EU: Balance of Competences Review

Baroness Falkner of Margravine Excerpts

Wednesday 11th March 2015 Lords Chamber

Asked by

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government, on completion of the European Union balance of competences review, how they will use the information gleaned.

[Baroness Falkner of Margravine (LD)]

My Lords, I declare that I am on the advisory board of British Influence; a British member of the Anglo-German Conference, Koenigswinter; and a member of the advisory group of Demos, the think tank. I bring in the latter as I will comment on its evidence.

Before I begin my substantive remarks on this balance of competences review, I commend the Minister for the role that he has played both in the Cabinet Office and with the FCO Minister, David Lidington, in delivering the 32 papers. The House is truly in their debt. I should also note that the European Select Committee of this House—I am delighted to see that the chairman is here in his normal place—is conducting an inquiry into this exercise and I look forward to its report, which I understand will be published shortly.

In July 2012, in the Command Paper setting out the parameters of this review, William Hague said:

“Now is the right time to take a critical and constructive look at exactly which competences lie with the EU, which lie with the UK, and whether it works in our national interest”.

This Command Paper was the product of the coalition agreement, which pledged to examine the balance of the EU’s existing competences. As William Hague went on to say:

“It will ensure that our national debate is grounded in knowledge of the facts and will be a vital aid for policy making in Government”.

This has been a marathon. In fact, given that a marathon is 26 miles, the publication of 32 papers has overtaken that finish line by some distance. When the most contentious paper was delayed—that dealing with the free movement of persons—ostensibly due to coalition squabbles over its content, many wondered whether the exercise would and could be completed successfully, given that impartiality was to be a benchmark. But again, this coalition Government have confounded the sceptics in producing papers that are balanced, fact-based and widely contributed to, setting out clearly where the wins, the draws and the losses lie for the United Kingdom as a single state when the EU negotiates with and legislates for 28.

It is fair to say that after the initial incredulity in the media about quite how balanced the papers were, they have elicited so little publicity that one fears they might just quietly end up on a shelf. But this lack of media attention does not detract from their merit. I predict that, when and if a referendum gets under way, they may well get a bit of a dusting down.

Nevertheless, one objective of the review bears examination: the question of how many partners from other EU member states and EU institutions engaged with this exercise. I know that the EU committees of this House have a multiplier effect in terms of our scrutiny, but noting our reports is a different matter from that of actively participating in a shared analysis of common problems. A lack of engagement could signal how out in the cold the UK has been from the rest of the Union. So I hope the Minister will be able to tell the House which other member states and institutions contributed to the analysis of these reports.

However, the overarching question has to be about where we go from here. The White Paper stated:

“A final decision will be taken closer to the time on how best to draw together the analysis produced during the review in the light of the EU’s rapidly changing situation”.

With my noble friend Lady Ludford, who has extensive experience on the EU end of this relationship and now leads on EU matters in this House, I attended the evidence session that the EU Committee of this House conducted yesterday with the Minister for Europe, Mr Lidington. He was asked where we go from here and, unsurprisingly given that the election is a few weeks away, he was non-committal. It is clear that this was conducted between two parties with very different views of the UK’s role in the EU, and could have turned into a far more partisan exercise than it did. However, I did get the impression from yesterday’s session that there would be a little selective emphasis on the analysis, should the Conservatives win the next election and move towards their referendum.

What if Labour wins the election? We know that it has ruled out an in/out referendum. But, given that it has taken the Government some 42 years after the UK joined the European Economic Community to carry out such a thorough exercise, one would hope that if Labour were in power, it would not leave these reports to gather dust but would actively use the analysis to guide its policy-making. It is notable that the treaties of Amsterdam, Nice and Lisbon took place on its watch without it undertaking any such exercise to inform themselves about the British people. I hope that the noble Baroness, Lady Morgan, will commit in her reply to build on that work.

What could be the useful purpose in practical terms? One way to build evidence would be to have a dedicated website hosted by the FCO or the Cabinet Office, which would be updated periodically as directives, regulations and case law developed. That could be accompanied by a refreshment of the analysis every now and then when the pace of change merits a different emphasis or conclusion.

We know that there is now a residue of EU expertise built up in each government department. Without very much additional cost, those roles could be maintained to keep a watching brief on changes. In other words, it could be possible to hardwire an area of EU analysis into each functional department.

I am aware that Liverpool University’s European law unit is undertaking detailed work on the methodology and statistical analysis of the evidence. That is important, as the data contained in the report are already at risk of being outdated, given that the research started in 2012. Liverpool has suggested a synoptic review of the reports, which is sensible, but I go further and suggest that they are periodically refreshed.

I turn to the substance of some of the reports—although, in the limited time, I shall have to be very brief. The report on foreign affairs was one of the early reports and is therefore somewhat dated. However, its evidence suggests that the creation of the External Action Service has understandably been challenging—as has been particularly experienced in the division of the responsibilities assigned to the high representative, who is as well the VP of the Commission. Some years on, the notable success of the high representative’s role in the E3+3 talks in Iran and the transition in Burma show that, when the EU has a clear focus, the sum can be greater than its parts. I should pay tribute to the noble Baroness, Lady Ashton, in that role. However, the real test will come here in Europe itself, where any divisions over Russia could have a disastrous impact on not only EU security but EU cohesion overall. A further point of potential disunity will be China, where we have seen selective attempts by the Chinese to play on bilateral relations to the cost of common EU rules, particularly in the area of competition policy.

I have a word or two to say on enlargement. The report commented on the use of conditionality after accession. It has been instructive to see that the co-operation and verification mechanism has been used for Bulgaria and Romania, because they did not conform to the Copenhagen criteria, but we have a fairly substantial slide into regression by Hungary and do not seem to be able to do anything about it. I accept that the Commission has been able to use limited infringement proceedings, but it seems rather impotent overall.

One wonders how egregious a state’s diversion from democratic values has to be before Article 7 of the TEU is invoked. That test is:

“a serious and persistent breach by a Member State of the values”,

but there seems little clarity as to whether the Commission can use EU law for a general failure to abide by the Copenhagen criteria.

I turn to a mild criticism by the EU Select Committee on the use of selective evidence in the free movement of persons report. In its letter of 22 October 2014 to the EU Minister, the committee states that,

“there was significant reference ... to evidence by Demos and Open Europe, evidence that was closely aligned with the position of the UK Government”.

As the noble Lord, Lord Boswell, will know, I have the highest regard for the committee, but I respectfully suggest that when there are strongly held views about a subject matter, such as immigration, as opinion polls show that there are in this country, it is not only inevitable but important for a report to reflect that in its analysis. Otherwise, it would not be balanced and would not therefore command public respect as a serious exercise.

Moreover, Demos and its director, David Goodhart, should be taken seriously, as his book, The British Dream, is an important contribution to the debate from the progressive side of the political spectrum. Demos is no tool of the right, I assure him.

Finally, with about 10 days left of this Parliament, this is probably the last time that we will have substantively to discuss EU matters in this House. With one EU Act, two referendum Bills and numerous debates and Statements on the Floor of the House, I thank my noble friend Lord Wallace of Saltaire for his regard, courtesy and good humour over five years, when he has covered such a wide brief with such knowledge and insight. We wish him a happy retirement after the general election.

--- Later in debate ---

[Lord Wallace of Saltaire (LD)]

My Lords, it is very good to hear a number of complimentary remarks at the outset of this debate. However, it sounded rather as if I was about to retire from the House and everything else as well. I do not intend to retire yet, thank you. Perhaps, like others, I hope to do so when I reach my 80th birthday—that is a hint to various other people who are not here.

This was a coalition exercise. It was agreed in the coalition agreement, and it was no secret that the two parties disagreed and had different approaches to Europe. This was set up as a means to find some common ground in the detailed evidence as to what stakeholders thought. We agreed that we would not produce policy recommendations at the end, because that would have been difficult—the two parties have widely differing approaches, or at least we do from the right wing of the Conservative Party. We therefore set out to provide an evidence basis for a more informed debate on the European Union. In that respect I think that we have been successful. I pay tribute to my Conservative colleagues in this exercise—David Lidington, who chaired the ministerial Star Chamber throughout, and Mark Hoban and then Mark Harper, who also took part. I thank the good-quality teams from the Foreign Office and the Cabinet Office who supported us throughout.

I say to the noble Baroness, Lady Morgan, that we did not leave publication until the last minute. The reports came out in four groups at six-monthly intervals, so this has been a two-year process. We are grateful that the weight of evidence has grown as we have gone on. Interest among stakeholders has therefore been sustained throughout that two-year period. There were some 2,300 submissions, and we held a whole range of meetings and seminars—across the United Kingdom, in Brussels and elsewhere—with substantial participation from the Community institutions, and other member states and governments.

Sadly, we heard rather little from the Eurosceptic side. I must, as I always do, pay a real compliment to the quality of the evidence produced by Open Europe throughout the whole process. The TaxPayers’ Alliance loyally put in a large amount of evidence, which was not, I think, always as expert as it hoped it would be. I said to one of my Conservative colleagues at one stage, “Why do we not have more evidence from the committed Eurosceptic side?”, to which he replied, “For heaven’s sake, William, these people are not really interested in evidence. It’s belief; it’s faith; it’s prejudice”.

[Baroness Falkner of Margravine]

My noble friend will, of course, be aware that the noble Lord, Lord Pearson of Rannoch, was meant to speak in this debate, but then decided he was not going to. I made the effort to go through almost all the reports, including the parts on those people’s pet subjects—agriculture, the budget, fisheries and so on. Does my noble friend agree that they did not contribute a shred of evidence on the issues that they continue to go on about in this House and outside?

[Lord Wallace of Saltaire]

That is exactly the point. We have heard the noble Lord, Lord Pearson of Rannoch, being, it seems to me, cavalier with the evidence on many occasions in this House in recent years. I am sorry that he is not here, but I am not entirely surprised that he is not prepared to stand up and argue the evidence carefully with others when a lot of careful evidence is in place.

Following the slightly partisan speech by the noble Baroness, Lady Morgan, I can tell her that one of my roles as this process went on was to keep the Labour leadership informed of what we were doing and encourage them to engage. I have to say that most of my interlocutors in the Labour Party were hiding in the long grass themselves. I welcome the Labour Party’s final commitment to the importance of staying in the European Union. It has been a certain time coming over the past three years, but it is very good that the Labour position is now clear. We look forward to the Labour Party spelling out its approach in rather more detail.

This exercise provides the basis for a reform agenda. We have the contributions of a wide range of businesses and business organisations, academics and various other bodies. It was interesting to me that the most negative evidence from business came from small business associations few of whose members export—those who therefore, obviously, have the least interest in the European single market. Some seem to have the impression that if we got rid of European regulation we would have no regulation at all, without understanding that we would then need to have national regulation, or to accept other international frameworks for regulation.

We have all learned a great deal from this process. Of the consistent themes that have come out of it, the first was the idea that although we talk about completing the single market, we shall never do that, because the single market changes as we go along. We did not have to worry about a digital single market 20 years ago, whereas now it is one of the central issues with which we are concerned. As new technologies and new services develop, clearly we must continue to move on.

Secondly, the European Union is not just the international body to which we belong and do not want to belong to, it is embedded in an intricate network of international organisations such as the OECD, the Bank for International Settlements and the World Health Organization, of which the European Union is almost a regional organisation. If Britain were to leave the European Union, that network of international organisations would still constrain us. Globalisation means that Britain has to pool a great deal of its sovereignty, and the European Union provides a very good way of sharing that within a relatively transparent and friendly network.

We also discovered—this was a common theme across many of the reports—that the Commission has often been much too enthusiastic in proposing legislation without being sufficiently concerned about its impact, implementation or enforcement. I am happy to say that that is beginning to change. I hope that we have contributed to that. Impact assessments are the flavour of the year in Brussels, both in the European Parliament and the Commission, and Frans Timmermans and others are very clear that the Commission should be careful about the weight of the new proposals it puts through.

Another common theme concerned the tendency of the Court of Justice of the European Union to support integrationist cases and to pay insufficient attention to subsidiarity and proportionality. I think that is also changing, although I may say that, of the 32 reports, the report on subsidiarity and proportionality is, I suspect, the most widely read in other countries as this is a key topic which many of us do not fully understand the European Union has to take fully on board.

The reports stand by themselves. We did not intend to have policy conclusions; they are to be dug out to inform the debate and to make sure that those who deny the situation as we have found it are properly corrected in debate. We found that the review feeds into the domestic debate, but it is bounded by time. In two or three years’ time, attitudes will be different because the policy priorities will be different. Therefore, I am not sure that we necessarily want to embed all this in stone. However, we hope that it provides a basis for what may or may not be a referendum debate in 2017.

One report—the fisheries report—provided an alternative model that might be used on competence, involving European regulation or less European regulation. Perhaps we might have tried that out in one or two other reports, but the evidence that came in did not support it.

I think that the least anticipated outcome of the review was the rising level of interest and engagement across other member states. It has been very impressive. For example, I am told that the French department of transport is now using the transport report and that it is one of the things new recruits read. There are a whole set of discussions. On various occasions I was detailed to phone Ministers in other Governments and was happily surprised to discover that senior Ministers in other Governments had at least read the summaries of the reports. There have been contributions from a number of other Governments. The French parliament’s Senate committee is now conducting its own review. I could go on at length about how many other Governments have drawn lessons from what they see as a particularly valuable and detailed review of the current state of competences, which feeds into the British Government’s reform agenda.

I stress that the reform agenda is a continuing process. Reform is not something that you start and then finish. As we have operated over the last three years, the fisheries regime has been changed quite substantially. The budget has continued to change in emphasis, with more going to scientific research and less going to agriculture. We are in no doubt that we will continue to press that reform agenda.

The Foreign Secretary has so far visited 24 of the other 27 capitals and he is discussing the UK’s reform ideas and finding a lot of like-minded Governments who have similar approaches to strengthening the role of national Parliaments, making sure that new regulations are entirely justified and investigating the subsidiarity and proportionality issues. They ask: do we need to do this at the European level or can we leave sufficient flexibility at the national level? This has fed into the British debate, the wider European debate and the Commission’s agenda in terms of the need for better consultation, more attention to impact assessment and all of that area.

I am clear that this has been an extremely valuable exercise. I will say in passing to the noble Earl, Lord Dundee, that the relationship between the European Union and the Council of Europe is a matter for another time. The Council of Europe, which includes Russia, is not at the moment in the easiest state to deal with peacekeeping issues and other such matters. The EU itself, for security reasons, is becoming even more valuable for the UK than before.

What we have done, over the last year and more, as these reports have been absorbed in other national capitals, is to make progress on our continuing reform agenda. We look forward to doing that, whoever becomes the next Government—whichever parties form the next Government. I have said to some of my Conservative friends that I expect we might have to be a caretaker Government for some time in May, while the Conservatives and the SNP negotiate.

There is a basis here for an intelligent discussion. We have made an impression, not only on the debate here, on the readiness of Whitehall and on the willingness and expertise of the various business associations that have fed in, but we have also affected the debate in Brussels and around the European Union. That seems to me to be a great success and worth doing in itself. I am very glad that the European Affairs Committee will take this on from here.