Trade and Investment

Lord Davies of Stamford Excerpts

Monday 15th June 2015 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I agree very much with what the noble Lord has just said about the European Union. It is a great pleasure to be the first from the Labour Benches to be able to congratulate the noble Lord, Lord Maude, on his maiden speech, which was characteristically informative and—perhaps not characteristically but certainly quite notably for anybody who knows the noble Lord as I have for many years—unpartisan. We very much look forward to his contributions to this House. I do not want to be hypocritical. The noble Lord and I have known each other for a long time, we have not always agreed and we certainly did not always agree when we were members of the same party. We did not agree about matters such as Europe and economic policy even when we were members of the same Front-Bench Opposition team in the other place. That was a bit awkward because the noble Lord was shadow Chancellor at the time and I was shadow Paymaster-General. Nevertheless, I have always respected the noble Lord because he is a politician who believes in something. That is not always the case, as we know. He has always had an agenda. It might not have been mine, but there always was an agenda and I always had high personal regard for him on those grounds. In that respect—as well as the many other talents he has—he is very much in the tradition of his father, whom I met in 1977 when he was kind enough to come and support me in my first election, the Ladywood by-election. I have the fondest memories of his father, and many people in the House who were good friends of Angus Maude will have been delighted to have heard his name mentioned again today in his son’s maiden speech.

The noble Lord takes over his very important brief at a time when our trade in not in a very healthy state at all. We have a current account deficit of 4.2% and rising—that was the figure for 2013; I have not seen the figure for 2014—and it has actually doubled since 2010. That is a very worrying, chronic balance of payments deficit. Why is it a problem? Clearly, it means that we are consuming more than we are producing. We are building up international liabilities. We certainly do not have any problem financing those at present. There are a lot of portfolio flows into this country. People are buying apartments in Mayfair and so forth. Foreigners are buying gilts because there is a considerable yield premium on gilts in relation to other prime European sovereign credits. All that is fine, but we know that these flows are very volatile over the long term. They can go backwards as well as forwards, and it is not good to be in a chronic and permanent major current account deficit. Indeed, it simply cannot go on. What do we do about it? That is a matter which the House should focus on and the noble Lord has given us a good opportunity to do exactly that.

Some people would say that the obvious answer if you have a current account deficit is to increase the savings ratio. But you cannot increase the savings ratio just like that, and if you could the solution would involve substantial reduction in consumption, which is hardly welcome news to the people of this country and hardly a policy the Government would want to propose. What one needs to do is to turn it round the other way and to make sure that we are increasing output per person—in other words, increasing productivity. I put it to the noble Lord that that is the most important task at present facing anybody with any responsibility whatever for the economic governance of this country. I am extremely worried that the Government do not seem to appreciate that. We heard nothing about productivity before the election campaign from the Government, and we have heard a few things about it since but they are extraordinarily misinformed. I was absolutely horrified—I must put it very frankly; there is no hyperbole in using that term—this time last week in this House to hear the noble Lord’s colleague, the noble Lord, Lord O’Neill of Gatley, say,

“Germany, which is generally regarded as successful and whose measured productivity has been even weaker than ours in the past few years”.—[Official Report, 8/6/15; col. 628.]

I repeat,

“weaker than ours in the past few years”.

That is what the government colleague of the noble Lord, Lord Maude, said in this House last Monday. How can he possibly have been so ill-informed?

Of course, productivity is measured by professional statisticians, be they in the OECD, the IMF, the European Commission or indeed our own national statistical service. I have before me the latest statistical bulletin dealing with these matters, issued by the Office for National Statistics on 20 February 2015. I will quote from the paragraph headed “Current price productivity” on page 3, which states that,

“UK productivity in 2013 was … Lower than that of France, Germany and the United States by 27-31 percentage points … Lower than that of the rest of the G7 by 17 percentage points”.

It is a deeply worrying and shameful record—and what is even more worrying and shameful is that the Government do not seem to realise it. I have to say that the comment in this House of the noble Lord, Lord O’Neill, shows either the most colossal ignorance, the most colossal complacency or the most colossal cynicism. I hope that, before the end of this debate, we will hear from the government side some explanation of this extraordinary state of affairs, because they are denying reality.

We must do something about productivity. How do we do that? The classic answer is that you increase investment per employee. How do we do that? That is the question to which we should address our minds this afternoon. The popular view of investment is that it consists of purchasing plant and equipment and applies only to manufacturing industry. That is doubly wrong. It does not consist just of purchasing plant and equipment; it could consist of purchasing buildings, software or licences, or investing in human capital by setting up training programmes for employees. All this is investment, which is defined simply as money that you spend in the current period not for some gain in that period, nor to be able to consume it or generate profits in that period, but for the opportunity to make profits and enjoy consumption in the future. That is the simple definition of investment that I think the whole House will agree with.

The question is how you go about enhancing those things. All of them are very important. Let us take the service sector. A restaurant that invests in a new digital ordering system increases productivity by purchasing equipment. A garage that invests in a new electronic diagnostic system for dealing with cars is in the service sector but is making a capital investment that will increase productivity. Employees will have to be trained to use these things. These businesses are investing in human capital and increasing productivity as a result. I remember well that in my business days my shareholders paid quite a lot of money for me to spend a month on an intensive course to improve my German. It turned out to be a very good thing for my subsequent productivity. They spent another large amount of money sending me on the advanced financial programme at INSEAD, and I have not the slightest doubt that that, too, increased my productivity. Investment in human capital is extremely important and we need to make sure that we have in place incentives that drive all these forms of investment. The last Labour Government introduced, at the behest of Gordon Brown, special tax credits for research and development. They have proved to be a very good incentive and have made a very useful contribution.

There is a strange tax anomaly in the area of investment. Tax follows the rather artificial conventions of the accounting profession; certain forms of investment are regarded as investment and certain forms are regarded as current spending. If you invest in software, you can write it off as an expense in the current period, but if you invest in hardware, you cannot: you have to depreciate it over its useful life, or over a maximum of four years. So there are many anomalies in these matters, and my first suggestion for the noble Lord is that he discusses with his Treasury colleagues the possibility of introducing a system of 100% write-offs for capital equipment by investing businesses, irrespective of whether they are in the manufacturing sector or the service sector. That would be a useful incentive to increase investment. It should be done not just as a gimmick or for a short period, which would distort investment flows; but over the long term. This would be logical, because it would be treating investment of that kind as a current expense, which is how other forms of investment are treated.

The second thing the noble Lord could do is something he has already touched on. It is enormously important for investor confidence in this country that it becomes clear as soon as possible that we shall remain part of the European Union. The noble Lord talked about all the trade agreements which the European Union has around the world and how important they have been in enabling us to increase our exports, and he is absolutely right. I think I am right in saying—the noble Lord will correct me if I am wrong—that the European Commission has so far negotiated, or is in the process of negotiating, about 45 trade agreements with other countries or trading groups around the world. That is a very considerable achievement. It takes many years, as he knows very well, to negotiate any of these agreements. An enormous amount of effort is required, even when you have the whole weight of the European Union behind you with an enormous incentive to any counterparty to come to some arrangement.

If we left the European Union we would lose overnight the opportunity to benefit from all those trade agreements. What an absolute nightmare that would be. We would have to set up, start again and persuade all those countries to negotiate some separate deal with us, which many would not have the time or patience to do. They would have other, greater bureaucratic priorities, and if they did so at all they would demand a sort of payment—some concessions which they would not have expected to receive from the European Union as a whole. It would be a very bad day’s work for us, and it is very important that the uncertainty that now exists is remedied, so the second thing the noble Lord could do for investment is to talk to his colleagues and make sure that, now that we are going to have this referendum, we have it as soon as possible to limit to the minimum amount of time the economically damaging uncertainty which we now face.

Thirdly, if the noble Lord wants to do something about productivity, he should speak to those of his colleagues who are responsible for infrastructure. We are taking far too long to build necessary infrastructure, such as the new high-speed train. It should have been built years ago. What is absolutely appalling is the uncertainty about the future of the London airports system. Airports are extremely important for investment decisions, for the location of investment, management and important organisations within firms, particularly R&D and marketing companies and so forth, and these are people who need to travel a lot; if you do not have a good airline hub close to where you intend to locate them, you will not locate them there. In many cases, these people are extremely highly paid and are therefore extremely productive, and that is very important for trying to increase output per man or woman and productivity in the economy. The uncertainty about the new runway at Heathrow—which is quite disgraceful and had we had a Labour victory in 2010 it would have been built by now—must not be allowed to run on any longer. I hope that the noble Lord will have a very positive influence with his colleagues on these important matters in the months and years to come. I am sure that we will enjoy many debates with him on these important issues.

Queen’s Speech

Lord Davies of Stamford Excerpts

Thursday 28th May 2015 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I will make three introductory remarks and will then say a word about the EU referendum, which has been much discussed today, and about Greece, which has not been mentioned at all.

First, the maiden speech of the noble Baroness, Lady Helic, was absolutely brilliant—one of the best I have heard in three decades in either House—and I congratulate her most warmly. Secondly, all of us throughout the House were delighted to hear of the reconfirmation in her role of the noble Baroness, Lady Anelay. She picked up her very complicated brief very impressively in an extraordinarily rapid time in the last Parliament, and has always displayed the greatest conscientiousness and courtesy in her dealings with every Member of the House, which is deeply appreciated. Thirdly, I second the proposals of the noble Lord, Lord Howell, to set up a permanent international affairs committee in this House. That has of course already been welcomed on all sides of the House.

I think that all of us on this side of the House recognise that the Government have a mandate to go ahead with an EU referendum. Personally, I hope that it can be concluded as quickly as possible: first, to reduce to a minimum the economically damaging uncertainty before it takes place, and secondly, to ensure that if we remain in the Union we can have an effective presidency in 2017, which we certainly would not be able to have if we were conducting a referendum campaign at the same time. However, no one will be under any illusion—and certainly not our negotiating partners on the continent—that the whole of the Government’s policy on this matter is not based on a series of contradictions and self-delusions.

The first contradiction is that the Government are acting in the national interest—they purport to do that—but as we know, the Prime Minister’s policy is just being driven by internal party-political considerations. That is why he changed his mind so dramatically on the referendum in the last Parliament. The Government have conducted a very useful exercise, the balance of competences review, which shows that there is no case at all for a renegotiation. All that is required is a normal pragmatic evolution of the European Union, which in my view would be the most desirable solution.

Secondly, there is a fundamental contradiction, in that the aim is clearly to appease the Eurosceptics. But of course the Eurosceptics cannot be appeased by anything other than our withdrawal from the European Union, and, in my view, the dissolution of the European Union itself will be required to satisfy them. So we are engaged in an exercise which cannot succeed in its intended purpose. The conclusions regarding the tactics to be adopted towards the Eurosceptics as a result of that are obvious, and certainly not the tactics that John Major adopted so disastrously for himself and his party, of which I was then fortunately, or unfortunately, a member.

Thirdly, the most serious contradiction in my view is that the Government say they are embarked on a course designed to change the treaty. However, you cannot negotiate a change in the treaty with other Heads of Government or State or with the President of the European Commission or the European Council for the simple reason that more and more countries have established that there has to be a referendum if there is a change in the treaty. We cannot complain about that. We did the same ourselves under the Europe Act, which I opposed in the previous Parliament.

Nor can you negotiate with an electorate, and you cannot even predict how an electorate are going to react to a negotiation. Surely we all know that. You cannot rely on the opinion polls, as we also know. It is more than likely that even the countries which geographically, politically and psychologically are quite close to us, such as Ireland and Denmark, will react very badly to being told that they have to go to the polls to revise a treaty—it is their treaty as much as ours—simply to help the British Prime Minister with a party-political problem of his own. Therefore, the prospects are not quite as easy or as bright as the Government often say they are.

My advice to the Government is simply, first, to abandon any idea of changing the treaty. In any case, the substantive objective that they have in that context—to get rid of freedom of movement—is the wrong one. Freedom of movement is an enormous asset to this country, as well as to every other member state and citizen of the Union. There are just about as many British people living on the continent elsewhere in the EU as there are EU citizens living here. Hundreds of thousands of young people are benefiting from the Erasmus programme and the educational exchanges. We will begin to regret all these things just a day or two after we abandon them, and we will not be able to get them back. It is a crazy policy.

I have no objection to extending the period of transition for future member states before they qualify for freedom of movement and I have no objection to making it impossible for people to claim out-of-work benefits when they come from other member states and do not have a job in this country, but I do not believe for a moment that you can deny them in-work benefits. You cannot have a situation in which people pay taxes and national insurance contributions alongside other workers in the same workplace but do not get the benefits. That is a sort of apartheid in the workplace, which would be utterly obnoxious to anybody in this country who believes in our traditions of fairness and equity, so it is quite the wrong road to go down.

I think that the Government should concentrate on positive things: completing the single market, getting a proper services directive, establishing a capital markets union—of which of course we must be a part—and getting a proper energy policy. There are lots of good objectives of that kind.

I want to say a few words about Greece. It is said that Greece may be about to default. In my view, that is very likely. It is said that that would be a great and devastating blow—some would say a fatal blow—to the European Union or to the eurozone. I do not believe anything of the kind. Greece is entirely the architect of its own misfortunes. The malaise or curse from which it has suffered is, ironically enough, a curse which was first defined and given a name by Greeks: demagogy. You can read about it in Thucydides—it is all there; it has all happened before. Plato’s The Republic and Aristotle’s Politics are very different works and propose very different solutions but they are both inspired to a large extent by the need to combat the effects of demagogy in 5th-century Athens, as we all recall.

Demagogy consists of politicians offering unrealisable, irresponsible and incompatible policies, and that is exactly what has happened in Greece, although not just in Greece. A lot of people in Latin America have suffered from it, as Argentina currently does. A Government come to power and promise the earth, and then run up debts, which creates a crisis. The crisis then has its own costs. Somebody else comes to power saying, “Don’t worry about the costs. We have a magic solution here. You don’t have to pay for the costs or have any austerity. It’s all going to be fine. Vote for us”. That is exactly what has happened in Greece, and Syriza is a very bad example of the original Greek phenomenon of demagogy.

The bailout programme provided a wonderful opportunity for Greece to address some of its fundamental structural problems, such as overemployment in the public sector and excessive protection in the labour market. Greece was coming through that programme very effectively, as Spain, Portugal and the Republic of Ireland are doing at present. Spain is, I think, the country which is growing fastest in the European Union as we speak. Greece began to grow again last year and unemployment began to fall. Just at that vital moment, Syriza came to power and said. “Don’t worry about all this austerity, vote for us and everything will be fine”. Well, if it were to be fine simply because everybody else signed a cheque for Greece, it would establish the most appalling precedent. That would be a disaster for the European Union. It would be a most perverse action by the European Union, creating negative incentives and a moral hazard that could be extraordinarily damaging to the future of the European Union.

As we know, what actually will happen if Greece defaults is that the ECB will no longer be able to provide liquidity support for Greek banks. As a result, the Greek Government will have to support their banks. They cannot do that in euros—they will not have any and they cannot borrow any—and so will have to impose capital controls and go back to a sort of drachma mark 2. It is almost inconceivable that any sane person in Greece still has an account in Greece in euros, but of course it will always be the small people—the poorer, less sophisticated people—who suffer from these things. Those are the people Syriza, quite dishonestly, pretends that it is trying to support. The Greek Government, if they go on wanting to spend more money and running a primary deficit, as they do, will not be able to borrow that money from anybody in Greece, or outside, and will be monetising their deficit. Therefore, Greece faces the prospect of serious inflation, perhaps hyperinflation, and economic crisis. That will not be the case for the rest of the European Union and I do not believe that there is much of a systemic risk. The exposure of other banks in the EU to Greece is only just over €30 billion and much of that is already provided for. Of course the stress tests which the ECB undertook last year took account of the possibility of a Greek failure. If that comes about, it will be the fault of the Greeks alone. The lesson that will be drawn from it will probably be a very salutary one for all concerned.

EU and Russia (EUC Report)

Lord Davies of Stamford Excerpts

Tuesday 24th March 2015 Lords Chamber

[Baroness Coussins (CB)]

My Lords, I had the privilege to serve on Sub-Committee C of the EU Select Committee. I thank the noble Lord, Lord Tugendhat, for steering us so skilfully through this complex inquiry, which was so topical that the landscape seemed to change virtually from meeting to meeting. I endorse his thanks to the clerk, the policy analyst and the special adviser for their magnificent policy and technical support.

I will confine my remarks to the two very different points in this report to do with language and language skills. First, one of the report’s conclusions was:

“There has been a decline in Member States’ analytical capacity on Russia. This has weakened their ability to read the political shifts and to offer an authoritative response. Member States need to rebuild their former skills”.

The same deficit was found in our own Foreign Office as in the member states as a whole, and was thought to have occurred over some time in relation to Russia and the region. Sir Tony Brenton, a former British ambassador to Russia, told us that UK diplomacy has,

“suffered because of a loss of language skills, particularly in the Foreign Office”.

This point is all the stronger for echoing one of the conclusions of another Select Committee report, on soft power, which was debated in your Lordships’ House only two weeks ago.

Language skills and the cultural knowledge and understanding that go with them are a very important part of the analytical capacity that we found wanting. The report recommends that the FCO should review how its diplomats and other officials can regain this expertise. The new FCO language school is a first-class resource that is already making a contribution towards equipping some of the right people with Russian language skills prior to postings. About 10% of the 800 or so civil servants who had been on courses at the language school up to last November were studying Russian. If the recommendation on regaining linguistic and cultural skills is to be implemented on a solid, long-term basis, we need to see some changes much further back in the pipeline and not have to wait until people are already part of the Foreign Office or the Diplomatic Service for access to an intensive Russian course.

As a nation, we need to see a sea-change in our attitude towards language learning and a dramatic improvement in the take-up of languages at school and university. On Russian, I can give the House a very up-to-date picture of what is going on in schools from data published only last week in the 13th annual Language Trends survey. The curious thing about Russian is that at A-level take-up has nearly tripled over the past 20 years to nearly 1,200 in 2014. However, before anyone gets too excited about this apparent progress, it seems that the increase is largely due to increased numbers of native Russian-speaking non-UK nationals, mainly at independent schools. By contrast, a tiny proportion of state schools offer Russian—between 1% and 2%.

At university level, over the last 10 years there has been a 51% decline in the number of entrants to Russian and east European studies degree courses. Only 14 of our universities now offer Russian as a single honours degree and only 17 offer degrees in which Russian is a significant component. No universities in either Wales or Northern Ireland offer Russian, and only three in Scotland do—down from six quite recently. Slavonic languages other than Russian have fared very much worse still. I hope that the Minister will agree that the languages pipeline needs urgent attention and that the problems with Russian in particular, in the light of this report, cannot be solved simply by leaving it to the Foreign Office language school. Indeed, even with the benefit of the language school, only 27% of posts in the Diplomatic Service associated with a level of proficiency in Russian are actually filled by someone who meets the required standards.

The second language-related issue that appears in this report concerns not UK nationals but Russian nationals and ethnic Russians whose language rights may have been threatened or undermined by an EU member state. The report observes that the treatment of Russian speakers was one key theme in Russia’s actions in Crimea and eastern Ukraine. A proposal in the Ukrainian Parliament to repeal the 2012 language law allowing Ukraine regions to have Russian as a second official language was seen by many Russian-speaking Ukrainians as an alarming threat, even though it was subsequently withdrawn.

More pertinent still as far as the EU is concerned is that in Estonia and Latvia, two member states, Russian does not have the status of an official language, and in both countries citizenship rights, including the right to vote in national elections, are dependent on a language test in the official language. The result is that ethnic Russians, mainly older people, are denied citizenship and are unable to participate in the political process.

President Putin has, in various public statements, made much of this discrimination against Russian speakers living in EU countries and has accused the EU of double standards. Some of our witnesses thought that the plight of ethnic Russians was simply being used by Putin as a convenient pretext, that their social isolation was perhaps exaggerated, and that in any case in strictly legalistic terms Estonia and Latvia were violating no specific EU standards. Nevertheless, it is more than uncomfortable that any EU member state should make citizenship conditional on these terms and thereby hand Putin a card to play that suggests that the EU does not practise what it preaches.

[Lord Davies of Stamford (Lab)]

I am one of those people who believe that it is perfectly reasonable to state that English would be a requirement for British citizenship, and I have no problem in principle about what happens in Estonia and Latvia. However, does the Baroness not agree that Putin has stated that Latvian and Estonian citizens who take the language test and then apply for and receive local nationality will no longer be allowed into Russia without a visa? He is preventing contact between the Russians living in those two countries and Russia, which he is then complaining about.

[Baroness Coussins]

The report acknowledges that point about visas. My point is that it is short-sighted to hand Putin a card to play that enables him to accuse the EU of double standards. The report concluded that there is a prima facie case requiring this historical grievance by ethnic Russians in Estonia and Latvia to be investigated. That is as far as we went. I hope that the UK Government will press for this investigation to be pursued by the EU so that any excuse for any level of Russian interference in these states on these particular grounds can be effectively neutralised and removed.

I look forward to the Minister’s response on this and to my earlier points about language skills.

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[Lord Davies of Stamford]

My Lords, Russia is a country that I know reasonably well. My first job was in the Diplomatic Service. In my 20s, I spent a year learning Russian, and three years as second secretary in Moscow in the 1970s at the height of the Cold War. I have been back more than 20 times since then, including in recent years. I also know reasonably well Ukraine, which I first visited in the days of the Soviet Union and, most recently, about a month ago. I shall be there again from tomorrow morning, visiting, I hope, the front line in Luhansk and Donetsk provinces.

Like, I imagine, most people who have some sense of affinity and affection for Russia, I was particularly disappointed that the end of communism did not mean, as it did in the rest of eastern Europe, the emergence of a successful democracy and of a successful, sustainable and diversified economy, and still less that Russia re-entered, as I had hoped it would, the European family of nations which it had been definitely a part of before 1914—diplomatically, economically, culturally and intellectually. Those were the years of Blok and Yesenin, of Rachmaninoff, the Ballets Russes and Stravinsky; and the years in art of Malevich, Tatlin and the young Kandinsky—an enormous flowering of talent and striking originality.

It is very sad that Russia has gone the way that it has. Some people say that it is the fault of the West. It is arguable that we might have done more to support or be sympathetic to the requirements and difficulties of Yeltsin, but in the Putin era it would have been very difficult to blame the West for that. The shadow of the Soviet Union, which had shortened, has fallen and ever lengthened over Russia during the past few years. The state, the regime, controls now all the broadcasting media and has an effective veto over all the printed media. There is an increasing sense of fear in terms of people’s willingness to express themselves freely. There is a labyrinthine kleptocracy—not a word that is mentioned in the report, unfortunately. The best account of that—I do not need to go into it—is in a remarkable book of which noble Lords may have seen very good reviews in the Times Literary Supplement and The New York Review of Books: Karen Dawisha’s Putin’s Kleptocracy. Unfortunately, because of legal blackmail or fear that some oligarch, perhaps put up to it by Putin, might spend millions of pounds suing it for some form of libel, the projected British publisher, Cambridge University Press—I am sorry to have to say this about an institution related to one of my own universities—has cravenly decided not to publish here, so anybody who wants that book has to look to the United States, as I did, to get it.

The worst aspect of all, however, has been the regular murder of critics or supposed enemies of the regime. Some names, such as Politkovskaya, Litvinenko, Magnitsky and, most recently, Nemtsov, are now world renowned—these were deeply brave people who will go down in history—but there are many others whose names are much less well known. It is deeply worrying, and it has objectively not been possible for us to have, even had we wished it, the kind of relationship of confidence, the ability to discuss in a friendly and mutually supportive way the future of the world, which we would like to have had with the Russian leadership. It is not possible to deal with people on that basis who behave in that fashion.

However, deal with them we must. They are there and, as has rightly been said, Putin is now enormously popular and is likely to remain in power for a long time. That is a reality that we have to cope with, so how do we deal with him? The first thing to remember is that we must deal with him in the only currency which he understands, which is that of power realities. There, I slightly disagree with the noble Lord, Lord Kerr. Economics is part of power realities; sanctions are important. I described in the House at the time the reaction of the West to the invasion of Crimea as derisory and said that it would almost certainly encourage Putin to come back for a bigger bite elsewhere. The sanctions that we came up with when he invaded, or took part in the subversion and take-over of, parts of eastern Ukraine have been slightly more robust. That has induced slightly greater hesitation in Putin which is much to be welcomed. But we need to go a great deal further. We need certainly to consider much fiercer sanctions if there are any further breaches. I think that I was the first person to suggest in this House, in November, that we should look at the possibility of denying Russian banks, or certainly those associated with the regime, access to the interbank market—the SWIFT system. I see that that idea has been taken up recently in the United States Congress by John McCain and others and it would be an extremely effective weapon. However, I agree with the noble Lord, Lord Kerr, that we need to do other things as well. We need certainly to make sure that the Ukrainian army is supplied with reasonable, including lethal, defensive weapons. I have raised that point in many different contexts in this House during the past few weeks. I certainly agree with him that we need to make much greater progress in ensuring that the European Union gradually weans itself from excessive dependence on Russian natural gas. I support the initiatives in building up a European common energy policy designed, among other things, to achieve that objective. It is enormously important to reinforce our commitment to Article 5. We want to put right out of court, out of anybody’s imagination, in Moscow the idea that they might have a go at a NATO or EU member. For that purpose, the high-readiness reaction force which NATO is now considering is very useful, but the best way of reinforcing the Article 5 commitment would be to put our troops, or NATO/EU troops from elsewhere in the Union and the alliance, in the front line, within 100 kilometres of the frontier, so that if there was trouble, they would be likely to be killed in the first hours of any conflict. There is no greater commitment that you can make than that to support your allies.

If we do those things, we have a reasonable chance of reaching a reasonable accord. I would regard a reasonable accord as one in which there is a genuine election—not at the point of a gun but with proper campaigning, international observers and so forth—in Crimea and in the areas of Donetsk province and Luhansk province that have been occupied to see what the local population really wants. If they want to join the Russian Federation, that is fine—they have a right to do that and it can go ahead—but equally, as a quid pro quo, the rest of the Ukrainian population would also have a right to determine their future, and if they wished to do so, their right to join the EU and to join NATO would be respected by Russia. That is essential. Some people say that that is unrealistic or, as the noble Lord, Lord Lamont, said in a lucid speech with which I mostly disagreed, that we should ourselves exclude that idea. That would be quite wrong. To try to create a separate status for Ukraine that did not allow it to join NATO or the EU would be wrong for two reasons. First, it would be wrong morally. It would be a terrible betrayal. It would amount to saying that the people of Crimea can have a free choice, because they want to join Russia; the people in the rest of Ukraine cannot have a free choice, they are not sovereign. That would be a disgraceful retreat, psychologically damaging and very dangerous, because of course it would encourage Putin to go further. Secondly, it would not work. The Ukrainian population would not accept it, and why would Putin respect it? Russia has already signed a piece of paper from which the noble Lord, Lord Kerr, quoted extensively, the Budapest agreement, under which Russia guaranteed the sovereignty and territorial integrity of Ukraine. That agreement has been breached in just about every respect, and I think that Putin regards it as some sort of joke.

We should be quite clear about our determination to preserve the right of sovereignty, to which we are committed, and therefore the right to self-determination of Ukraine in future. It would be a great mistake for us, in my view, to allow a situation to arise in which there is uncertainty and seen to be something to play for. That is to invest in future instability and attempts by Putin to change facts on the ground. It would also be a great mistake to allow Ukraine to join the EU but not NATO, because that would mean that we had a commitment under the Lisbon treaty but the United States did not have a commitment under the Washington treaty to support Ukraine. Again, that would be an area of uncertainty that could be exploited in future, which could be destabilising and which could lead to exactly the sort of nightmares which we all hope to avoid.

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[The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)]

My Lords, this has been an important debate, covering one of the most crucial foreign policy issues that we face today. As my noble friend Lord Tugendhat said, it has taken place under slightly unusual circumstances, coming as it does before the Government have had the opportunity to issue their formal response to the committee’s report. That response will be coming within the usual timeframe. But I perfectly well understand why the committee wished to go ahead at this early stage. There has been a clearly expressed view around the House on more than one occasion that we should have a full debate on the situation with regard to Russia and Ukraine. We have debated it in the past but, apart from the debate about the association agreements, not within the past month or so. We are, of course, running out of time to have this kind of debate. As Dissolution faces us next Monday, it was perfectly understandable that noble Lords wished to go ahead now with the debate.

When I attended the Human Rights Council in Geneva earlier this month, I had a bilateral meeting with the Deputy Foreign Minister of Ukraine. I reaffirmed the UK Government’s support for Ukraine and assured him that we would continue to raise awareness of the crisis there. The committee has assisted me in carrying out that commitment by holding this debate today.

I thank the committee for its detailed and far-reaching work on this critical issue and I pay tribute to my noble friend Lord Tugendhat for his expert chairmanship. The Government agree with a great deal of the committee’s findings, but there are also a number of conclusions with which we must disagree. Today I will seek to address some of the main themes.

It is important to consider the roots of this crisis, as so many noble Lords have done. They lie in Russia’s rejection of the rights of the people of Ukraine to choose their own future, free from external interference. Since 2007, Ukraine had been working towards an association agreement with the European Union. It was not a secret, it was not rushed, it was not a surprise to Russia—it was an open and transparent process between a sovereign state and the European Union. But when Russia decided that it did not like the path that its sovereign neighbour was following, it responded in the worst of ways. Under pressure from Moscow, Ukrainian President Yanukovych cancelled negotiations with the European Union. When the people of Ukraine took to the Maidan to protest and to express their democratic right to demand a new course for their country’s future, they were met with threats, intimidation and violence. Protesters were shot and killed by security forces acting on behalf of the Yanukovych Government. President Yanukovych then fled to Russia.

The events that then followed are well known. On 18 March 2014, Russia illegally annexed Crimea. I assure the right reverend Prelate and others that we do not forget Crimea. I will return to the matter of sanctions raised by the noble Lord, Lord Davies of Stamford, in a little while. Within weeks, Russian troops and weapons started crossing the border to support separatist proxies in fighting Ukrainian forces in Donbass. In July, 298 civilians lost their lives in the downing of Malaysia Airlines flight MH17, by a missile from an area controlled by Russian-backed separatists.

Moscow’s actions in ignoring sovereign borders, illegally annexing territory and using military force in order to preserve what it sees as Russia’s sphere of influence constitute the biggest threat to European security since the fall of the Iron Curtain. Today we heard important analyses from around the House from noble Lords who lived through the Cold War and practised diplomacy during that era and beyond. It was important to hear their perspective because it is in that way that we learn. Perhaps one of the most moving testimonies was from my noble friend Lord Elton, to whom I am grateful.

I turn to analysis. Russia has proved itself an unpredictable and dangerous actor, willing to risk international security and its own economic stability to satisfy its geopolitical aim of preventing Ukraine leaving its sphere of influence and forming a closer association with the EU. We reject the claim that the UK or EU together “sleepwalked” into the current crisis. The UK and EU were well aware of Russia’s hostility towards the EU-Ukraine Association Agreement, particularly in the run-up to the Vilnius Summit in November 2013. Of course, Russian military action was considered as a possible response, but at the extreme end of its available options. However, no one could have predicted the scale of the unjustifiable and illegal Russian intervention in eastern Ukraine. As noble Lords have remarked, the proximate cause of the crisis was the sudden collapse of the Yanukovych regime in Ukraine the following February after weeks of street protests in Kiev. As President Putin has now publicly confirmed, it was this event that triggered the decision by the Russian leadership to annex Crimea—an unprecedented action that tore up all the rules of security in Europe. The associated decision-making process was therefore days, not weeks. The blame for what has followed in the Donbass lies squarely with the pro-Russian separatists, backed by the Russian authorities, not with a benign association agreement between the EU and Ukraine which had been under negotiation for more than seven years. I should say at this point that I was grateful to the noble Lord, Lord Bach, for his support when we discussed the association agreements for Ukraine, Moldova and Georgia and I am grateful today for the support for the wider policy on Ukraine expressed by the noble Baroness, Lady Morgan of Ely.

A criticism throughout the committee’s report is that the Foreign Office and the EU lacked sufficient analytical capacity on Russia and an understanding of Russian goals. The noble Baroness, Lady Coussins, has a lot of experience of the teaching of languages and their use and she argued that we lacked capacity with regard to language skills in this area. This House is an example of the importance of expert knowledge and the value of long-standing experience. We recognise that there is always more that we can do to build knowledge and insight. It is certainly true, simply due to the passage of time, that there are very few officials in any government department or agency with direct professional experience of working with the old Soviet Union before it collapsed. My noble friend Lord Tugendhat and the noble Baroness, Lady Morgan of Ely, referred to the high turnover of staff in our Russian department and the nature of our capability. It is true that as a response to the Ukraine crisis we upgraded the position of Director Eastern Europe and Central Asia, as well as adding a new additional director and new deputy directors, which meant that the staff necessarily changed. However, that occurred because we were trying to improve our response and our staffing ratio. It is, of course, not true that none of those incumbents spoke Russian; some did. However, we do not employ our directors primarily for their language skills; rather, it is their leadership and policy skills that come to the fore in London, where they work. However, when we speak to the Russian embassy in London, we expect to speak in English. That is because when they speak to us in Moscow, they expect to speak to us in Russian, and that is where the language expertise should lie.

Through necessity we have increased resource and analytical focus on other parts of the world in recent years—for example, the Middle East, Afghanistan and Africa. However, that does not mean that we have taken our eyes off Russia. I have just explained the upgrade that has taken place in that regard. Since 2010, the Foreign Office has increased from 43 to 56 the number of Russian speakers posted to Russia and the former Soviet Union. This week, the Foreign Office will launch an eastern Europe and central Asia cadre of experts, already counting 400 members, designed to pool experience and ensure that officials working on this region have the support and skills to lead first-class foreign policy towards Russia and the region.

I also cannot accept wholesale the report’s claim of a decline in the EU’s Russia expertise. In the past 11 years, the EU as a whole has absorbed lifetimes of experience of officials working with Russia and the Soviet Union through the accession of the Baltic states, the Visegrad four, and Black Sea states. The EU’s response to the crisis has always been in support of one clear goal—the restoration of the sovereignty and territorial integrity of Ukraine.

The noble Lord, Lord Kerr of Kinlochard, asked what action was being taken on the basis of the Budapest memorandum and thinks that we were absent from that. We were not. As I said back in October, we have tried to engage in discussions on this but the Russians simply refused on that particular point. Throughout the whole period, the Prime Minister spoke to President Putin eight times in 2014. They met most recently at the G20 in Brisbane on 15 November. The Foreign Secretary—both the current and the former one—spoke to Foreign Minister Lavrov five times in 2014, most recently in a phone call on 9 August, and the UK is playing a key role in resolving the crisis in Ukraine through the EU, UN and NATO. That goes also with regard to comments by some noble Lords about what appears to be our taking a back seat over Minsk. That is by no means the case. We have led throughout on negotiations and sanctions. It is only because of the imposition of sanctions, as I will repeat in a moment, that President Putin came to the table and we got Minsk I and what some call Minsk II.

The committee’s report notes the remarkable degree of unity seen in Brussels over the course of the crisis. I will give way but I am aware of the time.

[Lord Davies of Stamford]

I am most grateful to the Minister for giving way. She raised the Minsk I and Minsk II agreements. An important issue arises which I tried to raise yesterday in questions on the Statement. However, I received no satisfactory answer from the Leader of the House. Yesterday’s Statement on the Council said that the sanctions would not be eased until the Minsk agreements were fully implemented. I think that I have cited that correctly. The implication there is that if the Minsk agreements are fully implemented, sanctions will be eased. However, as the noble Baroness knows, the Minsk agreements do not mention Crimea. The prospect therefore arises under the terms of the EU Council Statement yesterday that sanctions could be eased, or indeed removed, while Ukraine remained occupied by Russia. Am I reading the situation correctly? What actually is the policy of the Government and the EU in relation to sanctions and Crimea aside from sanctions and the rest of Ukraine which is dealt with in the Minsk agreements?

[Baroness Anelay of St Johns]

My Lords, I assured the noble Lord that I would be answering his question later but he is so eager that perhaps, with the leave of the House, I will jump about a bit. I hope I will not confuse the rest of the House too much but at least I may perhaps enlighten the noble Lord, Lord Davies of Stamford, and the noble Lord, Lord Kerr of Kinlochard, who asked pertinent questions on this matter.

Will the sanctions relating to Crimea be lifted if Minsk is implemented? A moment ago, I had a quick read of yesterday’s Hansard while we were continuing the debate. No, we do not, and will not, recognise the illegal annexation of Crimea by Russia. The change of borders by force is a direct challenge to international security. Sanctions relating to Crimea will remain in place until Russia returns it to Ukraine. This was made clear most recently in a statement by all 28 EU member states at this month’s Foreign Affairs Council, predating last week’s meeting. The agreement reached at the March European Council was to make clear that the tier 3 sectoral sanctions adopted in response to Russia’s actions in Donbass, not Crimea, will be lifted only once the Minsk agreement has been implemented in full. I appreciate that for some there has been conflation of the two types of sanctions. That is as far as one can go. I intend to speak about Minsk. Perhaps I may leave it at that point.

[Lord Davies of Stamford]

My Lords—

[Baroness Anelay of St Johns]

My Lords, I have gone as far as I can in elucidating the matter and ought to return to the major issues around this.

We have unified in the EU around a strategy of three pillars to restore Ukrainian sovereignty. First, we are supporting Ukraine through reform assistance, emergency funds, military training and ensuring that its vital energy needs are met. We are giving Ukraine a basis on which to resist Russian pressure and succeed as a sovereign country. My noble friend Lord Risby, in particular, asked whether the UK should push Ukraine towards decentralisation. We need to continue to support Ukraine, particularly on its political commitments, such as setting out modalities for local elections on constitutional reform and reaching out to the east through national dialogue. That is part of the implementation of Minsk.

The second pillar is the diplomatic track. We are clear that this crisis will be resolved diplomatically only in a way that secures Ukraine’s sovereignty, independence and territorial integrity in the face of Russian-backed aggression. Russia and its separatist proxies must abide by the commitments they made at Minsk.

The third pillar is pressure on Russia, primarily through sanctions. The UK has led the EU in ensuring that it agrees robust sanctions that, in concert with the fall in oil prices—to which noble Lords referred—and Russia’s own structural problems, deliver real economic pressure on Russia. In answer to the noble Lord, Lord Cromwell, that is why we have seen Mr Putin willing to come to the table to discuss agreements made at Minsk last September and last month. Until Russia meets the entirety of its commitments made under the Minsk agreements of September and March, we are clear that the full pressure of sanctions must remain. I am referring to Minsk, not Crimea. To do anything else would simply reward continued Russian aggression.

[Lord Davies of Stamford]

My Lords—

[Baroness Anelay of St Johns]

My Lords, if I go further, I will test the patience of the House myself. I should return to this matter; I am already going to run over what on this length of debate would be a 25-minute speech. I am hoping not to reach that.

The European Council agreed last week to link clearly the duration of sanctions against Russia,

“to the complete implementation of the Minsk agreements, bearing in mind that this is only foreseen by 31 December 2015”.

This is a clear demonstration of the political will of the EU to maintain the pressure on Russia for as long as is necessary. My noble friend Lord Howell made a skilful analysis of the Russian perspective of the geopolitical world, as did other noble Lords.

While we have focused on Ukraine, it is clear to the Government that we do not have a Ukraine crisis but a Russia crisis, of which Ukraine is the unfortunate victim. We need only look elsewhere to what Moscow terms its “near-abroad”—a term that other noble Lords have used—to see how the ripples of the Russia problem are disturbing others. Georgia’s 2008 conflict with Russia showed the international community the dangers of appeasing Moscow. The fundamental truth behind all the incidents in the eastern neighbourhood is that they reflect Russia’s world view—a world of great powers and vassal states, and a world in which the EU and Russia are strategic competitors, not strategic partners. I am grateful to the committee for so clearly identifying the true nature of this relationship. The Government are in full agreement.

How we respond to our recast relationship with Russia is a key priority, and I must respectfully disagree with the committee’s claim that the UK has no Russia strategy. On the contrary, we have a clear strategy that recognises many of the same risks and opportunities that the committee brings out in its report, and which will form the basis of how the UK interacts with Russia in the coming years. Fundamentally, we must recognise that Russia can no longer be considered a partner. Both our attempts to forge a modern and mature political relationship have, sadly, failed. None the less, we agree that we must continue to engage with Russia where it is in our interests to do so. After all, Russia is a permanent member of the United Nations Security Council and we must continue to co-operate on the key global challenges we all face. We all want to continue to trade with Russia. The report is correct in its assertion that Russia must not simply be ignored in Europe’s eastern neighbourhood. We agree. We must also do more to support civil society in Russia and to forge closer people-to-people links between us.

At the same time, we must also do more to protect ourselves, our allies and our eastern partners from Russian manoeuvring. Many noble Lords made reference to NATO. I will not repeat the excellent guidance we received from my noble friend Lord Jopling about the new, high-readiness joint task force. I will merely add an elucidation to the noble Lord, Lord Kerr, and others with regard to Article 5. We agree that what Article 5 means is clear. I can say also to the noble Lord, Lord Davies of Stamford, that we confirm our commitment to the intent of Article 5. However, I have to say that we have always made it clear that there is not a military solution to the crisis in Ukraine.

Further, the EU and UK must support those countries in our neighbourhood that want to benefit from closer association with our way of life. That is where I am brought to talk about the Good Governance Fund, which was referred to by my noble friends Lord Caithness and Lady Neville-Jones. My right honourable friend the Prime Minister announced at the March European Council last week a new UK technical assistance programme to support reforms in countries in the eastern neighbourhood and western Balkans. In the first year, the fund will provide expert advice, training and assistance to the Governments of Ukraine, Georgia, Moldova, Serbia, and Bosnia and Herzegovina. There will be options to extend the fund to other countries in further years. We expect the work to be up and running this summer. The initial £20 million will come from DfID in the next financial year, but this will be a cross-government department fund. Future funding will therefore be confirmed in due course.

I add my congratulations to those of other noble Lords to my noble friend Lord Oxford and Asquith on his remarkable and informed maiden speech. It is one of those occasions where one might say one expected nothing less. He set the bar high with his experience before he came here and he proved that he will be a most valuable Member of this House. He and the noble Lord, Lord Hannay, raised the importance of strengthening the rule of law and democratic accountability, as well as reforming the police and, in particular, the justice system. I agree. We must also have anti-corruption measures to help improve transparency and encourage effective management of public finances—and to strengthen independent media to ensure balanced and accurate news and public affairs reporting. All those matters will be the subject of spending that can be achieved from this new fund. That is what it is for—to give support on those matters.

I was also interested to hear from my noble friend Lord Howell and others, such as the noble Lord, Lord Kerr, about the crucial matter of energy and energy supply. I accept that the EU needs to reduce its dependence—or at least its perceived dependence—on Russian energy.

I have reached the closing part of my speech. I know that I am at 22 minutes, but I am going to test the patience of the House because I have been intervened on. I know that in a timed debate of this length I could be allowed 25 minutes, so I will rush on.

I reiterate my appreciation for the committee’s work and for the high-quality debate that we have had today. We strongly welcome the fact that the committee’s report includes a wealth of evidence, taken from a wide range of sources. However, I place on record my concern at the prominence given in some parts of the report to unjustified claims. In particular, there are assertions made by Alexander Yakovenko, Russia’s ambassador to the UK, that the committee should regard with the utmost scepticism, as I did when I met him in November and challenged his version of events. For example, he said that the EU was not ready to discuss with Russia its concerns regarding the association agreements—it was. He said that the Maidan protests were dominated by neo-Nazi and other extremist groupings. He said that the Maidan protests were supported by the EU and the US and were part of a deliberate plot against Russia. These are key elements in a deceptive Russian narrative, in which the West is to blame for Russia’s problems, and in which NATO seeks to encircle and threaten Russia. That is not the real picture. We do not see the world in such terms. We reject the charge that we have trampled over Russia’s legitimate concerns.

I can assure the committee that this Government have no intention of allowing the current crisis to break all links between Russia and the West. Diplomacy in all its forms, including all the cultural channels, is the route to better EU-Russia relations. It is right that we should follow that route: diplomacy suffers when dialogue ends.

My noble friend Lord Tugendhat asked a particular question: will the UK be represented at the 9 May Victory Day commemorations in Moscow? Yes: the UK has close historical ties with Russia, based on the sacrifices that we made in the Second World War. We have a responsibility to honour the sacrifice of our own service men and women during that conflict and pay our respects to those who died fighting for a shared cause. We will therefore be represented there on 9 May. That is the spirit in which our relationship with Russia must continue: one of continued negotiation and business, but not one of business as usual until Russia respects the sovereignty of Ukraine.

Israel: Gaza

Lord Davies of Stamford Excerpts

Monday 23rd March 2015 Lords Chamber

[Baroness Anelay of St Johns]

My Lords, there were several strands in there. Clearly, it is still a priority for this Government to achieve a two-state solution to the issue of Israel. With regard to the words used by Mr Netanyahu, who is at this moment seeking to form a Government, on Thursday 19 March he said:

“I do not want a one-state solution, I want a sustainable, peaceful two-state solution but for that circumstances have to change”.

We have to agree. Partners from the region would be welcome if they became involved in constructive peace negotiations, but of course Hamas must renounce violence, recognise Israel and accept previously signed agreements and Israel, for example, must stop its settlements expansion policy.

[Lord Davies of Stamford (Lab)]

My Lords, is it not the case that the Hamas regime in Gaza could get the blockade lifted any day they wanted by the simple action of renouncing violence, recognising the state of Israel and accepting existing agreements, including the Oslo accords? Would it not be very much in the interest of everybody, but particularly the long-suffering people of Gaza, if they did just that?

[Baroness Anelay of St Johns]

Yes, my Lords.

Ukraine

Lord Davies of Stamford Excerpts

Tuesday 10th February 2015 Lords Chamber

[Baroness Anelay of St Johns]

My Lords, I give the same answer to my noble friend as I gave in January. We are not considering rearming ourselves and increasing our own armed position to launch any form of military action in Ukraine. That is simply not something that would be considered at this stage or, I would hope, in any event. That is not on the table. What we are considering is how best to continue the strong pressure on Mr Putin to ensure that the discussions tomorrow bear fruit and then to hold him to the results of that.

We have a strong part to play in all the continuing negotiations, and the diplomatic airwaves, both face to face and over the internet and telephone, have been a-buzzing this last week, as all noble Lords would expect. My right honourable friend the Foreign Secretary had meetings in Munich on Saturday with Mr Kerry, Secretary of State of the United States, and Herr Steinmeier, the German Foreign Secretary. There are talks a-plenty between all the key players. That is why the consensus can be maintained.

[Lord Davies of Stamford (Lab)]

My Lords, I commend the Government on the robust tone of their Statement, but, as it says, words do not get very far with Mr Putin, and even sanctions have not so far had the effect that we had hoped.

Does the noble Baroness agree that the only physical obstacle to the further advance of Russian special forces, Russian separatists and Russian so-called volunteers have been the brave men and women of the Ukrainian armed forces, who have been fighting with inadequate weapons? Nothing is more devastating for the morale of any fighter than knowing that he or she is less well armed than his or her opponents. If there is not a convincing settlement in Minsk tomorrow and no real evidence for believing that the ceasefire terms will in future be observed, are we not getting to the point when it would be right for the Government to take the lead within the European Union in indicating that we would be prepared to sell defensive weapons, including lethal ones, to the Ukrainian armed forces?

[Baroness Anelay of St Johns]

My Lords, the noble Lord raises questions that I know colleagues have been discussing and about which they are deeply concerned. I know that he raises them with his background as a Minister in the MoD and has experience of the kinds of difficulty that surround dealing with someone such as Mr Putin.

Briefly, I agree that the courage of the Ukrainians who are trying to resist the separatists being fuelled by up-to-date materiel has been remarkable. There are allegations that they have carried out atrocities. One hopes that those allegations will be disproved, but if they have committed atrocities, that is wrong. The majority have been committed by the separatists.

We have had a long-term relationship in providing non-weapons-based help and support, supplying training and advice more generally as well as the non-defensive materiel that can assist them. Any further step would be one that no Government would wish to rehearse in public, unless there were the need. The important thing is to ensure that there is never that need and that we hold Mr Putin to account, slippery and careful in creating smoke and mirrors as he is.

Russia: Arms

Lord Davies of Stamford Excerpts

Wednesday 18th June 2014 Lords Chamber

[Baroness Warsi]

My noble friend makes an incredibly important point. Our common interests with Russia—and, indeed, any differences—go well beyond just the dispute in Ukraine. We have many interests on which we have worked together, whether with regard to Syria or, more recently, Iran. It is therefore important that we keep those diplomatic routes open to continue trying to resolve those matters.

On Ukraine, I have stood at this Dispatch Box and raised concerns about the amassing of troops on Ukraine’s borders. It has therefore been right for us to send air defence support for monitoring in the region, to make sure that our allies feel that we are there and are supportive.

[Lord Davies of Stamford (Lab)]

My Lords, I totally agree with my noble friend that the culmination of the considerable arms build-up, year after year, by Mr Putin, along with ourselves and the rest of the EU cutting our defence expenditure is extremely dangerous and should not be sustained. Would it not be deplorable and shameful if we reached a deal with Mr Putin on the basis of which the Crimeans could exercise self-determination if they wished to join Russia but Ukraine could not exercise democratic self-determination if it wished to join the EU and NATO?

[Baroness Warsi]

Each country must have the right to determine its own future, and Ukraine has indicated that it would like a closer relationship, certainly with the EU. Membership of NATO is not on the cards at the moment as regards Ukraine. However, ultimately, this is a matter which the Ukrainian people have to decide through their legitimately elected Government.

Ukraine

Lord Davies of Stamford Excerpts

Tuesday 13th May 2014 Lords Chamber

[Baroness Warsi]

The noble Lord is right that Russia’s actions contravene its obligations under the UN charter, the OSCE Helsinki Final Act and the 1997 partition treaty on the status and conditions of the Black Sea fleet and are in breach of its commitments under the Budapest memorandum signed in 1994. Russia is not following a plethora of its obligations.

[Lord Davies of Stamford (Lab)]

My Lords—

[Lord Higgins (Con)]

My Lords—

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[Baroness Warsi]

First, in relation to the point on recess, my understanding is that apparently the number of recess days does not exceed what has happened in previous years. As a Minister who is part of this coalition Government, I cannot remember the last time I had recess.

On the economic consequences, it is already clear, for example from the recent downgrade of growth for Russia’s economy from 2.3% to 0.2% this year, the $63 billion capital flight and the downgrading of Russian bonds, that this is having a real impact on Russia’s economy. The format for making sure that these sanctions are having an impact has been, among other things, the EU Foreign Affairs Committee. It is because there is constant planning happening that when there is an escalation in the situation there is an escalation in sanctions, and those sanctions are biting.

[Lord Davies of Stamford]

The Minister said a few moments ago that she was very careful about language. I put it to her that her right honourable friend the Foreign Secretary was most unfortunate in his language in one section of the Statement, when he said:

“We demanded that Russia move its troops away from the Ukrainian border”.

I do not need to remind the House and the Minister that Russia’s troops are, unfortunately, already within the Ukrainian border, in Crimea. It is most unfortunate, undesirable and dangerous to use language that implies that, even if we have not accepted that situation formally or legally, we have somehow psychologically acquiesced in the annexation by Russia of Ukraine.

Does the Minister agree with me that President Putin will naturally take whatever he thinks he can get away with? The sanctions that we imposed on him after the illegal annexation of Crimea were so footling—at the time I think that I described them as “derisory”—that it is hardly surprising that he has come back for a bigger bite. Does the Minister accept that, if we are going to need new sanctions, they had better this time be a great deal more powerful, because she has a very considerable credibility gap to cover?

[Baroness Warsi]

I have outlined the impact that the sanctions are already having. We are designing these sanctions in such a way as to have a maximum impact on Russia with the minimum impact on others—but, of course, there will be an impact on others, including on ourselves. HMG do not accept—the Foreign Secretary has said this on numerous occasions—the illegal annexation of Crimea. I do not think that anything in the Statement suggests that we do.

Ukraine

Lord Davies of Stamford Excerpts

Tuesday 18th March 2014 Lords Chamber

[Baroness Warsi]

My Lords, I will have an opportunity to consider that specific question and will make sure that it is answered during this debate if we have that information.

On 6 March, an extraordinary meeting of the European Council in which the Prime Minister played a pivotal role agreed a three-phase approach to stand up to Russia’s illegal behaviour: first, immediate steps to respond to what Russia has done; secondly, urgent work on a set of measures to follow if Russia refuses to enter dialogue with the Ukrainian Government; and, thirdly, a set of further, far-reaching consequences should Russia take further steps to destabilise the situation in Ukraine.

I am sure that your Lordships would appreciate more detail on each of those steps, and I will take them in turn. First, as a response to what Russia has already done, immediate steps have already been taken. We have suspended preparations for the G8 summit in Sochi indefinitely. We have withdrawn royal and ministerial visits to the Sochi Paralympic Games. Work on a comprehensive new agreement on relations between Russia and the European Union has ceased, and the EU has suspended discussions on a more liberal visa regime in the Schengen area—a long-standing goal of Russian policy.

In the second phase, and in company with other allies, we have worked to persuade Russia to negotiate with the Government of Ukraine about their concerns rather than resorting to illegal measures. We have pushed for the creation of a contact group, first proposed by the Prime Minister back in January. The European Council agreed that such talks should start within a matter of days or further measures would be adopted—the so-called second phase. Yesterday, on 17 March, the Foreign Affairs Council agreed additional measures including asset freezes and travel bans against 21 individuals responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine. These measures are in addition to those already agreed against Yanukovych and his circle.

[Lord Davies of Stamford (Lab)]

Has the Minister noted President Putin’s contemptuous remarks about those sanctions this morning? Did she also note that yesterday the Russian stock market rose by more than 5% in one day with relief that the sanctions were so weak and shallow? In effect, have these sanctions not been so derisory as to ensure that the Russians feel that there is hardly any cost at all to them in taking over Crimea, which has a great psychological as well as a strategic significance for them? It was really cheap at the price that we have set.

[Baroness Warsi]

My Lords, I did notice the specific comments to which the noble Lord refers. We fundamentally believe that the issue of sanctions will work; indeed, it has worked in a number of scenarios in relation to other foreign policy matters. These sanctions are currently being kept under review and the situation as it develops will be responded to with further measures, including further sanctions.

Thirdly and most significantly, the Council agreed that if further steps were taken by Russia to destabilise Ukraine there would be “additional and far-reaching consequences” for the relationship between Russia and the EU, including,

“in a broad range of economic areas”.

The Prime Minister played a leading role in helping to reach this agreement, including through convening a meeting with fellow leaders from France, Germany, Italy and Poland on the morning of the Council. Such sanctions would have consequences for many EU member states, including Britain, but the Government believe that the costs of not standing up to aggression are far greater.

Finally, the Council sent a clear message of support to Ukraine by agreeing to accelerate the signature of the political part of the EU’s association agreement with Ukraine and by unilaterally lowering trade tariffs. The EU has now frozen the assets of 18 people linked to the former regime, and Britain has deployed a team to Kiev from our National Crime Agency to help the new Ukrainian Government track down misappropriated funds. Ukraine also needs support for its economy. My right honourable friend the Foreign Secretary has been at the forefront of efforts to co-ordinate an international package of support for Ukraine, drawing principally on IMF and EU funds.

The Prime Minister announced last week that we would review all UK bilateral military co-operation with Russia. Today, my right honourable friend the Foreign Secretary has announced that we have suspended all such co-operation, including the signing of the military technical co-operation agreement, along with the cancellation of this year’s France-Russia-US-UK naval exercise and the suspension of a proposed Royal Navy ship visit to St Petersburg and of all senior military visits. We believe that under current circumstances, there is a compelling case for EU member states to suspend export licensing for military and dual-use items destined for units of the Russian armed forces or other state agencies which could be, or are being, deployed against Ukraine. The UK has now, with immediate effect, suspended all licence and application processing for licences for direct export to Russia. We will also suspended licences for exports to a third country for incorporation into equipment for export to Russia where there is a clear risk that the end product could and will be used against Ukraine.

A major focus for the interim Government in Ukraine and the international community is to ensure that the pre-term presidential elections called for 25 May are properly conducted, enabling all Ukrainians, including Russian speakers and minorities, to choose their leaders freely. Britain is providing technical assistance to support these elections and to assist with reforms on public finance management, debt management and energy pricing.

Europe is facing a grave challenge to the peace and security that we have worked so hard to build since the end of the Second World War. That security has hinged on respecting the territorial integrity of our neighbours. History has taught us many hard lessons about the dangers of turning a blind eye when the rights of fellow Europeans are being threatened. I am sure noble Lords will agree with the Prime Minister’s recent statement that we must stand up to aggression, uphold international law and support the Ukrainian Government and the Ukrainian people. They surely have the right to make their own choices about their own future. That is right for Europe, right for Ukraine and right for Britain.

The reality on the ground in Ukraine has constantly changed over the past few weeks and, regrettably, will continue to do so. I have sought to keep the House regularly informed through debates and Questions and have benefited from the expertise and knowledge of noble Lords from all sides of the House. Today’s debate is another timely opportunity to update noble Lords and to take note of the interventions, suggestions and views of the House.

--- Later in debate ---

[Lord Howell of Guildford (Con)]

My Lords, I feel that in a dangerous situation of this kind the first duty is to escape from hyperbole. This is not a renewal of the Cold War and the 20th-century ideological conflict, which has passed into history. It is certainly not the greatest crisis in Europe since 1945—that is an absurd exaggeration—let alone a repeat of the horrors of Sudetenland. If anything, it is the old 19th-century struggle involving unending tensions in the eternally disputed lands between Russia and Europe and the always unanswered question of where Europe ends, whether Russia is part of it and in whose sphere the regions and the lands in between should lie.

But there is a huge difference. In the 21st century, conditions internationally have totally changed. The world is now hyper-connected at every level, from schoolchildren in their schools, to universities, to business, to science, to major corporations and every conceivable interest in between. We are wound together in ways that not even some of our policymakers have fully grasped. Even in the past five years there has been a total transformation of the international landscape and huge shifts of power, with which some people in Moscow, and perhaps some even in the West, seem not to have caught up.

Of course there should be no appeasement of rough methods and treaty breaches, but nor should there be any hysteria. I have in mind the primitive outpourings in the New York Times and the ridiculous over-the-top piece in yesterday’s Financial Times saying that this was going to be the end of democracy in our time. Nor should we be driven by demands on the White House to show more machismo—“See off the Russkies”, and so on—and we certainly should not buy into the “weak Obama” story being spread about, although I must say that I think he made a huge mistake yesterday in using the word “never” about Crimea’s changing status. Rule 1 is never to use the word “never”. When I hear speeches of the sabre-rattling kind, I share the view of Bismarck, who said:

“The only thing we learn from history is that we learn nothing”.

He went on to say:

“The secret of politics? Make a good treaty with Russia”.

But of course he was sacked after that.

I believe that we should view the current crisis in two perspectives, which are not totally separate but which comprise two distinct areas. For the medium term, I fully support making Vladimir Putin and the cronies in his circle count the full and very painful cost of trying to use force in the rest of Ukraine, should they be so stupid as to do so. Not only will force not work in an age of street empowerment, as former President Yanukovych found out all too rapidly, but it will ruin Russia even while it certainly will hurt us as well. My noble friend Lady Warsi rightly referred to that.

However, our leverage is far greater in the medium term than many people realise. The financial screws can bring down the weak Russian financial system, while the vital gas and oil revenues, on which the whole of Putin’s Russia and certainly his inner clique float, can be drained away in due course. That is his jugular vein. Russia today is living on the hopes of high gas and oil prices; I believe that the budget can be balanced if the price is $119 a barrel. That can easily be undermined and removed. It could take time, because of course the idea that USA shale gas can come to the immediate rescue is a fantasy. It has been a fantastic story—shale gas provided 3% of US needs four years ago and provides 30% to 35% today—but just at the moment US gas inventories are extremely low and the gas export terminals are not yet completed.

None the less, gradually and in due course Europe can live without Russian gas, or it will acquire the customer power to beat down the price substantially, thus removing Gazprom’s monopoly position in the central European customer countries—as long as it is not stopped by misplaced green zealotry, which of course could undermine even that. Piped gas can come from Norway and from Azerbaijan in the Caspian region, while LNG can come from just about everywhere in growing quantities. Eventually, shale gas will indeed change everything, as I kept warning my colleagues in the Foreign and Commonwealth Office during my time there, but it will not be tomorrow. That is the medium term, where we are actually in a very strong position. We should have the confidence to develop it and set it out quite clearly to Mr Putin and his advisers.

It is on the immediate Crimean vote where we really need a sense of proportion and a lot of creative diplomacy. To let the Crimean situation escalate into an East-West military confrontation with total Russian isolation—if that was possible, which in fact it is not—would be to abort world recovery and to create massive worldwide suffering and probably political turmoil all round, on an impossible scale. To say that there should, instead, be a search for a deal is not appeasement; it is common sense. If there is to be a search for a deal, it should include urging Russia to wait until there is a fully elected Government in Kiev—Russia of course completely rejects the current interim Government—before rushing to complete the 100% annexation of Crimea, although it looks very late in the day from Mr Putin’s speech this morning, and to work with and talk to the new Government in Kiev when they are elected.

Ironically, taking Crimea away from Ukraine makes a Europe-inclined Government much more likely. This is a curious twist of the situation, because it would return a majority in favour of those looking west rather than east. In exchange, there could be a lifting of the targeted sanctions that we have now put in place and joint agreement in the proposed contact group, which both sides have agreed on, to work for Ukraine’s economic recovery. That will be extremely expensive, because it is bankrupt, and will only work if both sides co-operate. The final part of any package could be the re-inclusion of Russia in the G8. We should remember that Ukraine is extremely rich in all kinds of resources including, ironically, vast resources of shale gas.

It is not beyond the wit of diplomats to find an interim status for Crimea as an independent entity, as some Crimean leaders themselves have suggested. It would be a superficially independent little nation, like many others that have sprung up in recent years. However, of course, while they talk about independence, they are all in fact completely interdependent in practice, as all small nations have to be nowadays and as Scotland would soon discover if it voted for the independence illusion—it no longer in practice exists.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. I am listening carefully to the possible package that he is outlining, which might be the basis for some agreement over Crimea. Some solution must of course at some point be achieved. Does he agree that an essential part of such a package is that if we recognise the right of Crimea to exercise self-determination and join Russia if it wishes to do so—if the procedures are democratic and so forth—equally the right of the people of the rest of Ukraine to self-determination should also be respected? If they choose in due time to join the European Union and NATO, they should be allowed to do so and that should be recognised by Russia.

[Lord Howell of Guildford]

I think that those would be the unfolding ideals. It is in the interests of Russia—although I am not sure that it fully understands this—to have a stable Ukraine that is confident and able to resolve its internal differences, with the Russian-speaking part and the Ukrainian-speaking part living together. However, even that is a ridiculous division, because many Ukrainian people speak Russian and many Russian people speak Ukrainian. Until recently—until the tensions rose and there was this polarisation—no one cared a damn what language they spoke in Ukraine. It is possible for these people to live together.

The kind of evolution for Crimea that I am talking about is possible. However, the fact is that the Crimean referendum has happened, with 96% or whatever it was voting in favour, and the previous unstable status quo cannot be magically restored. I agree that there is indeed a generalised separatist movement going on all round the world, which noble Lords have already referred to. It is not just in Russia—Nagorno-Karabakh is stirring again, we hear what they are saying down in Catalonia and we know what is being said on our own island in Scotland. However, this has more to do with local digital empowerment, which is growing everywhere, than specifically with Russian imperialism.

Eventually, if we keep our minds on the true goals and interests of this country, it should be clear that it is completely in our interests to have a prosperous, open, connected and stable Russia. Russia cannot just eventually become a pariah nation, if its rulers want to survive and be part of, for instance, the World Trade Organisation, as they are, and the global economic system.

Finally, some other lessons have emerged from this. First, the European Union collectively—and we can provide some help from London—should rethink the style of its approach to neighbouring states. The EU, as much as Russia, has, I am afraid, helped to polarise a nation that could have lived together and could still live together, with the language issues being put back in the box as being largely irrelevant.

Secondly, with most countries and peoples continuously connected nowadays with an intensity never before experienced in history, with the electronic empowerment of all kinds of groups, official and unofficial, and the consequent fragmentation in the whole pattern of state power in country after country, and with the rising influence and economic weight of the non-western world—the “rise of the rest”—the whole behaviour pattern of international affairs has started to shift. For America, as much as for Europe, and the UK within Europe, if we want to prosper in these new conditions it is time to shift our attitudes as well. Force and coercion alone can no longer settle borders, crush minorities or deliver clear-cut victories, as we have bitterly discovered in many theatres in recent times. Softer and smarter methods have to be deployed, and the sooner that is grasped in Moscow, Washington and, indeed, Brussels, the better.

Ukraine

Lord Davies of Stamford Excerpts

Tuesday 4th March 2014 Lords Chamber

[Baroness Warsi]

I hear what my noble friend says, but I am not entirely sure that this is the kind of discussion that we should be having at the Dispatch Box at this time.

[Lord Davies of Stamford (Lab)]

My Lords, there is a very widespread feeling in the world that Vladimir Putin’s ultimate ambition is to restore the frontiers of the Soviet empire and the Tsarist empire. If he succeeds in de facto occupying—or even, one might say, de facto annexing—the Crimea, that surely will be a great encouragement to him to proceed with that agenda a bit further; in fact, he would probably become a great hero to nationalist sentiment in Russia. Against that background, is it not important that not only do we have the right sanctions to apply if it is not possible to achieve some diplomatic solution over the next few days and weeks, as we all hope, but also that we look again at the long-term signals that we are sending to Russia? We should review two things in particular: first, the dependence of the European Union on Soviet, or rather Russian, natural gas—surely as an urgent strategic priority we should try to reduce that—and, secondly, the deplorable signal that we, along with many other EU countries, have been sending in reducing our defence expenditure. Terrible tragedies have happened in history because the wrong signals were sent to a potentially aggressive party.

[Baroness Warsi]

My Lords, no doubt there is previous history in a very similar matter. We can draw parallels between Russia’s intentions in what is happening now with what happened not so long ago in relation to Georgia. That is something that we are acutely aware of. Only last week we were talking about sanctions with regard to Ukrainian politicians and now here we are talking about sanctions of a completely different kind. That just shows how quickly the situation is moving on the ground. We have already seen some of the consequences of sanctions and economic costs in what is being felt within Russia in relation to both its currency and its stock exchange. As to what is now happening and the consequences of Russia’s actions, it is important that we keep up that pressure. I do not think that a military option is on the table—the noble Lord opposite was kind enough to refer to that—and therefore I do not draw any parallels in relation to defence expenditure.

European Union (Referendum) Bill

Lord Davies of Stamford Excerpts

Friday 24th January 2014 Lords Chamber

[Lord Richard (Lab)]

My Lords, I will deal first with the so-called constitutional argument that seems to have emerged in the past three-quarters of an hour or so, which is that somehow or other this House should not seek to scrutinise this Bill too closely, it should not seek to amend it and it should certainly not seek to do anything that sent it back to the House of Commons in a different form from that in which it arrived here.

Over the past two years I have listened ad nauseam to Members of this House, particularly some of those who have spoken today. I am thinking notably of the noble Lord, Lord Cormack, who lectured me continually on the virtues of the nominated House as we have it and the iniquities of possibly having an elected House and told me—as I say, very frequently and very loudly—that the function of this House was that we should scrutinise a Bill, we should revise a Bill, we should examine it in detail, we should send it back to the House of Commons if we thought it was right, and we should amend it. The phrase that I heard so often was that the main function of this House was to ask the House of Commons to think again.

I do not detect any dissent from the other side so I was rather disappointed when the noble Lord, Lord Cormack, at Second Reading and indeed today, repeated the argument that somehow or other this Bill is so special and so unique that we should not consider it, we should not try to amend it, we should certainly not succeed in amending it and we should certainly not ask the House of Commons to think again about what it has sent here. That is a nonsense: it is a constitutional nonsense; it is a political nonsense; and it makes absolute nonsense of the functions of this House.

We do have those duties. They are not just rights but duties. If proposed legislation comes before the House of Lords, the House of Lords has a duty to scrutinise it, particularly if it has not been done properly in the other place. The short answer to this issue and this amendment is very simple: it is that the Electoral Commission, an independent body, has looked at this issue and had some research done. It may be imperfect, as the noble Lord, Lord Lipsey, told us, but the general effect of all that work by the Electoral Commission is that it has come up with a proposal for a question that should be put in the referendum. It is a question which on the Electoral Commission’s analysis is clear, unambiguous, neutral and fair, and it should therefore be one which this House should be prepared to include in the Bill.

For the life of me, I do not understand the attitude on the other side. The noble and learned Lord, Lord Mackay, said that, somehow or other, we would be strengthening the UKIP argument that the United Kingdom should withdraw from the European Union. If the noble and learned Lord had looked in the rows behind him at the moment that he said that he was against that, he would have seen the faces of those whose predominant passion as far as Europe is concerned seems to be that we should withdraw. It is quite extraordinary that the people who are most vociferous in support of this legislation are not the democrats in the Conservative Party but are, as somebody has christened them, the Tea Party.

So be it. That is what we are faced with. For the House of Lords not to accept that that is what we are faced with and for the House of Lords not to do its duty in relation to this Bill would be a derogation of its duties. I hope therefore that the House will vote strongly in favour of the amendment.

[Lord Davies of Stamford]

My Lords, I have great respect and regard for the noble and learned Lord, Lord Mackay—

[Lord Wigley (PC)]

My Lords, as someone who has put his name to two of the amendments grouped with the lead amendment, I am very happy to support the amendment put forward by the noble Lord, Lord Armstrong. As a relatively new Member of this House—it is three years ago this week that I took my place in this Chamber—I am acutely aware that I had to be conscious then of the role of this House as a revising Chamber but a Chamber, of course, which always gives way to the democratically expressed wish in the House of Commons.

At the Second Reading of this Bill, I was flabbergasted to hear the suggestion that we as a House of Lords should not consider amending this Bill in any shape or form even if there was a glaring weakness in it and that we should return it unamended to the House of Commons for reasons that I do not understand. I know from having spent 27 years in the House of Commons that it has the capability of creating the time, certainly if it is the Government’s wish to do so. If there is the extent of consensus in the House of Commons that has been suggested in this debate, surely that consensus would allow that time to be made available for it—or perhaps the consensus does not exist to the extent that has been suggested in this debate.

Be that as it may, I believe that the amendment before us is a vital one. It is one which I am conscious of in the context of the debate that we had some months ago on the position in Scotland. My good friend, Mr Alex Salmond, who has been roundly rubbished for suggesting a question other than the question being put forward by the Electoral Commission, had the good sense to accept the Electoral Commission’s suggestion. I believe that we should have the good sense to accept the words proposed in Amendment 1 that would provide for that to take place.

I invite the noble Lord, Lord Dobbs, who is in charge of this Bill, to do what would be the sensible thing and accept the amendment. That would curtail the time that is being used and give an indication that this House still has a role on important legislation such as this. In doing so, he would change the tone of the whole debate from hereon in.

[Lord Lea of Crondall (Lab)]

My Lords—

[Lord Davies of Stamford]

I have given way already on two or three occasions. I think that I have shown considerable courtesy in giving way several times before speaking. I say with the greatest sincerity that I have nothing but the greatest admiration for the noble and learned Lord, Lord Mackay. Anybody who knows him knows that he is a man of the greatest integrity, and he was undoubtedly an extremely distinguished Lord Chancellor. But I was really quite shocked by something that he said this morning and I feel that, for once, he has allowed party loyalty to override his general judgment.

He seemed to suggest—I wish I could believe that I had misheard him—that we should allow in this place any kind of rubbish to become the law of the land simply on grounds of political expediency, as a substitute for party manifestos as a declaration of future intent or something of that sort. That seemed to me an extraordinary thing for any Member of this House to say, particularly a former Lord Chancellor.

We have a duty, which it is perhaps not an exaggeration to call a sacred duty, to make sure that anything that goes forward from this place on to the statute book has been thoroughly examined. If we see something coming from the House of Commons which we believe to be anomalous or improper, or not up to the highest standards of a democratic legislature or false in any way, we must do everything possible to modify and improve the text before it leaves this House.

Equally, there is really no doubt that there is something very false about the text of this Bill. There is something very artificial about the language of the question. We all in this House think that we understand the English language. We think that we understand the difference between the verb “to be” and the verb “to remain”. We know perfectly well in any context, be it a newspaper or a novel, that if we changed every use of the verb “to remain” to “to be”, we would fundamentally change the meaning and produce complete chaos and nonsense in many cases.

If I were to say to a friend of mine, “Do you think that I should be a member of a trade union?” or “Do you think that I should be a member of my local rotary?” or “Do you think that I should be a member of the Mormon church?”, and if, subsequent to the conversation he discovered that I was already a member of a trade union or a member of the local rotary or a member of the Mormon church, I think that he could come to only two conclusions. One would be that I was going slightly mad, perhaps showing the advanced symptoms of Alzheimer’s; I can see some noble Lords who have felt for years that I have had that. Alternatively, he would feel, with reason, that I was being very disingenuous and slippery and that he needed in future to be very cautious in his understanding of everything that I had said. That, I am afraid, is the position of the Government, or the position of the Tory party, or the position of the proposers of this Bill. They have subscribed to a use of language which is clearly very slippery and disingenuous, and we have to ask why they have done it.

I have no doubt that they have done it because the spin doctors have said that people confronted with a question will be inclined to vote for the status quo, particularly if it is a matter not of immediate concern to themselves or their families—we know that Europe is not a matter of immediate concern to most people and their families—and particularly if it is a slightly complicated matter. That is the easy option—some people would say the lazy option—so that, if you want to get an answer against membership of the European Union, you imply, although it would be quite false to do it, that our membership of the European Union is something new and is not the status quo. We all know that that is the game that they are playing. The question is whether the Government, or the Tory party more precisely, should be allowed to get away with that or whether the House of Lords should feel it wants the Government of the day to get away with that. That is the question that we have to weigh very carefully, because on that depends the integrity to a very large extent of our processes here.

If it becomes known in the country that the Government of the day can get away in a referendum with posing an obviously slightly bogus and biased question, what does that say for the integrity of our democracy? What does that say for people’s confidence in our political processes? There is already enough cynicism in this country about politics without adding to it in this fashion.

Even if there was no such thing as an Electoral Commission in this country, quite openly and straightforwardly on the basis of the two texts we are comparing this morning, the one put forward by the noble Lord, Lord Armstrong, is undoubtedly the one we should go for. However, there is an Electoral Commission. We have established it as an umpire to deal with precisely these matters, to give better confidence to the British people that politicians cannot get away with dirty tricks. Here, the sponsors and supporters of the Bill propose that we should simply override the views of the Electoral Commission—the umpire. Two things follow from that. First, it would be quite clear that there is no point at all in having an Electoral Commission. Why are we spending public money on an Electoral Commission if the Government of the day—or anybody who can get a majority in the two Houses—can always override its views? There would be complete cynicism about the Electoral Commission. Secondly, there would be even greater cynicism about all our political processes. I have my name to several amendments in this group but I am delighted to support the amendment put forward by the noble Lord, Lord Armstrong.

[Lord Pearson of Rannoch (UKIP)]

My Lords, I do not know if others of your Lordships are in the same position as me in that I remain confused about procedure between your Lordships’ House and the House of Commons on this Private Member’s Bill. I am fairly sure that very large numbers of the British public would be similarly confused having listened to this debate so far. I refer here particularly to the helpful interventions from the noble Lords, Lord Forsyth and Lord Elystan-Morgan, and the noble and learned Lord, Lord Mackay of Clashfern.

I will not make more of a speech on the Bill itself except to remind your Lordships, yet again, that the Bill passed through the House of Commons unopposed and is on a subject upon which a very large majority of the British people say they want a referendum. Of course, it would be a very foolhardy Government in future who dared to repeal this Bill if we passed it.

I still have a question on which we need an authoritative answer from the government Front Bench. I regret that the noble Baroness the Chief Whip is not in her place but the noble Lord the Leader of the House is—or perhaps it is the duty of the noble Lord, Lord Dobbs, to answer this. The question is, quite simply: what happens if we pass any amendment to this Private Member’s Bill? Will there be time in the Commons to consider it and get it back to us, or will we in effect kill the Bill? What are the prospects of a similar Bill in the next Session and before the general election? Even if the wording in the proposed question may not be perfect, are we in effect killing this Bill if we vote through this or any other amendment? We should be very clear about that before we vote.

--- Later in debate ---

[Lord Davies of Stamford]

My Lords, each of the last three speakers has put very significant questions to the noble Lord, Lord Dobbs, and we all look forward to his response. The House will have listened with particular attention to the comments of the noble Lord, Lord Higgins, as he has long experience of public life and the logic of his intervention seems to me very compelling.

I very much enjoyed the speech of the noble Lord, Lord Maclennan. I agreed with every word of it. He and I have had pretty much the same views on this subject during the 25 years we have known each other. I am as confident as I ever was that the judgment that we have taken on these matters over the years will be vindicated by history.

The noble Lord, Lord Kinnock, said some very wise things that I hope have been taken good note of. It will have struck the House—and I trust that it will strike the public—that we have heard in the course of the past two or three hours from the four Members of the House who have the greatest experience of dealing with the European Union and European Union affairs— that is, the noble Lords, Lord Kinnock, Lord Tugendhat, Lord Hannay and Lord Kerr, coming from the two major parties and from no party. All that they said and the advice they gave to the Government, which I think was very sound, was strikingly in harmony. That is probably a very significant point.

I put my name to several amendments in this group, a number of which—Amendments 13, 14 and 15—I saw, and continue to see, essentially as probing amendments designed to illuminate the issue and clarify the options. In that respect, as I shall explain in a moment, my expectations have been more than fulfilled. However, if we want to make the Bill a little more viable and a little less absurd, the right agenda for the House now is to agree Amendment 10 of the noble Lord, Lord Kerr, and Amendment 16 of the noble Lord, Lord Foulkes, to which I put my name. That would produce a coherent solution to the problem the House now faces.

There has been a lot of comment in the course of these debates to the effect that what we are faced with in the Bill is a series of absurdities. It is absurd to have a referendum that is supposed to take place up to four years after the decision to hold it is taken. I do not think that in the whole history of referenda, which as far as I can recall started with Napoleon I’s plebiscites, anybody has ever had such a ridiculous notion before. How could the Government possibly have come up with such an extraordinary notion? The whole thing looks suspect from the start.

What also looks very suspect from the start is the fact that the Prime Minister, the Chancellor, the Foreign Secretary and the other Conservative members of the Government have all apparently had this damascene conversion over the past year and a half in favour of having a referendum Bill when a short time ago they opposed it, using very much the arguments that we continue to use quite genuinely against the whole idea.

It is also very suspect that intelligent men—they are intelligent men; they are not fools—cannot have worked out for themselves the compelling logic set out by the noble Lord, Lord Kerr, which makes this date an absurdity if there is to be a renegotiation or some sort of change in our relationship with the European Union as a result of the initiatives launched by this Government. I think that the noble Lord, Lord Kerr, has persuaded everybody, including—this is the point that I am coming to—those who have brought forward the Bill, have pushed for it and have forced the Prime Minister to go along with this initiative: that is, the people who have been described in this House several times already today as the Tea Party.

The most eloquent spokesman I know of the so-called Tea Party—the noble Lord, Lord Forsyth—appears to have accepted the logic of the noble Lord, Lord Kerr. I noted that in his intervention, which was a dramatically important one, he said that the referendum might take place before the renegotiation. He had obviously abandoned the idea of making anybody believe that there was a reasonable chance of concluding the negotiation before the referendum, so he decided to switch it round and say that the referendum might take place first. I think what has happened this afternoon is that one more cat has been let out of the Tea Party’s bag, because a referendum which took place before the negotiation would make our leaving the European Union almost inevitable. Why? Because, in having a referendum, the Government would have to get a mandate for a particular negotiating agenda. They would have to say, “We are going to change this, change that, demand this and demand that”, and that would be the agenda that the public would then endorse.

Unless the Tea Party believes, rather like Napoleon I, that we could proceed in our European policy on the basis of diktat and simply lay down to 27 other nations exactly, in the finest detail, what they will and will not do, and what they will and will not subscribe to, there is no way in hell, if I may say so, that we would ever end up with a final agreement that corresponded exactly with the negotiating mandate that the Government had obtained the consent of the British people to pursue. In other words, such a referendum would be doomed to certain disaster. It could not possibly lead to a successful conclusion or any position other than there being a gap between what had been promised at the time of the referendum—and the deal that the British people had presumably endorsed if they had accepted the referendum and supported the Government’s negotiating agenda—and what emerged from that negotiation.

This is another example of the cat being let out of the bag. These are people who are devising methods, fair or foul, to ensure that, whatever happens, we come out of the European Union. Another cat was let out of the bag last week. A letter from 95 or, as some people said, 100 members of the Tory Party told the Prime Minister that the Government should introduce a Bill that would give the British Parliament the right, whenever it wished, not to fulfil but to derogate from any rule, directive or resolution of the European Union.

Again, these are not stupid people. They knew what they were doing. What would happen if we were to pass such a Bill in this Parliament? De facto, we would have left the European Union, because immediately we would be in breach of the treaty of accession. De facto, we would be out, but without a referendum. We would be out without the British people having realised what the process was that was leading to our inevitably having to get out. Unfortunately, they still have not woken up to that.

So much for democracy and for the idea that you cannot make such a move without the consent of the British people. We must be quite clear what the agenda of members of the Tea Party is in taking over the Conservative Party in this way, which they have done so successfully—to get us out of the European Union by hook or by crook. It is therefore important that in our debates we throw light on that and open up the truth, because it is a terrible truth, about which the British public should be in no doubt.

[Lord Cormack]

My Lords, I do not think that the noble Lord, Lord Davies of Stamford, could accuse me of being a member of any Tea Party. I well remember when he was a Conservative and enthusiastically cheered on the party, sitting by my side in another place. He has had a dramatic conversion, but I do not want to talk about that.

[Lord Davies of Stamford]

I have to ask the noble Lord to let me intervene because he said something about me that I cannot accept. Of course I have never suggested that the noble Lord is a member of the Tea Party, and I do not know why he supposed that I was saying that or could draw any such imputation. He has indeed known me for a long time in two parties; he reminds me of an embarrassing part of my past. However, I hope he will acknowledge that I have never changed my views on this subject, and I am glad to say that many other Members of this House here, including on this side of the House, will vouch for that. I have not moved on that question, and any imputation to the contrary—the idea that I was cheering a contrary view at some point—is utterly wrong, and I hope that he withdraws it.

[Lord Cormack]

I did not suggest any such thing. The noble Lord should keep his cool. He may always have supported Britain’s membership of the European Union, and so have I. I made it plain at Second Reading that I had advocated an “in or out” referendum since the Maastricht negotiations. I felt that the boil needed lancing. I also made it plain that in any such referendum I would campaign enthusiastically for our continued membership. If I had to give a single reason for that, it is that I was in the House of Commons long before he was. I remember when Romania, Bulgaria, Poland and all those Eastern bloc countries were in the Soviet bloc and under the grip of the Soviet Union. I rejoice that they are members of the European Union today. That alone is a reason for keeping the European Union in being.

I have been somewhat chided today by the noble Lords, Lord Grenfell and Lord Richard, for what I said at Second Reading. I take it in good part, as they meant it in good part. However, in my speech I sought to put a case for giving the Bill a fair wind. I think it was a reasonable case and anyone reading the whole of the speech, and not merely quoting selectively from it, could come to only that conclusion.

I wanted to intervene at this point today because we are now in a rather different place. The advice that I gave was certainly not heeded. It was comprehensively unheeded in the first vote. I say to my noble friend Lord Dobbs—whom I have been very glad to support and will continue to support and who has been doing a valiant and very difficult job—that the Bill has not been ruined by the two amendments that have been passed, and it is now up to the House of Commons to grasp that fact. When the Bill goes before another place on 28 February, all it has to do is to accept our amendments and the Bill will pass into law. I hope that that counsel of pragmatism will prevail and that is what will happen.

--- Later in debate ---

[Lord Davies of Stamford]

Why is the noble Baroness continuing to use “we”, referring to the Government, when she says that she speaks merely on behalf of the Conservative Party? The list of so-called achievements she has just reeled off are—if they are achievements—achievements of the Government as a whole.

[Baroness Warsi]

They are—and that Government are headed by a Conservative Prime Minister and a Conservative Foreign Secretary, who have led on these matters in the negotiations.

--- Later in debate ---

[Lord Davies of Stamford]

Since it is not easy to know what the pronunciation is of Welsh, it would be an awful pity not to have this passage in Hansard. Would the noble Lord like to read out in the Welsh language the text of the question that he has drafted?

[Lord Wigley]

I am more than delighted to do so. I think that it will be in Hansard anyway as it is an amendment, but it says:

“A ddylai’r Deyrnas Unedig barhau yn aelod o’r Undeb Ewropeaidd neu adael yr Undeb Ewropeaidd?”,

which says exactly the same as the English version.