the delay. It may be that the Lord chairman—the noble Lord, Lord Boswell—can assist me when he comes to reply. Maybe even the Minister can, too—in fact, I feel certain that he can from the grin on his face.

The youth employment inquiry under the chairmanship of the noble Baroness is of huge interest, too. I get the impression that the sub-committee was not entirely happy with the Government’s response to that inquiry. What I do not know, and perhaps should, is whether the Government have yet formally replied to the inquiry and, if so, what they have said about the sub-committee’s criticisms.

Let me move forward from last year to the coming year and chapter 10, looking ahead to the 2014-15 session. At paragraph 225, the report states that there was to be a pre-Council evidence session with the Minister for Europe ahead of the vital June European Council meetings. I believe that the meeting took place. I wonder whether in his response the noble Lord, Lord Boswell, will tell us how it went. Noble Lords will remember that, before 2010, the House of Commons used to have the opportunity to debate upcoming European Council meetings; in other words—just to make position clear—before they took place. That system was scrapped by the coalition Government shortly after they took office. Will the Minister remind us why those debates were scrapped? This all contrasts very badly with the Dutch approach, where Ministers appear before the relevant Select Committees in advance of European Council meetings. My question to both the noble Lord, Lord Boswell, and the Minister is whether such a system—that is, that of June 2014, where a Minister comes before the committee before the Council meeting—will become the norm again in the United Kingdom. My party’s intention, if it is to win the general election, will be to reinstate House of Commons debates pre European Council meetings and we will consult on the creation of a dedicated EU Select Committee in another place.

I support my noble friend Lord Harrison in the important question for the Minister that he asked at the end of his speech.

My final question is more for the Minister than for the noble Lord, Lord Boswell—and I have given the Minister some notice of it. Is it the intention of Her Majesty’s Government to allow either your Lordships’ Committee on the European Union or its Commons equivalent, or perhaps both, to scrutinise the appointment of our new European Commissioner, the noble Lord, Lord Hill? This would mean a formal hearing, with the noble Lord present to answer questions, but, of course, it would not be a confirmation hearing.

The appointment of the noble Lord, Lord Hill, is popular in your Lordships’ House for very good reasons, not least our admiration for his many qualities. However, if we really believe in an increased role for the British Parliament in scrutinising the Government’s handling of European affairs—there has been some talk of that this afternoon, not least from the noble Lords, Lord Hannay and Lord Boswell—surely the Government should agree with members of the House of Commons EU Scrutiny Committee and accept its proposal for such a hearing in this case.

The noble Lord, Lord Hill, will, of course, be before the European Parliament between 20 and 23 September this year. As I understand it, by or on 30 August the European Council will have recommended the new Commissioners for the top posts. I put to the Minister that there is an unanswerable case for our own Parliament to be able to question the noble Lord before he goes before the European Parliament. I look forward to his reply on that important point. I, of course, would like to hear the view of the noble Lord, Lord Boswell, on this but my question is specifically for the Minister in his reply. I really hope he can be encouraging in his answer.

To finish, on behalf of all of us I once again congratulate the noble Lord, Lord Boswell, and his colleagues—those in the House tonight and all the other Members who served on the committee and the sub-committees—on their hard work. They enhance the reputation of this House and deserve our thanks.

19:06

[Lord Wallace of Saltaire (LD)]

My Lords, I think this is the third time we have had an annual debate on the work of this extremely important committee. I regret that we are very much at the last hour of a Thursday evening and keeping the staff here, and that we are rather thinly staffed on the Benches at the moment, because this is an extremely important committee. When the noble Lord, Lord Boswell, introduced this debate I thought about how long this committee has gone on and how closely many of us have been involved with it. When I first became a Member of this House, the then Clerk of the Parliaments, Michael Wheeler-Booth, enjoyed entertaining people in front of me by saying that when he was the first clerk to the committee one of its first witnesses was a rather nervous young woman academic. He gave her a double gin and tonic before she gave evidence to the committee to steady her nerves. The young academic was Helen Wallace, my wife.

Shortly after I joined the House, I was posted to Sub-Committee F and, because the chair resigned unexpectedly, I became its chair. I had an experienced clerk to train me and then found myself with an entirely newly appointed and totally inexperienced clerk called Christopher Johnson, whom I was expected to train. I think he has done quite well since then and I hope the committee is happy with the highly experienced clerk he now is.

We all need calm and reasoned debate on matters European and we all realise how enormously difficult it is amid the cacophony of ignorant prejudice all around us to hold to a highly reasoned and calm debate, often on highly technical issues, set out in highly technical language which, nevertheless, can touch on major UK interests and dilemmas. As some noble Lords may know, I have been involved very closely in the balance of competences reports. I hope noble Lords have followed these with increasing confidence because we have attempted to see them very much as a parallel process of evidence-based consideration of British interests in European co-operation and of how far the current balance of competences suits British economic, social and political bodies engaged with European policy.

I say to the noble Lord, Lord Bach, that the reason some reports have only just been given to the committee is that the third round of this four-round exercise was completed only some weeks ago, and the 11 reports were published on Tuesday of this week. These included the delayed report on the free movement of persons and the single market report on financial services and capital, which was mentioned in last evening’s debate and provides a high-quality analysis of some of those complicated issues.

The fourth round is now in process. We hope to complete that before the end of the year. It will include a report on subsidiarity and proportionality, a matter of active interest to the noble Lord, Lord Hannay, among others. The fourth round has only seven papers, but because they are on complicated, cross-cutting issues, these will be some of the most difficult. I hope that this will all feed back into the work of your Lordships’ European Union Committee.

There is another report coming up on enlargement. The noble Lord, Lord Bowness, touched on how complex and delicate a subject that has now become. There is another on citizenship, voting and the related issues of individual rights within the European Union.

In the process of negotiating the balance of competences papers through three rounds now, I have discovered how much overlap and interaction there is between UK engagement with the European Union and with other multilateral organisations through which the UK pursues and negotiates its economic security, regulatory and political interests: the OECD, the OSCE, the WHO—within which the EU operates as a regional body for certain purposes, which I did not know until I read the balance of competences health report—the IMF, the Bank for International Settlements, the Food and Agriculture Organization and so on. There is a case for this House to consider in the new Parliament whether it should not at least experiment with one or two more committee inquiries that will look at how the UK works through other technical and specialised international organisations.

The need for calm and reasoned debate, particularly on questions such as Russia and Europe, came home to me as I picked up my Daily Mail this morning and saw the full-page article by Stephen Glover which explains that it is the EU’s fault that the Dutch aircraft was shot down over eastern Ukraine. One need not go through the various stages through which he demonstrates that it is entirely the EU’s fault. There is no mention of the pressure from within Ukraine itself for closer relations with the European Union. In December 1991, I spoke at a conference in Kiev, when Ukraine had been independent for three weeks, at which the Prime Minister announced that among the two strategic aims of the state’s foreign policy was to join the EU within three years. I was then asked to explain why that might be a little more difficult than he expected. There was no mention in the article of the Bush Administration’s encouragement of Ukraine and other states to join NATO—“No, it is the European Union’s fault. President Putin is a splendid man and everything that is wrong with the country is the fault of those dreadful people in Brussels”. That means that we absolutely need detailed arguments demonstrating where British interests are better pursued at an EU level or better pursued at the national level, and thus to unpick, one by one, some of the arguments that are produced in the other direction.

The noble Lord, Lord Harrison, asked me a specific point about whether the Government had been invited to engage with the euro group and whether we have declined or not. I do not know the answer to that. I will draw it to the attention of my Treasury colleagues and promise that we will respond to the committee as soon as we can.

The noble Lord, Lord Bach touched on the extent to which the Foreign Office co-operates with the committee. As a Foreign Office Minister, I am impressed by the quality of FCO officials working on European issues, the balance of competences and a number of other areas. We are keen to co-operate as far as possible with the committee; that, of course, is part of the strategy of wanting to strengthen the role of national parliaments. Mr Lidington appearing before the committee before the June Council was seen as an experiment, but it is certainly something that we might well take further.

I would merely mention, in terms of what I understand are the Labour Party’s intentions for the other place, that the Commons European Scrutiny Committee proposals—to which the Government have now also responded—suggest that it would be more useful in the other place for departmental Select Committees to become more directly engaged with European issues themselves, rolling the European dimension in with the regular spread of sectoral policy in the United Kingdom.

Extending the role of national parliaments is one of the targets of the coalition Government’s EU reform agenda, which requires active engagement with the Brussels institutions and other national parliaments, with the National Parliament Office, which we maintain in Brussels, and with COSAC. I note the slightly mixed message about COSAC from the noble Lord, Lord Boswell. I am sure that it is much better than when I used to go to COSAC.

We are experimenting with reasoned opinions and yellow cards. Some other parliaments have already produced more reasoned opinions and yellow cards than either of the two Houses of the British Parliament; that is something that we clearly need to take further.

I take the various critical points that the noble Lord, Lord Hannay, made—that there is a shortage of time, which we need to discuss again at the Commission, that there has been resistance from within the Commission to reasoned opinions and that we need to strengthen links also between national parliaments and the new European Parliament, which is an issue to which we must all return.

[Baroness Scott of Needham Market]

Would my noble friend accept that a particular role for government departments in all this is the speed with which Explanatory Memoranda are issued. Certainly on my committee, we have had problems when the clock is ticking on the reasoned opinion taxi meter and we are still waiting for the Government’s Explanatory Memorandum.

[Lord Wallace of Saltaire]

We all understand that that is part of the problem and the pressure, and we are doing our utmost to look at that as well. I also take the point made by the noble Lord, Lord Hannay, that effective scrutiny necessitates the earliest possible engagement with developing areas of policy, looking at work programmes and strategic views.

I am glad that the noble Lord, Lord Boswell, feels that the Government’s scrutiny performance has improved somewhat in the last year. It is one of those things on which we all have to maintain the pressure. Civil servants are always very busy and Ministers always have too many things in their in-tray, but we have to keep up the pressure on all that.

The noble Lord, Lord Bach, asked whether the Government’s evidence on the abuse of free movement rights could be shared with the House. Much of that is in the free movement of persons paper that was published on Tuesday. Having been very closely involved in negotiations over that paper, I might say that the evidence is not always entirely clear; that is part of the problem in discussing questions of free movement of persons and labour and the abuse of free movement rights. That is partly because we do not have exit controls in this country and partly because we do not collect all the central evidence. For example, I questioned at one stage an academic study that suggested that there were 40,000 British citizens receiving benefits in other states in the EU. That is an academic estimate, but nobody is entirely sure whether that is an exact figure. So there are many problems in addressing that very complicated issue.

The noble Earl, Lord Caithness, asked whether the UK had been diffident in its approach to the financial transaction tax. The Government have been very closely engaged with this issue since publication and, indeed, took a case to the European Court of Justice on that issue to raise the question of how far it would be appropriate for the European Union to move on that subject. We remain actively engaged.

The noble Lord, Lord Tugendhat, talked about the Transatlantic Trade and Investment Partnership. That will be a central but extremely difficult issue for the coming year; we know that there will be lobbies not just in France and elsewhere but in this country that will want to raise negative issues about TTIP. That is something that we will clearly have to follow.

May I say, as spokesperson for the Cabinet Office and therefore dealing with a lot of data sharing issues, that I would welcome the European Union Committee looking further at aspects of the digital single market as well as data sharing and data protection? Some months ago, I asked for a briefing within Whitehall on the digital single market and officials from five different departments came to brief me, demonstrating just how complicated an issue it is. After all, this is all one issue in a complex, multi-levelled set of issues for government that is driven by the speed of technological change. I am constantly struck by how much faster technology is taking us down the road to online, cross-border transactions than we previously understood. The digital single market is a major priority in the Government’s drive for EU reform and it is part of the extension of the single market to services, as services and manufacturing intertwine and overlap. It will be a difficult issue also in TTIP, as data regulation, the cloud and the role of the US service providers hit the issue of data protection.

I am conscious of the time. I hope that I have answered most of the issues, but I see that there are one or two questions still to come.

[Lord Hannay of Chiswick]

Before the Minister sits down, I understand why he is in some difficulty in addressing the point that I raised about the claim that national parliaments are “the basis” for real legitimacy in the European Council, not in the European Union, not “a basis” for it. Of course he cannot take back the words that, alas, have been written in the response to the national parliament role report, but we are going to debate it again and I hope that he will report back to his colleagues the dangers they are taking if they turn the question of strengthening the role of national parliaments into a contest with the European Parliament. They will not get anywhere if they do that. It has to be pursued as a matter in which both national parliaments and the European Parliament have a role in assuring the democratic legitimacy.

[Lord Wallace of Saltaire]

I very much take that point. The new European Parliament is a rather more difficult body with which to co-operate than its predecessor, but I think it is extremely important nevertheless that we do co-operate. I am in the middle of making arrangements to go out myself with one or two others in September to talk to new Members of the European Parliament, British and others, with whom, of course, we must co-operate.

[Lord Bach]

I am grateful to the noble Lord. May I remind him of my final question? It was about the position regarding the new Commissioner and the Government’s response to him coming to a hearing at either of the two committees or both.

[Lord Wallace of Saltaire]

My Lords, I apologise; I should of course have responded to that. The Government have no difficulty with the noble Lord, Lord Hill, coming to talk to the committee. I think that they would resist any idea that this should be a formal process through which the committee would decide whether or not it thought he was the appropriate British candidate. However, in pursuance of a close and continuing relationship with the committee, I am sure that he would be entirely open to coming to give evidence and to start what will be a continuing process. One of the sad disadvantages of the noble Baroness, Lady Ashton, being the European Union’s high representative has been that she has, perforce, had to spend much of her time outside Europe. She has therefore not been able to pursue one of the many useful roles of a commissioner from a particular country, which is to spend time maintaining a link between the public and political elite in her own country and the Brussels process. I know that the noble Lord, Lord Hill, is very anxious to make sure that that is seen to be part of his new role.

19:23

[Lord Boswell of Aynho]

My Lords, this has been an excellent debate and I am grateful to my noble friends and colleagues for their contributions and their very friendly personal remarks, which were much appreciated. I am also grateful to the Minister, as he has outed himself as a former chairman of our home affairs sub-committee. We already know where he comes from, but he reflected that in his thoughtful response.

I wish to pick up two points that the Minister made. The first one is in relation to yellow cards. I would not for a moment caricature his line of argument as saying that we ought to have yet another performance table on the number of yellow cards tendered by any particular chamber of the 41 across the European Union, although, of course, COSAC does keep a score of that. However, I can give him the news, if he was not previously aware of it, that we have gone a stage further this week, not formally by actually tendering but by indicating our readiness to tender a red card, in our sense of the word, in relation to what we feel is an inordinate breach of the subsidiarity principle regarding occupational pensions, as referred to by the noble Baroness, Lady O’Cathain. We will, if necessary, see the Commission in court on that matter. Machinery has been devised and there is a Memorandum of Understanding between the various parties but I think that the suit would probably be brought in the name of your Lordships’ House, if it was minded to do so. However, that is ongoing. Of course, the intention is to try to force a further discussion on the matter rather than to take it to court.

The Minister also mentioned the noble Lord, Lord Hill, as did the noble Lord, Lord Bach. Even as we speak, I am, as they say, warming up to sign a letter to the noble Lord, Lord Hill. It will be very much on the basis the Minister indicated. This is not a confirmation hearing—we are not seeking that—but it would be to establish, and then to develop, a continuing relationship. The only gloss I put on that—and it is not purely for the record—is that, of course, all Commissioners have a duty to the European Union and all Commissioners will be very welcome as and when they are available in London or via electronic means. We shall seek to tap into their expertise and interests, as we have done in the recent past with a somewhat uneven result, although in certain cases that was very helpful.

In relation to the comments made by the noble Lord, Lord Bach, on the question of freedom of movement, my weekend reading will comprise looking very carefully at that particular balance of competences review, the articulation of the evidence and the conclusions of that. As a committee, we have sought not to conduct a running commentary on the balance of competences but we look at the details when they are issued and we may well want to take further steps. I also say to the noble Lord, Lord Bach, that we did indeed hold a pre-Council session with the Minister for Europe, David Lidington. I should make it clear to the House that that was an on-the-record public evidence session, as is all our work unless it is specifically to the contrary. It will also have occurred to your Lordships that that took place at a very fraught moment in the Council’s deliberation. Nevertheless, we felt that it was a marked success and it is one that we would seek to repeat on a future occasion. That issue may surface again when the substantive debate takes place on our report on the national parliaments, which is where the recommendation was derived from.

I am very conscious of the lateness of the hour. I add only that we were given a tremendous structure 40 years ago. That has led to a building-up of experience but it does not lead to either complacency or stasis. We will continue to move forward and take new interest in the developing pattern of the European Union and its challenges and we will be ready to serve your Lordships’ House by looking into those when it is appropriate. I do not want to test your Lordships’ patience by prolonging my remarks further. In that spirit, I thank all those who have contributed to the debate.

Motion agreed.

House adjourned at 7.29 pm.