European Union Referendum Bill
(8 years, 6 months ago)
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Lord Kerr of Kinlochard
“Report on the United Kingdom’s future relationship with the European Union in the event of withdrawal from the European Union
(1) The Secretary of State shall report on the relationship with the European Union which the Government envisage in the event of a referendum vote to leave the European Union, and on the acceptability of this arrangement to every European Union member state.
(2) The report provided for by subsection (1) must be published and laid before each House of Parliament, no later than 12 weeks prior to the appointed date of the referendum.”
Lord Kerr of Kinlochard (CB)
Amendment 24 is in my name and those of the noble Baroness, Lady Morgan of Ely, the noble Lord, Lord Tugendhat, and the noble Baroness, Lady Smith of Newnham—a perfectly balanced ticket.
I begin by saying:
“Those campaigning for Britain to leave the EU and choose the Norwegian way can … correctly claim that a country can retain access to the single market from outside the EU”.
But this means also,
“retaining all the EU’s product standards, financial regulations, employment regulations, and substantial contributions to the EU budget. A Britain choosing this track would, in other words, keep paying, it would be ‘run by Brussels’, and … remain committed to the four freedoms, including free movement”,
of persons. It would, however,
“have given up on having a say over EU policies. Like Norway, it would have no vote and no presence when crucial decisions that affect the daily lives of its citizens are made”.
These are not my words but those of Espen Barth Eide, a former Europe Minister in Norway, last week. On his financial point, it is worth noting that the noble Lord, Lord Hannay, correctly pointed out that we are now the ninth largest contributor to the EU budget in per capita terms. The 10th largest is Norway.
If noble Lords do not believe Mr Eide, they might try the Norwegian Conservative Party’s current EU spokesman, Mr Nikolai Astrup. His advice is simple: “If you want to run the EU, stay in; if you want to be run by the EU, feel free to join us in the EEA”.
Lord Forsyth of Drumlean (Con)
Could the noble Lord tell us on how many occasions in the last five years we have expressed a view in opposition to a particular EU policy and on how many occasions we have been defeated in percentage terms?
Lord Kerr of Kinlochard
I am afraid I do not work in the British Government and do not have the statistics to hand. However, it is the case that a large member state such as the United Kingdom, with a voting weight proportionate to its population, has a considerable say in EU legislation. An EEA but non-EU member state, such as Norway, has none whatever.
Lord Hamilton of Epsom (Con)
Can the noble Lord explain the free trade treaty between the EU and South Korea? Does it bind South Korea to following all EU legislation?
Lord Kerr of Kinlochard
I had assumed that the principal interest of the noble Lord, Lord Hamilton, was making sure that we managed, as some sort of country member or associate, to remain within the single market. The Koreans have no such rights. They have a very good free trade agreement, which is greatly in the UK’s interest, and has produced a considerable increase in UK exports to South Korea.
There is no doubt that the UK could secure a free trade agreement with the EU. That is not an issue. But if we want access to the single market, we need more than a free trade agreement. That is why the Norwegians are in what is known as EFTA and the EEA and why they are complaining about their relations with the EU.
The noble Lord, Lord Forsyth, told us that nobody in Norway wants to join the EU. Actually, the entire Norwegian establishment would like to join the EU but has not, as yet, managed to persuade the Norwegian public of that.
Lord Forsyth of Drumlean
It sounds just like us. I have read in a newspaper—so it may be wrong—that on the last 77 occasions when Britain has sought to amend a provision that it did not like, it has been defeated. Is the noble Lord aware of that? If that is the case, I question whether, by being in the room, we have influence. We have influence only if we are able to persuade the room. We seem to be singularly unable to do so.
Lord Kerr of Kinlochard
I hope I may leave it to the Minister to deal with the allegation that on the last 77 occasions when we have expressed views and wished to change a piece of legislation we have been overruled. I would be completely astonished if there was any truth in that statement.
Lord Wallace of Saltaire (LD)
I may be able to help. Part of popular opposition to the European Union, particularly in northern Norway, is the belief that it is a Catholic outfit and all part of a Catholic conspiracy. This was the case with much of the anti-European Union efforts when we first applied, but it is slightly below the surface now in Britain and rather more on the surface in Norway.
Lord Kerr of Kinlochard
I do not think I will follow the noble Lord, although I am grateful to him. The Norwegians are not happy with their relationship with the European Union, and no wonder their Prime Minister told us last week that it would not do for us. I entirely agree with him. Before the electorate are asked to decide whether we should leave the Union, they clearly need to know where we would land if we did, what new relationship with the rest of Europe the Government envisage and how certain they are that it would be obtainable—hence my amendment.
If it is not the Norwegian model, what is it? The Swiss model is clearly worse from our point of view and probably not on offer. The Swiss have individual, sectoral and bilateral agreements with the EU. However, they do not extend to services, our major export, and would take many years to negotiate. Both sides—the EU and Switzerland—agree that the arrangement is unsatisfactory, complex and unwieldy.
Lord Stoddart of Swindon (Ind Lab)
Why do the noble Lord and other people keep referring to the “Swiss model” or the “Norway model”? They are not relevant to this country. What we want is a British model. We are of the size and the importance, including the historic importance, to be quite different from, and to negotiate a much better agreement than, either of those two small—but highly successful—countries.
Lord Kerr of Kinlochard
I must ask the noble Lord not to be carried away by the impetuosity of youth. I will come to his point in a moment. The Council, with the UK concurring, agreed 18 months ago that the relationship with Switzerland should be put on a new institutional basis and be overseen by the Commission under the judicial control of the European Court of Justice—although there would not be a Swiss Commissioner or a Swiss judge in the European Court of Justice. That would be a more onerous regime and even less satisfactory to us than the arrangement agreed 20 years ago for Norway, Iceland and Liechtenstein. One could look at the Turkish model, but there you have no access to the single market at all. There is a customs union, but that means that Turkey has to apply EU customs tariffs against third countries and has no say in setting them. The Turks find the relationship highly unsatisfactory; it would be doubly unsatisfactory for us.
A free trade agreement or an association agreement between the United Kingdom and the EU would certainly be possible, and there are plenty of precedents for it. I do not think it would be particularly difficult to negotiate, so I am with the noble Lord, Lord Hamilton, to that extent, but it would not provide the access to the single market that I thought was the object of the exercise from our point of view. Let us bow to the noble Lord, Lord Stoddart, on this: if the EU were to decide that it needed to make an exception for us—I do not think it would, as so many would want to follow suit if it did—and gave us what we sought, its price would undoubtedly be our agreement to follow its labour market rules, health and safety rules, product standards, consumer protection laws and technical specifications. It will not agree that our goods should freely circulate in its single market if they do not meet EU standards. That is not an unreasonable position, and that is the one the EU would take. We would of course have lost our say in the setting of these standards.
Lord Hamilton of Epsom
Assuming the United Kingdom decides to leave, Europe will surely be somewhat concentrating its mind in these negotiations on the fact that it sells one and a half times as much to us as we do to it. The idea of it having some kind of stand-off with the United Kingdom and it saying, “We’re not going to trade with you at all” is almost unthinkable bearing in mind the astronomical levels of unemployment, particularly youth unemployment, in the EU at the moment.
Lord Kerr of Kinlochard
The impetuosity of youth is spreading all around the Chamber. The point will be addressed in a second.
If we had no structured relationship with the EU and operated purely as WTO members, the damage to our exports and inward investment would come more quickly, since UK exports to the EU would become subject to EU tariffs straightaway—10% on cars, 15% on food products and so on. We would also lose the benefit of the EU’s 200 or so trade agreements with third countries and regional groupings and we would need to negotiate our own.
Maybe there is too much Nordic gloom and doom in my analysis. Maybe the noble Lords, Lord Forsyth and Lord Stoddart, are correct. Certainly, that great Scottish economist, Peter McKay, writing in today’s Daily Mail, finds my analysis defeatist, but it is possible that the Norwegians know what they are talking about. Maybe we could, to address directly the point of the noble Lord, Lord Stoddart, secure a new sui generis deal more generous than any that the EU currently has with anybody. Maybe we could forget all these models and establish the new Union Jack model. It is true, as the noble Lord, Lord Hamilton, says, that we would have some cards in our hand. Some 6% of exports from the rest of the EU come to us and we could threaten to cut them off, so pleasing Mr McKay in the Daily Mail, if not the British consumer. However, we need to face facts—four facts. First, 6% of their exports come to us—3% if one excludes the Netherlands, Germany and Ireland—but nearly 50% of ours go to them. In a protectionist showdown, we would be shooting uphill. They would be facing a blip; we would be fighting for our lives.
Lord Hamilton of Epsom
The noble Lord talks about a blip. We are talking about 4.5 million Europeans losing their jobs, on top of the astronomically high levels of unemployment they have now. If that is a blip, I am very glad that the noble Lord does not advise me on economics.
Lord Kerr of Kinlochard
I do not recognise the figure of 4.5 million. Maybe the noble Lord is assuming that exports that did not come to Britain, because we erected a protectionist barrier against them, would not go somewhere else in the world. It is a static analysis.
Lord Stoddart of Swindon
The noble Lord mentioned that we export 50% to the EU. That is a figure I have not heard before. It is usually 40%. Can he confirm the 50%?
Lord Kerr of Kinlochard
No, I cannot confirm it. I think I said nearly 50%; that is what I understand. It is over 40%; I think it is nearly 50%, but the noble Lord may be right.
Secondly, half the trade surplus of the EU with us is accounted for by the Netherlands and Germany. Among the other 25 member states, a considerable number run a trade deficit with us. They might be less generous in the sort of showdown—dreadful thought—that I am talking about. Their withers might not wrung quite so much by Mr Peter McKay’s threats.
Thirdly, it would be the Commission across the table from us, because what we would be negotiating—if, under Article 50, the withdrawal clause of the treaty, we were negotiating our withdrawal—would be a treaty not between us and the other member states but between us and the EU. The Commission would, I think—it has always said so—attach particular importance to retaining the EU’s decision-taking autonomy, if only to prevent Norway and all the other neighbours, all unhappy with their present, subordinate status, seeking to secure the seat at the table which we would be seeking.
Fourthly, the procedures under Article 50, paragraph 2, become highly relevant. The Commission would need to secure a qualified majority in the Council for any deal that it struck with us. We of course would have no vote. It would also need the approval of the European Parliament and the Commission would be operating on the basis of guidelines laid down by the European Council, which would operate by unanimity. Yes, we would have friends and advocates, and yes, there would be bits of German industry that in practice would be lobbying on our side in this debate, but everyone would have to be on board, and unanimity in the European Council is what we would need to secure. That is why my amendment asks the Government to report to the electorate before the referendum, not just on what form of relationship they would envisage between us if we left, and the EU that we had left, but on its acceptability to every remaining member state. I beg to move.
Baroness Smith of Newnham (LD)
My Lords, I very much support the amendment in the name of the noble Lord, Lord Kerr. It is important that we think about the implications for the UK of its relations with the EU, should there be a vote to leave it. Before dinner, we heard of concerns about fear and claims that the pro-Europeans wanted to talk about withdrawal and its dangers only because we wanted to whip up fear. There is a danger that comes from Eurosceptics such as Dan Hannan, who says, “You pro-Europeans invent things. We don’t want to be Norway”. That is certainly something that was suggested in your Lordships’ House at Second Reading. The noble Lord, Lord Stoddart of Swindon, has already suggested today that the UK does not want to have a Norwegian model or a Swiss model; it would like its own model. In order for the citizens of the UK, and anyone else who may be enfranchised in the forthcoming referendum, to understand the implications of what they are doing in the vote, it is important that they have an understanding, and that the Government make clear, what the implications of leaving would be for our relationship with the EU.
The noble Lord, Lord Hamilton, intervened earlier on my noble friend Lord Wallace of Saltaire to ask whether arrangements could not just carry on as they are if the UK were to leave the EU. That strikes me as a very strange sort of club. If you say to your golf club, “I’m not going to pay my dues any more; I no longer want to be a member of this club”, it is not going to say, “That’s fine, you can come and play golf again on Sunday”.
Lord Hamilton of Epsom
We were actually talking about the arrest warrant and the legal arrangements that we have. There seems to be no reason why those should not be negotiated to continue as they were before.
Baroness Smith of Newnham
I thank the noble Lord for his comment. It would indeed be perfectly possible to negotiate a whole range of things associated with access to the internal market, the European arrest warrant and many other aspects of the relationship that the UK currently has with our European partners. However, we would need to consider, and the Government would need to be able to explain, in what areas they would envisage having relationships with the EU.
The idea that things could just carry on as before, as was suggested in a previous group of amendments, is rather complacent. Legislation that the UK has on its statute books would certainly persist, and on day one it might look very similar, but with regard to access to markets there is no reason whatever to assume that the EU 27—particularly acting by unanimity on Article 50, which the noble Lord, Lord Kerr, has just referred to—would simply say, “The United Kingdom is so important to us that we will give it free access to our markets”. There would have to be negotiations, and there is no reason to assume that our current colleagues in the EU would open up the markets without extracting some sort of quid pro quo with some sort of agreement. I know it is not palatable to everyone to hear yet again about the European Economic Area, but looking at those relationships reveals that the member states of the EEA have effectively signed up to a huge amount of the EU’s acquis but without a seat at the table. They have to accept what the EU agrees.
The United Kingdom may be out-voted while we are a member of the European Union but if we play our cards right as a member we can negotiate, we can work with partners and we can amend legislation. On the outside we would be policy-takers and we would be doing what the European Union asked us to do. If we felt it was in our interests we might sign up to it but the costs are likely to be significant. If we engaged in a relationship that looked like a Norwegian model, we would end up paying into the Union budget, taking policy and having even less influence than now.
Noble Lords may say that I say that only because I want Britain to remain in. I am simply suggesting that it is important for citizens of the United Kingdom to understand the implications and that the Government should make clear what the implications of leaving would be and how they envisage the relationship of the United Kingdom with the rest of the European Union.
On Amendment 32A, could the Minister bring back to the Committee some thoughts on how the Government envisage the relationship with the Republic of Ireland if there were a vote to leave the European Union? That relationship is sui generis. The relationship between the Republic and Northern Ireland and the fact that there is currently no land border would be fundamentally changed. Withdrawal has implications for the United Kingdom and this one particular close neighbour in the European Union. I ask the Government to look again at that relationship.
Lord Liddle (Lab)
My Lords, Amendment 26, in my name, is of similar import to the amendment of the noble Lord, Lord Kerr. Mine, of course, is a political adviser’s amendment. It is sloppily drafted and not the expert amendment that you would expect of a senior Eurocrat; therefore, I am happy not to move my amendment in favour of that moved by the noble Lord. In my view if we wanted to educate the public about alternatives to EU membership we could do a lot worse than to ask the Government to send a printed copy, suitably amended, of the speech by the noble Lord, Lord Kerr, to every household in the country—I thought it was brilliantly argued. We are going to hear a lot of these arguments in the coming year, and I shall not reiterate them now.
I want to make a couple of observations which I think are relevant. First, on the arguments about Britain’s strength to negotiate its own arrangements, I used to think in the same way as the noble Lord, Lord Stoddart. When I was a young man I am afraid I rather bought into the line of the German Social Democrat leader of the time, who described the Common Market as a conservative, cartelist, capitalist, clerical conspiracy. I was rather of that view but when I learned about it and read its history I realised that the Macmillan Government tried very hard in the 1950s to negotiate the kind of free trade agreement which the noble Lord, Lord Hamilton, thinks is the solution to all our problems, but they came to the conclusion that it could not be done. The only possible alternative for Britain was to become a full member alongside the original six. I think that that judgment, which was made around 1959-60, is still sound, even though the European Union has transformed itself. So, too, has our economy. When I listen to some of the arguments of the anti-Europeans here, I think they still think in terms of British companies exporting to Europe.
Lord Forsyth of Drumlean
I am not aware that there are any anti-Europeans here. There may be people who are anti the European Union; these are not the same things.
Lord Liddle
I take the point. The noble Lord has thrown me off my path. I was saying that the nature of our economy has changed and that sometimes when I listen to these debates I do not get an appreciation of that. The fact is that Britain has benefited more from European Union membership than virtually any other member, and has done so through attracting inward investment to the United Kingdom from all parts of the world. This has been a tremendous boost; it has been the only successful industrial policy we have had since the era of Margaret Thatcher; she was the one who first started it, and it has worked. That has meant that many British businesses are part of European and global supply chains, and we as a country benefit from hosting many foreign companies here. I often think, when I listen to the arguments, that people just do not appreciate that. Yet, that is clearly the major economic issue in the debate on membership. If that inward investment, that ability to organise your supply chains across Europe, were to be interrupted as a result of withdrawal and badly damaged, that could seriously deter future inward investment in the UK.
Most of us in this Chamber are pretty passionate in our views about the European Union, for and against. However, we also have to remember that most of the great British public are not very passionate about it; in fact, the great majority do not regard it as the most important issue in the world at all. Most opinion polling suggests that only about 10% of the voters are worked up about our membership of the European Union. That does not mean that they are pro—I am not trying to argue that. They are genuinely sceptic about the whole issue in a way in which a lot of the people who are anti-European Union in this Chamber, who claim to be sceptics, are not—they are passionate ideologues. However, most of the voters are sceptics, who want to weigh the evidence and be convinced one way or another by the argument.
Lord Hamilton of Epsom
I totally accept the noble Lord’s thesis that this is not a high priority for the British public at the moment. On the other hand, however, he will recollect the time when the Tory party was tearing itself apart over the issue of Europe, and it was certainly a very much higher priority at that time. Does he not feel that as we approach the referendum and the debate rages it will move up in people’s priorities, and that they will take more interest in it?
Lord Liddle
The noble Lord is right about that, but it is the result of dissent in an elite and a particular part of the British political elite. People will get worked up about this because of a vigorous argument on one side of the political spectrum; it is not as a result of massive popular demand from below. However, that is not my point, which is that a lot of people are genuinely sceptic and probably dislike the Brussels bureaucracy a great deal but worry about our future outside the EU. That is where I think that the need for objectivity is very important. Clearly, I am not the right person to make an objective case about the European Union but I still believe that we have a public service in Britain which is independent and can be objective and which can help to frame a rational debate about our membership. That is why I think that the amendment moved by the noble Lord, Lord Kerr, is so important.
I hope that the Minister, for whom I have the greatest respect, and the Government will look favourably on the argument regarding the need for objectivity in this debate and on the argument that the public service can help to bring that to the debate. That is what the public are looking for. I would hate to think that our politics had got to the state of that of the United States, where everything is so polarised that it is impossible to have any kind of meeting of minds or objectivity and rationality in discussions. I think that the senior members of the Government are coming round to a certain view about Britain’s future which I favour, so I hope that they will be prepared to support this call for independent, objective analysis, which is so important for the quality of our politics.
Lord Forsyth of Drumlean
I was tempted to support the amendment of the noble Lord, Lord Kerr. As I listened to his speech, he said, “The Commission is there to maintain the EU decision-making autonomy”. What a ghastly phrase. It suggests that an unelected body has autonomy. The noble Lord, Lord Liddle, said that the speech of the noble Lord, Lord Kerr, should be circulated as part of the campaign. I agree with that because in summary he said, “Look, we’re stuck with this organisation. They’re in charge. If you try to do anything about it, they’ll all gang up against you and throw your people out of work”. If that is the best argument that we can come up with for staying in this organisation, I despair. If that is the position, the sooner we get out the better, because we are being told that we are part of an EU decision-making autonomy.
Lord Lea of Crondall (Lab)
Taking the analogy of Ministers and the UK Civil Service, is the noble Lord saying that if you do not like the word “autonomy” there must be some other word that is not going to be suborned by politicians? With regard to the Office for Budget Responsibility, no one doubts that we are looking for some degree of independence. If the noble Lord does not like the word “autonomy”, how will he handle the problem of not wanting self-interested politicians to give advice—it is people who, in the analogy with Britain, are not politicians?
Lord Forsyth of Drumlean
The noble Lord must go on because he is making my case for me. He is saying that we do not want politicians and that we need to think of another word for “autonomy”. How about “dictatorship”? If by EU decision-making autonomy you mean, “We don’t want politicians”, then that is dictatorship. Politicians, however much they may be despised or disliked, are accountable to the electorate. These people are accountable to no one, and we are now being told that we cannot possibly go against the EU decision-making autonomy.
Lord Kerr of Kinlochard
The noble Lord, Lord Forsyth, is making marvellous campaign speeches; I think that our job is to address the Bill and the amendments. I was trying to give an analytical speech, assessing the various models and the possibility of a sui generis, something-completely-different Stoddart model. When I used the words “decision-making autonomy”, I was using words which are quite common in the Council, in the Parliament and in the court; I was not referring to the Commission.
Lord Kerr of Kinlochard
Yes, I said that the Commission would be the spokesman in the negotiation, but its concern would be to preserve the autonomy of EU decision-making—which the European Council regularly insists on and insisted on in relation to the changes to the arrangement with Switzerland. If you are not a member of the club, you do not have a vote on club decisions. That is all it means.
Lord Forsyth of Drumlean
I will come on to address these points, because I took the opportunity of checking a few facts. For example, just before the dinner break, I did not know why when we were supposed to be discussing what is in Britain’s interest we continued to discuss what is in Norway’s or Iceland’s interest—but, as people have raised it and have said they want facts, I have found the following quote from the Icelandic Prime Minister from June this year. The noble Lord has already read this quote, but he did not put it in his speech. The Icelandic Prime Minister said:
“'For us staying outside of the European Union has been very important, even instrumental in getting us out of the economic crisis so it has affected us in positive ways, giving us control over our own natural resources, but also having control over our own legislation and our own currency, which if we had not had that, we would not be in the situation where we are now with a very fast improving economy”.
When I said earlier that nobody in Norway wanted to join the European Union and I was shot down and told by the noble Lord that the establishment wanted to join the EU, I thought that I had better check what the position was. I found that seven out of 10 Norwegians would reject EU membership and just 19% would like to join. Seventy-four per cent would say no to Norway joining the EU, with 17% wanting to join—these figures are from an opinion poll in 2014.
The noble Lord mentioned Switzerland. According to a 2012 poll for the Swiss Broadcasting Corporation, just 6% of Swiss voters favoured joining the EU against 63% who want the present bilateral arrangements preserved, and 11% who want to join the EEA. There does not seem to be any great feeling in either of those countries that they have made some dreadful mistake; on the contrary, they seem very happy. The Norwegians are very happy with their fish, their oil and their prosperity.
Then we have the bogus argument that says that if you are outside, you have to accept a huge amount of legislation which you would have no say over. I do not know whether the figures in the Daily Telegraph—the noble Lord tells me that that is where they were from—that say that the last 74 times we have objected to things we have been defeated are correct, but those people who argue that we need to stay in to have a say should tell us how effective that say is because the evidence is that it is not very effective. The noble Lord, I know, has conspired with me and other Ministers to turn defeat into an apparent victory in drafting the press release after one such defeat.
Lord Hannay of Chiswick
The noble Lord is very kind. He seems to be a glutton for information. May I recommend that he reads two slim volumes produced by an all-party panel, first in 2014 and then 2015, called The British Influence Scorecard? They looked at every part of European policy and concluded that Britain’s influence in the European Union was considerable. I am sure that he would find that a very enlightening read, and it is not as long as some of the documents around.
Lord Forsyth of Drumlean
I would be very happy to read it; what I would be interested in is who has written it. I note, for example, that three of my honourable friends from the other end of the corridor were kicked off the Council of Europe recently because their views did not accord with those of the establishment. But I am certainly happy to read what the noble Lord suggests.
I want to put some more figures into the debate that arise from our earlier discussions and are relevant to the amendment. They relate to the number of EU laws that EEA members such as Norway and Iceland have to accept. The Icelandic Government estimate 10%—5,000 legislative Acts in force, divided by 23,078 legislative Acts in consolidated EU acquis.
There seems to be a debate about the extent to which this applies to these countries, but as the noble Lord, Lord Stoddart, said, all of this is completely irrelevant. We are not Iceland; we are not Norway; we are Britain. We are a country with a long history and relationships around the globe in a global marketplace in the Far East and elsewhere. It is utterly ridiculous to suggest that we would get into some sort of trade war with the EU and be vetoed by Portugal or Spain. It is a shallow argument that demeans our country, and will be hugely counterproductive if it is deployed, as we discovered when perhaps overenthusiastic unionists tried to deploy the same argument in Scotland when they said that Scotland would not be able to survive on its own.
Iceland has a population that is smaller than that of Edinburgh, for goodness sake, and here we have it on the authority of the Icelandic Prime Minister himself that Iceland is much better off outside the EU. So I do not think that these arguments apply. It has been suggested that the British Government could produce a report on what it would be like if we were outside the EU, and that we should not embark on taking control of our own destiny unless we had such a report, which would by its very nature be speculative and might very well underestimate the opportunities. Thank goodness we did not have this kind of thinking in May 1940.
This United Kingdom has a huge range of relationships and great talent and ability, and it is wrong to suggest that we cannot work with our colleagues in Europe outside the EU. It is not we who are leaving the European Union; it is the European Union that is leaving us. Of course it is. In order to maintain the integrity of the single currency, the euro, which the noble Lord and others would have had us join—what a mess we would be in if we had done that—the EU is having to introduce a more integrated system. Therefore, it is not a matter of whether we are able to have influence and to punch above our weight within this organisation. This organisation is changing; it has to change because countries are so obsessed with maintaining currency union that they are prepared not only to sacrifice the jobs and living standards of young people in the southern European states but to give up their autonomy. We are not prepared to give up our autonomy.
When we joined the EU, we joined the common market, which was a free trade area. That free trade area is being turned into something else. It is being turned into a country with its own currency and the ability to raise taxes and to control its own fiscal issues. The noble Baroness, Lady Smith, said that you cannot join a golf club and then not pay your subscription. We did join the golf club—but they want to play tennis now. They want to play a completely different game, which is not what we joined for.
Lord Wallace of Saltaire
The noble Lord is making a long campaign speech, and I hesitate to interrupt him. I merely remind him that Edward Heath, Harold Macmillan, Alec Douglas-Home and others said as we joined the European Community that it had clear political connotations and that our foreign policy would be affected. I will send him tomorrow the speech by Alec Douglas-Home in 1971.
Lord Forsyth of Drumlean
The noble Lord may very well be correct that Edward Heath said this and Alec Douglas-Home said this, but most people thought that they were voting to join a common market. Certainly, Scottish fishermen thought that they would keep control of their fish stocks and that their industry would survive, and it has been destroyed—and facts are chiels that winna ding, as they say north of the border. The fact is that what we thought we were joining is not what has come to pass.
Lord Stoddart of Swindon
Is it not true that Harold Macmillan’s real reason for wanting to join is that he had come to the conclusion that the United Kingdom was ungovernable? That was his reason. However, in the 1971 White Paper issued by Mr Heath, did he not make the assertion that our general sovereignty would not be undermined—or something of that sort—and is it not true that our essential sovereignty is being undermined and has been undermined?
Lord Forsyth of Drumlean
I agree entirely with all the points that the noble Lord has made. In the context of the late Edward Heath—with whom I got on very well personally while not agreeing with many of his views—that is the same Edward Heath who was elected on a Selsdon manifesto but did a U-turn and came to the conclusion that it was not possible to govern our country without the consent of the trade unions. However, a certain Lady Thatcher was elected in 1975 as leader of the Conservative Party on a manifesto which said that Britain is able to govern itself and that it is possible to restore the authority of Parliament. This resulted in her election as Prime Minister in 1979 and all the things that were said to be impossible were turned around. It was her belief in Britain and its ability to stand proud in the world which transformed our economic achievements during the 1980s.
This fatalism, this extraordinary idea that we are trapped in the European Union and that there is nothing we can do to escape it—that we might as well knuckle under and accept that we have got to be a part of it in order to advance what influence we have—is the politics of surrender.
The noble Lord, Lord Kerr, accuses me of making a campaigning speech. I do not know what he was doing when he wrote his letter to the Sunday Times, signed by other fellow mandarins. I have listened to his amendments and the constant prattling on about Iceland and Norway when they are totally irrelevant to this discussion. Most people in Britain would find it offensive being treated alongside Iceland as an equivalent party. I hope my noble friend will reject this amendment. I do not support it.
Lord Hannay of Chiswick
My Lords, we have been on an extraordinary, lengthy digression which bore not the slightest relationship—the noble Lord, Lord Forsyth, might like to listen to this as I am referring to his speech—to the amendment we are discussing.
I would like to go back and simply make two points. First, it is not sufficiently recognised that if the electorate were to vote to leave the European Union a decision would have to be taken by the Government—not by the leave campaign—as to what the future relationship they would wish to have should be. The purpose of the amendment is to ask the Government what relationship they would envisage in those circumstances. Is that an unreasonable thing to ask? I do not think so. Every time that the basic issue about Britain being in or not in the European Union has come up, every government White Paper and document has reviewed the alternatives. That was true in the times of Harold Macmillan and Edward Heath, and it was true in both attempts when Harold Wilson sought to join and when he had a referendum. It is a perfectly reasonable thing to do.
Judging from the speech of the noble Lord, Lord Forsyth, I have the impression that he would hate what the Government said they would envisage doing if there was a no vote. He would have every right to riddle it through with bullets as he has riddled everything through with bullets this evening. However, surely it is right that the British people, the electorate, should be told what relationship the Government would envisage if they chose to vote to leave. That is a reasonable thing to ask, is it not?
Baroness Morgan of Ely (Lab)
My Lords, the noble Lord, Lord Kerr, with his vast experience of working within EU institutions, knows better than us how the EU works and what the various alternatives to membership might be. No one here disputes the fact that we would wish to continue in some kind of trade relationship with the EU. To those who ask for figures, I cite IMF figures that state that 51% of our trade in goods is with the EU, as is 41% of our trade in goods and services. We would undoubtedly wish to have some kind of trading relationship with it.
Lord Kilclooney (CB)
When I asked a question about that figure last year, I was told that it included United Kingdom exports going to the rest of the world through Antwerp and Rotterdam. Does the noble Baroness have figures that refer only to the European Union?
Baroness Morgan of Ely
These are the figures from the IMF. My understanding is that they refer to the EU. I will check them, but I have not heard the noble Lord’s point made before. We will look at that, but I think these figures make a lot more sense. We will examine that.
Let me talk now about the winning side. How well do we do within the Council? As it happens, an article in today’s Guardian states that,
“the UK voted on the winning side 97.4% of the time in 2004-09 and 86.7% of the time in 2009-15”.
That tells me that this Government are not such good negotiators as the Labour Government were.
We have heard about several models tonight, but I should like to dwell a little on what Article 50 means and on what its implications are. There is a strong likelihood that, were we to vote to leave, we would need transitional measures to cover the period between the notification of the European Council by the UK of its decision to withdraw and the conclusion of the withdrawal treaty that sets out what our future relationship would look like. If that is not concluded within two years, it may be possible to extend it for a short period if both sides so decide. However, if we could not come to a conclusion—and, let us face it, it would be an incredibly complicated negotiation—then we would be out, with no formal relationship whatever. So this is very serious, and we have to understand that we should be discussing it now. We are having the referendum pretty soon and we need some idea of what the alternative might look like.
There a few other things that I should like to touch on. First, we know that the Prime Minister does not like the Norwegian model—
Lord Forsyth of Drumlean
I wonder whether the noble Baroness might comment on what the noble Lord, Lord Rose, said about what would happen. He said:
“Nothing is going to happen if we come out of Europe in the first five years, probably. There will be absolutely no change. Then, if you look back ten years later, there will have been some change, and if you look back 15 years later there will have been some.
It’s not until you get to 20 years later that there’s probably going to be some movement if we came out which says ‘Please can we come back into Europe again’”.
Would she like to comment on those remarks by the leader of the “stay in” campaign?
Baroness Morgan of Ely
I think the noble Lord probably needs to study Article 50 to understand that if the negotiation is not concluded, there will be repercussions that will come fast and be quite dramatic. Everyone in this country who exports to the EU needs to take note of that.
Lord Stoddart of Swindon
Perhaps I may put this to the noble Baroness. Is it not the situation that if the people voted to come out, the next thing that would have to be done is that Parliament would have to repeal the European Communities Act 1972? If it does not repeal that Act, it will be bound by its provisions, which of course give powers and instructions to Parliament to pass regulations, and the European Court of Justice would still operate in this country. A sensible Government would repeal that Act before they even started negotiations under Article 50 of the Lisbon treaty.
Baroness Morgan of Ely
If we were leaving the EU, obviously we would have to repeal a whole raft of policies. That is something we referred to earlier.
Lord Stoddart of Swindon
Everything that has happened since 1972 depends on that treaty, and every other treaty is an amendment to that treaty. The treaty would have to be abandoned before you could even embark on a negotiation.
Baroness Morgan of Ely
These are the kind of questions to which we need answers from the Government. That is precisely what we are asking: what would it look like and what would we need to do? What would the administrative consequences be? Does the Foreign Office have the capacity to deal with this?
Let us look at the Swiss model, where each negotiation is done bilaterally and on a piece-by-piece basis. You would need an army to start renegotiating that model if we were interested in pursuing that kind of thing. Let us not forget that the Swiss model does not allow access to financial services, which is something that should concern the City of London. The fact is that the City would be locked out. I am absolutely sure of that because if the Swiss financial services sector is locked out, I am quite sure that the Germans would be eyeing up the financial services sector very happily in terms of the opportunities for them. The City of London commissioned a report by the University of Kent looking specifically at the Swiss relationship and financial services. It found that Swiss financial services do not have unfettered access to the EU and that Switzerland—listen to this—currently uses London as a staging post to get access to the EU. We need to take note of that.
We could rely on WTO rules, of course, but again let us be clear that services, particularly financial services, would not be covered. Let us face it, the WTO is not an organisation that exactly moves fast. I think the last massive deal was done in 1994. When we are pressing the button and knowing that we need to get a negotiation done within two years, that is not something we could rely on. We also have to understand that if we wanted access to EU markets, WTO rules mean that British car manufacturers would face a 9.8% tariff on the export of cars, 5% on car components, 15% on food and 11% on clothing. Those are the rules of the WTO. If you want a loose relationship, that is what you would be looking at.
Lord Hamilton of Epsom
I am grateful to the noble Baroness for giving way. Has she considered the number of luxury cars that Germany sells to the United Kingdom?
Baroness Morgan of Ely
Absolutely, that is fine, and of course we would negotiate a deal with the Germans. But we come back to the point that we would not be holding all the cards. Exports to the UK account for 2.5% of their GDP, while it is 14% of our GDP. The other thing we should bear in mind is that the people who trade with us are, on the whole, Germany and the Netherlands. A lot of other countries do not do massive trade with us, quite frankly, and they would not have much interest in negotiating a great deal for the UK. Moreover, each of them would have a say in what that deal says.
Some have suggested that we have special links with the Commonwealth and with emerging markets around the world, so that is where we should be focusing our efforts. Really? How come Germany’s trade with China is three times greater than ours? The Germans also export more to India than we do. How come France finds it easier to land defence contracts with India than we do? That is the special relationship that we have with our Commonwealth friends. We cannot rely on historic relationships when 50% of our market in goods is with the EU.
Whatever deal is agreed, we know that each of the other 27 member states will be given a say in addition to the three members of the EEA, while Switzerland might have something to say if the UK managed to negotiate better terms than it. Some member states would be more generous than others and some would feel betrayed by a UK exit. The European Parliament would also have to ratify the agreement. So we have to be absolutely clear: the UK would not be holding very strong cards and it would not be an easy negotiation. Moreover, let us face it, negotiation is not exactly our Prime Minister’s strongest suit. The Prime Minister found it difficult to negotiate changes to the treaty from the inside but that will be nothing compared to trying to negotiate a new trade relationship with the EU from the outside.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, Amendment 24 moved by the noble Lord, Lord Kerr, calls for the Government to set out the relationship that it envisages having with the European Union in the event of a vote to leave. The amendment states that this report would have to be published 12 weeks before the date of the referendum and goes even further than that. It requires the Government to provide detail on the acceptability of hypothetical arrangements from the point of view of the 27 other member states. That seems unrealistic. I have just been listening to the noble Baroness, Lady Morgan, give details of some of the implications of Article 50. Amendment 24 seems to be asking the Government to put the cart before the horse before the horse has even bolted.
Lord Lea of Crondall
My Lords, I am sorry. There will not be many interruptions to the noble Baroness’s speech from the Labour Benches. Is she saying that it is unrealistic to consider the acceptability of this arrangement to every other member state? Does she not accept that that is very important? Indeed, it would be game, set and match if it were the case that not all 27 other member states agreed. Is it not essential to consider how it would be with all those vetoes around the place? If we are not careful, we will be in a very difficult position. She cannot utter that little phrase and have nothing more to say about it. Is it not rather important?
Baroness Anelay of St Johns
My Lords, it is indeed important. Perhaps I did not take enough care to explain the position. The amendment is asking the Government to do something that is impossible because they are barred from knowing what the agreement will be by the text of Article 50, which states:
“A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union”.
It then goes on to give the procedure. All I am saying is that the second part of the amendment moved by the noble Lord, Lord Kerr of Kinlochard, asks the Government to leap over that and to say in advance of even notifying the European Council of their intent to withdraw what should be acceptable to the other states within the European Union in the event of a withdrawal. It is hypothetical simply because the Government cannot predict what will be acceptable to other states before there has been a referendum, before this country has taken a decision, and before this Government have been able to notify the European Council in accord with Article 50 if it takes a decision to leave. I am merely pointing out the procedure. I am sorry if I truncated that, thus making it less clear.
The second amendment in this group—Amendment 26 in the name of the noble Lord, Lord Liddle—would create a similar statutory requirement for the Secretary of State to commission and publish an objective assessment of the alternatives to the UK’s membership of the EU in advance of the referendum.
Amendment 32A, spoken to by the noble Baroness, Lady Smith of Newnham, calls for the Government to set out the relationship that it envisages with Ireland in the event of a vote to leave the European Union. I appreciate the reasons why she has put this forward and the importance of our relationship with Ireland. Her proposed report would also need to be published by the Government 12 weeks before the date of the referendum. I mentioned when replying to an earlier group of amendments the danger of imposing arbitrary deadlines given the possibility of legal challenge. I hope that I can be a little more helpful in saying that—
Lord Hannay of Chiswick
Will the noble Baroness kindly address the first part of the amendment of the noble Lord, Lord Kerr, to which she has not replied? I understand what she is saying about acceptability. I have no doubt that if the Government stated what they envisaged, quite a few people in the other 27 member states would answer the acceptability problem quite promptly. Will she address the problem about what the Government envisage doing if there were a vote to leave the European Union?
Baroness Anelay of St Johns
My Lords, as I said, perhaps I can be more helpful. The noble Lord has been patient. I am now getting to the point that he wishes to hear. Noble Lords may recall the Prime Minister’s words last week in the other place, when he said,
“if we do not get what we need in our renegotiation I rule absolutely nothing out. I think that it is important that as we have this debate as a nation we are very clear about the facts and figures and about the alternatives”.—[Official Report, Commons, 28/10/15; col. 345.]
As I mentioned earlier today, if we are to put an obligation on the Government, the Committee would need to think very carefully about the terminology used. That goes to part of the debate we have just had. I have concerns about some of the wording used in these amendments. I can understand the good will behind some of it but there would be uncertainty about what the objective obligation specifically requires. While the Government acknowledge the importance of providing balanced information, this requirement could be an undue source of criticism, as there can often be a surprising—or, rather, unsurprising, I should say, given what we have heard tonight—level of disagreement about what counts as objective.
I think there has been a very fair reflection tonight of the feelings on all sides of the argument and about how fairness and evenness may not be perceived as such by others. It is a very serious matter to which we all need to address our greatest concentration in considering how we make progress on these issues. As I advised the Committee earlier, the Government will now think carefully about the issue of public information and consider what we may be able to bring forward by way of an amendment on Report. I continue to listen with interest to the arguments put forward by the Committee. Each of these groups of amendments has rounded out the debate more fully and started to crystallise some of the areas where there may be some agreement and those where perhaps there is unlikely ever to be agreement.
In the light of the answer I have given, I hope that the noble Lord, Lord Kerr of Kinlochard, will withdraw his Amendment 24. I urge other noble Lords with amendments in this group not to move them when we reach them.
Lord Kerr of Kinlochard
I thank the noble Baroness for her customary courteous, careful response to my amendment. I accept the criticism she made of its second proposed new subsection. She put it very vividly in saying that I was putting the cart before the horse before the horse had even bolted. I am sure the stable door was there somewhere. She has a point. Of course, the sequence would be, if we voted no, there is the vote, then presumably the Government go to Brussels and invoke Article 50, and there is a discussion from which an arrangement emerges, so she is absolutely right in her logic.
My amendment would have been better if I had asked the Government to report on the relationship with the European Union that they envisage in the event of a referendum vote to leave and on their view of the acceptability of such an arrangement to every European member state. I would be happy to see it adjusted. Maybe the Minister would wish to adjust it a little further.
Lord Forsyth of Drumlean
“Report on the outcomes of negotiations between Her Majesty’s Government and the European Union
Not less than four months before the date of the referendum, the Secretary of State shall publish, and lay before each House of Parliament, a report setting out the outcomes of Her Majesty’s Government’s negotiations with the European Union, and any resulting changes in the relationship between the United Kingdom and the European Union.”
Lord Forsyth of Drumlean
My Lords, I am very conscious that I must not irritate the noble Lords, Lord Hannay and Lord Kerr, by making a campaigning speech. Having looked at my amendment, Amendment 25, I am at a loss to think how one could turn this into a campaigning speech. It is clearly an amendment that should be acceptable to all noble Lords in the House, including to my noble friend the Minister.
Lord Kerr of Kinlochard
I do not in any way wish to interrupt his flood. I merely wish to tell him that I support his amendment.
Lord Forsyth of Drumlean
I am now having doubts. I am not surprised that the noble Lord supports the amendment, because it is a very sensible one. All that it does is seek to ensure that when the Prime Minister has finished his negotiations we have some kind of government publication that tells us what they were about, what their outcome was and what the implications would be for our continued membership of the European Union with those changes, if he so recommends, or the alternative.
The amendment is drafted in neutral terms and I hope that my noble friend might be able to accept the principle. I do not think that it is too much to ask. In my noble friend’s Second Reading speech, he hinted as much. The Chancellor of the Exchequer said in the early part of the summer that there would have to be some sort of paper. There are none of the issues that we have had to discuss earlier this evening arising from the debates that we had on publications of the benefits of being in and out. This is completely straightforward. What did the Prime Minister want? What did he get? What will be the effect on our relationship with the EU and what is the outcome? I beg to move.
Lord Wallace of Saltaire
My Lords, I, too, agree with this amendment. I anticipate that when the negotiations are complete, the Prime Minister will publish a paper and I think it highly likely that the noble Lord, Lord Forsyth, will disagree fundamentally with what the Prime Minister says.
Lord Hamilton of Epsom
My Lords, I went to the Public Bill Office and said that I wanted to put down an amendment very similar to this. It would have called for a White Paper, which this amendment does not. When it was pointed out to me that my noble friend Lord Forsyth’s amendment was already tabled, I added my name to it. This smacks very much of Amendment 1, which I put my name to and which was supported very early on by the noble Lord, Lord Kerr. The Liberal Democrats supported it, too, and I suspect that the Front Bench of the Labour Party is going to support it. This amendment ties in with everything that the Government have said already. The only worry I have is that my noble friend the Minister may say that the Government have given an undertaking to this and that it does not need to be in the Bill. I have to say that we will all be very reassured if it is.
Lord Forsyth of Drumlean
Before my noble friend sits down, one of the key points is of course the provision:
“Not less than four months before the date of the referendum”.
Baroness Morgan of Ely
My Lords, we are all keen to know the outcome of the Prime Minister’s negotiations. Now we have an idea of what he is hoping to achieve and he has promised to write down the UK’s negotiating position in a letter to the President of the Council. I think we are expecting that to happen next week. I am sure that other EU leaders will be happy to see that as well, given the reports we have read of their frustration at the vagueness of the UK’s negotiating position.
We know the broad themes—sovereignty, economic governance and what the meaning is of “ever-closer union”—but I would take issue with one point brought up in relation to the report written by the European Committee of this House. In relation to restrictions on free movement of labour, we would warn the Government not to talk up the problem of benefit tourism, as they did in their response to the European Committee on its report assessing the reform process. They said in their response that they want to reform,
“welfare to reduce the incentives which have led to mass immigration from Europe”.
I am afraid that the facts simply do not match up to that proposition. Last year, a European Commission report found there was no evidence of systematic or widespread benefit tourism by EU nationals migrating within the EU, including to the UK. In fact, the UK is the only EU member state where there were fewer beneficiaries among EU migrants than among nationals.
We are expecting the first substantive discussions on reform at the December summit. Let us hope that they are given a bit more of an airing than in June, when I think the Prime Minister was lucky to have had 10 minutes. Of course, it would make sense if the outcomes of the negotiations were made clear to the public. We would endorse the idea of the production of a report to this effect.
Baroness Anelay of St Johns
My Lords, we are coming towards the end of a long, thorough and well-considered debate on the issue of public information. As I explained earlier, I agree that the public will expect Ministers to set out the results of the renegotiation, how the relationship with Europe has been changed and if, and how, those changes address their concerns.
My noble friend Lord Forsyth’s amendment would create a statutory requirement for the Secretary of State to publish and lay before both Houses a report on the renegotiation outcome, and any resulting changes in the relationship between the United Kingdom and the European Union. He stipulates that this must be done four months before the referendum poll date. I am sympathetic with the aim behind the amendment: to ensure that the British people understand the outcome of the renegotiations. However, because of my earlier comments about deadlines, I do not think my noble friend will be surprised to hear that the four-month period imposed by this amendment between publication of a report and the poll is not necessarily going to be helpful to having a fair and even campaign. As I explained earlier, there could be unnecessary complications with regard to legal challenges if there were a prescriptive date. We need to think very carefully about the most appropriate timeframe for the delivery of public information. I think it would be unwise to commit to an arbitrary deadline at this stage.
Lord Forsyth of Drumlean
I do not want to introduce any more animals into the debate and would certainly not want to look a gift horse in the mouth. I am most grateful to my noble friend for saying that she is sympathetic. Is her problem with the length of the period? The reason that there is a period in there is so that there is enough time for people to consider the impact of the changes before they cast their vote. It is arbitrary in the sense that it should not be less than four months. It is clearly very important that the White Paper, or whatever you want to call it, should not be published two weeks before polling day, before people have an opportunity to consider its value.
Baroness Anelay of St Johns
My Lords, I entirely agree with my noble friend. The important thing, as the Committee has discussed today, is that we are able to have information that it is appropriate and reasonable for the Government to produce, but at a time when it can be considered by those who are to cast their vote.
We need to consider carefully what that timeframe may be, taking into account that the Government will need to ensure that the production of information is done in a reliable, sustainable way. Of course, the Government must not only compile a report but ensure that mechanisms are in place for its widespread distribution. These days, so many of us in this House access reports online, but that is not the only way that information needs to be distributed. I am not saying that I have already made up my mind what the deadline should be. I am saying that we need to consider carefully how there should be an opportunity for information to be produced and presented to the public in time for them to be able to make a decision.
I have listened very carefully to each of the debates, each of which has added something to our consideration. There is clearly an important role for the Government. The public will expect Ministers to set out the results of the negotiation. They will expect the Government to set out how the relationship with Europe is being changed, and if and how those changes address their concerns. That goes to the heart of what my noble friend has just said. The public need to be able to look at that information to answer the question that a voter might ask: what does it mean to me?
As my right honourable friend the Chancellor of the Exchequer said in June, the Government intend to publish an assessment,
“of the merits of membership and the risks of a lack of reform in the European Union, including the damage that could do to Britain’s interests”.—[Official Report, Commons, 16/6/15; col 165.]
I have also heard the calls today for an assessment of the implications of a vote to leave the European Union. We will now give careful consideration to what we may be able to bring forward by way of an amendment on Report that would command the support of both Houses. I know that we will continue to discuss this matter with noble Lords who have tabled amendments at this stage. I hope that that is a productive discussion.
The noble Lord, Lord Hamilton, asked a specific question: would the Government’s commitment be to put something in the Bill? I have been talking about the Government bringing forward an amendment, which means that something would go into the Bill, simply because it would be an amendment.
I urge the noble Lord, Lord Kerr of Kinlochard, to withdraw his amendment and to await discussions that I hope will proceed to a constructive conclusion. I am sorry.
Baroness Anelay of St Johns
It must have been a long day for me to confuse the two noble Lords. I offer my humble apologies to my noble friend Lord Forsyth. What a day!
Lord Forsyth of Drumlean
The connection is closer than my noble friend may think. If I look out of my bedroom window, I see Kinlochard. When I arrive in London, I look behind me and I see Kinlochard.
I am most grateful to my noble friend. In the shadow of Halloween, we have had a pretty scary debate listening to some of the speeches about the awful things that will befall us if we leave the European Union. It is very pleasurable that we can conclude our discussions on such a positive note, for which I am very grateful to my noble friend. We look forward to seeing the amendment that will be tabled on Report and being able to sleep soundly in our beds, knowing that the Government will address at least this issue in respect of the Bill. I am happy to withdraw my amendment.