EU Referendum: Assessing the Reform Process (EUC Report)
Lord Boswell of Aynho
That this House takes note of the Report of the European Union Committee on The referendum on UK membership of the EU: assessing the reform process.
Lord Boswell of Aynho (Non-Afl)
My Lords, I am delighted to introduce this report by the European Union Select Committee entitled The Referendum on UK Membership of the EU: Assessing the Reform Process. This report, published in July, marked the committee's first formal response to the Government’s announcement that they would seek to renegotiate the UK’s relationship with the EU, followed by an in/out referendum on UK membership by the end of 2017. The report took account of an evidence session held with the Minister for Europe, David Lidington, and meetings with EU institutions and others during an intensive committee visit to Brussels. At the outset, I record my thanks to all those who took part: those who gave evidence or discussed matters with us; those Members and colleagues who participated and, as ever, our expert and committed staff.
To be clear, the committee did not and will not make a recommendation concerning whether the United Kingdom should remain a member of the European Union. Neither did the report focus on the provisions of the European Union Referendum Bill, which is currently before your Lordships’ House. Rather, the report was designed to inform noble Lords of our views and concerns about the process of renegotiation and reform.
The committee reached the following conclusions, which I will summarise. We supported the Government’s efforts to ensure that the referendum takes place as soon as possible, in order to minimise uncertainty. The UK’s upcoming presidency of the European Council, scheduled for the second half of 2017, makes the arguments for an earlier referendum all the stronger. Notwithstanding the Minister for Europe’s assurances that it would be possible, in theory, to hold a referendum during the course of the presidency, common sense tells us otherwise. On the other hand, an earlier referendum creates the possibility of the UK having voted to leave before the presidency takes place. While the Government were right to press ahead with their plans for the presidency in 2017, it is only fair on our fellow member states to be ready to put contingency plans in place should the referendum either be delayed or result in a vote to leave.
The Minister told us that the internal Whitehall system for carrying forward negotiations—which seems to involve the Foreign and Commonwealth Office, the Cabinet Office, No. 10, HM Treasury and our Brussels officials in UKRep—was intended to work,
“by network rather than by hierarchy”.
This struck us as both unrealistic and a recipe for confusion. By way of example, the media frequently report that the Chancellor of the Exchequer is in fact leading this process, as exemplified by his high-profile visit to Berlin this week. Is that true? If so, what role is his department playing? How will he be held to account by Parliament for his actions? How is he interacting with the Prime Minister, the Foreign Secretary and our diplomats in Brussels? I would be grateful if the Minister provided some clarity on this in his response.
Equally, from the UK perspective, it would be helpful to know more about who our key interlocutors are in Brussels. The Government’s written response to our report—brief as it is—stressed that the Prime Minister’s key contacts were with the presidents of the EU institutions. But what about the role of influential, well-regarded and technically expert officials in their teams, such as the Council Secretary-General Jeppe Tranholm Mikkelsen, the Head of Commission President Juncker’s Cabinet, Martin Selmayr, or, indeed, Jonathan Faull, who has been appointed to head a Commission task force for strategic issues related to the UK referendum? Will the Minister tell us more about what role they are playing and how they interact with interlocutors at official and ministerial level in the UK Government?
The committee was pleased to have the opportunity to meet Martin Schulz, the President of the European Parliament, to discuss these issues. It is essential that the Government do not overlook the role of that Parliament in the reform process, as its approval is likely to be required for any legislative proposals that emerge. What assurances can the Minister give us that the Government are actively engaging with the European Parliament?
I acknowledge that, at the time of our report’s publication, the Prime Minister had left a good impression with other member states thanks to his efforts to engage with them ahead of the June Council. We stressed that the onus was on the Government to explain what they seek to achieve by way of reform, and to ensure that such positive momentum was not lost. It is therefore regrettable that a number of member states, notably Estonia and Finland last week, as well as the EU institutions, have expressed frustration at the lack of detail on the Government’s reform objectives.
The Prime Minister last week promised to “quicken the pace” of negotiations and reiterated that he will write to the President of the European Council, Donald Tusk, in “early November”, setting out his position in more detail. The calendar tells us that we have now arrived in early November. Can the Minister tell us when the stamp will go on the letter which is so greatly anticipated by all? Can he also provide clarity on how the letter will be brought to the attention of my committee and the House?
On the subject of parliamentary accountability, our report acknowledges that the sensitivities of the process meant that the Government were unwilling, in their words, to provide Parliament with a “running commentary”. Yet, the committee also warns in it against presenting Parliament with a fait accompli. The Government have consistently repeated the mantra that Parliament will be kept informed. Yet actions speak rather louder than words. By way of illustration, last Friday’s Financial Times reported that the Chancellor was pushing for an “emergency brake” to safeguard the interests of non-eurozone countries. Is there any truth to this? If so, when will Parliament be given an opportunity to scrutinise or consider such proposals? It has come to a poor pass when Parliament must rely on media reports, rather than the Government, for the latest update.
To give another example, two months ago the Minister assured the House that the Foreign Secretary would be willing to appear before my committee, but we have yet to receive a response to our invitation to him to do so. Will the Minister repeat his assurance this evening and assure us that we will get a swift response to our outstanding invitation?
Equally, given the profound implications for the nations of the United Kingdom, we feel that it is vital that the Government engage fully with the devolved institutions. We, for our own part, are seeking to do so. Last month we visited the National Assembly for Wales, where we met the First Minister and the Assembly’s Constitutional and Legislative Affairs Committee, and we will be travelling to Belfast and Edinburgh over the coming weeks. We therefore note with concern that our colleagues in the Scottish Parliament have apparently been met with a brick wall in their efforts to secure an evidence session with the Minister for Europe. What assurance can the Minister here tonight give us that the Government are engaging with counterparts in the devolved institutions, including meeting their legislatures’ committees—and, more to the point, taking their views and concerns into account during the negotiation process?
Our report also dwelt on the question of treaty change. We accept that it is not feasible for changes to the EU treaties to come into force ahead of a referendum. Nevertheless, the Government are right to seek to ensure that any agreement on key aspects of a reform deal is legally binding. Two potential precedents are the 1992 Edinburgh agreement, by which Denmark secured legally binding opt-outs to be incorporated in future treaty change, and the guarantees offered to Ireland before its second referendum on the Lisbon treaty, which were contained in conclusions of the European Council.
In the absence of firm details, the report found that it was premature to examine the Government's policy priorities at this stage. However, the committee naturally takes a close interest in the question of enhancing the role of national parliaments. We have no principled objection to the Government’s proposal for a red card, by which national parliaments would be able to block unwanted legislation. Yet viewed in isolation, it could give the misleading impression that national parliaments should, or could, only play a blocking role. If the Government are serious about enhancing the role of national parliaments, they should explore means such as our own proposal for a “green card”, whereby national parliaments could make a positive and proactive contribution to the development of EU policies and legislation—which could, of course, include proposals for deregulation or decluttering the system, as well as altogether new innovations. Can the Minister give us an assurance that the Government will take the green card model seriously in their forthcoming negotiations?
To conclude, we recognise that the question of UK membership of the EU is only one of several fundamental issues facing the EU at present. Nevertheless, as our report says, the process that is now under way,
“presents significant challenges and opportunities, not only for the UK, but for the EU as a whole. As the Prime Minister has stated, the package of reforms … should be for the benefit of every nation and citizen of the EU”.
For the committee’s part, we will continue to engage with the Government, the devolved institutions, the EU institutions and other member states, in particular in the context of our new inquiry, entitled “Visions of EU Reform”. However, that debate is for another day. For the moment, I commend this report to the House and look forward to contributions from noble Lords on all sides.
Lord Howell of Guildford (Con)
My Lords, this is a good report from a very able chairman, my noble friend Lord Boswell; I congratulate him. When we consider the colossal implications for the whole future of our nation for years ahead, quite why we should be debating this matter late in the evening, in the dinner hour, puzzles me. Sometimes the arrangements for business in this House baffle me, and this is one of those times.
For me, the last paragraph of the report, to which the noble Lord, Lord Boswell, has already referred, is the most important, because it emphasises the fact that reform,
“should be for the benefit of every nation and citizen of the EU”.
That suggests that one gigantic piece of the whole jigsaw of the negotiation process, and the policy behind it, is still missing. The missing bit is what I call the deep reform agenda—the careful unpacking of the old 20th-century EU model, which everyone knows is obsolete—that is the view of the vast majority throughout Europe—and its reassembly in a form fit for the digital age. Some people call that the “somewhat looser Europe” model.
The challenge is not actually a British problem: it is to create a modern and resilient European Union. That is what millions of people throughout Europe want—and all the blogs and all the airwaves we see and hear every day are full of new ideas along those lines. Even the most ardent Europeans know that the European Union’s core institutions and procedures must be revisited. That is the essential context for the negotiations.
My question, which is prompted by the excellence of the report, is simply: where is the British contribution to this deeper debate? If we are against ever-closer union, what kind of union, or co-operative structure, do we want to work for Europe, both in Europe’s best interests and in our own, assuming that we want to see Europe enjoying stability and prosperity, never again to be destroyed by the horrors of the 20th century?
There are answers to that question, and I hope they are ones that the committee, under my noble friend Lord Boswell, will address in the future. I shall give your Lordships a brief list. First, the nature and scope of the competences—the powers—of the European Union, and the allocation of powers at different levels between the Union and nation states, need the most thoroughgoing review. The balance of competences exercise conducted by the Foreign and Commonwealth Office was not thoroughgoing. It did not look at the essential point that many of the competences, the boxes into which they were put 20 and 30 years ago, and the definitions, are simply out of date, or muddled. They do not match the nature and shape of the modern economy at all. Energy policy is a classic example of that.
Secondly, the nature of the single market itself needs total re-examination. The single market today is something quite different from what it was even 10 years ago. There are entirely new supply chains, a whole new pattern of trade agreements around the world surrounding the European Union—what has been called a spaghetti bowl of global trade agreements—and new world markets which hardly existed 10 or 15 years ago. There is far more ambiguity in the rules of origin of any product or service. One could elaborate on that but that is the reality now.
Thirdly, the doctrines of standardisation of rules and integration, which were economically fashionable in the 20th century and which argued for more and more cohesion, size and scale, no longer apply in the digital age. The opposite is now the reality.
Fourthly, the whole subsidiarity process needs vastly expanding and applying rigorously to existing overcentralised and outdated acquis. This is acknowledged by everybody privately but somehow does not come into the negotiating scene.
Fifthly, fewer central powers for the European Union would mean a more limited area for EU laws and the European Court of Justice. There have to be laws governing the good conduct of trade but they should cover far fewer areas than they do. EU legislation anyway, as every lawyer will tell you, is full of problems that need uncovering and reforming. In that context, we also need context to look at not just the relations between the European Parliament and our national parliaments but at the role of the European Parliament itself, which also needs reform and which many people are very uncomfortable with.
Then there is the euro currency’s problems which, of course, are chronic and insoluble. As even the Financial Times, the great cheerleader for these things, warns, there will be unending crises. Any day of the week you can see a profound pro-European commentary in the Financial Times warning us of that. My own view is that modern Europe should leave the whole eurozone system to wither on the vine.
The great principle of freedom of movement in Europe is, of course, crumbling before our eyes. Again, it is not just, or even mainly, a British problem. Recent weeks have shown that very clearly.
Obviously there must be treaty change eventually. I think that is mentioned in the report. Ministers keep admitting it. The Prime Minister has conceded it in the past and, indeed, has argued for it. Clearly, there is no time to do that between now and 2017, or whenever the referendum comes, but the process should be set in motion for another intergovernmental conference to bring forward the reforms that are wanted by everyone throughout Europe, not just by Britain and one or two other countries.
Reform must come before, or at least alongside, renegotiation. That is the essential framework without which just negotiating a list of demands makes no sense at all. The Prime Minister has said that the EU is an organisation in peril, and so it is. It is riddled with crises, of which the refugee and migrant issue is only the latest. There will be many more and there have been many more. Negotiating with an unreformed European Union is negotiating with yesterday. Our focus should be on negotiating with tomorrow.
Lord Desai (Lab)
My Lords, I very much welcome the committee’s report. As the noble Lord, Lord Boswell, said, we are not deciding whether we are in or out; right now we are looking at the process by which the negotiations will be carried out. The report points out that the structure with which we are negotiating is a very complex, multitiered one. As Henry Kissinger once said, “You never know who to call to find out the mind of the European Union”. On the one hand we have the trinity of the president of the Council, the president of the Commission and the head of the Parliament to talk to, then there are the 27 countries. On the other side, there is not only the Westminster Parliament but also the devolved Administrations, so it is a very complex process.
I do not know whether we have the time to do an adequate job in this respect, with negotiations starting, as it were, after the election victory, and given that we are setting ourselves a deadline of having a referendum by the first half of 2017 to avoid the fact that in the second half of that year we will hold the presidency of the European Union. It would be reassuring if the Government could tell us that they have a strategy, the machinery and the lines laid down that will, in good time—that is, by the end of 2016 or very early in 2017—let us look at what has been agreed and what has not. As I said, this is not the time to go into what we should or should not insist on. One thing that would be clear from this process is that if we stay in—as certainly I hope—we ought to go much further in reforming the governance structure of the European Union than at present. At present it is neither fish nor fowl; it is not a confederation; it is not a federation. The whole euro crisis has shown that it is a very inadequate form of governance and perhaps we could reform it. Of course, we will have our own agenda to negotiate with the assembly of bodies we are negotiating with, and I wish the Government luck in whatever they say.
I will add just one more thing because I do not want to go on for too long. There is a question about whether the Government can take Parliament into their confidence. That is a tricky one, I understand, because to take Parliament into their confidence as the process is going on might disrupt the process. I have a helpful suggestion for the Government. I think they should constitute a small committee of privy counsellors in both Houses of Parliament and, on Privy Council terms, let them know what is going on. They can be trusted—let us hope—not to blabber, and to give the Government good advice on what they, as representatives of Parliament, think about the process. That may be an adequate bridge between consulting Parliament and not being able to tell everybody what is going on.
Lord Lawson of Blaby (Con)
My Lords, I join in the congratulations to my noble friend Lord Boswell and his committee on having produced an interesting report and having elicited a perhaps even more interesting written response from the Government. I must declare some interests. I am a member of the EU Financial Affairs Sub-Committee of the European Affairs Committee now, but I was not when this report was being produced; I am president of Conservatives for Britain; and my home is in France. I think that is all the declarations I need to make now.
The central question that was asked in the report is: what exactly are the Government up to? What are their negotiating demands? What are their requirements? We had a somewhat inadequate response, but a response of sorts, in the Government’s written response to the committee’s report, and we have heard a little bit more today, with the Chancellor of the Exchequer’s speech in Berlin. I have a high regard for the Chancellor of the Exchequer but I found his demands—or requests—in Berlin today disappointingly unambitious. However, what he did reiterate, which the Prime Minister has said on a number of occasions, is that we need an opt-out from ever-closer union. That is certainly necessary. At least since the Solemn Declaration on European Union in Stuttgart in 1983, and probably before, it has been clear that the objective was the creation of a single state—a united states of Europe, albeit of a federal nature—and that is not something that we wish to see; at least, it is certainly not something that we wish the United Kingdom to be part of.
What does an opt-out mean in practice? There are two things at least that are characteristic of a single state. One is that it has its own currency and the other is that it has control of its own borders. In a single state, as in the United States of America, there is free movement of people from the northern United States to the southern states and so on, but the state has control of its own borders.
We have the first of these—control of our own currency—and the Chancellor of the Exchequer may be right to say that the European Union must resile from the claim that the euro is the currency of the European Union. But we do not have control of our own borders and it is necessary that we achieve this. The Prime Minister’s suggestion that this is simply all about welfare benefits is nonsense. The vast majority of people who wish to come to this country, whether from the European Union or outside it, come to work and not to claim benefits. Some do it to claim benefits but they are a tiny minority. We have to achieve not merely securing our own currency, which we have, but control of our own borders. That must be a condition.
There is also a third requirement. Under the spirit of ever-closer union, although it will be presented as bringing economic benefit—not that it will—there will be a continual flow of integrationist legislation and regulation from the European Commission in Brussels, and that is not something which we can block. We have not been able to block it hitherto but, at least technically, we might have assembled a coalition of member states to block some of it. But from next year, the eurozone countries will have an automatic qualifying majority, and since everything requires only a qualifying majority and not, understandably, unanimity, we will not be able to block it. Therefore we have to seek to build on the Luxembourg compromise, to which the French used to attach such importance at the time of General de Gaulle.
We should have an agreement that if we believed anything to be contrary to the fundamental interests of this country, we should not block it—as General De Gaulle wanted to do—but it should not apply to the United Kingdom. This is particularly important in the field of financial services. I noticed that in his speech in Berlin today, the Chancellor of the Exchequer made much reference to the problems of European legislation in this area. Even then, if we secured all these things that I have talked about, we would still be unable to negotiate free-trade agreements with third countries. Even then, there would also still be the democratic deficit or what Andrew Tyrie MP, the chairman of the Treasury Select Committee in another place, has called a crisis of legitimacy—because that is what it is.
In a recent speech in Iceland, the Prime Minister stressed the need for, in his own words, continued access to the single market. That is most misleading. The single market is frequently misunderstood and it is not merely the Prime Minister who gets it wrong. The single market is the single regulatory system. Understandably, when the European market was intended to be a “single market” and there was the common external tariff but no tariffs within the member countries, trade did not flow freely because each country had its own regulatory system, and they were different. The single market initiative simply created a single regulatory system—so “access to the single regulatory system” makes no sense whatever.
The Prime Minister also said that the arrangements that Norway has with the European Union are not good enough for us. Curiously, he failed to mention Switzerland, which has a better arrangement, but he is right about Norway. It is a small country, with a correspondingly small negotiating strength. Just compare these two figures. The exports of goods and services to Norway from the rest of the European Union, apart from this country, amount to £50 billion a year. Exports from the rest of the European Union to the United Kingdom amount to £300 billion a year—about the same, incidentally, as they do to the United States. That suggests that we ought to be able to negotiate an arrangement which is six times as good as Norway has done—and I will settle for that.
I recall that a couple of years ago my old friend and former homologue, as we say in France, Jacques Delors, the father of the euro, said:
“If the British cannot support the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis. I could imagine a form such as a European economic area or a free-trade agreement”.
I will settle for that, too—and so, I believe, would the British people.
Lord Hannay of Chiswick (CB)
My Lords, it is always a pleasure to follow the noble Lord, Lord Lawson of Blaby, but I will spare the House a description of the very large number of areas in which what he said relates more closely to fantasy than to reality. Speaking as someone who is no longer a member of your Lordships’ EU Select Committee, I can without embarrassment or self-congratulation say that the report we are debating maintains the high standards of topicality, forensic inquiry and probing of the Government’s positions which remain the mark of the committee’s work. The same can be said of the opening remarks of the committee’s chairman, the noble Lord, Lord Boswell of Aynho. If I have a criticism of this report, it would be that it is overly focused on process and says too little about the matters of substance that are at stake. I would hope that the committee will remedy that shortcoming in further reports as we move closer to the date of the referendum.
In paragraph 49 of its report, the committee, very wisely in my view, urges the Government to engage fully with the devolved Administrations. The Government’s response to this recommendation can best be described as limp and inadequate. The consequences of a vote to leave the European Union for the three devolved Administrations could be dramatic, and would certainly be irreversible. The risk that Scottish and Welsh votes to remain in the European Union might be overturned by an English vote to leave is extremely likely to trigger a demand, in Scotland at least, for a further referendum on independence.
The risks in Northern Ireland are different but even more severe. In the event of the two parts of Ireland emerging with one part inside the European Union and the other outside, we could find ourselves slipping towards a re-establishment of border controls on goods, services and people. This would be a major backward step, fraught with political dangers. So would a loss of the European arrest warrant, which has underpinned the depoliticisation of the island-wide fight against terrorism and organised crime. One should not underestimate the importance of that particular instrument. The issues at stake in Scotland, Wales and Northern Ireland really need to be better understood and more fully debated. Otherwise, we could be sleep-walking towards a binary choice best described as that between two unions and no union.
The committee’s report rightly devotes a good deal of attention to the role of national Parliaments in influencing and shaping EU legislation. The committee’s comprehensive list of ideas in this area remains, I suggest, the best available quarry for possible reforms. The Government’s attachment to the terminology of a “red” card is, I fear, too likely to prove both misleading and counterproductive: misleading because there is no question of a single national parliamentary veto being agreed and counterproductive because red card terminology will cut across the necessary task of gaining support in other member states for the strengthening of the existing yellow card procedures so that they work more effectively. This is a case where the Government’s and your Lordships’ House’s objectives are cutting with the grain of European opinion, but they could be damaged by overbidding.
In last night’s Committee proceedings on the EU Referendum Bill, there was some mockery by those who advocate the UK leaving the EU of the fact that those of us who advocate Britain’s best interests being served by remaining in the EU are focusing attention on the weaknesses of the possible alternatives to membership in the event of a vote to leave. But to do otherwise would surely be to display astonishing complacency, which could only bring its own nemesis. Moreover, those who advocate leaving need to explain and to defend the alternatives they favour, if the electorate are not to be duped and left completely unaware of the consequences of the decision they are being asked to make.
The problem is that there is no agreement among those advocates of leaving on the alternative to be picked. Do they favour the Norwegian model, the Swiss model, the Turkish customs union, a WTO membership framework or simply a leap in the dark? Nor is there any agreement among them as to whether the UK outside the European Union would set a tariff lower than the common external tariff, higher or, perhaps, just the same—in which case, what on earth is all the fuss about? These are all important choices that need to be made and to be set before the electorate before they make their choice.
So there are plenty of substantive issues relating to the referendum, and they do not involve—here I respond to a point made by the noble Lord, Lord Boswell—taking sides in it, which I entirely agree would be quite inappropriate. But there are issues here on which our Select Committee could turn the spotlight of its attention. After the noble Lord has completed the trio of visits to Wales, Scotland and Northern Ireland, it would be extraordinarily valuable if a report could be produced setting out the main issues that have arisen during those visits and the conclusions of the committee on the attitudes of the devolved Administrations as, so far, we are in total ignorance from the government side of what those attitudes are. There is not a word in the reply to this report about their attitude; it merely says that the Government are engaged with them and that, if they are jolly lucky, Mr Lidington might go and see them one day. I think that we have to go a bit further than that. Of course, whether the committee takes up such a matter is of course entirely a matter for its present membership and not for a former member like myself.
Lord Hamilton of Epsom (Con)
My Lords, when I was a member of European Union Sub-Committee A, we produced copious reports. Most of them were pretty dull and boring as far as most people were concerned, but I must say that this report takes the biscuit—it really does. This is the most fantastically missed opportunity. I know that it is the convention of this House that I should congratulate my noble friend Lord Boswell on such a wonderful report, but I am not going to do that. I am actually going to address the report; I am not going to rerun the campaign, which is what we have been doing over the past few days in Committee on the European Union Referendum Bill. It is quite interesting that there are 19 members of the Select Committee, and only one is here tonight to debate the report—and that is the chairman of the committee, my noble friend Lord Boswell. I am not surprised that the other 18 have copped out; I would not want to put my name to this report, because it is a very dreary contribution to the debate.
Let us look into all this, because what is being negotiated in Europe is extremely complicated. People do not understand—or I, certainly, do not understand—what the different options are facing the Government if they want to get concessions out of Europe. There are three categories. There is the sort of stuff that can come through as a press release, which basically makes no difference to anybody and is probably stating the obvious. There are then certain measures that have to be taken which involve treaty change but, as I understand it—and I am more than happy to be put right on this, as we have great experts here this evening—if we are amending an existing treaty, and that is all that is involved, that can probably be ratified by national parliaments and does not involve a referendum. On the other hand, if what we are talking about involves a new treaty, at that stage we are in the business of ruling the thing out completely. The reason for that is, as stated by President Hollande of France, that he is not going to countenance the idea of a new treaty, because under the French constitution he has to hold a referendum and, if he holds a referendum in France on a new treaty he thinks—and he is probably right—that Le Pen would beat him. That seems to be sensible, logical politics. The Dutch would have to have a referendum, and I should think that they want one like a hole in the head, and the Danes are in the same position. The Irish would be extremely reluctant, and under their constitution they have to hold a referendum on a new treaty. So anything that is a concession given to our Prime Minister that involves a new treaty is actually not going to happen.
On top of that, I would have hoped that the committee would have looked around Europe and seen where we had friends and where we had enemies in terms of measures that we might put forward—what countries might support us and what countries would be against us. That would be a constructive element in this report, in response to the very vexed questions that we face. One big question, as raised by my noble friend Lord Lawson, is on the free movement of labour, which as I understand it involves a new treaty. On top of that, I do not think that a renegotiation has the support of member states of the EU. So on two questions, it is actually ruled out as something that can be negotiated, so we can forget about free movement of labour. I suspect that the Social Chapter and employment legislation would fall into the same category—that they would need a new treaty and, therefore, that is not going to happen. Also I doubt whether there is support for that within the EU.
We have to clarify what is going on here, what is negotiable and what is not. When the Government discovered that free movement of labour was completely unnegotiable, they started talking about depriving immigrants who come into the country from the EU of benefits. I gather that that has had a certain amount of flak from the Poles, who are not very keen on it. I am speaking off the top of my head, and I am happy to be rectified—I had rather hoped that the report might put one straight on these things—but I gather that that would involve amendment of existing treaties and therefore could be ratified by national parliaments. Then we go through all the things that have been raised by the Government, which they say they are negotiating about, such as ever-closer union. I must admit that, in my ignorance, I thought that John Major years ago negotiated that we did not have to be involved in ever-closer union, but I am told that that involves treaty change as well. Then there is the support for the single market and the financial services. It seems to me rather amazing that a number of countries in Europe have managed to exempt themselves from the single market in financial services, but that seems to be what happens. I thought the single market was designed to cover all areas of activity, but quite clearly it does not.
Then there is great determination that defence policy should remain the sovereign responsibility of this country. I am not sure an awful lot of negotiation needs to go on about that because that is the position as it stands now, and although there have been efforts to pool defence capabilities in Europe, I do not think they are getting very far.
There is lower EU spending. The noble Lord, Lord Kerr, will remember the times when we used to look at the reductions in the EU budget and compare it with the great undertakings. For some reason, whenever it had been reduced, we found it had actually gone up, and there was some very magical form of accounting which meant that lower spending meant that you spent more.
Reform of the common agricultural policy and structural funds are another area on which the Government are apparently looking for concessions. I remember when half our rebate was given away by Tony Blair in return for reform of the common agricultural policy. Of course, nothing has actually happened since, so I do not think we have to worry about that too much.
At the end of the day, we have a big problem—this has been alluded to by my noble friend Lord Lawson—that if the eurozone is going to survive, it has to have fiscal and political union. It has to come together, and inevitably we are going to be outside that, in which case we will be excluded. Decisions will be taken by the members of the eurozone who have a majority in the Council of Ministers. We have this great debate on whether we are going to be like Iceland or Norway, but at the end of the day if we stay in the EU we will be like Iceland and Norway because what will happen is the eurozone will hand down decisions that have been made by the eurozone members of the Council of Ministers and we will have to go along with them. It is extraordinary that we seem to be going on endlessly about the awful fate of being outside the EU and being like Norway and in fact we are going to be inside the EU and still have the fate of Norway.
A great deal has been made of the signing of trade deals. This is one of the other things the Government are very keen on getting agreement on. There are a number of trade deals. There are trade deals with the United States of America, China, India and Japan, and to date none of them has been ratified or signed. We hear constantly about how it is so much better to be a large unit representing 28 different countries to achieve trade deals, but when it comes to the main countries in the world that we want to do business with, to date we have not signed a free trade deal with any of them.
We are going to get concessions from Europe that we can remain a multicurrency EU. Is that not a wonderful thing? As long as you have people who are outside the eurozone, they will have their own currencies and we will inevitably be a multicurrency EU, so I do not think that is much of a concession either.
It would have been nice if this report had explored these issues. We know what has been debated, but the reality is that the committee, about which I have the gravest doubts, made up its mind. It did not want to say that our Prime Minister is an emperor with no clothes, so therefore it produced this perfectly absurd report which has not addressed any of the issues that are of any interest to anybody whatever. I am very sorry that I cannot support my noble friend Lord Boswell and congratulate him on producing it.
Viscount Brookeborough (CB)
My Lords, I shall change the tone by thanking my noble friend Lord Boswell, so he can be relieved to a certain extent, and the EU Select Committee for this short but, I agree, very light introduction to the referendum and reforms. I agree with much of what the report says, but it is very vague and does not open up all the issues. We look forward to something further from the committee.
I would like to comment, and perhaps plead, on two issues. The first is enabling the electorate to understand the issues and the reforms by keeping the language as simple as possible. My noble friend Lord Hannay has already brought up the second, which is the engagement of the devolved institutions in our nation: Scotland, Wales and Northern Ireland, where I come from.
I could not believe this, but I have been in your Lordships’ House for 28 years this month. Most of that time I have spent on EU sub-committees, except when I have rolled off—rather too regularly—and, once, on the EU Select Committee. I was on the finance and economics sub-committee until this spring, which caused quite a stress level from my point of view, coming from rural Fermanagh in Northern Ireland, where, in order to get money out of a bank, it appears that you need a JCB and to do the job quickly. However, I have been enlightened that there are better ways of doing it.
I have been involved in many inquiries. They have stretched from the irradiation of food, which should have been taken on but was not because, in the view of most of us, the EU quashed it; carbon trading, which made millionaires out of people who did not even know what a tonne of carbon looked like and could not explain it, and I am not sure exactly how cost-effective that has been; the financial transaction tax and banking union; and other subjects, many of which would now be in the realms of whether there should not be reform of the powers that the EU has had in order to override other people.
As Members of this House, we are in a privileged position. But the language in which most of the report is termed is beyond the average person in the street—the citizens who are leading a busy life. I am not maligning them but we all have other things to do, and without them doing their work we would not have an economy. So we simply have to look at this in a reasonable light for them. The negotiations will be and are hard work and very complicated, and we accept that, but they must be explained in a way that the public can understand. I remember, as might some noble Lords, a wonderful lady, the late Baroness Elliot of Harwood. She seemed to remain on the Agriculture Committee and never left it, whether I was on it or rolled off it. She would sit there and after amazing evidence from whoever, her first question was always, “Why can’t you speak plain English?”. She was part of our privileged society, yet she was saying that. Perhaps we should have a ministry of plain English in her remembrance. Okay, obviously we would not, but in order to translate so much of what we are doing at this moment in the process of EU reforms and so on, somebody must be able to put it all into a language that people understand.
The progress must be transparent and comprehensible to the vast majority of people in their own homes. It must not require them to go to meetings and become politicised by attending rallies. We should just remember one thing: inasmuch as we discuss it, and the Government do a certain amount of negotiation and may or may not tell us about it, we are not the people who will decide that referendum. The people who will are outside this Chamber, this Palace and this city, and if we do not achieve something on this we need not be surprised when the emotional vote comes out.
As my noble friend Lord Hannay mentioned, paragraphs 47 to 49 deal with the issue of the devolved institutions. I share his disappointment not in the performance but in the attention of the Minister for Europe to this issue. It is not very impressive, because when he was asked various things at paragraph 47, a paraphrase of his answer is: “UK membership—reserved matter. Not for them”. But every single bit of what is agreed will have an impact on every single bit of the lives of people in those areas, and in my own area of Northern Ireland. He says that there is no veto, but there is only no veto if the poll is so far apart that the numbers of people in those devolved areas cannot change it. To leave them out of it and then antagonise them into perhaps a different way of voting will give them a veto—so basically, he is wrong.
It says that their interests are “to be respected”. The respect agenda has not worked very well with devolved parts of the United Kingdom, and that applies to both sides. When I have been on committees and in my case have asked the Northern Ireland Executive to give us an opinion on something, either it has not arrived at all, or, on a very good day, it has arrived just after we have done the report. However, it goes both ways. We do not give them the chance, therefore we cannot expect to be respected at all. We have to do something about it.
Lord Wigley (PC)
If indeed there is a reluctance or a refusal to engage from the point of view of the Minister in London with the attitudes of the devolved Assemblies, would the noble Viscount accept that those devolved Assemblies have not only a right but a responsibility to give a leadership to the people within the devolved territories as to how they should address this question?
Viscount Brookeborough
Absolutely. I agree entirely with what the noble Lord said. All I am saying is that it is a two-way thing and that it cannot happen without people respecting each other, getting on with each other and talking. I note, too, that the Minister says that he will visit Scotland, Wales and Northern Ireland by the end of the year. That is very nice—that shows a lot of urgency, does it not? We are talking maybe— according to my noble friend Lord Boswell—about a referendum perhaps not in the new year but in the early part of it. It is crackers—sorry, I mean it is a bit bemusing.
We also have the problem—which I do not want to go into because it goes into devolved things—that we have three hugely devolved systems, so nobody knows how to deal with each system, and each one demands something different from the other. I know that Northern Ireland was devolved first, therefore you would not have taken it as a model. However, would it not be lovely if we had a devolved package, and, if somebody wanted to be devolved, they could be devolved, with a package? That would end all the further demands for corporation tax, for this and that and everything else. You would get it or leave it. We are now going into powers for Manchester or further into the north and maybe the west of England. We are inventing things by the day, and how will we deal with them, because it is not an EU thing? However, on this issue, it is.
Scotland has been through a referendum; perhaps it went through an emotional vote, but I will not argue about that. However, it was quite interesting to talk to people in Scotland about their motivation. When one said, “North Sea oil isn’t doing very well”, and so on, they would say, “Okay—we accept that. It may not be”. Then you would say, “Do you want to be like Iceland”, to which they would reply, “Actually, Iceland seems to be better now”—I was there the other day, and it has not destroyed them. “We want to try something new”. They want to do that because they cannot see what the Government and everybody else are going on about when it comes to the EU, because it is not explained.
I will make one small plea and then I will stop. It is from a Northern Ireland point of view; other areas have their own. We have the only land border with the EU, which perhaps means we can smuggle, but it means a lot of other things, too. We should also take note of the report of the Oireachtas Joint Committee on EU Affairs, in the Republic of Ireland, on the effects that a UK exit could have in Northern Ireland and Ireland as a whole. It is quite interesting, because the Republic is being very sympathetic towards us, and it knows how damaging an exit could also be to it if we exit; the Republic will have to take account of that. I believe the Prime Minister said that he would respect an exit decision if that should come through the referendum. Where is the Government’s plan B? If they accept that they may respect it, they must have a plan B. I hope that the Minister will lead us not too late into the night and let us know what the Government’s plan B is. Maybe it will not take him very long, because it might be quite short, but let us see.
What about our land border? What about the restrictions and tariffs for Northern Ireland? What about border controls, which have already been mentioned? Northern Ireland is an agricultural community—82% of farm incomes come from the CAP. What are the Government going to replace that with? The Minister may not have reckoned on the fact that peace funding will have given £5 billion by 2020. Are the Government going to replace that because it means a lot?
This report raises important issues but only as an introduction. We look forward to a more detailed inquiry, sooner rather than later—clarity is the key. I appeal to the Government to try a bit of clarity for once.
Lord Suri (Con)
My Lords, having heard noble Lords’ worthy speeches, I would like to say that I read this report with great interest. The authors have done an excellent job in uncovering the indicators which can signify the direction of travel for these negotiations. The information given to the public and us parliamentarians from the Cabinet Office and the Prime Minister’s office has been very light on detail. This is, to an extent, understandable, as these discussions are very much in flux, but I call on the Government to be more open with information on how the negotiations are progressing. One existing problem that the committee uncovered was that the existing principles and mechanisms for parliamentary accountability are inadequate and do not cover satisfactorily this sort of negotiation, which is extremely rare and has no precedent. Indeed, it would be a wise move to generate some sort of consensus on what Ministers should tell Parliament in cases such as this, to save future generations the arduous task of drawing up and entrenching new conventions.
Another salient point was how to guarantee treaty change. Some of the Prime Minister’s aims, as set out in the Bloomberg speech, will certainly require full-blooded treaty change, especially reform of ever closer union and the free movement of people—treaty revision will simply be inadequate. In the mean time, Ministers have refused to confirm or deny whether they are planning to use the 1992 Edinburgh agreement model, by which Denmark secured legally binding opt-outs to be incorporated in future treaty change, by depositing such agreements with the UN.
It is welcome to see from the report that the Minister for Europe is said to be pushing for greater competitiveness in the EU, but he has not said how he plans to safeguard the City of London from the onerous financial regulations that the Commission will be generating over the coming years. The UK is by far the largest financial hub in the EU and we must make protecting the financial services marketplace a priority in our negotiations. I feel that this could be rolled into the existing demand for greater subsidiarity in the red card system to simplify negotiations. Of course, I, along with members of the committee, welcome the Government’s efforts to enhance the role of national parliaments as part of the reform agenda.
The last salient point pertains to the committee’s recommendation of a green card system so that national parliaments can club together to propose new rules or reforms to existing ones. I feel that this would return power back to states more effectively than the veto that the red card system would entail. Controlling the process and outcome is far better than controlling the outcome alone. I thank the members of the committee for their detailed report.
Lord Kerr of Kinlochard (CB)
My Lords, I welcome the report with all the enthusiasm of a former member of a team who, sacked by the manager and sold by the proprietor, hears that the team is still winning. My enthusiasm is enormous.
I thought that the noble Lord, Lord Hamilton, showing all his customary understatement and finesse, was a little hard on the report. To even things up, I thought I would be hard on the Government’s response to it. It reminds me of the story of the old lady who said that she had greatly enjoyed “Hamlet”—it was full of quotations. The Government’s response seems to me to consist only of quotations of things said previously by the Government. I look forward to the Minister’s reply, in which I suspect we may hear some of them again. However, I hope that none of them will descend to the level of the first substantive point made by the Government in their response to the committee of the noble Lord, Lord Boswell:
“The Government has been clear that the outcome of the renegotiation will determine the timing of the referendum”.
I have never been in doubt about that but it is good to be reassured.
I want to make a couple of points about process, because the report is basically about process. The committee says at paragraph 69 that it found some of the foreigners a bit concerned at not knowing precisely what we want. The report is dated July. They may not perhaps be much the wiser now, but next week the famous letter to Mr Tusk may tell them. Actually, I thought that the Chancellor of the Exchequer’s speech to the BDI today told us quite a bit. In the passages that dealt with what seem to be much the most intellectually difficult and complex problem in the negotiations—the relationship between the euro-ins and the euro-outs—it seemed that what the Chancellor was suggesting to the BDI, although I do not know what he said to Mr Schäuble, was both reasonable and achievable. The noble Lord, Lord Lawson, suggested that it was a little unambitious—something about “reach and grasp” comes to mind—but “reasonable and achievable” is not too bad as an aim at this stage of the negotiations.
I admit that the process being followed is one I have never seen before. I worked for Mrs Thatcher, who had a rather different technique. Officials would be summoned and interrogated as to what the maximum was that we could possibly achieve. She would then publicly announce 120% of what the officials had advised. This was an excellent technique—it worked extremely well. For example, in the 1988 negotiation on the budget and the CAP, which started the process of bringing down the CAP as a proportion of the budget with the introduction of stabilisers on agricultural spending, in the end she settled with remarkable ill grace for 100%, denouncing her officials, her allies and her ministerial colleagues as feeble and wet. The foreign foe, defeated, went home able to say, “Well, at least we got 20% off her”. It was an excellent technique in my view.
I am a little worried about the technique of not saying what you want until you have established what you can get. From my point of view, it is a slightly unusual order in which to proceed. I suspect that real negotiations are going on—I know nothing—but that they are taking place on the basis of non-papers, without commitment and probably prepared not by British officials but by the admirable Council secretariat and Mr Faull in the Commission, to whom the noble Lord, Lord Boswell, referred.
That is fine, and it is rather the way that, in 1992, we, the British presidency, dealt with the Danish issue. It was a small circle and the Council secretariat played an important role, particularly the remarkable Mr Piris, then chairman of the Council’s legal service. But when we had the outlines of a deal, it was then spread EU-wide to successive meetings of the Committee of Permanent Representatives and then the General Affairs Council. Finally, when it went to the Edinburgh European Council, there were absolutely no surprises in it for anybody. Many had started out with suspicions—suspicions of the British for perhaps being in bed with the Danes, suspicions of the British for perhaps not wanting the Maastricht treaty to be ratified by Denmark. In the end, it was Mr Piris’s presentation of the text to the European Council, a well-prepared European Council, which saw the Danish problem solved and the Danes ratify Maastricht.
Blind-siding is always a mistake. The committee is absolutely right to say in the report that it has found some concern among other member states at not knowing what is wanted. It is really important that they should be brought in, because unanimity will be required in the European Council—that means Lithuania, Luxembourg, Slovakia and Slovenia just as much as Germany and France. Everybody has the right to feel that they have been consulted and their views taken into account. Blind-siding does not work. That should have become painfully clear to us in 2011, in the strange midnight disaster when the Prime Minister sprang a series of detailed demands on a European Council most of whose members are still not sure precisely what he was asking for, only to have the ridicule of Mr Sarkozy obliging Mr Cameron to walk out. Small circles are all very well, but well before an attempt is made to secure a European Council agreement, everybody has to be in some way brought on board.
It is perhaps worth noting that the deal that was struck for the Danes, like that struck for the Irish, did not involve either treaty change or a promissory note promising future treaty change—I mention this just as a footnote to paragraph 61 of the report. The texts that were agreed were common acknowledgements of statements the Danes made as to their intentions, and common interpretations—clarifications—of the treaty. They were legally binding. They took treaty form, in that at least one of them was registered at the United Nations as an international treaty, but they did not change the treaty of Maastricht, which meant that the ratification problems elsewhere did not arise.
I feel sympathy for the noble Lord, Lord Boswell, in his ceaseless attempts to bring the Government to account. This report is clear that it would be very good if the Government kept Parliament fully informed throughout. I understand that, but if I were in government, I would be doing exactly as the Government are doing. To be involved in a running commentary and a negotiation is not a good idea. If I were back in my old haunt as a faceless bureaucrat, I would be extremely anxious to avoid close parliamentary scrutiny of each negotiating move. I do not therefore criticise the Government. At some stage, they will have to tell the foreigners exactly what they want and they will have to widen the circle of those involved in the negotiation. But I would not myself be rushing to insist that at that point, we should cross-examine the Government as to their intentions. They will require flexibility.
I am sure that the reason why the Government are resisting the overtures of the noble Lord, Lord Boswell, has nothing to do with him. I am reminded of some of the noble Lord’s friends, possibly even the noble Lord, Lord Hamilton. It could be that they worry the Government. I am also reminded of the Duke of Wellington, not the present one but the great Iron Duke, when he said of his army in Spain:
“I don't know what effect these men will have on the enemy, but by God, they terrify me”.
Mr Cameron may well have that in mind.
Lord Balfe (Con)
My Lords, I add my thanks to the noble Lord, Lord Boswell, for chairing the committee that produced this report. Whatever reports are produced on this subject, I am afraid that they will not please many people for a long time because it is a long-running saga. I have been part of this saga for almost as long as it has run. The opposition Benches are not fully staffed, but I can tell them that they have an organisation that used to be known as the Labour Common Market Safeguards Committee. It is run by a remarkable person called John Mills. I understand that he is the only person who has given a seven-figure sum to a political party and got nothing for it for it apart from running the Labour Common Market Safeguards Committee. It has been in operation since around 1971 and it has constantly niggled about the EU. At first it wanted the referendum to result in a no vote, which it did not. It then spent 20 years, from roughly the mid-1970s to the late 1990s, arguing for expansion and enlargement. It wanted the EU to do more and it wanted it to have more members. When you challenged the committee as to why, its members would say, “Because that is the way it will break down. It will break down under its own pressures”. That was the only reason they wanted it.
Of course, a number of noble Lords and Members of the other House have a long history in this. My good friend Kate Hoey has never hidden her reluctance, shall we say, to have anything to do with the EU and the people it represents. I am sure that the noble Viscount, Lord Brookeborough, will correct me if I am wrong, but she alleges that she represents a strong strand of opinion in Northern Ireland, because although she represents Vauxhall, she represents a good part of Northern Ireland as well, so this has been a long-running saga.
One of the saddest things about it is that it is a very short queue because only one country is actually talking about leaving the EU. Everyone else who is dissatisfied with the EU is talking about reforming it because they all realise that Europe is quite a small part of the world. It is made up of a number of small countries and even the biggest of them is not that big. Put Germany against Bangladesh, and I am afraid Bangladesh wins. So let us have a look at what we want to do. We will not get anywhere by constantly saying that we want to leave: “Our solution to your problems is that we will go away”.
What will happen if there is a no vote? Nothing will happen. Britain will have voted no and we will then start a long process of negotiation about withdrawal. I do not know whether it is an interest that should be declared, but I am the chairman of the European Parliament Members Pension Fund. I also served for a period as a director of the CERN pension fund in Switzerland. I mention that because many member states are represented in CERN and there are many member states in the European Union. At one point in CERN, we had to look at what the consequences of a member state leaving would be. We decided that the pension fund would have to buy out its liabilities. Buying out liabilities from a pension fund on an insurance basis not only takes a long time but is extremely expensive. That is just one little corner.
I tell you what would happen if there was a no vote: there would be another referendum about three years later and it would be called a general election. Without predicting too much, I think noble Lords on the opposite Benches and their party would be saying, “We have had three years of negotiating to leave the European Union; the thing is a whole mess. We never wanted to leave anyway and if you vote in a Labour Government next Thursday, we will scrap the whole thing”. So a no vote would actually be a “let’s have another vote after you have got yourself into a thorough mess”, which is what would happen if we started negotiation for withdrawal. Do not doubt it: no one in Brussels would have any vested interest in making our process of withdrawal easy. Everybody would want something out of the pot as Britain goes. There would also be enormous complications. What would happen to the TTIP arrangements with the United States? Are we to withdraw from them before they are signed or will we go along with them? Then what will we do—have separate negotiations with the United States? Are we going to endorse TTIP and ask Congress to approve it, in two or three years’ time, because it is not covered by the decision that gives Obama the right to conclude the treaty? This would be a compounding of lots of different interests. I am not saying that we do not need reform in the EU: of course we do.
I shall finish with a different story. There is a lot of concern about migration in Europe, but let me retell a conversation I had in Frankfurt three weeks ago, with someone who is well placed to know the feelings of the German Government. The migrants are coming into Europe; Germany needs more population. Some people in Germany believe that the cost of absorbing the migrants, even 800,000 of them, would represent about 0.5% of its GDP, which is a really serious amount. However, within five to eight years, all that money would have come back into the economy because of the productivity of the migrants. Do you know what they said about the British Government’s brave idea that we would take migrants from the camps? The gentleman I was talking to said, “Fine. They’re the losers, Richard. The winners are the ones who have crossed Europe to get to Germany; they are the ones with the initiative and the get up and go. You go to the camps and take the people who want to stay there. The people who will build a modern Germany are the refugees”. That may be a controversial point of view but it is probably an economically sound one, if you look at the quality of the people who are now in Germany. I am not saying that we should change our policy, but when we look at mainland Europe we should not be full of pity, saying, “Oh dear, poor them”, thinking that none of them has thought it out or has any idea what to do, or that these people are just washing in and the response is, “Oh dear, poor little us”. There is quite a well-developed school of thought at the upper levels of European polity which says that we have to control the refugee crisis but it will not necessarily be the worst thing for our economy and our future. We should not forget that.
Last week I was in Turkey, monitoring the election. Turkey still wishes to join the European Union. It has been the wish of all three parties that have served in government that Turkey should join. Frankly, we have treated it disgracefully. We have treated it to promises and we have gone on about human rights, which are important, but we have used things to hide behind. We should start looking around Europe at the large number of countries that want to join. We should say that a stable Europe is one that has one of its biggest countries—namely, us—firmly anchored in the middle, pressing for the sort of reforms that many countries want and leading from within Europe, not this nonsense of sitting on the sidelines and constantly carping, which means that we lose influence because people say, “Oh God, you’re at it again are you?”. We can do much better than that.
Baroness Smith of Newnham (LD)
My Lords, I will endeavour not to detain the House for too long. As the noble Lord, Lord Howell, pointed out, we are already debating late into the evening. Many of us have been here debating late into the evening night after night. I note that we are missing the noble Lord, Lord Forsyth of Drumlean. I thought that he and the noble Lord, Lord Kerr, constantly had to spend time interacting, but he and the Minister, the noble Baroness, Lady Anelay, seem to have been given time off for good behaviour.
Some of us are taking part night after night in the EU Referendum Bill, which is now in Committee. As preparation for that, I read the excellent report produced by your Lordships’ EU Committee on the referendum and the reform process. Unlike the noble Lord, Lord Hamilton, I found it a useful document and one that very much sets the scene for what we are thinking about.
However, I feel a little as if I am intruding on private grief or an internal dispute, because so much of what we have heard is from the Conservative Benches: differences of opinion, whether the renegotiation is doing the right thing, what the renegotiation may or may not be doing and whether there will be treaty reform. Essentially, it is asking what the Prime Minister thinks he is doing. There seems to be quite a lot of dissatisfaction on the Conservative Benches.
In the very insightful comments from the noble Lord, Lord Howell, there was a comment about the timing for reform, renegotiation and referendum, and the fact that we ideally need reform to come first. However, it was not this side of the House or the Cross Benches that put forward the idea of reform, renegotiation and referendum. That was the Prime Minister in his Bloomberg speech of January 2013. It may have served him and his party well until 8 May 2015, but he now has to deliver it. The triptych of reform, renegotiation and referendum is very difficult to manage in the time he suggested. The fact that the noble Lord, Lord Hamilton, is struggling to know whether there will be treaty reform, whether it will be legally binding and how it will come about very much depends on what the Prime Minister, the Chancellor of the Exchequer and the Foreign Secretary are asking. In response to one of the points in the report, I say that those seem to be the three key figures from the Government who are leading negotiations—that is certainly what I have been told privately—but clearly the Minister for Europe is playing an important role.
We know broadly what the Prime Minister is asking for. On several occasions your Lordships’ House has been told by the noble Baroness, Lady Anelay, about the four baskets that the Prime Minister is talking about. We have heard them again in Berlin today in various different iterations from the Chancellor of the Exchequer. We have a sense of what is being asked for. Obviously we are all very much looking forward to the letter that is officially going to President Tusk in, we assume, the next few days.
I share the concerns of the noble Lord, Lord Kerr. While it is a nice idea that your Lordships’ House and the other place should get a running commentary on the negotiations—that we are apprised at various stages of what the Prime Minister is doing—it clearly is not appropriate for us to try to monitor the negotiations on an ongoing basis. We see that with the Danish model of mandating; one gets a Government who are very much constrained. Negotiations of this type—the noble Lord, Lord Kerr, has already said that he finds this a very strange sort of negotiation—are a complete innovation. Nobody has tried to negotiate prior to a referendum on potential departure before, so we are in unknown territory. The idea of Parliament trying to mandate the Prime Minister, to second-guess what he is doing or to ask too frequently for reports back, is unhelpful, I suggest.
The noble Lord, Lord Desai, had an interesting idea about a group of privy counsellors trying to listen to the Prime Minister and maybe advise him, but given the differences—
Lord Balfe
Is that not an extremely good idea, which would give Mr Corbyn, as a privy counsellor, something to do?
Baroness Smith of Newnham
I am not aware whether Mr Corbyn is yet a member of the Privy Council.
The thought is an interesting one—but given the differences of opinion that seem to persist, even on the Conservative Benches, in your Lordships’ House, the idea that a selected group of privy counsellors are somehow going to be able to give wise counsel to the Prime Minister when he is in the process of negotiating something that is a manifesto commitment rather than something that the ordinary man or woman on the street is necessarily demanding, and that they will be ideally suited to assisting him, is not persuasive.
On the subject of the man or woman on the street, the noble Viscount, Lord Brookeborough, made a first-rate point. I have not declared any interests, but my day job is teaching European politics at Cambridge University, and I occasionally get funding from the European Commission. I say that so that it is on the record, and your Lordships’ House does not feel that I have misled anybody, or failed to acknowledge it. I talk about Europe all the time, but there is a whole set of jargon used in discussing the European Union, which we need to get away from. Clearly, it is hugely important to have plain speech in the discussion, in the renegotiation and in the referendum. However, a fact that we often fail to recollect is that your Lordships’ House also uses language that is not necessarily common parlance in the outside world. It is easy to assume that the European Union has too many intricacies and is too complicated, when the language of British government is not necessarily straightforward either.
I shall now turn to a couple of final points on the report. First, it mentions bilateral engagement. The fact that the Prime Minister and other Ministers have now started talking to the 27 other Heads of State and Government is hugely important. But may I ask the Minister: to what extent is the Prime Minister going beyond bilaterals just with Prime Ministers, and also talking through party organisations and with sister parties? Is there an opportunity to work on a cross-party basis as well, and involve members of the Labour Party, or the Liberal Democrats, which also have sister parties with Prime Ministers in government? Yes, it may come as a surprise, but the Liberal Democrats do still have sister parties in government in other member states, which might possibly be able to give assistance in the negotiations. As the noble Lord, Lord Hamilton, said, there is an issue of, “Where are our friends, and where are our enemies?”. I think that none in the 27 countries would say, “We are an enemy of the United Kingdom”—but clearly some member states are closer than others. One of the important things is to identify the countries with which we can easily make common cause, and those with which we need to work harder. For those of us who believe that Britain’s place remains within the European Union, working on a cross-party basis, or even a no-party basis, with partners across the European Union appears to be one way of dealing with that.
Reform is important. We have heard that from the Cross Benches and the Conservative Benches. However, that reform must benefit the European Union as a whole. It cannot be done on a unilateral basis just for the United Kingdom. The idea of a Luxembourg compromise that works merely to enable the United Kingdom to opt out of things we do not like will not be the way forward. To keep the negotiations going with 27 other member states we need to work on a basis of compromise and co-operation. The reforms need to be realistic and to reflect the needs of the whole European Union. Most member states want the United Kingdom to remain in the EU, but not at any price. The Prime Minister needs to remember that if he is to get the deal which he is seeking, which this country and the European Union need, it has to be done on the basis of working to a common agenda, not one that simply appears to be pick and mix for the United Kingdom.
Like noble Lords on both sides of this House and our colleagues in other European member states, I very much look forward to the Prime Minister’s letter to President Tusk, but I also look forward to the next report of your Lordships’ committee on visions of reform.
Baroness Morgan of Ely (Lab)
My Lords, it feels as if we have been here for weeks, talking about the same issues for days and days, and we have more to come tomorrow, of course.
I, too, thank the noble Lord, Lord Boswell, and his committee for the report, which is very good as it talks about what is in the title—the reform process. It is not about the content of the negotiations themselves, but rather the process and mechanics of the reform negotiations. The report highlights a number of important areas on which the Government should focus their attention. The Government have not given us much back in terms of anything new or exciting, or any vision. They have kept their cards close to their chest, as they have done throughout the negotiation process.
The committee focuses on a few issues, including the timetable, and on the fact that the French and German elections have to be avoided. However, it has missed out the fact that a lot of other elections will take place in Europe between now and 2017. Spain will hold elections this December. Next year, Ireland, Slovakia, Cyprus and Lithuania will hold elections, as will the Czech Republic, Luxembourg and Holland. We ignore these countries at our peril. This is about not just how Germany and France feel about the British desire for change, but how every single member state feels about it. It is a shame that that was not alluded to in the report. We should please remember that every country is important in this negotiation.
We know, and hope, that David Cameron has learned the lesson that squaring matters with the German Government does not guarantee delivery, as we saw when he failed to stop Juncker being nominated as President of the Commission. He thought that was all sorted out because he did some nice little deal with Germany, but he did not manage to deliver on it. You have to go beyond Germany and France. Let us please learn that lesson. It is incredible to think that we are in line to take the presidency of the EU in the second half of 2017. What a situation that would be if we had just voted to come out of the EU. It would be absolute chaos, as the report rightly points out.
The killer point of the report is that the internal Whitehall process for handling renegotiation is unrealistic and unaccountable. There is no mechanism for keeping Parliament informed of the discussions, so we are all fumbling in the dark until the white smoke appears, when we are expected to cheer and celebrate. The report is highly critical of the complexity of the negotiations, and questions who is in charge. The noble Lord, Lord Desai, rightly brought to the attention of the House the question that Henry Kissinger used to ask: “Who do I phone if I want to call Europe?”. We have an answer to that now: Donald Tusk.
It took a while to get there, it has to be said, but we are there, and that proves that this is not a one-off negotiation; negotiations are constant in the European Union. We are constantly seeing reform. But imagine you are a civil servant in charge of social security in Latvia and you want to discuss in-work tax benefits; who would you call and how would you be sure that the line given by the Cabinet Office or the Department for Work and Pensions would be the same as that given by the Treasury or the Foreign Office? Can we be confident that they would give the same answer? The mechanisms of the process are unclear.
There would be a requirement for the European Parliament to approve any legislative proposals that emerged, so it would make sense for the Prime Minister to become very friendly indeed with the European Parliament very quickly. It has invited him to go and speak to it and present his desires for the nation, and I suggest that he take up that offer because it will be important for the Government to get the blessing of the European Parliament.
Lord Hamilton of Epsom
What should the Prime Minister say to the European Parliament when he gets there?
Baroness Morgan of Ely
The European Parliament has invited the Prime Minister to put forward his objectives for the reform process. It would like to know what they are—we would all like to know what they are—but it will have a say in the process. So it is about enlightening the European Parliament, and I think it absolutely right that he goes and presents to it. Once the letter has been written, we should all be in a better place, but it is taking a long time.
It is also important for us to take note of the points made by the noble Lord, Lord Hannay, about the devolved Administrations. They do not feel loved on this issue at all. It is important that they feel loved and feel involved. It is part of their nation that is being negotiated with. They need to be involved in that process, and a little visit, perhaps by the end of the year, when actually everything has more or less been decided about what we are looking to change, is probably not the best way to work with them. I suggest that the Government ignore the devolved Administrations at their peril.
The committee is also right to underline the fact that the implications of EU withdrawal would be profound for Gibraltar. The Government there have even gone as far as to suggest that this would create an “existential threat” to Gibraltar—imagine that. It is clear that Gibraltar will need some real reassurance on that matter.
We know there are four broad areas where the Prime Minister wants to see change. Of course, we are all waiting for that letter. It is true that a little more light has been shone on the situation today but the noble Lord, Lord Kerr, is right: the whole approach to this negotiation seems very odd. The Government should probably take some advice from junior doctors, who seem to have managed to negotiate a deal with the Government that the Government were not prepared to give. Taking some tips from junior doctors—or some pretty good trade unionists—would be a good place to start. This method of communicating and negotiating is not necessarily the best way to work.
I take issue with the Government’s response to the committee, especially their suggestion that they would like to reform welfare,
“to reduce the incentives which have led to mass immigration from Europe”.
I brought this to the House’s attention yesterday. It is a load of nonsense. According to the Economic and Social Research Council Centre for Population Change, a number of EU countries are as generous as Britain in terms of social security per head. France, Germany, Denmark and the Netherlands all spend more in real terms than the UK on social security. Last year, a European Commission report concluded that there was no evidence of systematic or widespread benefit tourism by EU nationals migrating within the EU, including to the UK. The UK is the only EU member state where there were fewer beneficiaries among EU migrants than among its own people. So let us stop this scaremongering and stop talking it up as an issue, when it is simply not true. According to the DWP’s own figures, 6.4% of those claiming benefits were non-UK nationals. That means that British nationals were two and a half times more likely to be claiming working-age benefits than non-UK nationals. I would like to hear the Minister withdraw that statement because I think it was misleading and wrong.
We would like to wish the Prime Minister all the best in his negotiations with the EU. The future of our country depends on it, and the stakes for the UK could not be higher. The Prime Minister does not have a great track record on working with his EU colleagues, so lots of diplomatic schmoozing will be essential in the next few months. The Prime Minister has painted himself into a corner on the EU date. While this issue might be at the very top of his in-tray, with the migration crisis unfolding in Europe, the effects of the financial crisis still unfolding across the continent and the tension between the EU and Russia, it is probably not a priority for any other member state. This year, following weeks of trailing, the start of UK negotiations was going to be on the agenda of the June EU Council meeting. How long was the Prime Minister given to bring up his ideas on the changes he wants to see? He was given 10 minutes. We were hearing for months that this was going to be the big occasion, but he was given 10 minutes. I hope, for the sake of the country, that he is given a better hearing in future. We hope and trust that he will do much better in his negotiations than he has in the past.
The Earl of Courtown (Con)
My Lords, this has been a quite excellent debate with some very varied and informed speeches.
The Earl of Courtown
Yes, we have been here for some evenings now and—please excuse me—it has all been blending into one debate.
As noble Lords will no doubt be aware, the Government published their response to the committee’s report on this issue on 28 September this year. They welcomed the report and responded to its recommendations in turn but things are moving swiftly on this issue, so let me begin by setting out the Government’s position before I turn to the individual points raised by noble Lords during the debate.
My right honourable friend the Prime Minister has been clear about the changes that are needed. He has set out four clear areas of reform. First, on sovereignty and subsidiarity, Britain must not be part of an ever-closer union, which may be right for others but will never be right for the United Kingdom. We want a greater role for national parliaments in the European Union.
It is vital that the European Union adds to our competitiveness rather than detracting from it. We need to sign new trade deals, cut regulation and complete the single market. On this, we have already made much progress. As the Prime Minister set out in his Statement to the House following the October European Council, there has been an 80% reduction in new legislative proposals under the new European Commission. We have reached important agreements on a capital markets union, on liberalising services and on completing the digital single market. We have also championed vital trade deals but there is more to be done.
On eurozone governance, we need to make sure that the European Union works for those outside the single currency as well as those within it. The single market must be protected and we must face neither discrimination nor additional costs from the integration of the eurozone. Finally, as has been mentioned, on immigration we need to tackle abuses of the right to free movement and deliver changes that ensure our welfare system is not an artificial draw for people to come to Britain. There is a clear process to secure these reforms.
Baroness Morgan of Ely
I am sorry, but the facts, as I pointed out, simply do not bear that out. I request that the Minister withdraw that statement because it is simply not factually correct. Welfare is not a magnet, as has been proved by a European Commission report, and I ask the Minister to withdraw the statement.
The Earl of Courtown
I have some notes for later in my speech that will refer to that point, which the noble Baroness made in her speech. As far as withdrawing something that I did not put out in in the first place, I understand what the noble Baroness is saying, but I will write to her on that and put a copy in the House Library if possible.
The European Union Referendum Bill has passed through the other place and is now making its way through this House. The Prime Minister has already met with leaders of all 27 other member states as well as with the presidents of the European Commission, of the European Parliament and of the European Council to discuss the reforms that we seek. Technical talks have been taking place in Brussels to inform our analysis of the legal options for reform. There will now be a process of negotiation between all 28 member states, leading up to the December European Council. The Prime Minister will be writing to the President of the European Council to set out the changes that we want to achieve.
I will now address the points raised today. The noble Lord, Lord Boswell, asked a number of questions in his speech, which I will do my best to answer. He asked whether my right honourable friend the Chancellor is leading on this and how he interacts with the Foreign Secretary and the Prime Minister. The Prime Minister is leading the renegotiation, working closely with the Chancellor and Foreign Secretary, supported by the Minister for Europe and Cabinet colleagues.
The noble Lord, Lord Boswell, also asked about treaty change. The Prime Minister has been very clear in his discussions with other leaders that the reforms we are seeking must be legally binding and irreversible and that, in some areas, that will mean treaty change. There must then be agreement to those changes before the referendum.
Lord Kerr of Kinlochard
I congratulate the noble Earl. He has proved my prophecy correct. The last sentence that he read out is there in the Government’s response—the same clichés in the same order.
The Earl of Courtown
I thank the noble Lord for bringing that to my attention. The noble Lord, Lord Boswell, also asked about the role of the European Parliament. We will work closely with the European Parliament and recognise the important role that it plays in the European Union’s institutional architecture, for example as co-legislator for secondary legislation and in scrutinising trade agreements. My right honourable friend the Prime Minister welcomed President Schulz to the UK recently, and the Foreign Secretary has also met key players in the European Parliament.
The noble Lord, Lord Boswell, also raised the subject of the key interlocutors in Brussels. As I mentioned earlier, the Prime Minister has met all the leaders, as well as the President of the European Commission. The technical talks, led for the UK by the Prime Minister’s Europe adviser and UK Permanent Representative to Brussels, have been taking place in Brussels, and there will now be a process of negotiation between all 28 member states leading up to the December European Council. The Prime Minister will be writing to the President of the European Council to set out those changes.
Lord Boswell of Aynho
I am most grateful to the noble Earl for how far he has taken this. Can he give any news—or at least an undertaking to reflect and report back—on the possibility of the Foreign Secretary honouring his undertaking to attend our committee?
The Earl of Courtown
My Lords, I was going to come to that. Yes, I will bring that point about the Foreign Secretary appearing before the noble Lord’s committee to the attention of the department.
A number of noble Lords mentioned the devolved Administrations, including the noble Viscount, Lord Brookeborough. The Government have been clear that they will continue to keep Parliament informed on the progress of this renegotiation. As foreign policy issues are reserved, relations with the European Union are the responsibility of the Parliament and Government of the United Kingdom. However, the United Kingdom Government involve the devolved Administrations as directly and fully as possible in decision-making on EU matters that touch on devolved areas.
The noble Lord, Lord Boswell, asked about the green card issue. The Government are committed to making it easier for national Parliaments to work together to influence the European Union’s decision-making. Many member states agree with the United Kingdom that there are shortcomings in democratic accountability in the European Union, and there is widespread support for enhancing the role that national Parliaments play. It is clear from the noble Lord’s letter to President Juncker that the House of Lords EU Committee—and, I am sure, the other committees around the EU—sees this as a way of shifting the political culture for the better within the European Union. The Government share that overall objective.
Several noble Lords mentioned the letter. As the Prime Minister said when he arrived at the European Council in October, he will again be setting out the four areas which we need to change and laying down what the changes will be at the start of November. The Government will continue to keep Parliament informed, and the Prime Minister will share his letter with Parliament.
My noble friend Lord Howell of Guildford referred to treaty change. The Prime Minister’s position that some of the reforms we are seeking will require treaty change has not changed. We must have agreement to such treaty change before the referendum. My right honourable friend the Prime Minister also said that Britain would benefit from being in a reformed European Union, but that a reformed European Union would also benefit from having Britain in it. The Prime Minister has clearly set out the four areas where we are seeking change, and I will not repeat them.
I take note of the suggestion of the noble Lord, Lord Desai, relating to a Privy Council committee, but Her Majesty’s Government continue to believe that the scrutiny arrangements are valid. Our strategy is reform, renegotiation and then referendum. We will work together with other countries to discuss and agree reforms, many of which will benefit the entire European Union, before holding a referendum to ensure that the British people have the final and decisive say.
The noble Lord, Lord Hannay, raised the question of national Parliaments and the red card. As I have already set out, the Government want a greater role for national Parliaments in the European Union. Many member states agree with the United Kingdom that there are shortcomings in democratic accountability, and there is widespread support for enhancing the role that national Parliaments play.
The noble Viscount, Lord Brookeborough, mentioned matters relating to enabling the electorate to understand the issues. At the conclusion of any deal, the public will rightly 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. As my right honourable friend the Chancellor of the Exchequer said in June, the Government will publish assessments of the merits of membership and the risks of a lack of reform in the European Union, including the damage that could be done to Britain’s interests. The noble Viscount also asked about plan B. The Prime Minister is focused on success. He believes that he can and will succeed in reforming and renegotiating our relationship with the European Union and in campaigning to keep the United Kingdom in the European Union on that basis.
The noble Baroness, Lady Morgan, mentioned welfare and migration. If I can add anything more, I will, but I will go through the note I have. We accept that the free movement of people to work is one of the four fundamental freedoms of the European Union, and these negotiations do not seek to curtail this freedom, but we want to protect the United Kingdom’s welfare system from abuse and reduce the incentives that encourage highly skilled workers to travel to the UK to do low-skilled jobs. This undermines economic growth in their countries of origin and belief in the fairness of free movement in destination countries. That means reforming welfare to reduce the incentives that have encouraged such mass migration from Europe, including the very generous way in which you can access our welfare system and in-work benefits almost on day one of arrival in Britain. We must also develop other freedoms, in particular freedom of movement of services and capital, to ensure that it is not just free movement of people that contributes to convergence of living standards across Europe.
Baroness Morgan of Ely
I am sorry, but the noble Earl keeps repeating things that are simply not true. I ask him to go back to the Department for Work and Pensions, ask for the figures and make sure that there is an understanding that this is not abuse in the way that people are making out that it is. Let us not talk up this issue, because it is not a problem—it is making a problem up.
The Earl of Courtown
I have already committed to the noble Baroness that I will take this back and look at it.
I disagree with the noble Lord, Lord Kerr of Kinlochard, over his suggestion about not revealing what we want. The Prime Minister has been clear and has spoken on several occasions about the areas where we are seeking change. Technical talks started in July, and their purpose is to explore the technical and legal options for delivering reforms. We are not going to give a running commentary on those discussions. Unsurprisingly, I agree with the noble Lord, Lord Kerr, about giving a running commentary, as also made by the noble Baroness, Lady Morgan. I add that his self-description does not do him justice.
This has been a fine debate, and I thank noble Lords for their important contributions. The Government are clear about the interest that the House has taken in this issue, and rightly so, as it is one of the utmost importance and one in which the Prime Minister is focused on success. He believes that he can and will succeed in reforming and renegotiating our relationship with the European Union and campaigning to keep the UK in the EU on that basis, before holding a referendum to ensure that the British people have a final and decisive say.
Lord Boswell of Aynho
My Lords, veterans of debates on the European Union and reports of the Select Committee and its sub-committees will be familiar with the fact that we are often obliged to do this at a late hour. That is partly a function of being able to get the reports debated in a timely manner. If we are honest, there are occasions when the subject matter is somewhat staid and the comments are occasionally even a touch self-congratulatory. I think we have been spared that tonight. The convention is to say that we have had a very good debate, but actually, amazingly enough, we have; it has been very lively, and one could almost call it enjoyable. I would take some encouragement from that, in that there may be something going on in the air, because there appears to be a renewed interest, sensitivity and liveliness about the debate, which is probably to the good for the future.
It is late and I do not intend to speak at length, but, first, I should say that the Minister is very good—sometimes better than some of the professional politicians, if I may put it that way—at playing a straight bat against both fast bowling and some deadly spin. He has done that in a way that the noble Lord, Lord Kerr, forecast, almost quintessentially. In a sense, I admire that technique. Amazingly enough, we manage to distil words of wisdom even as we go along, albeit that it is a slow process. I reflect on my own experience as a Minister, when the dilemma was not what you knew—that was quite easy—but what you knew but could not remember whether you were allowed to say, which was more difficult. However, the debate will continue, as it will with other noble Lords.
I do not want to go through in seriatim, but there have been some important calls for better vision and fascinating suggestions about better communication with this committee and the role of this committee in communicating at large. If I can do so without invidiousness, I shall single out three contributions to comment on. The first is that of the noble Lord, Lord Hamilton, who remains my good friend. He is very right, occasionally, to shake us up. He did not like the report, and I am sorry about that. I suppose my excuse is a sort of Billy Bunter excuse for eating the cake: it was quite a small one. The reason the report was quite a small one was, as we say in our final paragraph, that we are beginning the process of shedding light on the process. There is more work to be done.
Many of his adversions related to the treaties and how they would interact, what would happen to them and whether it would be necessary to change them. Frankly, we need to remind the House that the Government, not the EU Select Committee, have called, in their terms, for a new settlement with the European Union, which they are negotiating and on which it is our duty to comment. We are not, as it were, functioning as the Government. We are not striking out too far. However, I take the point, and I think in our forthcoming report on visions we will want to give a bit more meat to this process. As we learn more of the Government’s intentions from the letter to President Tusk and otherwise, we will take that forward.
The second contribution was made by the noble Lord, Lord Balfe, who talked about a possible scenario on exit. I know that the Government are very reluctant to talk about this. I would like to report to the House and to the noble Lord, Lord Hamilton, that it may not be as simple as that. If one thinks that there may or may not be treaty change engaged in remaining, it is almost certain, on the intelligence and advice I have received, that there would be treaty change on leaving. It would require three treaty changes under Article 50: a treaty of withdrawal negotiating our exit; an amending treaty for the remaining 27 member states who would have to take us out of the equations of the Lisbon treaty; and, one assumes, a future treaty of association between the United Kingdom and European Union. That is a triple bill which might entail all these potentials for referenda and other debates to go on. However, I leave that.
I shall close on two aspects of the comments of the noble Viscount, Lord Brookeborough. I acknowledge that he was not the only speaker, although I think he is the resident most directly affected, who talked about the sensibility of the devolved Administrations. He singled out the problems in the island of Ireland. I think I am right in saying that near Clones one of the major roads crosses the border four times in five miles, which is an example of the kind of issue that can arise—and that is before you look at some of the constitutional implications of the Anglo-Irish agreement and so forth. We are sensitive to that and we will continue that work with our colleagues in the devolved Administrations.
Even more, he made an impassioned point which reflects the view of us all that there should be as much plain speaking and common sense about this discussion as there can be. I understand that the words “derogation”, “protocol” and so forth trip off our tongues easily because we are used to them, but they not the kind of thing that will engage the electorate. We have a primary duty to report to this House, and we have an important secondary duty to contribute to the national debate which will now start to get under way and to do it in a fair and objective way. In doing that, we will need to focus very carefully on what the Government are doing. We will then report as we can and as material becomes clearer to us. We have made a start. We intend to carry on. I am very grateful for the support of noble Lords in this debate tonight.