EU Referendum: Assessing the Reform Process (EUC Report)

Baroness Morgan of Ely Excerpts

Tuesday 3rd November 2015 Lords Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.