EU Referendum and EU Reform (EUC Report)

Baroness Falkner of Margravine Excerpts

Wednesday 15th June 2016 Lords Chamber

[Baroness Falkner of Margravine (LD)]

My Lords, I should declare that I am a co-owner of a property in the eurozone area and that I am married to a citizen from another EU member country whose right to remain in the UK could theoretically be affected by Britain leaving the European Union.

It has been a pleasure to work under the chairmanship of the noble Lord, Lord Boswell, and the committee has been extremely well served by its chairman and its secretariat through the inquiries and its scrutiny work. For my part, as chairman of the sub-committee responsible for economic and financial affairs, I will confine my remarks to those areas where additional safeguards have been obtained in economic governance.

I turn to the new settlement for the UK. It is an extraordinary settlement when viewed from other EU capitals. One has only to talk to the delegations from the 27 other countries to see how special this new status the UK has secured is in their eyes. We are not in the eurozone or in Schengen. We have chosen our opt-outs in justice and home affairs and we now have safeguards on the impact of eurozone integration, on welfare, on sovereignty and on further integration. The other EU countries are rather envious that we can dine à la carte while they are stuck with the set menu.

This renegotiation has also been dismissed for lacking legal force, as our chairman pointed out. In the committee’s view, the terms of the new settlement have the same legal force as any other intergovernmental treaty under international law, so those who rubbish the legal status of the renegotiation need to explain to the public why any other treaty has legal force if they believe that this one does not. Why should the public believe that our international obligations under the UN charter hold, or indeed under the WTO, in which the Brexiteers have such faith as the basis of a new trading relationship—oblivious, of course, to the fact that the WTO does not cover services or financial services trade? That is such an important and vital aspect of the UK’s relationship with the EU and the rest of the world. So the question they need to answer is why their new trade deal would have any legal basis if this renegotiation does not. Moreover, the renegotiation specifically states at Article 7 of the section on economic governance that the provisions under Section A will be incorporated into EU law the next time treaty change takes place.

On the details of economic governance, the UK and my committee had concerns that eurozone integration would disadvantage sterling. In Section A of the new settlement the UK has ensured that there can be no discrimination against those who do not use the euro and that our interests are protected. There was concern that eurozone caucusing might leave us outside the room, so to speak, when decisions are taken by the eurogroup. That, too, has been addressed and we have secured safeguards not only for ourselves but for the other eight countries currently outside the eurozone. We also have the additional safeguard mechanism whereby, if we feel that Section A has not being upheld, we can escalate our concern to the European Council, which, if our argument has merit, is required to,

“do all in its power to reach … a satisfactory solution”,

within a “reasonable time”.

I have been bemused by Vote Leave’s obsession with the Five Presidents’ Report. This, for the uninitiated in the Chamber, is a paper published last year by the leaders of the five EU institutions. The sub-committee I chair has conducted an inquiry into this and we published our report only last month. We say, in terms, that the ambitions of the five presidents apply mainly to the eurozone. Where they do not, such as recommending national competitiveness boards, they are voluntary. The Five Presidents’ Report is actually notable for saying so little. We commented on that in our report. We criticised it on the institutional direction and political structures needed for the eurozone to proceed to be successful. It is a very thin statement of good intentions. The conspiracy theorists in Vote Leave need to be pressed as to where they find all that they claim indicates the direction of European monetary integration—it is pure fiction.

I turn to the process of withdrawal, as the framework proposed by Vote Leave today sets out, and on which the noble Lord, Lord Liddle, has commented. We are led to believe from what one is tempted to call the presumptive Government—pace the Republican nominee; both have rather similar traits—that they will not need to use Article 50. Presumably they will take their time until 2020 to finalise the exit, including their new trade deal.

As noble Lords have heard, the legal experts consulted by the committee told us that Article 50 provided the only means of withdrawing that was consistent with the UK’s obligations under international law. If the UK unilaterally decided to start putting Bills through Parliament to disentangle ourselves—and, of course, this assumes that Parliament would be prepared to break its own treaty obligations in a very significant way, demonstrating to the world that it does not live by its word—the same UK, assuming Parliament were prepared to do this, would then seek to sign a whole lot of other treaties with the rest of the world, including the 27 other EU states, having spectacularly broken its word. What a non-display of bona fides this would represent.

So those who seek to disregard law while they sit in a law-making body need to bear one thought in mind. Trust is at such a low ebb in British political life, but the British public still expect their country to uphold the rule of law. That is the foundation of our democracy. This is a nation that values integrity, and if it finds that it has sleepwalked into a self-made disaster it will be a very long time indeed before it will permit itself to be led in that way again by that group of individuals.